[Federal Register Volume 82, Number 62 (Monday, April 3, 2017)]
[Proposed Rules]
[Pages 16152-16155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-06532]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 36

[CC Docket No. 80-286; FCC 17-22]


Jurisdictional Separations and Referral to the Federal-State 
Joint Board

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Commission proposes a further eighteen month extension of 
the current freeze of category relationships and allocation factors for 
price cap carriers and all allocation factors for rate-of-return 
carriers and seeks comment on several issues regarding the potential 
effects of the freeze extension.

DATES: Comments are due on or before April 17, 2017. Reply comments are 
due on or before April 24, 2017.

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

FOR FURTHER INFORMATION CONTACT: Rhonda Lien, Wireline Competition 
Bureau, Pricing Policy Division at (202) 418-1540 or at 
[email protected].

SUPPLEMENTARY INFORMATION: This a summary of the Commission Further 
Notice of Proposed Rulemaking released on March 20, 2017. The full text 
of this document may be accessed at the following internet address: 
https://apps.fcc.gov/edocs_public/attachmatch/FCC-17-22A1.docx.
    Pursuant to sections 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 the Commission's Electronic 
Comment Filing System (ECFS). See Electronic Filing of Documents in 
Rulemaking Proceedings, 63 FR 24121 (1998). Section 1.415(b) of the 
Commission's rules does not establish a minimum time period for the 
Commission to receive comments on proposed rules. Rather, the rule 
states that a ``reasonable time will be provided for submission of 
comments.'' In this proceeding, because the current separations freeze 
will otherwise expire on June 30, 2017, and because we expect our 
proposal to extend the freeze will not generate controversy, we find 
that it is reasonable to allow 14 days after Federal Register 
publication for the filing of comments and seven days after that for 
the filing of any reply comments.
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and one copy 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.
    [ssquf] Filings can be sent by hand or messenger delivery, by 
commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
    [ssquf] 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 
8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with 
rubber bands or fasteners. Any envelopes and boxes must be disposed of 
before entering the building.
    [ssquf] 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.

[[Page 16153]]

