01-15832. Phase 2 of the Comprehensive Review of the Accounting Requirements and ARMIS Reporting Requirements for Incumbent Local Exchange Carriers

AGENCY:

Federal Communications Commission.

ACTION:

Proposed rule; comments requested.

SUMMARY:

In this document the Commission is seeking supplemental comment in the Phase 2 Comprehensive Review of the Accounting and ARMIS Reporting Requirements for Incumbent Local Exchange Carriers. This document expressly seek comment on additions, consolidations, or eliminations of accounts on the attached list of Class A and Class B accounts. One of the goals of the comprehensive review proceeding is to update our accounting system based on changes in the marketplace and in technology.

DATES:

Written comments by the public are due on or before July 16, 2001, reply comments are due on or before July 26, 2001.

ADDRESSES:

Federal Communications Commission, 445-12th Street, SW, TW-A325, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT:

Mika Savir, Accounting Safeguards Division, Common Carrier Bureau, at [phone] or Andrew Mulitz, Accounting Safeguards Division, Common Carrier Bureau, at [phone].

SUPPLEMENTARY INFORMATION:

On October 18, 2000, the Commission released a Notice of Proposed Rulemaking in CC Docket No. 00-199, 65 FR 67675 (November 18, 2000), seeking comment on, inter alia, changes to our Part 32 Uniform System of Accounts (“USOA”). One of the goals in this comprehensive review proceeding is to update our accounting system based on changes in the marketplace and in technology. Based on our review of the specific accounts and comments filed in this proceeding, we now wish to focus the record on streamlining the Commission's Class A and Class B accounts, as shown in the attachment to this document. We expressly seek comment on additions, consolidations, or eliminations of accounts on this proposed list.

Comments are due on the attached proposal July 16, 2001. Reply comments are due on or before July 26, 2001. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS) or by filing paper copies.

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. If multiple docket or rulemaking numbers appear in the caption of this proceeding, however, commenters must transmit one electronic copy of the comments to each docket or rulemaking number referenced in the caption. 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 [e-mail], and should include the following words in the body of the message, “get form <your e-mail address>.” A sample form and directions will be sent in reply.

Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appear in the caption of this proceeding, commenters must submit two additional copies for each additional docket or rulemaking number. 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., Washington, D.C. 20554.

Parties who choose to file by paper should also submit their comments on diskette. These diskettes should be submitted to: Ernestine Creech, Room 6-C317, Accounting Safeguards Division, 445 12th Street, S.W., Washington, D.C. 20554. Such a submission should be on a 3.5-inch diskette formatted in an IBM compatible format using Word 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 labeled with the commenter's name, proceeding (including the docket number, in this case CC Docket No. 00-199, type of pleading (comment or reply comment), date of submission, and the name of the electronic file on the diskette. The label should also 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.

Initial Regulatory Flexibility Analysis

As required by the Regulatory Flexibility Act (RFA), the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of any possible significant economic impact on small entities by the policies and rules proposed in this document. Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on this document, which are set out in the document. The Commission will send a copy of this document, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration. In addition, this document and IRFA (or summaries thereof) will be published in the Federal Register.

A. Need for, and Objectives of, the Proposed Rules

The Commission has initiated this proceeding to determine whether it should streamline or modify the current accounting and reporting requirements. This document seeks comment on further reducing the accounting requirements for incumbent local exchange carriers.

B. Legal Basis

The legal basis for the action as proposed for this rulemaking is contained in sections 4(i), 4(j), 11, 201(b), 303(r), and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 161, 201(b), 303(r), and 403.

C. Description and Estimate of the Number of Small Entities to which the Proposed Action May Apply

The RFA directs agencies to provide a description of, and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. To estimate the number of small entities that may be affected by the proposed rules, 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.” 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. 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 Small Business Administration (SBA).

We have included small incumbent local exchange carriers (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 the Commission's analyses and determinations in other, non-RFA contexts.

The SBA has developed a definition of small entities for telephone communications companies other than radiotelephone companies. 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. The Census Bureau reports that, there were 2,321 such telephone companies in operation for at least one year at the end of 1992. 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. It seems certain that some of these carriers are not independently owned and operated, but we are unable at this time to estimate with greater precision the number of wireline carriers that would qualify as small business concerns under SBA's definition. Consequently, we estimate that fewer than 2,295 small telephone communications companies other than radiotelephone companies are small entities or small incumbent LECs that may be affected by the proposed rules, if adopted.

The proposed changes to the accounting requirements in this document, which are reductions in the Commission's accounting requirements, could affect all incumbent local exchange carriers. Some of these companies may be considered “small entities” under the SBA definition. Therefore, it is possible that some of the 2,295 small entity telephone companies may be affected by the proposals in this document.

