[Federal Register: June 2, 2003 (Volume 68, Number 105)]
[Proposed Rules]
[Page 32720-32724]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02jn03-34]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[CC Docket No. 96-128; FCC 03-119]
Implementation of the Pay Telephone Reclassification and
Compensation Provisions of the Telecommunications Act of 1996
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: This document seeks comment on whether the Commission needs to
amend its payphone compensation rules, which are designed to provide
fair per-call compensation, pursuant to section 276 of the Act, to
payphone service providers (PSPs). On a petition for review, the United
States Court of Appeals for the District of Columbia Circuit (D.C.
Circuit), on January 21, 2003, remanded the Second Order on
Reconsideration, 66 FR 21105-01 (2001) in this proceeding. The Second
Order on Reconsideration had amended the Commission's payphone
compensation rules. The D.C. Circuit, however, held that the Commission
violated the Administrative Procedure Act (APA) when it modified its
rules pursuant to a Common Carrier Bureau--issued notice that was not
published in the Federal Register. The D.C. Circuit held that the
Commission should have issued a Notice of Proposed Rulemaking (NPRM).
The D.C. Circuit vacated the Commission's order, but stayed its mandate
and its vacatur of the Second Order on Reconsideration through
September 30, 2003. As a result, the rules promulgated in the Second
Order on Reconsideration remain in effect through September 30, 2003.
Accordingly, the Commission adopts this Further Notice of Proposed
Rulemaking seeking comment on whether to retain the rules or to adopt
alternative ones by this deadline.
DATES: Comments are due June 23, 2003, and Reply Comments are due July
3, 2003.
ADDRESSES: Federal Communications Commission, 445 12th Street, SW.,
Washington, DC 20554. See Supplementary Information for further filing
instructions.
FOR FURTHER INFORMATION CONTACT: Darryl Cooper, Attorney-Advisor,
Competition Policy Division, Wireline Competition Bureau, at (202) 418-
7131, or via the Internet at dcooper@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
Further Notice of Proposed Rulemaking (FNPRM) in CC Docket No. 96-128,
FCC 03-119, adopted May 23, 2003, and released May 28, 2003. The
complete text of this FNPRM is available for inspection and copying
during normal business hours in the FCC Reference Information Center,
Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC, 20554.
This document may also be purchased from the Commission's duplicating
contractor, Qualex International, Portals II, 445 12th Street, SW.,
Room CY-B402, Washington, DC 20554, telephone 202-863-2893, facsimile
202-863-2898, or via e-mail qualexint@aol.com. It is also available on
the Commission's Web site at http://www.fcc.gov.
Comments may be filed using the Commission's Electronic Comment
Filing System (ECFS) or by filing paper
[[Page 32721]]
copies. All filings should refer to CC Docket No. 96-128. Comments
filed through ECFS can be sent as an electronic file via the Internet
to http://www.fcc.gov/e-file/ecfs.html. Only one copy of an electronic
submission must be filed. In completing the transmittal screen,
commenters should include their full name, postal service mailing
address, and the applicable docket number, which in this instance is CC
Docket No. 96-128. Parties may also submit an electronic comment by
Internet e-mail. To get filing instructions for e-mail comments,
commenters should send an e-mail to ecfshelp@fcc.gov, and should
include the following words in the regarding line of the message: ``get
form.'' A sample form and directions
will be sent in reply.
Parties who choose to file by paper must file an original and four
copies of each filing. Filings can be sent by hand or messenger
delivery, by commercial overnight courier, or by first-class or
overnight U.S. Postal Service mail (although we continue to experience
delays in receiving U.S. Postal Service mail).
For hand deliveries, the Commission's contractor, Vistronix, Inc.,
will receive hand-delivered or messenger-delivered paper filings for
the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110,
Washington, D.C. 20002. The filing hours at this location are 8 a.m. to
7 p.m. All hand deliveries must be held together with rubber bands or
fasteners. Any envelopes must be disposed of before entering the
building.
Commercial overnight mail (other than U.S. Postal Service Express
Mail and Priority Mail) must be sent to 9300 East Hampton Drive,
Capitol Heights, MD 20743. U.S. Postal Service first-class mail,
Express Mail, and Priority Mail should be addressed to 445 12th Street,
SW, Washington, DC 20554.
