[Federal Register Volume 61, Number 171 (Tuesday, September 3, 1996)]
[Proposed Rules]
[Pages 46420-46430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22348]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 22
[WT Docket No. 96-162; GEN Docket No. 90-314; FCC 96-319]
Competitive Service Safeguards for Local Exchange Carrier
Provision of Commercial Mobile Radio Services
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: In this Notice of Proposed Rulemaking (NPRM), in WT Docket No.
96-162 and GEN Docket No. 90-314, the Commission initiates a
comprehensive review of the existing regulatory framework of structural
and nonstructural safeguards for local exchange carrier (LEC) provision
of commercial mobile radio services (CMRS). The Commission proposes to
eliminate the current requirement that Bell Operating Companies (BOCs)
must provide cellular service through a structurally separate
corporation. The Commission also proposes rule changes necessary to
implement those provisions of the Telecommunications Act of 1996,
Public Law 104-104, 110 Stat. 56 (1996) (``the 1996 Act'') that govern
the joint marketing of CMRS and landline services, protections for
customer proprietary network information (CPNI) and network information
disclosure. The Commission's objective is to implement further the
mandate of the Omnibus Budget Reconciliation Act of 1993, Title VI,
Sections 6002(b)(2)(A), 6002(b)(2)(B), Public Law No. 103-66, 107 Stat.
312, 392 (1993) to treat similar commercial mobile radio services
similarly by placing all CMRS licensees under a uniform set of
nonstructural safeguards.
DATES: Comments must be filed on or before October 3, 1996. Reply
comments are to be filed on or before October 24, 1996. Comment of the
Office of Management and Budget on the information collections
contained herein are due November 4, 1996.
ADDRESSES: Federal Communications Commission, 1919 M Street, NW.,
Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: Jane Halprin or Mika Savir, Commercial
Wireless Division, Wireless Telecommunications Bureau, at (202) 418-
0620.
SUPPLEMENTARY INFORMATION: This Notice of Proposed Rulemaking in WT
Docket No. 96-162 and GEN Docket No. 90-314, adopted on July 25, 1996
and released on August 13, 1996, is available for inspection and
copying during normal business hours in the FCC Reference Center, Room
575, 2000 M Street, NW., Washington, DC. The complete text may also be
purchased from the Commission's copy contractor, International
Transcription Service, Inc., 2100 M Street, NW., Suite 140, Washington,
DC 20037, (202) 857-3800. Synopsis of the Notice of Proposed
Rulemaking:
I. Background
1. Currently, there are distinct rules for BOC provision of
cellular service versus non-BOC provision of personal communications
service (PCS) and other commercial mobile radio services. BOCs are
required to provide cellular service through structurally separate
subsidiary corporations, whereas all other LECs may provide cellular
service on an unseparated basis. Moreover, the Commission has declined
to impose these restrictions on LEC, including BOC, provision of other
CMRS, such as PCS and specialized mobile radio (SMR)
[[Page 46421]]
service. The BOCs have sought relief from the Commission's cellular
structural separation rule on the grounds of changed circumstances and
competitive necessity. The BOCs' challenges to the continued viability
of the restrictions contained in Section 22.903 are premised on two
points: (1) the Commission's existing interconnection rules and
accounting safeguards are sufficient to protect against anti-
competitive behavior by the BOCs; and (2) LECs that are not BOCs are
treated differently with respect to the provision of cellular service
and other commercial mobile radio services. In response, parties
opposing grant of such waivers have cited the broader competitive
implications of the individual waiver requests, and have generally
disputed the BOC claims.
2. A central purpose of the 1996 Act is to provide open access to
local and other telecommunications markets in order to encourage entry
by new competitors. Structural separation was originally imposed over a
decade ago on certain LECs to prevent them from leveraging their market
power in the local exchange market into other competitive markets, such
as cellular service. The Commission notes that CMRS providers will, in
the very near term, need to enter into a series of agreements with
local exchange incumbents for such things as the mutual exchange of
traffic, the location of equipment, and the sharing of network
functionalities. Effective competitive safeguards, where a demonstrated
need exists, should permit competitors to construct their networks,
implement their business plans, and begin offering service to customers
with the reasonable assurance that the incumbent LEC will not be able
to extend its market power into the critical new PCS market.
3. The original version of Section 22.903 was adopted as Section
22.901 in 1981 when the Commission amended Part 22 of the rules to
provide for the authorization of two cellular licensees in each
market--one wireline carrier and one non-wireline carrier. To preserve
the competitive potential of the non-wireline cellular provider, the
Commission required the wireline carrier to provide its cellular
service through a structurally separate subsidiary, i.e., an
independent corporation with separate officers, separate books of
account, and separate operating, marketing, installation and
maintenance personnel, and also prohibited cellular licensees
affiliated with landline LECs from owning facilities for the provision
of landline telephone service. The structural separation requirement
was intended to protect against improper cross-subsidization, to assure
equitable interconnection arrangements, and to make the detection of
anti-competitive conduct somewhat easier for regulatory authorities.
4. In 1982, the Commission revised Section 22.901 to apply only to
AT&T and its affiliates. In 1983, the Commission further amended
Section 22.901 in response to the breakup of AT&T under the divestiture
agreement entered into by AT&T and the Department of Justice. A final
revision of the cellular structural separation requirement occurred in
the Part 22 Rewrite Order, Revision of Part 22 of the Commission's
Rules Governing the Public Mobile Services, CC Docket No. 92-115,
Report and Order, 59 FR 59502 (November 17, 1994) (Part 22 Rewrite
Order), reconsideration pending, as part of the Commission's
comprehensive reorganization of Part 22 of the rules. In the Part 22
Rewrite Order, Section 22.903 was amended to incorporate the provisions
of former Section 22.901. Section 22.903 essentially consists of two
parts: (1) the requirement that BOCs provide cellular service through a
separate corporation; and (2) a series of restrictions on the operation
of that separate affiliate, including restrictions on use and ownership
of landline transmission facilities and requirements for the
independent operation of the separate cellular affiliate through
separate books of account, officers, operating, marketing, installation
and maintenance personnel and utilization of separate computer and
transmission facilities in the provision of cellular service. In
addition, Section 22.903(d) requires that all transactions between the
BOC and the cellular subsidiary or its affiliates be reduced to writing
and that a copy of all agreements (other than interconnection
agreements) between such entities be kept available for inspection upon
reasonable request by the Commission. It also requires that all
affiliate contracts with respect to cellular/landline interconnection
be filed with the Commission; however, this requirement does not apply
to any transaction governed by an effective state or federal tariff.
Section 22.903(e) prohibits BOCs from engaging in the sale or promotion
of cellular service on behalf of the separate corporation. This
prohibition does not extend to joint advertising or promotions by the
landline carrier and its cellular affiliate. Finally, the rule
prohibits the provision of BOC customer proprietary network information
(CPNI) to the cellular affiliate, unless such CPNI is made publicly
available on the same terms and conditions.
