[Federal Register: December 30, 2002 (Volume 67, Number 250)]
[Proposed Rules]
[Page 79543-79549]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30de02-15]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-116, 98-170;
FCC 02-329]
Federal-State Joint Board on Universal Service
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Commission seeks comment on specific
aspects of three connection-based proposals to further refine the
record in its proceeding to revisit its universal service contribution
methodology.
DATES: Comments are due on or before January 29, 2003. Reply comments
are due on or before February 28, 2003. Written comments by the public
on the proposed information collections are due on or before January
14, 2003. Written comments must be submitted by the Office of
Management and Budget (OMB) on the proposed information collections on
or before February 28, 2003.
ADDRESSES: All filings must be sent to the Commission's Secretary,
Marlene Dortch, Office of the Secretary, Federal Communications
Commission, 445 12th Street, SW., Washington, DC 20554. See
SUPPLEMENTARY INFORMATION for filing instructions.
FOR FURTHER INFORMATION CONTACT: Diane Law Hsu, Acting Deputy Chief,
Wireline Competition Bureau, Telecommunications Access Policy Division,
(202) 418-7400.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second
Further Notice of Proposed Rulemaking (Second Further NPRM) in CC
Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-116, 98-170; FCC
02-329 released on December 13, 2002. The full text of this document is
available for public inspection during regular business hours in the
FCC Reference Center, Room CY-A257, 445 12th Street, SW., Washington,
DC 20554. This Second Further NPRM contains proposed information
collection(s) subject to the Paperwork Reduction Act of 1995 (PRA). It
has been submitted to the Office of Management and Budget (OMB) for
review under the PRA. OMB, the general public, and other Federal
agencies are invited to comment on the proposed information collections
contained in this proceeding.
Paperwork Reduction Act
The Second Further NPRM contains a proposed information collection.
The Commission, as part of its continuing effort to reduce paperwork
burdens, invites the general public and OMB to comment on the
information collection(s) contained in this Second Further NPRM, as
required by the PRA, Pub. L. 104-13. Public and agency comments on the
proposed information collections are due on or before January 14, 2003.
Written comments must be submitted by the Office of Management
[[Page 79544]]
and Budget (OMB) on the proposed and/or modified information
collections on or before February 28, 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.
OMB Control Number: 3060-1009.
Title: Telecommunications Reporting Worksheet, CC Docket No. 96-45.
Form No.: FCC Form 499 (499-A, 499-Q, 499-M).
Type of Review: Proposed Revised Collection.
Respondents: Business or other for-profit; Not for Profit
Institutions.
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Number of Est. time per Total annual
Title respondents response burden
----------------------------------------------------------------------------------------------------------------
1. Connections Based Methodology............................. 5,500 11.5 \1\ 427,936
Total Annual Burden.......................................... ............... ............... 427,936
Cost to Respondents.......................................... $0
--------------------------------------------------------------
2. Splitting Connection-Based Methodology.................... 5,500 11.5 \2\ 867,472
Total Annual Burden.......................................... ............... ............... 867,472
Cost to Respondents.......................................... $0
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3. Telephone Number-Based Assessments........................ 5,500 11.5 \3\ 461,290
Total Annual Burden.......................................... ............... ............... 461,290
Cost to Respondents.......................................... ............... ............... $0
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\1\ 11.5 hrs for 5,500 respondents for the annual filing. 13.3 hrs for 2,285 respondents for each monthly
filing, if adopted.
\2\ 11.5 hrs for 5,500 respondents for the annual filing. 28.1 hrs for 2,385 respondents for each monthly
filing, if adopted.
\3\ 11.5 hrs for 5,500 respondents for the annual filing. 10.7 hrs for 3,100 respondents for each monthly
filing, if adopted.