All filings must be addressed to the Commission's Secretary, Office
of the Secretary, Federal Communications Commission.
Comments and reply comments must include a short and concise
summary of the substantive arguments raised in the pleading. Comments
and reply comments must also comply with 47 CFR 1.48 and all other
applicable sections of the Commission's rules. The Commission directs
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.
All parties are encouraged to utilize a table of contents, regardless
of the length of their submission. The Commission also strongly
encourages that parties track the organization set forth in this FNRPM
in order to facilitate our internal review process.
Synopsis of the Further Notice of Proposed Rulemaking
1. Background. In the Second Order on Reconsideration, 66 FR 21105-
01 (2001), in this proceeding, the Commission found that payphone
service providers (PSPs) were not receiving fair compensation when a
switch-based long distance reseller completed a payphone-originated
call. The Commission found that, prior to the adoption of the order,
there was confusion in the marketplace as to which facilities-based
carrier--the interexchange carrier (IXC) or the switch-based reseller--
was responsible for tracking payphone-originated calls to completion
and compensating the PSP (switchless resellers are not required to
track calls or compensate the PSP). The Commission also found that,
because of the way telephone calls are switched, PSPs do not have the
ability to track calls to completion. Thus, the Commission, in the
Second Order on Reconsideration in this proceeding, amended its rules
to specify that the first IXC to receive a payphone call from a local
exchange carrier (LEC) was responsible for tracking the call to
completion and for compensating the PSP for the call. The first IXC was
also required to prepare reports of completed payphone calls so that
the PSPs could verify that they were being adequately compensated. The
Commission permitted the IXC to then seek reimbursement from its
switch-based reseller customer for both the payment to the PSP and its
expenses in tracking and preparing tracking reports.
2. Discussion. The Commission tentatively concludes that, prior to
the adoption of our current rules, PSPs were not receiving fair per
call compensation. The Commission bases this conclusion on the record
amassed prior to the release of the Second Order on Reconsideration,
which shows that payphone service providers are not fairly compensated
and that they face myriad difficulties in identifying resellers that
complete calls. The item discusses how the very structure of the PSP
industry may exacerbate this problem and solicits further comment on
this issue. The Commission invites comment on this tentative conclusion
and its bases, and on what rules, if any, the Commission should adopt
to ensure that PSPs are fairly compensated. Specifically, to assist the
Commission in its analysis of the PSP marketplace and whether to retain
or amend the payphone compensation rules, this FNRPM requests comment
on whether the Commission should retain the rules adopted in the Second
Order on Reconsideration or whether it should adopt alternative rules
to ensure that PSPs receive fair compensation. To assist the Commission
in its analysis of whether to maintain or alter the current payphone
compensation rules, it invites comments on four questions: (1) Whether
PSPs are not receiving fair compensation when a switch-based reseller
is involved in the routing of a payphone originated call; (2) which
facilities-based carrier in the call path is best able to track a
completed call made from a payphone; (3) which facilities-based carrier
is best situated both to compensate the PSP and seek reimbursement from
other carriers that derive an economic benefit from the call; and (4)
what types of contractual relationships for tracking and payment of
payphone calls should the Commission permit as exceptions to its
payphone compensation rules. The item then poses a series of detailed
questions to flesh out each of these four over-riding questions.
Initial Paperwork Reduction Act Analysis
3. This FNRPM contains a proposed information collection
requirement. 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 FNPRM, as required by the
Paperwork Reduction Act of 1995, Public Law No. 104-13. Public and
agency comments are due June 23, 2003, and Reply Comments are due July
3, 2003. OMB comments are due August 1, 2003. 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.
4. In addition to filing comments with the Secretary, a copy of any
comments on the information collection(s) contained herein should be
submitted to Judith Boley Herman, Federal Communications Commission,
Room 1-C804, 445 12th Street, SW, Washington, DC 20554, or via the
Internet to jboley@fcc.gov and to Kim A. Johnson,
[[Page 32722]]
OMB Desk Officer, Room 10236 NEOB, 725 17th Street, NW., Washington, DC
20503, or via the Internet to KimA.Johnson@omb.eop.gov.
Initial Regulatory Flexibility Analysis
5. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), the Commission has prepared the present Initial
Regulatory Flexibility Analysis (IRFA) of the possible significant
economic impact on a substantial number of small entities by the
policies and rules proposed in this FNPRM. 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 the FNPRM
provided above. The Commission will send a copy of the FNPRM including
this IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration. In addition, the FNPRM and IRFA (or summaries thereof)
will be published in the Federal Register.