5. The Broadband PCS Order, Amendment of the Commission's Rules to
Establish New Personal Communications Services, GEN Docket No. 90-314,
Second Report and Order, 58 FR 59174 (November 8, 1993),
reconsideration, 59 FR 32830 (June 24, 1994) (Broadband PCS Order),
found that allowing LECs to participate in PCS may produce significant
economies of scope between wireline and PCS networks, and that these
economies will promote more rapid development of PCS, yield a broader
range of PCS services at lower costs to consumers, and should encourage
LECs to develop their wireline architectures to better accommodate all
PCS. Thus, the Commission declined to impose structural separation for
PCS providers affiliated with LECs, including the BOCs, reasoning that
such limitations on the ability of LECs to take advantage of their
potential economies of scope would jeopardize, if not eliminate, the
public interest benefits sought through LEC participation in PCS. The
Commission further concluded that the cellular-PCS cross-ownership
policies are adequate to ensure that LECs do not behave in an anti-
competitive manner. The Commission also found that existing accounting
safeguards were sufficient to protect against cross-subsidization by
the LECs, and therefore declined to impose additional cost-accounting
rules on LECs that provide PCS service. The Broadband PCS Order also
reiterated that commencement of PCS operations by LECs would be
contingent on the LEC implementing an acceptable non-structural
safeguards plan.
6. In the CMRS Second Report and Order, Implementation of Sections
3(n) and 332 of the Communications Act, Regulatory Treatment of Mobile
Services, GEN Docket No. 93-252, Second Report and Order, 59 FR 18493
(April 19, 1994) CMRS Second Report and Order), reconsideration
pending, the Commission concluded that all LECs with CMRS affiliates
must follow the same accounting safeguards that were adopted in the PCS
proceeding. The Commission observed that these safeguards were
necessary to prevent cost-shifting from the non-regulated affiliates to
the regulated ratebase of the LEC. The Commission also noted that the
commenters had raised important issues with respect to the potential
role of accounting, structural separation, and other safeguards in
promoting a competitive CMRS environment. At that time, due to
inadequate notice and an insufficient record, the Commission
[[Page 46422]]
again declined to address the issue of removing the cellular structural
separations requirements for the BOCs.
7. In Cincinnati Bell, Cincinnati Bell Telephone v. FCC, 69 F.3d
752 (6th Cir. 1995) (Cincinnati Bell), the Sixth Circuit Court of
Appeals found that the Commission had failed to adequately justify its
retention of Section 22.903, in light of the Commission's decision
permitting LECs (including BOCs) to provide PCS under nonstructural
safeguards. The court stated that the Commission was required to give a
reasoned explanation of its disparate treatment of the Bell companies.
Accordingly, the court remanded the matter to the Commission with
instructions to promptly conduct an inquiry into whether the structural
separation requirement continues to serve as a necessary regulatory
restriction on BellSouth and other Bell Operating Companies. Both
before and after Cincinnati Bell, a number of BOCs filed waiver
petitions seeking varying forms of relief from the requirements of
Section 22.903. The Commission has granted one such waiver
(Southwestern), another has been withdrawn (BellSouth), and the
remainder (US West, Bell Atlantic) are pending.
8. The 1996 Act contains specific requirements that BOCs be
permitted to enter into previously prohibited or constrained lines of
business, including, inter alia, in-region interLATA telecommunications
services, interLATA manufacturing, information, and electronic
publishing services through a separate affiliate. In certain cases,
this separate subsidiary requirement ``sunsets'' after a number of
years. With respect to in-region interLATA service, these separate
affiliates are under additional structural and transactional
constraints including the requirement that the BOC deal with the
separate affiliate on an arm's length basis. Section 272(c), 47 U.S.C.
Sec. 272(c), imposes additional nondiscrimination safeguards on a BOC's
dealings with its separate affiliate. With the addition of Section
601(d), Public Law 104-104, 110 Stat. 56 (1996), the 1996 Act expressly
permits BOCs to market jointly and sell CMRS together with a variety of
landline services. Section 222, 47 U.S.C. Sec. 222, contains new
requirements for maintaining the confidentiality of proprietary
information.
II. Notice of Proposed Rulemaking
A. BOC Cellular Safeguards
In this NPRM, the Commission addresses one of the issues remanded
by the Sixth Circuit in Cincinnati Bell: whether the structural
separation requirement continues to serve as a necessary regulatory
restriction on the BOCs. The Commission proposes a series of amendments
to the rule intended to provide BOCs sufficient flexibility in serving
the public, while preserving the ability to detect and correct any
potential anti-competitive behavior, whether that be cost shifting,
interconnection discrimination, or some other form of leveraging the
BOCs' dominant position in the local exchange market. The Commission
also seeks comment on whether the public interest would be better
served by (1) a transitional arrangement whereby some aspects of the
current structural separation requirements would be retained during an
interim period; or (2) immediate replacement of Section 22.903 with the
uniform streamlined safeguards proposed for in-region LEC PCS and other
commercial mobile radio services.
10. One of the primary objectives underlying the Commission's
adoption of structural separations was to prevent interconnection
discrimination by BOCs in their relationship with affiliated and
unaffiliated cellular carriers. In considering whether to retain
structural separation for BOC cellular service, the Commission is
taking into account whether proposed changes to the existing LEC CMRS
interconnection policies either support retention of Section 22.903, or
demonstrate its obsolescence. In addition, the 1996 Act contains
significant new provisions with respect to interconnection. The
Commission has examined LEC CMRS interconnection issues in recent
dockets. In the Interconnection Compensation NPRM, Interconnection
Between Local Exchange Carriers and Commercial Mobile Radio Service
Providers, CC Docket No. 95-185, Notice of Proposed Rulemaking, 61 FR
03644 (February 1, 1996) (Interconnection Compensation NPRM), the
Commission found that if the commercial mobile radio services are to
compete directly against LEC landline services, it is important that
the prices, terms and conditions of interconnection arrangements not
serve to buttress LEC market power against erosion by competition.
Section 251, 47 U.S.C. Sec. 251, imposes extensive interconnection
obligations on all telecommunications carriers, and particularly on
LECs and incumbent LECs. Section 251(a) imposes a general duty on all
telecommunications carriers (1) to interconnect directly or indirectly
with the facilities and equipment of other telecommunications carriers;
and (2) not to install network features, functions, or capabilities
that do not comply with the guidelines and standards established
pursuant to Section 255 or 256. The new interconnection obligations in
Section 251(b) for LECs govern LEC provision of resale, number
portability, dialing parity, access to rights-of-way, and reciprocal
compensation for the transport and termination of traffic originating
on another carrier's facilities. Section 251(c) contains additional
obligations for incumbent LECs, which include, inter alia: (1) good
faith negotiation of terms and conditions of agreements to fulfill
Section 251 (b) and (c) interconnection obligations; (2) provision of
interconnection with the LEC's network for transmission and routing of
telephone exchange and exchange access service, at any technically
feasible point, that is at least equal in quality to that provided by
the LEC to itself or any affiliate or other party, on rates, terms and
conditions that are just, reasonable and nondiscriminatory; (3)
provision of unbundled, nondiscriminatory access to network elements to
any requesting telecommunications carrier, at any technically feasible
point on rates, terms and conditions that are just, reasonable and
nondiscriminatory; (4) provision of public notice of changes in the
information necessary for transmission and routing of services using
the LEC's network or of changes that would affect interoperabililty;
and (5) the duty to provide physical collocation of equipment necessary
for interconnection or access to unbundled network elements at the
premises of the LEC, on reasonable and nondiscriminatory rates, terms
and conditions, unless the LEC demonstrates to the State commission
that physical collocation is not practical due to technical reasons or
space limitations, in which case the LEC may provide virtual
collocation. Section 252 contains procedures for negotiation,
arbitration, and approval of agreements, and gives the States authority
to resolve interconnection disputes arising under Sections 251 and 252.