Needs and Uses: The Commission has issued a Second Further Notice
of Proposed Rulemaking which seeks comment on whether to return a
revenue-based system and specific aspects of three connection-based
proposals in the record. First, the Commission seeks comment on a
contribution methodology that would impose a minimum contribution
obligation on all interstate telecommunications carriers, and a flat
charge for each end-user connection, depending on the nature or
capacity of the connection. Next, the Commission seeks comment on a
proposal to assess all connections based purely on capacity. Finally,
the Commission seeks comment on a proposal to assess providers of
switched connections based on their working telephone numbers. The
Commission is also seeking comment on whether to use a modified FCC
Form 499-M, the Telecommunications Reporting Worksheet (OMB 3060-1009),
to serve as the appropriate means for the collection of contribution
information. The Universal Service Company (Administrator) would use
information filed on connections and capacity or revenues to determine
the universal service contribution factor. Section 254 of the Act
requires carriers providing interstate telecommunications services to
contribute to universal service. Currently, respondents file their end-
user telecommunications revenues on a quarterly basis in FCC Form 499-
Q, and on an annual basis in FCC Form 499-A.
Synopsis of Second Further Notice of Proposed Rulemaking
I. Introduction
1. In the Second Further NPRM, we seek to further refine the record
in the contribution methodology proceeding. Although the interim
measures we adopt in the companion Order will improve the current
contribution methodology, they do not address our concerns regarding
the long-term viability of any revenue-based system. In the First
Further NPRM, 67 FR 1125, March 13, 2002, we observed that interstate
telecommunications revenues are becoming increasingly difficult to
identify as customers migrate to bundled packages of interstate and
intrastate telecommunications and non-telecommunications products and
services. This has increased opportunities to mischaracterize revenues
that should be counted for contribution purposes. Such
mischaracterization may result in decreases in the assessable revenue
base. Increased competition also is placing downward pressure on
interstate rates and revenues, which also contributes to the decline in
the contribution base. For example, traditional long-distance providers
increasingly are entering local markets at the same time that
competitive and incumbent local exchange carriers are increasingly
providing long-distance services. Customers also are migrating to
mobile wireless and Internet-based services. As we recently noted,
these changes have led to fluctuations in the contribution base and
rising contribution obligations.
2. The Commission initiated this proceeding to consider
alternatives or modifications to a revenue-based system. An analysis of
the record reveals interest in a connection-based methodology that
would assess carriers based on their provision of connectivity to
interstate networks, regardless of how many minutes of use or revenues
are derived from a connection. A substantial number of parties across
various industry segments now support adoption of a connection-based
assessment methodology. In addition, four out of five state members of
the Federal-State Joint Board on Universal Service (Joint Board)
recommend adoption of a connection-based system for calculating
universal service contributions, while the fifth member proposes
assessing contributions on a combination of connections, capacity, and
terminating minutes of use.
3. Although many parties agree that a connection-based contribution
methodology will best ensure the long-term viability of the
Commission's universal service mechanisms as the telecommunications
marketplace continues to evolve, they differ on how best to implement
such a mechanism. Key areas of disagreement include whether to make the
provider of the end-user connection (most often the local exchange
carrier) solely
[[Page 79545]]
responsible for contributions or whether that responsibility should be
shared between the access (e.g., local exchange carrier) and transport
(e.g., interexchange carrier) providers. Commenters also disagree on
how best to calculate assessments for higher-capacity connections.
Moreover, parties have expressed concern that they cannot estimate
assessments for multi-line business connections without access to more
reliable data on the number and capacity of non-switched (e.g., special
access or private line) connections. We conclude that it is appropriate
to further study long-term reforms of the contribution methodology.
II. Overview
4. In this Second Further NPRM, we seek to further refine the
record in this proceeding. We are hopeful that we will adopt additional
modifications to our contribution methodology to ensure the continued
viability of universal service as the marketplace continues to develop.
5. First, we ask commenters to discuss whether the changes to the
revenue-based methodology adopted herein are sufficient to ensure the
long-term viability of universal service as the telecommunications
marketplace evolves. Should any additional modifications to the
revenue-based system be made? For example, we seek comment on whether
bundling of local and long distance services raises any unique problems
for wireline carriers in identifying interstate telecommunications
revenues and how such problems should be addressed.
