Further Forbearance From Title II Regulation for Certain Types of Commercial Mobile Radio Service Providers

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 20

[GN Docket No. 94-33, FCC 94-101]

Further Forbearance From Title II Regulation for Certain Types of

Commercial Mobile Radio Service Providers

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rule making.

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SUMMARY: This notice of proposed rule making (Notice) solicits comment

on whether, within particular services classified as Commercial Mobile

Radio Service (CMRS), there may be types of providers that merit

forbearance from certain requirements found in Title II of the

Communications Act. Specifically, the Commission asks whether we should

forbear from enforcing those provisions of Title II that we determined

did not merit general forbearance in our Second Report and Order in

Gen. Docket No. 93-252. If the further forbearance is warranted, the

Commission asks how we should determine which types of CMRS providers

should be excused from remaining Title II requirements and how we

should implement and enforce such forbearance provisions.

DATES: Comments are due by June 27, 1994 and reply comments are due by

July 12, 1994.

ADDRESSES: Federal Communications Commission, Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT:

Gina Harrison or Susan McNeil, Private Radio Bureau, Land Mobile and

Microwave Division, (202) 632-7792 and 634-2443, respectively, or Peter

Batacan, Common Carrier Bureau, Tariff Division (202) 632-6917.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's

Notice in GN Docket No. 94-33, adopted April 20, 1994 and released May

4, 1994. The full text of Commission decisions are available for

inspection and copying during normal business hours in the FCC Docket

Branch (room 230), 1919 M Street, NW., Washington, DC. The complete

text of this decision may also be purchased from the Commission's copy

contractor, International Transcription Service, Inc., (202) 857-3800,

2100 M Street, NW., Washington, DC 20037.

Synopsis of the Notice of Proposed Rule Making

1. In the Second Report and Order in General Docket No. 93-252, 59

FR 18493 (Apr. 19, 1994) the Commission elected, pursuant to the

Omnibus Budget Reconciliation Act of 1993 (Budget Act), to forbear from

applying Sections 203, 204, 205, 211, 212, and 214 of Title II of the

Communications Act to any service classified as CMRS. The Commission

determined that the remaining sections of Title II should be enforced

with respect to CMRS providers in order to promote competition or to

protect consumers, and that this decision would not place any undue

burden on any CMRS provider or class of providers. Nevertheless, the

Commission also announced that it would consider additional relief in a

future rule making that would gather a more extensive record on the

potential effect of the remaining sections of Title II on particular

types of CMRS providers within each class of service. The purpose of

this Notice is to initiate that rule making.

2. The Budget Act authorizes the Commission to take forbearance

actions if it determines that: (i) Enforcement of such provision is not

necessary in order to ensure that the charges, practice,

classifications, or regulations for or in connection with that service

are just and reasonable and are not unjustly discriminatory; (ii)

enforcement of such provision is not necessary for the protection of

consumers; and (iii) specifying such provision is consistent with the

public interest. The legislative history of this provision indicates

that the Commission may distinguish among types of CMRS providers in

making this determination. Assuming that further forbearance in a

particular case would not adversely affect rates or practices or harm

consumers under the first two prongs of the test, the Commission

tentatively identified two factors under the public interest test of

the last prong that could serve to guide its determinations: (1)

Whether there are differential costs of compliance with the remaining

Title II sections that could make further forbearance appropriate for

particular types of providers; and (2) whether the public interest

benefits from application of particular Title II provisions are less

for certain types of CMRS providers. Thus, in applying the last prong

of the statutory test, the Commission asks commenters to identify (1)

the benefits of applying the remaining Title II sections, (2) the costs

of compliance with any the remaining Title II sections, and (3) whether

the costs of compliance with any of the remaining sections of Title II

outweigh the benefits. In addition, the Commission asks, pursuant to 47

CFR 332(c)(1)(C), whether further forbearance will enhance future CMRS

competition from a diversity of entities.

