[Federal Register Volume 67, Number 10 (Tuesday, January 15, 2002)]
[Proposed Rules]
[Pages 1947-1953]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-902]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 51
[CC Docket No. 01-338, CC Docket No. 96-98, CC Docket No. 98-147, FCC
01-361]
Review of the Section 251 Unbundling Obligations of Incumbent
Local Exchange Carriers; Implementation of the Local Competition
Provisions of the Telecommunications Act of 1996; Deployment of
Wireline Services Offering Advanced Telecommunications Capability
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: This document seeks comment on whether the Commission should
adopt a more granular approach to its unbundling analysis under section
251 of the Communications Act of 1934 (the Act) and on the
identification of specific unbundling requirements for incumbent local
exchange carriers (LECs). In particular, the Commission seeks comment
on whether it should consider application of its unbundling
requirements on the basis of service, geographic, facility, customer or
other factors. In addition, the Commission seeks comment on whether to
retain, modify or eliminate its existing definitions and requirements
for network elements. The Commission also seeks comment on the role of
state commissions and whether to retain or modify the existing
triennial review process for examination of its unbundling
requirements.
DATES: Comments are due March 18, 2002 and Reply Comments are due April
30, 2002.
FOR FURTHER INFORMATION CONTACT: Jeremy Miller, Attorney Advisor,
Policy and Program Planning Division, Common Carrier Bureau, telephone
(202) 418-1580.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking (NPRM) in CC Docket No. 01-338, FCC 01-361,
adopted December 12, 2001, and released December 20, 2001. The complete
text of this NPRM is available for inspection and copying during normal
business hours in the FCC Reference Information Center, Portals II, 445
12th Street, SW., Room CY-A257, Washington, DC 20554. This document may
also be purchased from the Commission's duplicating contractor, Qualex
International, Portals II, 445 12th Street, SW., Room CY-B402,
Washington, DC 20554, telephone (202) 863-2893, facsimile (202) 863-
2898, or via email [email protected]. It is also available on the
Commission's website at http://www.fcc.gov.
Synopsis of the Notice of Proposed Rulemaking
1. Background. In the Third Local Competition Report and Order, (65
FR 19334, April 11, 2000) the Commission stated that it would reexamine
its network element unbundling requirements every three years. In
addition, the Commission intends to address a number of outstanding
issues concerning the unbundling obligations of incumbent LECs raised
by parties in the last several years.
2. The Commission seeks comment on how it should apply section
251(d)(2). In particular, the Commission seeks comment on how to align
more directly its unbundling requirements with the multiple stated
goals of the Act, such as the directive to encourage the deployment of
advanced telecommunications capability. The Commission also seeks
comment on whether and how to apply a more granular approach to its
existing unbundling analysis by incorporating such refinements as
considering for each network element the specific service to be
provided, the geographic location, the facility to be unbundled, or the
customer to be served. The Commission also seeks comment on what
triggers might be adopted to limit or sunset unbundling requirements
over time.
3. The Commission seeks comment on its existing rules for network
elements. The Commission seeks comment on how to apply a more refined
unbundling analysis to its existing unbundling requirements and whether
it should retain, modify or eliminate any of these requirements. In
addition, the Commission seeks comment on parties' practical experience
with the current unbundling requirements. The Commission also seeks
comment on a number of general issues including (1) application of the
``just, reasonable and nondiscriminatory'' standard of section
251(c)(3); (2) the relationship between services as governed by
sections 251(c)(4) and 251(b)(1) and network elements as governed by
sections 251(d)(2) and 251(c)(3); (3) the Commission's existing co-
mingling restrictions; (4) the Commission's safe harbor provisions for
``significant local usage;'' (5) the relationship between section
271(c)(2)(B) and sections 251(d)(2) and 251(c)(3); (6) the
applicability of sections 201, 202 or other sections of the Act to
incumbent LEC wholesale services in the absence of a section 251
unbundling obligation; and (7) clarification of the term ``superior''
as used in the now invalidated rule 47 CFR 51.311(c).
4. State Role. The Commission seeks comment on the role of states
in adoption and implementation of unbundling requirements. Among other
alternatives, the Commission offers for comment a proposal to adopt
national standards for unbundling that would leave specific
implementation to the states.