6. In addition, although we have increased the mobile wireless safe
harbor to 28.5 percent, we note that some commenters assert that, using
certain methodologies, mobile wireless carriers are capable of
determining their actual interstate end-user telecommunications
revenues. If a revenue-based system is retained, we seek comment on
whether we should abolish the safe harbor for mobile wireless carriers
and, if so, how such carriers should determine their actual interstate
end-user telecommunications revenues. We specifically seek comment on
whether minutes of use is an appropriate proxy for determining
interstate revenues for mobile wireless providers. We also request
comment on whether the originating cell site and the terminating area
code or NPA of a call reasonably approximates the jurisdictional nature
of traffic for reporting purposes. In addition, we seek comment on
whether it would be appropriate to include both outgoing and incoming
calls in mobile wireless provider traffic studies and whether and how
to include roaming and international minutes in such studies. We seek
comment on burdens presented by proposed methodologies to determine
interstate revenues and particularly invite comment from smaller mobile
wireless providers on whether they face unique difficulties in
identifying interstate telecommunications revenues. We also ask
commenters to discuss whether other CMRS carriers, such as paging and
analog SMR carriers, are able to determine their actual interstate end-
user telecommunications revenues and whether those safe harbors should
also be abolished. We seek comment on how eliminating the safe harbors
would affect wireless carriers whose contributions to universal service
are de minimis.
7. Although the actions taken today will improve the operation of
our revenue-based methodology in the near term, we remain concerned
that any contribution system based on interstate telecommunications
revenues will be dependent on the ability of contributors to
distinguish between interstate and intrastate telecommunications and
non-telecommunications revenues. Several commenters have argued that a
connection-based mechanism may be the best alternative to ensure the
long-term viability of the Commission's universal service mechanisms as
the telecommunications marketplace continues to evolve. We, therefore,
seek additional comment on three specific connection-based proposals.
8. In the First Further NPRM, we sought comment on a specific
proposal to base contributions on the number and capacity of
connections a contributor provides to interstate networks, rather than
revenues. Since that time, a number of parties across various industry
segments, as well as four out of five state members of the Joint Board,
have supported adoption of a connection-based assessment methodology
and have proposed their own variations of connection-based proposals.
Proponents of a connection-based methodology argue that such a system
would provide a sufficient and predictable funding source for universal
service in a telecommunications marketplace increasingly characterized
by new and innovative bundles of intrastate and interstate
telecommunications and non-telecommunications products and services,
and increased competition between wireline and wireless technology
platforms. These commenters point out that the number of connections
historically has been more stable than end-user interstate
telecommunications revenues. Commenters also point out that connection-
based assessments would eliminate the need for contributors to
distinguish between interstate and intrastate revenues, or revenues
from telecommunications and non-telecommunications services, as is
required under the current methodology. These commenters therefore
argue that connection-based assessments would better accommodate new
services and technologies as they develop. Such a framework also may be
more economically efficient than the current revenue-based methodology,
because connection-based assessments are less likely to create
inefficient incentives for end users to curtail their usage of
interstate telecommunications networks.
9. The proponents of certain connection-based proposals argue that
their proposals would be consistent with the requirement of section
254(d) that every telecommunications carrier that provides interstate
telecommunications services contribute to the Commission's universal
service mechanisms on an equitable and nondiscriminatory basis.
However, several other parties have expressed concerns that such
proposals in the record would be inconsistent with this statutory
mandate. We specifically take note of arguments that specific
connection-based proposals in the record may be inconsistent with
section 254(d)'s requirement that every provider of interstate
telecommunications service contribute on an equitable basis.
10. We conclude it is appropriate to further develop the record on
aspects of certain proposals to assess universal service contributions
on the number and capacity of connections. We also conclude it is
appropriate to continue refining our analysis of the potential impacts
on contributors, and, ultimately, consumers, of the various proposals.
