[Federal Register Volume 63, Number 150 (Wednesday, August 5, 1998)]
[Proposed Rules]
[Pages 41757-41765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20819]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 41
[FCC 98-152]
1998 Biennial Regulatory Review--Elimination of Part 41 Telegraph
and Telephone Franks
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: On July 21, 1998, the Federal Communications Commission
released a Notice of Proposed Rulemaking (NPRM) that proposed to
eliminate, in toto, part 41 (Telephone and Telegraph Franks) of the
Commission's rules. The NPRM, part of the Commission's 1998 biennial
regulatory review, tentatively concludes that the development of
competition among interstate and foreign telecommunications service
providers renders these regulations unnecessary.
DATES: Comments are due on or before August 31, 1998. Reply comments
are due on or before September 10, 1998.
ADDRESSES: Comments and reply comments should be sent to the Office of
the Secretary, Federal Communications Commission, 1919 M Street, NW,
Suite 222, Washington, DC 20554, with a copy to Scott Bergmann of the
Common Carrier Bureau, Federal Communications Commission, 2033 M
Street, NW, Suite 500, Washington, DC 20554. Parties should also file
one copy of any documents filed in this docket with the Commission's
copy contractor, International Transcription Services, Inc. (ITS), 1231
20th St., NW, Washington, DC 20037.
FOR FURTHER INFORMATION CONTACT: Thomas J. Beers, Deputy Chief of the
Industry Analysis Division, Common Carrier Bureau, at (202) 418-0952,
or Scott K. Bergmann, Industry Analysis Division, Common Carrier
Bureau, at (202) 418-7102.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking released July 21, 1998 (FCC 98-152). The full
text of this Notice of Proposed Rulemaking is available for inspection
and copying during normal business hours in the FCC Reference Center,
Room 239, 1919 M Street, Washington, DC 20554. The complete text also
may be purchased from the Commission's copy contractor, International
Transcription Service, Inc. (202) 857-3800, 1231 20th St., NW,
Washington, DC 20036.
Summary of the Notice of Proposed Rulemaking
1. In the Notice of Proposed Rulemaking (NPRM) summarized here, we
propose to eliminate, in toto, part 41 (Telegraph and Telephone Franks)
of the Commission's rules.1 Part 41 governs the issuance of
franks for interstate and foreign telegraph and telephone service by
communications common carriers.2 Part 41 also governs
[[Page 41758]]
the issuance of ``reports of positions of ships at sea furnished to
newspapers of general circulation without charge, or at nominal
charges, as authorized in section 201(b) of the Act.'' 3
Part 41 requires carriers, inter alia, to retain records of these
activities.
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\1\ 47 CFR 41.1 et seq.
\2\ See 47 CFR 41.11. Part 41 was adopted pursuant to section
210(a) of the Communications Act of 1934, as amended. 47 USC 210(a).
In pertinent part, section 210(a) provides:
Nothing in this Act or in any other provision of law shall be
construed to prohibit common carriers from issuing or giving franks
to, exchanging franks with each other for the use of, their
officers, agents, employees, and their families, or subject to such
rules as the Commission may prescribe, from issuing, giving, or
exchanging franks and passes to or with other common carriers not
subject to the provisions of this Act, for the use of their
officers, agents, employees, and their families.
47 USC 210(a). We will refer to the Communications Act of 1934,
as amended, as ``the Communications Act'' or ``the Act.''
\3\ 47 CFR 41.31(c); 47 USC Sec. 201(b).
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2. We undertake this examination of part 41 of our rules pursuant
to our 1998 biennial review of regulations as required by section 11 of
the Communications Act, as amended.4 Section 11 requires us
to review all of our regulations applicable to providers of
telecommunications services and to determine whether any rule is no
longer in the public interest as the result of meaningful economic
competition between providers of telecommunications service. We seek,
consistent with the Telecommunications Act of 1996, to strike a
reasonable balance between our goal of reducing and eliminating
regulatory requirements as competition supplants the need for such
requirements, and our recognition that, until full competition is
realized, certain safeguards may still be necessary. In this case, we
tentatively conclude that the development of competition among
interstate and international telecommunications service providers
renders part 41 unnecessary and we propose to eliminate it.
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\4\ 47 USC 161.
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II. Background
3. Part 41 of the Commission's rules governs the provision of
franks and certain reports by communications common carriers pursuant
to sections 210(a) and 201(b) of the Act. Franks enable authorized
persons to send ``interstate or foreign telephone or telegraph''
messages, free of charge or at reduced rates, over communications
facilities. Section 210 of the Act authorizes communications common
carriers to issue franks and passes to other common carriers, including
other communications common carriers, for the benefit of the officers,
agents, and employees of the common carrier that receives the franks,
and their families. As such, section 210(a) authorizes a per se class
of lawful preferences that otherwise might be prohibited as unlawful
pursuant to the terms of section 202(a).
4. Section 210(a) was adopted as part of the original
Communications Act. As such, its origin was the Interstate Commerce Act
of 1887, as amended.5 By its own terms, section 210(a)
states that the Commission may regulate the issuance of franks by
common carriers subject to the Communications Act (referred to here as
``communications common carriers'') to common carriers not subject to
the Communications Act. In contrast, section 210(a) does not
specifically grant the Commission the authority to regulate the
issuance of franks from communications common carriers to other
communications common carriers or to themselves. In accordance with
section 210(a), the Commission adopted rules, codified in part 41 of
the Code of Federal Regulations, that govern the issuance of franks to
common carriers not subject to the Communications Act, such as
railroads. The rules were adopted and modified in a series of orders
from the late 1930's and have been subject to only minor modifications
since that time. Pursuant to these rules the Commission has capped the
value of individual franks at $50 per year and imposed certain
recordkeeping requirements on carriers issuing franks.