5. Procedural Issues. The Commission seeks comment on whether to
retain or modify the existing triennial review process for the
examination of its unbundling requirements. The Commission also seeks
comment on the use of a sunset period for unbundling obligations and
whether it needs to consider transitional mechanisms to address the
potential financial impact that would be created by changes to
unbundling obligations.
I. Initial Regulatory Flexibility Analysis
6. As required by the Regulatory Flexibility Act (RFA), as amended,
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 document. 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 document provided above. The
Commission will send a copy of the document, including this IRFA, to
the Chief Counsel for Advocacy of the Small Business Administration
(SBA). In addition, this document will be published in the Federal
Register.
[[Page 1948]]
II. Need for, and Objectives of, the Proposed Rules
7. In the Third Local Competition Report and Order, the Commission
stated that it would reexamine its network element requirements within
a three-year period. In this document, the Commission seeks comment on
its unbundling analysis under sections 251(d)(2) and 251(c)(3) and
whether it should retain, modify or eliminate any of the current
unbundling requirements for network elements. Moreover, the Commission
seeks comment on the role of the states and whether, in the future, it
should retain a triennial review process.
III. Legal Basis
8. The legal basis for any action that may be taken pursuant to
this document is contained in sections 1-4, 157, 201-05, 251, 252, 254,
256, 271, 303(r), and 332 of the Communications Act of 1934, as
amended, 47 U.S.C. 151-54, 157, 201-05, 251, 252, 254, 256, 271,
303(r), and 332.
IV. Description and Estimate of the Number of Small Entities To
Which the Proposed Rules Will Apply
9. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that will be
affected by the proposed rules. 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).
10. In this section, the Commission further describes and estimates
the number of small entity licensees and regulatees that may be
affected by rules adopted pursuant to this NPRM. The most reliable
source of information regarding the total numbers of certain common
carrier and related providers nationwide, as well as the number of
commercial wireless entities, appears to be the data that the
Commission publishes in its Trends in Telephone Service report. In a
news release, the Commission indicated that there are 4,822 interstate
carriers. These carriers include, inter alia, local exchange carriers,
wireline carriers and service providers, interexchange carriers,
competitive access providers, operator service providers, pay telephone
operators, providers of telephone service, providers of telephone
exchange service, and resellers.
11. The SBA has defined establishments engaged in providing
``Radiotelephone Communications'' and ``Telephone Communications,
Except Radiotelephone'' to be small businesses when they have no more
than 1,500 employees. Below, we discuss the total estimated number of
telephone companies falling within the two categories, and the number
of small businesses in each. The Commission then attempts to further
refine those estimates to correspond with the categories of telephone
companies that are commonly used under our rules.
12. The Commission has 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. The Commission has
therefore included small incumbent LECs in this RFA analysis, although
it emphasizes that this RFA action has no effect on Commission analyses
and determinations in other, non-RFA contexts.
13. Total Number of Telephone Companies Affected. The U.S. Bureau
of the Census (``Census Bureau'') reports that, at the end of 1992,
there were 3,497 firms engaged in providing telephone services, as
defined therein, for at least one year. This number contains a variety
of different categories of carriers, including local exchange carriers,
interexchange carriers, competitive access providers, cellular
carriers, mobile service carriers, operator service providers, pay
telephone operators, covered specialized mobile radio providers, and
resellers. It seems certain that some of these 3,497 telephone service
firms may not qualify as small entities because they are not
``independently owned and operated.'' For example, a PCS provider that
is affiliated with an interexchange carrier having more than 1,500
employees would not meet the definition of a small business. It is
reasonable to conclude that fewer than 3,497 telephone service firms
are small entity telephone service firms that may be affected by the
new rules.
