[Federal Register Volume 70, Number 124 (Wednesday, June 29, 2005)]
[Rules and Regulations]
[Pages 37273-37288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-12828]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 9

[WC Docket No. 04-36; FCC 05-116]


E911 Requirements for IP-Enabled Services

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) adopts rules requiring providers of interconnected voice 
over Internet Protocol (VoIP) service--meaning VoIP service that allows 
a user generally to receive calls originating from and to terminate 
calls to the public switched telephone network (PSTN)--to supply 
enhanced 911 (E911) capabilities to all of their customers as a 
standard feature of the service, rather than as an optional 
enhancement. The rules further require interconnected VoIP service 
providers to provide E911 from wherever the customer is using the 
service, whether at home or away from home. These changes will enhance 
public safety and ensure E911 access to emergency services for users of 
interconnected VoIP services.

DATES: Effective Date: This rule is effective July 29, 2005, except for 
Sec.  9.5, which contains information collection requirements that have 
not been approved by the Office of Management and Budget (OMB). The 
Commission will publish a document in the Federal Register announcing 
the effective date.
    Comment Date: Written comments by the public on the new and/or 
modified information collection requirements are due August 29, 2005.
    Compliance Date: Subject to OMB approval, compliance with the 
customer notification requirements in Sec.  9.5(e) is required by July 
29, 2005. Subject to OMB approval, the compliance letter required by 
Sec.  9.5(f) must be submitted to the Commission no later than November 
28, 2005. Subject to OMB approval, compliance with the requirements in 
Sec.  9.5(b) through (d) is not required until November 28, 2005.

ADDRESSES: Federal Communications Commission, 445 12th Street, SW., 
Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Christi Shewman, Attorney-Advisor, 
Competition Policy Division, Wireline Competition Bureau, at (202) 418-
1686.
    For additional information concerning the Paperwork Reduction Act 
information collection requirements contained in this document, contact 
Judith B. Herman at (202) 418-0214, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's First 
Report and Order (Order) in WC Docket No. 04-36, FCC 05-116, adopted 
May 19, 2005, and released June 3, 2005. The complete text of this 
document 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 www.bcpiweb.com. It is also 
available on the Commission's website at http://www.fcc.gov.
    In addition to filing comments with the Office of the Secretary, a 
copy of any comments on the Paperwork Reduction Act information 
collection requirements contained herein should be submitted to Judith 
B. Herman, Federal Communications Commission, Room 1-C804, 445 12th 
Street, SW, Washington, DC 20554, or via the Internet to [email protected].

Synopsis of the First Report and Order (Order)

    1. Background. In the Notice of Proposed Rulemaking (NPRM) (69 FR 
16193, March 29, 2004), we asked, among other things, about the 
potential applicability of ``basic 911,'' ``enhanced 911,'' and related 
critical infrastructure regulation to VoIP and other Internet Protocol 
(IP)-enabled services. Specifically, after noting that the Commission 
previously found in the E911 Scope Order (69 FR 6578, February 11, 
2004) that it has statutory authority under sections 1, 4(i), and 
251(e)(3) of the Communications Act of 1934, as amended (Act), to 
determine what entities should be subject to the Commission's 911 and 
E911 rules, the Commission sought comment on whether it should exercise 
its regulatory authority in the context of IP-enabled services. The 
Commission further sought comment on the appropriate criteria for 
determining whether and to what extent IP-enabled services should fall 
within the scope of its 911 and E911 regulatory framework, and whether 
IP-enabled services are technically and

[[Page 37274]]

operationally capable of meeting the Commission's basic and/or E911 
rules or of providing analogous functionalities that would meet the 
intent of the 911 Act and the Commission's regulations.
    2. Discussion. In this Order, we define ``interconnected VoIP 
service'' and require providers of this type of VoIP service to 
incorporate E911 service into all such offerings within the period of 
time specified below. We commit ourselves to swift and vigorous 
enforcement of the rules we adopt today. Because we have not decided 
whether interconnected VoIP services are telecommunications services or 
information services, we analyze the issues addressed in this Order 
primarily under our Title I ancillary jurisdiction to encompass both 
types of service. We decline to exempt providers of interconnected VoIP 
services from liability under state law related to their E911 services.
    3. Scope. Our first task is to determine what IP-enabled services 
should be the focus of our concern. We begin by limiting our inquiry to 
VoIP services, for which some type of 911 capability is most relevant. 
The Commission previously has determined that customers today lack any 
expectation that 911 will function for non-voice services like data 
services. The record clearly indicates, however, that consumers expect 
that VoIP services that are interconnected with the PSTN will function 
in some ways like a ``regular telephone'' service. At least regarding 
the ability to provide access to emergency services by dialing 911, we 
find these expectations to be reasonable. If a VoIP service subscriber 
is able to receive calls from other VoIP service users and from 
telephones connected to the PSTN, and is able to place calls to other 
VoIP service users and to telephones connected to the PSTN, a customer 
reasonably could expect to be able to dial 911 using that service to 
access appropriate emergency services. Thus, we believe that a service 
that enables a customer to do everything (or nearly everything) the 
customer could do using an analog telephone, and more, can at least 
reasonably be expected and required to route 911 calls to the 
appropriate destination.
    4. The E911 rules the Commission adopts today apply to those VoIP 
services that can be used to receive telephone calls that originate on 
the PSTN and can be used to terminate calls to the PSTN--
``interconnected VoIP services.'' Although the Commission has not 
adopted a formal definition of ``VoIP,'' we use the term generally to 
include any IP-enabled services offering real-time, multidirectional 
voice functionality, including, but not limited to, services that mimic 
traditional telephony. Thus, an interconnected VoIP service is one we 
define for purposes of the present Order as bearing the following 
characteristics: (1) The service enables real-time, two-way voice 
communications; (2) the service requires a broadband connection from 
the user's location; (3) the service requires IP-compatible customer 
premise equipment (CPE); and (4) the service offering permits users 
generally to receive calls that originate on the PSTN and to terminate 
calls to the PSTN. We make no findings today regarding whether a VoIP 
service that is interconnected with the PSTN should be classified as a 
telecommunications service or an information service under the Act.
    5. While the rules we adopt today apply to providers of all 
interconnected VoIP services, we recognize that certain VoIP services 
pose significant E911 implementation challenges. For example, the 
mobility enabled by a VoIP service that can be used from any broadband 
connection creates challenges similar to those presented in the 
wireless context. These ``portable'' VoIP service providers often have 
no reliable way to discern from where their customers are accessing the 
VoIP service. The Commission's past experience with setting national 
rules for 911/E911 service is informative, and we expect that our 
adoption today of E911 service obligations for providers of 
interconnected VoIP service will speed the further creation and 
adoption of such services, similar to the manner in which the 
Commission's adoption of E911 service obligations in the wireless 
context helped foster the widespread availability of E911 services for 
mobile wireless users, where it formerly was not possible for wireless 
carriers automatically to determine the precise geographic location of 
their customers. We recognize and applaud the progress that has already 
been made to ensure that VoIP customers have E911 services. We stress, 
however, that should the need arise, we stand ready to expand the scope 
or substance of the rules we adopt today if necessary to ensure that 
the public interest is fully protected.
    6. Authority. We conclude that we have authority under Title I of 
the Act to impose E911 requirements on interconnected VoIP providers, 
and commenters largely agree. In addition, we conclude that we have 
authority to adopt these rules under our plenary numbering authority 
pursuant to section 251(e) of the Act. We find that regardless of the 
regulatory classification, the Commission has ancillary jurisdiction to 
promote public safety by adopting E911 rules for interconnected VoIP 
services. This Order, however, in no way prejudges how the Commission 
might ultimately classify these services. To the extent that the 
Commission later finds these services to be telecommunications 
services, the Commission would have additional authority under Title II 
to adopt these rules.
    7. Ancillary jurisdiction may be employed, in the Commission's 
discretion, when Title I of the Act gives the Commission subject matter 
jurisdiction over the service to be regulated and the assertion of 
jurisdiction is ``reasonably ancillary to the effective performance of 
[its] various responsibilities.'' Both predicates for ancillary 
jurisdiction are satisfied here.
    8. First, based on sections 1 and 2(a) of the Act, coupled with the 
definitions set forth in section 3(33) (``radio communication'') and 
section 3(52) (``wire communication''), we find that interconnected 
VoIP is covered by the Commission's general jurisdictional grant. 
Specifically, section 1 states that the Commission is created ``[f]or 
the purpose of regulating interstate and foreign commerce in 
communication by wire and radio so as to make available, so far as 
possible, to all the people of the United States * * * a rapid, 
efficient, Nation-wide, and world-wide wire and radio communication 
service with adequate facilities at reasonable charges,'' and that the 
agency ``shall execute and enforce the provisions of th[e] Act.'' 
Section 2(a), in turn, confers on the Commission regulatory authority 
over all interstate communication by wire or radio. In the NPRM, the 
Commission adopted no formal definition of ``VoIP'' but used the term 
generally to include ``any IP-enabled services offering real-time, 
multidirectional voice functionality, including, but not limited to, 
services that mimic traditional telephony.'' Recently, in the Vonage 
Order, the Commission found that Vonage's DigitalVoice service--an 
interconnected VoIP service--is subject to the Commission's interstate 
jurisdiction. Consistent with that conclusion, we find that 
interconnected VoIP services are covered by the statutory definitions 
of ``wire communication'' and/or ``radio communication'' because they 
involve ``transmission of [voice] by aid of wire, cable, or other like 
connection * * *'' and/or ``transmission by radio * * *'' of voice. 
Therefore, these services come within the scope of the Commission's 
subject matter jurisdiction granted in section 2(a) of the Act.