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\5\ 49 USC 10101 et seq., 10722. In an explanatory statement
entered in the Congressional Record, Representative Sam Rayburn
indicated that section 210(a) is ``based upon section 1(7) of the
Interstate Commerce Act.'' 78 Cong. Rec. 10313-10314. Rayburn
further explained that the provision ``carries over existing law
permitting communications companies to exchange franks for messages
and to exchange such franks with railroads for passes.'' Id.
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5. Section 41.31(c) of the Commission's rules implements section
201(b) of the Act allowing, but not requiring, common carriers to
furnish reports of the positions of ships at sea to newspapers of
general circulation. Section 201(b) provides that ``nothing in this Act
or in any other provision of law shall prevent a common carrier subject
to this Act from furnishing reports of positions of ships at sea to
newspapers of general circulation, either at a nominal charge or
without charge, provided the name of such common carrier is displayed
along with such ship position reports.''
III. Discussion
6. As noted, section 11 of the Act directs the Commission to
determine whether any regulation applicable to providers of
telecommunications services ``is no longer necessary in the public
interest as the result of meaningful economic competition between
providers of such service.'' We seek comment as to whether our
regulation of telephone and telegraph franking privileges and certain
reports pursuant to part 41 of the rules continues to be in the public
interest. For the reasons set out in the NPRM and summarized in the
following paragraphs, we tentatively conclude that it does not, and we
seek comment on our analysis and tentative conclusion that we should
eliminate part 41 in its entirety.
7. Section 41.11 states that ``franks valid for interstate and
foreign telegraph or telephone service may be issued or used and free
service may be rendered only in accordance with * * *'' the provisions
of part 41. Section 41.13 nevertheless goes on to exempt certain
carriers, services, and persons from much of this regulation. These
exemptions reflect the limitations imposed on Commission regulation of
common carrier-issued franks and passes by the terms of section 210 of
the Act. Thus, for example, section 210(a) does not, on its face,
authorize the Commission to regulate the issuance of franks by
communications common carriers regulated under the Communications Act
to their own officers, agents, employees, and their families or to
other communications common carriers. Section 41.13(c) of the rules
generally exempts ``free or concession service now or hereafter granted
to officers, agents, or employees of common carriers subject to the
Act, and to their families.''
8. Other sections of part 41 impose specific limitations or
requirements on carriers issuing franks to other carriers not regulated
by the Act, and on persons receiving such franks. Thus, Secs. 41.21 and
41.22, respectively, set a specific monetary limit or cap of $50 on the
value of franks that can be issued to or used by any one person in a
given year and prescribe particular requirements for issued franks.
Section 41.31, inter alia, requires common carriers issuing lawful
franks to maintain records of issued franks. These records must be
maintained in connection with franks regulated pursuant to part 41
(Sec. 41.31(a)) and other franks which are specifically exempted from
regulation pursuant to Sec. 41.13 (Sec. 41.31(b)). In other words,
regardless of whether certain carrier-issued franks are subject to the
substantive limitations imposed by part 41, Sec. 41.31 requires that
communications common carriers maintain specified records for all
issued franks, records which must be produced upon Commission demand.
Finally, Sec. 41.31(c) imposes a recordkeeping requirement on carriers
who provide ``reports of positions of ships at sea to
[[Page 41759]]
newspapers of general circulation, without charge, or at nominal
charges'' pursuant to section 201(b) of the Act.
9. These rules, we tentatively conclude, reflect the regulation--
and, derivatively, the market structure and competitive realities--of a
bygone era and are long overdue for elimination. We believe they impose
unnecessary burdens on competitive carriers operating in current
interstate and international markets. We propose to eliminate these
rules.
10. Early Commission decisions about carrier-issued franks reflect
Commission concerns that franking privileges might be used for
anticompetitive purposes and might be subject to ``excessive use.'' For
example, following an investigation of the telegraph industry initiated
in 1935, i.e., within a year of the enactment of the Communications
Act, the Commission discovered that some telegraph carriers were
issuing franks valued at hundreds of thousands of dollars.6
Assessing this practice, the Commission observed:
\6\ 1935 Telegraph Franks Order, 1 FCC 291, 295-296.
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[W]e are convinced, that the issuance of franks and the giving
away of free service by telegraph companies is used as a competitive
measure; and that, as a competitive measure, it is subject to great
abuse.7
\7\ 1935 Telegraph Franks Order, 1 FCC 291, 295.
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The genesis of part 41 of the rules is this concern with carrier
abuse of franking to achieve competitive advantage. This concern may
very well have been valid in an era when telecommunications service
markets were dominated by carrier monopolists and oligopolists. Indeed,
in such an environment, anticompetitive abuses such as those described
by the Commission in 1935 would eventually have ratepayer consequences
as well. In other words, excessive issuance of franking privileges
might have resulted in costs borne unfairly by ratepayers.