14. Wireline Carriers and Service Providers. The SBA has developed
a definition of small entities for telephone communications companies
except radiotelephone (i.e., wireless) companies. The Census Bureau
reports that there were 2,321 such telephone companies in operation for
at least one year at the end of 1992. According to the SBA's
definition, a small business telephone company other than a
radiotelephone company is one employing no more than 1,500 persons. All
but 26 of the 2,321 non-radiotelephone companies listed by the Census
Bureau were reported to have fewer than 1,000 employees. Thus, even if
all 26 of those companies had more than 1,500 employees, there would
still be 2,295 non-radiotelephone companies that might qualify as small
entities. The Commission does not have data specifying the number of
these carriers that are not independently owned and operated, and thus
are unable at this time to estimate with greater precision the number
of wireline carriers and service providers that would qualify as small
business concerns under the SBA's definition. Consequently, the
Commission estimates 2,295 or fewer small telephone communications
companies other than radiotelephone companies are small entities that
may be affected by rules adopted pursuant to this NPRM.
15. Local Exchange Carriers. Neither the Commission nor the SBA has
developed a definition for small providers of local exchange services.
The closest applicable definition under the SBA rules is for telephone
communications companies other than radiotelephone (i.e., wireless)
companies. According to the most recent Telecommunications Industry
Revenue data, 1,335 incumbent carriers reported that they were engaged
in the provision of local exchange services. The Commission does not
have data specifying the number of these carriers that are either
dominant in their field of operations, are not independently owned and
operated, or have more than 1,500 employees, and thus it is unable at
this time to estimate with greater precision the number of LECs that
would qualify as small business concerns under the SBA's definition.
Consequently, the Commission estimates that 1,335 or fewer providers of
local exchange service are small entities or small incumbent LECs that
may be affected by the new rules.
16. Interexchange Carriers. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
providers of interexchange services (IXCs). The
[[Page 1949]]
closest applicable definition under the SBA rules is for telephone
communications companies other than radiotelephone (i.e., wireless)
companies. According to the most recent Trends in Telephone Service
data, 204 carriers reported that they were engaged in the provision of
interexchange services. We do not have data specifying the number of
these carriers 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 IXCs that would qualify as small
business concerns under the SBA's definition. Consequently, we estimate
that there are 204 or fewer small-entity IXCs that may be affected by
rules adopted pursuant to this NPRM.
17. Competitive Access Providers. Neither the Commission nor the
SBA has developed a definition of small entities specifically
applicable to competitive access services providers (CAPs). The closest
applicable definition under the SBA rules is for telephone
communications companies other than radiotelephone (i.e., wireless)
companies. According to the most recent Trends in Telephone Service
data, 349 CAP/CLEC carriers and 60 other LECs reported that they were
engaged in the provision of competitive local exchange services. The
Commission does not have data specifying the number of these carriers
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 CAPs that would qualify as small business
concerns under the SBA's definition. Consequently, we estimate that
there are 349 or fewer small-entity CAPs and 60 or fewer other LECs
that may be affected by rules adopted pursuant to this NPRM.
18. Operator Service Providers. Neither the Commission nor the SBA
has developed a definition of small entities specifically applicable to
providers of operator services. The closest applicable definition under
the SBA rules is for telephone communications companies other than
radiotelephone (i.e., wireless) companies. According to the most recent
Trends in Telephone Service data, 21 carriers reported that they were
engaged in the provision of operator services. The Commission does not
have data specifying the number of these carriers that are not
independently owned and operated or have more than 1,500 employees, and
thus it is unable at this time to estimate with greater precision the
number of operator service providers that would qualify as small
business concerns under the SBA's definition. Consequently, the
Commission estimates that there are 21 or fewer small-entity operator
service providers that may be affected by rules adopted pursuant to
this NPRM.
19. Pay Telephone Operators. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to pay
telephone operators. The closest applicable definition under SBA rules
is for telephone communications companies other than radiotelephone
(i.e., wireless) companies. According to the most recent Trends in
Telephone Service data, 758 carriers reported that they were engaged in
the provision of pay telephone services. The Commission does not have
data specifying the number of these carriers that are not independently
owned and operated or have more than 1,500 employees, and thus it is
unable at this time to estimate with greater precision the number of
pay telephone operators that would qualify as small business concerns
under the SBA's definition. Consequently, the Commission estimates that
there are 758 or fewer small-entity pay telephone operators that may be
affected by rules adopted pursuant to this NPRM.
