[Federal Register Volume 73, Number 219 (Wednesday, November 12, 2008)]
[Proposed Rules]
[Pages 66821-66830]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-26849]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 51, 54, 61, and 69

[WC Docket Nos. 06-122, 05-337, 04-36, 03-109; CC Docket Nos. 01-92, 
99-200, 99-68, 96-98, 96-45; FCC 08-262]


Universal Service Contribution Methodology; High-Cost Universal 
Service Support; IP-Enabled Services; Lifeline and Link Up; Developing 
a Unified Intercarrier Compensation Regime; Numbering Resource 
Optimization; Intercarrier Compensation for ISP-Bound Traffic; 
Implementation of the Local Competition Provisions in the 
Telecommunications Act of 1996; Federal-State Joint Board on Universal 
Service

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Commission seeks comment on three 
specific proposals that are available in the appendices of the 
document. We note that members of industry, Congress, and the general 
public have urged the Commission to seek comment on these proposals. We 
also seek particular comment on two questions. First, should the 
additional cost standard utilized under section 252(d)(2) of the Act be 
either the existing TELRIC standard or the incremental cost standard 
described in the draft order? Second, should the terminating rate for 
all section 251(b)(5) traffic be set as either a single, statewide rate 
or a single rate per operating company?

DATES: Comments are due on or before November 26, 2008 and reply 
comments are due on or before December 3, 2008.

ADDRESSES: You may submit comments, identified by WC Docket Nos. 06-
122, 05-337, 04-36, 03-109; CC Docket Nos. 01-92, 99-200, 99-68, 96-98, 
96-45 by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web Site: http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
     E-mail: [email protected], and include the following words in 
the body of the message, ``get form.'' A sample form and directions 
will be sent in response. Include the docket number in the subject line 
of the message.
     Mail: Secretary, Federal Communications Commission, 445 
12th Street, SW., Washington, DC 205544.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: [email protected] or phone: 202-418-
0530 or TTY: 202-418-0432.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Jennifer McKee, Telecommunications 
Access Policy Division, Wireline Competition Bureau, 202-418-7400 or 
TTY: 202-418-0484 (universal service), or Victoria Goldberg, Pricing 
Policy Division, Wireline Competition Bureau, 202-418-1520 or TTY 202-
418-0484 (intercarrier compensation).

SUPPLEMENTARY INFORMATION: In this Further Notice of Proposed 
Rulemaking (FNPRM), the Commission seeks comment on three specific 
proposals. See Universal Service Contribution Methodology; High-Cost 
Universal Service Support; IP-Enabled Services; Lifeline and Link Up; 
Developing a Unified Intercarrier Compensation Regime; Numbering 
Resource Optimization; Intercarrier Compensation for ISP-Bound Traffic; 
Implementation of the Local Competition Provisions in the 
Telecommunications Act of 1996; of Federal-State Joint Board on 
Universal Service, WC Docket Nos. 06-122, 05-337, 04-36, 03-109; CC 
Docket Nos. 01-92, 99-200, 99-68, 96-98, 96-45, Order on Remand and 
Report and Order and Further Notice of Proposed Rulemaking, FCC 08-262 
(rel. Nov. 5, 2008) (Order on Remand and Report and Order and Further 
Notice of Proposed Rulemaking). Copies of the Order on Remand and 
Report and Order and Further Notice of Proposed Rulemaking and any 
subsequently filed documents in this matter are or will be available on 
the Commission's Internet site at http://www.fcc.gov and for public 
inspection Monday through Thursday from 8 a.m. to 4:30 p.m. and Friday 
from 8 a.m. to 11:30 a.m. at the FCC Reference Information Center, 
Portals II, 445 12th St., SW., Room CY-A257, Washington, DC 20554. 
Copies of any such documents may also be purchased from the 
Commission's copy contractor, Best Copy and Printing, Inc. (BCPI), 
Portals II, 445 12th St., SW., Room CY-B402, Washington, DC 20554, 
telephone (202) 488-5300, facsimile (202) 488-5563, TTY (202) 488-
55672, e-mail

[[Page 66822]]

[email protected]. Accessible formats (computer diskettes, large print, 
audio recording and Braille) are available to persons with disabilities 
by contacting the Consumer & Governmental Affairs Bureau, at (202) 418-
0531, TTY (202) 418-7365, or at [email protected]

