02-3278. Numbering Resource Optimization

AGENCY:

Federal Communications Commission.

ACTION:

Final rule.

SUMMARY:

In this document the Federal Communications Commission (FCC or Commission) continues to develop, adopt and implement a number of strategies to ensure that the numbering resources of the North American Numbering Plan (NANP) are used efficiently, and that all carriers have the numbering resources they need to compete in the rapidly expanding telecommunications marketplace.

DATES:

Effective March 14, 2002, except for §§ 52.19(c)(3)(i) and 52.19(c)(4), which contain information collection requirements that have not been approved by OMB. The Commission will publish a document in the Federal Register announcing the effective date.

ADDRESSES:

Federal Communications Commission, Secretary, 445 12th Street, SW., Room TW-B204F, Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT:

Sanford Williams, [phone] or e-mail at [e-mail] or Jennifer Gorny at [phone] or [e-mail].

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Third Report and Order and Second Order on Reconsideration in CC Docket No. 96-98 and CC Docket No. 99-200 (Third Report and Order), adopted on December 12, 2001, and released on December 28, 2001. The full text of this document is available for inspection and copying during normal business hours in the Commission Reference Center, 445 12th Street, SW., Washington, DC 20554. The complete text may also be obtained through the World Wide Web at http://www.fcc.gov/​Bureaus/​CommonCarrier/​Orders,, or may be purchased from the Commission's copy contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone [phone], facsimile 202-863-2898, or via e-mail at [e-mail].

Synopsis of the Third Report and Order and Second Order on Reconsideration in CC Docket No. 96-98 and CC Docket No. 99-200

1. With the rules adopted in the Third Report and Order, the Commission creates national standards to address numbering resource optimization. The Third Report and Order, among other things: (1) Declines to require paging providers and providers that do not have local number portability (LNP) and are operating outside the top 100 metropolitan statistical areas (MSA) to participate in thousands-block number pooling; (2) lifts the ban on service-specific and technology-specific overlays (collectively, specialized overlays or SOs), and provides that the Commission will consider petitions filed by state commissions for authority to implement SOs on a case-by-case basis; (3) subjects carriers that violate numbering requirements or fail to cooperate with an auditor conducting a “for cause” or random audit to the denial of requests for numbering resources; (4) allows incumbent local exchange carriers (LECs) subject to rate-of-return or price cap regulation to recover their carrier-specific costs directly related to national thousands-block number pooling through the existing cost recovery mechanisms of rate-of-return or price cap adjustments, and allows all other carriers to recover their carrier-specific costs related to pooling in any manner allowed under the Act; and (5) clarifies that all non-exempt carriers operating within the top 100 MSAs must be LNP-capable and must participate in thousands-block number pooling.

2. The Third Report and Order also finds that state commissions should be allowed to have password-protected access to the North American Numbering Plan Administration (NANPA) database to obtain data concerning area codes within their state.

3. The rules adopted herein facilitate increased carrier accountability and incentives to use numbers efficiently, and promote the judicious conservation of numbering resources.

Final Paperwork Reduction Analysis

4. This Third Report and Order contains some new and/or modified information collections, which will be submitted to OMB for approval, as prescribed by the Paperwork Reduction Act.

Final Regulatory Flexibility Analysis

5. As required by the Regulatory Flexibility Act, as amended, (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Second Report and Order, Order on Reconsideration in CC Docket No. 96-98 and CC Docket No. 99-200, and Second Further Notice of Proposed Rulemaking (Second Report and Order), 66 FR 9528 (Feb. 8, 2001). The Commission sought written public comment on the proposals in the Second Report and Order, including comment on the IRFA. No comments received addressed the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

A. Need for, and Objectives of, the Third Report and Order

6. In the Second Report and Order, we sought public comment on (a) the relative advantages of SOs as opposed to all-services overlays, and the conditions under which SOs, if adopted, should be implemented to promote competitive equity, maximize efficient use of numbering resources, and minimize customer inconvenience; (b) whether carriers should be held accountable when related carriers fail to comply with reporting requirements; (c) whether state commissions should be granted direct, password-protected access to the mandatory reporting data received by the NANPA; (d) whether to allow extensions (for a fee or otherwise) on the 180-day reservation period for numbers; (e) what enforcement mechanisms should be applied when a carrier either fails to cooperate with an audit, or fails to resolve identified areas of noncompliance; (f) whether state commissions should be allowed to conduct audits; (g) the costs associated with thousands-block number pooling; (h) whether to require carriers to become LNP-capable for the purpose of participating in thousands-block number pooling; and (i) whether a “safety valve” should be established for carriers that need additional numbering resources, but fail to meet the utilization threshold in a given rate center.