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

This document seeks to further reduce accounting requirements for all incumbent local exchange companies. These proposals, if adopted, would result in fewer accounting requirements for all incumbent local exchange carriers, including small entities.

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

The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) the establishment of differing compliance 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. 5 U.S.C. 603(c).

The rule changes proposed in this document are reductions in our accounting requirements for all incumbent local exchange carriers. Our proposals, if adopted, would streamline the accounting rules and would significantly lessen regulatory requirements for all carriers, including small entities. This should produce a significant economic benefit to small entities. Alternatives considered for small entities subject to our accounting and reporting requirements were to maintain our current rules or to consider changes proposed in this document on a case-by-case basis in ongoing proceedings where related accounting changes may properly be considered within the scope of such proceedings. Streamlining our current rules will reduce regulatory burdens on carriers, including small entities.

F. Federal Rules that May Duplicate, Overlap, or Conflict With the Proposed Rule

None.

Federal Communications Commission.

Kenneth P. Moran,

Chief, Accounting Safeguards Division, Common Carrier Bureau.

Attachment A

Part 32 Class Accounts (Proposed)

1120 Cash and equivalents

1170 Receivables

1171 Allowances for doubtful accounts

1220 Inventories

—Materials and supplies

—Property held for sale or lease

1280 Prepayments

1350 Other current assets

1406 Nonregulated investments

—Permanent investment

—Receivable/payable

—Current net income or loss

1410 Noncurrent assets

1437 Deferred tax regulatory asset

1438 Other deferred charges

1500 Other jurisdictional assets—net

2001 Telecommunications plant in service

2002 Property held for future telecommunications use

2003 Telecommunications plant under construction

2005 Telecommunications plant adjustment

2006 Nonoperating plant

2007 Goodwill

2111 Land

2112 Motor vehicles

2113 Aircraft

2114 Tools and other work equipment

2121 Buildings

2122 Furniture

2123 Office equipment

—Office support equipment

—Company communications equipment

2124 General purpose computers

2211 Non-digital switching

2212 Digital electronic switching

—Circuit

—Packet

2213 Optical switching

—Circuit

—Packet

2220 Operator system

2231 Radio system

2232 Circuit equipment

—Electronic

—Optical

2311 Station apparatus

2321 Customer premises wiring

2341 Large private branch exchanges

2351 Public telephone terminal equipment

2362 Other terminal equipment

2411 Poles

2421 Aerial cable

—Nonmetallic cable

—Metallic cable

2422 Underground cable

—Nonmetallic cable

—Metallic cable

2423 Buried cable

—Nonmetallic cable

—Metallic cable

2426 Intrabuilding network cable

—Nonmetallic cable

—Metallic cable

2431 Aerial wire

2441 Conduit systems

2681 Capital leases

2682 Leasehold improvements

2690 Intangibles

—Network Software

—Other

3100 Accumulated depreciation

3200 Accumulated depreciation—held for future telecommunications use

3300 Accumulated depreciation—nonoperating

3410 Accumulated amortization—capitalized leases

4000 Current accounts and notes payable

4070 Income taxes—accrued

4080 Other taxes—accrued

4100 Net current deferred operating income taxes

4110 Net current deferred nonoperating income taxes

4130 Other current liabilities

4200 Long term debt and funded debt

4300 Other long-term liabilities and deferred credits

4320 Unamortized operating investment tax credits—net

4330 Unamortized nonoperating investment taxcredits—net

4340 Net noncurrent deferred operating income taxes

4341 Net deferred tax liability adjustments

4350 Net noncurrent deferred nonoperating income taxes

4361 Deferred tax regulatory liability

4370 Other jurisdictional liabilities & deferred credits—net

4510 Capital stock

4520 Additional paid-in-capital

4530 Treasury stock

4540 Other Capital

4550 Retained earnings

5000 Basic local service revenue

5080 Network access revenue

5081 End user revenue

5082 Switched access revenue

5083 Special access revenue

5086 Interconnection revenue

—UNE revenue

—Resale revenue

—Reciprocal Compensation revenue

—Other Interconnection revenue

5090 USF support revenue

5105 Long distance message revenue

5200 Miscellaneous revenue

5280 Nonregulated operating revenue

5300 Uncollectible revenue

6112 Motor vehicle expense

6113 Aircraft expense

6114 Tools and other work equipment expense

6121 Land & building expense

6122 Furniture & artworks expense

6123 Office equipment expense

6124 General purpose computers expense

