[Federal Register Volume 64, Number 196 (Tuesday, October 12, 1999)]
[Rules and Regulations]
[Pages 55164-55172]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26594]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[CC Docket No. 97-213; FCC 99-229]
Implementation of the Communications Assistance for Law
Enforcement Act
AGENCY: Federal Communications Commission.
ACTION: Policy statement.
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SUMMARY: This document examines the definition of ``telecommunications
carrier'' set forth in section 102 of the Communications Assistance to
Law Enforcement Act (CALEA), which determines which entities and
services are subject to the assistance capability and other
requirements of CALEA, and discusses how the definition applies to
various types of service providers. It also provides guidance regarding
the factors the Commission will consider in making determinations under
section 109 of CALEA as to whether compliance with CALEA's assistance
capability requirements is ``reasonably achievable'' for particular
carriers, and the showings to be made by entities filing petitions
under section 109.
FOR FURTHER INFORMATION CONTACT: Thomas Wasilewski, 202-418-1310.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second
Report and Order (Second R&O) in CC Docket No. 97-213, FCC 99-229,
adopted August 26, 1999, and released August 31, 1999. The complete
text of the Second R&O is available on the Commission's Internet site,
at www.fcc.gov. It is also available for inspection and copying during
normal business hours in the FCC Reference Information Center,
Courtyard Level, 445 12th Street, S.W., Washington, DC, and may be
purchased from the Commission's copy contractor, International
Transcription Services, Inc., CY-B400, 445 12th Street S.W.,
Washington, DC.
Synopsis of the Report and Order
1. The Commission adopts a Second Report and Order (Second R&O) in
CC Docket No. 97-213, regarding implementation of sections 102 and 109
of the Communications Assistance for Law Enforcement Act, Public Law
103-414, 108 Stat. 4279 (1994) (CALEA). Although the Notice of Proposed
Rule Making (NPRM) in this proceeding (which can be found at 62 FR
63302, Nov. 11, 1997) proposed certain rules, the Second R&O does not
adopt rules regarding sections 102 and 109.
2. Section 102 Issues: CALEA does not modify the existing
surveillance laws. Instead, it requires telecommunications carriers to
ensure that their facilities are capable of providing the surveillance
law enforcement is authorized to conduct. The language and legislative
history of CALEA provide sufficient guidance as to what the term
``telecommunications carrier'' means, such that it can be applied to
particular carriers, their offerings and facilities.
3. Subsections 102(8)(A) and (B) identify what entities are subject
to CALEA: essentially, common carriers offering telecommunications
services for sale to the public. Section 103(a) clarifies that the
assistance capability requirements apply to ``equipment, facilities, or
services that provide a customer or subscriber with the ability to
originate, terminate, or direct communications. * * *'' The House
Report provides further clarification in terms of the functions of
covered services, stating: ``Thus, a carrier providing a customer with
a service or facility that allows the customer to obtain access to a
publicly switched network is responsible for complying with the
capability requirements'' (H.R. Rep. No. 103-827(I), at 26 (1994).) The
House Report also describes CALEA's focus in terms of law enforcement
agencies' traditional surveillance requirements: ``The only entities
required to comply with the [assistance capability] requirements are
telecommunications common carriers, the components of the public
switched network where law enforcement agencies have served most of
their surveillance orders.'' (Id., at 21.) Further, the legislative
history contains examples of the types of service providers subject to
CALEA: ``The definition of `telecommunications carrier' includes such
service providers as local exchange carriers, interexchange carriers,
competitive access providers (CAPs), cellular carriers, providers of
personal communications services (PCS), satellite-based service
providers, cable operators, and electric and other utilities that
provide telecommunications services for hire to the public, and any
other wireline or wireless service for hire to the public.'' (140 Cong.
Rec. H-10779 (daily ed. October 7, 1994) (statement of Rep. Hyde).)
4. The legislative history of CALEA makes clear that the
requirements of CALEA do not necessarily apply to all offerings of a
carrier. The House Report states: ``[C]arriers are required to comply
only with respect to services or facilities that provide a customer or
subscriber with the ability to originate, terminate or direct
communications.'' (H.R. Rep. No. 103-827(I), at 21.) Thus, an entity is
a telecommunications carrier subject to CALEA to the extent it offers,
and with respect to, such services.
5. CALEA also makes clear that its requirements do not apply to
certain entities and services. Subsection 102(8)(C) of the definition
specifically excludes information services, and the legislative history
makes clear that CALEA does not apply to private network services:
[T]elecommunications services that support the transport or
switching of communications for private networks or for the sole
purpose of interconnecting telecommunications carriers * * * need
not meet any wiretap standards. PBXs are excluded. So are automated
teller machine (ATM) networks and other closed networks. Also
excluded from coverage are all information services, such as
Internet service providers or services such as Prodigy and America-
On-Line.
All of these private network systems or information services can
be wiretapped pursuant to court order, and their owners must
cooperate when presented with a wiretap order, but these services
and systems do not have to be designed so as to comply with the
capability requirements.
6. CALEA's definitions of ``telecommunications carrier'' and
``information services'' were not
[[Page 55165]]
modified by the 1996 Act, and the CALEA definitions therefore remain in
force for purposes of CALEA. The pertinent sections of CALEA are not
part of the Communications Act. Further, the 1996 Act expressly
provides that it did not alter existing law by implication, and in the
1996 Act Congress did not repeal or even address the CALEA definitions.
Although in virtually all cases the definitions of the two Acts will
produce the same results, as a matter of law the entities and services
subject to CALEA must be based on the CALEA definition, independently
of their classification for the separate purposes of the Communications
Act.
7. Common Carriers and Utilities. All entities previously
classified as ``common carriers'' are considered telecommunications
carriers for the purposes of CALEA, as are cable operators and electric
and other utilities to the extent they offer telecommunications
services for hire to the public. Such entities offer services (some
subject to CALEA, some not) that use copper-wire, cable, fiber-optic,
and wireless facilities to provide traditional telephone service, data
service, Internet access, cable television, and other services. The
Act's legislative history identifies such entities as subject to CALEA
to the extent that their service offerings satisfy CALEA's description
of covered services. Entities are not subject to CALEA, however, with
respect to services and facilities leased for private networks,
pursuant to the statute. In addition, cable television is an example of
a service not covered by CALEA because it is not a
``telecommunications'' service, even if delivered via the same
transmission facility as other, covered services.