Background

    In enacting the Act, Congress sought to introduce competition into 
local telephone service, which traditionally was provided through 
regulated monopolies. Recognizing that in introducing such competition, 
it was threatening the implicit subsidy system that had traditionally 
supported universal service, it directed the Commission to reform its 
universal service program to make support explicit and sustainable in 
the face of developing competition.
    The communications landscape has undergone many fundamental changes 
that were scarcely anticipated when the 1996 Act was adopted. The 
Internet was only briefly mentioned in the 1996 Act, but now has come 
into widespread use, with broadband Internet access service 
increasingly viewed as a necessity. Consistent with this trend, 
carriers are converting from circuit-switched networks to IP-based 
networks. These changes have benefited consumers and should be 
encouraged. Competition has resulted in dramatically lower prices for 
telephone service, and the introduction of innovative broadband 
products and services has fundamentally changed the way we communicate, 
work, and obtain our education, news, and entertainment. At the same 
time, however, these developments have challenged the outdated 
regulatory assumptions underlying our universal service and 
intercarrier compensation regimes, forcing us to reassess our existing 
approaches. We have seen unprecedented growth in the universal service 
fund, driven in significant part by increased support for competitive 
eligible telecommunications carriers. The growth of competition also 
has eroded the universal service contribution base as the prices for 
interstate and international services have dropped. Finally, we have 
seen numerous competitors exploit arbitrage opportunities created by a 
patchwork of above-cost intercarrier compensation rates.
    This is a summary of the FNPRM portion of the Order on Remand and 
Report and Order and Further Notice of Proposed Rulemaking. We seek 
comment on three appendices not available in this Federal Register 
summary but available on the Commission's Web site at: http://www.fcc.gov/fcc08262/FCC-08-262A1.pdf.
    The first proposal we seek comment on, attached as Appendix A to 
the item, is the Chairman's Draft Proposal circulated to the Commission 
on October 15, 2008, which was placed on the Commission's agenda for a 
vote on November 4, 2008. This item was subsequently removed from the 
Agenda on November 3, 2008. The second, attached as Appendix B to the 
item, is a Narrow Universal Service Reform Proposal circulated to the 
Commission on October 31, 2008. The third, attached as Appendix C to 
the item, is a draft Alternative Proposal first circulated by the 
Chairman on the evening of November 5, 2008. Appendix C incorporates 
changes proposed in the ex parte presentations attached as Appendix D 
to the item. We note that members of industry, Congress, and the 
general public have urged the Commission to seek comment on these 
proposals.
    We seek particular comment on two questions. First, should the 
additional cost standard utilized under section 252(d)(2) of the Act be 
either the existing TELRIC standard or the incremental cost standard 
described in the draft order? Second, should the terminating rate for 
all section 251(b)(5) traffic be set as either a single, statewide rate 
or a single rate per operating company?

Comment Filing Procedures

    Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 
CFR sections 1.415, 1.419, interested parties may file comments and 
reply comments on or before the dates indicated in the DATES section of 
this document. Comments may be filed using: (1) The Commission's 
Electronic Comment Filing System (ECFS); (2) the Federal Government's 
eRulemaking Portal; or (3) by filing paper copies. See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ 
or the Federal eRulemaking Portal: http://www.regulations.gov. Filers 
should follow the instructions provided on the Web site for submitting 
comments.
     For ECFS filers, if multiple docket or rulemaking numbers 
appear in the caption of this proceeding, filers must transmit one 
electronic copy of the comments for each docket or rulemaking number 
referenced in the caption. In completing the transmittal screen, filers 
should include their full name, U.S. Postal Service mailing address, 
and the applicable docket or rulemaking number. Parties may also submit 
an electronic comment by Internet e-mail. To get filing instructions, 
filers should send an e-mail to [email protected], and include the following 
words in the body of the message, ``get form.'' A sample form and 
directions will be sent in response.
     Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. If more than one 
docket or rulemaking number appears in the caption of this proceeding, 
filers must submit two additional copies for each additional docket or 
rulemaking number.
     Filings can be sent by hand or messenger delivery, by 
commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail (although we continue to experience delays in 
receiving U.S. Postal Service mail). All filings must be addressed to 
the Commission's Secretary, Office of the Secretary, Federal 
Communications Commission.
     The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street, SW., Washington, DC 20554.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an e-mail to [email protected] or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (TTY).

Ex Parte Requirements

    This matter shall be treated as a ``permit-but-disclose'' 
proceeding in accordance with the Commission's ex parte rules. See 47 
CFR 1.1200, 1,1206. Persons making oral ex parte presentations are 
reminded that memoranda summarizing the presentations must contain 
summaries of the substance of the presentations and not merely a 
listing of the subjects discussed. More than a one or two sentence 
description of the views and

[[Page 66823]]

arguments presented generally is required. See 47 CFR 1.1206(b). Other 
rules pertaining to oral and written ex parte presentations in permit-
but-disclose proceedings are set forth in section 1.1206(b) of the 
Commission's rules. 47 CFR 1.1206(b).

Initial Regulatory Flexibility Analysis

    As required by the Regulatory Flexibility Act of 1980, as amended 
(RFA), the Commission has prepared this Initial Regulatory Flexibility 
Analysis (IRFA) of the possible significant economic impact on a 
substantial number of small entities by the policies and rules proposed 
in this FNPRM. Written public comments are requested on this IRFA. 
Comments must be identified as responses to the IRFA and must be filed 
by the deadlines for comments on the FNPRM. The Commission will send a 
copy of the FNPRM, including this IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (SBA). See 5 U.S.C. 
603(a). In addition, the FNPRM and IRFA (or summaries thereof) will be 
published in the Federal Register.