In addition, a LEC must make available to any requesting carrier, on
the same terms and conditions, any interconnection, service, or network
element provided under an approved agreement to which it is a party.
11. The question remanded by the Sixth Circuit is whether the
structural separation requirements of Section 22.903 continue to serve
as a necessary
[[Page 46423]]
regulatory restriction on the BOCs, or whether changed circumstances
have either obviated the need for such restrictions, or rendered them
contrary to the public interest. The Section 22.903 restrictions on the
BOCs were imposed, as a general matter, to prevent them from leveraging
their dominance into the newly created cellular service markets. The
structural separation requirements were specifically intended to
protect BOC local exchange ratepayers by preventing cross-subsidization
of the more competitive cellular service, and to prevent discriminatory
interconnection practices with respect to the non-wireline cellular
provider, by requiring that the wireline and non-wireline entities
exist independently from one another with respect to facilities,
operations, management and other personnel. With respect to both cross-
subsidization and interconnection, structural separation was believed
to permit easier detection and disclosure of improper activities and to
reduce unnecessary regulatory intrusion into competitive or unregulated
operations.
12. The Commission has also recognized that structural separation
entails costs to the carriers, in the form of lost efficiencies of
scope and added costs of establishing separate facilities, operations,
and personnel, as well as lost opportunities for customers to obtain
integrated and innovative service packages. In the case of CPE and
enhanced services, the Commission recognized costs to small business
and residential customers because the BOCs, which already had existing
marketing contacts with households in their service regions, could not
inform them of new and desirable enhanced service offerings, such as
voice messaging, through existing marketing contacts. The result, in
many cases, was that such customers would never learn of the
availability of such desired offerings at all. Thus, the public benefit
of dissemination of advanced telephone offerings that has been the
product of joint marketing of basic and enhanced services and CPE was
found to outweigh the costs to competition of integrated BOC offerings,
if such integrated services were provided pursuant to appropriate
nonstructural safeguards.
13. The Commission referred to the economies of scope arising from
the use of wireless loops and wireless tails in the broadband PCS
orders, but there were no specific findings about the public benefits
of integrated operations or joint marketing of BOC cellular and
landline services. The only nonstructural safeguards specifically
addressed in the broadband PCS proceeding were the cost accounting and
allocation rules contained in Parts 32 and 64 of the Commission's
rules. Thus, the nature of the nonstructural safeguards, other than the
accounting rules, that might be applied in lieu of structural
separations to LEC-provided CMRS has never been squarely addressed by
this Commission until this NPRM.
14. The Commission observes that Congress has concluded as a
general matter that such requirements, together with associated
nondiscrimination safeguards, constitute an appropriate initial
safeguard for BOC entry into the provision of certain competitive
services, which can be phased out as markets become more competitive.
At the same time, the Commission notes that the BOCs have been subject
to structural separation requirements for their cellular operations
since their inception, and that the BOCs are generally incumbents in
CMRS markets, facing market entry by PCS competitors. In this NPRM, the
Commission explores varying approaches to separate affiliate and
nondiscrimination safeguards for BOC cellular operations, while
proposing to give full expression to Congressional intent regarding
joint marketing, customer proprietary information and network
information disclosure requirements.
15. The Commission finds that although there have been vast changes
in the nature of the wireless market since the 1981 imposition of the
BOC cellular structural separation requirement, the market power of the
BOCs in the landline local exchange and exchange access markets has
remained relatively stable, and is likely to remain so until the market
entry and interconnection changes authorized by the 1996 Act occur. The
BOCs thus currently retain market power in the local exchange market,
and therefore control over public switched network interconnection
within their in-region states. The Commission seeks comment as to
whether in-region application of separate affiliate and
nondiscrimination requirements would continue to serve as an important
regulatory check on the BOCs' market power in local exchange.
16. Interconnection. Prevention of interconnection discrimination
was one of the central justifications for imposing structural
separation. A separate cellular affiliate provides a template by which
to measure the rates, terms, and conditions of these entities'
interconnection agreements with their affiliated LECs. The effective
enforcement of nondiscrimination rules depends on the visibility of the
transactions under scrutiny. Such visibility does not depend on
structural separation per se, but could be achieved through a more
limited separate affiliate requirement, including one that permitted
integrated management with affiliates providing landline services. The
Commission believes that it will be particularly crucial to retain some
form of separate affiliate requirement, either structural or non-
structural, as the new CMRS entrants begin to negotiate their
interconnection arrangements with the incumbent BOCs. The Commission
seeks comment on this analysis.
17. Price Discrimination. The Commission is concerned that the
possibility of discrimination by a BOC or incumbent LEC in favor of its
own cellular operations and against other CMRS providers could be
increased absent some form of separate subsidiary requirement, either
structural or non-structural, and that the Commission's tasks of
detecting such discrimination and determining whether it is reasonable
or unreasonable would be greatly complicated. The Commission seeks
comment on the value of separate affiliates in detecting and deterring
pricing discrimination, and whether the degree of separation (i.e.,
structural versus non-structural) has any effect on the value of this
safeguard.
18. Cross-subsidization. The Commission observes that some
commenters continue to argue that cross-subsidization is possible even
under a price cap regime, for those services that are either not
subject to a pure price cap option, or continue to be regulated under a
rate-of-return system at the intrastate level. Presumably, the cost-
shifting these parties are concerned with would occur between the as-
yet primarily intrastate competitive cellular service and the
intrastate as-yet primarily monopoly local exchange service. The
Commission seeks further comment on these issues, and urges the parties
alleging continued cross-subsidy problems under price caps to provide
specific data in support of their claims and to address the relative
value of structural and non-structural separate affiliate requirements
in this regard.
19. Leveraging of Market Power. The Commission notes that one
concern with respect to integrated landline and cellular operations has
been the incentives and opportunities such a corporate structure
provides for leveraging of the LEC's local exchange market power into
the more competitive cellular market. The Commission is concerned about
the potential for abuses in provisioning, installation, maintenance and
customer network design that might not be addressed adequately by the
uniform nonstructural
[[Page 46424]]
safeguards proposed for LEC provision of CMRS, at least during the
transitional period before implementation of the 1996 Act's
interconnection and network unbundling provisions. Structural
separation, if continued on an interim basis, could prevent, for
example, the BOC from tasking a single set of officers and personnel
with the interconnection arrangements for its cellular unit's PCS
competitor as well as dealings with that competitor's major customers
to provide local exchange service, or cellular service, or both. The
Commission notes that nonstructural safeguards would not prevent such
sharing of personnel and integrated management decisionmaking. The
Commission seeks comment on whether such integrated operations would
present realistic opportunities for anti-competitive conduct and, if
so, whether safeguards less restrictive than our current structural
separation rules would sufficiently constrain such conduct.
20. Costs and Benefits of Integrated Versus Structurally Separated
Operations. The Commission notes that the BOCs have sought relief from
Section 22.903 primarily so that they could benefit from the cost
efficiencies of integrated operations, and so that their customers
could benefit from ``one-stop-shopping,'' i.e., a single point of
contact for all service, repair and billing needs. The Commission
observes Section 601(d) increases the flexibility afforded the BOCs to
meet customer demands without necessarily eliminating the remainder of
the structural separation requirement. The Commission seeks comment on
this analysis. Additionally, the Commission seeks data on the relative
benefit of integrated operations other than those relating to joint
marketing. The Commission seeks comment on specific public benefits
from integrated cellular/landline operations that structural separation
precludes. Parties submitting comments should provide specific
instances of savings, economies of scale and/or scope, or other
consumer benefits that they contend would be impossible without
integrated operations. The Commission is particularly interested in
receiving information and comment on the effect on the cost-benefit
analysis of recent initiatives seeking to introduce greater flexibility
for CMRS licensees' use of their spectrum.