20. Resellers (including debit card providers). Neither the
Commission nor the SBA has developed a definition of small entities
specifically applicable to resellers. The closest applicable SBA
definition for a reseller is a telephone communications company other
than radiotelephone (i.e., wireless) companies. According to the most
recent Trends in Telephone Service data, 454 toll and 87 local entities
reported that they were engaged in the resale of telephone service. The
Commission does not have data specifying the number of these carriers
that are not independently owned and operated or have more than 1,500
employees, and thus it is unable at this time to estimate with greater
precision the number of resellers that would qualify as small business
concerns under the SBA's definition. Consequently, the Commission
estimates that there are 454 or fewer small-toll-entity resellers and
87 or fewer small-local-entity resellers that may be affected by rules
adopted pursuant to this NPRM.
21. Toll-Free 800 and 800-Like Service Subscribers. Neither the
Commission nor the SBA has developed a definition of small entities
specifically applicable to 800 and 800-like service (``toll free'')
subscribers. The most reliable source of information regarding the
number of these service subscribers appears to be data the Commission
collects on the 800, 888, and 877 numbers in use. According to the
Commission's most recent data, at the end of January 1999, the number
of 800 numbers assigned was 7,692,955; the number of 888 numbers that
had been assigned was 7,706,393; and the number of 877 numbers assigned
was 1,946,538. The Commission does 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 it is unable at this time to
estimate with greater precision the number of toll free subscribers
that would qualify as small business concerns under the SBA's
definition. Consequently, the Commission estimates that there are
7,692,955 or fewer small-entity 800 subscribers, 7,706,393 or fewer
small-entity 888 subscribers, and 1,946,538 or fewer small-entity 877
subscribers that may be affected by rules adopted pursuant to this
NPRM.
22. Cellular Licensees. Neither the Commission nor the SBA has
developed a definition of small entities applicable to cellular
licensees. Therefore, the applicable definition of small entity is the
definition under the SBA rules applicable to radiotelephone (i.e.,
wireless) companies. This definition provides that a small entity is a
radiotelephone company employing no more than 1,500 persons. According
to the Bureau of the Census, only 12 radiotelephone firms out of a
total of 1,178 such firms that operated during 1992 had 1,000 or more
employees. Therefore, even if all 12 of these firms were cellular
telephone companies, nearly all cellular carriers were small businesses
under the SBA's definition. In addition, the Commission notes that
there are 1,758 cellular licenses; however, it does not know the number
of cellular licensees, since a cellular licensee may own several
licenses. The most reliable source of information regarding the number
of cellular service providers nationwide appears to be data the
Commission publishes annually in its Telecommunications Industry
Revenue report, regarding the Telecommunications Relay Service (TRS).
The report places cellular licensees and Personal Communications
Service (PCS) licensees in one group. According to recent data, 808
carriers reported that they were engaged in the provision of either
cellular or PCS services. The Commission does not have data specifying
the number of these carriers that are not independently owned and
operated or have more than
[[Page 1950]]
1,500 employees, and thus it is unable at this time to estimate with
greater precision the number of cellular service carriers that would
qualify as small business concerns under the SBA's definition.
Consequently, the Commission estimates that there are no more than 808
small cellular service carriers.
23. 220 MHz Radio Service--Phase I Licensees. The 220 MHz service
has both Phase I and Phase II licenses. Phase I licensing was conducted
by lotteries in 1992 and 1993. There are approximately 1,515 such non-
nationwide licensees and 4 nationwide licensees currently authorized to
operate in the 220 MHz band. The Commission has not developed a
definition of small entities specifically applicable to such incumbent
220 MHz Phase I licensees. To estimate the number of such licensees
that are small businesses, the Commission applies the definition under
the SBA rules applicable to radiotelephone communications companies.
This definition provides that a small entity is a radiotelephone
company employing no more than 1,500 persons. According to a 1995
estimate by the Bureau of the Census, only 12 radiotelephone firms out
of a total of 1,178 such firms that operated during 1992 had 1,000 or
more employees. Therefore, assuming that this general ratio has not
changed significantly in recent years in the context of Phase I 220 MHz
licensees, we estimate that nearly all such licensees are small
businesses under the SBA's definition.