8. It is unnecessary to adopt the FBI's recommendation not to use
the adverb ``indiscriminately'' in clarifying the definition of
telecommunications carrier. The FBI is concerned that the inclusion of
this term may allow companies that hold themselves out to serve only
particular groups to undermine CALEA, intentionally or inadvertently,
by creating a loophole that would permit criminals to use
telecommunications providers that do not indiscriminately offer their
services to the public. However, the courts have long held that a
common carrier is one that holds itself out to serve the public
indiscriminately. This does not amount to a threshold test that a
service provider is a common carrier only if it serves all who seek
service. Instead, it is simply a restatement of the proposition that
common carriage status involves offering one's services to the general
public.
9. Commercial Mobile Radio Services (CMRS). CMRS providers are
considered telecommunications carriers for the purposes of CALEA. This
result is required by section 102(8)(B)(i) of CALEA, which states that
the definition of ``telecommunications carrier'' includes ``a person or
entity engaged in providing commercial mobile service (as defined in
section 332(d) of [the Communications Act]).'' Section 332(d) in turn
defines the term ``commercial mobile service'' as ``any mobile service
* * * that is provided for profit and makes interconnected service
available (A) to the public or (B) to such classes of eligible users as
to be effectively available to a substantial portion of the public. * *
*''
10. Certain commenters claim that some entities normally classified
as CMRS should not be considered subject to CALEA because they do not
meet CALEA's definition of telecommunications carrier or are not
technologically capable of CALEA compliance. Examples cited include
providers serving niche business markets with limited interconnect
capability, such as Industrial/Business Radio Services licensees
offering for-profit interconnected service, local interconnected
Specialized Mobile Radio (SMR) providers, and for-profit commercial
interconnected 220 MHz service licensees. To the extent these services
consist of interconnected service offered to the public, however, they
meet the definition of CMRS set forth in section 332(d) and the
entities offering them therefore must be considered telecommunications
carriers subject to CALEA.
11. To the extent ``traditional'' SMR service offers
interconnection, it meets the definition of CMRS and thus is subject to
CALEA, but otherwise not. Similarly, push-to-talk ``dispatch'' service
is subject to CALEA to the extent it is offered in conjunction with
interconnected service, because in such case it is a switched service
functionally equivalent to a combination of speed dialing and
conference calling, but otherwise not. Thus, in any given case, the
services an entity offers would determine its CALEA responsibilities.
12. The Commission recognizes that in certain cases compliance with
the CALEA assistance capability requirements may be economically
burdensome, or even impossible. In these cases, providers are allowed
to seek extensions under section 107(c) of CALEA, or may seek relief
under section 109. The Commission is also prepared to reexamine this
issue once it has gained some experience in applying section 109.
Exempting entire classes of CMRS services is not warranted, however,
absent a more complete record on the resultant impact on operators and
on CALEA objectives.
13. Private Mobile Radio Services (PMRS). PMRS operators are not
telecommunications carriers subject to CALEA when they offer PMRS
services, but the determination of whether a particular mobile service
offering is private or common carrier depends on the nature of the
service and to whom it is offered. Although private and common carrier
services are by definition mutually exclusive, see 47 U.S.C. 332(d)(3),
a given carrier may offer both. Where a PMRS operator uses its
facilities to offer interconnected service for profit to the public, or
a substantial portion of the public, that service qualifies as CMRS,
and thus is subject to CALEA.
14. Resellers. Resellers, as telecommunications carriers under the
terms of section 102, are generally subject to CALEA. However,
resellers' responsibility under CALEA is limited to their own
facilities, and they will therefore not be held responsible for the
CALEA compliance responsibilities of the carrier whose services they
are reselling with respect to the latter's underlying facilities.
Further, because their offerings are limited to essentially private
networks, most PBX providers and many aggregators would fall outside
the scope of CALEA.
15. Pay Telephone Providers. Pay telephone providers are excluded
from the CALEA definition of telecommunications carrier. The CALEA
legislative history states that ``[t]he only entities required to
comply with the functional requirements are telecommunications common
carriers, the components of the public switched network where law
enforcement agencies have always served most of their surveillance
orders.'' (H.R. Rep. No. 103-827(I), at 21.) Moreover, pay telephone
providers do not have the information and the means to effectuate
lawful electronic surveillance, which is maintained by the carriers who
provide switched telephone services to pay telephone providers.
16. Information Services (IS) and Calling Features. Where
facilities are used solely to provide an information service, whether
offered by an exclusively-IS provider or by a common carrier that has
established a dedicated IS system apart from its telecommunications
system, such facilities are not subject to CALEA. Where facilities are
used to provide both telecommunications and information services,
however, such joint-use facilities are subject to CALEA in order
[[Page 55166]]
to ensure the ability to surveil the telecommunications services.
(Moreover, CALEA is technology neutral, and a carrier's choice of
technology when offering common carrier services thus does not change
its obligations under CALEA.) For example, digital subscriber line
(DSL) services are generally offered as tariffed telecommunications
services, and therefore subject to CALEA, even though the DSL offering
often would be used in the provision of information services. On the
other hand, where an entity uses its own wireless or satellite
facilities to distribute an information service only, the mere use of
transmission facilities would not make the offering subject to CALEA as
a telecommunications service.
17. Calling features such as call forwarding (and the corresponding
voice mail feature, call redirection), call waiting, three-way (i.e.,
conference) calling, and speed dialing are considered to be so closely
related to basic service that they are treated as adjuncts to it. See
North American Telecommunications Ass'n, 101 FCC 2d 349 (1985), recon.
denied, 3 FCC Rcd 4385 (1988). They are also like traditional pen
registers and traps and traces in that they relate to the set-up or
routing of telecommunications, rather than its content. Moreover, the
legislative history of CALEA explicitly states that they are covered
services. Accordingly, these specific calling features will be
considered covered by CALEA, whether offered over wireline or wireless
facilities.
18. Other Issues. It is not necessary at this time either to
identify by rule additional classes of entities within CALEA's
definition of telecommunications carrier, pursuant to section
102(8)(B)(ii), or to exempt in the Commission's rules any classes
pursuant to section 102(8)(C)(ii). Moreover, codification in the
Commission's rules of a list of examples would run the risk of being
considered definitive rather than merely illustrative, and such a list
is therefore not adopted.