21. Proposed revisions to Section 22.903--limitation to in-region
BOC cellular services. The Commission tentatively concludes that, at a
minimum, certain aspects of Section 22.903 may be safely relaxed to
permit the BOCs increased flexibility in meeting customer needs, while
at the same time protecting BOC ratepayers and wireless competitors.
The Commission believes that for out-of-region combined service
offerings, the costs to the carrier of establishing a subsidiary in
addition to their structurally separate cellular subsidiary to provide
integrated competitive landline local exchange (CLLE) and cellular
services outweigh any possible benefits to the public of such
fragmented operations. The Commission also believes that additional
relief is warranted for BOC provision of out-of-region cellular
service. The Commission tentatively concludes that Section 22.903
should be limited in scope to in-region services of the BOC and its
cellular operations, or, in the case of a joint venture between two or
more BOCs, the in-region services of all of the joint venture
participants together. The Commission tentatively concludes that such
relief would promote local exchange competition in those areas in which
the affiliated LEC is not the incumbent local exchange provider. The
Commission seeks comment on these tentative conclusions.
22. Proposed revisions to Section 22.903--interim relief for out-
of-region operations. The Commission eliminates any out-of-region
effect of Section 22.903, as part of the effort to narrowly tailor
restrictions to reach only the relationship between the incumbent BOC
and its cellular subsidiary in the incumbent's in-region service area.
The Commission concludes that the public interest would be served by
granting the BOCs interim relief from the out-of-region reach of our
existing Section 22.903 requirements. The Commission also concludes
that immediate out-of-region relief from Section 22.903 will benefit
consumers by promoting competition in those areas in which the BOC
cellular operation is not affiliated with the incumbent LEC by
permitting the BOCs to structure their out-of-region offerings to suit
their business judgment. The Commission further concludes that the BOCs
may exercise this degree of flexibility in provisioning their out-of-
region cellular services without undermining the core protections of
the rule for either the BOCs' in-region local exchange ratepayers, or
their cellular competitors. The Commission is granting to all BOCs a
waiver of the requirements of Section 22.903 with respect to the
provision of cellular service outside of their in-region service areas.
23. Ownership of Landline Facilities. Section 22.903(a) prohibits,
inter alia, BOC separate cellular affiliates from owning any facilities
for the provision of landline service. The Commission proposes to amend
the portion of Section 22.903(a) prohibiting the cellular affiliate
from owning any facilities for the provision of landline service to
permit a BOC cellular affiliate to own landline facilities for the
provision of landline services, including competitive landline local
exchange (CLLE) and interexchange service, in the same market with the
affiliated incumbent LEC. Thus, the rule would be modified only to
prohibit the cellular affiliate from owning, including jointly owning
with the incumbent affiliated LEC, landline facilities that the latter
uses in the provision of landline local exchange services. The
Commission believes that retention of this prohibition is appropriate
for the same reasons that the Commission proposes to include a limited
separate affiliate requirement in the proposed uniform LEC/CMRS
safeguards, i.e., to distinguish clearly between charges applied to all
interconnectors and joint cost allocations resulting from integrated
operations. The Commission believes that such relief would benefit the
public by enabling a new entrant to the local exchange market to
provide a package of services without the risk of LEC monopoly cross-
subsidization or interconnection discrimination. The Commission seeks
comment on this proposal.
24. BOC CMRS Joint Marketing and Resale; Section 222 CPNI
Requirements; and Section 251(c)(5) Network Information Disclosure
Obligations. The 1996 Act expressly permits a BOC to market jointly and
sell CMRS in conjunction with several types of landline service in
Section 601(d). The Commission tentatively concludes that Section
601(d) does not necessarily require the elimination of the remainder of
our current structural separation requirements. As support for this
conclusion, the Commission notes that the authority to engage in joint
marketing and sale of landline and CMRS services is expressly made
subject to the provisions of Section 272, which include separate
affiliate requirements. The Commission believes that it retains
authority and responsibility to determine the scope of Section 601(d),
the definition of joint marketing intended, and the rules to define the
relationship between the affiliated entities engaged in such joint
marketing. The Commission seeks comment on this interpretation of the
effect of Section 601(d).
25. The Commission proposes to define ``joint marketing'' as
referenced in that provision as the advertising, promotion, and sale,
at a single point of
[[Page 46425]]
contact, of the CMRS, telephone exchange service, exchange access,
intraLATA and interLATA telecommunications, and information services
provided by the BOC. Such joint marketing also includes, but is not
limited to, activities such as promotion, advertising and in-bound
service marketing. The Commission further tentatively concludes that
Section 601(d) restores the ability of the BOCs to engage in the joint
sale or promotion of cellular and landline service. The Commission
tentatively concludes that the public interest in preventing, and
permitting easy detection of, cross-subsidization requires that such
joint marketing be done on behalf of the separate affiliate, subject to
affiliate transaction rules and classified as a non-regulated activity,
on a compensatory, arms-length basis. The Commission seeks comment on
these tentative conclusions, and whether it should impose a requirement
similar to that of Section 272(b)(5) requiring that all transactions be
reduced to writing and made available for public inspection.
26. Integrated sales and marketing of resold cellular and incumbent
LEC landline local exchange service are clearly permitted under Section
601(d). The Commission seeks comment on whether it should impose
conditions implementing the resale authority under Section 601(d) of
the 1996 Act, and if so, what these conditions should be. In addition,
the Commission seeks comment on whether it should mandate public
disclosure of rates, terms, and conditions of service in cases where
the LEC is reselling its cellular affiliate's service. In the
alternative, the Commission seeks comment on whether the general
proscription against unjust or unreasonable discrimination in Section
202(a) and the formal complaint process are sufficient deterrents to
discriminatory resale practices. In addition, the Commission seeks
comment as to how implementation of Section 601(d) should affect
potentially related joint marketing and sale activities that are
currently prohibited under Section 22.903, such as joint installation,
maintenance, and repair of BOC cellular and landline local exchange
services. The Commission also seeks comment on the effect of the joint
marketing authorization on activities such as billing and collection.
27. Section 22.903(f) currently prohibits BOCs from providing any
customer proprietary information to a cellular affiliate unless such
information is publicly available on the same terms and conditions. The
Commission seeks comment whether the current CPNI rule in Part 22 is
inconsistent with Section 222. The Commission notes that continued
application of the existing rule would limit a customer's options in
granting approval for use or disclosure of, or access to, individually
identifiable CPNI under Section 222(c)(1) and (2). In addition, the
Commission seeks comment whether it should eliminate Section 22.903(f)
even if it were to determine that continued application of this rule is
not inconsistent with Section 222, on the grounds that the current rule
would be superfluous in light of the comprehensive statutory scheme put
in place by Section 222. In addition, the Commission seeks comment on
whether, in considering the joint marketing authorization in Section
601(d) of the 1996 Act together with the CPNI requirements contained in
the new Section 222, the Commission should require any particular BOC
organizational structure or procedures to guard against the
unauthorized disclosure of CPNI in the context of joint marketing of
CMRS and other BOC-provided services. The Commission asks for comment
on the need for, and formulation of, appropriate organizational and
procedural guidelines specific to the BOC/CMRS joint marketing
situation that would be in accord with both Section 601(d) and Section
222.