Need for, and Objectives of, the Proposed Rules

    Today, the Commission adopts an FNPRM to seek comment on three 
specific proposals. The first proposal we seek comment on, attached as 
Appendix A to the item, is the Chairman's Draft Proposal circulated to 
the Commission on October 15, 2008, which was placed on the 
Commission's agenda for a vote on November 4, 2008. This item was 
subsequently removed from the Agenda on November 3, 2008. The second, 
attached as Appendix B to the item, is a Narrow Universal Service 
Reform Proposal circulated to the Commission on October 31, 2008. The 
third, attached as Appendix C to the item, is a draft Alternative 
Proposal first circulated by the Chairman on the evening of November 5, 
2008. Appendix C incorporates changes proposed in the ex parte 
presentations attached as Appendix D to the item. We note that members 
of industry, Congress, and the general public have urged the Commission 
to seek comment on these proposals.
    We seek particular comment on two questions. First, should the 
additional cost standard utilized under section 252(d)(2) of the Act 
be: (i) The existing TELRIC standard; or (ii) the incremental cost 
standard described in the draft order? Second, should the terminating 
rate for all section 251(b)(5) traffic be set as: (i) A single, 
statewide rate; or (ii) a single rate per operating company?

Legal Basis

    The legal basis for any action that may be taken pursuant to the 
FNPRM is contained in sections 1-4, 201-209, 214, 218-220, 224, 251, 
252, 254, 303(r), 332, 403, 502, and 503 of the Communications Act of 
1934, as amended, and sections 601 and 706 of the Telecommunications 
Act of 1996, 47 U.S.C. 151-154, 157 nt, 201-209, 214, 218-220, 224, 
251, 252, 254, 303(r), 332, 403, 502, 503, and sections 1.1, 1.411-
1.429, and 1.1200-1.1216 of the Commission's rules, 47 CFR 1.1, 1.411-
1.429, 1.1200-1.1216

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

    The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small-business concern'' under the Small Business 
Act. A small-business concern'' is one 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).
    Wired Telecommunications Carriers. The SBA has developed a small 
business size standard for Wired Telecommunications Carriers, which 
consists of all such companies having 1,500 or fewer employees. 
According to Census Bureau data for 2002, there were 2,432 firms in 
this category, total, that operated for the entire year. Of this total, 
2,395 firms had employment of 999 or fewer employees, and an additional 
37 firms had employment of 1,000 employees or more. Thus, under this 
size standard, the majority of firms can be considered small.
    Local Exchange Carriers (LECs). Neither the Commission nor the SBA 
has developed a size standard for small businesses specifically 
applicable to local exchange services. The closest applicable size 
standard under SBA rules is for Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer employees. According to Commission data, 1,311 carriers reported 
that they were incumbent local exchange service providers. Of these 
1,311 carriers, an estimated 1,024 have 1,500 or fewer employees and 
287 have more than 1,500 employees. Consequently, the Commission 
estimates that most providers of local exchange service are small 
entities that may be affected by the rules and policies proposed in the 
FNPRM.
    Incumbent Local Exchange Carriers (Incumbent LECs). Neither the 
Commission nor the SBA has developed a size standard for small 
businesses specifically applicable to incumbent local exchange 
services. The closest applicable size standard under SBA rules is for 
Wired Telecommunications Carriers. Under that size standard, such a 
business is small if it has 1,500 or fewer employees. According to 
Commission data, 1,311 carriers reported that they were engaged in the 
provision of local exchange services. Of these 1,307 carriers, an 
estimated 1,024 have 1,500 or fewer employees and 287 have more than 
1,500 employees. Consequently, the Commission estimates that most 
providers of incumbent local exchange service are small businesses that 
may be affected by rules adopted pursuant to the FNPRM.
    We have included small incumbent LECs in this present RFA analysis. 
As noted above, a ``small business'' under the RFA is one that, inter 
alia, meets the pertinent small business size standard (e.g., a 
telephone communications business having 1,500 or fewer employees), and 
``is not dominant in its field of operation.'' The SBA's Office of 
Advocacy contends that, for RFA purposes, small incumbent LECs are not 
dominant in their field of operation because any such dominance is not 
``national'' in scope. We have therefore included small incumbent LECs 
in this RFA analysis, although we emphasize that this RFA action has no 
effect on Commission analyses and determinations in other, non-RFA 
contexts.
    Competitive Local Exchange Carriers (Competitive LECs), Competitive 
Access Providers (CAPs), Shared-Tenant Service Providers, and Other 
Local Service Providers. Neither the Commission nor the SBA has 
developed a small business size standard specifically for these service 
providers. The appropriate size standard under SBA rules is for the 
category Wired Telecommunications Carriers. Under that size standard, 
such a business is small if it has 1,500 or fewer employees. According 
to Commission data, 1,005 carriers reported that they were engaged in 
the provision of either competitive local exchange services or 
competitive access provider services. Of these 1,005 carriers, an 
estimated 918 have 1,500 or fewer employees and 87 have more than 1,500 
employees. In addition, 16

