[Federal Register Volume 64, Number 155 (Thursday, August 12, 1999)]
[Rules and Regulations]
[Pages 43937-43941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20886]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 62
[CC Docket No. 98-195; FCC 99-163]
1998 Biennial Regulatory Review--Repeal of Part 62 of the
Commission's Rules
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: This document seeks as part of its 1998 biennial review of
regulations whether its rules governing interlocking directorates
should be repealed. After reviewing the comments, the Commission
released a Report and Order (Order) repealing part 62 of the rules
governing interlocking directorates, because it concluded that part 62
is no longer necessary in the public interest. The Commission concludes
that it should forbear from applying those provisions in section 212 of
the Act that prohibit any person from holding the position of officer
or director of more than one carrier subject to the Act without
obtaining prior Commission authorization.
DATES: Effective September 13, 1999.
ADDRESSES: Federal Communications Commission, 445 12th Street, S.W.,
Room TW-A325, 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 Report
and Order in CC Docket 98-195 [FCC 99-163], adopted on July 7, 1999,
and released on July 16, 1999. The full text of the Report and Order is
available for inspection and copying during normal business hours in
the FCC Reference Center, Room CY-A257, 445 12th Street, S.W.,
Washington, D.C. 20554. The complete text of this decision also may be
purchased from the Commission's duplicating contractor, International
[[Page 43938]]
Transcription Services, 445 12th Street, S.W., Room CY-B400,
Washington, D.C. 20554.
1. The Commission initiated this proceeding by a Notice of Proposed
Rulemaking (Notice) released on November 17, 1998. In the Notice, the
Commission designated 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.'' 1 Section
11 further requires the Commission to repeal or to modify any
regulation it determines is no longer necessary in the public interest.
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\1\ 47 U.S.C. 161(a).
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2. In the Notice, the Commission tentatively concluded that part 62
of its rules governing interlocking directorates is no longer necessary
to the public interest and therefore should be repealed. Specifically,
the Commission proposed to eliminate the requirements that: (1)
application be made to hold interlocking positions with more than one
carrier subject to the Act where one carrier sought to be interlocked
is either a dominant carrier, or a carrier not yet determined to be
non-dominant; (2) applications for findings of common ownership be
filed if dominant carriers are involved; (3) interlocking positions of
more than one carrier subject to the Act involving non-dominant
carriers, connecting carriers, cellular licensees operating in
different geographic markets, and parents of carriers, among others, be
reported to the Commission within 30 days after such interlock occurs;
and (4) any change in status as reported under part 62 of the rules be
reported to the Commission within 30 days of such change.
3. Additionally, in the Notice, the Commission tentatively
concluded that it should forbear from enforcing those provisions of
section 212 of the Act that address interlocking directorates. Section
10 of the 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. In the Notice, the Commission tentatively
concluded that section 212 of the Act: (1) is not necessary to ensure
that carriers' charges, practices, or classifications are just and
reasonable, and are not unjustly or unreasonably discriminatory; and
(2) is not necessary for the protection of consumers. The Commission
also tentatively concluded that forbearance from applying interlocking
directorate requirements is consistent with the public interest.
4. The Commission received eleven comments and one reply comment in
this proceeding. All but one commenter support the Commission's
tentative conclusions that the Commission should repeal part 62 of its
rules and forbear from enforcing the interlocking directorate
provisions of section 212 of the Act.
5. In the Report and Order, the Commission concludes that it should
repeal part 62 of its rules, which implements section 212 of the Act.
Specifically, the Commission concludes that it should delete its rules
that require: (1) dominant carriers and those carriers not yet found to
be non-dominant to seek Commission approval prior to accepting an
interlocking directorate position; (2) non-dominant carriers,
connecting carriers, parent companies, and other carriers as may be
required under our rules, to file post interlocking directorate
reports; (3) carriers desiring authorization to hold interlocking
directorates based on a finding of common ownership to make specific
filings with the Commission; and (4) carriers that undergo a change in
status with respect to interlocking directorate status to file a change
of status report. The Commission found that interlocking directorates
rarely threaten to constrain competition. More precisely, the
Commission finds it difficult to envision a proposed interlock that the
Commission would conclude to be anticompetitive, ab initio, such that
the Commission would deny approval for such interlock. To the extent
that potentially anticompetitive interlocks may occur, the Commission
further finds that other Title II provisions and antitrust laws
adequately protect against the particular concerns its Part 62 rules
seek to address. Therefore, the Commission found that its rules are no
longer necessary in the public interest and should be repealed.
The Commission also concludes that, pursuant to section 10 of the
Act, the Commission should forbear from enforcing the interlocking
directorate provisions of section 212 of the Act. In the Notice, the
Commission tentatively concluded that the Commission should forbear
from enforcing the provisions of section 212 of the Act requiring any
person seeking to hold the position of officer or director with more
than one carrier subject to the Act to seek prior Commission approval.
The Commission tentatively concluded that these provisions of section
212 of the Act: (1) Are not necessary to ensure that a carrier's
charges, practices, or classifications are just and reasonable, and are
not unjustly or unreasonably discriminatory; and (2) are not necessary
for the protection of consumers. The Commission also tentatively
concluded that forbearance from enforcing these requirements is
consistent with the public interest. The Commission recognized in the
Notice that section 212 of the Act applies to carriers in
telecommunications markets that may not yet be fully competitive, and
therefore, sought comment on whether the analysis undertaken to
consider forbearance from enforcing section 212 of the Act should vary
from market to market. No commenter opposes the Commission's tentative
conclusion that the Commission should forbear from section 212 of the
Act as applied to all carriers in all telecommunications markets. For
all the reasons detailed previously in support of eliminating its part
62 rules, the Commission concludes that each of the statutory criteria
for forbearance is satisfied, and therefore, that it should forbear
from enforcing these provisions of section 212 of the Act in all
markets.