28. The Commission tentatively concludes that no specific Part 22
rule pertaining to network information disclosure by the BOCs is
necessary or appropriate. The Commission seeks comment on this
tentative conclusion. Commenters supporting a specific Part 22 rule
should provide information about particular technical or regulatory
issues to be addressed by such a rule.
29. Sunset/Elimination of Section 22.903. Section 22.903 and its
predecessor, Section 22.901, were established without sunset
provisions, or the requirement that the Commission periodically review
the continued need for the restrictions contained therein. In contrast,
the general approach of the 1996 Act to BOC-provided competitive
services is initial entry pursuant to establishment of separate
subsidiary corporations, through which the competitive service must be
provided for a period of years. In the case of BOC entry into interLATA
services, a competitive checklist must be met prior to BOC entry into
that competitive market, and such entry must be through a structurally
separate corporation. This structural separation continues for three
years after the BOC receives in-region interLATA authorization, unless
extended by order of this Commission. With respect to other competitive
services, the Act imposes sunset provisions of varying lengths.
30. The Commission seeks ultimately to eliminate any regulatory
asymmetry between BOC provision of cellular services, on the one hand,
and BOC provision of other CMRS as well as LEC provision of any CMRS,
on the other. Yet, the competitive safeguards contained in Section
22.903, as modified through the proposals above, may continue to serve
the public interest during the present crucial phase of entry of new
wireless competitors into the CMRS markets. Further, the realization of
the fundamental regulatory reforms contained in the 1996 Act, including
the opening of the LEC network for purposes of local exchange
competition pursuant to Section 251, would reduce the need for these
safeguards in the not too distant future, and would provide a
convenient milepost to mark a transition period. The Commission
therefore seeks comment on the addition of a sunset provision to
Section 22.903, similar to those contained in the 1996 Act for BOC
provision of other competitive services. Upon the sunset of the Section
22.903 requirements for each BOC's cellular operations, the Commission
proposes that such service would be governed by the uniform set of
competitive safeguards proposed below for all in-region LEC CMRS.
31. The Commission proposes to sunset the effectiveness of the
Section 22.903 requirements for a particular BOC in tandem with that
BOC's receipt of authorization pursuant to Section 271(d) to provide
interLATA service originating in any in-region State. In addition to
the interconnection requirements, the competitive checklist requires
BOCs to provide, inter alia, further unbundling of local loops,
switching and transport; nondiscriminatory access to 911 and E911
services; directory assistance, and operator call completion services;
and nondiscriminatory access to databases and associated signaling
necessary for call routing and completing. The effective implementation
of these requirements should provide potential CMRS competitors with
sufficient protection from interconnection discrimination and monopoly
leveraging such that the Commission may safely relax the degree of
separation required for BOC cellular operations. The Commission
believes that effectively conditioning relief from Section 22.903 upon
each BOC's meeting a ``competitive checklist'' may be a viable approach
to assure that, from the regulator's and the competitor's standpoint, a
sufficiently level playing
[[Page 46426]]
field is in place such that structural safeguards may safely be
eliminated. Moreover, this approach to sunsetting Section 22.903 would
provide the BOCs with an added incentive to meet the requirements of
the competitive checklist. The Commission seeks comment on this
formulation of an approach to sunsetting Section 22.903.
32. The Commission also seeks comment on alternative sunset dates.
Parties advocating a different sunset should provide information
supporting their recommendations. Parties proposing a sunset date and/
or competitive checklist different than that contained in Section 271
(c)(2)(B) and (d) should detail why their proposed factors are relevant
to the question of BOC cellular safeguards. Parties may also suggest
alterations to the list for purposes of setting a sunset date for our
Section 22.903 requirements. The Commission also notes that BOC entry
in some areas could potentially occur without a single facilities-based
competitor actually obtaining interconnection arrangements consistent
with Sections 251 and 252 as long as the BOC is generally offering
access and interconnection in a manner that meets the requirements of
the competitive checklist. The Commission seeks comment on the effect
of this aspect of Section 271 on the proposal to tie sunset of Section
22.903 to BOC entry into in-region interLATA markets.
33. The Commission seeks comment on whether it should forgo the
transition period described above, where a streamlined Section 22.903
would be in effect for BOC cellular operations until a designated
sunset, in favor of immediate elimination of Section 22.903 and its
replacement by the uniform set of safeguards proposed below. The
Commission is concerned about whether transitional structural
separation for BOC provision of cellular service, which is more
restrictive than any rules applying to other cellular providers or any
provision of PCS, will promote or inhibit the development of
competition. The Commission seeks comment on this aspect of our two
alternative safeguards proposals, and whether immediate elimination of
Section 22.903 in favor of uniform LEC CMRS safeguards will promote
competition and the public interest more effectively than the sunset
approach outlined above.
34. The Commission seeks comment on the relative costs and benefits
for the public and the BOCs if the independent operation and joint
research requirements were eliminated before the BOCs meet the
requirements of the competitive checklist in Section 271. Parties
should focus specifically on how the relative costs and benefits of
independent versus integrated management and personnel bear upon the
competitive equity issues discussed above.
35. BOC Provision of Incidental InterLATA CMRS. The Commission does
not believe that the authorization contained in Sections 271(g)(3) and
272(a)(2)(B)(i) for immediate BOC provision of in-region, incidental
interLATA service, defined as commercial mobile radio service, limits
the Commission's authority to retain the current BOC cellular separate
affiliate rules, or to prescribe alternative rules, should the
Commission determine that such rules constitute an appropriate
competitive safeguard. The Commission notes that Section 271(f)(3)
preserves the Commission's authority to prescribe safeguards consistent
with the public interest, convenience, and necessity. The Commission
seeks comment on this analysis.
B. Symmetry of Cellular Safeguards
36. The Commission notes that one of the principal criticisms of
the cellular structural separation requirement is that it applies only
to the BOCs, but not to other large LECs with similar characteristics,
particularly GTE. The lack of regulatory symmetry between BOC-provided
cellular service and LEC-provided cellular service under Section 22.903
presents a difficult problem in this period of transition to more
competitive landline and wireless markets. Rather than distinguish
between BOCs and other LECs, it would arguably be more consistent to
apply Section 22.903 to GTE, which is similar in size to the BOCs, or
to all LECs above a particular size, e.g., all Tier 1 LECs. The
rationale for imposing structural separation on the BOCs' cellular
service would appear to apply to all Tier 1 LECs. The Commission does
not propose to apply Section 22.903 to any additional LECs at this
time. The Commission seeks comment on this approach.
37. The Commission also proposes to require all the Tier 1 LECs to
implement the same service safeguards for their in-region cellular
service that is proposed for in-region PCS and other CMRS below. The
Commission seeks comment on the costs to the Tier 1 LECs of
establishing nonstructurally separate affiliates. The Commission does
not believe it appropriate to impose either a streamlined Section
22.903 or the proposed nonstructural competitive safeguards on any non-
Tier 1 independent and rural LECs because, on balance, the cost and
potential disruption of requiring non-Tier 1 LECs to establish new
separate affiliates for the provision of cellular service would likely
be significant, both in terms of the direct costs of incorporation and
lost efficiencies of joint operations, facilities, and staff. These
costs are obviously different than the going-forward costs of retaining
a structurally separate corporate entity, discussed above. The
Commission seeks comment on the nature and extent of such costs, and
asks that commenters be specific in their quantification of both direct
costs of separate incorporation, and of lost economies of scope. The
Commission seeks comment on the tentative conclusion that such costs
likely outweigh the benefits of imposing a limited separate affiliate
requirement.