[[Page 66824]]

carriers have reported that they are Shared-Tenant Service Providers, 
and all 16 are estimated to have 1,500 or fewer employees. In addition, 
89 carriers have reported that they are Other Local Service Providers. 
Of the 89, all 89 have 1,500 or fewer employees and none has more than 
1,500 employees. Consequently, the Commission estimates that most 
providers of competitive local exchange service, competitive access 
providers, Shared-Tenant Service Providers, and Other Local Service 
Providers are small entities that may be affected by rules adopted 
pursuant to the FNPRM.
    Interexchange Carriers (IXCs). Neither the Commission nor the SBA 
has developed a size standard for small businesses specifically 
applicable to interexchange services. The closest applicable size 
standard under SBA rules is for Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer employees. According to Commission data, 300 companies reported 
that their primary telecommunications service activity was the 
provision of interexchange services. Of these 300 companies, an 
estimated 268 have 1,500 or fewer employees and 32 have more than 1,500 
employees. Consequently, the Commission estimates that the majority of 
interexchange service providers are small entities that may be affected 
by rules adopted pursuant to the FNPRM.
    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. According to Commission data, 28 carriers have reported that 
they are engaged in the provision of operator services. Of these, an 
estimated 27 have 1,500 or fewer employees and one has more than 1,500 
employees. Consequently, the Commission estimates that the majority of 
OSPs are small entities that may be affected by rules adopted pursuant 
to the FNPRM.
    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. According to Commission data, 526 carriers have reported 
that they are engaged in the provision of payphone services. Of these, 
an estimated 524 have 1,500 or fewer employees and two have more than 
1,500 employees. Consequently, the Commission estimates that the 
majority of payphone service providers are small entities that may be 
affected by rules adopted pursuant to the FNPRM.
    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. 
According to Commission data, 88 carriers have reported that they are 
engaged in the provision of prepaid calling cards. Of these, an 
estimated 85 have 1,500 or fewer employees and three have more than 
1,500 employees. Consequently, the Commission estimates that the 
majority of prepaid calling card providers are small entities that may 
be affected by rules adopted pursuant to the FNPRM.
    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. According to Commission data, 151 carriers have reported 
that they are engaged in the provision of local resale services. Of 
these, an estimated 149 have 1,500 or fewer employees and two have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of local resellers are small entities that may be affected by 
rules adopted pursuant to the FNPRM.
    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. According to Commission data, 815 carriers have reported 
that they are engaged in the provision of toll resale services. Of 
these, an estimated 787 have 1,500 or fewer employees and 28 have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of toll resellers are small entities that may be affected by 
rules adopted pursuant to the FNPRM.
    Other Toll Carriers. Neither the Commission nor the SBA has 
developed a size standard for small businesses specifically applicable 
to Other Toll Carriers. This category includes toll carriers that do 
not fall within the categories of interexchange carriers, operator 
service providers, prepaid calling card providers, satellite service 
carriers, or toll resellers. The closest applicable size standard under 
SBA rules is for Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 91 companies reported that their primary 
telecommunications service activity was the provision of other toll 
carriage. Of these 91 companies, an estimated 88 have 1,500 or fewer 
employees and three have more than 1,500 employees. Consequently, the 
Commission estimates that most Other Toll Carriers are small entities 
that may be affected by the rules and policies adopted pursuant to the 
FNPRM.
    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. The most reliable source of information 
regarding the number of these service subscribers appears to be data 
the Commission collects on the 800, 888, 877, and 866 numbers in use. 
According to our data, at the beginning of December 2007, the number of 
800 numbers assigned was 7,860,000; the number of 888 numbers assigned 
was 5,210,184; the number of 877 numbers assigned was 4,388,682; and 
the number of 866 numbers assigned was 7,029,116. We do not have data 
specifying the number of these subscribers that are not independently 
owned and operated or have more than 1,500 employees, and thus are 
unable at this time to estimate with greater precision the number of 
toll free subscribers that would qualify as small businesses under the 
SBA size standard. Consequently, we estimate that there are 7,860,000 
or fewer small entity 800 subscribers; 5,210,184 or fewer small entity 
888 subscribers; 4,388,682 or fewer small entity 877 subscribers; and 
7,029,166 or fewer small entity 866 subscribers.