11. We need not, in the NPRM, recite in great detail just how the
Commission's regulation has altered as interstate and international
service competition has developed in the decades since 1935. In summary
form, and driven in large part by technological developments since the
Second World War, the Commission embarked on a course of regulation
that both stimulated and reflected the development of competitive
markets. For example, in a series of orders beginning in 1982, the
Commission has sought to reduce or eliminate various regulatory burdens
imposed on interexchange carriers who have been found to be
nondominant. Such nondominant status has even been awarded to AT&T,
with the result that all domestic interexchange service markets have
now been found to be subject to competition. As a result, the
Commission has stated its belief that market forces will generally
ensure that the rates, practices, and classifications of nondominant
interexchange carriers are just and reasonable and not unjustly or
unreasonably discriminatory. In point of fact, almost all of the
``interstate and foreign telegraph or telephone'' services that are the
subject of part 41 regulation per franks and reports are now provided
in markets that the Commission has found to be competitive.
12. Because our part 41 rules were adopted at a very different time
than the world of today, i.e., a time when firms providing interstate
and foreign services faced a vastly different set of statutory,
regulatory, economic, and operational barriers, we believe that
franking regulation is no longer necessary. We believe that the
discipline of competitive markets exists to restrict almost any
conceivable misuse of the franking privilege, a privilege that is, we
note, guaranteed by statute. It is our belief that most communications
franks issued today are, in fact, concessions issued to the
communications carrier's own employees, officers, or other personnel or
are franks issued to other carriers regulated by the Act. Such franks
are not, pursuant to the language of section 210(a), subject to this
Commission's regulation in any event. We have, nevertheless, in
Sec. 41.31(b) of our rules, imposed carrier recordkeeping requirements
in these cases. Such records are, we tentatively conclude, unnecessary
to prevent anticompetitive conduct which in most, if not all cases,
will be most effectively prevented by the operation of free market
mechanisms. In the event that investigations by this Commission ever
become necessary in such cases, we believe that we have ample authority
under the Act to compel the production of carrier accounting records to
assist such investigations. We further note that, for Class A and Class
B telephone companies, such accounting records are kept pursuant to
Commission rules and are subject at all times to the Commission's right
of inspection. Taking into account all these considerations, we
tentatively conclude that we may eliminate part 41 requirements as they
apply to franks for interstate and international services as issued by
common carriers regulated by the Act to common carriers regulated by
the Act. We seek comment on this tentative conclusion.
13. Concerning section 201(b)-authorized ``reports of positions of
ships at sea,'' we believe it unlikely that carriers would be able to
gain an improper or unlawful competitive advantage were we to lift our
Sec. 43.31(c) recordkeeping requirement. Carriers issuing such reports
exist in markets subject to the same current and developing competitive
pressures described in the NPRM and as summarized supra. We see no
reason to encumber these carriers--carriers who provide a valuable
service specifically authorized by the Act--with special recordkeeping
requirements and we find it unlikely that carriers are likely to abuse
this provision. Accordingly, we tentatively conclude that we should
eliminate Sec. 43.31(c) of the rules, and we seek comment on this
tentative conclusion.
14. In the NPRM, we tentatively conclude that no part 41 regulation
is necessary and we accordingly propose to eliminate part 41, in toto.
If any commenters consider that some form of regulation is required to
govern the provision of franks and certain section 201(b) reports, we
encourage them to suggest alternatives that are less burdensome than
those currently set out in part 41. Such commenters, to the extent that
they wish to retain part 41 regulation, should present a cost-benefit
analysis addressing the costs of compliance, including direct costs and
burdens on companies, regulators, customers and taxpayers, as well as
any indirect costs. The statute affords the Commission wide discretion
in determining the contours of the public interest. We also note that
many costs and benefits of regulation may be difficult, if not
impossible to quantify. As a general matter, however, we will not
maintain a regulation pursuant to the section 11 public interest
analysis where we determine that the costs of the regulation exceed the
benefits. We seek comment on this approach. Overall, we seek comment on
any and all analysis and conclusions contained in the NPRM.
IV. Procedural Matters
A. Initial Regulatory Flexibility Act Analysis
15. As required by the Regulatory Flexibility Act
(RFA),8 the Commission has prepared an Initial Regulatory
Flexibility Analysis (IRFA), summarized here, of the possible
significant economic impact on small entities by
[[Page 41760]]
the policies and rules proposed in this NPRM. Written public comments
are requested on this IRFA. Comments must be identified as responses to
the IRFA and must be filed by the deadlines for comments on this NPRM
provided above on the first page. The Commission will send a copy of
this NPRM, including this IRFA, to the Chief Counsel for Advocacy of
the Small Business Administration.9 In addition, this NPRM
and IRFA (or summaries thereof) will be published in the Federal
Register.10
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\8\ See 5 USC 603. The RFA, see 5 USC 601 et. seq., has been
amended by the Contract With America Advancement Act of 1996, Pub.
L. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is
the Small Business Regulatory Enforcement Fairness Act of 1996
(SBREFA).
\9\ See 5 USC 603(a).
\10\ See id.
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16. Need for, and Objectives of, the Proposed Action. The
Commission undertakes this examination of Part 41 11 of its
rules as a part of its 1998 biennial review of regulations as required
by section 11 of the Communications Act, as amended.12 Our
objective is to reduce or eliminate unnecessary or duplicative
regulatory requirements as competition supplants the need for such
requirements, consistent with section 11 of the Communications Act, as
amended,13 and the Telecommunications Act of
1996.14 The NPRM seeks comment as to whether the
Commission's regulation of telephone and telegraph franking privileges
and certain reports concerning ``ships at sea'' pursuant to part 41 of
the rules continues to be in the public interest. The NPRM tentatively
concludes that the development of competition among interstate and
international telecommunications service providers renders Part 41
unnecessary and proposes to eliminate it, in toto.