Need for, and Objectives of, the Proposed Rules
6. On a petition for review, the United States Court of Appeals for
the District of Columbia Circuit (D.C. Circuit), on January 21, 2003,
remanded the Second Order on Reconsideration in this proceeding. The
Second Order on Reconsideration had amended the Commission's payphone
compensation rules. The D.C. Circuit did not address the merits of
these rules, but instead found that the Commission had violated the
Administrative Procedure Act (APA) in adopting them.
7. In the Second Order on Reconsideration in this proceeding, the
Commission found that payphone service providers (PSPs) were not
receiving fair compensation when a switch-based long distance reseller
completed a payphone-originated call. The Commission found that, prior
to the adoption of the order, there was confusion in the marketplace as
to which facilities-based carrier--the interexchange carrier (IXC) or
the switch-based reseller--was responsible for tracking payphone-
originated calls to completion and compensating the PSP (switchless
resellers are not required to track calls or compensate the PSP). The
Commission also found that, because of the way telephone calls are
switched, PSPs do not have the ability to track calls to completion.
Thus, the Commission, in the Second Order on Reconsideration in this
proceeding, amended its rules to specify that the first IXC to receive
a payphone call from a local exchange carrier (LEC) was responsible for
tracking the call to completion and for compensating the PSP for the
call. The first IXC was also required to prepare reports of completed
payphone calls so that the PSPs could verify that they were being
adequately compensated. The Commission permitted the IXC to then seek
reimbursement from its switch-based reseller customer for both the
payment to the PSP and its expenses in tracking and preparing tracking
reports.
8. The overall objective of this FNPRM is to ensure that PSPs
receive fair per-call compensation pursuant to section 276 of the Act.
In this regard, the FNPRM asks whether the Commission should retain the
PSP compensation rules adopted in the Second Order on Reconsideration
or whether any alternative rules should be adopted to address PSP
problems in receiving fair compensation.
Legal Basis
9. The legal basis for any action that may be taken pursuant to the
FNPRM is contained in sections 1, 4(i), 4(j), and 276 of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j),
and 276, and Sec. Sec. 1.1, 1.48, 1.411, 1.412, 1.415, 1.419, and
1.1200-1.1216, of the Commission's rules, 47 CFR 1.1, 1.48, 1.411,
1.412, 1.415, 1.419, and 1.1200-1.1216.
Description and Estimate of the Number of Small Entities to Which the
Proposed Rules Will Apply
10. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that will be
affected by the proposed rules. The RFA generally defines the term
``small entity'' as having the same meaning as the terms ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. A small business concern is one which: (1) Is independently owned
and operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the Small Business
Administration (SBA).
11. Incumbent Local Exchange Carriers. Neither the Commission nor
the SBA has developed a specific definition of small providers of
incumbent local exchange services. The closest applicable definition
under the SBA rules is for Wired Telecommunications Carriers. Under
that SBA definition, such a business is small if it has 1,500 or fewer
employees. According to the most recent Telephone Trends Report data,
1,335 incumbent local exchange carriers reported that they were engaged
in the provision of local exchange services. Of these 1,335 carriers,
1,037 reported that they have 1,500 or fewer employees and 298 reported
that, alone or in combination with affiliates, they have more than
1,500 employees. The Commission does not have data specifying the
number of these carriers that are either dominant in their field of
operations or are not independently owned and operated, and thus are
unable at this time to estimate with greater precision the number of
incumbent local exchange carriers that would qualify as small business
concerns under the SBA's definition. Consequently, the Commission
estimates that 1,037 or fewer providers of local exchange service are
small entitles that may be affected by the rules and policies adopted
herein.