C. Safeguards for Provision of CMRS by LECS
38. Cellular/PCS Regulatory Parity. The Commission seeks comment on
whether there are differences between cellular and PCS that justify
different regulatory treatment, at least in the short term. The
Commission notes that PCS was intended to be competitive with both
incumbent cellular systems and landline networks, and its identity as a
new entrant places PCS providers in a different competitive situation
from incumbent cellular carriers. The Commission intended that PCS
would compete with cellular service at the outset, and eventually
compete with, complement, or, where appropriate, replace landline local
exchange service. In addition, PCS providers face competitive hurdles
unlike those existing when the cellular service was established, such
as auction payments, competition with incumbent cellular providers
themselves, and the need, in some cases, to relocate incumbent
microwave users before PCS can become fully operational. Permitting
LECs greater flexibility in the provision of PCS than the BOCs enjoy
with respect to cellular was part of the Commission's plan to get PCS
into the market quickly, and to encourage the LECs to engineer their
network architectures in a ``PCS-friendly'' manner. This added degree
of flexibility may act as a counterbalance to the competitive hurdles
unique to PCS. The Commission seeks comment on whether this analysis
pertains today in the same way as when PCS was established as a new
service.
39. Need for Uniform Safeguards. The Commission believes that the
imposition of competitive safeguards in addition to accounting
safeguards for LEC provision of in-region broadband PCS will serve the
public interest. The Commission believes it is time to
[[Page 46427]]
replace the initial case-by-case approach with a uniform set of
requirements. This should be more efficient for both the carriers and
the Commission, as it will streamline the review process and provide a
consistent regulatory framework for future competition. The Commission
seeks comment on this analysis. The potential costs of imposing
additional nonstructural safeguards on LEC provision of PCS at this
time are different from the costs for either retaining structural
separation for BOC cellular service, or for extending such structural
separation requirements for the first time to other LECs, such as GTE.
In the case of BOC cellular service, the costs of establishing the
subsidiary have already been incurred, whereas in the case of the
independent LECs, the re-arrangement of existing corporate structures
would entail additional costs of a particular scope and nature. The
Commission also recognizes that, in the case of an entirely new service
such as in-region LEC broadband PCS, the start-up costs of structural
separation would likely be of a different nature and scope altogether.
Few LECs currently have in-region PCS licenses as a result of the
cellular-PCS cross-ownership and spectrum cap requirements. It is also
not clear how far along those other LECs are in building-out their PCS
networks and in structuring their PCS operations from an organizational
perspective. The Commission seeks comment on this analysis and on the
relative costs of imposing the requirements proposed herein.
40. In-Region/Spectrum Allocation Limitations. With respect to the
imposition of nonstructural safeguards, the Broadband PCS Order did not
distinguish between in-region versus out-of-region PCS, nor did it
distinguish among LEC PCS providers on the basis of the amount of PCS
spectrum they would be utilizing to provide service. The Commission
does not believe that the competitive dangers of integrated LEC
provision of landline and PCS outside of the local exchange service
areas in which they are the incumbent LEC raises the same concerns as
in-region integrated services. In fact, the Commission has found that
out-of-region competition from LECs offering integrated service
packages will promote local exchange competition. The Commission
therefore proposes to limit LEC PCS nonstructural safeguards to in-
region broadband PCS service. The Commission seeks comment on this
tentative conclusion. In addition, the Commission seeks comment on the
relevance of the distinction raised in the record between LEC holders
of 30 MHz versus 10 MHz in-region PCS licenses for the proposed uniform
nonstructural safeguards. Specifically, the Commission seeks comment on
whether it should exempt LEC licensees with no more than 10 MHz of PCS
spectrum from some or all of the competitive safeguards discussed
herein, with the exception of those safeguards which arise from the
provisions of the 1996 Act.
41. Applicability to Tier 1 LECs. The Commission believes that the
goal of regulatory symmetry should be tempered by a realistic
assessment of the costs and benefits of applying the proposed
competitive safeguards to small telephone companies. The Commission
notes that small telephone companies, particularly those operating in
rural areas, are uniquely positioned to provide wireless services to
populations which might otherwise not receive them. The Commission does
not want to unduly burden or discourage small telephone company entry
into cellular and PCS markets. The Commission does not believe that
these companies pose a significant threat of anti-competitive conduct
toward potential wireless competitors, as their ability to leverage
their bottleneck local exchange facilities is limited as compared to
that of the BOCs and the larger independents. The Commission also seeks
to ensure that the local exchange and exchange access customers of the
small telephone companies are not unduly burdened with the costs of
these companies' ventures in competitive wireless markets. The
Commission therefore would apply the uniform set of competitive
safeguards proposed here only to the Tier 1 LECs. The Commission seeks
comment on this proposal and on what changes, if any, to our accounting
rules are necessary or appropriate to ensure that LECs not subject to
the proposed competitive safeguards will not cross-subsidize PCS
activities from the regulated telephone ratebase.
42. The Commission proposes that all Tier 1 LECs providing
broadband PCS within their in-region states implement a nonstructural
safeguard plan, and file the plan for approval with the Commission. The
plan would include the following elements: (1) a description of a
separate affiliate, as defined herein, for the provision of PCS; (2) a
description of compliance with Part 64 and Part 32 accounting rules,
with copies of the relevant CAM changes attached; (3) a description of
planned compliance with all outstanding interconnection obligations;
(4) a description of compliance with all outstanding network disclosure
rules; and (5) a description of planned compliance with the CPNI
requirements in new Section 222. Additionally, the Commission proposes
to require that LEC in-region broadband PCS services should be provided
through a corporate affiliate that is separate from the LEC.
43. The Commission proposes to require the affiliate to meet the
following separation conditions: the affiliate must (1) maintain
separate books of account; (2) not jointly own transmission or
switching facilities with the exchange telephone company; and (3)
obtain any exchange telephone company-provided communications services
at tariffed rates and conditions. The Commission proposes to modify the
second requirement to conform with the proposed modification of the
facilities-sharing prohibition of Section 22.903(a). That is, the
separate PCS affiliate would not be permitted to have joint ownership
with the incumbent LEC of transmission and switching facilities that
the latter uses in the provision of landline services in the same in-
region market. The Commission seeks comment on these proposals.
44. The Commission tentatively concludes that these requirements
will not impose excessive burdens on LECs, while providing some
protection against cost-shifting and anti-competitive conduct, in the
case of Tier 1 LEC in-region PCS. The Commission tentatively concludes
that the separate affiliate requirement permits greater flexibility for
the LEC than the Section 22.903 structural separation requirement,
while preserving the competitive safeguards of separate books of
account, facilities, and tariffed services between the PCS affiliate
and its affiliated LEC. The Commission seeks comment on the effect that
changes in interconnection tariffing requirements under Sections 251
and 252 have on the requirement that the separate affiliate obtain any
exchange telephone company service at tariffed rates and conditions. In
addition, the Commission tentatively concludes that joint marketing of
PCS and LEC landline services should be permitted on a compensatory,
arm's length basis. Any such joint marketing must be subject to the
Part 64 cost allocation and affiliate transaction rule and the CPNI
requirements. The Commission seeks comment on these tentative
conclusions.
