[Federal Register Volume 63, Number 239 (Monday, December 14, 1998)]
[Proposed Rules]
[Pages 68714-68718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33115]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 62
[CC Docket No. 98-185; FCC 98-294]
1998 Biennial Regulatory Review--Repeal of Part 62 of the
Commission's Rules
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: As part of its 1998 biennial review of regulations pursuant to
section 11 of the Communications Act of 1934, as amended (the
Act),1 the Commission initiated a Notice of Proposed Rule
Making (NPRM) seeking comment on whether its rules governing
interlocking directorates should be repealed. The Commission
tentatively concludes that the rules should be repealed. The Commission
also tentatively concludes that it should forbear from applying the
provision of the Act that prohibits any person from holding the
position of officer or director of more than one carrier subject to the
Act without obtaining prior Commission authorization.
\1\ 47 U.S.C. 161.
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DATES: Comments must be received on or before December 14, 1998. Reply
comments must be received on or before January 4, 1999.
ADDRESSES: Magalie Roman Salas, Office of the Secretary, Federal
Communications Commission, 445 12th Street, S.W., Room TW-A325,
Washington, D.C. 20554, with a copy to Jennifer Myers Kashatus of the
Common Carrier Bureau, 2025 M Street, N.W., Room 6120, Washington, D.C.
20554.
FOR FURTHER INFORMATION CONTACT: Jennifer Myers Kashatus, Formal
Complaints and Investigations Branch, Enforcement Division, Common
Carrier Bureau (202) 418-0960.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's NPRM
in CC Docket 98-195 [FCC 98-294], adopted on November 3, 1998, and
released on November 17, 1998. The full text of the NPRM is available
for inspection and copying during normal business hours in the FCC
Reference Center, Room 239, 1919 M Street, N.W., Washington, D.C. The
complete text of this decision also may be purchased from the
Commission's duplicating contractor, International Transcription
Services, 1231 20th Street, N.W., Washington, D.C. 20036.
[[Page 68715]]
Background
1. The Commission is initiating this proceeding as part of its 1998
biennial review of regulations pursuant to section 11 of the Act.
Section 11 requires the Commission to conduct a biennial review, in
every even-numbered year beginning in 1998, of ``all regulations . . .
that apply to the operations or activities of any provider of
telecommunications service'' and to ``determine whether any such
regulation is no longer necessary in the public interest as the result
of meaningful economic competition between providers of such service.''
2 Section 11 further requires the Commission to repeal or
modify any regulation it determines is no longer necessary in the
public interest.3 The Commission tentatively concludes that
its rules governing interlocking directorates,4 which
implement section 212 of the Act,5 are no longer necessary
to the public interest, and therefore should be repealed.6
To the extent interlocking directorates could be used to inhibit
competition in communications markets, the Commission believes other
laws, particularly antitrust laws, adequately address the potential for
harm. Accordingly, the Commission proposes to repeal the requirement
that application be made to the Commission ``to hold interlocking
positions with more than one carrier subject to the Act where any
carrier sought to be interlocked'' is defined as a dominant carrier or
a carrier not yet found to be non-dominant.7 The Commission
also proposes to repeal the reporting requirements set forth in its
rules that require that all persons holding ``interlocking positions on
more than one carrier subject to the Act'' such as those between non-
dominant carriers, among others, report such interlocking position to
the Commission within 30 days of assuming such position and that
carriers report any change in status within 30 days of such
change.8 The Commission further proposes to repeal the
requirement that certain carriers obtain authorization to hold
interlocking directorates based on a finding of common
ownership.9 By these proposals, the Commission seeks to
promote competition by eliminating unnecessary regulations that are no
longer in the public interest.
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\2\ 47 U.S.C. 161(a).
\3\ 47 U.S.C. 161(b).
\4\ 47 CFR 62.
\5\ 47 U.S.C. 212.
\6\ 47 U.S.C. 161.
\7\ 47 CFR 62.1(a).
\8\ 47 CFR 62.26.
\9\ 47 CFR 62.12, 62.25.
