[Federal Register Volume 75, Number 92 (Thursday, May 13, 2010)]
[Proposed Rules]
[Pages 26906-26916]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-11321]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[WC Docket No. 10-90; GN Docket No. 09-51, WC Docket No. 05-337; FCC
10-58]
Connect America Fund, A National Broadband Plan for Our Future,
High-Cost Universal Service Support
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Communications Commission (Commission) delivered
to Congress a National Broadband Plan recommending that the Commission
adopt cost-cutting measures for existing voice support and create a
Connect America Fund, without increasing the overall size of the Fund,
to support the provision of broadband communications in areas that
would be unserved without such support or that depend on universal
service support for the maintenance of existing broadband service. This
document and the companion Notice of Inquiry is the first in a series
of proceedings to implement that vision. This proceeding will develop
the detailed analytic foundation necessary for the Commission to
distribute funds in an efficient, targeted manner that avoids waste and
minimizes burdens on American consumers. This document seeks comment on
specific common-sense reforms to cap growth and cut inefficient funding
in the legacy high-cost support mechanisms and to shift the savings
toward broadband communications.
DATES: Comments on the proposed rules are due on or before July 12,
2010, and reply comments are due on or before August 11, 2010.
ADDRESSES: You may submit comments, identified by WC Docket No. 10-90,
GN Docket No. 09-51, WC Docket No. 05-337, 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://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting
comments.
People with Disabilities: Contact the FCC to request
reasonable
[[Page 26907]]
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: Katie King, Wireline Competition
Bureau, Telecommunications Access Policy Division, (202) 418-7491 or
TTY: (202) 418-0484.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rulemaking in WC Docket No. 10-90, GN Docket No. 09-
51, WC Docket No. 05-337; FCC 10-58, adopted April 21, 2010, and
released April 21, 2010. 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. The 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 the Internet at http://www.bcpiweb.com. It is also available on
the Commission's Web site at http://www.fcc.gov.
Pursuant to Sec. Sec. 1.415 and 1.419 of the Commission's rules,
47 CFR 1.415, 1.419, interested parties may file comments and reply
comments on or before the dates indicated on the first page 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.
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.
All hand-delivered or messenger-delivered paper filings
for the Commission's Secretary must be delivered to FCC Headquarters at
445 12th St., SW., Room TW-A325, Washington, DC 20554. The filing hours
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 should be addressed to 445 12th Street, SW., Washington, DC 20554.
In addition, one copy of each pleading must be sent to each of the
following:
The Commission's duplicating contractor, Best Copy and
Printing, Inc, 445 12th Street, SW., Room CY-B402, Washington, DC
20554; Web site: http://www.bcpiweb.com; phone: 1-800-378-3160; and
Charles Tyler, Telecommunications Access Policy Division,
Wireline Competition Bureau, 445 12th Street, SW., Room 5-A452,
Washington, DC 20554; e-mail: [email protected].
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) or
(202) 418-0432 (TTY). Contact the FCC to request reasonable
accommodations for filing comments (accessible format documents, sign
language interpreters, CART, etc.) by e-mail: [email protected]; phone:
(202) 418-0530 or (202) 418-0432 (TTY).
Filings and comments are also available for public inspection and
copying during regular business hours at the FCC Reference Information
Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC
20554. Copies may also be purchased from the Commission's duplicating
contractor, BCPI, 445 12th Street, SW., Room CY-B402, Washington, DC
20554. Customers may contact BCPI through its Web site: http://www.bcpiweb.com, by e-mail at [email protected], by telephone at (202)
488-5300 or (800) 378-3160 (voice), (202) 488-5562 (TTY), or by
facsimile at (202) 488-5563.
I. Notice of Proposed Rulemaking
1. Controlling the Size of the High-Cost Program
1. As an essential first step toward repurposing the universal
service fund to support broadband as well as voice service, we must
ensure that the size of the fund remains reasonable. The National
Broadband Plan recommends that the Commission take steps to manage the
universal service fund so that its total size remains close to its
current level (in 2010 dollars) to minimize the burden of increasing
universal service contributions on consumers. The Commission already
has taken action to control the overall size of the high-cost fund. In
2008, the Commission adopted on an interim basis an overall competitive
eligible telecommunications carrier (ETC) high-cost cap of
approximately $1.4 billion, pending comprehensive USF reform.
Similarly, today we seek comment on capping legacy high-cost support
provided to incumbent telephone companies at 2010 levels, which would
have the effect of creating an overall ceiling for the legacy high-cost
program. Such a cap would remain in place while the Commission
determines how to distribute funds in a more efficient, targeted manner
to those areas of the country where no firm can operate profitably
without government support, while minimizing burdens on American
consumers who ultimately pay for universal service through carrier
pass-through charges.
2. We seek comment on how the Commission could implement such a
cap. Alternatively, we invite other proposals that would ensure that
the overall size of the high-cost fund stays at or below current
levels. Should the Commission impose an overall cap on legacy high-cost
support for incumbent LECs at 2010 levels? Should the Commission impose
a cap on each individual high-cost mechanism (to the extent each is not
already capped) at 2010 levels? Should the Commission freeze per-line
support for each carrier at 2010 levels? For example, the Alliance for
Rural CMRS Carriers proposed that incumbent LEC support amounts per
line be capped at either March 2008 or March 2010 levels. We seek
comment on this proposal. Alternatively, should the Commission freeze
the total amount of support a carrier receives in a particular study
area at 2010 levels? Are there other
[[Page 26908]]
ways to implement such a cap? What rule changes would be required to
implement this proposal? How would the Commission implement this
proposal in conjunction with the reforms identified in the following
paragraphs? In addition, what implications would this proposal have for
other Commission rules, as such the Commission's current pricing rules,
and should the implementation of this proposal be coordinated with any
other regulatory actions?