[[Page 37275]]

    9. Second, our analysis requires us to evaluate whether imposing a 
E911 requirement is reasonably ancillary to the effective performance 
of the Commission's various responsibilities. Based on the record in 
this matter, we find that the requisite nexus exists. The Act charges 
the Commission with responsibility for making available ``a rapid, 
efficient, Nation-wide, and world-wide wire and radio communication 
service * * * for the purpose of promoting safety of life and property 
through the use of wire and radio communication.'' In light of this 
statutory mandate, promoting an effective nationwide 911/E911 emergency 
access system has become one of the Commission's primary public safety 
responsibilities under the Act. As the Commission has recognized, 
``[i]t is difficult to identify a nationwide wire or radio 
communication service more immediately associated with promoting safety 
of life and property than 911.'' Indeed, the Commission has previously 
relied on Title I to satisfy both prongs of the standard for asserting 
ancillary jurisdiction: (1) Subject matter jurisdiction; and (2) the 
statutory goal furthered by the regulation. For example, in Rural 
Telephone Coalition v. FCC, the United States Court of Appeals for the 
District of Columbia Circuit (D.C. Circuit) upheld the Commission's 
assertion of ancillary jurisdiction to establish a funding mechanism to 
support universal service in the absence of specific statutory 
authority as ancillary to its responsibilities under section 1 of the 
Act to ``further the objective of making communications service 
available to all Americans at reasonable charges.'' Thus, we conclude 
that as more consumers begin to rely on interconnected VoIP services 
for their communications needs, the action we take here ensures that 
the Commission continues to ``further the achievement of long-
established regulatory goals'' to ``promot[e] safety of life and 
property.''
    10. Our actions today are consistent with, and a necessary 
extension of, our prior exercises of authority to ensure public safety. 
Since 1996, the Commission has acted to impose 911/E911 rules on 
providers of new technologies. Since that time, the Commission has 
affirmed and expanded on those efforts by exercising jurisdiction over 
other services to impose 911/E911 requirements, relying primarily on 
its Title I authority. That exercise of authority has been ratified, 
not rebuked, by Congress.
    11. Further, we note that our actions here are consistent with 
other provisions of the Act. For example, we are guided by section 706, 
which directs the Commission (and state commissions with jurisdiction 
over telecommunications services) to encourage the deployment of 
advanced telecommunications capability to all Americans by using 
measures that ``promote competition in the local telecommunications 
market'' and removing ``barriers to infrastructure investment.'' 
Internet-based services such as interconnected VoIP are commonly 
accessed via broadband facilities (i.e., advanced telecommunications 
capabilities under the 1996 Act). The uniform availability of E911 
services may spur consumer demand for interconnected VoIP services, in 
turn driving demand for broadband connections, and consequently 
encouraging more broadband investment and deployment consistent with 
the goals of section 706. Indeed, the Commission's most recent Fourth 
Section 706 Report to Congress recognizes the nexus between VoIP 
services and accomplishing the goals of section 706.
    12. Moreover, as stated above, in recognition of the critical role 
911/E911 services play in achieving the Act's goal of promoting safety 
of life and property, Congress passed the 911 Act, which among other 
things made 911 the universal emergency telephone number for both 
wireline and wireless telephone service for the nation. In the 911 Act, 
Congress made a number of findings regarding wireline and wireless 911 
services, including that ``improved public safety remains an important 
public health objective of Federal, State, and local governments and 
substantially facilitates interstate and foreign commerce,'' and that 
``emerging technologies can be a critical component of the end-to-end 
communications infrastructure connecting the public with emergency 
[services].'' Thus, we believe that our action here to impose E911 
obligations on interconnected VoIP providers is consistent with 
Congress' public safety policy objectives.
    13. Finally, as an additional and separate source of authority for 
the requirements we impose on providers of interconnected VoIP service 
in this Order, we rely on the plenary numbering authority over U.S. 
North American Numbering Plan (NANP) numbers Congress granted this 
Commission in section 251(e) of the Act and, in particular, Congress' 
direction to use its plenary numbering authority to designate 911 as 
the universal emergency telephone number within the United States, 
which ``shall apply to both wireline and wireless telephone service.'' 
We exercise our authority under section 251(e) of the Act because 
interconnected VoIP providers use NANP numbers to provide their 
services.
    14. When the Commission initially implemented the 911 Act, it took 
actions similar to those we take today under its numbering authority. 
For instance, in the order implementing the 911 Act, the Commission 
exercised federal jurisdiction over the establishment of the deadlines 
by when all carriers had to provide 911 functionality, and adopted 
various deadlines depending on such things as whether a local community 
had established a public safety answering point (PSAP). The Commission 
also required carriers to implement certain switching and routing 
changes to their networks. Specifically, the Commission required all 
carriers to ``implement a permissive dialing period, during which 
emergency calls will be routed to the appropriate emergency response 
point using either 911 or the seven-or ten-digit number.'' In order to 
achieve this, carriers had to ``prepare and modify switches to 
`translate' the three-digit 911 dialed emergency calls at the 
appropriate network points to the seven-or ten-digit emergency number 
in use by those PSAPs, and, subsequently, route the calls to them.'' 
The Commission also recognized that the transition to 911 in general 
required more network changes than required by translation.
    15. The Commission's authority to require network changes to 
provide the E911 features that have long been central to the nation's 
911 infrastructure is included within Congress' directive to the 
Commission to require the establishment of 911 as a ``universal 
emergency telephone number * * * for reporting an emergency to 
appropriate authorities and requesting assistance.''
    16. Requirements. In this Order, we adopt an immediate E911 
solution that applies to all interconnected VoIP services. We find that 
this requirement most appropriately discharges the Commission's 
statutory obligation to promote an effective nationwide 911/E911 
emergency access system by recognizing the needs of the public safety 
community to get call back and location information and balancing those 
needs against existing technological limitations of interconnected VoIP 
providers. With regard to portable interconnected VoIP services, 
however, we intend to adopt in a future order an advanced E911 solution 
for interconnected VoIP that must include a method for determining a 
user's location without assistance from

[[Page 37276]]

the user as well as firm implementation deadlines for that solution.
    17. Enhanced 911 Service. We require that, within 120 days of the 
effective date of this Order, an interconnected VoIP provider must 
transmit all 911 calls, as well as a call back number and the caller's 
``Registered Location'' for each call, to the PSAP, designated 
statewide default answering point, or appropriate local emergency 
authority that serves the caller's Registered Location and that has 
been designated for telecommunications carriers under section 64.3001 
of the Commission's rules. These calls must be routed through the use 
of ANI and, if necessary, pseudo-ANI, via the dedicated Wireline E911 
Network, and the Registered Location must be available from or through 
the ALI Database. As explained infra, however, an interconnected VoIP 
provider need only provide such call back and location information as a 
PSAP, designated statewide default answering point, or appropriate 
local emergency authority is capable of receiving and utilizing. While 
120 days is an aggressively short amount of time in which to comply 
with these requirements, the threat to public safety if we delay 
further is too great and demands near immediate action.
    18. Interconnected VoIP providers may satisfy this requirement by 
interconnecting indirectly through a third party such as a competitive 
local exchange carrier (LEC), interconnecting directly with the 
Wireline E911 Network, or through any other solution that allows a 
provider to offer E911 service as described above. As an example of the 
first type of arrangement, Level 3 offers a wholesale product that 
allows certain interconnected VoIP providers to provide E911 service to 
their customers. 8x8, Inc. recently announced that it is utilizing 
Level 3's service to provide E911 service to its Packet8 service 
subscribers in 2,024 rate centers covering 43 U.S. states. Likewise, 
Intrado has indicated that it is prepared to operate as a competitive 
LEC in a number of states to provide indirect interconnection to 
interconnected VoIP providers, and Pac-West Telecom is offering a 
similar service in ``virtually 100%'' of the state of California. We 
note that the Commission currently requires LECs to provide access to 
911 databases and interconnection to 911 facilities to all 
telecommunications carriers, pursuant to sections 251(a) and (c) and 
section 271(c)(2)(B)(vii) of the Act. We expect that this would include 
all the elements necessary for telecommunications carriers to provide 
911/E911 solutions that are consistent with the requirements of this 
Order, including NENA's I2 or wireless E911-like solutions.
    19. At the same time, the record indicates that incumbent LECs are 
increasingly offering E911 solutions that allow VoIP providers to 
interconnect directly to the Wireline E911 Network through tariff, 
contract, or a combination thereof. For example, Qwest has tariffed 
E911 offerings that are currently available to VoIP providers and can 
be coupled with third party service offerings to enable the provision 
of E911 service to portable interconnected VoIP services, including 
those that allow their end users to use non-native NPA-NXX numbers. 
Verizon is developing an E911 solution for interconnected VoIP 
providers that is comparable to the solution it offers for wireless 
E911. Verizon has announced that it will offer this solution in New 
York City beginning in summer 2005 and will roll it out in other 
locations if the New York City model succeeds. BellSouth currently 
offers tariffed services similar to those that Qwest uses to provide 
its VoIP E911 solution and recently announced that it is offering 
interconnected VoIP providers access to 911 facilities equivalent to 
that which it offers commercial mobile radio service (CMRS) carriers. 
SBC has offered to negotiate commercial agreements with VoIP providers 
for direct connection to Selective Routers and ALI databases, 
comparable to the E911 access that SBC provides to competitive LECs. 
SBC further has established a new commercial offering that ``will 
enable VoIP providers to offer customers who use their service at a 
fixed location, such as their home'' full E911 service and has stated 
that it is ``willing to develop a wireless-like VOIP 911 capability for 
VOIP providers'' pending receipt of necessary technical information.
    20. We are requiring that all interconnected VoIP 911 calls be 
routed through the dedicated Wireline E911 Network because of the 
importance of protecting consumers who have embraced this new 
technology. We recognize that compliance with this obligation is 
necessarily dependent on the ability of the interconnected VoIP 
providers to have access to trunks and selective routers via 
competitive LECs that have negotiated access with the incumbent LECs, 
through direct connections to the incumbent LECs, or through third-
party providers. We expect and strongly encourage all parties involved 
to work together to develop and deploy VoIP E911 solutions and we point 
out that incumbent LECs, as common carriers, are subject to sections 
201 and 202 of the Act. The Commission will closely monitor these 
efforts within the industry and will not hesitate to take further 
action should that be necessary.
    21. By requiring that all 911 calls be routed via the dedicated 
Wireline E911 Network, we are requiring interconnected VoIP service 
providers to provide E911 service only in those areas where Selective 
Routers are utilized. We expect that few VoIP 911 calls will be placed 
in areas that are not interconnected with a dedicated Wireline E911 
Network. We further note that nothing in this Order prevents 
interconnected VoIP providers from entering into mutually acceptable 
911 call termination arrangements with PSAPs that are not 
interconnected with a dedicated Wireline E911 Network.
    22. Service Level Obligation. For the purposes of these 
requirements, the phrase ``all 911 calls'' is defined as ``any voice 
communication initiated by an interconnected VoIP user dialing 911.'' 
We recognize that not all PSAPs will immediately be capable of 
receiving and utilizing the call back number and Registered Location 
information associated with the E911 requirements outlined above. By 
way of example, NENA estimates that approximately 26.6 percent of all 
PSAPs are not currently capable of receiving and utilizing wireless 
E911 Phase I data. We therefore hold that the E911 requirements set 
forth above shall be applicable when an interconnected VoIP provider 
provides service to a Registered Location only to the extent that the 
PSAP, designated statewide default answering point, or appropriate 
local emergency authority designated to serve that Registered Location 
is capable of receiving and utilizing the data, such as Automatic 
Location Identification (ALI) or Automatic Numbering Information (ANI), 
associated with those requirements. Even in those areas where the PSAP 
is not capable of receiving or processing location or call back 
information, however, we conclude that interconnected VoIP providers 
must transmit all 911 calls to the appropriate PSAP via the Wireline 
E911 Network. To be clear, this means that interconnected VoIP 
providers are always required to transmit all 911 calls to the 
appropriate PSAP, designated statewide default answering point, or 
appropriate local emergency authority utilizing the Selective Router, 
the trunk line(s) between the Selective Router and the PSAP, and such 
other elements of the Wireline E911 Network as are necessary in those 
areas where Selective Routers are utilized.