19. Section 109 Issues: Section 109(b)(1) of CALEA provides that
any interested person may petition the Commission for a determination
regarding whether compliance with the assistance capability
requirements of section 103 of CALEA is ``reasonably achievable'' with
respect to any equipment, facility, or service installed or deployed
after January 1, 1995. Section 109(b) provides that, in making
determinations as to reasonable achievability, ``the Commission shall
determine whether compliance would impose significant difficulty or
expense on the carrier or on the users of the carrier's system and
shall consider the following factors'':
A. The effect on public safety and national security;
B. The effect on rates for basic residential telephone service;
C. The need to protect the privacy and security of communications
not authorized to be intercepted;
D. The need to achieve the capability assistance requirements of
section 103 by cost-effective methods;
E. The effect on the nature and cost of the equipment, facility, or
service at issue;
F. The effect on the operation of the equipment, facility, or
service at issue;
G. The policy of the United States to encourage the provision of
new technologies and services to the public;
H. The financial resources of the telecommunications carrier;
I. The effect on competition in the provision of telecommunications
services;
J. The extent to which the design and development of the equipment,
facility, or service was initiated before January 1, 1995;
K. Such other factors as the Commission determines are appropriate.
20. Some commenters suggested that certain of these factors should
be accorded special significance, while others suggested that
additional factors should be considered. It would be premature at this
point to assign special weight to any one factor generally, or to adopt
additional factors. Legislative history indicates that CALEA ``seeks to
balance three key policies: (1) to preserve a narrowly focused
capability for law enforcement agencies to carry out properly
authorized intercepts; (2) to protect privacy in the face of
increasingly powerful and personally revealing technologies; and (3) to
avoid impeding the development of new communications services and
technologies.'' (H.R. Rep. No. 103-827(I), at 13.) In light of the
overall purpose of CALEA to preserve law enforcement's ability to
conduct surveillance, the Commission must in all cases consider public
safety and, where applicable, national security, in its analysis of
section 109 petitions. At the same time, given the importance Congress
has placed on the privacy and security of communications that are not
the targets of court-ordered surveillance, and the need to ensure that
the development of new technologies and services is not impeded, those
factors involving privacy and innovation are also likely to be
important in many cases. However, the technological diversity of
carrier networks, as well as other carrier characteristics, will, as a
matter of course, mean that certain factors will be more important to
the arguments of certain carriers than others, and that not all of the
factors enumerated in section 109 may be relevant to the analysis of a
given reasonable achievability petition.
21. A central concern to many commenters is the issue of how the
Commission will approach the cost of CALEA compliance when evaluating
section 109 petitions. As a general principle, in making judgments
under section 109, the Commission will look only to the additional cost
incurred in making equipment and facilities CALEA compliant. In many
instances carriers will become CALEA compliant in the course of general
network upgrades, and will recover any additional cost of CALEA
compliance through their normal charges. (If, in particular, law
enforcement and industry reach agreements regarding switch
prioritization that enable the Commission to grant extensions of time
under section 107(c) allowing carriers to make certain equipment CALEA
compliant as part of the normal upgrade cycle, with resulting low
compliance costs, the Commission would expect such compliance generally
to be reasonably achievable. On the other hand, there may be cases in
which law enforcement opposes any extension of time for making
particular equipment CALEA compliant, resulting in substantial
additional costs to a carrier. In those cases, compliance could be
considered not to be reasonably achievable.) The Commission expects
that CALEA solutions that would require a carrier to change vendors in
order to purchase costly new switching equipment, or to replace costly
existing facilities, would generally not be deemed reasonably
achievable. Any petitioner who argues that it is unable to comply with
CALEA for reasons of cost must present quantitative cost information
that is as detailed, accurate and complete as possible, which the
Commission will analyze along with any technological problems related
to the nature of the equipment, facility, or service at issue. Large
carriers with multiple switch types in networks that cover large or
diverse areas may present data on a per-switch basis, in order to
identify compliance problems specific to particular segments of the
carrier's network.
22. In order to distinguish the additional costs of CALEA
compliance from the costs of general network upgrades, costs will be
considered related to CALEA compliance only if
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carriers can show that they would not have been incurred but for the
implementation of CALEA. For instance, costs incurred as an incidental
consequence of CALEA compliance are not directly related to CALEA
compliance and should be excluded from the carrier's showing. Finally,
general overhead costs cannot be allocated to CALEA compliance, only
additional overheads incremental to and resulting from CALEA
compliance.
23. Carrier size and geographic location may be significant
considerations under section 109. However, if law enforcement and the
telecommunications industry agree on a flexible CALEA deployment
schedule that results in an extension of the current compliance
deadline for equipment and facilities in areas that are not high
priorities for law enforcement, it is not likely that many small rural
carriers will need relief under section 109.
24. Implementation of section 109 should seek to minimize any
adverse effects of CALEA compliance on quality of service and
subscriber rates. This approach is consistent with the mandate to the
Commission in section 109(b)(1) to determine ``whether compliance would
impose significant difficulty or expense on the carrier or the users of
the carrier's systems . . . .'' Moreover, the same section directs the
Commission to consider the effect of compliance on rates for ``basic
residential telephone service,'' reflecting a special Congressional
concern about rate impacts for that service. (In addition, under
section 107(b), one of the factors that the Commission is to consider
in establishing technical requirements or standards is minimizing the
cost of compliance on residential ratepayers.) However, the arguments
in this record that CALEA compliance will increase rates, affect
quality of service, make particular technologies and services
unprofitable, prevent the introduction of services to the market, or
price services out of the reach of certain groups of customers, are at
this point inherently speculative. Any such arguments made in
individual petitions under section 109 will be given substantial weight
only to the extent they are made with particularity and are grounded on
specific quantitative data.
25. The Commission may consider the financial resources of
individual telecommunications carriers under section 109(b)(1)(H), and
industrywide competitive pressures under section 109(b)(1)(I), in
evaluating section 109 petitions. Requests for relief based on such
factors must be supported by carrier- or industry-specific facts,
including quantitative data. Special consideration for a new market
entrant would not necessarily be tantamount to an unfair subsidy.
26. Any petitioner who seeks relief under section 109 on the basis
of the delay in the adoption of assistance capability standards must
present carrier- or equipment-specific facts demonstrating that such
delay actually has made CALEA compliance infeasible. Claims alleging a
lack of CALEA-compliant software and hardware on the market will be
taken into consideration in the evaluation of section 109 petitions,
but only if raised with sufficient specificity and supported with a
particularized showing. Law enforcement need not demonstrate that
equipment or facilities have been used for criminal activity in cases
where reasonable achievability petitions are filed before CALEA-
compliant hardware or software is available. With respect to the FBI's
delay in issuing capacity requirements, there has now been ample time
for industry to evaluate these requirements, and the Commission does
not expect to grant section 109 petitions on the basis of the timing of
the issuance of the requirements.