2. Specific Steps To Cut Legacy High-Cost Support
3. As discussed in more detail below, the National Broadband Plan
identifies several specific first steps that could reduce funding in
the legacy high-cost support mechanisms and recommends that those
savings be used to further the goals of universalizing broadband
without increasing the overall size of the universal service fund. The
National Broadband Plan recognizes that shifting funds could have
transitional impacts and recommends that ``[a]s the FCC considers this
policy shift, it should take into account the impact of potential
changes in free cash flows on providers' ability to continue to provide
voice service and on future broadband network deployment strategies.''
Below, we seek comment on the first steps set forth in the National
Broadband Plan. To the extent that any commenter believes that these
proposals, or the proposal to cap legacy high-cost support, would
negatively affect affordable voice service for consumers today, we
would encourage such a commenter to identify all assumptions and to
provide data, including information on network investment plans over
the next five years and free cash flows, to support that position. The
intent of these proposals is to eliminate the indirect funding of
broadband-capable networks today through our legacy high-cost programs,
which is occurring without transparency or accountability for the use
of funds to extend broadband service. We seek comment on the timing of
implementing such reforms in conjunction with the creation of a more
efficient and targeted framework that will provide support for
broadband and voice. We encourage commenters to address when each rule
change should be implemented and how specific reforms should be
sequenced to provide regulatory clarity for ongoing private sector
investment.
4. In addition, we seek comment on the relationship between such
universal service reforms and carriers' rates, including intercarrier
compensation rates, under the Commission's current pricing rules. We
seek comment both on the likely rate impacts under existing pricing
rules that would arise from the possible universal service reforms and
any appropriate responses. We also note that many rural rate-of-return
carriers participate in the National Exchange Carrier Association
(NECA) pooling process for their interstate access charges. If
universal service support under the legacy programs were frozen for
such carriers, are there special considerations resulting from
operation of the NECA pool that would unfairly advantage or
disadvantage certain carriers? The Commission previously has expressed
concern about the risks of continued participation in NECA pools by
carriers that were subject to incentive regulation. We seek comment on
whether such concerns would remain if all rate-of-return carriers
converted to incentive regulation. Would the pool be able to continue
to operate pursuant to regulation other than rate-of-return?
5. Shifting Rate-of-Return Carriers to Incentive Regulation. The
National Broadband Plan recommends that the Commission ``require rate-
of-return carriers to move to incentive regulation.'' We seek comment
on requiring current rate-of-return companies to convert to some form
of incentive regulation. We note that a number of companies have
voluntarily converted to price cap regulation in the last two years. In
such cases, the Commission effectively converted the companies'
interstate common line support (ICLS) to a frozen amount per line. We
seek comment on whether the Commission should replace rate-of-return
regulation with the price-cap framework recently adopted for voluntary
conversions, an alternative price-cap framework, or some other form of
incentive regulation. We seek comment on the costs and the benefits
that would be realized by converting all rate-of-return carriers to
price cap regulation or other incentive regulation. We seek comment on
whether, in an increasingly competitive marketplace, and with carriers'
service offerings expanding beyond regulated services, the current
rate-of-return framework, which considers only regulated costs and
revenues, has become less appropriate.
6. We seek comment on whether we should convert ICLS to a frozen
amount per line, which would have the effect of limiting growth in the
legacy high-cost program. We seek comment on whether this reform should
be implemented at the same time as any measures the Commission may
adopt to provide targeted funding for the deployment of broadband-
capable infrastructure to areas that are unserved, or should such a
rule change occur before the development of the CAF, or otherwise be
coordinated with some other regulatory action such as conversion to
incentive regulation. The National Broadband Plan recognizes that the
savings realized by eliminating future growth in the legacy ICLS
program represent funding that could be redirected toward achieving
broadband-related goals. We seek comment on this proposal.
7. Elimination of Interstate Access Support. The National Broadband
Plan also recommends that the Commission ``redirect access replacement
funding known as Interstate Access Support (IAS) toward broadband
deployment.'' Thus, we now seek comment on the elimination of IAS. When
the Commission created IAS in 2000, it said that it would revisit this
funding mechanism ``to ensure that such funding is sufficient, yet not
excessive.'' That re-examination has not occurred.
8. Specifically, we now seek comment on eliminating Sec. Sec.
54.800-54.809 of our rules and transferring any IAS funding levels as
of the date of elimination to the new Connect America Fund to provide
support for broadband-capable networks. We invite commenters to propose
an appropriate timeline for the elimination of these rules and any
glide-path that may be necessary to ensure that recipients continue to
be able to provide voice services during the transition.
9. Sprint and Verizon Wireless Voluntary Commitments. The National
Broadband Plan also recommends that the Commission ``issue an order to
implement the voluntary commitments of Sprint and Verizon Wireless to
reduce the High-Cost funding they receive as competitive ETCs to zero
over a five-year period as a condition of earlier merger decisions.''
The Commission will consider shortly an order clarifying how to
implement Verizon Wireless's and Sprint's voluntary commitments.
10. Elimination of Competitive ETC High-Cost Support. The National
Broadband Plan recommends that the Commission phase out remaining
competitive ETC funding under the existing funding mechanisms over a
five-year period and target the savings toward the deployment of
broadband-capable networks and other reforms in the plan. We seek
comment on this proposal.