[[Page 37277]]

    23. We further hold that the obligation to determine what type of 
information, such as ALI or ANI, each PSAP is capable of receiving and 
utilizing rests with the provider of interconnected VoIP services. 
There is no limit to the number of entities that may engage in the 
provision of interconnected VoIP services in a given geographic area. 
It would be unreasonable to require PSAPs to attempt to inform every 
provider of interconnected VoIP services when the PSAP is prepared to 
receive and utilize the information associated with E911 service.
    24. We decline at this time to adopt performance standards 
regarding how much time may elapse after an end user updates the 
Registered Location before the provider has taken such actions as are 
necessary to provide that end user with the level of E911 service 
specified in this Order.
    25. We also require interconnected VoIP providers to take certain 
additional steps to minimize the scope of the 911 issues associated 
with their service and to facilitate their compliance with our new VoIP 
E911 rules, as explained below. First, we require interconnected VoIP 
providers to obtain, and facilitate updating of, customer location 
information. Second, we preclude interconnected VoIP providers from 
requiring subscribers to ``opt-in'' or allowing subscribers to ``opt-
out'' of 911 services and expect that VoIP providers will notify their 
customers of the limitations of their 911 service offerings.
    26. Registered Location Requirement. We recognize that it currently 
is not always technologically feasible for providers of interconnected 
VoIP services to automatically determine the location of their end 
users without end users' active cooperation. We therefore require 
providers of interconnected VoIP services to obtain location 
information from their customers. Specifically, interconnected VoIP 
providers must obtain from each customer, prior to the initiation of 
service, the physical location at which the service will first be 
utilized. Furthermore, providers of interconnected VoIP services that 
can be utilized from more than one physical location must provide their 
end users one or more methods of updating information regarding the 
user's physical location. Although we decline to specify any particular 
method, we require that any method utilized allow an end user to update 
his or her Registered Location at will and in a timely manner, 
including at least one option that requires use only of the CPE 
necessary to access the interconnected VoIP service. We caution 
interconnected VoIP providers against charging customers to update 
their Registered Location, as this would discourage customers from 
doing so and therefore undermine this solution. The most recent 
location provided to an interconnected VoIP provider by a customer is 
the ``Registered Location.'' Interconnected VoIP providers can comply 
with this requirement directly or by utilizing the services of a third 
party.
    27. Customer Requirements. In light of the recent incidents 
involving problems with 911 access from interconnected VoIP services, 
it is clear that not all providers of interconnected VoIP are including 
E911 as a standard feature of their services. We find that allowing 
customers of interconnected VoIP providers to opt-in to or, for that 
matter, opt-out of E911 service is fundamentally inconsistent with our 
obligation to ``encourage and support efforts by States to deploy 
comprehensive end-to-end emergency communications infrastructure and 
programs.'' Thus, interconnected VoIP providers must, as a condition of 
providing that service to a consumer, provide that consumer with E911 
service as outlined in the requirements above.
    28. Further, although many VoIP providers include explanations of 
the limitations of their 911-like service (or lack thereof) in the 
Frequently Asked Questions sections on their web sites or in their 
terms of service, recent incidents make clear that consumers in many 
cases may not understand that the reasonable expectations they have 
developed with respect to the availability of 911/E911 service via 
wireless and traditional wireline telephones may not be met when they 
utilize interconnected VoIP services. In order to ensure that consumers 
of interconnected VoIP services are aware of their interconnected VoIP 
service's actual E911 capabilities, by the effective date of this 
Order, we require that all providers of interconnected VoIP service 
specifically advise every subscriber, both new and existing, 
prominently and in plain language, the circumstances under which E911 
service may not be available through the interconnected VoIP service or 
may be in some way limited by comparison to traditional E911 service. 
VoIP providers shall obtain and keep a record of affirmative 
acknowledgement by every subscriber, both new and existing, of having 
received and understood this advisory. In addition, in order to ensure 
to the extent possible that the advisory is available to all potential 
users of an interconnected VoIP service, interconnected VoIP service 
providers shall distribute to all subscribers, both new and existing, 
warning stickers or other appropriate labels warning subscribers if 
E911 service may be limited or not available and instructing the 
subscriber to place them on and/or near the CPE used in conjunction 
with the interconnected VoIP service.
    29. Additional customer education efforts may well be necessary for 
users of portable interconnected VoIP, for whom E911 service requires 
that they notify their service provider affirmatively of their 
location. For example, customers of portable interconnected VoIP 
services likely will need to be instructed on how to register their 
locations with their providers, the need to update that information 
promptly when they relocate, and how to confirm that the registration 
is effective.
    30. Compliance Letter. We require all interconnected VoIP providers 
to submit a letter to the Federal Communications Commission detailing 
their compliance with our rules no later than 120 days after the 
effective date of this Order. The letter and all other filings related 
to this Order should be filed with the Commission's Secretary in WC 
Docket No. 05-196 on a going-forward basis.
    31. Because of the vital public safety interests at stake in this 
proceeding, we are committed to ensuring compliance with the rules we 
adopt in this Order. Failure to comply with these rules cannot and will 
not be tolerated, as noncompliance may have a direct effect on the 
lives of those customers who choose to obtain service from the 
interconnected VoIP providers covered by this Order. Interconnected 
VoIP providers who do not comply fully with the requirements set forth 
in this Order will be subject to swift enforcement action by the 
Commission, including substantial proposed forfeitures and, in 
appropriate cases, cease and desist orders and proceedings to revoke 
any Commission licenses held by the interconnected VoIP provider.
    32. 911 Funding. We believe that the requirements we establish 
today will significantly expand and improve interconnected VoIP 911 
service while substantially reducing the threat to 911 funding that 
some VoIP services currently pose. First, we recognize that while some 
state laws today may already require 911 funding contributions from 
providers of interconnected VoIP, interconnected VoIP providers may not 
be covered by existing state 911 funding mechanisms in other states. 
But even in the latter circumstance, the record does not indicate that 
states are receiving no 911