24. 220 MHz Radio Service--Phase II Licensees. The Phase II 220 MHz
service is a new service, and is subject to spectrum auctions. In the
220 MHz Third Report and Order (63 FR 2976, January 20, 1998), the
Commission adopted criteria for defining small businesses and very
small businesses for purposes of determining their eligibility for
special provisions such as bidding credits and installment payments.
The Commission has defined a small business as an entity that, together
with its affiliates and controlling principals, has average gross
revenues not exceeding $15 million for the preceding three years.
Additionally, a very small business is 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 has approved these definitions. An auction of
Phase II licenses commenced on September 15, 1998, and closed on
October 22, 1998. Nine hundred and eight (908) licenses were auctioned
in three different-sized geographic areas: 3 nationwide licenses, 30
Regional Economic Area Group (REAG) licenses, and 875 Economic Area
(EA) licenses. Of the 908 licenses auctioned, 693 were sold. Companies
claiming small business status won: 1 of the Nationwide licenses, 67%
of the Regional licenses, 47% of the REAG licenses and 54% of the EA
licenses. As of January 22, 1999, the Commission announced that it was
prepared to grant 654 of the Phase II licenses won at auction. A second
220 MHz Radio Service auction began on June 8, 1999 and closed on June
30, 1999. This auction offered 225 licenses in 87 EAs and 4 REAGs. (A
total of 9 REAG licenses and 216 EA licenses. No nationwide licenses
were available in this auction.) Of the 215 EA licenses won, 153 EA
licenses (71%) were won by bidders claiming small business status. Of
the 7 REAG licenses won, 5 REAG licenses (71%) were won by bidders
claiming small business status.
25. Private and Common Carrier Paging. The Commission has adopted a
two-tier definition of small businesses in the context of auctioning
licenses in the Common Carrier Paging and exclusive Private Carrier
Paging services. A small business will be defined as either: (1) An
entity that, together with its affiliates and controlling principals,
has average gross revenues for the three preceding years of not more
than $3 million; or (2) an entity that, together with affiliates and
controlling principals, has average gross revenues for the three
preceding calendar years of not more than $15 million. Because the SBA
has not yet approved this definition for paging services, we will
utilize the SBA's definition applicable to radiotelephone companies,
i.e., an entity employing no more than 1,500 persons. At present, there
are approximately 24,000 Private Paging licenses and 74,000 Common
Carrier Paging licenses. According to recent data, 172 carriers
reported that they were engaged in the provision of either paging or
``other mobile'' services, which are placed together in the data. The
Commission does not have data specifying the number of these carriers
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 paging carriers that would qualify as small
business concerns under the SBA's definition. Consequently, we estimate
that there are no more than 172 small paging carriers. We estimate that
the majority of private and common carrier paging providers would
qualify as small entities under the SBA definition.
26. Mobile Service Carriers. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
mobile service carriers, such as paging companies. As noted above in
the section concerning paging service carriers, the closest applicable
definition under the SBA rules is that for radiotelephone (i.e.,
wireless) companies, and recent data show that 172 carriers reported
that they were engaged in the provision of either paging or ``other
mobile'' services. Consequently, the Commission estimates that there
are no more than 172 small mobile service carriers.
27. Broadband Personal Communications Service (PCS). The broadband
PCS spectrum is divided into six frequency blocks designated A through
F, and the Commission has held auctions for each block. The Commission
defined ``small entity'' for blocks C and F as an entity that has
average gross revenues of less than $40 million 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 affiliates, has average gross revenues of not more than $15
million for the preceding three calendar years. These regulations
defining ``small entity'' in the context of broadband PCS auctions have
been approved by the SBA. No small businesses within the SBA-approved
definition bid successfully for licenses in blocks A and B. There were
90 winning bidders that qualified as small entities in the C block
auctions. A total of 93 small and very small business bidders won
approximately 40% of the 1,479 licenses for blocks D, E and F. On March
23, 1999, the Commission held another auction (Auction No. 22) of C, D,
E and F block licenses for PCS spectrum returned to the Commission by
previous license holders. In that auction, 48 bidders claiming small
business, very small business or entrepreneurial status won 272 of the
341 licenses (80%) offered. Based on this information, we conclude that
the number of small broadband PCS licensees includes the 90 winning C
block bidders, the 93 qualifying bidders in the D, E and F blocks, and
the 48 winning bidders from Auction No. 22, for a total of 231 small-
entity PCS providers as defined by the SBA and the Commission's auction
rules.