11. We seek comment on whether we should ramp down competitive ETC
support under the legacy programs, and if so, how the transition should
occur. For example, should the Commission
[[Page 26909]]
reduce support on a pro rata basis (e.g., 20% reduction each year) for
each state? Should the Commission reduce support at an accelerated rate
of decline? Should the Commission reduce support on a proportional
basis for all states, or in some other manner, and if so, on what
basis? Would there be any impact on existing subscribers of competitive
ETCs if the Commission were to reduce competitive ETC support under the
legacy funding mechanisms? How should reductions in legacy high-cost
support for all competitive ETCs be coordinated with implementation of
Verizon Wireless's and Sprint's voluntary commitments to phase-out
legacy high-cost support over a five-year period?
12. General Proposals. Commenters are invited to submit other
proposals to eliminate or reduce funding levels in the legacy high-cost
support mechanisms to transition to efficient funding levels in the
Connect America Fund. We encourage parties that submit alternative
proposals to identify specific rule changes and quantify the impact of
such changes.
II. Procedural Matters
A. Initial Regulatory Flexibility Analysis
13. As required by the Regulatory Flexibility Act (``RFA''), the
Commission prepared this Initial Regulatory Flexibility Analysis
(``IRFA'') of the possible significant economic impact on small
entities by the policies and rules proposed in this Notice of Proposed
Rulemaking (NPRM). The Commission requests written public comments on
this IRFA. Comments must be identified as responses to the IRFA and
must be filed on or before the dates indicated on the first page of
this NPRM. The Commission will send a copy of the NPRM, including this
IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration (SBA). In addition, the NPRM and IRFA (or summaries
thereof) will be published in the Federal Register.
1. Need for, and Objectives of, the Notice
14. On March 16, 2010, the Commission released a Joint Statement on
Broadband stating that ``[t]he nearly $9 billion Universal Service Fund
(USF) and the intercarrier compensation (ICC) system should be
comprehensively reformed to increase accountability and efficiency,
encourage targeted investment in broadband infrastructure, and
emphasize the importance of broadband to the future of these
programs.'' On the same day, the Commission delivered to Congress a
National Broadband Plan recommending that the Commission adopt cost-
cutting measures for existing voice support and create a Connect
America Fund (CAF), without increasing the overall size of the Fund, to
support the provision of broadband communications in areas that would
be unserved without such support or that depend on universal service
support for the maintenance of existing broadband service.
15. The National Broadband Plan recommends that the Commission take
steps to manage the universal service fund so that its total size
remains close to its current level (in 2010 dollars) to minimize the
burden of increasing universal service contributions on consumers. The
NPRM seeks comment on specific common-sense reforms to contain growth
in the legacy high-cost support mechanisms and identify savings that
can be shifted toward broadband. Specifically, the NPRM seeks comment
on capping legacy high-cost support provided to incumbent telephone
companies at 2010 levels; shifting rate-of-return carriers to incentive
regulation and converting interstate common line support to a frozen
amount per line; eliminating interstate access support; and eliminating
high-cost support for competitive eligible telecommunications carriers.
2. Legal Basis
16. This legal basis for any action that may be taken pursuant to
the NPRM is contained in sections 1, 2, 4(i), 201-205, 214, 254, and
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152,
154(i), 201-205, 214, 254, and 403, and Sec. 1.411 of the Commission's
rules, 47 CFR 1.411.
3. Description and Estimate of the Number of Small Entities to Which
the Rules Will Apply
17. 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 and policies, 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
SBA.
18. Small Businesses. Nationwide, there are a total of
approximately 29.6 million small businesses, according to the SBA.
19. Small Organizations. Nationwide, as of 2002, there are
approximately 1.6 million small organizations. A ``small organization''
is generally ``any not-for-profit enterprise which is independently
owned and operated and is not dominant in its field.''
20. Small Governmental Jurisdictions. The term ``small governmental
jurisdiction'' is defined generally as ``governments of cities, towns,
townships, villages, school districts, or special districts, with a
population of less than fifty thousand.'' Census Bureau data for 2002
indicate that there were 87,525 local governmental jurisdictions in the
United States. We estimate that, of this total, 84,377 entities were
``small governmental jurisdictions.'' Thus, we estimate that most
governmental jurisdictions are small.
21. 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.
22. Incumbent Local Exchange Carriers (``ILECs''). Neither the
Commission nor the SBA has developed a small business size standard
specifically for incumbent local exchange services. The appropriate
size standard under SBA rules is for the category Wired
Telecommunications Carriers. Under that size standard, such a business
is small if it has 1,500 or fewer employees. According to Commission
data, 1,311 carriers have reported that they are engaged in the
provision of incumbent local exchange services. 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 incumbent local exchange
[[Page 26910]]
service are small businesses that may be affected by our proposed
action.
23. 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.
According to Commission data, 1,005 carriers have reported that they
are engaged in the provision of either competitive access provider
services or competitive local exchange carrier 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 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 have 1,500 or fewer employees. Consequently, the Commission
estimates that most providers of competitive local exchange service,
competitive access providers, ``Shared-Tenant Service Providers,'' and
``Other Local Service Providers'' are small entities that may be
affected by our proposed action.
24. 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
our proposed action.
25. 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
our proposed action.
26. Interexchange Carriers (``IXCs''). Neither the Commission nor
the SBA has developed a small business size standard specifically for
providers of interexchange services. The appropriate size standard
under SBA rules is for the category Wired Telecommunications Carriers.