[[Page 37278]]

funding contributions from interconnected VoIP providers. On the 
contrary, the record indicates that many interconnected VoIP providers 
currently are contributing to state 911 funding mechanisms. In 
addition, states have the option of collecting 911 charges from 
wholesale providers with whom interconnected VoIP providers contract to 
provide E911 service, rather than assessing those charges on the 
interconnected VoIP providers directly. For example, we have explained 
that interconnected VoIP providers often enlist a competitive LEC 
partner in order to obtain interconnection to the Wireline E911 
Network, and we believe that as a result of this Order, many more will 
do so. In that situation, states may impose 911 funding obligations on 
the competitive LEC partners of interconnected VoIP providers, 
regardless of whether the VoIP providers themselves are under any 
obligation to contribute. Similarly, states may be able to impose 
funding obligations on systems service providers, such as incumbent 
LECs, that provide direct interconnection to interconnected VoIP 
providers. We believe that the ability to assess 911 funds on 
interconnected VoIP providers indirectly should narrow any gap in 911 
funding attributable to consumers switching to interconnected VoIP 
service.
    33. Second, the record indicates that the network components that 
have been developed to make wireless E911 possible can also be used for 
VoIP E911, which should make the implementation process simpler and far 
less expensive than the initial upgrades necessary for wireless E911. 
For that reason, we do not expect the rules we adopt today to impose 
substantial implementation costs on PSAPs. In short, we believe that 
the rules we adopt today will neither contribute to the diminishment of 
911 funding nor require a substantial increase in 911 spending by state 
and local jurisdictions.
    34. Liability. We decline to exempt providers of interconnected 
VoIP service from liability under state law related to their E911 
services. Although the NPRM did not directly address the issue, 
Intrado, among others, requests that the Commission insulate these VoIP 
providers from liability to the same extent that Congress insulated 
wireless carriers from liability related to the provision of 911/E911 
service in the wireless context. In the 911 Act, Congress gave wireless 
carriers providing 911 service liability protection equal to that 
available to wireline carriers for 911 calls. Congress has enacted no 
similar protection for providers of interconnected VoIP service. As the 
Commission has said in an analogous context, before we would consider 
taking any action to preempt liability under state law, the Commission 
would need to demonstrate that limiting liability is essential to 
achieving the goals of the Act.
    35. No commenter has identified a source of authority for the 
Commission to limit liability in this way. Limiting liability related 
to the use or provision of E911 services is not necessary to the 
creation or use of E911 services, and we are not persuaded that absent 
the liability protection sought by Intrado and others, interconnected 
VoIP providers will be unwilling or unable to provide E911 services. 
Rather, the record shows that some interconnected VoIP providers have 
already begun deploying E911 services. In addition, to the extent 
individual interconnected VoIP providers believe they need this type of 
liability protection, they may seek to protect themselves from 
liability for negligence through their customer contracts and through 
their agreements with PSAPs, as some interconnected VoIP providers have 
done.

Final Paperwork Reduction Act Analysis

    36. This document contains new information collection requirements. 
The Commission, as part of its continuing effort to reduce paperwork 
burdens, invites the general public to comment on the information 
collection requirements contained in this Report and Order as required 
by the Paperwork Reduction Act of 1995, Public Law 104-13. Public and 
agency comments are due August 29, 2005.

Final Regulatory Flexibility Analysis

    37. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the NPRM. The Commission sought written public comment 
on the proposals in the NPRM, including comment on the IRFA. We 
received comments specifically directed toward the IRFA from three 
commenters. These comments are discussed below. This Final Regulatory 
Flexibility Analysis (FRFA) conforms to the RFA.

1. Need for, and Objectives of, the Rules

    38. The Order establishes rules requiring providers of 
interconnected VoIP--meaning VoIP service that allows a user generally 
to receive calls originating from and to terminate calls to the PSTN--
to provide E911 capabilities to their customers as a standard feature 
of service. The Order requires providers of interconnected VoIP service 
to provide E911 service no matter where the customer is using the 
service, whether at home or away.
    39. The Order is in many ways a necessary and logical follow-up to 
the Vonage Order issued late last year. In that order, the Commission 
determined that Vonage's DigitalVoice service--an interconnected VoIP 
service--cannot be separated into interstate and intrastate 
communications and that this Commission has the responsibility and 
obligation to decide whether certain regulations apply to DigitalVoice 
and other IP-enabled services having similar capabilities. The Vonage 
Order also made clear that questions regarding what regulatory 
obligations apply to providers of such services would be addressed in 
the pending IP-Enabled Services proceeding. In accord with that 
statement, the Order takes critical steps to advance the goal of public 
safety by imposing E911 obligations on certain VoIP providers.

2. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    40. In this section, we respond to comments filed in response to 
the IRFA. A more detailed FRFA is contained in the Order. In addition, 
to the extent we received comments raising general small business 
concerns during this proceeding, those comments are discussed 
throughout the Order.
    41. We disagree with SBA and Menard that the Commission should 
postpone acting in this proceeding--thereby postponing imposing E911 
obligations on interconnected VoIP service providers--and instead 
should reevaluate the economic impact and the compliance burdens on 
small entities and issue a further notice of proposed rulemaking in 
conjunction with a supplemental IRFA identifying and analyzing the 
economic impacts on small entities and less burdensome alternatives. We 
believe the additional steps suggested by SBA and Menard are 
unnecessary because, as described below, small entities already have 
received sufficient notice of the issues addressed in the Order and 
because the Commission, as requested by the VON Coalition, has 
considered the economic impact on small entities and what ways are 
feasible to minimize the burdens imposed on those entities, and, to the 
extent feasible, has implemented those less burdensome alternatives.
    42. The NPRM specifically sought comment on what 911/E911 
obligations should apply in the context of IP-enabled services, and 
discussed the criteria the Commission previously has

[[Page 37279]]

used to determine the scope of its existing 911/E911 rules. While the 
NPRM did not specify particular rules the Commission might adopt--and 
the IRFA therefore did not catalogue the effects that such particular 
rules might have on small businesses--the Commission provided notice to 
parties regarding the range of policy outcomes that might result from 
the Order. A summary of the NPRM was published in the Federal Register 
(69 FR 16193, March 29, 2004) and we believe that such publication 
constitutes appropriate notice to small businesses subject to this 
Commission's regulation.
    43. Moreover, we note that we have attempted to balance the 
economic interests of small businesses with the public's great interest 
in access to E911 services when using interconnected VoIP services. The 
Order discusses how E911 service is critical to our nation's ability to 
respond to a host of crises and that the public has come to rely on the 
life-saving benefits of such services in emergency situations. While 
the Commission sought comment on, and considered, ways that the public 
safety could be protected through access to E911 services that are less 
burdensome to small businesses than the imposition of E911 obligations, 
the Commission concluded that it was important for all interconnected 
VoIP service providers to participate in protecting the public safety. 
As SBA notes, many VoIP providers are likely to be small businesses. 
SBA claims that ``[t]hese small providers are developing a nascent 
technology and are especially vulnerable to disproportionate regulatory 
costs.'' Nevertheless, as discussed in the Order, we believe it is 
reasonable to expect any business electing to interconnect with the 
PSTN to the extent required to provide interconnected VoIP service also 
to provide E911 service in order to protect the public interest. Small 
businesses may still offer VoIP service without being subject to the 
rules adopted in the Order by electing not to provide an interconnected 
VoIP service. We therefore have provided alternatives for small 
entities.
    44. We disagree with Menard's contention that the Commission did 
not meet its obligations under the RFA because it failed to list as a 
significant alternative to the proposed rulemaking imposing economic 
regulation on the underlying facilities of cable carriers. The rules we 
adopted in the Order apply to cable operators that provide 
interconnected VoIP service. Moreover, we reject the above contention 
as insufficient to achieve our goal of ensuring that users of 
interconnected VoIP service have access to E911, as well as rejecting 
it for the reasons already provided generally. As discussed in the 
Order, there currently is no way for portable VoIP providers reliably 
and automatically to provide location information to PSAPs without the 
customer's active cooperation. Not only is the provider of an 
interconnected VoIP service the entity actively involved in routing the 
calls of users of interconnected VoIP service, but it is the entity 
that has the relationship with the customer who currently plays an 
essential role in providing accurate location information; hence, it is 
reasonable to impose E911 rules on that interconnected VoIP service 
provider. In addition, although the Commission determined that it was 
necessary to impose E911 obligations on all providers of interconnected 
VoIP service in order to ensure the ubiquitous availability of E911 
service for users of interconnected VoIP service, the Commission 
minimized the burdens of this regulation by, for example, by requiring 
straightforward reporting requirements and by setting reasonable 
timetables for implementation of the rules adopted in the Order. The 
Commission minimized the burdens of this regulation by not mandating 
any particular technical solution; interconnected VoIP providers may 
connect directly to the Wireline E911 Network, connect indirectly 
through a third party, such as a competitive local exchange carrier, or 
through any other solution that allows a provider to offer E911 
service.
    45. We also disagree with Menard's contention that the Commission 
inappropriately failed to ``weigh the impact on non-affiliated regional 
Internet Service Providers of the consequence for the removal of all 
forms of economic regulation for broadband services provided by 
incumbent carriers.'' The Order does not remove ``all forms of economic 
regulation for broadband services provided by incumbent carriers,'' and 
would be an inappropriate forum for reconsideration of any such 
decision the Commission has made in other proceedings. The Commission 
reached its decision in the Order in full awareness and consideration 
of the Commission's other rules and to that extent satisfied Menard's 
request and SBA's request to consider how the requirements imposed in 
the Order overlap with other requirements imposed on small entities.
    46. Finally, we reject claims that the present proceeding is not 
the appropriate docket in which to address what E911 obligations should 
be imposed on providers of interconnected VoIP service. The Commission 
provided proper notice that these issues would be addressed in this 
proceeding, and in the Vonage Order made clear that questions regarding 
what regulatory obligations apply to providers of a type of 
interconnected VoIP service would be addressed in this proceeding. 
Therefore, we do not accede to the preferences of some small businesses 
that the Commission resolve various other proceedings, including 
proceedings involving E911 requirements, prior to addressing issues in 
the IP-Enabled Services docket. We reject Menard's claim that the 
Commission is using the present rulemaking as a way of by-passing its 
statutory obligations under section 10 of the Telecommunications Act of 
1996 (section 10) because that statutory section is not applicable to 
the present situation. Section 10 sets forth the Commission's 
obligation to forbear from existing regulation to a telecommunications 
carrier or a telecommunications service, or class of telecommunications 
carriers or telecommunications services, if certain criteria are 
satisfied. Prior to the Order, the Commission had not imposed E911 
obligations on interconnected VoIP service providers. In addition, the 
Commission to date has not classified interconnected VoIP service as a 
telecommunications service.