Wireless Carriers and 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

[[Page 66825]]

subsequent business size unless, in the context of assignments or 
transfers, unjust enrichment issues are implicated.
    Wireless Telecommunications Carriers (except Satellite). Since 
2007, the SBA has recognized wireless firms within this new, broad, 
economic census category. Prior to that time, the SBA had developed a 
small business size standard for wireless firms within the now-
superseded census categories of Paging and Cellular and Other Wireless 
Telecommunications. Under the present and prior categories, the SBA has 
deemed a wireless business to be small if it has 1,500 or fewer 
employees. Because Census Bureau data are not yet available for the new 
category, we will estimate small business prevalence using the prior 
categories and associated data. For the first category of Paging, data 
for 2002 show that there were 807 firms that operated for the entire 
year. Of this total, 804 firms had employment of 999 or fewer 
employees, and three firms had employment of 1,000 employees or more. 
For the second category of Cellular and Other Wireless 
Telecommunications, data for 2002 show that there were 1,397 firms that 
operated for the entire year. Of this total, 1,378 firms had employment 
of 999 or fewer employees, and 19 firms had employment of 1,000 
employees or more. Thus, using the prior categories and the available 
data, we estimate that the majority of wireless firms can be considered 
small. According to Commission data, 434 carriers reported that they 
were engaged in the provision of cellular service, Personal 
Communications Service (PCS), or Specialized Mobile Radio (SMR) 
Telephony services, which are placed together in the data. We have 
estimated that 222 of these are small, under the SBA small business 
size standard. Thus, under this category and size standard, 
approximately half of firms can be considered small.
    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 that 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.
    Narrowband Personal Communications Services. To date, two auctions 
of narrowband PCS licenses have been conducted. For purposes of the two 
auctions that have been held, ``small businesses'' were entities with 
average gross revenues for the prior three calendar years of $40 
million or less. Through these auctions, the Commission has awarded a 
total of 41 licenses, out of which 11 were obtained by small 
businesses. To ensure meaningful participation of small business 
entities in future auctions, the Commission has adopted a two-tiered 
small business size standard in the Narrowband PCS Second Report and 
Order. A ``small business'' is an entity that, together with affiliates 
and controlling interests, has average gross revenues for the three 
preceding years of not more than $40 million. A ``very small business'' 
is an entity that, together with affiliates and controlling interests, 
has average gross revenues for the three preceding years of not more 
than $15 million. The SBA has approved these small business size 
standards. In the future, the Commission will auction 459 licenses to 
serve Metropolitan Trading Areas (MTAs) and 408 response channel 
licenses. There is also one megahertz of narrowband PCS spectrum that 
has been held in reserve and that the Commission has not yet decided to 
release for licensing. The Commission cannot predict accurately the 
number of licenses that will be awarded to small entities in future 
actions. However, four of the 16 winning bidders in the two previous 
narrowband PCS auctions were small businesses, as that term was defined 
under the Commission's rules. The Commission assumes, for purposes of 
this analysis that a large portion of the remaining narrowband PCS 
licenses will be awarded to small entities. The Commission also assumes 
that at least some small businesses will acquire narrowband PCS 
licenses by means of the Commission's partitioning and disaggregation 
rules.
    Paging (Private and Common Carrier). The SBA has developed a small 
business size standard for Paging, under which a business is small if 
it has 1,500 or fewer employees. In addition, 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. 
According to Commission data, 281 carriers have reported that they are 
engaged in Paging or Messaging Service. Of these, an estimated 279 have 
1,500 or fewer employees, and two have more than 1,500 employees. 
Consequently, the Commission estimates that the majority of paging 
providers are small entities that may be affected by our action. 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.
    Wireless Telephony. Wireless telephony includes cellular, 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. According to Commission data, 434 carriers reported that 
they were engaged in the provision of wireless telephony. We have 
estimated that 222 of these are small under the SBA small business size 
standard.
    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

[[Page 66826]]

and four nationwide licensees currently authorized to operate in the 
220 MHz band. The Commission has not developed a small business size 
standard for small entities specifically applicable to such incumbent 
220 MHz Phase I licensees. To estimate the number of such licensees 
that are small businesses, we apply the small business size standard 
under the SBA rules applicable to Cellular and Other Wireless 
Telecommunications companies. Under this category, the SBA deems a 
wireless business to be small if it has 1,500 or fewer employees. The 
Commission estimates that nearly all such licensees are small 
businesses under the SBA's small business size standard that may be 
affected by rules adopted pursuant to the FNPRM.
    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.
    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.
    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'' is an entity that, together with its 
affiliates and controlling principals, has average gross revenues not 
exceeding $40 million for the preceding three years. Additionally, a 
``very small business'' is an entity that, together with its affiliates 
and controlling principals, has average gross revenues that are not 
more than $15 million for the preceding three years. 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.
    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.
    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 and may be affected by rules adopted pursuant to the 
FNPRM.
    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'' business is one that, 
together with

[[Page 66827]]