27. Pursuant to section 109(b)(1)(J), the extent to which the
design and development of equipment was initiated before January 1,
1995, will be considered to the extent appropriate in the Commission's
examination of section 109 petitions. In commenting on section
109(b)(1)(J), certain parties argue as well that the definition of
``installed or deployed'' adopted by the FBI as part of its cost
recovery rules is excessively narrow in restricting its application to
equipment, facilities, and services ``operable and available for use''
by a carrier's customers by January 1, 1995. (The FBI's final cost
recovery rules are set forth at 28 CFR 100.9-100.21. The FBI's
definition in its rules of ``installed or deployed'' is found at 28 CFR
100.10.) Under section 109(e) of CALEA, the Attorney General is vested
with the responsibility for establishing cost control regulations
governing the Federal Government's payment of costs associated with
bringing equipment installed or deployed on or before January 1, 1995,
into compliance with CALEA. The Commission is assigned only a
consultatory role with respect to such cost control regulations. 47
U.S.C. 1008(e)(2).
Thus, it is not within the Commission's authority to adopt rules
defining ``installed or deployed.''
28. Equipment manufacturers and their associations are interested
parties to this proceeding, and therefore will be allowed to file
section 109 petitions. The filing of a section 109 petition will not
automatically toll the CALEA compliance deadline; such tolling would be
tantamount to an automatic extension of the deadline, which may not be
appropriate in all cases.
29. In light of industry's significant role in developing the
assistance capability standards of CALEA, section 109 is to be reserved
for the examination of specific carrier compliance problems, and is not
to be used as a vehicle for rearguing the standards that have been
established for compliance with section 103.
30. Some carriers may file petitions under section 107(c) for
extensions of time to comply with CALEA, which the Commission may grant
if it ``determines that compliance with the assistance capability
requirements under section 103 is not reasonably achievable through
application of technology available within the compliance period.'' To
the extent the Commission finds it appropriate to grant extensions of
time under section 107(c), it may be necessary to provide relief under
section 109 only in unusual cases.
31. Procedural matters. This action is taken pursuant to sections
1, 2, 4(i), 201(a), 229, 301, 303 and 332(c) of the Communications Act
of 1934, 47 U.S.C. 151, 152, 154(i), 201(a), 229, 301, 303,
332(c)(1)(B).
32. Ordering clauses. Accordingly, IT IS ORDERED that the
Regulatory Flexibility Analysis, as required by Section 604 of the
Regulatory Flexibility Act and as set forth below, is adopted.
33. It is Further Ordered that the Commission's Office of Public
Affairs, Reference Operations Division, SHALL SEND a copy of this
SECOND REPORT AND ORDER, including the Final Regulatory Flexibility
Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
Final Regulatory Flexibility Analysis
34. As required by the Regulatory Flexibility Act (RFA),\1\ an
Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the
Notice of Proposed Rulemaking in this proceeding.\2\ The Commission
sought written public comment on the proposals in the NPRM, including
the IRFA. This Final Regulatory Flexibility Analysis (FRFA) conforms to
the RFA.\3\
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\1\ See 5 U.S.C. 603. The RFA, 5 U.S.C. 601 et seq., has been
amended by the Contract with America Advancement Act, Public Law
104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).
\2\ 62 FR 63302, Nov. 11, 1997, 13 FCC Rcd 3149, 3184-94 (1997)
(NPRM).
\3\ See 5 U.S.C. 604.
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[[Page 55168]]
35. Need for and Purpose of this Action. In the Second R&O, the
Commission, in compliance with 47 U.S.C. 229, promulgates policies
implementing the Communications Assistance for Law Enforcement Act.\4\
In enacting CALEA, Congress sought to ``make clear a telecommunications
carrier's duty to cooperate in the interception of communications for
law enforcement purposes * * *'' \5\ The Second R&O addresses in
particular certain issues relevant to sections 102 and 109 of CALEA:
(1) the definition of ``telecommunications carrier'' set forth in
section 102, which determines which entities and services are subject
to the assistance capability and other requirements of CALEA; and (2)
the factors the Commission will consider in making determinations under
section 109 of the Act as to whether compliance with CALEA is
reasonably achievable for particular carriers.
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\4\ Public Law 103-414, 108 Stat. 4279 (1994) (codified as
amended in sections of 18 U.S.C. and 47 U.S.C.).
\5\ CALEA, supra, at preamble.
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36. The policies adopted in the Second R&O implement Congress's
goal of ensuring that telecommunications carriers support the lawful
electronic surveillance needs of law enforcement agencies as
telecommunications technologies evolve. These policies promote the
three key policies Congress sought to balance in enacting CALEA: ``(1)
to preserve a narrowly focused capability for law enforcement agencies
to carry out properly authorized intercepts; (2) to protect privacy in
the face of increasingly powerful and personally revealing
technologies; and (3) to avoid impeding the development of new
communications services and technologies.'' \6\
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\6\ H.R. Rep. 103-827(I), at 16 (1994).
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37. Summary of the Issues Raised by Public Comments Made in
Response to the IRFA. In the NPRM, the Commission asked for comments
that specifically addressed issues raised in the IRFA.\7\ The IRFA
focused on proposed reporting, recordkeeping and other compliance
requirements relating primarily to sections 105 and 107 of CALEA. These
matters lie outside the immediate scope of the Second R&O, which is
limited to clarifying what entities, services, and facilities are
subject to CALEA (pursuant to section 102) and examining the factors
the Commission will consider when determining if compliance with
CALEA's assistance capability requirements is reasonably achievable
(pursuant to section 109). No party filed comments directly responding
to the IRFA that addressed issues dealt with in the Second R&O. Many
parties, however, submitted comments on the Commission's proposals
affecting small businesses set forth in the NPRM. These included
requests that we exempt certain categories of telecommunications
carriers from the assistance capability requirements, based on their
limited operations or the burden of implementing the facility changes
necessary to meet the requirements, and that in considering whether
compliance is reasonably achievable, we attach special significance to
the economic impact on ``smaller carrier[s].'' We summarize our action
on these comments below.
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\7\ NPRM at pars. 54-76.
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38. Description and Estimate of the Number of Small Entities to
Which the Actions Taken 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 action taken.\8\ The RFA
generally defines the term ``small entity'' as having the same meaning
as the terms ``small business,'' ``small organization,'' and ``small
governmental jurisdiction.'' \9\ In addition, the term ``small
business'' has the same meaning as the term ``mall business concern''
under the Small Business Act.\10\ A small business concern is one that:
(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).\11\ A small
organization is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
\12\ Nationwide, as of 1992, there were approximately 275,801 small
organizations.\13\ And finally, ``small governmental jurisdiction''
generally means ``governments of cities, counties, towns, townships,
villages, school districts, or special districts, with a population of
less than 50,000.'' \14\ As of 1992, there were approximately 85,006
such jurisdictions in the United States.\15\ This number includes
38,978 counties, cities, and towns; of these, 37,566, or 96 percent,
have populations of fewer than 50,000.\16\ The United States Bureau of
the Census (Census Bureau) estimates that this ratio is approximately
accurate for all governmental entities. Thus, of the 85,006
governmental entities, we estimate that 81,600 (91 percent) are small
entities. Below, we further describe and estimate the number of small
business concerns that may be affected by the actions taken in this
Second Report and Order.