In this Second Further NPRM, we seek comment on specific measures the
Commission could take to ensure that a connection-based contribution
methodology would be consistent with the Act. First, we seek comment on
a contribution methodology that would impose a minimum contribution
obligation on all interstate telecommunications carriers, and a flat
charge for each end-user connection, depending on the nature or
capacity of the connection. Next, we seek comment on a proposal to
assess all connections based purely on capacity (without regard to
distinctions between residential/single-line business and multi-line
business connections),
[[Page 79546]]
and share contribution obligations for each switched end-user
connection between access and transport providers. Finally, we seek
comment on a proposal to assess providers of switched connections based
on their number of working telephone numbers.
11. We invite commenters to discuss potential advantages and
disadvantages of each approach, and whether each satisfies the
requirements of section 254 that ``[e]very telecommunications carrier
that provides interstate telecommunications services * * * contribute,
on an equitable and nondiscriminatory basis, to the specific,
predictable, and sufficient [universal service support] mechanisms.''
We urge commenters to submit data and analysis on assessment levels
under each approach. We further request comment on the relative
contribution obligations of different industry segments under each
approach. We ask commenters to address the potential impacts of the
different methodologies on consumers, both generally and also on
residential consumers that place no long-distance calls. What would be
the impact of each of the proposals on the average residential customer
and on residential customers generally? Would the typical residential
customer pay more, less, or approximately the same amount of pass-
through charges to different carriers than they do today?
12. Commenters should also describe and estimate the costs
associated with the implementation of each proposal, including the cost
of any necessary billing system changes. We also invite comment on the
reporting obligations associated with each of the proposals discussed
below and ask that commenters quantify, to the extent possible, the
burdens associated with each proposal and compare the relative burdens.
We seek comment on whether it would be appropriate to require
contributors to report their number and capacity of end-user
connections and/or numbers on a monthly basis, or whether less frequent
reporting would be adequate. We particularly invite comment on the
potential administrative burdens associated with each of these
proposals from entities that are ``small business concerns'' under the
Small Business Act. We also seek comment on whether to continue basing
contributions to the Telecommunications Relay Service, Numbering
Administration, Local Number Portability and wireline regulatory fees
programs on annual revenue data, or whether contributions to these
mechanisms also should be based on connections and/or numbers.
III. Procedural Matters
A. Initial Regulatory Flexibility Act Analysis
13. As required by the Regulatory Flexibility Act (RFA), the
Commission has prepared this Initial Regulatory Flexibility Analysis
(IRFA) on the possible significant economic impact on small entities of
policies and rules proposed in this Second Further Notice of Proposed
Rulemaking. 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 Second Further NPRM provided
below.
1. Need for and Objectives of the Proposed Rules
14. The assessment and recovery of universal service contributions
are governed by the statutory framework established by Congress in the
Act. Section 254(b) instructs the Commission to establish universal
service support mechanisms with the goal of ensuring the delivery of
affordable telecommunications services to all Americans, including
consumers in high-cost areas, low-income consumers, eligible schools
and libraries, and rural health care providers. Section 254(d) of the
Act states that ``[e]very telecommunications carrier that provides
interstate telecommunications services shall contribute, on an
equitable and nondiscriminatory basis, to the specific, predictable,
and sufficient mechanisms established by the Commission to preserve and
advance universal service.''
15. Consistent with section 254 of the Act and as noted in the
companion Order, we take interim measures to maintain the viability of
universal service in the near term--a fundamental goal of this
Commission--while we consider further long-term reforms. As discussed
in further detail in the companion Order, although the interim measures
we adopt today will improve the current contribution methodology, they
do not address our concerns regarding the long-term viability of any
revenue-based system. We therefore conclude that it is appropriate to
further study long-term reforms of the contribution methodology.
16. Therefore, in this Second Further NPRM, we seek comment on
specific aspects of three connection-based proposals in the record.