7. In this Third Report and Order, we continue efforts to utilize efficiently the numbering resources in the North American Numbering Plan (NANP). Our goal with this Third Report and Order is to build upon previous successes in working with the state commissions and the telecommunications industry to ensure that the limited numbering resources of the NANP do not exhaust prematurely, and to ensure that all carriers have the numbering resources they need to compete in the telecommunications marketplace. In particular, we address issues raised in the Second Report and Order and several petitions for reconsideration and/or clarification of the Report and Order and Further Notice of Proposed Rulemaking, 65 FR 37703 (June 16, 2000), and the Second Report and Order. In addition, we also clarify, on our own motion, certain aspects of our numbering resource optimization rules and local number portability requirements.

B. Summary of Significant Issues Raised by Public Comments

8. In a recent letter, the Small Business Administration (SBA) contends that in the Final Regulatory Flexibility Analysis for the Second Report and Order the Commission failed to “* * * include a description of telecommunications service providers that are directly affected by the audit provisions * * *” and believes that the “* * * oversight may be due to the inconsistency in the text of the Order itself. Under the Commission's numbering rules, carriers and service providers are two separate classes.” The SBA then notes that the terms “carrier” and “service provider” were used interchangeably within the audit provisions of the Second Report and Order.

9. Although the terms “carrier” and “service provider” were used interchangeably within the audit provisions, the rule on auditing procedures in section 52.15(k) of the Commission's rules (in Appendix A of the Second Report and Order) clearly applies to telecommunications service providers. As discussed in section 52.5(i) of the Commission's numbering rules, a service provider is an “* * * entity that receives numbering resources from the NANPA * * *” Thus, given our findings that the rule is clear, we conclude that the description of telecommunications service providers in the FRFA for the Second Report and Order was adequate, and that no clarifications are needed in the FRFA.

10. In the SBA Letter, the SBA states that, in the FRFA for the Second Report and Order, the Commission fails to “* * * adequately consider alternatives to the audit program that would minimize the impact on small businesses.” In the FRFA, the Commission is required to discuss significant alternatives that would change the impact on small businesses. Because we did not identify any significant alternatives to the rules that would influence the impact on small businesses, no significant alternatives were discussed in the FRFA for the Second Report and Order. The Commission also notes that the small businesses that commented on our audit proposal generally were in favor of audits.

11. Commenters responded to several issues addressed in the Second Report and Order that concern small entities. Their opinions are summarized below. In addition, the Commission has considered any potential significant economic impact of the rules on small entities.

12. Thousands-Block Number Pooling for Non-LNP Capable Carriers. Commenters generally agree that the costs to small and rural carriers to participate in thousands-block number pooling would outweigh any benefits derived from the pooling requirements. The Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO) fears that the costs may be so prohibitive as to delay the implementation of advanced services to rural subscribers. The Commission agrees with commenters that there is insufficient evidence in the record to conclude that requiring non-LNP capable carriers to participate in pooling would result in significant number resource savings. Data from the Local Exchange Routing Guide (LERG) shows that in the approximately 2,012 rate centers in the 180 MSAs beyond the largest 100, approximately 1,320 are rate centers where there are no competing service providers and approximately 300 are rate centers where there is only one competing service provider. Because these carriers hold relatively few numbering resources, we agree that requiring them to participate in pooling would not result in significant numbering resource optimization benefits.

13. Independent State Commissions' Authority to Conduct Audits. One commenter expressed concern that giving states individual authority to conduct audits may expose carriers to two different standards. It predicts that this result would impose costs and burdens on small carriers that outweigh the benefits of the additional audits. The Commission declined to give states the independent authority to conduct audits, concluding that most of the audits that states would be given authority to conduct would serve the same purpose as the Commission audits, thus posing the potential burden of overlapping audits that would outweigh the benefits of the additional audits. It is the Commission's expectation, however, that the Commission audit staff will cooperate with state commissions, including coordinating compliance and enforcement activities and sharing information gathered during the course of the audits. In addition, this Third Report and Order does not modify a state commission's authority to conduct audits under state law.

C. Description and Estimate of the Number of Small Entities to Which Rules Will Apply

14. 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 rules adopted herein. The RFA defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 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 for its activities. 5 U.S.C. 601(3). Under the Small Business Act, a “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. 15 U.S.C. 632.

15. The most reliable source of information regarding the total numbers of certain common carrier and related providers nationwide appears to be data the Commission publishes annually in its Telecommunications Provider Locator report, derived from filings made in connection with the Telecommunications Relay Service (TRS). According to data in the most recent report, there are 5,679 interstate service providers. These providers include, inter alia, local exchange carriers, wireline carriers and service providers, interexchange carriers, competitive access providers, operator service providers, pay telephone operators, providers of telephone service, providers of telephone exchange service, and resellers.