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\11\ 47 CFR 41.1 et seq.
\12\ 47 USC 161.
\13\ Id.
\14\ Telecommunications Act of 1996, Pub. L. 104-104, 110 Stat.
56 (1996 Act), codified at 47 USC 151 et seq. See Joint Explanatory
Statement of the Committee of Conference, S. Conf. Rep. No. 230,
104th Cong., 2d Sess. 113 (1996) (Joint Explanatory Statement).
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17. Legal Basis. The legal basis for the action as proposed for
this rulemaking is contained in sections 1, 4(i) and (j), 11, 201-205,
210, 218 and 403 of the Communications Act of 1934, as amended, 47 USC
151, 154(i) and (j), 161, 201-205, 210, 218, and 403.
18. Description and Estimate of the Number of Small Entities to
Which the Proposed Action May Apply. Part 41 governs the issuance of
franks (authorized pursuant to section 210 of the Act) and certain
reports of ships at sea (authorized pursuant to section 201(b)) by all
common carriers subject to the Communications Act of 1934, as amended.
This NPRM asks commenters to address the extent to which communications
common carriers currently utilize these statutory privileges--the
issuance of franks and reduced cost reports on the positions of ships
at sea--so that the Commission may determine the actual burden imposed
by part 41 on these common carriers. In the absence of a more complete
record, we note that the proposals set forth in this proceeding may
have an economic impact on a substantial number of small telephone
companies, i.e. all common carriers subject to the Act. The economic
impact of these proposals would, of course, be a positive and
beneficial impact, in the form of reduced regulatory burdens and
recordkeeping requirements, for these common carriers.
19. 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.'' 15 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.16 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).17 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.18 We first discuss the
number of small telephone companies falling within these SIC
categories, then attempt to refine further those estimates to
correspond with the categories of telephone companies that are commonly
used under our rules.
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\15\ 5 USC 601(6).
\16\ 5 USC 601(3) (incorporating by reference the definition of
``small business concern'' in 5 USC 632). Pursuant to 5 USC 601(3),
the statutory definition of a small business applies ``unless an
agency after consultation with the Office of Advocacy of the Small
Business Administration and after opportunity for public comment,
establishes one or more definitions of such term which are
appropriate to the activities of the agency and publishes such
definition in the Federal Register.''
\17\ 15 USC 632. See, e.g., Brown Transport Truckload, Inc. v.
Southern Wipers, Inc., 176 B.R. 82 (N.D. Ga. 1994).
\18\ 13 CFR 121.201.
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20. We expect that the rules in part 41--and the privileges
regulated therein--have only been utilized by a limited class of
entities, specifically the Bell Operating Companies and certain other
providers of local exchange and interexchange telecommunications
services. Nevertheless, given that the language of sections 201(b) and
210(a) speaks broadly of ``common carriers'' we analyze a wide range of
categories in an effort to identify the greatest number of small
entities possible that could be effected by the proposals in this NPRM.
Thus, in some cases below, we expect that not all of the entities
within a given category offer common carrier services, let alone issue
franks or reports of ships at sea pursuant to part 41. In all cases, of
course, entities affected by this proposal would not lose any of their
statutorily-granted rights under sections 201(b) or 210(a) and would
enjoy a positive economic impact from reduced regulation of those
privileges.
21. 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).19 According to data in the most recent report, there
are 3,459 interstate carriers.20 These carriers include,
inter alia, local exchange carriers, wireline carriers and service
providers, interexchange carriers, competitive access providers,
operator service providers, pay telephone operators, providers of
telephone toll service, providers of telephone exchange service, and
resellers.
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\19\ FCC, Telecommunications Industry Revenue: TRS Fund
Worksheet Data, Figure 2 (Number of Carriers Paying Into the TRS
Fund by Type of Carrier) (Nov. 1997) (Telecommunications Industry
Revenue).
\20\ Id.
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22. 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,
[[Page 41761]]
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.'' 21
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\21\ See 13 CFR 121.201, SIC Code 4813.
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23. 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.22 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, PCS providers, covered SMR
providers, 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.'' 23 For example, a PCS provider that is
affiliated with an interexchange carrier having more than 1,500
employees would not meet the definition of a small business. It seems
reasonable to conclude, therefore, that fewer than 3,497 telephone
service firms are small entity telephone service firms or small
incumbent LECs that may be affected by this NPRM.
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\22\ United States Department of Commerce, Bureau of the Census,
1992 Census of Transportation, Communications, and Utilities:
Establishment and Firm Size, at Firm Size 1-123 (1995) (``1992
Census'').
\23\ 15 USC 632(a)(1).
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24. 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 1992.24 According to SBA's definition, a
small business telephone company other than a radiotelephone company is
one employing no more than 1,500 persons.25 All but 26 of
the 2,321 non-radiotelephone companies listed by the Census Bureau were
reported to have fewer than 1,000 employees. Thus, even if all 26 of
those companies had more than 1,500 employees, there would still be
2,295 non-radiotelephone companies that might qualify as small entities
or small incumbent LECs. Although it seems certain that some of these
carriers are not independently owned and operated, we are unable at
this time to estimate with greater precision the number of wireline
carriers and service providers that would qualify as small business
concerns under SBA's definition. Consequently, we estimate that there
are fewer than 2,295 small entity telephone communications companies
other than radiotelephone companies that may be affected by the
decisions and rules recommended for adoption in this NPRM.