First, we ask for comment on a proposed contribution methodology that
would impose a minimum contribution obligation on all interstate
telecommunications carriers and flat charge for each end-user
connection depending on the nature or capacity of the connection. Next,
we seek comment on a proposal to assess all connections based purely on
capacity. Under this proposal, contribution obligations for each
switched end-user connection would be shared between access and
transport providers. Finally, we seek comment on a proposal to assess
providers of switched connections based on their working telephone
numbers.
2. Legal Basis
17. The legal basis as proposed for this Second Further NPRM is
contained in sections 4(i), 4(j), 201-205, 254, and 403 of the
Communications Act of 1934, as amended.
3. Description and Estimate of the Number of Small Entities To Which
the Proposed Rules Will Apply
18. The RFA directs agencies to provide a description of, and,
where feasible, an estimate of the number of small entities that may be
affected by the proposals herein. The RFA generally defines the term
``small entity'' as having the same meaning as the terms ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' A small organization is generally ``any not-for-profit
enterprise which is independently owned and operated and is not
dominant in its field.'' Nationwide, as of 1992, there were
approximately 275,801 small organizations. ``Small governmental
jurisdiction'' generally means ``governments of cities, counties,
towns, townships, villages, school districts, or special districts,
with a population of less than 50,000.'' As of 1992, there were
approximately 85,006 governmental entities, total, in the United
States. This number includes 38,978 cities, counties, and towns; of
these, 37,566, or 96%, have populations of fewer than 50,000. The
Census Bureau estimates that this ratio is approximately accurate for
all governmental entities. Thus, of the 85,006 governmental entities,
we estimate that 81,600 (96%) are small entities. In addition, the term
``small business'' has the same meaning as the term ``small business
concern'' under the Small Business Act, unless the Commission has
developed one or more definitions that are appropriate to its
activities. Under the Small Business Act, a ``small business concern''
is one that: (1) Is independently owned and operated; (2) is not
dominant in its field of operation; and (3) meets any additional
criteria established by the Small Business Administration (SBA).
19. We have included small incumbent local exchange carriers in
[[Page 79547]]
this present RFA analysis. As noted above, a ``small business'' under
the RFA is one that, inter alia, meets the pertinent small business
size standard (e.g., a telephone communications business having 1,500
or fewer employees), and ``is not dominant in its field of operation.''
The SBA's Office of Advocacy contends that, for RFA purposes, small
incumbent local exchange carriers are not dominant in their field of
operation because any such dominance is not ``national'' in scope. We
have therefore included small incumbent local exchange carriers in this
RFA analysis, although we emphasize that this RFA action has no effect
on Commission analyses and determinations in other, non-RFA contexts.
20. Wireline Carriers and Service Providers (Wired
Telecommunications Carriers). The SBA has developed a small business
size standard for Wired Telecommunications Carriers, which consists of
all such companies having 1500 or fewer employees. According to Census
Bureau data for 1997, there were 2,225 firms in this category, total,
that operated for the entire year. Of this total, 2,201 firms had
employment of 999 or fewer employees, and an additional 24 firms had
employment of 1,000 employees or more. Thus, under this size standard,
the great majority of firms can be considered small.
21. Local Exchange Carriers, Interexchange Carriers, Competitive
Access Providers, Operator Service Providers, Payphone Providers, and
Resellers. Neither the Commission nor SBA has developed a definition
particular to small local exchange carriers (LECs), interexchange
carriers (IXCs), competitive access providers (CAPs), operator service
providers (OSPs), payphone providers or resellers. The closest
applicable definition for these carrier-types under 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 our
most recent data, there are 1,329 incumbent LECs, 532 CAPs, 229 IXCs,
22 OSPs, 936 payphone providers and 710 resellers. Of these, an
estimated 1,024 incumbent LECs, 411 CAPs, 181 IXCs, 20 OSPs, 933
payphone providers, and 669 resellers reported that they have 1,500 or
fewer employees; 305 incumbent LECs, 121 CAPs, 48 IXCs, 2 OSPs, 3
payphone providers, and 41 resellers reported that, alone or in
combination with affiliates, they have more than 1,500 employees. We do
not have data specifying the number of these carriers that are not
independently owned and operated, and therefore we are unable to
estimate with greater precision the number of these carriers that would
qualify as small business concerns under SBA's definition.