Under that size standard, such a business is small if it has 1,500 or
fewer employees. According to Commission data, 300 carriers have
reported that they are engaged in the provision of interexchange
service. Of these, 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 IXCs are small entities that may be
affected by our proposed action.
27. Satellite Telecommunications and All Other Telecommunications.
These two economic census categories address the satellite industry.
The first category has a small business size standard of $15 million or
less in average annual receipts, under SBA rules. The second has a size
standard of $25 million or less in annual receipts. The most current
Census Bureau data in this context, however, are from the (last)
economic census of 2002, and we will use those figures to gauge the
prevalence of small businesses in these categories.
28. The category of Satellite Telecommunications ``comprises
establishments primarily engaged in providing 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
our action.
29. The second category of All Other Telecommunications comprises,
inter alia, ``establishments primarily engaged in providing specialized
telecommunications services, such as satellite tracking, communications
telemetry, and radar station operation. This industry also includes
establishments primarily engaged in providing satellite terminal
stations and associated facilities connected with one or more
terrestrial systems and capable of transmitting telecommunications to,
and 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 All Other Telecommunications firms are small entities
that might be affected by our action.
30. Wireless Telecommunications Carriers (except Satellite). Since
2007, the Census Bureau has placed wireless firms within this new,
broad, economic census category. Prior to that time, such firms were
within the now-superseded 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
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 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, we estimate that the majority of wireless
firms are small.
31. 2.3 GHz Wireless Communications Services. This service can be
used for fixed, mobile, radiolocation, and digital audio broadcasting
satellite uses. The Commission defined ``small business'' for the
wireless communications services (``WCS'') auction as an entity with
average gross revenues of $40 million for each of the three preceding
years, and a ``very small business'' as an entity with average gross
revenues of $15 million for each of the three preceding years. The SBA
has approved these definitions. The Commission auctioned geographic
area licenses in the WCS service. In the auction, which was conducted
in 1997, there were seven bidders that won 31 licenses that qualified
as very small business entities, and one bidder that won one license
that qualified as a small business entity.
32. 1670-1675 MHz Services. An auction for one license in the 1670-
1675 MHz band was conducted in 2003. One
[[Page 26911]]
license was awarded. The winning bidder was not a small entity.
33. Wireless Telephony. Wireless telephony includes cellular,
personal communications services, and specialized mobile radio
telephony carriers. As noted, the SBA has developed a small business
size standard for Wireless Telecommunications Carriers (except
Satellite). Under the SBA small business size standard, a business is
small if it has 1,500 or fewer employees. According to Trends in
Telephone Service data, 434 carriers reported that they were engaged in
wireless telephony. Of these, an estimated 222 have 1,500 or fewer
employees and 212 have more than 1,500 employees. We have estimated
that 222 of these are small under the SBA small business size standard.
34. Broadband Personal Communications Service. The broadband
personal communications services (``PCS'') spectrum is divided into six
frequency blocks designated A through F, and the Commission has held
auctions for each block. The Commission has created a small business
size standard for Blocks C and F as an entity that has average gross
revenues of less than $40 million in the three previous calendar years.
For Block F, an additional small business size standard 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 small business
size standards, 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. In 1999, the Commission reauctioned 155 C, D, E,
and F Block licenses; there were 113 small business winning bidders.
35. In 2001, the Commission completed the auction of 422 C and F
Broadband PCS licenses in Auction 35. Of the 35 winning bidders in this
auction, 29 qualified as ``small'' or ``very small'' businesses.
Subsequent events, concerning Auction 35, including judicial and agency
determinations, resulted in a total of 163 C and F Block licenses being
available for grant. In 2005, the Commission completed an auction of
188 C block licenses and 21 F block licenses in Auction 58. There were
24 winning bidders for 217 licenses. Of the 24 winning bidders, 16
claimed small business status and won 156 licenses. In 2007, the
Commission completed an auction of 33 licenses in the A, C, and F
Blocks in Auction 71. Of the 14 winning bidders, six were designated
entities. In 2008, the Commission completed an auction of 20 Broadband
PCS licenses in the C, D, E and F block licenses in Auction 78.
36. Advanced Wireless Services. In 2008, the Commission conducted
the auction of Advanced Wireless Services (``AWS'') licenses. This
auction, which as designated as Auction 78, offered 35 licenses in the
AWS 1710-1755 MHz and 2110-2155 MHz bands (``AWS-1''). The AWS-1
licenses were licenses for which there were no winning bids in Auction
66. That same year, the Commission completed Auction 78. A bidder with
attributed average annual gross revenues that exceeded $15 million and
did not exceed $40 million for the preceding three years (``small
business'') received a 15 percent discount on its winning bid. A bidder
with attributed average annual gross revenues that did not exceed $15
million for the preceding three years (``very small business'')
received a 25 percent discount on its winning bid. A bidder that had
combined total assets of less than $500 million and combined gross
revenues of less than $125 million in each of the last two years
qualified for entrepreneur status. Four winning bidders that identified
themselves as very small businesses won 17 licenses. Three of the
winning bidders that identified themselves as a small business won five
licenses. Additionally, one other winning bidder that qualified for
entrepreneur status won 2 licenses.
37. 700 MHz Band Licenses. The Commission previously adopted
criteria for defining three groups of small businesses for purposes of
determining their eligibility for special provisions such as bidding
credits. The Commission defined a ``small business'' as an entity that,
together with its affiliates and controlling principals, has average
gross revenues not exceeding $40 million for the preceding three years.
A ``very small business'' is defined as an entity that, together with
its affiliates and controlling principals, has average gross revenues
that are not more than $15 million for the preceding three years.