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2. Further, in the Telecommunications Act of 1996 (``1996 Act''),
Congress sought to establish ``a pro-competitive, de-regulatory
national policy framework'' for the United States telecommunications
industry.10 Integral to achieving this goal, the 1996 Act
requires the Commission to forbear from applying any provision of the
Act, or any regulations, to a telecommunications carrier or
telecommunications service, or class thereof, if the Commission makes
certain specified findings with respect to such provisions or
regulations.11 In the NPRM, the Commission tentatively
concludes that it should forbear from applying section 212 of the
Act,12 which prohibits any person from holding the position
of officer or director of more than one carrier subject to the Act
without obtaining prior Commission authorization.13
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\10\ S. Conf. Rep. No. 104-230, 104th Cong. 1 (1996).
\11\ See section 10, codified at 47 U.S.C. 160, is added to the
Act through section 401 of the 1996 Act.
\12\ 47 U.S.C. 212.
\13\ Id. We note that this notice does not address the remainder
of section 212, which makes it ``unlawful for any officer or
director of any carrier subject to this Act to receive for his own
benefit directly or indirectly, any money or thing of value in
respect of negotiation, hypothecation, or sale of securities issued
or to be issued by such carriers, or to share in any of the proceeds
thereof, or to participate in the making or paying of any dividends
of such carriers from any funds properly included in the capital
account.''
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3. This is a permit-but-disclose rule making proceeding. Ex Parte
presentations are permitted, except during the Sunshine Agenda period,
provided that they are disclosed as provided in the Commission's
rules.14
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\14\ 47 CFR 1.1206(a).
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Initial Regulatory Flexibility Analysis
4. As required by the Regulatory Flexibility Act
(RFA),15 the Commission has prepared this Initial Regulatory
Flexibility Analysis (IRFA) of the possible significant economic impact
on small entities by the policies and rules proposed in this NPRM.
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 this NPRM provided above on the first page. The
Commission will send a copy of this NPRM, including this IRFA, to the
Chief Counsel for Advocacy of the Small Business
Administration.16 In addition, this NPRM and IRFA (or
summaries thereof) will be published in the Federal
Register.17
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\15\ 5 U.S.C. 603. The RFA, see 5 U.S.C. 601 et. seq., has been
amended by the Contract With America Advancement Act of 1996, Pub.
L. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is
the Small Business Regulatory Enforcement Fairness Act of 1996
(SBREFA).
\16\ See 5 U.S.C. 603(a).
\17\ See id.
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5. Need for, and Objectives of, the Proposed Action: The Commission
undertakes this examination of its rules governing interlocking
directorates as part of its 1998 biennial review of regulations as
required by the Act.18 In addition, the Commission is
issuing this NPRM to review its regulatory regime for interlocking
directorates, and to determine whether in light of section 10 of the
1996 Act, the Commission should forbear from applying such
requirements.
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\18\ 47 U.S.C. 161.
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6. Legal Basis: The NPRM is adopted pursuant to sections 1, 4(i)
and (j), and 11 of the Communications Act of 1934, as amended, 47
U.S.C. 151, 154(i) and 154(j), and 161.
7. Description, potential impact, and number of small entities
affected: The Commission proposes to repeal its rules governing
interlocking directorates. This includes eliminating the post-interlock
filing requirement for non-dominant carriers, many of whom may be small
entities. The Commission also proposes to forbear from enforcing
section 212 of the Act. Forbearance from enforcing these rules will
benefit small entities by reducing the regulatory burden to which small
businesses would otherwise be subject.
8. To estimate the number of small entities that would benefit from
this positive economic impact, we first consider the statutory
definition of ``small entity'' under the RFA. The RFA generally defines
``small entity'' as having the same meaning as the term ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' 19 In addition, the term ``small business''
has the same meaning as the term ``small business concern'' under the
Small Business Act, unless the Commission has developed one or more
definitions that are appropriate to its activities.20 Under
the Small Business Act, a ``small business concern'' is one that: (1)
is independently owned and operated; (2)
[[Page 68716]]
is not dominant in its field of operation; and (3) meets any additional
criteria established by the Small Business Administration
(SBA).21 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.22 We first discuss the number of small telephone
companies falling within these SIC categories, then attempt to refine
further those estimates to correspond with the categories of telephone
companies that are commonly used under our rules.
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\19\ 5 U.S.C. 601(6).
\20\ 5 U.S.C. 601(3) (incorporating by reference the definition
of ``small business concern'' in 5 U.S.C. 632). Pursuant to 5 U.S.C.
601(3), 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 in the Federal Register.''