12. Competitive Local Exchange Carriers. Neither the Commission nor
the SBA has developed a specific definition for small providers of
competitive local exchange services. The closest applicable definition
under the SBA rules is for Wired Telecommunications Carriers. Under
that SBA definition, such a business is small if it has 1,500 or fewer
employees. According to the Commission's Telephone Trends Report data,
349 companies reported that they were engaged in the provision of
either competitive access provider services or competitive local
exchange carrier services. Of these 349 companies, 297 reported that
they have 1,500 or fewer employees and 52 reported that, alone or in
combination with affiliates, they have more than 1,500 employees. The
Commission does not have data specifying the number of these carriers
that are either dominant in their field of operations or are not
independently owned and operated, and thus is unable at this time to
estimate with greater precision the number of competitive local
exchange carriers that would qualify as small business concerns under
the SBA's definition. Consequently, the Commission estimates that fewer
than 297 providers of competitive local exchange service are small
entities that may be affected by the rules.
13. Competitive Access Providers. Neither the Commission nor the
SBA has developed a definition of small entities specifically
applicable to competitive access providers (CAPS). The closest
applicable definition under the SBA rules is for Wired
Telecommunications Carriers. Under that SBA definition, such a business
is small if it has 1,500 or fewer employees. According to the
Commission's most
[[Page 32723]]
recent Telephone Trends Report data, 349 CAPs or competitive local
exchange carriers and 60 other local exchange carriers reported that
they were engaged in the provision of either competitive access
provider services or competitive local exchange carrier services. Of
these 349 competitive access providers and competitive local exchange
carriers, 297 reported that they have 1,500 or fewer employees and 52
reported that, alone or in combination with affiliates, they have more
than 1,500 employees. Of the 60 other local exchange carriers, 56
reported that they have 1,500 or fewer employees and 4 reported that,
alone or in combination with affiliates, they have more than 1,500
employees. The Commission does not have data specifying the number of
these carriers that are not independently owned and operated, and thus
is unable at this time to estimate with greater precision the number of
CAPS or other local exchange carriers that would qualify as small
business concerns under the SBA's definition. Consequently, the
Commission estimates that there are 297 or fewer small entity CAPS and
56 or fewer other local exchange carriers that may be affected by the
rules.
14. Local Resellers. SBA has developed a definition for small
businesses within the category of Telecommunications Resellers. Under
that SBA definition, such a business is small if it has 1,500 or fewer
employees. According to the Commission's most recent Telephone Trends
Report data, 87 companies reported that they were engaged in the
provision of local resale services. Of these 87 companies, 86 reported
that they have 1,500 or fewer employees and one reported that, alone or
in combination with affiliates, it had more than 1,500 employees. The
Commission does not have data specifying the number of these local
resellers that are not independently owned and operated, and thus is
unable at this time to estimate with greater precision the number of
local resellers that would qualify as small business concerns under the
SBA's definition. Consequently, the Commission estimates that there are
86 or fewer local resellers that may be affected by the rules.
15. Toll Resellers. The SBA has developed a definition for small
businesses within the category of Telecommunications Resellers. Under
that SBA definition, such a business is small if it has 1,500 or fewer
employees. According to the Commission's most recent Telephone Trends
Report data, 454 companies reported that they were engaged in the
provision of toll resale services. Of these 454 companies, 423 reported
that they have 1,500 or fewer employees and 31 reported that, alone or
in combination with affiliates, they have more than 1,500 employees.
The Commission does not have data specifying the number of these toll
resellers that are not independently owned and operated, and thus is
unable at this time to estimate with greater precision the number of
toll resellers that would qualify as small business concerns under the
SBA's definition. Consequently, the Commission estimates that there are
423 or fewer toll resellers that may be affected by the rules.
16. Payphone Service Providers. Neither the Commission nor the SBA
has developed a definition of small entities specifically applicable to
payphone service providers (PSPs). The closest applicable definition
under the SBA rules is for Wired Telecommunications Carriers. Under
that SBA definition, such a business is small if it has 1,500 or fewer
employees. According to the Commission's most recent Trends in
Telephone Service data, 758 PSPs reported that they were engaged in the
provision of payphone services. Of these 758 payphone service
providers, 755 reported that they have 1,500 or fewer employees and 3
reported that, alone or in combination with affiliates, they have more
than 1,500 employees. The Commission does not have data specifying the
number of these payphone service providers that are not independently
owned and operated, and thus is unable at this time to estimate with
greater precision the number of PSPs that would qualify as small
business concerns under the SBA's definition. Consequently, the
Commission estimates that there are 755 or fewer PSPs that may be
affected by the rules.