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\24\ 1992 Census, supra, at Firm Size 1-123.
\25\ 13 CFR 121.201, Standard Industrial Classification (SIC)
Code 4813.
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25. 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).26 According to our most recent data, 1,371
companies reported that they were engaged in the provision of local
exchange services.27 Although it seems certain that some of
these carriers are not independently owned and operated, or have more
than 1,500 employees, we are unable at this time to estimate with
greater precision the number of LECs that would qualify as small
business concerns under SBA's definition. Consequently, we estimate
that there are fewer than 1,371 small entity LECs or small incumbent
LECs that may be affected by the decisions and rules recommended for
adoption in this NPRM.
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\26\ See 47 CFR 64.601 et seq.
\27\ Telecommunications Industry Revenue at Fig. 2.
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26. 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.28 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.29 Although it seems certain that some of these
carriers are not independently owned and operated, or have more than
1,500 employees, we are unable at this time to estimate with greater
precision the number of IXCs that would qualify as small business
concerns under SBA's definition. Consequently, we estimate that there
are fewer than 143 small entity IXCs that may be affected by the
decisions and rules recommended for adoption in this NPRM.
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\28\ 13 CFR 121.210, SIC Code 4813.
\29\ Telecommunications Industry Revenue at Fig. 2.
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27. 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.30 Although it seems certain that some of these
carriers are not independently owned and operated, or have more than
1,500 employees, we are unable at this time to estimate with greater
precision the number of CAPs that would qualify as small business
concerns under SBA's definition. Consequently, we estimate that there
are fewer than 109 small entity CAPs that may be affected by the
decisions and rules recommended for adoption in this NPRM.
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\30\ Telecommunications Industry Revenue at Fig. 2.
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28. 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.31 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
[[Page 41762]]
that there are fewer than 27 small entity operator service providers
that may be affected by the decisions and rules recommended for
adoption in this NPRM.
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\31\ Telecommunications Industry Revenue at Fig. 2.
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29. 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.32 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.33 Although it seems certain that some of these
carriers are not independently owned and operated, or have more than
1,500 employees, we are unable at this time to estimate with greater
precision the number of resellers that would qualify as small business
concerns under SBA's definition. Consequently, we estimate that there
are fewer than 339 small entity resellers that may be affected by the
decisions and rules recommended for adoption in this NPRM.
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\32\ 13 CFR 121.210, SIC Code 4813.
\33\ Telecommunications Industry Revenue at Fig. 2.
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30. 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 1992.34
According to SBA's definition, a small business radiotelephone company
is one employing no more than 1,500 persons.35 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 and rules recommended
for adoption in this NPRM.
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\34\ United States Department of Commerce, Bureau of the Census,
1992 Census of Transportation, Communications, and Utilities:
Establishment and Firm Size, at Firm Size 1-123 (1995) (``1992
Census'').
\35\ 13 CFR 121.201, SIC Code 4812.
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31. Cellular and Mobile Service Carriers. In an effort to further
refine our calculation of the number of radiotelephone companies
affected by the rules adopted herein, we consider the categories of
radiotelephone carriers, Cellular Service Carriers and Mobile Service
Carriers. Neither the Commission nor the SBA has developed a definition
of small entities specifically applicable to Cellular Service Carriers
and to Mobile Service Carriers. The closest applicable definition under
SBA rules for both services is for telephone companies other than
radiotelephone (wireless) companies.36 The most reliable
source of information regarding the number of Cellular Service Carriers
and Mobile Service Carriers 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, 804 companies reported that they are
engaged in the provision of cellular services and 117 companies
reported that they are engaged in the provision of mobile
services.37 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 Cellular Service Carriers and Mobile Service
Carriers that would qualify as small business concerns under SBA's
definition. Consequently, we estimate that there are fewer than 804
small entity Cellular Service Carriers and fewer than 138 small entity
Mobile Service Carriers that might be affected by the decisions and
rules recommended for adoption in this NPRM.
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\36\ Id.
\37\ Telecommunications Industry Revenue at Fig. 2.
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32. Broadband PCS Licensees. The broadband PCS spectrum is divided
into six frequency blocks designated A through F, and the Commission
has held auctions for each block. The Commission defined ``small
entity'' for Blocks C and F as an entity that has average gross
revenues of less than $40 million in the three previous calendar years.
See Amendment of Parts 20 and 24 of the Commission's Rules--Broadband
PCS Competitive Bidding and the Commercial Mobile Radio Service
Spectrum Cap, Report and Order, FCC 96-278, WT Docket No. 96-59,
Paras. 57-60 (June 24, 1996), 61 FR 33859 (July 1, 1996); see also 47
CFR 24.720(b). For Block F, an additional classification for ``very
small business'' was added, and is defined as an entity that, together
with its affiliates, has average gross revenues of not more than $15
million for the preceding three calendar years.38 These
regulations defining ``small entity'' in the context of broadband PCS
auctions have been approved by SBA.39 No small businesses
within the SBA-approved definition bid successfully for licenses in
Blocks A and B. There were 90 winning bidders that qualified as small
entities in the Block C auctions. A total of 93 small and very small
business bidders won approximately 40% of the 1,479 licenses for Blocks
D, E, and F. However, licenses for Blocks C through F have not been
awarded fully, therefore there are few, if any, small businesses
currently providing PCS services. Based on this information, we
conclude that the number of small broadband PCS licenses will include
the 90 winning C Block bidders and the 93 qualifying bidders in the D,
E, and F blocks, for a total of 183 small PCS providers as defined by
the SBA and the Commissioner's auction rules.