Consequently, most incumbent LECs, IXCs, CAPs, OSPs, payphone providers
and resellers are small entities that may be affected by the proposed
rules discussed in this Order.
22. Wireless Service Providers. The SBA has size standards for
wireless small businesses within the two separate Economic Census
categories of Paging and of Cellular and Other Wireless
Telecommunications. For both of those categories, the SBA considers a
business to be small if it has 1,500 or fewer employees. According to
the most recent Trends in Telephone Report data, 1,761 companies
reported that they were engaged in the provision of wireless service.
Of these 1,761 companies, an estimated 1,175 reported that they have
1,500 or fewer employees and 586 reported that, alone or in combination
with affiliates, they have more than 1,500 employees. Consequently, we
estimate that most wireless service providers are small entities that
may be affected by the proposed rules discussed herein.
23. Broadband Personal Communications Service (PCS). The broadband
PCS spectrum is divided into six frequency 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 $40 million or less in the three previous calendar years.
For Block F, an additional classification for ``very small business''
was added and is defined as an entity that, together with affiliates,
has average gross revenues of not more than $15 million for the
preceding three calendar years. These standards defining ``small
entity'' in the context of broadband PCS auctions have been approved by
the SBA. 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
percent of the 1,479 licenses for Blocks D, E, and F. On March 23,
1999, the Commission re-auctioned 347 C, D, E, and F Block licenses;
there were 48 small business winning bidders. On January 26, 2001, the
Commission completed the auction of 422 C and F Broadband PCS licenses
in Auction No. 35. Of the 35 winning bidders in this auction, 29
qualified as ``small'' or ``very small businesses.'' Based on this
information, we conclude that the number of small broadband PCS
licensees will include the 90 winning C Block bidders, the 93
qualifying bidders in the D, E, and F blocks, the 48 winning bidders in
the 1999 re-auction, and the 29 winning bidders in the 2001 re-auction,
for a total of 260 small entity broadband PCS providers, as defined by
the SBA small business size standards and the Commission's auction
rules. Consequently, we estimate that 260 broadband PCS providers are
small entities that may be affected by the proposed rules discussed
herein.
24. Narrowband PCS. To date, two auctions of narrowband PCs
licenses have been conducted. Through these auctions, the Commission
has awarded a total of 41 licenses, out of which 11 were obtained by
small businesses. For purposes of the two auctions that have already
been held, small businesses were defined as entities with average gross
revenues for the prior three calendar years of $40 million or less. To
ensure meaningful participation of small business entities in the
auctions, the Commission adopted a two-tiered definition of small
businesses in the Narrowband PCS Second Report and Order, 65 FR 35843,
June 6, 2000. A small business is an entity that, together with
affiliates and controlling interests, has average gross revenues for
the three preceding years of not more than $40 million. A very small
business is an entity that, together with affiliates and controlling
interests, has average gross revenues for the three preceding years of
not more than $15 million. These definitions have been approved by the
SBA. In the future, the Commission will auction 459 licenses to serve
MTAs and 408 response channel licenses. There is also one megahertz of
narrowband PCS spectrum that has been held in reserve and that the
Commission has not yet decided to release for licensing. The Commission
cannot predict accurately the number of licenses that will be awarded
to small entities in future auctions. However, four of the 16 winning
bidders in the two previous narrowband PCS auctions were small
businesses, as that term was defined under the Commission's Rules. The
Commission assumes, for purposes of this FRFA, that a large portion of
the remaining narrowband PCS licenses will be awarded to small
entities. The Commission also assumes that at least some small
businesses will acquire narrowband PCS licenses by means of the
Commission's partitioning and disaggregation rules.