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 and 
may be affected by rules adopted pursuant to the FNPRM.
    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 note, however, that the common carrier microwave fixed 
licensee category includes some large entities.
    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 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.
    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 that qualified as 
``very small business'' entities, and one that qualified as a ``small 
business'' entity. We conclude that the number of geographic area WCS 
licenses affected by this analysis includes these eight entities.
    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 rules adopted 
pursuant to the FNPRM.
    Wireless Cable Systems. Wireless cable systems use 2 GHz band 
frequencies of the Broadband Radio Service (BRS), formerly Multipoint 
Distribution Service (MDS), and the Educational Broadband Service 
(EBS), formerly Instructional Television Fixed Service (ITFS), to 
transmit video programming and provide broadband services to 
residential subscribers. These services were originally designed for 
the delivery of multichannel video programming, similar to that of 
traditional cable systems, but over the past several years licensees 
have focused their operations instead on providing two-way high-speed 
Internet access services. We estimate that the number of wireless cable 
subscribers is approximately 100,000, as of March 2005. Local 
Multipoint Distribution Service (LMDS) is a fixed broadband point-to-
multipoint microwave service that provides for two-way video 
telecommunications. As described below, the SBA small business size 
standard for the broad census category of Cable and Other Program 
Distribution, which consists of such entities generating $13.5 million 
or less in annual receipts, appears applicable to MDS, ITFS and LMDS.
    The Commission has defined small MDS (now BRS) and LMDS entities in 
the context of Commission license auctions. In the 1996 MDS auction, 
the Commission defined a small business as an entity that had annual 
average gross revenues of less than $40 million in the previous three 
calendar years. This definition of a small entity in the context of MDS 
auctions has been approved by the SBA. In the MDS auction, 67 bidders 
won 493 licenses. Of the 67 auction winners, 61 claimed small business 
status. At this time, the Commission estimates that of the 61 small 
business MDS auction winners, 48 remain small business licensees. In 
addition to the 48 small businesses that hold BTA authorizations, there 
are approximately 392 incumbent MDS licensees that have gross revenues 
that are not more than $40 million and are thus considered small 
entities. MDS licensees and wireless cable operators that did not 
receive their licenses as a result of the MDS auction fall under the 
SBA small business size standard for Cable and Other Program 
Distribution. Information available to us indicates that there are 
approximately 850 of these licensees and operators that do not generate 
revenue in excess of $13.5 million annually. Therefore, we estimate 
that there are approximately 850 small entity MDS (or BRS) providers, 
as defined by the SBA and the Commission's auction rules that may be 
affected by rules adopted pursuant to the FNPRM.
    Educational institutions are included in this analysis as small 
entities; however, the Commission has not created a specific small 
business size standard for ITFS (now EBS). We estimate that there are 
currently 2,032 ITFS (or EBS) licensees, and all but 100 of the 
licenses are held by educational institutions. Thus, we estimate that 
at least 1,932 ITFS licensees are small entities that may be affected 
by rules adopted pursuant to the FNPRM.
    In the 1998 and 1999 LMDS auctions, the Commission defined a small 
business as an entity that has annual average gross revenues of less 
than $40 million in the previous three calendar years. Moreover, the 
Commission added an additional classification for a ``very small 
business,'' which was defined as an entity that had annual average 
gross revenues of less than $15 million in the previous three calendar 
years. These definitions of ``small business'' and ``very small 
business'' in the context of the LMDS auctions have been approved

[[Page 66828]]

by the SBA. In the first LMDS auction, 104 bidders won 864 licenses. Of 
the 104 auction winners, 93 claimed status as small or very small 
businesses. In the LMDS re-auction, 40 bidders won 161 licenses. Based 
on this information, we believe that the number of small LMDS licenses 
will include 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 as defined by the SBA and the Commission's auction rules.
    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. These size standards 
will be used in future auctions of 218-219 MHz spectrum.
    24 GHz--Incumbent Licensees. This analysis may affect incumbent 
licensees who were relocated to the 24 GHz band from the 18 GHz band, 
and applicants who wish to provide services in the 24 GHz band. The 
applicable SBA small business size standard is that of ``Cellular and 
Other Wireless Telecommunications'' companies. This category provides 
that such a company is small if it employs no more than 1,500 persons. 
We believe that there are only two licensees in the 24 GHz band that 
were relocated from the 18 GHz band, Teligent and TRW, Inc. It is our 
understanding that Teligent and its related companies have less than 
1,500 employees, though this may change in the future. TRW is not a 
small entity. Thus, only one incumbent licensee in the 24 GHz band is a 
small business entity.
    24 GHz--Future Licensees. With respect to new applicants in the 24 
GHz band, the 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 a future 24 GHz license auction, if held.