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\38\ Id., at para. 60.
\39\ Implementation of Section 309(j) of the Communications
Act--Competitive Bidding, PP Docket No. 93-253, Fifth Report and
Order, 9 FCC Rcd 5532, 5581-84 (1994).
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33. SMR Licensees. Pursuant to 47 CFR 90.814(b)(1), the Commission
has defined ``small entity'' in auctions for geographic area 800 MHz
and 900 MHz SMR licenses as a firm that had average annual gross
revenues of less than $15 million in the three previous calendar years.
The definition of a ``small entity'' in the context of 800 MHz SMR has
been approved by the SBA,40 and approval for the 900 MHz SMR
definition has been sought. The rules proposed in this NPRM may apply
to SMR providers in the 800 MHz and 900 MHz bands that either hold
geographic area licenses or have obtained extended implementation
authorizations. We do not know how many firms provide 800 MHz or 900
MHz geographic area SMR service pursuant to extended implementation
authorizations, nor how
[[Page 41763]]
many of these providers have annual revenues of less than $15 million.
We assume, for purposes of this IRFA, that all of the extended
implementation authorizations may be held by small entities, that may
be affected by the decisions and rules recommended for adoption in this
NPRM.
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\40\ See Amendment of Parts 2 and 90 of the Commission's Rules
to Provide for the Use of 200 Channels Outside the Designated Filing
Areas in the 896-901 MHz and the 935-940 MHz Bands Allotted to the
Specialized Mobile Radio Pool, PR Docket No. 89-583, Second Order on
Reconsideration and Seventh Report and Order, 11 FCC Rcd 2639, 2693-
702 (1995); Amendment of Part 90 of the Commission's Rules to
Facilitate Future Development of SMR Systems in the 800 MHz
Frequency Band, PR Docket No. 93-144, First Report and Order, Eighth
Report and Order, and Second Further Notice of Proposed Rulemaking,
11 FCC Rcd 1463 (1995).
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34. The Commission recently held auctions for geographic area
licenses in the 900 MHz SMR band. There were 60 winning bidders who
qualified as small entities in the 900 MHz auction. Based on this
information, we conclude that the number of geographic area SMR
licensees that may be affected by the decisions and rules proposed in
this NPRM includes these 60 small entities. No auctions have been held
for 800 MHz geographic area SMR licenses. Therefore, no small entities
currently hold these licenses. A total of 525 licenses will be awarded
for the upper 200 channels in the 800 MHz geographic area SMR auction.
The Commission, however, has not yet determined how many licenses will
be awarded for the lower 230 channels in the 800 MHz geographic area
SMR auction. There is no basis, moreover, on which to estimate how many
small entities will win these licenses. Given that nearly all
radiotelephone companies have fewer than 1,000 employees and that no
reliable estimate of the number of prospective 800 MHz licensees can be
made, we assume, for purposes of this IRFA, that all of the licenses
may be awarded to small entities who may be affected by the decisions
recommended for adoption in this NPRM.
35. 220 MHz Radio Services. Because the Commission has not yet
defined a small business with respect to 220 MHz services, we will
utilize the SBA definition applicable to radiotelephone companies,
i.e., an entity employing no more than 1,500 persons.41 With
respect to 220 MHz services, the Commission has proposed a two-tiered
definition of small business for purposes of auctions: (1) For Economic
Area (EA) licensees, a firm with average annual gross revenues of not
more than $6 million for the preceding three years and (2) for regional
and nationwide licensees, a firm with average annual gross revenues of
not more than $15 million for the preceding three years. Given that
nearly all radiotelephone companies under the SBA definition employ no
more than 1,500 employees (as noted supra), we will consider the
approximately 1,500 incumbent licensees in this service as small
businesses under the SBA definition.
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\41\ 13 CFR 121.201, SIC Code 4812.
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36. Private and Common Carrier Paging. The Commission has proposed
a two-tier definition of small businesses in the context of auctioning
licenses in the Common Carrier Paging and exclusive Private Carrier
Paging services.42 Under the proposal, a small business will
be defined as either (1) an entity that, together with its affiliates
and controlling principals, has average gross revenues for the three
preceding years of not more than $3 million, or (2) an entity that,
together with affiliates and controlling principals, has average gross
revenues for the three preceding calendar years of not more than $15
million. Because the SBA has not yet approved this definition for
paging services, we will utilize the SBA's definition applicable to
radiotelephone companies, i.e., an entity employing no more than 1,500
persons.43 At present, there are approximately 24,000
Private Paging licenses and 74,000 Common Carrier Paging licenses.
According to the most recent Telecommunications Industry Revenue data,
172 carriers reported that they were engaged in the provision of either
paging or ``other mobile'' services, which are placed together in the
data.44 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. Consequently, we
estimate that there are fewer than 172 small paging carriers that may
be affected by the proposed rules, if adopted. We estimate that the
majority of private and common carrier paging providers would qualify
as small entities under the SBA definition.