25. Specialized Mobile Radio (SMR). The Commission awards ``small
entity'' and ``very small entity'' bidding credits in auctions for
Specialized Mobile Radio (SMR) geographic area licenses in
[[Page 79548]]
the 800 MHz and 900 MHz bands to firms that had revenues of no more
than $15 million in each of the three previous calendar years, or that
had revenues of no more than $3 million in each of the three previous
calendar years, respectively. In the context of both the 800 MHz and
900 MHz SMR service, the definitions of ``small entity'' and ``very
small entity'' have been approved by the SBA. These bidding credits
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 many of these providers have annual revenues of
no more than $15 million. One firm has over $15 million in revenues. We
assume, for our purposes here, that all of the remaining existing
extended implementation authorizations are held by small entities, as
that term is defined by the SBA. The Commission has held auctions for
geographic area licenses in the 800 MHz and 900 MHz SMR bands. There
were 60 winning bidders that qualified as small and very small entities
in the 900 MHz auctions. Of the 1,020 licenses won in the 900 MHz
auction, bidders qualifying as small and very small entities won 263
licenses. In the 800 MHz SMR auction, 38 of the 524 licenses won were
won by small and very small entities. Consequently, we estimate that
there are 301 or fewer small entity SMR licensees in the 800 MHz and
900 MHz bands that may be affected by the proposed rules discussed
herein.
26. Rural Radiotelephone Service. The Commission has not adopted a
definition of small entity specific to the Rural Radiotelephone
Service. A significant subset of the Rural Radiotelephone Service is
the Basic Exchange Telephone Radio Systems (BETRS). For purposes of
this FRFA, we will use the SBA's size standard applicable to wireless
service providers, supra--an entity employing no more than 1,500
persons. There are approximately 1,000 licensees in the Rural
Radiotelephone Service, and the Commission estimates that almost all of
them qualify as small entities under the SBA's size standard.
Consequently, we estimate that there are 1,000 or fewer small entity
licensees in the Rural Radiotelphone Service that may be affected by
the proposed rules discussed herein.
27. Air-Ground Radiotelephone Service. The Commission has not
adopted a definition of small entity specific to the Air-Ground
Radiotelephone Service. For purposes of this FRFA, we will use the
SBA's size standard applicable to wireless service providers, supra--an
entity employing no more than 1,500 persons. There are approximately
100 licensees in the Air-Ground Radiotelephone Service, and we estimate
that almost all of them qualify as small under the SBA definition.
4. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
28. Should the Commission decide that fundamental reform of the
existing contribution methodology is needed, the associated rule
changes potentially could modify the reporting and recordkeeping
requirements of telecommunications service providers regulated under
the Communications Act. Under a connection-based mechanism, we
potentially could require telecommunications service providers to file
additional and/or different monthly or quarterly reports. Any such
reporting requirements potentially could require the use of
professional skills, including legal and accounting expertise. Without
more data, we cannot accurately estimate the cost of compliance by
small telecommunications service providers. In this IFRA, we therefore
seek comment on the frequency with which carriers should submit reports
to USAC, the types of burdens carriers will face in periodically
submitting reports to USAC, and whether the costs of such reporting are
outweighed by the potential benefits of the possible reforms. Entities,
especially small businesses and small entities, more generally, are
encouraged to quantify the costs and benefits of the reporting
requirement proposals.
5. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
29. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include the following four alternatives (among others): (1)
The establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
(3) the use of performance, rather than design, standards; and (4) an
exemption from coverage of the rule, or any part thereof, for small
entities.
30. The Second Further NPRM seeks comment on a number of
connection-based alternatives to modify the existing contribution
methodology system. Although the proponents of specific connection-
based proposals argue that they would be consistent with the
requirements of section 254(d) of the Act that every telecommunications
carrier that provides interstate telecommunications services contribute
to the Commission's universal service mechanisms on a equitable and
nondiscriminatory basis, several other parties have expressed concerns
that the connection-based proposals in the record would be inconsistent
with the statutory mandate. We specifically take note of those
commenters that argue that the connection-based proposals in the record
would result in inequitable contributions.