    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW., Washington, DC 20554.
    Accessible Formats. To request materials in accessible formats for 
people with disabilities (Braille, large print, electronic files, audio 
format), send an email to [email protected] or call the Consumer & 
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 
(tty).
    Ex Parte Presentations. The proceeding this Further Notice 
initiates shall be treated as a ``permit-but-disclose'' proceeding in 
accordance with the Commission's ex parte rules. Persons making ex 
parte presentations must file a copy of any written presentation or a 
memorandum summarizing any oral presentation within two business days 
after the presentation (unless a different deadline applicable to the 
Sunshine period applies). Persons making oral ex parte presentations 
are reminded that memoranda summarizing the presentation must (1) list 
all persons attending or otherwise participating in the meeting at 
which the ex parte presentation was made, and (2) summarize all data 
presented and arguments made during the presentation. If the 
presentation consisted in whole or in part of the presentation of data 
or arguments already reflected in the presenter's written comments, 
memoranda or other filings in the proceeding, the presenter may provide 
citations to such data or arguments in his or her prior comments, 
memoranda, or other filings (specifying the relevant page and/or 
paragraph numbers where such data or arguments can be found) in lieu of 
summarizing them in the memorandum. Documents shown or given to 
Commission staff during ex parte meetings are deemed to be written ex 
parte presentations and must be filed consistent with rule 1.1206(b). 
In proceedings governed by rule 1.49(f) or for which the Commission has 
made available a method of electronic filing, written ex parte 
presentations and memoranda summarizing oral ex parte presentations, 
and all attachments thereto, must be filed through the electronic 
comment filing system available for that proceeding, and must be filed 
in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). 
Participants in this proceeding should familiarize themselves with the 
Commission's ex parte rules.
    We propose to extend the existing separations freeze for an 
additional eighteen months while we work to reform the separations 
rules. As with our prior freezes, we propose that the freeze extension 
be implemented as described in the 2001 Separations Freeze Order. 
Specifically, we propose to direct rate-of-return ILECs to continue to 
use the same frozen jurisdictional allocation factors, and the same 
frozen category relationships if they had opted previously to freeze 
those relationships. We seek comment on this proposal. Are there 
adjustments we should make on a going-forward basis to the current 
freeze?
    The policy changes adopted by the Commission in recent years, 
particularly those arising from the Commission's fundamental reform of 
the high cost universal service support program and intercarrier 
compensation systems in the USF/ICC Transformation Order and from our 
recent changes to the Part 32 accounting rules, will significantly 
affect the Commission's and the Joint Board's analysis of interim and 
comprehensive separations reform. We believe that extending the freeze 
for eighteen months will allow the Joint Board sufficient time to 
consider the impact of our recent reforms on the separations rules and 
will allow us the opportunity to fashion a Notice of Proposed 
Rulemaking that benefits from the Joint Board's consideration of how 
best to approach separations reform. We seek comment on this proposed 
path forward, and invite commenters to identify alternative approaches.
    One significant benefit of extending the freeze while we undertake 
reform will be to provide stability and regulatory certainty for ILECs 
during the reform process. As the Commission has observed, if the 
frozen category relationships and allocation factors were unfrozen, 
ILECs would be required to reinstitute their separations processes that 
have not been used since the inception of the freeze almost sixteen 
years ago. Reinstating these requirements would require substantial 
training and investment. Moreover, given the significant changes in 
technologies and investment decisions, as well as changes in regulatory 
approaches at both the state and federal levels, the existing 
separations rules are likely outdated. We anticipate that extending the 
jurisdictional separations freeze would provide rate-of-return ILECs 
with certainty in the near future as they continue apportioning costs 
as they have since the 2001 Separations Freeze Order, and would be 
preferable to re-imposing the burden of the separations rules. We seek 
comment on these on other benefits or drawbacks to a continued freeze.
    We also seek comment on the effect that our proposal to extend the 
freeze would have on small entities, and whether any rules that we 
adopt should apply differently to small entities. We seek comment on 
the costs and burdens of an extension on small ILECs and whether the 
extension would disproportionately affect specific types of carriers or 
ratepayers.
    The Joint Board has a pending referral to consider broadly any 
appropriate changes to the separations rules. We will evaluate whether 
other discrete issues should be referred to the Joint Board. We 
anticipate that the Joint Board will meet in July 2017 to consider 
reform of the separations process. We expect to receive the Joint 
Board's recommendations for comprehensive separations reform within 
nine months thereafter, that is, in April 2018.

Procedureal Matters

    Paperwork Reduction Act. This document does not contain proposed 
information collection(s) subject to the Paperwork Reduction Act of 
1995 (PRA), Public Law 104-13. In addition, therefore, it does not 
contain any new or modified information collection burden for small 
business concerns with fewer than 25 employees, pursuant to the Small 
Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4).
    Initial Regulatory Flexibility Act Analysis. As required by the 
Regulatory Flexibility Act of 1980 (RFA), the Commission has prepared 
an Initial Regulatory Flexibility Analysis (IRFA) for this Further 
Notice of Proposed Rulemaking, of the possible significant economic 
impact on small entities of the policies and rules addressed in this 
document.

Need for, and Objectives of, the Proposed Rules

    In the 1997 Separations Notice, the Commission noted that the 
network infrastructure by that time had become vastly different from 
the network and services used to define the cost categories appearing 
in the Commission's Part 36 jurisdictional separations rules, and that 
the separations process codified in Part 36 was developed during a time 
when common carrier regulation presumed that interstate and intrastate 
telecommunications service must be provided through a regulated 
monopoly. Thus, the Commission initiated a proceeding with the goal of 
reviewing comprehensively the Commission's Part 36 procedures to ensure 
that they meet the objectives of the Telecommunications Act of 1996 
(1996 Act). The Commission sought comment on the extent to which 
legislative

[[Page 16154]]

changes, technological changes, and market changes might warrant 
comprehensive reform of the separations process. More than eighteen 
years have elapsed since the closing of the comment cycle on the 1997 
Separations Notice, and more than fifteen years have elapsed since the 
imposition of the freeze. The industry has experienced myriad changes 
during that time, including reform of universal service and 
intercarrier compensation; therefore, we ask for comment on the impact 
of a further extension of the freeze. The purpose of the proposed 
extension of the freeze is to ensure that the Commission's separations 
rules meet the objectives of the 1996 Act, and to allow the Commission 
additional time to consider changes that may need to be made to the 
separations process in light of changes in the law, technology, and 
market structure of the telecommunications industry.