28. Narrowband PCS. The Commission has auctioned nationwide and
regional licenses for narrowband PCS. There are 11 nationwide and 30
regional licensees for narrowband PCS. The Commission does not have
sufficient information to determine
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whether any of these licensees are small businesses within the SBA-
approved definition for radiotelephone companies. At present, there
have been no auctions held for the major trading area (MTA) and basic
trading area (BTA) narrowband PCS licenses. The Commission anticipates
a total of 561 MTA licenses and 2,958 BTA licenses will be awarded by
auction. Such auctions, however, have not yet been scheduled. Given
that nearly all radiotelephone companies have no more than 1,500
employees, and no reliable estimate of the number of prospective MTA
and BTA narrowband licensees can be made, we assume, for our purposes
here, that all of the licenses will be awarded to small entities, as
that term is defined by the SBA.
29. Rural Radiotelephone Service. The Commission has not adopted a
definition of small entity specific to the Rural Radiotelephone
Service. A significant subset of the Rural Radiotelephone Service is
the Basic Exchange Telephone Radio Systems (BETRS). The Commission will
use the SBA's definition applicable to radiotelephone companies, i.e.,
an entity employing no more than 1,500 persons. There are approximately
1,000 licensees in the Rural Radiotelephone Service, and we estimate
that almost all of them qualify as small entities under the SBA's
definition.
30. Air-Ground Radiotelephone Service. The Commission has not
adopted a definition of small entity specific to the Air-Ground
Radiotelephone Service. Accordingly, we will use the SBA's definition
applicable to radiotelephone companies, i.e., an entity employing no
more than 1,500 persons. There are approximately 100 licensees in the
Air-Ground Radiotelephone Service, and the Commission estimates that
almost all of them qualify as small under the SBA definition.
31. Specialized Mobile Radio (SMR). The Commission awards bidding
credits in auctions for geographic area 800 MHz and 900 MHz SMR
licenses to two tiers of firms: (1) ``Small entities,'' those with
revenues of no more than $15 million in each of the three previous
calendar years; and (2) ``very small entities,'' those with revenues of
no more than $3 million in each of the three previous calendar years.
The regulations defining ``small entity'' and ``very small entity'' in
the context of 800 MHz SMR (upper 10 MHz and lower 230 channels) and
900 MHz SMR have been approved by the SBA. 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 its
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 (upper 10 MHz) and 900 MHz SMR bands.
There were 60 winning bidders that qualified as small and very small
entities in the 900 MHz auction. Of the 1,020 licenses won in the 900
MHz auction, 263 licenses were won by bidders qualifying as small and
very small entities. In the 800 MHz SMR auction, 38 of the 524 licenses
won were won by small and very small entities.
32. Marine Coast Service. 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 this auction, and for future
public coast auctions, the Commission defines 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. A ``very small'' business is one that, together with
controlling interests and affiliates, has average gross revenues for
the preceding three years not to exceed $3 million dollars. There are
approximately 10,672 licensees in the Marine Coast Service, and the
Commission estimates that almost all of them qualify as ``small''
businesses under the Commission's definition, which has been approved
by the SBA.
33. Fixed Microwave Services. 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 yet defined a small business with respect to
microwave services. For the Commission's purposes here, it will utilize
the SBA's definition applicable to radiotelephone companies'i.e., an
entity with no more than 1,500 persons. Under this definition, the
Commission estimates that all of the Fixed Microwave licensees
(excluding broadcast auxiliary licensees) would qualify as small
entities.
34. Local Multipoint Distribution Service. The Commission held two
auctions for licenses in the Local Multipoint Distribution Services
(LMDS) (Auction No. 17 and Auction No. 23). For both of these auctions,
the Commission defined a small business as an entity, together with its
affiliates and controlling principals, having average gross revenues
for the three preceding years of not more than $40 million. A very
small business was defined as an entity, together with affiliates and
controlling principals, having average gross revenues for the three
preceding years of not more than $15 million. Of the 144 winning
bidders in Auction Nos. 17 and 23, 125 bidders (87%) were small or very
small businesses.