\21\ 15 U.S.C. 632. See, e.g., Brown Transport Truckload, Inc.
v. Southern Wipers, Inc., 176 B.R. 82 (N.D. Ga. 1994).
\22\ 13 CFR 121.201.
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9. The most reliable source of information regarding the total
numbers of certain common carrier and related providers nationwide, as
well as the numbers of commercial wireless entities, appears to be data
the Commission publishes annually in its Telecommunications Industry
Revenue report, regarding the Telecommunications Relay Service
(TRS).23 According to data in the most recent report, there
are 3,459 interstate carriers.24 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 toll service, providers of telephone exchange service, and
resellers.
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\23\ FCC, Telecommunications Industry Revenue: TRS Fund
Worksheet Data, Figure 2 (Number of Carriers Paying Into the TRS
Fund by Type of Carrier) (Nov. 1997) (``Telecommunications Industry
Revenue'').
\24\ Id.
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10. Although some affected incumbent local exchange carriers
(ILECs) may have 1,500 or fewer employees, we do not believe that such
entities should be considered small entities within the meaning of the
RFA because they are either dominant in their field of operations or
are not independently owned and operated, and therefore by definition
not ``small entities'' or ``small business concerns'' under the RFA.
Accordingly, our use of the terms ``small entities'' and ``small
businesses'' does not encompass small ILECs. Out of an abundance of
caution, however, for regulatory flexibility analysis purposes, we will
separately consider small ILECs within this analysis and use the term
``small ILECs'' to refer to any ILECs that arguably might be defined by
the SBA as ``small business concerns.'' 25
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\25\ See 13 CFR 121.201, SIC code 4813. Since the time of the
Commission's 1996 decision, Implementation of the Local Competition
Provisions in the Telecommunications Act of 1996, First Report and
Order, 11 FCC Rcd 15499, 16144-45 (1996), 61 FR 45476 (Aug. 29,
1996), the Commission has consistently addressed in its regulatory
flexibility analyses the impact of its rules on such ILECs.
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11. Total Number of Telephone Companies Affected. The United States
Bureau of the Census (``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.26 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, 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 operated.'' 27 Additionally, we
note that the number of small entities affected by this proposed rule
change as set forth in this NPRM is less than the total number of
telephone companies as stated herein, because as discussed in the NPRM,
the Commission already has decided to forbear from applying section 212
of the Act with regard to CMRS providers. 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 this NPRM.
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\26\ United States Department of Commerce, Bureau of the Census,
``1992 Census of Transportation'', Communications, and Utilities:
Establishment and Firm Size, at Firm Size 1-123 (1995) (``1992
Census'').
\27\ 15 U.S.C. 632(a)(1).
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12. Wireline Carriers and Service Providers. SBA has developed a
definition of small entities for telephone communications companies
other than radiotelephone companies. The Census Bureau reports that,
there were 2,321 such telephone companies in operation for at least one
year at the end of 1992.28 According to SBA's definition, a
small business telephone company other than a radiotelephone company is
one employing no more than 1,500 persons.29 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
decisions and rules recommended for adoption in this NPRM.
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\28\ 1992 Census, supra, at Firm Size 1-123.
\29\ 13 CFR 121.201, Standard Industrial Classification (SIC)
Code 4813.
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13. Local Exchange Carriers. Neither the Commission nor SBA has
developed a definition of small providers of local exchange services
(LECs). The closest applicable definition under SBA rules is for
telephone communications companies other than radiotelephone (wireless)
companies. The most reliable source of information regarding the number
of LECs nationwide of which we are aware appears to be the data that we
collect annually in connection with the Telecommunications Relay
Service (TRS).30 According to our most recent data, 1,371
companies reported that they were engaged in the provision of local
exchange 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 LECs that would qualify as small
business concerns under SBA's definition. Consequently, we estimate
that there are fewer than 1,371 small entity LECs or small incumbent
LECs that may be affected by the decisions and rules recommended for
adoption in this NPRM.
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\30\ See 47 CFR 64.601 et seq.
\31\ Telecommunications Industry Revenue at Fig. 2.