3. Description and Estimate of the Number of Small Entities To Which 
Rules Will Apply

    47. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules. 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).
    48. Small Businesses. Nationwide, there are a total of 
approximately 22.4 million small businesses, according to SBA data.
    49. Small Organizations. Nationwide, there are approximately 1.6 
million small organizations.
    50. Small Governmental Jurisdictions. The term ``small governmental 
jurisdiction'' is defined as ``governments of cities, towns, townships, 
villages,

[[Page 37280]]

school districts, or special districts, with a population of less than 
fifty thousand.'' As of 1997, there were approximately 87,453 
governmental jurisdictions in the United States. This number includes 
39,044 county governments, municipalities, and townships, of which 
37,546 (approximately 96.2%) have populations of fewer than 50,000, and 
of which 1,498 have populations of 50,000 or more. Thus, we estimate 
the number of small governmental jurisdictions overall to be 84,098 or 
fewer.
a. Telecommunications Service Entities
    51. Wireline Carriers and Service Providers. 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.'' 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. 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.
    52. Incumbent Local Exchange Carriers (LECs). 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. The Commission estimates 
that most providers of incumbent local exchange service are small 
businesses that may be affected by our action.
    53. Competitive Local Exchange Carriers (CLECs), 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. 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.
    54. Local Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. The Commission estimates that the majority of local 
resellers are small entities that may be affected by our action.
    55. Toll Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. The Commission estimates that the majority of toll resellers 
are small entities that may be affected by our action.
    56. Payphone Service Providers (PSPs). 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. The Commission estimates that the majority of payphone 
service providers are small entities that may be affected by our 
action.
    57. 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. The Commission estimates that the majority of IXCs are 
small entities that may be affected by our action.
    58. Operator Service Providers (OSPs). 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. The Commission estimates that the majority of OSPs are small 
entities that may be affected by our action.
    59. 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. 
The Commission estimates that all or the majority of prepaid calling 
card providers are small entities that may be affected by our action.
    60. 800 and 800-Like Service Subscribers. Neither the Commission 
nor the SBA has developed a small business size standard specifically 
for 800 and 800-like service (``toll free'') subscribers. 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. We estimate that there are 
7,692,955 or fewer small entity 800 subscribers; 7,706,393 or fewer 
small entity 888 subscribers; and 1,946,538 or fewer small entity 877 
subscribers.
    61. International Service Providers. The Commission has not 
developed a small business size standard specifically for providers of 
international service. The appropriate size standards under SBA rules 
are for the two broad categories of Satellite Telecommunications and 
Other Telecommunications. Under both categories, such a business is 
small if it has $12.5 million or less in average annual receipts. The 
majority of Satellite Telecommunications firms can be considered small.
    62. The second category--Other Telecommunications--includes 
``establishments primarily engaged in * * * providing satellite 
terminal stations and associated facilities operationally connected 
with one or more terrestrial communications systems and capable of 
transmitting telecommunications to or receiving telecommunications from 
satellite systems.'' Under this second size standard, the majority of 
firms can be considered small.
    63. Wireless Telecommunications Service Providers. Below, for those 
services subject to auctions, 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.
    64. 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

[[Page 37281]]

business is small if it has 1,500 or fewer employees. Under both 
categories and associated small business size standards, the majority 
of firms can be considered small.
    65. 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.'' Under this SBA 
category, a wireless business is small if it has 1,500 or fewer 
employees. Under this category and size standard, the great majority of 
firms can be considered small. We have estimated that 245 of the 
entities engaged in the provision of cellular service, Personal 
Communications Service (PCS), or Specialized Mobile Radio (SMR) 
Telephony services are small under the SBA small business size 
standard.
    66. Common Carrier Paging. The SBA has developed a small business 
size standard for wireless firms within the broad economic census 
category, ``Cellular and Other Wireless Telecommunications.'' Under 
this SBA category, a wireless business is small if it has 1,500 or 
fewer employees. Under this category and associated small business size 
standard, the 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. A ``small business'' is an entity 
that, together with its affiliates and controlling principals, has 
average gross revenues not exceeding $15 million for the preceding 
three years. Additionally, a ``very small business'' is an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues that are not more than $3 million for the preceding 
three years. The SBA has approved these small business size standards. 
An auction of Metropolitan Economic Area licenses commenced on February 
24, 2000, and closed on March 2, 2000. Of the 985 licenses auctioned, 
440 were sold. Fifty-seven companies claiming small business status 
won. Also, according to Commission data, 346 carriers reported that 
they were engaged in the provision of paging and messaging services. Of 
those, we estimate that 341 are small, under the SBA-approved small 
business size standard.
    67. Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation, and digital audio broadcasting satellite 
uses. The Commission established small business size standards for the 
wireless communications services (WCS) auction. A ``small business'' is 
an entity with average gross revenues of $40 million for each of the 
three preceding years, and a ``very small business'' is an entity with 
average gross revenues of $15 million for each of the three preceding 
years. The SBA has approved these small business size standards. The 
Commission auctioned geographic area licenses in the WCS service. In 
the auction, there were seven winning bidders that qualified as ``very 
small business'' entities, and one that qualified as a ``small 
business'' entity.
    68. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services (PCS), and specialized mobile radio 
(SMR) telephony carriers. As noted earlier, the SBA has developed a 
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. We 
have estimated that 245 of the carriers who reported to us that they 
were engaged in the provision of wireless telephony are small under the 
SBA small business size standard.
    69. Broadband Personal Communications Service. The broadband 
Personal Communications Service (PCS) spectrum is divided into six 
frequency blocks designated A through F, and the Commission has held 
auctions for each block. The Commission defined ``small entity'' for 
Blocks C and F as an entity that has average gross revenues of $40 
million or less in the three previous calendar years. For Block F, an 
additional classification for ``very small business'' was added and is 
defined as ``an entity that, together with its affiliates, has average 
gross revenues of not more than $15 million for the preceding three 
calendar years.'' These standards defining ``small entity'' in the 
context of broadband PCS auctions have been approved by the SBA. No 
small businesses, within the SBA-approved small business size standards 
bid successfully for licenses in Blocks A and B. There were 90 winning 
bidders that qualified as small entities in the Block C auctions. A 
total of 93 small and very small business bidders won approximately 40 
percent of the 1,479 licenses for Blocks D, E, and F. On March 23, 
1999, the Commission re-auctioned 347 C, D, E, and F Block licenses. 
There were 48 small business winning bidders. On January 26, 2001, the 
Commission completed the auction of 422 C and F Broadband PCS licenses 
in Auction No. 35. Of the 35 winning bidders in this auction, 29 
qualified as ``small'' or ``very small'' businesses. 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.
    70. Narrowband Personal Communications Services. To date, two 
auctions of narrowband personal communications services (PCS) licenses 
have been conducted. For purposes of the two auctions that have already 
been held, ``small businesses'' were entities with average gross 
revenues for the prior three calendar years of $40 million or less. 
Through these auctions, the Commission has awarded a total of 41 
licenses, out of which 11 were obtained by small businesses. To ensure 
meaningful participation of small business entities in future auctions, 
the Commission has adopted a two-tiered small business size standard in 
the Narrowband PCS Second Report and Order. A ``small business'' is an 
entity that, together with affiliates and controlling interests, has 
average gross revenues for the three preceding years of not more than 
$40 million. A ``very small business'' is an entity that, together with 
affiliates and controlling interests, has average gross revenues for 
the three preceding years of not more than $15 million. The SBA has 
approved these small business size standards. In the future, the 
Commission will auction 459 licenses to serve Metropolitan Trading 
Areas (MTAs) and 408 response channel licenses. There is also one 
megahertz of narrowband PCS spectrum that has been held in reserve and 
that the Commission has not yet decided to release for licensing. The 
Commission cannot predict accurately the number of licenses that will 
be awarded to small entities in future auctions. However, four of the 
16 winning bidders in the two previous narrowband PCS auctions were 
small businesses, as that term was defined. The Commission assumes, for 
purposes of this analysis, that a large portion of the remaining 
narrowband PCS licenses will be awarded to small entities. The 
Commission also assumes that at least some small businesses will 
acquire narrowband PCS licenses by means of the Commission's 
partitioning and disaggregation rules.
    71. 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

[[Page 37282]]