35. 24 GHz--Incumbent 24 GHz Licensees. The rules that the
Commission may later adopt could 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 Commission has not
developed a definition of small entities applicable to licensees in the
24 GHz band. Therefore, the applicable definition of small entity is
the definition under the SBA rules for the radiotelephone industry,
providing that a small entity is a radiotelephone company employing
fewer than 1,500 persons. The 1992 Census of Transportation,
Communications and Utilities, conducted by the Bureau of the Census,
which is the most recent information available, shows that only 12
radiotelephone firms out of a total of 1,178 such firms that operated
during 1992 had 1,000 or more employees. This information
notwithstanding, the Commission believes that there are only two
licensees in the 24 GHz band that were relocated from the 18 GHz band,
Teligent and TRW, Inc. Both Teligent and TRW, Inc. appear to have more
than 1,500 employees. Therefore, it appears that no incumbent licensee
in the 24 GHz band is a small business entity.
36. Future 24 GHz Licensees. The rules that the Commission may
later adopt could also affect potential new licensees on the 24 GHz
band. Pursuant to 47 CFR 24.720(b), the Commission has defined ``small
business'' for Blocks C and F broadband PCS licensees as firms that had
average gross revenues of less than $40 million in the three previous
calendar years. This regulation defining ``small business'' in the
context of broadband PCS auctions has been approved by the SBA. With
respect to new applicants in the 24 GHz band, we shall use this
definition of ``small business'' and apply it to the 24 GHz band under
the name ``entrepreneur.'' With regard to ``small business,'' we shall
adopt the definition of ``very small business'' used for 39 GHz
licenses and
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PCS C and F block licenses: businesses with average annual gross
revenues for the three preceding years not in excess of $15 million.
Finally, ``very small business'' in the 24 GHz band shall be defined as
an entity with average gross revenues not to exceed $3 million for the
preceding three years. The Commission will not know how many licensees
will be small or very small businesses until the auction, if required,
is held. Even after that, the Commission will not know how many
licensees will partition their license areas or disaggregate their
spectrum blocks, if partitioning and disaggregation are allowed.
37. 39 GHz. The Commission held an auction (Auction No. 30) for
fixed point-to-point microwave licenses in the 38.6 to 40.0 GHz band
(39 GHz Band). For this auction, the Commission defined a small
business as an entity, together with affiliates and controlling
interests, having average gross revenues for the three preceding years
of not more than $40 million. A very small business was defined as an
entity, together with affiliates and controlling principals, having
average gross revenues for the three preceding years of not more than
$15 million. The SBA has approved these definitions. Of the 29 winning
bidders in Auction No. 30, 18 bidders (62%) were small business
participants.
38. Multipoint Distribution Service (MDS). This service involves a
variety of transmitters, which are used to relay data and programming
to the home or office, similar to that provided by cable television
systems. In connection with the 1996 MDS auction, the Commission
defined small businesses as entities that had annual average gross
revenues for the three preceding years not in excess of $40 million.
This definition of a small entity in the context of MDS auctions has
been approved by the SBA. These stations were licensed prior to
implementation of Section 309(j) of the Communications Act of 1934, as
amended. Licenses for new MDS facilities are now awarded to auction
winners in Basic Trading Areas (BTAs) and BTA-like areas. The MDS
auctions resulted in 67 successful bidders obtaining licensing
opportunities for 493 BTAs. Of the 67 auction winners, 61 meet the
definition of a small business.
39. MDS is also heavily encumbered with licensees of stations
authorized prior to the MDS auction. SBA has developed a definition of
small entities for pay television services, which includes all such
companies generating $11 million or less in annual receipts. This
definition includes MDS systems, and thus applies to incumbent MDS
licensees and wireless cable operators which may not have participated
or been successful in the MDS auction. Information available to us
indicates that there are 832 of these licensees and operators that do
not generate revenue in excess of $11 million annually. Therefore, for
purposes of this analysis, the Commission finds there are approximately
892 small MDS providers as defined by the SBA and the Commission's
auction rules.