45. The Commission believes that the nonstructural safeguards plan
should address the separation of costs engendered by joint marketing
operations. The Commission believes that even with these filing
requirements only an annual audit will help
[[Page 46428]]
determine compliance with the accounting, affiliate transaction and
cost allocation rules. The Commission notes that all CAM changes are
also subject to comment and review by the Commission and interested
parties. The Commission believes that a description of the carrier's
procedures to ensure compliance with the Part 32 and 64 rules, together
with copies of the relevant CAM changes, is sufficient for purposes of
initial review of the carriers' nonstructural safeguards plans. This
initial review will determine whether adequate accounting procedures
are in place. The company's compliance with these procedures, however,
can only be determined through the existing annual audit process. The
Commission seeks comment on this analysis.
46. The Commission seeks comment on whether the same type of
organizational and procedural guidelines for the protection and
dissemination of CPNI for which the Commission is seeking comment
relating to BOC cellular operations, should apply to the PCS operations
of any LEC (including non-Tier 1 LECs) or interexchange carrier
possessing CPNI gathered in the provision of landline services. The
Commission also seeks comment as to whether there are any circumstances
under which the Commission should forbear from requiring a description
of such organizational structures and procedures, and rely instead on
enforcement procedures for any violations of the CPNI statutory
mandates. Such circumstances could include a weighing of relative costs
and benefits, as well as the significance of the CPNI at issue. The
Commission tentatively concludes that the filing of such descriptions
by non-Tier 1 LECs and non-dominant interexchange carriers holding PCS
licenses is not needed. The Commission seeks comment on this tentative
conclusion and this issue generally. In addition, the Commission seeks
comment on whether, for purposes of applying Section 222, cellular
service and PCS should be considered the same service (i.e., CMRS) such
that CPNI gained in the provision of one could be utilized without
restriction in the marketing of the other. The Commission also seeks
comment whether other CMRS, such as paging and Specialized Mobile
Radio, should be considered the same service as cellular service and
PCS for purposes of implementing Section 222 and what distinctions, if
any, should be made among these different types of CMRS. Finally, the
Commission seeks comment whether a toll service provided by means of
CMRS (e.g., cellular long distance) should be treated as a distinct
telecommunications service for purposes of implementing the new Section
222.
47. The Commission believes that in the case of LEC PCS two factors
render a lesser degree of separation appropriate. First, and most
importantly, the public interest benefits the Commission anticipates
from permitting LECs somewhat more flexibility in establishing their
PCS operations counterbalance the loss of the added level of protection
that complete structural separation under Section 22.903 provides. The
Commission's proposal that LECs establish nonstructurally separate
affiliates for the provision of in-region PCS is intended as an
interconnection safeguard that will render visible the LEC's
interconnection arrangements with its affiliate. The second factor is
one of timing. The Commission believes that the possible retention of
structural separation for the in-region BOC cellular service may act as
additional protection against anti-competitive actions with respect to
PCS competitors of the BOC cellular providers who are seeking
interconnection arrangements. The Commission seeks comment on this, and
asks that parties disagreeing with this analysis provide specific
examples and argument in support of their position.
48. In light of the statutory provision regarding public notice by
incumbent LECs of network technical changes and the implementation of
that provision, the Commission seeks comment on the need for specific
PCS rules pertaining to network information disclosure. Commenters
supporting a specific Part 24 rule should provide information about
particular technical or regulatory issues to be addressed by such a
rule.
49. With respect to LEC in-region broadband PCS, the Commission has
proposed a set of flexible service safeguards that strike an
appropriate balance between the Commission's pro-competitive goals and
the goal of expediting in-region LEC-provided broadband PCS service.
Nonetheless, assuming that competition in the local exchange market
increases to the point where LECs do not have market power in the
provision of local exchange service, those safeguards that are not
mandated by statute could be relaxed or eliminated. The Commission
seeks comment on whether the rules proposed here should be subject to a
sunset provision. The Commission also seeks comment on the appropriate
term of such a provision, or the conditions that would justify relaxing
or eliminating these restrictions in the future.
50. The Commission notes that Congress created the CMRS regulatory
classification and mandated that similar commercial mobile radio
services be accorded similar regulatory treatment under the rules.
Therefore, the Commission tentatively concludes that the nonstructural
safeguards discussed above for LEC provision of PCS should apply to
Tier 1 LEC provision of other in-region CMRS. The Commission seeks
comment on this proposal.
III. Conclusion
51. The Commission believes that the proposals in this NPRM are
consistent with the legislative mandate in the 1996 Act and will
promote competition in wireless communications markets by applying the
least intrusive means to curb the residual market power of the LECs.
The Commission intends to move rapidly to complete the comprehensive
review of the CMRS safeguards initiated by this NPRM, and to put into
place new, streamlined rules which accomplish the goals of promoting
wireless competition, limiting the exercise of market power, and
establishing regulatory symmetry.
IV. Procedural Matters and Ordering Clauses
A. Regulatory Flexibility Act
Summary: As required by Section 603 of the Regulatory Flexibility
Act, the Commission has prepared an Initial Regulatory Flexibility
Analysis (IRFA) of the expected impact on small entities of the
policies and rules proposed in this NPRM. Written public comments are
requested on the IRFA.
Reason for Action: The Commission is issuing this NPRM to review
the regulatory regime for the provision of commercial mobile services,
and to implement certain provisions of the Telecommunications Act of
1996. The proposals advanced in the NPRM are designed to explore
whether the BOC separate subsidiary requirement of Section 22.903
continues to be relevant in today's marketplace. The NPRM also proposes
streamlined safeguards for Tier 1 LECs seeking to provide PCS and other
commercial mobile services.
Objectives: The objective of the NPRM is to provide an opportunity
for public comment and to provide a record for a Commission decision
regarding appropriate competitive safeguards for landline telephone
companies seeking to provide wireless services. The NPRM proposes two
alternatives for modification of Section 22.903, the BOC/cellular
separate subsidiary
[[Page 46429]]
requirement. The first alternative is to retain the rule for in-region
provision of cellular service, subject to a sunset period. The second
alternative is to eliminate the rule immediately for in-region cellular
services. (The Commission waives the requirement for out-of-region
cellular service.) Further, the NPRM proposes a uniform set of
safeguards for Tier 1 LECs seeking to provide PCS and other CMRS
services.
Reporting, Recordkeeping and Other Compliance Requirements: The
LEC/PCS safeguards proposed in the NPRM would require that Tier 1 LECs
submit to the Commission a nonstructural safeguards plan. Smaller LECs
would not be subject to this requirement.
Federal Rules Which Overlap, Duplicate or Conflict With These
Rules: None.
Description and Number of Small Entities Involved: Because Section
22.903 only applies to the BOCs and because the proposed LEC/PCS
safeguards would apply only to the 23 Tier 1 LECs (including the BOCs),
no small entities would be affected by the proposals included in the
NPRM.