31. We therefore believe it is appropriate to further develop the
record on aspects of certain proposals to assess universal service
contributions at least in part on the number and capacity of
connections. We also believe it is appropriate to continue refining our
analysis of the potential impacts on consumers and contributors,
including small entities, of adopting such a methodology. In this
Second Further NPRM, we seek comment on specific measures the
Commission could take to ensure that a connection-based contribution
methodology would be consistent with these statutory mandates. The
Commission will also consider additional significant alternatives
developed in the record.
32. Wherever possible, the Second Further NPRM seeks comment on how
to reduce the administrative burden and cost of compliance for small
telecommunications service providers. For example, we seek comment on
the operation of a de minimis exemption under the various connections-
based proposals. We also seek comment on the appropriate frequency and
content of reporting under a connection-based methodology. We
specifically seek comment from contributors that are small entities
under the Small Business Act.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
33. None.
B. Initial Paperwork Reduction Act of 1995 Analysis
34. The Second Further NPRM contains a proposed information
collection. As part of a continuing effort to reduce paperwork burdens,
we invite the general public and the Office of
[[Page 79549]]
Management and Budget (OMB) to take this opportunity to comment on the
information collections contained in this Second Further NPRM, as
required by the Paperwork Reduction Act of 1995, Pub. L. 104-13. Public
and agency comments are due January 14, 2003; OMB comments are due
February 28, 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.
C. Comment Filing Procedures
35. Pursuant to Sec. Sec. 1.415 and 1.419 of the Commission's
rules, interested parties may file comments January 29, 2003. Reply
comments are due on or before February 28, 2003. Comments may be filed
using the Commission's Electronic Comment Filing System (ECFS) or by
filing paper copies.
36. Comments filed through the ECFS can be sent as an electronic
file via the Internet to <http://www.fcc.gov/e-file/ecfs.html
. Generally, only one copy of an electronic
submission must be filed. If multiple docket or rulemaking numbers
appear in the caption of this proceeding, however, commenters must
transmit one electronic copy of the comments to each docket or
rulemaking number referenced in the caption. In completing the
transmittal screen, commenters should include their full name, U.S.
Postal Service mailing address, and the applicable docket or rulemaking
number. Parties may also submit an electronic comment by Internet e-
mail. To get filing instructions for e-mail comments, commenters should
send an e-mail to ecfs@fcc.gov, and should include the following words
in the body of the message, ``get form .'' A sample form and directions will be sent in
reply.
37. Parties who choose to file by paper must file an original and
four copies of each filing. If more than one docket or rulemaking
number appears in the caption of this proceeding, commenters must
submit two additional copies for each additional docket or rulemaking
number. 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). 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, DC 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, Marlene H. Dortch, Office of
the Secretary, Federal Communications Commission. 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 B. 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, OMB Desk Officer, 10236 NEOB, 725 17th Street, NW.,
Washington, DC 20503, or via the Internet to Kim--A.--
Johnson@omb.eop.gov.
38. Parties also must send three paper copies of their filing to
Sheryl Todd, Telecommunications Access Policy Division, Wireline
Competition Bureau, Federal Communications Commission, 445 12th Street
SW., Room 5-B540, Washington, DC 20554. In addition, commenters must
send diskette copies to the Commission's copy contractor, Qualex
International, Portals II, 445 12th Street, SW., Room CY-B402,
Washington, DC 20054.
D. Ex Parte Presentations
39. This is a permit but disclose 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.
IV. Ordering Clauses
40. It is further ordered that, pursuant to the authority contained
in sections 4(i), 4(j), 201-205, 254, and 403 of the Communications Act
of 1934, as amended, this Second Further Notice of Proposed Rulemaking
is adopted.
41. The Commission's Consumer and Governmental Affairs Bureau,
Reference Information Center, shall send a copy of this Second Further
Notice of Proposed Rulemaking, including the Initial Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration.
List of Subjects in 47 CFR Part 54
Reporting and recordkeeping requirements, Telecommunications,
Telephone.
Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. 02-32926 Filed 12-27-02; 8:45 am]
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