developed a small business size standard for small entities 
specifically applicable to such incumbent 220 MHz Phase I licensees. To 
estimate the number of such licensees that are small businesses, we 
apply 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. Under this second category and size 
standard, the majority of firms can be considered small. Assuming this 
general ratio continues in the context of Phase I 220 MHz licensees, 
the Commission estimates that nearly all such licensees are small 
businesses under the SBA's small business size standard.
    72. 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, we adopted a small business size standard for 
``small'' and ``very small'' businesses for purposes of determining 
their eligibility for special provisions such as bidding credits and 
installment payments. This small business size standard indicates that 
a ``small business'' is an entity that, together with its affiliates 
and controlling principals, has average gross revenues not exceeding 
$15 million for the preceding three years. A ``very small business'' is 
an entity that, together with its affiliates and controlling 
principals, has average gross revenues that do not exceed $3 million 
for the preceding three years. The SBA has approved these small 
business size standards. Auctions of Phase II licenses commenced on 
September 15, 1998, and closed on October 22, 1998. In the first 
auction, 908 licenses were auctioned in three different-sized 
geographic areas: three nationwide licenses, 30 Regional Economic Area 
Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908 
licenses auctioned, 693 were sold. Thirty-nine small businesses won 
licenses in the first 220 MHz auction. The second auction included 225 
licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies 
claiming small business status won 158 licenses.
    73. 800 MHz and 900 MHz Specialized Mobile Radio Licenses. The 
Commission awards ``small entity'' and ``very small entity'' bidding 
credits in auctions for Specialized Mobile Radio (SMR) geographic area 
licenses in the 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, 
or that had revenues of no more than $3 million in each of the previous 
calendar years, respectively. These bidding credits apply to SMR 
providers in the 800 MHz and 900 MHz bands that either hold geographic 
area licenses or have obtained extended implementation authorizations. 
The Commission does not know how many firms provide 800 MHz or 900 MHz 
geographic area SMR service pursuant to extended implementation 
authorizations, nor how many of these providers have annual revenues of 
no more than $15 million. One firm has over $15 million in revenues. 
The Commission assumes, for purposes here, that all of the remaining 
existing extended implementation authorizations are held by small 
entities, as that term is defined by the SBA. The Commission has held 
auctions for geographic area licenses in the 800 MHz and 900 MHz SMR 
bands. There were 60 winning bidders that qualified as small or very 
small entities in the 900 MHz SMR auctions. Of the 1,020 licenses won 
in the 900 MHz auction, bidders qualifying as small or very small 
entities won 263 licenses. In the 800 MHz auction, 38 of the 524 
licenses won were won by small and very small entities.
    74. 700 MHz Guard Band Licensees. In the 700 MHz Guard Band Order, 
we adopted a small business size standard for ``small businesses'' and 
``very small businesses'' for purposes of determining their eligibility 
for special provisions such as bidding credits and installment 
payments. A ``small business'' as an entity that, together with its 
affiliates and controlling principals, has average gross revenues not 
exceeding $15 million for the preceding three years. Additionally, a 
``very small business'' is an entity that, together with its affiliates 
and controlling principals, has average gross revenues that are not 
more than $3 million for the preceding three years. An auction of 52 
Major Economic Area (MEA) licenses commenced on September 6, 2000, and 
closed on September 21, 2000. Of the 104 licenses auctioned, 96 
licenses were sold to nine bidders. Five of these bidders were small 
businesses that won a total of 26 licenses. A second auction of 700 MHz 
Guard Band licenses commenced on February 13, 2001 and closed on 
February 21, 2001. All eight of the licenses auctioned were sold to 
three bidders. One of these bidders was a small business that won a 
total of two licenses.
    75. Rural Radiotelephone Service. The Commission has not adopted a 
size standard for small businesses specific to the Rural Radiotelephone 
Service. A significant subset of the Rural Radiotelephone Service is 
the Basic Exchange Telephone Radio System (BETRS). The Commission uses 
the SBA's small business size standard applicable to ``Cellular and 
Other Wireless Telecommunications,'' i.e., an entity employing no more 
than 1,500 persons. There are approximately 1,000 licensees in the 
Rural Radiotelephone Service, and the Commission estimates that there 
are 1,000 or fewer small entity licensees in the Rural Radiotelephone 
Service that may be affected by the rules and policies adopted herein.
    76. Air-Ground Radiotelephone Service. The Commission has not 
adopted a small business size standard specific to the Air-Ground 
Radiotelephone Service. We 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 we estimate 
that almost all of them qualify as small under the SBA small business 
size standard.
    77. 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, we estimate 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''

[[Page 37283]]

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.
    78. Fixed Microwave Services. Fixed microwave services include 
common carrier, private operational-fixed, and broadcast auxiliary 
radio services. At present, there are approximately 22,015 common 
carrier fixed licensees and 61,670 private operational-fixed licensees 
and broadcast auxiliary radio licensees in the microwave services. The 
Commission has not created a size standard for a small business 
specifically with respect to fixed microwave services. For purposes of 
this analysis, the Commission uses the SBA small business size standard 
for the category ``Cellular and Other Telecommunications,'' which is 
1,500 or fewer employees. The Commission does not have data specifying 
the number of these licensees that have more than 1,500 employees, and 
thus is unable at this time to estimate with greater precision the 
number of fixed microwave service licensees that would qualify as small 
business concerns under the SBA's small business size standard. 
Consequently, the Commission estimates that there are up to 22,015 
common carrier fixed licensees and up to 61,670 private operational-
fixed licensees and broadcast auxiliary radio licensees in the 
microwave services that may be small and may be affected by the rules 
and policies adopted herein. We noted, however, that the common carrier 
microwave fixed licensee category includes some large entities.
    79. Offshore Radiotelephone Service. This service operates on 
several UHF television broadcast channels that are not used for 
television broadcasting in the coastal areas of states bordering the 
Gulf of Mexico. There are presently approximately 55 licensees in this 
service. We are 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.
    80. 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 
polices adopted herein.
    81. Multipoint Distribution Service, Multichannel Multipoint 
Distribution Service, and ITFS. Multichannel Multipoint Distribution 
Service (MMDS) systems, often referred to as ``wireless cable,'' 
transmit video programming to subscribers using the microwave 
frequencies of the Multipoint Distribution Service (MDS) and 
Instructional Television Fixed Service (ITFS). In connection with the 
1996 MDS auction, the Commission established a small business size 
standard as an entity that had annual average gross revenues of less 
than $40 million in the previous three calendar years. The MDS auctions 
resulted in 67 successful bidders obtaining licensing opportunities for 
493 Basic Trading Areas (BTAs). Of the 67 auction winners, 61 met the 
definition of a small business. MDS also includes licensees of stations 
authorized prior to the auction. In addition, the SBA has developed a 
small business size standard for Cable and Other Program Distribution, 
which includes all such companies generating $12.5 million or less in 
annual receipts. According to Census Bureau data for 1997, there were a 
total of 1,311 firms in this category, total, that had operated for the 
entire year. Of this total, 1,180 firms had annual receipts of under 
$10 million and an additional 52 firms had receipts of $10 million or 
more but less than $25 million. Consequently, we estimate that the 
majority of providers in this service category are small businesses 
that may be affected by the rules and policies adopted herein. This SBA 
small business size standard also appears applicable to ITFS. There are 
presently 2,032 ITFS licensees. All but 100 of these licenses are held 
by educational institutions. Educational institutions are included in 
this analysis as small entities. Thus, we tentatively conclude that at 
least 1,932 licensees are small businesses.
    82. Local Multipoint Distribution Service. Local Multipoint 
Distribution Service (LMDS) is a fixed broadband point-to-multipoint 
microwave service that provides for two-way video telecommunications. 
The auction of the 1,030 Local Multipoint Distribution Service (LMDS) 
licenses began on February 18, 1998 and closed on March 25, 1998. The 
Commission established a small business size standard for LMDS licenses 
as an entity that has average gross revenues of less than $40 million 
in the three previous calendar years. An additional small business size 
standard for ``very small business'' was added as an entity that, 
together with its affiliates, has average gross revenues of not more 
than $15 million for the preceding three calendar years. The SBA has 
approved these small business size standards in the context of LMDS 
auctions. We conclude that the number of small LMDS licenses consists 
of the 93 winning bidders in the first auction and the 40 winning 
bidders in the re-auction, for a total of 133 small entity LMDS 
providers.
    83. 218-219 MHz Service. The first auction of 218-219 MHz spectrum 
resulted in 170 entities winning licenses for 594 Metropolitan 
Statistical Area (MSA) licenses. Of the 594 licenses, 557 were won by 
entities qualifying as a small business. For that auction, the small 
business size standard was an entity that, together with its 
affiliates, has no more than a $6 million net worth and, after federal 
income taxes (excluding any carry over losses), has no more than $2 
million in annual profits each year for the previous two years. In the 
218-219 MHz Report and Order and Memorandum Opinion and Order, we 
established a small business size standard for a ``small business'' as 
an entity that, together with its affiliates and persons or entities 
that hold interests in such an entity and their affiliates, has average 
annual gross revenues not to exceed $15 million for the preceding three 
years. A ``very small business'' is defined as an entity that, together 
with its affiliates and persons or entities that hold interests in such 
an entity and its affiliates, has average annual gross revenues not to 
exceed $3 million for the preceding three years. We cannot estimate, 
however, 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.
    84. 24 GHz--Incumbent Licensees. This analysis may affect incumbent 
licensees who were relocated to the 24 GHz band from the 18 GHz band, 
and applicants who wish to provide services in the 24 GHz band. The 
applicable SBA small business size standard is that of ``Cellular and 
Other Wireless Telecommunications'' companies. This

[[Page 37284]]