Additionally, the lower 700 MHz Service had a third category of small
business status for Metropolitan/Rural Service Area (``MSA/RSA'')
licenses. The third category is ``entrepreneur,'' which is defined as
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 approved these small
size standards. The Commission conducted an auction in 2002 of 740
licenses (one license in each of the 734 MSAs/RSAs and one license in
each of the six Economic Area Groupings (EAGs)). Of the 740 licenses
available for auction, 484 licenses were sold to 102 winning bidders.
Seventy-two of the winning bidders claimed small business, very small
business or entrepreneur status and won a total of 329 licenses. The
Commission conducted a second auction in 2003 that included 256
licenses: 5 EAG licenses and 476 Cellular Market Area licenses.
Seventeen winning bidders claimed small or very small business status
and won 60 licenses, and nine winning bidders claimed entrepreneur
status and won 154 licenses. In 2005, the Commission completed an
auction of 5 licenses in the lower 700 MHz band (Auction 60). There
were three winning bidders for five licenses. All three winning bidders
claimed small business status.
38. In 2007, the Commission adopted the 700 MHz Second Report and
Order. The Order revised the band plan for the commercial (including
Guard Band) and public safety spectrum, adopted services rules,
including stringent build-out requirements, an open platform
requirement on the C Block, and a requirement on the D Block licensee
to construct and operate a nationwide, interoperable wireless broadband
network for public safety users. In 2008, the Commission commenced
Auction 73 which offered all available, commercial 700 MHz Band
licenses (1,099 licenses) for bidding using the Commission's standard
simultaneous multiple-round (``SMR'') auction format for the A, B, D,
and E block licenses and an SMR auction design with hierarchical
package bidding (``HPB'') for the C Block licenses. Later in 2008, the
Commission concluded Auction 73. A bidder with attributed average
annual gross revenues that did not exceed $15 million for the preceding
three years (very small business) qualified for a 25 percent discount
on its winning bids. A bidder with attributed average annual gross
revenues that exceeded $15 million, but did not exceed $40 million for
the preceding three years, qualified for a 15 percent discount on its
winning bids. There were 36 winning bidders (who won 330 of the 1,090
licenses won) that identified themselves as very small businesses.
There were 20 winning bidders that identified themselves as a small
business that won 49 of the 1,090
[[Page 26912]]
licenses won. The provisionally winning bids for the A, B, C, and E
Block licenses exceeded the aggregate reserve prices for those blocks.
However, the provisionally winning bid for the D Block license did not
meet the applicable reserve price and thus did not become a winning
bid.
39. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order,
the Commission adopted size standards for ``small businesses'' and
``very small businesses'' for purposes of determining their eligibility
for special provisions such as bidding credits and installment
payments. A small business in this service is an entity that, together
with its affiliates and controlling principals, has average gross
revenues not exceeding $40 million for the preceding three years.
Additionally, a very small business is an entity that, together with
its affiliates and controlling principals, has average gross revenues
that are not more than $15 million for the preceding three years. SBA
approval of these definitions is not required. In 2000, the Commission
conducted an auction of 52 Major Economic Area (``MEA'') licenses. 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 and closed in
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.
40. Specialized Mobile Radio. The Commission awards ``small
entity'' bidding credits in auctions for Specialized Mobile Radio (SMR)
geographic area licenses in the 800 MHz and 900 MHz bands to firms that
had revenues of no more than $15 million in each of the three previous
calendar years. The Commission awards ``very small entity'' bidding
credits to firms that had revenues of no more than $3 million in each
of the three previous calendar years. The SBA has approved these small
business size standards for the 900 MHz Service. The Commission has
held auctions for geographic area licenses in the 800 MHz and 900 MHz
bands. The 900 MHz SMR auction was completed in 1996. Sixty bidders
claiming that they qualified as small businesses under the $15 million
size standard won 263 geographic area licenses in the 900 MHz SMR band.
The 800 MHz SMR auction for the upper 200 channels was conducted in
1997. Ten bidders claiming that they qualified as small businesses
under the $15 million size standard won 38 geographic area licenses for
the upper 200 channels in the 800 MHz SMR band. A second auction for
the 800 MHz band was conducted in 2002 and included 23 BEA licenses.
One bidder claiming small business status won five licenses.
41. The auction of the 1,053 800 MHz SMR geographic area licenses
for the General Category channels was conducted in 2000. Eleven bidders
won 108 geographic area licenses for the General Category channels in
the 800 MHz SMR band qualified as small businesses under the $15
million size standard. In an auction completed in 2000, a total of
2,800 Economic Area licenses in the lower 80 channels of the 800 MHz
SMR service were awarded. Of the 22 winning bidders, 19 claimed small
business status and won 129 licenses. Thus, combining all three
auctions, 40 winning bidders for geographic licenses in the 800 MHz SMR
band claimed status as small business.
42. In addition, there are numerous incumbent site-by-site SMR
licensees and licensees with extended implementation authorizations in
the 800 and 900 MHz bands. We do not know how many firms provide 800
MHz or 900 MHz geographic area SMR 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. In
addition, we do not know how many of these firms have 1500 or fewer
employees. We assume, for purposes of this analysis, that all of the
remaining existing extended implementation authorizations are held by
small entities, as that small business size standard is approved by the
SBA.
43. Cellular Radiotelephone Service. Auction 77 was held to resolve
one group of mutually exclusive applications for Cellular
Radiotelephone Service licenses for unserved areas in New Mexico.