3. The Commission also asks commenters to demonstrate actual or

projected costs of compliance with each provision of Title II that was

not forborne, and the extent to which such costs vary across different

types of providers. For example, if the costs of regulation are fixed,

it could indicate that small CMRS providers are more likely than other

types of CMRS providers to be burdened by the costs of regulation. The

Commission asks whether there are instances where these additional

costs outweigh the public interest benefits of applying the statutory

provision in issue. The Commission seeks evidence on the magnitude of

any such fixed costs.

I. Application of Further Forbearance

4. Commenters should address (1) how the statutory forbearance test

applies to each remaining Title II provision, (2) how further

forbearance from applying each provision of Title II would enhance

future CMRS competition, (3) how Congressional intent underlying each

Title II provision would be affected, (4) how forbearance for

particular types of CMRS providers would comport with regulatory

symmetry and (5) whether there are other factors or alternatives we

should consider in classifying CMRS for further forbearance.

5. The Commission seeks comment on its tentative view that there

would be no purpose in forbearing from applying 47 U.S.C. 210, which

allows common carriers to issue franks and passes to their employees,

and to provide the Government with free service in connection with

preparation for national defense.

6. The Commission characterized 47 U.S.C. 213, 215, 218, 219, and

220 as primarily reservations of authority and reaffirmed its finding

in the Second Report and Order that it was unnecessary to forbear from

applying these provisions to CMRS. Section 213 authorizes the

Commission to make valuations of carrier property. Section 215 gives

the Commission the authority to examine carrier activities and

transactions. Section 218 authorizes the Commission to inquire into the

management of a carrier and its owner. Section 219, inter alia,

authorizes the Commission to require annual reports from carriers.

Section 220 gives the Commission discretion to prescribe the forms of

accounts, records, and memoranda to be kept by carriers, as well as

depreciation rates. Even though these provisions impose no affirmative

obligations on CMRS providers, and may have no immediate impact on

CMRS, the Commission seeks comment on whether the potential for

increased regulation (and any concomitant costs) might have an adverse

economic impact on specific types of provides that is not in the public

interest.

7. 47 CFR 223 governs obscene, harassing and indecent

communications. In relevant part, the statute forbids a common carrier

(if the carrier collects payments for an adult information provider

using the carrier's services) to the extent technically feasible, to

permit access to an obscene or indecent communication from the

telephone of any subscriber who has not previously requested such

access. This requirement, known as ``reverse blocking,'' applies only

if a carrier bills and collects fees for the adult information

provider. As a technical matter, then, a CMRS provider subject to this

obligation would have to program its switch (should it employ one) to

accomplish this blocking.

8. The Commission tentatively reaffirms its general conclusion in

the Second Report and Order that section 223 should continue to apply

to CMRS. Commenters are asked to address the impact of section 223 on

existing and projected CMRS offerings, and in particular, whether CMRS

providers are likely to be involved in services that implicate Section

223.

9. 47 U.S.C. 225, Title IV of the Americans with Disabilities Act,

requires all common carriers providing interstate or intrastate

telephone voice transmission service to provide telecommunications

services that enable persons with hearing and speech disabilities to

communicate with hearing individuals. Common carriers may select one of

several methods of offering TRS, but most have elected to designate a

TRS provider or to provide TRS in concert with other carriers.

10. For purposes of further forbearance, the Commission asks

whether there are any CMRS providers whose market is so specialized, or

their customer base or size of operation so small that applying TRS

obligations to them would not appreciably advance the universal service

objectives of Section 225. Would forbearance in such cases meet the

test in section 332? Parties are also asked to address whether the need

for forbearance is reduced by providers' ability to designate a third

party to provide TRS. The Commission also seeks comment on whether

there are technical or operational limitations that would make

compliance with our TRS technical standards difficult for a particular

type of CMRS provider. The Commission asks whether interfacing with a

third-party TRS provider would also pose technical difficulties,

particularly for those private providers who will be reclassified as

CMRS after new technical/operational rules become effective.

11. The Commission has adopted a shared-funding mechanism for

interstate TRS cost recovery. Under the Commission's shared-funding

plan, providers of interstate telecommunications services are required

to contribute to a TRS fund and comply with reporting and filing

obligations, including conforming their accounts to a specified format.