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\42\ See 47 CFR 20.9(a)(1) (noting that private paging services
may be treated as common carriage services).
\43\ 13 CFR 121.201, SIC Code 4812.
\44\ Telecommunications Industry Revenue at Figure 2.
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37. Narrowband PCS. The Commission has auctioned nationwide and
regional licenses for narrowband PCS. There are 11 nationwide and 30
regional licensees for narrowband PCS. The Commission does not have
sufficient information to determine whether any of these licensees are
small businesses within the SBA-approved definition for radiotelephone
companies. At present, there have been no auctions held for the major
trading area (MTA) and basic trading area (BTA) narrowband PCS
licenses. The Commission anticipates a total of 561 MTA licenses and
2,958 BTA licenses will be awarded by auction. Such auctions have not
yet been scheduled, however. Given that nearly all radiotelephone
companies have no more than 1,500 employees and that no reliable
estimate of the number of prospective MTA and BTA narrowband licensees
can be made, we assume, for purposes of this IRFA, that all of the
licenses will be awarded to small entities, as that term is defined by
the SBA.
38. Rural Radiotelephone Service. The Commission has not adopted a
definition of small entity specific to the Rural Radiotelephone
Service.45 A significant subset of the Rural Radiotelephone
Service is the Basic Exchange Telephone Radio Systems
(BETRS).46 We will use the SBA's definition applicable to
radiotelephone companies, i.e., an entity employing no more than 1,500
persons.47 There are approximately 1,000 licensees in the
Rural Radiotelephone Service, and we estimate that almost all of them
qualify as small entities under the SBA's definition.
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\45\ The service is defined in Sec. 22.99 of the Commission's
rules, 47 CFR 22.99.
\46\ BETRS is defined in Secs. 22.757 and 22.759 of the
Commission's rules, 47 CFR 22.757, 22.759.
\47\ 13 CFR 121.201, SIC Code 4812.
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39. Air-Ground Radiotelephone Service. The Commission has not
adopted a definition of small entity specific to the Air-Ground
Radiotelephone Service.48 Accordingly, we will use the SBA's
definition applicable to radiotelephone companies, i.e., an entity
employing no more than 1,500 persons.49 There are
approximately 100 licensees in the Air Ground Radiotelephone Service,
and we estimate that almost all of them qualify as small entities under
the SBA definition.
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\48\ The service is defined in section 22.99 of the Commission's
rules, 47 CFR 22.99.
\49\ 13 CFR 121.201, SIC Code 4812.
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40. Private Land Mobile Radio (PLMR). PLMR systems serve an
essential role in a range of industrial, business, land transportation,
and public safety activities.50 These radios are used by
companies of all sizes operating in all U.S. business categories. The
Commission has not developed a definition of small entity specifically
applicable to PLMR licensees due to the vast array of PLMR users. For
the purpose of determining whether a licensee is a small business as
defined by the SBA, each licensee would need
[[Page 41764]]
to be evaluated within its own business area.
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\50\ See 47 CFR 20.9(a)(2) (noting that certain Industrial/
Business Pool service may be treated as common carriage service).
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41. The Commission is unable at this time to estimate the number
of, if any, small businesses which could be impacted by the rules.
However, the Commission's 1994 Annual Report on PLMRs 51
indicates that at the end of fiscal year 1994 there were 1,087,267
licensees operating 12,481,989 transmitters in the PLMR bands below 512
MHz. Because any entity engaged in a commercial activity is eligible to
hold a PLMR license, the proposed rules in this context could
potentially impact every small business in the United States.
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\51\ Federal Communications Commission, 60th Annual Report,
Fiscal Year 1994, at 116.
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42. Fixed Microwave Services. Microwave services include common
carrier,52 private-operational fixed,53 and
broadcast auxiliary radio services.54 At present, there are
approximately 22,015 common carrier fixed licensees in the microwave
services. The Commission has not yet defined a small business with
respect to microwave services. For purposes of this IRFA, we will
utilize the SBA's definition applicable to radiotelephone companies--
i.e., an entity with no more than 1,500 persons.55 We
estimate, for this purpose, that all of the Fixed Microwave licensees
(excluding broadcast auxiliary licensees) would qualify as small
entities under the SBA definition for radiotelephone companies.
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\52\ 47 CFR 101 et seq. (formerly, part 21 of the Commission's
rules).
\53\ Persons eligible under parts 80 and 90 of the Commission's
rules can use Private Operational-Fixed Microwave services. See 47
CFR parts 80 and 90. Stations in this service are called
operational-fixed to distinguish them from common carrier and public
fixed stations. Only the licensee may use the operational-fixed
station, and only for communications related to the licensee's
commercial, industrial, or safety operations.
\54\ Auxiliary Microwave Service is governed by part 74 of Title
47 of the Commission's rules. See 47 CFR 74 et seq. Available to
licensees of broadcast stations and to broadcast and cable network
entities, broadcast auxiliary microwave stations are used for
relaying broadcast television signals from the studio to the
transmitter, or between two points such as a main studio and an
auxiliary studio. The service also includes mobile TV pickups, which
relay signals from a remote location back to the studio.
\55\ 13 CFR 121.201, SIC Code 4812.