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14. Interexchange Carriers. Neither the Commission nor SBA has
developed a definition of small entities specifically applicable to
providers of interexchange services (IXCs). The closest applicable
definition under SBA rules is for telephone communications companies
other than radiotelephone companies.32 The most reliable
source of information regarding the number of IXCs nationwide of which
we are aware appears to be the data that we collect annually in
connection with TRS. According to our most recent data, 143 companies
reported that they were engaged in the provision of
[[Page 68717]]
interexchange services.33 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 IXCs that would qualify as small
business concerns under SBA's definition. Consequently, we estimate
that there are fewer than 143 small entity IXCs that may be affected by
the decisions and rules recommended for adoption in this NPRM.
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\32\ 13 CFR 121.210, SIC Code 4813.
\33\ Telecommunications Industry Revenue at Fig. 2.
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15. Competitive Access Providers. Neither the Commission nor SBA
has developed a definition of small entities specifically applicable to
providers of competitive access services (CAPs). The closest applicable
definition under SBA rules is for telephone communications companies
other than radiotelephone companies. The most reliable source of
information regarding the number of CAPs nationwide of which we are
aware appears to be the data that we collect annually in connection
with the TRS. According to our most recent data, 109 companies reported
that they were engaged in the provision of competitive access
services.34 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 CAPs that would qualify as small business
concerns under SBA's definition. Consequently, we estimate that there
are fewer than 109 small entity CAPs that may be affected by the
decisions and rules recommended for adoption in this NPRM.
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\34\ Id.
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16. Pay Telephone Operators. Neither the Commission nor 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 except radiotelephone
(wireless) companies.35 The most reliable source of
information regarding the number of pay telephone operators nationwide
is the data that we collect annually in connection with the TRS
Worksheet. According to our most recent data, 271 companies reported
that they were engaged in the provision of pay telephone
services.36 We do not have information on the number of
carriers that are not independently owned and operated, nor have more
than 1,500 employees, and thus are unable at this time to estimate with
greater precision the number of pay telephone operators that would
qualify as small business concerns under SBA's definition.
Consequently, we estimate that there are fewer than 271 small pay
telephone operators.
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\35\ 13 CFR 121.201, SIC Code 4813.
\36\ TRS Worksheet.
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17. Operator Service Providers. Neither the Commission nor SBA has
developed a definition of small entities specifically applicable to
providers of operator services. The closest applicable definition under
SBA rules is for telephone communications companies other than
radiotelephone companies. The most reliable source of information
regarding the number of operator service providers nationwide of which
we are aware appears to be the data that we collect annually in
connection with the TRS. According to our most recent data, 27
companies reported that they were engaged in the provision of operator
services.37 Although it seems certain that some of these
companies 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 operator service providers that would qualify
as small business concerns under SBA's definition. Consequently, we
estimate that there are fewer than 27 small entity operator service
providers that may be affected by the decisions and rules recommended
for adoption in this NPRM.
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\37\ Telecommunications Industry Revenue at Fig. 2.
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18. Resellers. Neither the Commission nor SBA has developed a
definition of small entities specifically applicable to resellers. The
closest applicable definition under SBA rules is for all telephone
communications companies.38 The most reliable source of
information regarding the number of resellers nationwide of which we
are aware appears to be the data that we collect annually in connection
with the TRS. According to our most recent data, 339 companies reported
that they were engaged in the resale of telephone
services.39 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 resellers that would qualify as small business
concerns under SBA's definition. Consequently, we estimate that there
are fewer than 339 small entity resellers that may be affected by the
decisions and rules recommended for adoption in this NPRM.
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\38\ 13 CFR 121.210, SIC Code 4813.
\39\ Telecommunications Industry Revenue at Fig. 2.
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19. Private Paging. At present, there are approximately 24,000
Private Paging licenses. 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 paging carriers that would qualify
as small business concerns under the SBA's definition. We estimate that
the majority of private paging providers would qualify as small
entities under the SBA definition. We note that private paging does not
include common carrier paging, for which the Commission has adopted
auction rules and has proposed to SBA a special small business size
standard definition.
20. Wireless (Radiotelephone) Carriers. SBA has developed a
definition of small entities for radiotelephone (wireless) companies.
The Census Bureau reports that there were 1,176 such companies in
operation for at least one year at the end of 1992.40
According to SBA's definition, a small business radiotelephone company
is one employing no more than 1,500 persons.41 The Census
Bureau also reported that 1,164 of those radiotelephone companies had
fewer than 1,000 employees. Thus, 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 and 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 decisions and rules recommended
for adoption in this NPRM.