category provides that such a company is small if it employs no more 
than 1,500 persons. Under this size standard, the great majority of 
firms can be considered small.
    85. 24 GHz--Future Licensees. With respect to new applicants in the 
24 GHz band, the small business size standard for ``small business'' is 
an entity that, together with controlling interests and affiliates, has 
average annual gross revenues for the three preceding years not in 
excess of $15 million. ``Very small business'' in the 24 GHz band is an 
entity that, together with controlling interests and affiliates, has 
average gross revenues not exceeding $3 million for the preceding three 
years. The SBA has approved these small business size standards. These 
size standards will apply to the future auction, if held.
b. Cable and OVS Operators
    86. Cable and Other Program Distribution. This category includes 
cable systems operators, closed circuit television services, direct 
broadcast satellite services, multipoint distribution systems, 
satellite master antenna systems, and subscription television 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. 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.
    87. 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. The Commission estimates that there 
currently are fewer than 1,439 small entity cable system operators that 
may be affected by the rules and policies adopted herein.
    88. 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.'' The Commission has determined that 
there are 67,700,000 subscribers in the United States. 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. Based on available data, the Commission estimates that the 
number of cable operators serving 677,000 subscribers or fewer, totals 
1,450. The Commission neither requests nor collects information on 
whether cable system operators are affiliated with entities whose gross 
annual revenues exceed $250 million, 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.
    89. Open Video Services. Open Video Service (OVS) systems provide 
subscription services. The SBA has created a small business size 
standard for Cable and Other Program Distribution. This standard 
provides that a small entity is one with $12.5 million or less in 
annual receipts. The Commission concludes that up to 24 OVS operators 
might qualify as small businesses that may be affected by the rules and 
policies adopted herein.
c. Internet Service Providers
    90. 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.'' 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. We estimate that the majority of these firms are small 
entities that may be affected by our action.
 d. Other Internet-Related Entities
    91. Web Search Portals. Our action pertains to VoIP services, which 
could be provided by entities that provide other services such as 
email, online gaming, web browsing, video conferencing, instant 
messaging, and other, similar IP-enabled services. The Commission has 
not adopted a size standard for entities that create or provide these 
types of services or applications. However, the census bureau has 
identified firms that ``operate web sites that use a search engine to 
generate and maintain extensive databases of Internet addresses and 
content in an easily searchable format. Web search portals often 
provide additional Internet services, such as e-mail, connections to 
other web sites, auctions, news, and other limited content, and serve 
as a home base for Internet users.'' The SBA has developed a small 
business size standard for this category; that size standard is $6 
million or less in average annual receipts. We estimate that the 
majority of these firms are small entities that may be affected by our 
action.
    92. Data Processing, Hosting, and Related Services. Entities in 
this category ``primarily `` provid[e] infrastructure for hosting or 
data processing services.'' The SBA has developed a small business size 
standard for this category; that size standard is $21 million or less 
in average annual receipts. We estimate that the majority of these 
firms are small entities that may be affected by our action.
    93. All Other Information Services. ``This industry comprises 
establishments primarily engaged in providing other information 
services (except new syndicates and libraries and archives).'' Our 
action pertains to VoIP services, which could be provided by entities 
that provide other services such as email, online gaming, web browsing, 
video conferencing, instant messaging, and other, similar IP-enabled 
services. The SBA has developed a small business size standard for this 
category; that size standard is $6 million or less in average annual 
receipts. We estimate that the majority of these firms are small 
entities that may be affected by our action.
    94. Internet Publishing and Broadcasting. ``This industry comprises 
establishments engaged in publishing and/or broadcasting content on the 
Internet exclusively. These establishments do not provide traditional 
(non-Internet) versions of the content that they publish or 
broadcast.'' The SBA has developed a small business size standard for 
this new (2002) census category; that size standard is 500 or fewer 
employees. To assess the prevalence of small entities in this category, 
we will use 1997 Census Bureau data for a relevant, now-superseded 
census category, ``All Other Information Services.'' The SBA small 
business size standard for that prior category was $6 million or less 
in average annual receipts. We estimate that the majority of the firms 
in this current category are small entities that may be affected by our 
action.
    95. Software Publishers. These companies may design, develop or 
publish software and may provide other support services to software 
purchasers, such as providing documentation or assisting in 
installation. The companies

[[Page 37285]]

may also design software to meet the needs of specific users. The SBA 
has developed a small business size standard of $21 million or less in 
average annual receipts for all of the following pertinent categories: 
Software Publishers, Custom Computer Programming Services, and Other 
Computer Related Services. We estimate that the majority of the firms 
in each of these three categories are small entities that may be 
affected by our action.
    96. Equipment Manufacturers. The equipment manufacturers described 
in this section are merely indirectly affected by our current action, 
and therefore are not formally a part of this FRFA analysis. We have 
included them, however, to broaden the record in this proceeding and to 
alert them to our decisions. These manufacturers may include: Wireless 
Communications Equipment Manufacturers; Telephone Apparatus 
Manufacturing; Electronic Computer Manufacturing; Computer Terminal 
Manufacturing; Other Computer Peripheral Equipment Manufacturing; Fiber 
Optic Cable Manufacturing; Other Communication and Energy Wire 
Manufacturing; Audio and Video Equipment Manufacturing; Electron Tube 
Manufacturing; Bare Printed Circuit Board Manufacturing; Semiconductor 
and Related Device Manufacturing; Electronic Capacitor Manufacturing; 
Electronic Resistor Manufacturing; Electronic Coil, Transformer, and 
Other Inductor Manufacturing; Electronic Connector Manufacturing; 
Printed Circuit Assembly (Electronic Assembly) Manufacturing; Other 
Electronic Component Manufacturing; and Computer Storage Device 
Manufacturing.

4. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements

    97. We are requiring interconnected VoIP service providers to 
collect certain information and take other actions to comply with our 
rules requiring interconnected VoIP service providers to supply E911 
capabilities to their customers. The Order requires collection of 
information in four instances. First, interconnected VoIP providers 
must obtain from each customer, prior to the initiation of service, the 
physical location at which the service will first be utilized, and must 
provide customers a way to update this information (i.e., the 
``Registered Location''). Second, interconnected VoIP providers must 
place the Registered Location information for their customers into, or 
make that information available through, ALI Databases maintained by 
local exchange carriers (and, in at least one case, a state government) 
across the country. Third, the Order requires all providers of 
interconnected VoIP service specifically to advise new and existing 
subscribers of the circumstances under which E911 service may not be 
available through the interconnected VoIP service or may be in some way 
limited by comparison to traditional E911 service, and to obtain and 
keep a record of affirmative acknowledgement by every subscriber of 
having received and understood this advisory. Fourth, the Order 
requires all interconnected VoIP providers to submit a letter to the 
Commission detailing their compliance with the rules set forth in the 
Order no later than 120 days after the effective date of the Order.
    98. We also impose other requirements on providers of 
interconnected VoIP service. Specifically, the Order requires that, 
within 120 days of the effective date of the Order, an interconnected 
VoIP provider must transmit all 911 calls, as well as a call back 
number and the caller's Registered Location for each call, to the PSAP, 
designated statewide default answering point, or appropriate local 
emergency authority that serves the caller's Registered Location and 
that has been designated for telecommunications carriers under section 
64.3001 of the Commission's rules. These calls must be routed through 
the use of ANI or pseudo-ANI via the dedicated Wireline E911 Network, 
and the Registered Location must be available from or through the ALI 
Database. As explained in the Order, however, an interconnected VoIP 
provider need only provide such call back and location information as a 
PSAP, designated statewide default answering point, or appropriate 
local emergency authority is capable of receiving and utilizing. The 
obligation to determine what type of information, such as ALI or ANI, 
each PSAP is capable of receiving and utilizing rests with the provider 
of interconnected VoIP services.

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

    99. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include (among others) the following four alternatives: (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.
    100. The NPRM invited comment on a number of alternatives to the 
imposition of 911/E911 obligations on providers of interconnected VoIP 
service. For instance, the NPRM specifically sought comment on the 
effectiveness of alternatives to direct regulation to achieve the 
Commission's public policy goals of ensuring the availability of 911 
and E911 capability. The Commission also sought comment on whether 
voluntary agreements among public safety trade associations, commercial 
IP-stakeholders, consumers, and state and local E911 coordinators and 
administrators could lead to VoIP subscribers receiving enhanced 911 
functionality, and what the Commission could do to facilitate such 
agreements. The Commission also asked whether ``promulgation of best 
practices or technical guidelines [would] promote the provision of 
effective IP-based E911 services.'' The Commission also asked how it 
could provide for technological flexibility so that our rules allow for 
the development of new and innovative technologies in the event it 
concluded that mandatory requirements would be necessary.
    101. In addition, the Commission sought comment on more general 
issues surrounding the possible imposition of a 911/E911 requirement 
for IP-enabled services, which could have prompted commenters to 
suggest other alternatives to the rules adopted in the Order. For 
instance, the Commission sought comment on what ways IP-enabled service 
providers currently seek to provide emergency services to their 
customers. The Commission also noted that the development and 
deployment of IP-enabled services is in its early stages, that these 
services are fast-changing and likely to evolve in ways that it cannot 
anticipate, and that imposition of regulatory mandates should be 
undertaken with caution. In this regard, the Commission sought comment 
on how to weigh the potential public benefits of requiring emergency 
calling and other public safety capabilities against the risk that 
regulation could slow technical and market development.
    102. The Commission has considered each of the alternatives 
described above, and in the Order, imposes minimal regulation on small 
entities to the extent consistent with our goal of ensuring that users 
of interconnected VoIP service have access to appropriate emergency

[[Page 37286]]