6210 Central office switching expenses

6211 Non-digital expense

6212 Digital electronic expense

—Circuit

—Packet

6213 Optical expense

—Circuit

—Packet

6220 Operator systems expense

6231 Radio systems expense

6232 Circuit equipment expense

—Electronic

—Optical

6311 Station apparatus expense

6341 Large private branch exchange expense

6351 Public telephone terminal equipment expense

6362 Other terminal equipment expense

6411 Poles expense

6421 Aerial cable expense

—Nonmetallic cable

—Metallic cable

6422 Underground cable expense

—Nonmetallic cable

—Metallic cable

6423 Buried cable expense

—Nonmetallic cable

—Metallic cable

6426 Intrabuilding network cable expense

—Nonmetallic cable

—Metallic cable

6431 Aerial wire expense

6441 Conduit systems expense

6510 Property held for future telecommunications use expense

6512 Provisioning expense

6531 Power expense

6532 Network administration expense

6533 Testing expense

6534 Plant operations administration expense

6535 Engineering expense

6540 Access expense

6551 Interconnection expense

—UNE expense

—Resale expense

—Reciprocal Compensation expense

—Other interconnection expense

6554 USF support expense

6560 Depreciation & amortization expenses

6610 Marketing

6620 Customer services

6720 General and administrative

7100 Other operating income & expenses

7200 Operating taxes

7210 Operating investment tax credits net

7220 Operating federal income taxes

7230 Operating state and local income taxes

7240 Operating other taxes

7250 Provision for deferred operating income taxes—net

7300 Nonoperating income & expense

7400 Nonoperating taxes

7500 Interest and related items

7600 Extraordinary items—net

7910 Income effect of jurisdictional ratemaking differences—net

7990 Nonregulated net income

Account Total—178

Attachment B

Part 32 Class B Accounts (Proposed)

1120 Cash and equivalents

1170 Receivables

1171 Allowance for doubtful accounts

1220 Inventories

—Materials and supplies

—Property held for sale or lease

1280 Prepayments

1350 Other current assets

1406 Nonregulated investments

—Permanent investment

—Receivable/payable

—Current net income or loss

1410 Other noncurrent assets

1437 Deferred tax regulatory asset

1438 Other deferred charges

1500 Other jurisdictional assets—net

2001 Telecommunications plant in service

2002 Property held for future telecommunications use

2003 Telecommunications plant under construction

2005 Telecommunications plant adjustment

2006 Nonoperating plant

2007 Goodwill

2110 Land and support assets

2210 Central Office—Switching

2220 Operator systems

2230 Central office—Transmission

2310 Information origination/termination

2410 Cable and wire facilities

2680 Amortizable tangible assets

2690 Intangibles

3100 Accumulated depreciation

3200 Accumulated depreciation—Held for future telecommunications use

3300 Accumulated depreciation—nonoperating

3410 Accumulated amortization—capital leases

4000 Current accounts and notes payable

4070 Income taxes—accrued

4080 Other taxes—accrued

4100 Net current deferred operating income taxes

4110 Net current deferred operating income taxes

4130 Other current liabilities

4200 Long term funded debt

4300 Other long-term liabilities and deferred credits

4320 Unamortized operating investment tax credits—net

4330 Unamortized nonoperating investment tax credits—net

4340 Net noncurrent deferred operating income taxes

4341 Net deferred tax liability adjustments

4350 Net noncurrent deferred nonoperating income taxes

4361 Deferred tax regulatory liability

4370 Other jurisdictional liabilities and deferred credits—net

4510 Capital stock

4520 Additional paid-in-capital

4530 Treasury stock

4540 Other capital

4550 Retained earnings

5000 Basic local service revenue

5080 Network access revenue

5081 End user revenue

5082 Switched access revenue

5083 Special access revenue

5086 Interconnection revenue

5090 USF support revenue

5105 Long distance message revenue

5200 Miscellaneous revenue

5280 Nonregulated operating revenue

5300 Uncollectible revenue

6110 Network support expense

6120 General support expenses

6210 Central office switching expense

6220 Operator system expense

6230 Central office transmission expenses

6310 Information origination/termination expense

6410 Cable and wire facilities expenses

6510 Other property, plant and equipment expenses

6530 Network operations expenses

6540 Access expense

6551 Interconnection expense

6554 USF support expense

6560 Depreciation and amortization expenses

6610 Marketing

6620 Services

6720 General and administrative

7100 Other operating income and expense

7200 Operating taxes

7300 Nonoperating taxes

7500 Interest and related items

7600 Extraordinary items

7910 Income effect of jurisdictional ratemaking deferrences—net

7990 Nonregulated net income

Account Totals—89