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\8\ 5 U.S.C. 603(b)(3).
\9\ 5 U.S.C. 601(6).
\10\ 10 U.S.C. 601(3) (incorporating by reference the definition
of ``small business concern'' in 15 U.S. 632). Pursuant to the RFA,
the statutory definition of a small business applies ``unless an
agency, after consultation with the Office of Advocacy of the Small
Business Administration and after opportunity for public comment,
establishes one or more definitions of such term which are
appropriate to the activities of the agency and publishes such
definition(s) in the Federal Register.'' 5 U.S.C. 601(3).
\11\ Small Business Act, 15 U.S.C. 632.
\12\ 5 U.S.C. 601(4).
\13\ 1992 Economic Census, Bureau of the Census, U.S. Dept. of
Commerce, Table 6 (special tabulation of data under contract to
Office of Advocacy of the U.S. Small Administration).
\14\ 5 U.S.C. 601(5).
\15\ 1992 Census of Governments, Bureau of the Census, U.S.
Dept. of Commerce.
\16\ Id.
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39. As noted, under the Small Business Act, a ``small business
concern'' is one that: (1) is independently owned and operated; (2) is
not dominant in its field of operation; and (3) meets any additional
criteria established by the SBA.\17\ The SBA has defined a small
business for Standard Industrial Classification (SIC) categories 4812
(Radiotelephone Communications) and 4813 (Telephone Communications,
Except Radiotelephone) to be small entities when they have no more than
1,500 employees.\18\ We first discuss the number of small
telecommunications entities falling within these SIC categories, then
attempt to refine further those estimates to correspond with the
categories of telecommunications companies that are commonly used under
our rules.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 632. See, e.g., Brown Transport Truckload, Inc.
v. Southern Wipers, Inc., 176 B.R. 82 (N.D. Ga. 1994).
\18\ 13 CFR 121.201.
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40. Total Number of Telecommunications Entities Affected. The
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.\19\ This number contains a variety of different
categories of entities, including local exchange carriers,
interexchange carriers, competitive access providers, cellular
carriers, mobile service carriers, operator service providers, pay
telephone operators, PCS providers, covered SMR providers, and
resellers. It seems certain that some of those 3,497 telephone service
firms may not qualify as small entities or small incumbent LECs because
they are not ``independently owned and
[[Page 55169]]
operated.'' \20\ 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 seems reasonable to conclude,
therefore, that fewer than 3,497 telephone service firms are small
entity telephone service firms or small incumbent LECs that may be
affected by the actions taken in the Second R&O.
---------------------------------------------------------------------------
\19\ 1992 Census of Transportation, Communications, and
Utilities: Establishment and Firm Size, Bureau of the Census, U.S.
Dept. of Commerce, at Firm Size 1-123 (1995) (1992 Census).
\20\ 15 U.S.C. 632(a)(1).
---------------------------------------------------------------------------
41. The most reliable source of current information regarding the
total numbers of common carrier and related providers nationwide,
including the numbers of commercial wireless entities, appears to be
data the Commission publishes annually in its ``Carrier Locator''
report, derived from filings made in connection with the
Telecommunications Relay Service (TRS).\21\ According to data in the
most recent report, there are 3,604 interstate carriers.\22\ These
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 toll service, providers of telephone exchange
service, and resellers.
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\21\ Carrier Locator: Interstate Service Providers, Fig. 1 (Jan.
1999) (Carrier Locator). See also 47 CFR 64.601-608.
\22\ Carrier Locator at Fig. 1.
---------------------------------------------------------------------------
42. We have included small incumbent local exchange carriers (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.''
\23\ 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.\24\ We have
therefore included small incumbent LECs in this RFA analysis, although
we emphasize that this RFA action has no effect on FCC analyses and
determinations in other, non-RFA contexts.
---------------------------------------------------------------------------
\23\ 5 U.S.C. 601 (3).
\24\ Letter from Jere W. Glover, Chief Counsel for Advocacy,
SBA, to William E. Kennard, Chairman, FCC (May 27, 1999). The Small
Business Act contains a definition of ``small business concern,''
which the RFA incorporates into its own definition of ``small
business.'' See 15 U.S.C. 632(a) (Small Business Act); 5 U.S.C.
601(3) (RFA). SBA regulations interpret ``small business concern''
to include the concept of dominance on a national basis. 13 CFR
121.102(b). Since 1996, out of an abundance of caution, the
Commission has included small incumbent LECs in its regulatory
flexibility analyses. Implementation of the Local Competition
Provisions of the Telecommunications Act of 1996, CC Docket, 96-98,
First Report and Order, 61 FR 45475, Aug. 29, 1996, 11 FCC Rcd
15499, 16144-45 (1996).
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43. Wireline Carriers and Service Providers (SIC 4813). The Census
Bureau reports that there were 2,321 telephone communications companies
other than radiotelephone companies in operation for at least one year
at the end of 1992.\25\ 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 or small incumbent LECs.
Although it seems certain that some of these carriers are not
independently owned and operated, we 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
SBA's definition. Consequently, we estimate that there are fewer than
2,295 small entity telephone communications companies other than
radiotelephone companies that may be affected by the actions taken in
the Second R&O.
---------------------------------------------------------------------------
\25\ 1992 Census, supra, at Firm Size 1-123.
---------------------------------------------------------------------------
44. Local Exchange Carriers, Interexchange Carriers, Competitive
Access Providers, and Resellers. Neither the Commission nor SBA has
developed a definition of small LECs, interexchange carriers (IXCs),
competitive access providers (CAPs), or resellers. The closest
applicable definition for these carrier-types under SBA rules is for
telephone communications companies other than radiotelephone (wireless)
companies.\26\ The most reliable source of information regarding the
number of these carriers nationwide of which we are aware appears to be
the data that we collect annually in connection with the TRS.\27\
According to our most recent data, there are 1,410 LECs, 151 IXCs, 129
CAPs, and 351 resellers.\28\ Although it seems certain that some of
these carriers are not independently owned and operated, or have more
than 1,500 employees, we are unable at this time to estimate with
greater precision the number of these carriers that would qualify as
small business concerns under SBA's definition. Consequently, we
estimate that there are fewer than 1,410 small entity LECs or small
incumbent LECs, 151 IXCs, 129 CAPs, and 351 resellers that may be
affected by the actions taken in the Second R&O.
---------------------------------------------------------------------------
\26\ 13 CFR 121.210, SIC Code 4813.