services when they dial 911. As an initial matter, the Commission 
limited the scope of the Order to interconnected VoIP service 
providers. As a result, certain VoIP service providers are not subject 
to the E911 obligations imposed in the Order. Specifically, the Order 
does not apply to those entities not fully interconnected with the 
PSTN. Because interconnecting with the PSTN can impose substantial 
costs, we anticipate that many of the entities that elect not to 
interconnect with the PSTN, and which therefore are not subject to the 
rules adopted in the Order, are small entities. Small entities that 
provide VoIP services therefore also have some control over whether 
they will be subject to the E911 obligations adopted in the Order. 
Small businesses may still offer VoIP service without being subject to 
the rules adopted in the Order by electing not to provide an 
interconnected VoIP service.
    103. However, as stated above, we must assess the interests of 
small businesses in light of the overriding public interest in access 
to E911 services when using interconnected VoIP services. The Order 
discusses that E911 service is critical to our nation's ability to 
respond to a host of crises and that the public has come to rely on the 
life-saving benefits of such services in emergency situations. 
Therefore, the Commission concluded that it was important for all 
interconnected VoIP service providers to participate in protecting the 
public safety, regardless of their size. The Commission therefore 
rejected solutions that would rely on the voluntary agreement of VoIP 
service providers. The record indicated that this alternative had not 
resulted in, and was not likely soon to result in, ubiquitous access to 
E911 among users of interconnected VoIP service, which is the 
Commission's goal.
    104. While the rules adopted in the Order apply to all providers of 
interconnected VoIP service, the Commission attempted to minimize the 
impact of the new rules on all entities, including small entities. For 
instance, while it is essential that interconnected VoIP service 
providers interconnect with the Wireline E911 Network, the Commission 
employed performance rather than design standards to achieve this 
result. Thus, rather than mandating a particular technical solution, 
the Order allows interconnected VoIP providers to connect directly to 
the Wireline E911 Network, or connect indirectly through a third party, 
such as a competitive LEC, or through any other solution that allows a 
provider to offer E911 service, which thereby allows for technological 
and commercial flexibility, and leaves room under the new rules for the 
development of new and innovative technologies. The Commission also 
declined to specify any particular method by which interconnected VoIP 
service providers must enable their customers to provide and update 
their Registered Location. The Commission also declined to specify any 
particular method by which interconnected VoIP service providers must 
advise new and existing subscribers of the E911 service limitations of 
their interconnected VoIP service and declined to specify any 
particular method by which acknowledgments of such limitations must be 
gathered and stored. The Commission expects these decisions will help 
small entities comply with the rules adopted in the Order in the most 
practical means possible. In addition, the Commission in the Order 
imposes straightforward and limited reporting requirements, and sets 
reasonable timetables. For example, regarding reporting requirements, 
the Commission simply requires providers of interconnected VoIP service 
to file a letter detailing their compliance with our rules no later 
than 120 days after the effective date of the Order. In addition, while 
the Commission's review of the record in this proceeding convinces us 
that ensuring reliable E911 service for users of interconnected VoIP 
service is essential, and therefore that the location information of 
such users who dial 911 should automatically be sent to the relevant 
PSAP, the Commission did not impose the obligation in the Order 
automatically to locate the interconnected VoIP service user in light 
of record evidence of the current state of technological development 
and the costs, including on small entities, of such an obligation. The 
Commission fully expects this situation to change in the near future, 
helped in part by the present Order.
    105. We also note that by adopting E911 rules for providers of 
interconnected VoIP service at the present time, the Commission likely 
has saved small entities providing these services resources in the long 
run. For instance, in light of the importance of E911 service to the 
public, providers of interconnected VoIP service likely eventually 
would have been required by the Commission or Congress to provide E911 
service. This could have involved ``costly and inefficient 
`retrofitting' of embedded IP infrastructure'' for any interconnected 
VoIP service provider that had already adopted a E911 solution.
    106. Report to Congress: The Commission will send a copy of the 
Order, including this FRFA, in a report to be sent to Congress and the 
Government Accountability Office 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 this present summarized Order and FRFA is also hereby published 
in the Federal Register.)

Ordering Clauses

    107. Accordingly, it is ordered that pursuant to sections 1, 4(i), 
4(j), 251(e) and 303(r) of the Communications Act of 1934, as amended, 
47 U.S.C. 151, 154(i)-(j), 251(e), 303(r), the Report and Order in WC 
Docket No. 04-36 IS adopted, and that part 9 of the Commission's rules, 
47 CFR part 9, is added as set forth in the rule changes. The Order 
shall become effective July 29, 2005 subject to OMB approval for new 
information collection requirements. Accordingly, subject to such OMB 
approval: (i) Compliance within the customer notification requirements 
set forth in 47 CFR 9.5(e) is required by July 29, 2005; (ii) the 
compliance letter required by 47 CFR 9.5(f) must be submitted to the 
Commission no later than November 28, 2005; and (iii) compliance with 
the requirements in 47 CFR 9.5(b) through (d) is required by November 
28, 2005.
    108. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this First Report and 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 9

    Interconnected voice over internet protocol services, 
Communications, Telephone, Reporting and recordkeeping requirements.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Final Rules

0
For the reasons discussed in the preamble, the Federal Communications 
Commission is adding 47 CFR part 9 to read as follows:

PART 9--INTERCONNECTED VOICE OVER INTERNET PROTOCOL SERVICES

Sec.
9.1 Purpose.
9.3 Definitions.
9.5 E911 Service.


[[Page 37287]]


    Authority: 47 U.S.C. 151, 154(i)-(j), 251(e), and 303(r) unless 
otherwise noted.


Sec.  9.1  Purpose.

    The purpose of this part is to set forth the E911 service 
requirements and conditions applicable to interconnected Voice over 
Internet Protocol service providers.


Sec.  9.3  Definitions.

    ANI. Automatic Number Identification, as such term is defined in 
Sec.  20.3 of this chapter.
    Appropriate local emergency authority. An emergency answering point 
that has not been officially designated as a Public Safety Answering 
Point (PSAP), but has the capability of receiving 911 calls and either 
dispatching emergency services personnel or, if necessary, relaying the 
call to another emergency service provider. An appropriate local 
emergency authority may include, but is not limited to, an existing 
local law enforcement authority, such as the police, county sheriff, 
local emergency medical services provider, or fire department.
    Interconnected VoIP service. An interconnected Voice over Internet 
protocol (VoIP) service is a service that:
    (1) Enables real-time, two-way voice communications;
    (2) Requires a broadband connection from the user's location;
    (3) Requires Internet protocol-compatible customer premises 
equipment (CPE); and
    (4) Permits users generally to receive calls that originate on the 
public switched telephone network and to terminate calls to the public 
switched telephone network.
    PSAP. Public Safety Answering Point, as such term is defined in 
Sec.  20.3 of this chapter.
    Pseudo Automatic Number Identification (Pseudo-ANI). A number, 
consisting of the same number of digits as ANI, that is not a North 
American Numbering Plan telephone directory number and may be used in 
place of an ANI to convey special meaning. The special meaning assigned 
to the pseudo-ANI is determined by agreements, as necessary, between 
the system originating the call, intermediate systems handling and 
routing the call, and the destination system.
    Registered Location. The most recent information obtained by an 
interconnected VoIP service provider that identifies the physical 
location of an end user.
    Statewide default answering point. An emergency answering point 
designated by the State to receive 911 calls for either the entire 
State or those portions of the State not otherwise served by a local 
PSAP.
    Wireline E911 Network. A dedicated wireline network that:
    (1) Is interconnected with but largely separate from the public 
switched telephone network;
    (2) Includes a selective router; and
    (3) Is utilized to route emergency calls and related information to 
PSAPs, designated statewide default answering points, appropriate local 
emergency authorities or other emergency answering points.


Sec.  9.5  E911 Service.

    (a) Scope of Section. The following requirements are only 
applicable to providers of interconnected VoIP services. Further, the 
following requirements apply only to 911 calls placed by users whose 
Registered Location is in a geographic area served by a Wireline E911 
Network (which, as defined in Sec.  9.3, includes a selective router).
    (b) E911 Service. As of November 28, 2005:
    (1) Interconnected VoIP service providers must, as a condition of 
providing service to a consumer, provide that consumer with E911 
service as described in this section;
    (2) Interconnected VoIP service providers must transmit all 911 
calls, as well as ANI and the caller's Registered Location for each 
call, to the PSAP, designated statewide default answering point, or 
appropriate local emergency authority that serves the caller's 
Registered Location and that has been designated for telecommunications 
carriers pursuant to Sec.  64.3001 of this chapter, provided that ``all 
911 calls'' is defined as ``any voice communication initiated by an 
interconnected VoIP user dialing 911;''
    (3) All 911 calls must be routed through the use of ANI and, if 
necessary, pseudo-ANI, via the dedicated Wireline E911 Network; and
    (4) The Registered Location must be available to the appropriate 
PSAP, designated statewide default answering point, or appropriate 
local emergency authority from or through the appropriate automatic 
location information (ALI) database.
    (c) Service Level Obligation. Notwithstanding the provisions in 
paragraph (b) of this section, if a PSAP, designated statewide default 
answering point, or appropriate local emergency authority is not 
capable of receiving and processing either ANI or location information, 
an interconnected VoIP service provider need not provide such ANI or 
location information; however, nothing in this paragraph affects the 
obligation under paragraph (b) of this section of an interconnected 
VoIP service provider to transmit via the Wireline E911 Network all 911 
calls to the PSAP, designated statewide default answering point, or 
appropriate local emergency authority that serves the caller's 
Registered Location and that has been designated for telecommunications 
carriers pursuant to Sec.  64.3001 of this chapter.
    (d) Registered Location Requirement. As of November 28, 2005, 
interconnected VoIP service providers must:
    (1) Obtain from each customer, prior to the initiation of service, 
the physical location at which the service will first be utilized; and
    (2) Provide their end users one or more methods of updating their 
Registered Location, including at least one option that requires use 
only of the CPE necessary to access the interconnected VoIP service. 
Any method utilized must allow an end user to update the Registered 
Location at will and in a timely manner.
    (e) Customer Notification. Each interconnected VoIP service 
provider shall:
    (1) Specifically advise every subscriber, both new and existing, 
prominently and in plain language, of the circumstances under which 
E911 service may not be available through the interconnected VoIP 
service or may be in some way limited by comparison to traditional E911 
service. Such circumstances include, but are not limited to, relocation 
of the end user's IP-compatible CPE, use by the end user of a non-
native telephone number, broadband connection failure, loss of 
electrical power, and delays that may occur in making a Registered 
Location available in or through the ALI database;
    (2) Obtain and keep a record of affirmative acknowledgement by 
every subscriber, both new and existing, of having received and 
understood the advisory described in paragraph (e)(1) of this section; 
and
    (3) Distribute to its existing subscribers warning stickers or 
other appropriate labels warning subscribers if E911 service may be 
limited or not available and instructing the subscriber to place them 
on or near the equipment used in conjunction with the interconnected 
VoIP service. Each interconnected VoIP provider shall distribute such 
warning stickers or other appropriate labels to each new subscriber 
prior to the initiation of that subscriber's service.
    (f) Compliance Letter. All interconnected VoIP providers must

[[Page 37288]]

submit a letter to the Commission detailing their compliance with this 
section no later than November 28, 2005.

[FR Doc. 05-12828 Filed 6-28-05; 8:45 am]
BILLING CODE 6712-01-P