The amount of the yearly contribution is a percentage (.00030) of the

carrier's gross interstate revenues. Each carrier must contribute at

least $100, even if its share under the actual computation would be

less.

12. In light of the small percentage used to calculate the

contribution and the low minimum required, the Commission asks whether

the burden from the funding and concomitant filing obligations are

likely to be significant for any type of CMRS. The Commission also

reiterates that providers that do not themselves use TRS facilities are

nevertheless required to contribute to the Fund. The Commission seeks

comment on its tentative view that the public interest would not be

furthered by exempting CMRS entirely because they do not use TRS

facilities.

13. The Telephone Operator Consumer Services Improvement Act

(TOCSIA), codified at 47 U.S.C. 226, protects consumers making

interstate operator service calls from phones available to the public

or to transient users against unreasonably high rates and anti-

competitive practices. It regulates two groups. The first consists of

operator service providers (OSPs). These are providers of interstate

telecommunications service from phones available to the public or to

transient users that give automatic or live assistance for billing or

completion to a caller. The second group are aggregators, generally

persons that, in the ordinary course of their operations, make

telephones available to the public or to transient users of the

premises and who use a provider of operator services. Pursuant to

TOCSIA and Commission rules, OSPs are subject to various

identification, disclosure and billing requirements, including the

requirement that they ``brand'' calls, i.e., audibly identify

themselves at the beginning of the call and before the consumer incurs

any charges for the call. They may not engage in ``call splashing''

(transfer of a call to another carrier at a location different from the

originating consumer where the second carrier cannot tell the

originating location, with the result that the charge to the consumer

is incorrect and not based on originating location). OSPs must file

informational tariffs. Aggregators are required to identify and

disclose certain information regarding the presubscribed OSP and to

disclose that rate information is available and that the consumer has

the right to use an OSP of his or her choice. The aggregator must also

ensure (1) that its telephones presubscribed to an OSP allow consumers

to use 800 or 900 numbers to obtain access to the OSP of choice, and

(2) according to an established implementation schedule, that any of

its presubscribed equipment allows the consumer to use equal access

(10XXX) codes to access the customer's choice of OSP.

14. The Notice requests comment on whether forbearance from section

226 for particular classes of CMRS would be justified. Parties

advocating forbearance for specific types of providers from the

aggregator or OSP rules should explain how such action would meet the

three-part test for forbearance under Section 332. In particular,

parties should address how the first and second prongs of the test,

that rates be just and reasonable and that consumers be adequately

protected, would be met. In connection with the third prong, parties

should address whether the statute imposes any costs that would be

exceptionally difficult for certain types of CMRS provider to bear, and

whether forbearance in such case would significantly diminish statutory

protections for the public. In particular, the Commission seeks comment

on whether such costs are likely to prove unduly burdensome for

specific types of small CMRS providers.

15. The telephone Consumer Protection Act of 1991 (TCPA), 47 U.S.C.

227, restricts the use of automatic telephone dialing systems,

artificial or prerecorded voice messages, and telephone facsimile

machines to send unsolicited advertisements. TCPA prohibits autodialed

and prerecorded voice message calls to emergency lines, health care

facilities or similar establishments, and with certain exceptions,

number (such as cellular numbers) for which the called party is charged

for the call.

16. Current TCPA obligations primarily apply to the originator of

the unwanted message, e.g., telemarketers. Unless a CMRS provider also

engages in telemarketing or sends unsolicited facsimiles or other

unwanted communications, the statute generally does not apply to it. In

so far as small CMRS providers act as originators of unsolicited voice

or facsimile transmissions, the Commission tentatively concludes that

forbearance for such providers would not adequately protect consumers'

privacy interests under the second prong of the Section 332 test.

Moreover, the decision to undertake telemarketing services would be a

voluntary business judgment on the part of a CMRS provider. Such

telemarketing is not a necessary part of what is generally regarded as

CMRS. The Commission also sees no public interest benefit under the

third prong of the test in permitting CMRS providers, even small ones,

to undertake such activities without complying with TCPA. The Notice

seeks comment on these tentative views.