Legal Basis

    The legal basis for the Further Notice of Proposed Rulemaking is 
contained in sections 1, 2, 4(i), 201-205, 215, 218, 220, and 410 of 
the Communications Act of 1934, as amended.

Description and Estimate of the Number of Small Entities to Which Rules 
May 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). Nationwide, there are a total of approximately 
27.9 million small businesses, according to the SBA.
    Incumbent Local Exchange Carriers (Incumbent LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for providers of incumbent local exchange services. The 
closest applicable size standard under the SBA rules is for Wired 
Telecommunications Carriers. Under the SBA definition, a carrier is 
small if it has 1,500 or fewer employees. According to the FCC's 
Telephone Trends Report data, 1,307 incumbent LECs reported that they 
were engaged in the provision of local exchange services. Of these 
1,307 carriers, an estimated 1,006 have 1,500 or fewer employees and 
301 have more than 1,500 employees. Consequently, the Commission 
estimates that most incumbent LECs are small entities that may be 
affected by the rules and policies adopted herein.
    We have included small incumbent LECs in this 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. Because our proposals concerning the Part 36 
separations process will affect all incumbent LECs providing interstate 
services, some entities employing 1,500 or fewer employees may be 
affected by the proposals made in this Further Notice. We have 
therefore included small incumbent LECs in this RFA analysis, although 
we emphasize that this RFA action has no effect on the Commission's 
analyses and determinations in other, non-RFA contexts.

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    None.

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

    The RFA requires an agency to describe any significant alternatives 
that it has considered in reaching its proposed approach, which may 
include the following four alternatives (among others): (1) The 
establishment of differing compliance and 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 part thereof, for small 
entities.
    As described above, more than fifteen years have elapsed since the 
imposition of the freeze, thus, we are seeking comment on the impact of 
a further extension of the freeze. We seek comment on the effects our 
proposals would have on small entities, and whether any rules that we 
adopt should apply differently to small entities. We direct commenters 
to consider the costs and burdens of an extension on small incumbent 
LECs and whether the extension would disproportionately affect specific 
types of carriers or ratepayers.
    We believe that implementation of the proposed freeze extension 
would ease the administrative burden of regulatory compliance for LECs, 
including small incumbent LECs. The freeze has eliminated the need for 
all incumbent LECs, including incumbent LECs with 1,500 employees or 
fewer, to complete certain annual studies formerly required by the 
Commission's rules. If an extension of the freeze can be said to have 
any effect under the RFA, it is to reduce a regulatory compliance 
burden for small incumbent LECs by relieving these carriers from the 
burden of preparing separations studies and providing these carriers 
with greater regulatory certainty.

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

    None.
    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 Further Notice indicated on the first 
page of this document. The Commission's Consumer and Governmental 
Affairs Bureau, Reference Information Center, will send a copy of this 
Further Notice of Proposed Rulemaking, including the IRFA, to the Chief 
Counsel for Advocacy of the Small Business Administration (SBA).
    For further information regarding this proceeding, contact Rhonda 
J. Lien, Pricing Policy Division, Wireline Competition Bureau, at (202) 
418-1520, or [email protected].

Ordering Clauses

    Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1, 2, 4(i), 201-205, 215, 218, 220, and 410 of 
the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 
201-205, 215, 218, 220, 410, this Further Notice of Proposed Rulemaking 
IS ADOPTED.
    It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, SHALL SEND a 
copy of this Further Notice of Proposed Rulemaking, including the 
Initial Regulatory Flexibility Analysis, to the

[[Page 16155]]

Chief Counsel for Advocacy of the Small Business Administration.
    It is further ordered that, pursuant to sections 1.4(b)(1) and 
1.103(a) of the Commission's rules, 47 CFR 1.4(b)(1), 1.103(a), this 
Further Notice of Proposed Rulemaking shall be effective on the date of 
publication in the Federal Register.

List of Subjects

    Communications common carriers, Reporting and recordkeeping 
requirements; Telephone; Uniform System of Accounts.

Federal Communications Commission.
Marlene H. Dortch,
Secretary, Office of the Secretary.
[FR Doc. 2017-06532 Filed 3-31-17; 8:45 am]
BILLING CODE 6712-01-P