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43. Offshore Radiotelephone Service. This service operates on
several UHF TV broadcast channels that are not used for TV broadcasting
in the coastal area of the states bordering the Gulf of
Mexico.56 At present, there are approximately 55 licensees
in this service. We are unable at this time to estimate the number of
licensees that would qualify as small entities under the SBA's
definition for radiotelephone communications.
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\56\ This service is governed by subpart I of part 22 of the
Commission's rules. See 47 CFR 22.1001-22.1037.
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44. Wireless Communications Services. This service can be used for
fixed, mobile, radiolocation and digital audio broadcasting satellite
uses. The Commission defined ``small business'' for the wireless
communications services (WCS) auction as an entity with average gross
revenues of $40 million for each of the three preceding years, and a
``very small business'' as an entity with average gross revenues of $15
million for each of the three preceding years. The Commission auctioned
geographic area licenses in the WCS service. In the auction, there were
seven winning bidders that qualified as very small business entities,
and one that qualified as a small business entity. We conclude that the
number of geographic area WCS licensees affected includes these eight
entities.
45. Description of Proposed Reporting, Recordkeeping, and Other
Compliance Requirements. The proposals under consideration in the NPRM
would reduce the reporting and recordkeeping requirements on common
carriers regulated under the Communications Act. Part 41 imposes
specific limitations or requirements on carriers issuing franks to
other carriers not regulated by the Act, and on persons receiving such
franks.57 For example, Sec. 41.31(a) and (b), inter alia,
require common carriers issuing lawful franks to maintain records of
issued franks. Similarly, Sec. 41.31(c) imposes a recordkeeping
requirement on carriers who provide ``reports of positions of ships at
sea to newspapers of general circulation, without charge, or at nominal
charges'' pursuant to section 201(b) of the Act.58 The NPRM
proposes to eliminate part 41 which should provide a positive economic
impact on affected companies, including small entities.
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\57\ See, e.g., 47 CFR 41.21, 41.22, 41.31, 41.32.
\58\ 47 CFR 41.31(c) and citing 47 USC 201(b).
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46. 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 the
proposals set out in the NPRM would reduce the reporting or
recordkeeping requirements on all communications common carriers. As
noted in the NPRM,59 we seek comment on whether any level of
regulation currently within Part 41 should be retained.
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\59\ See supra, para. 20.
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47. Federal Rules that May Duplicate, Overlap, or Conflict With the
Proposed Rule. None.
B. Ex Parte Presentations
48. This proceeding will be treated as a ``permit-but-disclose''
proceedings subject to the ``permit-but-disclose'' requirements under
Sec. 1.1206 of the Commission's rules, as revised.60
Additional rules pertaining to oral and written presentations are set
forth in Sec. 1.1206.61
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\60\ 47 CFR 1.1206.
\61\ Id.
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C. Comment Filing Procedures
49. General. Pursuant to applicable procedures set forth in
Secs. 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419,
interested parties shall file comments not later than August 31, 1998,
and reply comments not later than September 10, 1998. To file formally
in this proceeding, you must file an original and six copies of all
comments, reply comments, and supporting comments. If you want each
Commissioner to receive a personal copy of your comments, you must file
an original and twelve copies. Comments and reply comments should be
sent to the Secretary, Federal Communications Commission, 1919 M
Street, NW, Room 222, Washington, DC 20554, with copies to: Thomas J.
Beers, Common Carrier Bureau, Industry Analysis Division, 2033 M
Street, NW, Room 500, Washington, DC 20554; Scott K. Bergmann, Common
Carrier Bureau, Industry Analysis Division, 2033 M Street, NW, Room
500, Washington, DC 20554. Parties should file one copy of any
documents filed in this docket with the Commission's copy contractor,
International Transcription Services, Inc., 1231 20th St., NW,
Washington, DC 20037. Comments and reply comments will be available for
public inspection during regular business hours in the FCC Reference
Center, 1919 M Street, NW, Room 239, Washington, DC 20554.
50. Other requirements. Comments and reply comments must also
comply with Sec. 1.49 and all other applicable sections of the
Commission's rules.62 We also direct all interested parties
to include the name of the filing party and the date of the filing on
each page of their comments and reply comments.
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\62\ See 47 CFR 1.49.
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51. Commenters may also file informal comments or an exact copy of
formal comments electronically via the Internet at: http://
dettifoss.fcc.gov:8080/cgi-bin/ws.exe/beta/ecfs/upload.hts>. Only one
copy of electronically filed comments must be
[[Page 41765]]
submitted. Commenters must note on the subject line whether an
electronic submission is an exact copy of formal comments. Commenters
also must include their full name and U.S. Postal Service mailing
address in their submissions. Further information on the process of
submitting comments electronically is available at that location and at
http://www.fcc.gov/e-file>.
52. Parties are also asked to submit comments and reply comments on
diskette. Such diskette submissions would be in addition to and not a
substitute for the formal filing requirements addressed above. Parties
submitting diskettes should submit them to: Ms. Terry Conway, Common
Carrier Bureau, Industry Analysis Division, 2033 M Street, NW, Room
500, Washington, DC 20554. Such diskettes should be on a 3.5 inch
diskette formatted in an IBM compatible format using WordPerfect 5.1
for Windows software. The diskette should be submitted in ``read only''
mode. The diskette should be clearly labeled with the party's name,
proceeding, type of pleading (comment or reply comments) and date of
submission. The diskette should be accompanied by a cover letter.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 98-20819 Filed 8-4-98; 8:45 am]
BILLING CODE 6712-01-P