\27\ See 47 CFR 64.601 et seq.; Carrier Locator at Fig. 1.
\28\ Carrier Locator at Fig. 1. The total for resellers includes
both toll resellers and local resellers. The TRS category for CAPs
also includes competitive local exchange carriers (CLECs) (total of
129 for both).
---------------------------------------------------------------------------
45. Wireless Carriers (SIC 4812). The Census Bureau reports that
there were 1,176 radiotelephone (wireless) companies in operation for
at least one year at the end of 1992, of which 1,164 had fewer than
1,000 employees.\29\ Even if all of the remaining 12 companies had more
than 1,500 employees, there would still be 1,164 radiotelephone
companies that might qualify as small entities if they are
independently owned are operated. Although it seems certain that some
of these carriers are not independently owned and operated, we are
unable at this time to estimate with greater precision the number of
radiotelephone carriers and service providers that would qualify as
small business concerns under SBA's definition. Consequently, we
estimate that there are fewer than 1,164 small entity radiotelephone
companies that may be affected by the actions taken in the Second R&O.
---------------------------------------------------------------------------
\29\ 1992 Census, supra, at Firm Size 1-123.
---------------------------------------------------------------------------
46. Cellular, PCS, SMR and Other Mobile Service Providers. In an
effort to further refine our calculation of the number of
radiotelephone companies that may be affected by the actions taken in
the Second R&O, we consider the data that we collect annually in
connection with the TRS for the subcategories Wireless Telephony (which
includes PCS, Cellular, and SMR) and Other Mobile Service Providers.
Neither the Commission nor the SBA has developed a definition of small
entities specifically applicable to these broad subcategories, so we
will utilize the closest applicable definition under SBA rules, which
is for radiotelephone communications companies.\30\ According to our
most recent TRS data, 732 companies reported that they are engaged in
the provision of Wireless Telephony services and 23 companies reported
that they are engaged in the provision of Other Mobile Services.\31\
Although it seems certain that some of these carriers are not
independently owned and operated, or have more than 1,500 employees, we
are unable at this time to estimate with greater precision the number
of Wireless Telephony Providers and Other Mobile Service Providers,
except as described below, that would qualify as small business
[[Page 55170]]
concerns under SBA's definition. Consequently, we estimate that there
are fewer than 732 small entity Wireless Telephony Providers and fewer
than 23 small entity Other Mobile Service Providers that might be
affected by the actions taken in the Second R&O.
---------------------------------------------------------------------------
\30\ Id. To the extent that the Commission has adopted
definitions for small entities in connection with the auction of
particular wireless licenses, we discuss those definitions below.
\31\ Carrier Locator at Fig. 1.
---------------------------------------------------------------------------
47. Broadband PCS Licensees. 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
business'' for Blocks C and F as an entity that has average gross
revenues of not more than $40 million in the three previous calendar
years.\32\ These regulations defining ``small business'' in the context
of broadband PCS auctions have been approved by SBA.\33\ No small
businesses within the SBA-approved definition bid successfully for
licenses in Blocks A and B. There have been 237 winning bidders that
qualified as small entities in the four auctions that have been held
for licenses in Blocks C, D, E and F, all of which may be affected by
the actions taken in the Second R&O.
---------------------------------------------------------------------------
\32\ 47 CFR 24.720(b)(1).
\33\ Implementation of Section 309(j) of the Communications
Act--Competitive Bidding, PP Docket No. 93-253, Fifth Report and
Order, 59 FR 37566, July 22, 1994, 9 FCC Rcd 5532, 5581-84 (1994).
---------------------------------------------------------------------------
48. SMR Licensees. The Commission has defined ``small business'' in
auctions for geographic area SMR licenses as a firm that had average
annual gross revenues of not more than $15 million in the three
previous calendar years, and the SBA has approved this definition.\34\
The actions taken in the Second R&O may apply to SMR providers that
either acquired geographic area licenses through auction or held
licenses before the auctions. We do not have data reflecting the total
number of firms holding pre-auction licenses, nor how many of these
providers have annual revenues of less than $15 million. Consequently,
for purposes of this FRFA, we estimate that all of the pre-auction SMR
authorizations may be held by small entities, some of which may be
affected by the actions taken in the Second R&O.
---------------------------------------------------------------------------
\34\ 47 CFR 90.1814(b)(1) and 90.912(b)(1). See Amendment of
Parts 2 and 90 of the Commission's Rules to Provide for the Use of
200 Channels Outside the Designated Filing Areas in the 896-901 MHz
and the 935-940 MHz Bands Allotted to the Specialized Mobile Radio
Pool, PR Docket No. 89-583, Second Order on Reconsideration and
Seventh Report and Order, 60 FR 48913,, Sept. 21, 1995, 11 FCC Rcd
2639, 2693-702 (1995); Amendment of Part 90 of the Commission's
Rules to Facilitate Future Development of SMR Systems in the 800 MHz
Frequency Band, PR Docket No. 93-144, First Report and Order, Eighth
Report and Order, and Second Further Notice of Proposed Rulemaking,
61 FR 6212, Feb. 16, 1996, 11 FCC Rcd 1463 (1995).
---------------------------------------------------------------------------
49. The Commission has held two auctions for geographic area SMR
licenses. Sixty winning bidders in the 900 MHz auction qualified as
small entities, and 38 in the 800 MHz auction. Based on this
information, we estimate that the number of geographic area SMR
licensees that may be affected by the actions taken in the Second R&O
includes these 98 small entities. An additional 230 channels in the
lower portion of the 800 MHz SMR band will be made available in a
future auction. However, the Commission has not yet determined how many
licenses will be offered, and thus at this time there is no basis on
which to estimate how many small entities may win these licenses. Given
that nearly all radiotelephone companies have fewer than 1,000
employees and that no reliable estimate of the number of prospective
800 MHz licensees can be made, we estimate, for purposes of this FRFA,
that all of the licenses may be awarded to small entities, some of
which may be affected by the actions taken in the Second R&O.
50. 220 MHz Radio Service. The 220 MHz service has both Phase I and
Phase II licenses. There are approximately 1,515 Phase I non-nationwide
licensees and four 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, we apply the definition under the SBA rules applicable to
radiotelephone communications companies.35 According to the
Census Bureau, only 12 radiotelephone firms out of a total of 1,176
such firms which operated during 1992 had 1,000 or more
employees.36 Therefore, if this general ratio continues to
1999 in the context of Phase I 220 MHz licensees, we estimate that
nearly all such licensees are small businesses under the SBA's
definition.
---------------------------------------------------------------------------
\35\ See supra par. 40.