40. Offshore Radiotelephone Service. This service operates on
several UHF TV broadcast channels that are not used for TV broadcasting
in the coastal area of the states bordering the Gulf of Mexico. At
present, there are approximately 55 licensees in this service. The
Commission is unable at this time to estimate the number of licensees
that would qualify as small under the SBA's definition for
radiotelephone communications.
41. Wireless Communications Services (WCS). This service can be
used for fixed, mobile, radio-location and digital audio broadcasting
satellite uses. The Commission defined ``small business'' for the 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 Commission auctioned geographic area licenses in
the WCS service. In the auction, there were seven winning bidders that
qualified as very small business entities, and one winning bidder that
qualified as a small business entity. We conclude that the number of
geographic area WCS licensees affected includes these eight entities.
42. General Wireless Communication Service (GWCS). This service was
created by the Commission on July 31, 1995 by transferring 25 MHz of
spectrum in the 4660-4685 MHz band from the federal government to
private sector use. The Commission sought and obtained SBA approval of
a refined definition of ``small business'' for GWCS in this band.
According to this definition, a small business is any entity, together
with its affiliates and entities holding controlling interests in the
entity, that has average annual gross revenues over the three preceding
years that are not more than $40 million. By letter dated March 30,
1999, NTIA reclaimed the spectrum allocated to GWCS and identified
alternative spectrum at 4940-4990 MHz. On February 23, 2000, the
Commission released its Notice of Proposed Rulemaking (65 FR 14230) in
WT Docket No. 00-32 proposing to allocate and establish licensing and
service rules for the 4.9 GHz band.
V. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements
43. In this NPRM, we seek comment on crafting unbundling rules that
promote the goals of the Act and on a more granular approach to
unbundling. In addition, the Commission asks for comment on how to
involve the experience and expertise of state commissions. As a result,
our unbundling regulations may require incumbent LECs to unbundle their
networks by facility, service, or geography, rather than on a national
basis for an entire element as they currently do. However, to identify
which factors advancing the goals of the Act are relevant to an
unbundling analysis, the Commission asks about the weight to assign to
reducing regulatory obligations as alternatives to the incumbent's
network becomes available, and whether the unbundling obligations are
administratively practical.
VI. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
44. The RFA requires an agency to describe any significant 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 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.
45. In this NPRM, we seek comment on refining our unbundling rules
by examining whether we should consider the type of customer that a
requesting carrier seeks to serve. In particular, the Commission asks
whether the availability of UNEs should differ on the basis of whether
the requesting carrier serves business or residential customers, and
whether to have different rules for facilities serving larger business
customers. The Commission asks questions in considerable depth with
regard to the carve-out for the residential market for local switching,
and seek comment on the practical experience of the carve-out has
worked in practice and whether a substantially
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revised approach is warranted. The size of the entity as a subscriber
to telecommunications services is therefore an important component of
our unbundling analysis.
46. In addition to examining the economic impact on customers, the
Commission also examines the economic impact on carriers. It especially
seeks comment from small entities on these issues. As the Commission
considers undertaking a more granular approach, it recognizes that the
resulting rules could be more administratively burdensome on carriers
because it would be more difficult to keep track of where and under
what circumstances certain elements must be unbundled. Accordingly, the
Commission asks for comment about balancing any administrative burden
against the benefits of a refined approach to unbundling. Particularly
with regard to definitions of different network elements, the
Commission asks whether there are less burdensome alternatives
available to achieve the goals of the Act.
VII. Federal Rules that May Duplicate, Overlap, or Conflict With
the Proposed Rules
47. None.
Ordering Clauses
48. Pursuant to the authority contained in sections 1-4, 157, 201-
05, 251, 252, 254, 256, 271, 303(r), and 332 of the Communications Act
of 1934, as amended, 47 U.S.C. 151-54, 157, 201-05, 251, 252, 254, 256,
271, 303(r), and 332, this NPRM Is adopted.
49. The Commission's Consumer Information Bureau, Reference
Information Center, Shall send a copy of this document, including the
Initial Regulatory Flexibility Analysis, to the Chief Counsel for
Advocacy of the Small Business Administration.
Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. 02-902 Filed 1-14-02; 8:45 am]
BILLING CODE 6712-02-P