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\40\ 1992 Census at Firm Size 1-123.
\41\ 13 CFR 121.201, SIC Code 4812.
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21. Recording, record keeping, and other compliance requirements:
No additional paperwork will be required by the proposals set forth in
this proceeding. This proceeding proposes to eliminate filing
requirements set forth for interlocking directorates in the
Commission's rules.
22. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered: The impact of this
[[Page 68718]]
proceeding should be beneficial to small businesses because the
proposals set out in this NPRM would reduce the reporting or
recordkeeping requirements on all communications common carriers. In
this NPRM, the Commission seeks comment on whether any level of
regulation currently within its interlocking directorates rules should
be retained. The Commission also seeks comment on whether we should
forbear from section 212 of the Act. The Commission expects that this
revision will benefit all entities subject to the rule, including small
entities.
23. Federal Rules that overlap, duplicate, or conflict with this
rule: No federal rules overlap, duplicate, or conflict with this rule
directly. As described above, however, we expect that the Clayton Act
will protect against certain types of conduct that would tend to
decrease competition.
Comment Filing Procedures
24. Pursuant to applicable procedures set forth in sections 1.415
and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested
parties may file comments on or before December 14, 1998, and reply
comments on or before January 4, 1999. Comments may be filed using the
Commission's Electronic Comment Filing System (ECFS) or by filing paper
copies. See Electronic Filing of Documents in Rulemaking Proceedings,
63 FR 24121 (1998).
25. Comments filed through the ECFS can be sent as an electronic
file via the Internet to http://www.fcc.gov/e-file/ecfs.html>.
Generally, only one copy of an electronic submission must be filed. In
completing the transmittal screen, commenters should include their full
name, Postal Service mailing address, and the applicable docket or
rulemaking number. Parties may also submit an electronic comment by
Internet e-mail. To get filing instructions for e-mail comments,
commenters should send an e-mail to ecfs@fcc.gov, and should include
the following words in the body of the message, ``get form .'' A sample form and directions will be sent in reply.
26. To file formally in this proceeding, you must file an original
and four copies of all comments, reply comments, and supporting
comments. All filings must be sent to the Commission's Secretary,
Magalie Roman Salas, Office of the Secretary, Federal Communications
Commission, 445 12th Street, S.W., Room TW-A325, Washington, D.C.
20554, with a copy to Jennifer Myers Kashatus of the Common Carrier
Bureau, 2025 M Street, N.W., Room 6120, Washington, D.C. 20554.
27. Parties who choose to file by paper should also submit their
comments on diskette. These diskettes should be submitted to: Jennifer
Myers Kashatus, Common Carrier Bureau, 2025 M Street, N.W., Room 6120,
Washington, D.C. 20554. Such a submission should be on a 3.5 inch
diskette formatted in an IBM compatible format using WordPerfect 5.1
for Windows or compatible software. The diskette should be accompanied
by a cover letter and should be submitted in ``read only'' mode. The
diskette should be clearly labelled with the commenter's name,
proceeding (Docket No. 98-195), type of pleading (comment or reply
comment), date of submission, and the name of the electronic file on
the diskette. The label also should include the following phrase ``Disk
Copy--Not an Original.'' Each diskette should contain only one party's
pleadings, preferably in a single electronic file. In addition,
commenters must send diskette copies to the Commission's copy
contractor, International Transcription Service, Inc., 1231 20th
Street, N.W., Washington, D.C. 20037.
28. Accordingly, it is ordered that pursuant to sections 1, 4, 10,
11, and 212 of the Communications Act of 1934, as amended, 47 U.S.C.
151, 154, 160, 161, and 212, a Notice of Proposed Rule Making is hereby
adopted.
29. It is further ordered that the Commission's Office of Public
Affairs, Reference Operations Division, shall send a copy of this
Notice of Proposed Rule Making, including the Initial Regulatory
Flexibility Analysis, to the Chief Counsel for the Advocacy of the
Small Business Administration.
List of Subjects in 47 CFR Part 62
Antitrust, Communications Common carriers, radio, reporting and
recordkeeping requirements, telegraph, and telephone.
Federal Communications Commission.
Shirley S. Suggs,
Chief, Publications Branch.
[FR Doc. 98-33115 Filed 12-11-98; 8:45 am]
BILLING CODE 6712-01-P