Satellite Service Providers

    Satellite Telecommunications. Since 2007, the SBA has recognized 
satellite firms within this revised category, with a small business 
size standard of $15 million. The most current Census Bureau data, 
however, are from the (last) economic census of 2002, and we will use 
those figures to gauge the prevalence of small businesses in this 
category. Those size standards are for the two census categories of 
``Satellite Telecommunications'' and ``Other Telecommunications.'' 
Under both prior categories, such a business was considered small if it 
had, as now, $15 million or less in average annual receipts.
    The first category of Satellite Telecommunications ``comprises 
establishments primarily engaged in providing point-to-point 
telecommunications services to other establishments in the 
telecommunications and broadcasting industries by forwarding and 
receiving communications signals via a system of satellites or 
reselling satellite telecommunications.'' For this category, Census 
Bureau data for 2002 show that there were a total of 371 firms that 
operated for the entire year. Of this total, 307 firms had annual 
receipts of under $10 million, and 26 firms had receipts of $10 million 
to $24,999,999. Consequently, we estimate that the majority of 
Satellite Telecommunications firms are small entities that might be 
affected by rules adopted pursuant to the FNPRM.
    The second category of Other Telecommunications ``comprises 
establishments primarily engaged in: (1) Providing specialized 
telecommunications applications, such as satellite tracking, 
communications telemetry, and radar station operations; or (2) 
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.'' For this category, Census 
Bureau data for 2002 show that there were a total of 332 firms that 
operated for the entire year. Of this total, 303 firms had annual 
receipts of under $10 million and 15 firms had annual receipts of $10 
million to $24,999,999. Consequently, we estimate that the majority of 
Other Telecommunications firms are small entities that might be 
affected by our action.

Cable and OVS Operators

    In 2007, the SBA recognized new census categories for small cable 
entities. However, there are no census data yet in existence that may 
be used to calculate the number of small entities that fit these 
definitions. Therefore, we will use prior definitions of these types of 
entities in order to estimate numbers of potentially-affected small 
business entities.
    Cable and Other Program Distribution. The Census Bureau defines 
this category as ``third-party distribution systems for broadcast 
programming * * * [that] deliver visual, aural, or textual programming 
received from cable networks, local television stations, or radio 
networks to consumers via cable or direct-to-home satellite systems on 
a subscription or fee basis * * * [and] do not generally originate 
programming material.'' The SBA has developed a small business size 
standard for Cable and Other Program Distribution, of firms having 
$13.5 million or less in annual receipts. According to Census Bureau 
data for 2002, there were a total of 1,191 firms in this category that 
operated for the entire year. Of this total, 1,087 firms had annual 
receipts of under $10 million, and 43 firms had receipts of $10 million 
or more but less than $25 million. Thus, under this size standard, the 
majority of firms can be considered small and may be affected by rules 
adopted pursuant to the FNPRM.
    Cable Companies and Systems. The Commission has developed its own 
small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rules, a ``small cable company'' is 
one serving 400,000 or fewer subscribers, nationwide. Industry data 
indicate that, of 1,076 cable operators nationwide, all but eleven are 
small under this size standard. In addition, under the Commission's 
rules, a ``small system'' is a cable system serving 15,000 or fewer 
subscribers. Industry data indicate that, of 7,208 systems nationwide, 
6,139 systems have under 10,000 subscribers, and an additional 379 
systems have 10,000-

[[Page 66829]]

19,999 subscribers. Thus, under this second size standard, most cable 
systems are small and may be affected by rules adopted pursuant to the 
FNPRM.
    Cable System Operators. The Act 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 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. Industry data indicate that, of 1,076 cable operators 
nationwide, all but ten are small under this size standard. We note 
that 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 we are unable to 
estimate more accurately the number of cable system operators that 
would qualify as small under this size standard.
    Open Video Services. Open Video Service (OVS) systems provide 
subscription services. As noted above, 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 $13.5 million or less 
in annual receipts. The Commission has certified approximately 45 OVS 
operators to serve 75 areas, and some of these are currently providing 
service. Affiliates of Residential Communications Network, Inc. (RCN) 
received approval to operate OVS systems in New York City, Boston, 
Washington, DC, and other areas. RCN has sufficient revenues to assure 
that they do not qualify as a small business entity. Little financial 
information is available for the other entities that are authorized to 
provide OVS and are not yet operational. Given that some entities 
authorized to provide OVS service have not yet begun to generate 
revenues, the Commission concludes that up to 44 OVS operators (those 
remaining) might qualify as small businesses that may be affected by 
rules adopted pursuant to the FNPRM.