16. We have included small incumbent LECs in this present RFA analysis. As noted above, a “small business” under the RFA is one that, inter alia, meets the pertinent small business size standard (e.g., a telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of operation.” The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent LECs are not dominant in their field of operation because any such dominance is not “national” in scope. 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.

17. Total Number of Telephone Companies 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. This number contains a variety of different categories of carriers, including LECs, interexchange carriers, competitive access providers, operator service providers, pay telephone operators, and resellers. It seems certain that some of these 3,497 telephone service firms may not qualify as small entities or small incumbent LECs because they are not “independently owned and operated.” It seems reasonable to conclude that fewer than 3,497 telephone service firms are small entity telephone service firms or small incumbent LECs that may be affected by these rules.

D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements

18. Federal Cost Recovery. In the Third Report and Order, the Commission establishes a federal cost recovery mechanism under which price cap LECs may recover their extraordinary carrier-specific costs directly related to thousands-block number pooling through an exogenous adjustment to access charges. This may require carriers to submit cost analyses demonstrating that pooling results in a net cost increase rather than a cost reduction to qualify for the exogenous adjustment to access charges.

19. Safety Valve. The Commission establishes a safety valve in the Third Report and Order to ensure that carriers experiencing rapid growth in a given market will be able to meet customer demand. Carriers may demonstrate the need for the safety valve by demonstrating to their state commission that: (1) The carrier will exhaust its numbering resources in a market or rate area within three months (in lieu of the 6 months-to-exhaust requirement); and (2) projected growth is based on the carrier's actual growth in the market or rate area, or on the carrier's actual growth in a reasonably comparable market, but only if that projected growth varies no more than 15 percent from historical growth in the relevant market. A carrier may also be granted relief if it demonstrates that it has received a customer request for numbering resources in a given rate center that it cannot meet with its current inventory. If the customer request is withdrawn or declined, the requesting carrier must return the numbering resources to the NANPA or Pooling Administrator, and may not retain the numbering resources to serve other customers without first meeting our growth numbering resource requirements.

20. Service-Specific and Technology—Specific Area Code Overlays (collectively, specialized overlays or SOs). State commissions seeking to implement a SO will be required to seek authority on a case-by-case basis from the Commission. State commissioners should discuss why the numbering resource optimization benefits of the proposed SO would be superior to implementation of an all-services overlay. State commissions should also specifically address the following: (1) The technologies or services to be included in the SO; (2) the geographic area to be covered; (3) whether the SO will be transitional; (4) when the SO will be implemented and, if a transitional SO is proposed, when the SO will become an all-services overlay; (5) whether the SO will include take-backs; (6) whether there will be 10-digit dialing in the SO and the underlying area code(s); (7) whether the SO and underlying area code(s) will be subject to rationing; and (8) whether the SO will cover an area in which pooling is taking place.

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

21. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

22. Thousands-Block Number Pooling for Non-LNP Capable Carriers. In this Third Report and Order, we decline to extend pooling requirements to paging carriers and non-LNP capable carriers outside of the largest 100 MSAs that have not received a request to deploy LNP from a competing carrier. We believe the costs associated with the alternative of requiring all carriers, including small entities, to participate in pooling would greatly outweigh any numbering resource optimization benefits. In addition, these costs imposed on smaller and rural carriers may delay efforts in bringing advanced services to rural subscribers. Thus, we reaffirm our current rules that certain carriers, e.g., paging carriers and carriers outside of the largest 100 MSAs who have not received a request to deploy LNP from a competing carrier, are exempted from pooling requirements.

23. Service-Specific and Technology-Specific Area Code Overlays. In this order, we lift the prohibition on SOs and will consider proposals submitted by state commissions to implement SOs on a case-by-case basis. Such an approach allows state commissions to consider the surrounding local circumstances, including the needs of small, local businesses, in deciding whether or how to provide area code relief. In the alternative, we examined a requirement mandating that state commissions impose all-services area code overlays as the primary method for area code relief. However, the Commission believes that states should have the flexibility to determine the best form of area code relief.

Report to Congress

24. The Commission will send a copy of this Third Report and Order, including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act. In addition, the Commission will send a copy of this Third Report and Order, including this FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of this Third Report and Order and FRFA (or summaries thereof) will also be published in the Federal Register.

25. Pursuant to Sections 1, 3, 4, 201-205, 251 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 153, 154, 201-205, and 251, this Third Report and Order is hereby Adopted and Part 52 of the Commission's rules Are Amended and Adopted as set forth in the rule changes.

26. The policies, rules and requirements adopted herein are adopted and shall be effective March 14, 2002, except for §§ 52.19(c)(3)(i) and 52.19(c)(4), which contain information collection requirements that have not been approved by OMB. The Commission will publish a document in the Federal Register announcing the effective date.