\36\ 1992 Census, supra, UC92-S-1, Subject Series, Establishment
and Firm Size, Table 5, Employment Size of Firms; 1992, SIC code
4812 (issued May 1995).
---------------------------------------------------------------------------
51. The Phase II 220 MHz service is a new service, and is subject
to spectrum auctions. In the 220 MHz Third Report and Order we adopted
criteria for defining small businesses for purposes of determining
their eligibility for special provisions such as bidding credits.\37\
We have defined a small business as an entity that has average gross
revenues not exceeding $15 million for the preceding three years.\38\
The Commission has held two auctions for Phase II 220 MHz licenses, and
in them 53 entities that qualified as small or very small entities were
winning bidders.
---------------------------------------------------------------------------
\37\ 220 MHz Third Report and Order, PR Docket No. 89-552, 62 FR
16004, Apr. 3, 1997, 12 FCC Rcd 10943, 11068-70, pars. 291-295
(1997). The SBA has approved these definitions. See Letter from A.
Alvarez, Administrator, SBA, to D. Phythyon, Chief, Wireless
Telecommunications Bureau, FCC (Jan. 6, 1988).
\38\ 47 CFR 90.1021(b) See also 220 MHz Third Report and Order,
supra, 12 FCC Rcd at 11068-69, par. 291.
---------------------------------------------------------------------------
52. Paging. The Wireless Telecommunications Bureau has announced a
series of auctions of paging licenses, offering a total of 16,630 non-
nationwide geographic area licenses.\39\ The first auction will
commence on February 24, 2000, and will consist of 2,499 licenses.\40\
For purposes of these auctions, a small business is defined as 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. The SBA has approved this definition.\41\ Given
the fact that nearly all radiotelephone companies had fewer than 1,000
employees, and that no reasonable estimate of the number of prospective
paging licensees could be made, the Commission has assumed, for
purposes of the evaluations and conclusions in the FRFA, that all the
auctioned 16,630 geographic area licenses would be awarded to small
entities.\42\
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\39\ See Future Development of Paging Systems, Second Report and
Order and Further Notice of Proposed Rulemaking, WT Docket 96-18, 62
FR 11616, Mar. 12 1997, 12 FCC Rcd 2732, 2863 (1997).
\40\ Public Notice, ``Auction of 929 and 91 MHz Paging Service
Spectrum,'' Report No. AUC-99-26-B, DA No. 99-1591, 64 FR 48623,
September 7, 1999 (Wireless Telecom. Bur. Aug. 12 1999).
\41\ See Letter from A. Alvarez, Administrator, SBA, to A.J.
Zoslov, Chief, Auctions Division, Wireless Telecommunications
Bureau, FCC (Dec. 2, 1998).
\42\ See Future Development of Paging Systems, Second Report and
Order and Further Notice of Proposed Rulemaking, WT Docket 96-18, 62
FR 11615, March 12, 1997, 12 FCC Rcd 2732, 2863-64 (1997).
---------------------------------------------------------------------------
53. In addition, our Third CMRS Competition Report estimated that
as of January 1998, there were more than 600 paging companies in the
United States.\43\ The Third CMRS Competition Report also indicated
that at least ten of the top twelve publicly held paging companies had
average gross revenues in excess of $15 million for the three
[[Page 55171]]
years preceding 1998.\44\ Data obtained from publicly available company
documents and SEC filings indicate that this is also true for the three
years preceding 1999.
---------------------------------------------------------------------------
\43\ Implementation of Section 6002(b) of the Omnibus Budget
Reconciliation Act of 1993, Annual Report and Analysis of
Competitive Market Conditions With Respect to Commercial Mobile
Services, Third Report, FCC 98-9, 63 FR 11612, March 10, 1998, at 40
(June 11, 1998) (Third CMRS Competition Report).
\44\ See Third CMRS Competition Report, App. C at 5.
---------------------------------------------------------------------------
54. Narrowband PCS. The Commission has auctioned 11 nationwide and
30 regional licenses for narrowband PCS. The Commission does not have
sufficient information to determine 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 have not
yet been scheduled, however. Given that nearly all radiotelephone
companies have no more than 1,500 employees and that no reliable
estimate of the number of prospective MTA and BTA narrowband licensees
can be made, we assume, for purposes of this FRFA, that all of the
licenses will be awarded to small entities, as that term is defined by
the SBA.
55. Rural Radiotelephone Service. The Commission has not adopted a
definition of small entity specific to the Rural Radiotelephone
Service.\45\ A significant subset of the Rural Radiotelephone Service
consists of Basic Exchange Telephone Radio Systems (BETRS).\46\ We will
use the SBA's definition applicable to radiotelephone companies, i.e.,
an entity employing no more than 1,500 persons.\47\ 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.
---------------------------------------------------------------------------
\45\ The service is defined in 47 CFR 22.99.
\46\ BETRS are defined in 47 CFR 22.757, 22.759.
\47\ See supra par. 40.
---------------------------------------------------------------------------
56. Air-Ground Radiotelephone Service. The Commission has not
adopted a definition of small entity specific to the Air-Ground
Radiotelephone Service.\48\ Accordingly, we will use the SBA's
definition applicable to radiotelephone companies, i.e., an entity
employing no more than 1,500 persons.\49\ There are approximately 100
licensees in the Air-Ground Radiotelephone Service, and we estimate
that almost all of them qualify as small entities under the SBA
definition.
---------------------------------------------------------------------------
\48\ The service is defined in 47 CFR 22.99.
\49\ 13 CFR 121.201, SIC Code 4812.
---------------------------------------------------------------------------
57. Offshore Radiotelephone Service. This service operates on
several UHF television broadcast channels that are not used for TV
broadcasting in the coastal area of the states bordering the Gulf of
Mexico.\50\ At present, there are approximately 55 licensees in this
service. We are unable at this time to estimate the number of licensees
that would qualify as small entities under the SBA's definition for
radiotelephone communications.
---------------------------------------------------------------------------
\50\ This service is governed by Subpart I or Part 22 of the
Commission's Ruled. See 47 CFR 22.1001-.1037.
---------------------------------------------------------------------------
58. 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 that are not more than
$40 million for each of the three preceding years, and a ``very small
business'' as an entity with average gross revenues that are not more
than $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 that qualified as a small business entity. We
conclude that the number of geographic area WCS licensees that may be
affected by the actions taken in the Second R&O includes these eight
entities.
59. Cable Services or Systems. The SBA has developed a definition
of small entities for cable and other pay television services, which
includes all such companies generating $11 million or less in revenue
annually.\51\ This definition includes cable systems operators, closed
circuit television services, direct broadcast satellite services,
multipoint distribution systems, satellite master antenna systems and
subscription television services. According to the Census Bureau data
from 1992, there were 1,788 total cable and other pay television
services and 1,423 had less than $11 million in revenue.\52\
---------------------------------------------------------------------------
\51\ 13 CFR 121.201, SIC 4841.