Internet Service Providers, Web Portals and Other Information Services

    In 2007, the SBA recognized two new small business, economic census 
categories: (1) Internet Publishing and Broadcasting and Web Search 
Portals and; (2) All Other Information Services. However, there is no 
census data yet in existence that may be used to calculate the number 
of small entities that fit these definitions. Therefore, we will use 
prior definitions of these types of entities in order to estimate 
numbers of potentially affected small business entities.
    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 
$23 million or less. According to Census Bureau data for 2002, there 
were 2,529 firms in this category that operated for the entire year. Of 
these, 2,437 firms had annual receipts of under $10 million, and an 
additional 47 firms had receipts of between $10 million and 
$24,999,999. Consequently, we estimate that the majority of these firms 
are small entities that may be affected by rules adopted pursuant to 
the FNPRM.
    Web Search Portals. Our action may pertain to interconnected VoIP 
services, which could be provided by entities that provide other 
services such as e-mail, 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.'' The SBA has developed a small business size standard for this 
category of $6.5 million or less in average annual receipts. According 
to Census Bureau data for 2002, there were 342 firms in this category 
that operated for the entire year. Of these, 303 had annual receipts of 
under $5 million, and an additional 15 firms had receipts of between $5 
million and $9,999,999. Consequently, we estimate that the majority of 
these firms are small entities that may be affected by rules adopted 
pursuant to the FNPRM.
    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 $23 million or less 
in average annual receipts. According to Census Bureau data for 2002, 
there were 6,877 firms in this category that operated for the entire 
year. Of these, 6,418 had annual receipts of under $10 million, and an 
additional 251 firms had receipts of between $10 million and 
$24,999,999. Consequently, we estimate that the majority of these firms 
are small entities that may be affected by rules adopted pursuant to 
the FNPRM.
    All Other Information Services. The Census Bureau defines this 
industry as including ``establishments primarily engaged in providing 
other information services (except new syndicates and libraries and 
archives).'' Our action pertains to interconnected VoIP services, which 
could be provided by entities that provide other services such as e-
mail, 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 $6.5 million or less in average annual receipts. According 
to Census Bureau data for 2002, there were 155 firms in this category 
that operated for the entire year. Of these, 138 had annual receipts of 
under $5 million, and an additional four firms had receipts of between 
$5 million and $9,999,999. Consequently, we estimate that the majority 
of these firms are small entities that may be affected by our action.
    Internet Publishing and Broadcasting. The Census Bureau defines 
this industry as ``establishments engaged in publishing and/or 
broadcasting content on the Internet exclusively * * *. [that * * *] 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 Census category; that size standard is 500 or 
fewer employees. According to Census Bureau data for 2002, there were 
1,362 firms in this category that operated for the entire year. Of 
these, 1,351 had employment of 499 or fewer employees, and 11 firms had 
employment of between 500 and 999. Consequently, we estimate that the 
majority of these firms are small entities that may be affected by our 
action.

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements for Small Entities

    In the FNPRM, the Commission seeks comment on three specific 
proposals. The first proposal we seek comment on, attached as Appendix 
A to the item, is the Chairman's Draft Proposal circulated to the 
Commission on October 15, 2008, which was placed on the Commission's 
agenda for a vote on November 4, 2008.

[[Page 66830]]

This item was subsequently removed from the Agenda on November 3, 2008. 
The second, attached as Appendix B to the item, is a Narrow Universal 
Service Reform Proposal circulated to the Commission on October 31, 
2008. The third, attached as Appendix C to the item, is a draft 
Alternative Proposal first circulated by the Chairman on the evening of 
November 5, 2008. Appendix C incorporates changes proposed in the ex 
parte presentations attached as Appendix D to the item. We note that 
members of industry, Congress, and the general public have urged the 
Commission to seek comment on these proposals.
    We seek particular comment on two questions. First, should the 
additional cost standard utilized under section 252(d)(2) of the Act be 
either the existing TELRIC standard or the incremental cost standard 
described in the draft order? Second, should the terminating rate for 
all section 251(b)(5) traffic be set as either a single, statewide rate 
or a single rate per operating company?

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

    The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): ``(1) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rules for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.''
    The FNPRM seeks comment from all interested parties. Small entities 
are encouraged to bring to the Commission's attention any specific 
concerns they may have with the proposals outlined in the FNPRM.
    Throughout these proceedings the Commission has received proposals 
to treat small entities differently. We believe that consideration of 
commenters' transition proposals for implementing intercarrier 
compensation reform, as well as alternatives for a carriers' recovery 
of intercarrier revenues reduced as a result of any reforms that might 
be adopted could be consistent with our goals of a unified and 
simplified intercarrier compensation regime that will reduce arbitrage 
opportunities and promote innovation and competition and our statutory 
requirement to secure the viability of universal service.

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

    None.

Paperwork Reduction Act

    This document may contain proposed new or modified information 
collection requirements. The Commission, as part of its continuing 
effort to reduce paperwork burdens, invites the general public and the 
Office of Management and Budget (OMB) to comment on the information 
collection requirements contained in this document, as required by the 
Paperwork Reduction Act of 1995, Public Law 104-13. In addition, 
pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 
107-198, we seek specific comment on how we might ``further reduce the 
information collection burden for small business concerns with fewer 
than 25 employees.''

Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. E8-26849 Filed 11-7-08; 4:15 pm]
BILLING CODE 6712-01-P