Bidding credits for designated entities were not available in Auction
77. In 2008, the Commission completed the closed auction of one
unserved service area in the Cellular Radiotelephone Service,
designated as Auction 77. Auction 77 concluded with one provisionally
winning bid for the unserved area totaling $25,002.
44. Private Land Mobile Radio (``PLMR''). PLMR systems serve an
essential role in a range of industrial, business, land transportation,
and public safety activities. These radios are used by companies of all
sizes operating in all U.S. business categories, and are often used in
support of the licensee's primary (non-telecommunications) business
operations. For the purpose of determining whether a licensee of a PLMR
system is a small business as defined by the SBA, we use the broad
census category, Wireless Telecommunications Carriers (except
Satellite). This definition provides that a small entity is any such
entity employing no more than 1,500 persons. The Commission does not
require PLMR licensees to disclose information about number of
employees, so the Commission does not have information that could be
used to determine how many PLMR licensees constitute small entities
under this definition. We note that PLMR licensees generally use the
licensed facilities in support of other business activities, and
therefore, it would also be helpful to assess PLMR licensees under the
standards applied to the particular industry subsector to which the
licensee belongs.
45. As of March 2010, there were 424,162 PLMR licensees operating
921,909 transmitters in the PLMR bands below 512 MHz. We note that any
entity engaged in a commercial activity is eligible to hold a PLMR
license, and that any revised rules in this context could therefore
potentially impact small entities covering a great variety of
industries.
46. 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 Wireless Telecommunications Carriers (except
Satellite), which is 1,500 or fewer employees. The Commission does not
have data specifying the number of these licensees that have no more
than 1,500 employees, and thus are unable at this time to estimate with
greater precision the number of fixed microwave service licensees that
would qualify as small business concerns under the SBA's small business
size standard. Consequently, the Commission estimates that there are
22,015 or fewer common carrier fixed licensees and 61,670 or fewer
private operational-fixed licensees and broadcast auxiliary radio
licensees in the microwave services that may be small and may be
affected by the rules and policies proposed herein. We note, however,
that the common carrier microwave fixed licensee category includes some
large entities.
[[Page 26913]]
47. 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 and closed in 2000. The 18 bidders who claimed
small business status won 849 licenses.
48. Local Multipoint Distribution Service. Local Multipoint
Distribution Service (``LMDS'') is a fixed broadband point-to-
multipoint microwave service that provides for two-way video
telecommunications. The auction of the 986 LMDS licenses began and
closed in 1998. The Commission established a small business size
standard for LMDS licenses as an entity that has average gross revenues
of less than $40 million in the three previous calendar years. An
additional small business size standard for ``very small business'' was
added as an entity that, together with its affiliates, has average
gross revenues of not more than $15 million for the preceding three
calendar years. The SBA has approved these small business size
standards in the context of LMDS auctions. There were 93 winning
bidders that qualified as small entities in the LMDS auctions. A total
of 93 small and very small business bidders won approximately 277 A
Block licenses and 387 B Block licenses. In 1999, the Commission re-
auctioned 161 licenses; there were 32 small and very small businesses
winning that won 119 licenses.
49. 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''). In the present
context, we will use the SBA's small business size standard applicable
to Wireless Telecommunications Carriers (except Satellite), 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 proposed herein.
50. 1.4 GHz Band Licensees. The Commission conducted an auction of
64 1.4 GHz band licenses in 2007. In that auction, the Commission
defined ``small business'' as an entity that, together with its
affiliates and controlling interests, had average gross revenues that
exceed $15 million but do not exceed $40 million for the preceding
three years, and a ``very small business'' as an entity that, together
with its affiliates and controlling interests, has had average annual
gross revenues not exceeding $15 million for the preceding three years.
Neither of the two winning bidders sought designated entity status.
51. Incumbent 24 GHz Licensees. This analysis may affect incumbent
licensees who were relocated to the 24 GHz band from the 18 GHz band,
and applicants who wish to provide services in the 24 GHz band. The
applicable SBA small business size standard is that of Wireless
Telecommunications Carriers (except Satellite). This category provides
that such a company is small if it employs no more than 1,500 persons.
The broader census data notwithstanding, 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 fewer than 1,500 employees, though this may
change in the future. TRW is not a small entity. There are
approximately 122 licensees in the Rural Radiotelephone Service, and
the Commission estimates that there are 122 or fewer small entity
licensees in the Rural Radiotelephone Service that may be affected by
the rules and policies proposed herein.
52. Future 24 GHz Licensees. With respect to new applicants in the
24 GHz band, we have defined ``small business'' as an entity that,
together with controlling interests and affiliates, has average annual
gross revenues for the three preceding years not exceeding $15 million.
``Very small business'' in the 24 GHz band is defined as an entity
that, together with controlling interests and affiliates, has average
gross revenues not exceeding $3 million for the preceding three years.
The SBA has approved these definitions. The Commission will not know
how many licensees will be small or very small businesses until the
auction, if required, is held.