V. Final Regulatory Flexibility Act Analysis
8. As required by the Regulatory Flexibility Act (RFA), the
Commission incorporated an Initial Regulatory Flexibility Analysis
(IRFA) of the possible significant economic impact on small entities by
the policies and rules proposed in the Notice. The Commission sought
written public comment on the proposals in the Notice, including
comment on the IRFA. This present Final Regulatory Flexibility Analysis
(FRFA) conforms to the RFA.
9. Need for, and Objectives of, this Action: The Commission
initiated its examination of its part 62 rules as part of its 1998
biennial review of regulations as required by section 11 of the
Communications Act of 1934, as amended. The Commission also issued the
Notice to review its regulatory regime for interlocking directorates,
and to determine whether in light of section 10 of the Act, the
Commission should forbear from applying such requirements. The purpose
of the Report and Order is to delete part 62 of the Commission's rules,
which the Commission finds are no longer
[[Page 43939]]
necessary in the public interest. The Commission also has determined
that it should forbear from addressing those provisions in section 212
of the Act that address interlocking directorates.
10. Summary of Significant Issues Raised by Public Comments in
Response to the IRFA: In the IRFA, the Commission sought comment on
whether repealing part 62 of its rules and forbearing from section 212
would benefit small entities. The Commission received no comments in
response to the IRFA. Several commenters, including one small entity,
however, indicated that the proposals in the Notice would benefit small
entities by reducing unnecessary regulatory burdens.
11. Description, potential impact, and number of small entities
affected: In this order, the Commission has decided to repeal part 62
of its rules, which includes eliminating the post-interlock filing
requirement for non-dominant carriers, many of whom may be small
entities. The Commission also has decided to forbear from enforcing
those provisions of section 212 of the Act addressing interlocking
directorates. Forbearance from enforcing these rules will benefit small
entities by reducing the regulatory burden to which small businesses
would otherwise be subject.
12. 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.'' 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). 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. 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.
13. 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).
According to data in the most recent report, there are 3,459 interstate
carriers. These carriers include, inter alia, local exchange carriers,
wireline carriers and service providers, interexchange carriers,
competitive access providers, operator service providers, pay telephone
operators, providers of telephone toll service, providers of telephone
exchange service, and resellers.
14. 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.''
15. 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. 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.'' Additionally, we note that the
number of small entities affected by this rule change as set forth in
this Order is less than the total number of telephone companies as
stated herein, because as discussed, 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 Order.
16. 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. According to SBA's definition, a small
business telephone company other than a radiotelephone company is one
employing no more than 1,500 persons. All but 26 of the 2,321 non-
radiotelephone companies listed by the Census Bureau were reported to
have fewer than 1,000 employees. Thus, even if all 26 of those
companies had more than 1,500 employees, there would still be 2,295
non-radiotelephone companies that might qualify as small entities 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 in this Order.
17. 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). According to our most recent data, 1,371 companies
reported that they were engaged in the provision of local exchange
services. 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
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entity LECs or small incumbent LECs that may be affected by the
decisions in this Order.
18. 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. 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 interexchange services.
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 in this Order.
19. 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.
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 in this Order.
20. 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. 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, 441 companies reported that they were engaged in the
provision of pay telephone services. 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.
21. 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. 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 in this Order.
22. 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. 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. 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 adopted in this Order.
23. 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.
24. 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. According to SBA's
definition, a small business radiotelephone company is one employing no
more than 1,500 persons. 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 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 decisions adopted in this Order.
25. Recording, record keeping, and other compliance requirements:
No additional paperwork will be required by the decisions adopted in
this proceeding. This proceeding eliminates filing requirements set
forth in part 62 of the Commission's rules.
26. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered: The impact of this
proceeding should be beneficial to small businesses, because
eliminating the Commission's part 62 rules will reduce the reporting or
recordkeeping
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requirements on all communications common carriers.
27. Report to Congress: The Commission will send a copy of this
Order, including this FRFA, in a report to be sent to Congress pursuant
to the Small Business Regulatory Enforcement Fairness Act of 1996, 5
U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of
this Order, including FRFA, to the Chief Counsel for Advocacy of the
Small Business Administration. A copy of the Order and FRFA (or
summaries thereof) will also be published in the Federal Register.
VI. Conclusion and Ordering Clauses
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, the policies, rules, and requirements set
forth herein ARE ADOPTED.
29. It is further ordered That pursuant to section 11 of the
Communications Act of 1934, as amended, 47 U.S.C. 161, that part 62 of
the Commission's rules, 47 CFR part 62, is no longer in the public
interest, and therefore is REMOVED, effective 30 days after publication
of the text thereof in the Federal Register.
30. It is further ordered That pursuant to section 10 of the
Communications Act of 1934, as amended, 47 U.S.C. 160, the Commission
WILL FORBEAR from those provisions of section 212 addressing
interlocking directorates, 47 U.S.C. 212, effective 30 days after
publication of the text thereof in the Federal Register.
31. It is further ordered That the Commission's Office of Public
Affairs, Reference Operations Division, shall send a copy of this
Order, including the Final Regulatory Flexibility Analysis, to the
Chief Counsel for 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.
William F. Caton,
Deputy Secretary.
Rule Changes
PART 62--[REMOVED]
Accordingly, under the authority 47 U.S.C. 154, amend 47 CFR
chapter I by removing part 62.
[FR Doc. 99-20886 Filed 8-11-99; 8:45 am]
BILLING CODE 6712-01-U