17. Interexchange Carriers. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
providers of interexchange services. The closest applicable definition
under the SBA rules is for Wired Telecommunications Carriers. Under
that SBA definition, such a business is small if it has 1,500 or fewer
employees. According to the most recent Telephone Trends Report data,
204 carriers reported that their primary telecommunications service
activity was the provision of interexchange services. Of these 204
carriers, 163 reported that they have 1,500 or fewer employees and 41
reported that, alone or in combination with affiliates, they have more
than 1,500 employees. The Commission does not have data specifying the
number of these carriers that are not independently owned and operated,
and thus are unable at this time to estimate with greater precision the
number of IXCs that would qualify as small business concerns under the
SBA's definition. Consequently, the Commission estimates that there are
163 or fewer small entity IXCs that may be affected by the rules.
18. Operator Service Providers. Neither the Commission nor the SBA
has developed a definition of small entities specifically applicable to
operator service providers. The closest applicable definition under the
SBA rules is for Wired Telecommunications Carriers. Under that SBA
definition, such a business is small if it has 1,500 or fewer
employees. According to the Commission's most recent Telephone Trends
Report data, 21 companies reported that they were engaged in the
provision of operator services. Of these 21 companies, 20 reported that
they have 1,500 or fewer employees and one reported that, alone or in
combination with affiliates, it had more than 1,500 employees. The
Commission does not have data specifying the number of these operator
service providers that are not independently owned and operated, and
thus is unable at this time to estimate with greater precision the
number of operator service providers that would qualify as small
business concerns under the SBA's definition. Consequently, the
Commission estimates that there are 20 or fewer local resellers that
may be affected by the rules.
19. Prepaid Calling Card Providers. The SBA has developed a
definition for small businesses within the category of
Telecommunications Resellers. Under that SBA definition, such a
business is small if it has 1,500 or fewer employees. According to the
Commission's most recent Telephone Trends Report data, 21 companies
reported that they were engaged in the provision of prepaid calling
cards. Of these 21 companies, 20 reported that they have 1,500 or fewer
employees and one reported that, alone or in combination with
affiliates, it had more than 1,500 employees. The Commission does not
have data specifying the number of these local resellers that are not
independently owned and operated, and thus is unable at this time to
estimate with greater precision the number of prepaid calling card
providers that would qualify as small business concerns under the SBA's
definition. Consequently, the Commission estimates that there are 20 or
fewer local resellers that may be affected by the rules.
[[Page 32724]]
Description of Projected Reporting, Recordkeeping and Other Compliance
Requirements
20. The rules adopted in the Second Order on Reconsideration, which
are subject to review in the item, require IXCs to produce and provide
reports to PSPs detailing which payphone-originated calls were
completed over a IXC's or a switch-based reseller's network so that the
PSPs may verify whether they are being fairly compensated pursuant to
section 276 of the Act. The FRNRM asks whether these rules should be
retained or whether other reporting requirements should be adopted.
Steps Taken To Minimize Significant Economic Impact on Small Entities,
and Significant Alternatives Considered
21. The RFA requires an agency to describe any significant,
specifically small business, alternatives that it has considered in
reaching its proposed approach, which may include the following four
alternatives (among others): (1) The establishment of differing
compliance or reporting requirements or timetables that take into
account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use
of performance, rather than design, standards; and (4) an exemption
from coverage of the rule, or any part thereof, for small entities.
22. The current rules requiring an IXC to track and report payphone
calls completed on an IXC's or switch-based reseller's network impose a
minimal burden on the IXC or switch-based reseller. This is because
IXCs and switch-based resellers already keep track of such data for
their own billing and collection purposes. In addition, the Commission
allows IXCs to diminish their expenses by (1) recovering their
reporting costs from other carriers in the call path and (2)
outsourcing their reporting obligations to clearinghouses. In this
FNRPM, the Commission seeks comment on the burdens of these reporting
requirements and asks whether alternative requirements should be
adopted.
Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
23. None.
Ordering Clauses
24. Accordingly, it is ordered that, pursuant to the authority
contained in sections 1, 4(i), 4(j), and 276 of the Communications Act
of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), and 276, this
Further Notice of Proposed Rulemaking is adopted.
25. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Further Notice of Proposed Rulemaking, including the IRFA,
to the Chief Counsel for Advocacy of the Small Business Administration,
in accordance with the Regulatory Flexibility Act.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-13722 Filed 5-30-03; 8:45 am]
BILLING CODE 6712-02-P