Significant Alternatives Minimizing the Impact on Small Entities
Consistent With the Stated Objectives: The NPRM proposes to adopt LEC/
PCS safeguards only for Tier 1 LECs and not for smaller LECs. A Tier 1
LEC is a local exchange carrier with over $100 million in revenues from
regulated telecommunications operations that are subject to the CAM
filing requirements of Section 64.903 of the Commission's Rules. The
Commission notes that small telephone companies are uniquely positioned
to provide wireless services to populations that might otherwise
receive them. The NPRM points out that the Commission wishes to take no
action that would unduly burden or discourage small telephone company
entry into cellular and PCS markets, nor do we believe that these
companies pose a significant threat of anti-competitive conduct toward
potential wireless competitors.
Legal Basis. The NPRM is adopted pursuant to Sections 1, 2, 4, and
332 of the Communications Act of 1934, as amended, 47 U.S.C. Secs. 151,
152, 154, and 332.
IRFA Comments. The Commission requests written public comment on
the foregoing Initial Regulatory Flexibility Analysis. Comments must
have a separate and distinct heading designating them as responses of
the IRFA and must be filed by the deadline for comments in response to
the NPRM.
B. Paperwork Reduction Act
This NPRM contains a proposed information collection. As part of
its continuing effort to reduce paperwork burdens, the Commission
invites the general public and the Office of Management and Budget
(OMB) to take this opportunity to comment on the information
collections contained in this NPRM as required by the Paperwork
Reduction Act of 1995, Public Law No. 104-13. Public and agency
comments are due October 3, 1996; OMB notification of action is due
November 4, 1996. Comments should address (a) whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have practical utility; (b) the accuracy of the Commission's
burden estimates; (c) ways to enhance the quality, utility, and clarity
of the information collected; and (d) ways to minimize the burden of
the collection of information on the respondents, including the use of
automated collection techniques or other forms of information
technology.
Dates: Written comments by the public on the proposed information
collections are due October 3, 1996. Written comments must be submitted
by the Office of Management and Budget (OMB) on the proposed
information collections on or before November 4, 1996.
Address: In addition to filing comments with the Secretary, a copy
of any comments on the information collections contained herein should
be submitted to Dorothy Conway, Federal Communications Commission, Room
234, 1919 M Street, N.W., Washington, D.C. 20554, or via the Internet
to dconway@fcc.gov, and to Timothy Fain, OMB Desk Officer, 10236 NEOB,
725-17th Street, N.W., Washington, D.C. 20503 or via the Internet to
fain__t@al.eop.gov.
Further Information: For additional information concerning the
information collections contained in this NPRM contact Dorothy Conway
at (202) 418-0217, or via the Internet at dconway@fcc.gov.
Supplementary Information:
Title: Amendment of the Commission's Rules to Establish Competitive
Service Safeguards for Local Exchange Carrier Provision of Commercial
Mobile Radio Services.
Type of Review: New Collection.
Respondents: Business or other for profit.
Number of Respondents: We estimate that approximately 25 Tier 1
LECs may submit a nonstructural safeguard plan.
Estimated Time Per Response: The average burden on the LEC is 30
hours to do the research and development and 30 hours to write and
review the plan. 25 plans x 60 hours=1,500 hours.
Estimated Cost to the Respondent: We presume that the LECs would
use attorneys and engineers (average $200 per hour) to prepare the
information. 25 plans x $200 per hour x 60 hours=$300,000.
Needs and Uses: This proceeding initiates a comprehensive review of
the existing regulatory framework of structural and nonstructural
safeguards for local exchange carrier (LEC) provision of commercial
mobile radio services (CMRS). All Tier 1 LECs providing broadband
Personal Communications Service (PCS) within their in-region states
will be required to implement a nonstructural safeguard plan and file
the plan for approval with the Commission. The plan should include the
following elements: (1) a description of a separate affiliate for the
provision of PCS; (2) a description of compliance with Part 64 and Part
32 accounting rules, with copies of the relevant Cost Allocation Manual
(CAM) changes attached; (3) a description of planned compliance with
all outstanding interconnection obligations; (4) a description of
compliance with all outstanding network disclosure rules; and (5) a
description of planned compliance with the Customer Propriety Network
Information (CPNI) requirements in Section 702 of the
Telecommunications Act of 1996 (which creates a new Section 222 of the
Communications Act). The Commission will use the information to
determine if the Tier 1 LECs are in compliance with our rules.
C. Ex Parte Presentations--Non-Restricted Proceeding
This is a non-restricted notice and comment rulemaking proceeding.
Ex parte presentations are permitted, except during the Sunshine Agenda
period, provided that they are disclosed as provided in the
Commission's rules. See generally 47 CFR 1.1202, 1.1203, 1.1206(a).
D. Comment Period
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 October 3, 1996. Reply comments
are to be filed on or before October 24, 1996. To file formally in this
proceeding, you must file an original and four copies of all comments,
reply comments, and supporting comments. If you want each
[[Page 46430]]
Commissioner to receive a personal copy of your comments, you must file
an original and nine copies. Comments and reply comments should be sent
to Office of the Secretary, Federal Communications Commission, 1919 M
Street, N.W., Room 222, Washington, D.C. 20554. Parties should also
submit two copies of comments and reply comments to Bobby Brown,
Commercial Wireless Division, Wireless Telecommunications Bureau, 2025
M Street, N.W., Room 7130, Washington, D.C. 20554. Parties should also
file one copy of any documents filed in this docket with the
Commission's copy contractor, International Transcription Services,
Inc., 2100 M Street, N.W., Suite 140, Washington, D.C. 20037.
E. Authority
The above action is authorized under the Communications Act of
1934, Secs. 1, 4, 222, 252(c)(5), 301, and 303, 47 U.S.C. Secs. 151,
154, 222, 252(c)(5), 301, and 303, as amended, and Section 601(d) of
the Telecommunications Act of 1996, Section 601(d), Public Law 104-104,
110 Stat. 56 (1996).
F. Ordering Clauses
It is ordered that pursuant to Sections 1, 4, 222, 252(c)(5), 301,
and 303 of the Communications Act of 1934, as amended, 47 U.S.C.
Secs. 151, 154, 222, 252(c)(5), 301, and 303, and Section 601(d) of the
Telecommunications Act of 1996, Section 601(d), Public Law 104-104, 110
Stat. 56 (1996), a notice of proposed rulemaking is hereby adopted.
It is further ordered that comments in WT Docket No. 96-162 will be
due October 3, 1996 and reply comments will be due October 24, 1996.
It is further ordered that, pursuant to Sections 1.3 and 22.19 of
the Commission's Rules, 47 CFR 1.3, 22.19, all Bell Operating Companies
are hereby granted a WAIVER of the provisions of Section 22.903 of the
Commission's Rules, 47 CFR 22.903 with respect to the provision of
cellular service outside of their in-region service areas as defined
herein.
It is further ordered that, pursuant to Sections 1.3 and 22.19 of
the Commission's Rules, 47 CFR Secs. 1.3, 22.19, a waiver of Section
22.903 with respect to the provision of cellular service outside of
their in-region service areas as defined herein, is GRANTED to Bell
Atlantic NYNEX Mobile, Inc. and US West, Inc.
It is further ordered that, the Secretary shall send a copy of this
Notice of Proposed Rulemaking, including the regulatory flexibility
certification, to the Chief Counsel for Advocacy of the Small Business
Administration, in accordance with paragraph 603(a) of the Regulatory
Flexibility Act, 5 U.S.C. Secs. 601 et seq.
List of Subjects in 47 CFR Part 22
Communications common carriers, Reporting and recordkeeping
requirements.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-22348 Filed 8-30-96; 8:45 am]
BILLING CODE 6712-01-P