53. Broadband Radio Service and Educational Broadband Service.
Broadband Radio Service systems, previously referred to as Multipoint
Distribution Service (``MDS'') and Multichannel Multipoint Distribution
Service (``MMDS'') systems, and ``wireless cable,'' transmit video
programming to subscribers and provide two-way high speed data
operations using the microwave frequencies of the Broadband Radio
Service (``BRS'') and Educational Broadband Service (``EBS'')
(previously referred to as the Instructional Television Fixed Service
(``ITFS'')). In connection with the 1996 BRS auction, the Commission
established a small business size standard as an entity that had annual
average gross revenues of no more than $40 million in the previous
three calendar years. The BRS 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. BRS also includes licensees of stations authorized prior to
the auction. At this time, we estimate that of the 61 small business
BRS auction winners, 48 remain small business licensees. In addition to
the 48 small businesses that hold BTA authorizations, there are
approximately 392 incumbent BRS licensees that are considered small
entities. After adding the number of small business auction licensees
to the number of incumbent licensees not already counted, we find that
there are currently approximately 440 BRS licensees that are defined as
small businesses under either the SBA or the Commission's rules. In
2009, the Commission conducted Auction 86, the sale of 78 licenses in
the BRS areas. The Commission offered three levels of bidding credits:
(i) A bidder with attributed average annual gross revenues that exceed
$15 million and do not exceed $40 million for the preceding three years
(small business) will receive a 15 percent discount on its winning bid;
(ii) a bidder with attributed average annual gross revenues that exceed
$3 million and do not exceed $15 million for the preceding three years
(very small business) will receive a 25 percent discount on its winning
bid; and (iii) a bidder with attributed average annual gross revenues
that do not exceed $3 million for the preceding three years
(entrepreneur) will receive a 35 percent discount on its winning bid.
Auction 86 concluded in 2009 with the sale of 61 licenses. Of the ten
winning bidders, two bidders that claimed small business status won 4
licenses; one bidder that claimed very small business status won three
licenses; and two bidders that claimed entrepreneur status won six
licenses.
54. In addition, the SBA's Cable Television Distribution Services
small business size standard is applicable to EBS. There are presently
2,032 EBS licensees. All but 100 of these licenses are held by
educational institutions. Educational institutions are included in this
analysis as small entities. Thus, we estimate that at least 1,932
licensees are small businesses. Since 2007, Cable
[[Page 26914]]
Television Distribution Services have been defined within the broad
economic census category of Wired Telecommunications Carriers; that
category is defined as follows: ``This industry comprises
establishments primarily engaged in operating and/or providing access
to transmission facilities and infrastructure that they own and/or
lease for the transmission of voice, data, text, sound, and video using
wired telecommunications networks. Transmission facilities may be based
on a single technology or a combination of technologies.'' The SBA has
developed a small business size standard for this category, which is:
All such firms having 1,500 or fewer employees. To gauge small business
prevalence for these cable services we must, however, use current
census data that are based on the previous category of Cable and Other
Program Distribution and its associated size standard; that size
standard was: All such 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 previous 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, the majority of these firms can be considered small.
55. Cable Television Distribution Services. Since 2007, these
services have been defined within the broad economic census category of
Wired Telecommunications Carriers; that category is defined as follows:
``This industry comprises establishments primarily engaged in operating
and/or providing access to transmission facilities and infrastructure
that they own and/or lease for the transmission of voice, data, text,
sound, and video using wired telecommunications networks. Transmission
facilities may be based on a single technology or a combination of
technologies.'' The SBA has developed a small business size standard
for this category, which is: All such firms having 1,500 or fewer
employees. To gauge small business prevalence for these cable services
we must, however, use current census data that are based on the
previous category of Cable and Other Program Distribution and its
associated size standard; that size standard was: All such 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 previous
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, the majority of
these firms can be considered small.
56. Cable Companies and Systems. The Commission has also 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 6,635 systems nationwide,
5,802 systems have under 10,000 subscribers, and an additional 302
systems have 10,000-19,999 subscribers. Thus, under this second size
standard, most cable systems are small.
57. Cable System Operators. 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 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.
58. Open Video Systems. The open video system (``OVS'') framework
was established in 1996, and is one of four statutorily recognized
options for the provision of video programming services by local
exchange carriers. The OVS framework provides opportunities for the
distribution of video programming other than through cable systems.
Because OVS operators provide subscription services, OVS falls within
the SBA small business size standard covering cable services, which is
``Wired Telecommunications Carriers.'' The SBA has developed a small
business size standard for this category, which is: All such firms
having 1,500 or fewer employees. To gauge small business prevalence for
such services we must, however, use current census data that are based
on the previous category of Cable and Other Program Distribution and
its associated size standard; that size standard was: All such 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
previous 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, the
majority of cable firms can be considered small. In addition, we note
that the Commission has certified some OVS operators, with some now
providing service. Broadband service providers (``BSPs'') are currently
the only significant holders of OVS certifications or local OVS
franchises. The Commission does not have financial or employment
information regarding the entities authorized to provide OVS, some of
which may not yet be operational. Thus, again, at least some of the OVS
operators may qualify as small entities.
59. Cable Television Relay Service. This service includes
transmitters generally used to relay cable programming within cable
television system distribution systems. This cable service is defined
within the broad economic census category of Wired Telecommunications
Carriers; that category is defined as follows: ``This industry
comprises establishments primarily engaged in operating and/or
providing access to transmission facilities and infrastructure that
they own and/or lease for the transmission of voice, data, text, sound,
and video using wired telecommunications networks. Transmission
facilities may be based on a single technology or a combination of
technologies.'' The SBA has developed a small business size standard
for this category, which is: All such firms having 1,500 or fewer
employees. To gauge small business prevalence for cable services we
must, however, use current census data that are based on the previous
category of Cable and Other Program Distribution and its associated
size standard; that size standard was: All such 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 previous 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
[[Page 26915]]
million. Thus, the majority of these firms can be considered small.