27. Incumbent local exchange carriers seeking to recover carrier-specific costs directly related to national thousands-block number pooling as described herein may file the necessary tariffs to take effect no earlier than April 2, 2002.

28. The Commission's Consumer Information Bureau, Reference Information Center, shall send a copy of this Third Report and Order and Second Order on Reconsideration in CC Docket No. 96-98 and CC Docket No. 99-200, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 52

• Communications common carriers
• Telecommunications
• Telephone

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

PART 52—NUMBERING

1.The authority citation for part 52 continues to read as follows:

Authority: Sections 1, 2, 4, 5, 48 Stat. 1066, as amended; 47 U.S.C. § 151, 152, 154, 155 unless otherwise noted. Interpret or apply secs. 3, 4, 201-05, 207-09, 218, 225-7, 251-2, 271 and 332, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 153, 154, 201-205, 207-09, 218, 225-7, 251-2, 271 and 332 unless otherwise noted.

2. In § 52.15, revise paragraphs (g)(4) and (k)(2) and add paragraphs (g)(5) and (k)(3) to read as follows:

§ 52.15

Central office code administration.

* * * * *

(g) * * *

(4) Non-compliance. The NANPA shall withhold numbering resources from any U.S. carrier that fails to comply with the reporting and numbering resource application requirements established in this part. The NANPA shall not issue numbering resources to a carrier without an Operating Company Number (OCN). The NANPA must notify the carrier in writing of its decision to withhold numbering resources within ten (10) days of receiving a request for numbering resources. The carrier may challenge the NANPA's decision to the appropriate state regulatory commission. The state commission may affirm, or may overturn, the NANPA's decision to withhold numbering resources from the carrier based on its determination that the carrier has complied with the reporting and numbering resource application requirements herein. The state commission also may overturn the NANPA's decision to withhold numbering resources from the carrier based on its determination that the carrier has demonstrated a verifiable need for numbering resources and has exhausted all other available remedies.

(5) State access to applications. State regulatory commissions shall have access to service provider's applications for numbering resources. The state commissions should request copies of such applications from the service providers operating within their states, and service providers must comply with state commission requests for copies of numbering resource applications. Carriers that fail to comply with a state commission request for numbering resource application materials shall be denied numbering resources.

* * * * *

(k) * * *

(2) The Enforcement Bureau will oversee the conduct and scope of all numbering audits conducted under the Commission's jurisdiction, and determine the audit procedures necessary to perform the audit. Numbering audits performed by independent auditors pursuant to this section shall be conducted in accordance with generally accepted auditing standards and the American Institute of Certified Public Accountants' standards for compliance attestation engagements, as supplemented by the guidance and direction of the Chief of the Enforcement Bureau.

(3) Requests for “for cause” audits shall be forwarded to the Chief of the Enforcement Bureau, with a copy to the Chief of the Common Carrier Bureau. Requests must state the reason for which a “for cause” audit is being requested and include documentation of the alleged anomaly, inconsistency, or violation of the Commission rules or orders or applicable industry guidelines. The Chief of the Enforcement Bureau will provide carriers up to 30 days to provide a written response to a request for a “for cause” audit.

3. In § 52.19, revise paragraph (c)(3) introductory text, and (c)(3)(i) and add paragraph (c)(4) to read as follows:

§ 52.19

Area code relief.

* * * * *

(c) * * *

(3) An all services area code overlay, which occurs when a new area code is introduced to serve the same geographic area as one or more existing area code(s), subject to the following conditions:

(i) No all services area code overlay may be implemented unless all numbering resources in the new overlay area code are assigned to those entities requesting assignment on a first-come, first-serve basis, regardless of the identity of, technology used by, or type of service provided by that entity, except to the extent that a technology- or service-specific overlay is authorized by the Commission. No group of telecommunications carriers shall be excluded from assignment of numbering resources in the existing area code, or be assigned such resources only from the all services overlay area code, based solely on that group's provision of a specific type of telecommunications service or use of a particular technology; and

* * * * *

(4) A technology-specific or service-specific overlay, which occurs when a new area code is introduced to serve the same geographic area as one or more existing area code(s) and numbering resources in the new area code overlay are assigned to a specific technology(ies) or service(s). State commissions may not implement a technology-specific or service-specific overlay without express authority from the Commission.

4. In § 52.21, add paragraph (r) to read as follows:

§ 52.21

Definitions.

* * * * *

(r) The term 100 largest Metropolitan Statistical Areas (MSAs) refers to the MSAs set forth in the appendix to this part and any subsequent MSAs identified by U.S. Census Bureau data to be in the largest 100 MSAs.