\52\ 1992 Economic Census Industry and Enterprise Receipts Size
Report, Table 2D, SIC code 4841 (U.S. Bureau of Census data under
contract to the Office of Advocacy of the U.S. Small Business
Administration).
---------------------------------------------------------------------------
60. The Commission has developed its own definition of a small
cable system operator for the purposes of rate regulation. Under the
Commission's rules, a ``small cable company'' is one serving fewer than
400,000 subscribers nationwide.\53\ Based on our most recent
information, we estimate that there were 1,439 cable operators that
qualified as small cable system operators at the end of 1995.\54\ Since
then, some of those companies may have grown to serve over 400,000
subscribers, and others may have been involved in transactions that
caused them to be combined with other cable operators. Consequently, we
estimate that there are fewer than 1,439 small entity cable system
operators.
---------------------------------------------------------------------------
\53\ 47 CFR 76.901(e). The Commission developed this definition
based on its determination that a small cable operator is one with
annual revenues of $100 million or less. Implementation of Sections
of the 1992 Cable Act: Regulation, Sixth Report and Order and
Eleventh Order on Reconsideration, 60 FR 10534, February 27, 1995,
10 FCC Rcd 7393 (1995).
\54\ Paul Kagan Associates, Inc., ``Cable TV Investor,'' Feb.
29, 1996 (based on figures for December 30, 1995).
---------------------------------------------------------------------------
61. The Communications Act also contains a definition of a small
cable system operator, 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.\55\ The Commission has determined that there are
66,000,000 subscribers in the United States. Therefore, we found that
an operator serving fewer than 660,000 subscribers shall be deemed a
small operator, if its annual revenues, when combined with the total
annual revenues of all of its affiliates, do not exceed $250 million in
the aggregate.\56\ Based on available data, we find that the number of
cable operators serving 660,000 subscribers or less totals 1,450.\57\
We do not request nor do we collect information concerning whether
cable system operators are affiliated with entities whose gross annual
revenues exceed $250,000,000,\58\ and thus are unable at this time to
estimate with greater precision the number of cable system operators
that would qualify as small cable operators under the definition in the
Communications Act. It should be further noted that recent industry
estimates project that there will be a total of 66,000,000 subscribers.
---------------------------------------------------------------------------
\55\ 47 U.S.C. 543 (m)(2).
\56\ 47 U.S.C. 76.1403(b).
\57\ Paul Kagan Associates, Inc., ``Feb. 29, 1996 (based on
figures for Dec. 30, 1995).
\58\ We do receive such information on a case-by-case basis only
if a cable operator appeals a local franchise authority's finding
that the operator does not qualify as a small cable operator
pursuant to section 76.1403(b) of the Commission's rules. See 47 CFR
76.1403(d).
---------------------------------------------------------------------------
62. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements. In the
[[Page 55172]]
Second R&O we affirm our proposals in the NPRM to clarify what
entities, services, and facilities are subject to CALEA.\59\ In
addition, we provide guidance regarding the factors the Commission will
consider when determining under section 109 of CALEA if compliance with
the assistance capability requirements of the Act is reasonably
achievable, as well as the showings that entities filing petitions
under section 109 will be expected to make.\60\ These actions impose no
reporting, recordkeeping or other compliance requirements beyond those
imposed by CALEA itself.
---------------------------------------------------------------------------
\59\ Second Report and Order, pars. 6-28.
\60\ Id. pars. 29-45.
---------------------------------------------------------------------------
63. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered. We have largely
adopted the tentative conclusions of the NPRM as to what entities are
and are not subject to the assistance capability requirements. Although
section 102(8)(B)(ii) of CALEA gives us the discretion, we have decided
not to exempt any categories in our rules. We have resolved the concern
mentioned most frequently in the comments' regarding the dispatch
service of ``traditional'' SMR operators--by finding such operations to
be outside CALEA's definition of ``telecommunications carrier'' insofar
as the service is not interconnected with the public switched network.
We have considered AMTA's argument that CMRS providers serving niche
business markets with limited interconnect capability are not
technologically capable of CALEA compliance, but we have found that to
the extent their services meet the definition of CMRS set forth in
section 332(d) of the Communications Act, such entities must be
considered subject to CALEA. In response to those commenters who argue
that a private mobile radio service (PMRS) operator cannot be subject
to CALEA for any reason, we have found that where a PMRS operator uses
its facilities to offer a service that qualifies as CMRS, that service
is subject to CALEA.
64. We recognize that compliance with the assistance capability
requirements may be economically burdensome for some entities. CALEA
provides two mechanisms through which carriers may seek relief: they
may petition the Commission for an extension of the compliance date
under section 107(c), and they may petition the Commission for a
determination that compliance is not reasonably achievable under
section 109(b). We believe these mechanisms provide the best approach
to avoiding undue burdens on small entities, without undercutting the
objectives of CALEA.\61\ We are also prepared to reexamine whether any
categories of service providers should be exempted, once we have gained
some experience in applying section 109.
---------------------------------------------------------------------------
\61\ See id., pars. 36-45.
---------------------------------------------------------------------------
65. We have decided that in determining whether compliance with the
assistance capability requirements is reasonably achievable, we will
not at this time accord special significance to any particular factor
enumerated in section 109 and we will not adopt any additional factors.
As we note in the Second R&O, ``the technological diversity of carrier
networks, as well as other carrier characteristics, will, as a matter
of course, mean that certain factors will be more important to the
arguments of certain carriers than others, and not all of the factors
enumerated in section 109 may be relevant to the analysis of a given
reasonable achievability petition.'' \62\ We recognize, however, that
carrier size may be a significant consideration in particular cases,
and we reject AT&T's assertion that special consideration for a new
market entrant could be tantamount to an unfair subsidy.
---------------------------------------------------------------------------
\62\ Id., par. 37.
---------------------------------------------------------------------------
66. Report to Congress. The Commission shall send a copy of the
Second R&O, including this FRFA, in a report to Congress pursuant to
the Small Business Regulatory Enforcement Fairness Act of 1996.\63\ In
addition, the Commission shall send a copy of the Second R&O, including
this FRFA, to the Chief Counsel for Advocacy of the Small Business
Administration. A copy of the Second R&O and FRFA (or summaries
thereof) will also be published in the Federal Register.
---------------------------------------------------------------------------
\63\ See 5 U.S.D. 801 (a)(1)(A).
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 99-26594 Filed 10-8-99; 8:45 am]
BILLING CODE 6712-01-P