60. Multichannel Video Distribution and Data Service. MVDDS is a
terrestrial fixed microwave service operating in the 12.2-12.7 GHz
band. The Commission adopted criteria for defining three groups of
small businesses for purposes of determining their eligibility for
special provisions such as bidding credits. It defined a very small
business as an entity with average annual gross revenues not exceeding
$3 million for the preceding three years; a small business as an entity
with average annual gross revenues not exceeding $15 million for the
preceding three years; and an entrepreneur as an entity with average
annual gross revenues not exceeding $40 million for the preceding three
years. These definitions were approved by the SBA. On January 27, 2004,
the Commission completed an auction of 214 MVDDS licenses (Auction No.
53). In this auction, ten winning bidders won a total of 192 MVDDS
licenses. Eight of the ten winning bidders claimed small business
status and won 144 of the licenses. The Commission also held an auction
of MVDDS licenses on December 7, 2005 (Auction 63). Of the three
winning bidders who won 22 licenses, two winning bidders, winning 21 of
the licenses, claimed small business status.
61. Internet Service Providers. The 2007 Economic Census places
these firms, whose services might include voice over Internet protocol
(VoIP), in either of two categories, depending on whether the service
is provided over the provider's own telecommunications connections
(e.g. cable and DSL, ISPs), or over client-supplied telecommunications
connections (e.g. dial-up ISPs). The former are within the category of
Wired Telecommunications Carriers, which has an SBA small business size
standard of 1,500 or fewer employees. The latter are within the
category of All Other Telecommunications, which has a size standard of
annual receipts of $25 million or less. The most current Census Bureau
data for all such firms, however, are the 2002 data for the previous
census category called Internet Service Providers. That category had a
small business size standard of $21 million or less in annual receipts,
which was revised in late 2005 to $23 million. The 2002 data show that
there were 2,529 such firms that operated for the entire year. Of
those, 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 ISP firms
are small entities.
62. The ISP industry has changed dramatically since 2002. The 2002
data cited above may therefore include entities that no longer provide
Internet access service and may exclude entities that now provide such
service. To ensure that this IRFA describes the universe of small
entities that our action might affect, we discuss in turn several
different types of entities that might be providing Internet access
service.
63. We note that, although we have no specific information on the
number of small entities that provide Internet access service over
unlicensed spectrum, we include these entities in our IRFA.
4. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements
64. As discussed above, the NPRM seeks comment on a number of
specific reforms to contain the growth in the legacy high-cost support
mechanisms and identify savings that can be shifted toward broadband.
Under the Commission's current rules, eligible telecommunications
carriers (ETCs) file certain information with the Commission, the
Universal Service Administrative Company (USAC), and/or the National
Carrier Exchange Association (NECA) that is used to determine the
amount of high-cost support each ETC receives. The proposals in the
NPRM to cap or eliminate support, if eventually adopted, are not likely
to substantially change the current reporting, recordkeeping, and
compliance requirements, and would, in some cases, reduce such burdens.
The proposal to shift rate-of-return carriers to incentive regulation
likely would result in certain one-time reporting requirements related
to the conversion, such as establishing initial price cap indexes for
price cap baskets. In addition, some ongoing reporting, recordkeeping
and other compliance requirements may change after the conversion from
rate-of-return regulation, but may result in less burdensome
requirements, in some cases. We do not have an estimate of potential
reporting, recordkeeping, and compliance burdens, because it is too
speculative at this time to anticipate the number of carriers that
would be required to convert to incentive regulation, or what type of
incentive regulation would be required. We anticipate that commenters
will provide the Commission with reliable information on any costs and
burdens on small entities.
5. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
65. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its approach, which may
include the following four alternatives, among others: (1) The
establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance 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.
66. As discussed above, the NPRM seeks comment on capping legacy
high-cost support provided to incumbent telephone companies; shifting
rate-of-return carriers to incentive regulation and converting
interstate common line support to a frozen amount per line; eliminating
interstate access support; and eliminating high-cost support for
competitive eligible telecommunications carriers. The NPRM seeks
comment generally on the proposed universal service reforms and
carriers' rates under the Commission's current pricing rules, and
specifically seeks comment on whether there are special considerations
resulting from the operation of the NECA pool that would unfairly
advantage or disadvantage certain carriers. The NPRM also seeks comment
on the costs and benefits that would be realized by converting all
rate-of-return carriers to price cap or other incentive regulation. We
anticipate that the record will reflect whether the overall benefits of
such a requirement would outweigh the burdens on small entities, and if
so, suggest alternative ways in which the Commission could lessen the
overall burdens on small entities. We encourage small entity comment.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
67. None.
B. Paperwork Reduction Act Analysis
68. This document discusses potential new or revised information
collection requirements. The reporting requirements, if any, that might
be adopted pursuant to this NPRM are too speculative at this time to
request comment from the OMB or interested parties under section
3507(d) of the Paperwork Reduction Act. Therefore, if
[[Page 26916]]
the Commission determines that reporting is required, it will seek
comment from the OMB and interested parties prior to any such
requirements taking effect. In addition, pursuant to the Small Business
Paperwork Relief Act of 2002, we will seek specific comment on how we
might ``further reduce the information collection burden for small
business concerns with fewer than 25 employees.'' Nevertheless,
interested parties are encouraged to comment on whether any new or
revised information collection is necessary, and if so, how the
Commission might minimize the burden of any such collection.
C. Ex Parte Presentations
69. These matters shall be treated as a ``permit-but-disclose''
proceeding in accordance with the Commission's ex parte rules. 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 arguments presented is generally required. Other requirements
pertaining to oral and written presentations are set forth in Sec.
1.1206(b) of the Commission's rules.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2010-11321 Filed 5-12-10; 8:45 am]
BILLING CODE 6712-01-P