17. 47 U.S.C. 228 incorporates the Telephone Disclosure and Dispute

Resolution Act (TDDRA), which governs pay-per-call services (also known

as ``audiotext'' or ``900'' services), and imposes obligations in

interexchange carriers, local exchange carriers and common carriers in

general. Pursuant to the Act and our implementing regulations, local

exchange carriers must offer subscribers, where technically feasible,

an option to block access to 900 services. They must also tariff the

terms and conditions for such blocking.

18. TDDRA also imposes additional obligations on all common

carriers. (a) 800 Service. With certain exceptions, information service

charges cannot be assessed against callers to 800 and other toll-free

numbers. Common carriers must enforce this obligation by contract or

tariff. (b) Collect Calls. Common carriers may not transmit collect

information services that are either at a per-call or per-time-interval

charge that is greater than, or in addition to, the charge for the

transmission of the call, or have not been affirmatively accepted by

the called party. (c) Payment. Common carriers are prohibited from

disconnecting or interrupting service for failure to remit pay-per-call

or similar service charges. Common carriers may not recover the cost of

complying with TDDRA requirements from ratepayers.

19. The Commission seeks comment on the extent to which the local

exchange carrier obligation to permit subscribers to block access where

technically feasible should apply to CMRS, and whether there are

particular types of CMRS providers for which such an obligation would

be particularly difficult. Would local exchange carriers provide

blocking for customers of CMRS providers that interconnect with the

public switched network? Additional TDDRA obligations, including

restrictions on disconnection or on transmission of collect pay-per-

call charges, are imposed on carriers who bill and collect for 900

services, which is not a common carrier service. The Commission asks

for comment on whether this type of voluntary business activity is not

essential to provision of CMRS and hence, would not justify forbearance

for any type of CMRS.

20. In analyzing application of any of the above TDDRA obligations,

commenters are asked to address the three parts of the section 332

forbearance test. In connection with the third prong, the Commission

asks whether Section 228 obligations would impose exceptional costs on

certain types of CMRS and whether forbearance in such cases would

significantly diminish statutory protections to the public. Parties

should also address the effect forbearance would have on the TDDRA

objectives of promoting the legitimate development of pay-per-call

services and protecting consumers from fraudulent and deceptive

practices.

II. CMRS Providers Meriting Further Forbearance

21. Turning to the question of which types of CMRS providers merit

further forbearance, the Commission asks as a threshold matter whether

any further forbearance is merited, noting that application of Title II

is not expected to create any undue burden on any CMRS provider, or on

CMRS competition generally. To the extent that regulatory obligations

impose fixed costs, however, they would place relatively greater

burdens on small providers who have less of a revenue base and other

resources to support them. The Commission seeks comment on whether

there are technical or operational limitations inherent in the services

these small businesses provide that may make application of certain of

the statutory provisions in question not in the public interest. The

Commission also recognizes the public interest in maintaining

opportunities for small businesses and the role that further

forbearance might play in reducing the cost of doing business for them.

The Notice thus seeks comment on whether the size of the provider may

be a basis for defining CMRS eligibility for further forbearance.

Finally, the Notice seeks comment on whether to consider an analysis of

a CMRS provider's customer base as another possible factor in

determining the appropriateness of further forbearance. Certain types

of providers, particularly small providers, may serve predominantly

business customers who require more advanced communications services

and may have relatively greater bargaining power than CMRS customers

that make personal use of the service. As a result the differing needs

of business and individual customers could affect the analysis of

whether forbearance would reduce benefits to customers. In addition,

the Commission asks whether it should distinguish between medium to

large business customers, and small businesses.

22. The Commission seeks comment on how to determine which type of

provider should be considered ``small'' for purposes of further

forbearance. The Commission asks interested parties to comment on

whether any one or any combination of the options advanced below should

be applied. Parties are invited to identify alternatives and to comment

on how the Commission could draw on its experience in identifying small

carriers in other contexts, e.g., the exemption to the cable-telco

cross-ownership rule. Finally, the Notice asks interested parties to

provide their views on how the Commission might best implement and

enforce any classification scheme. The Notice seeks comment on the

advantages and disadvantages of the various options with respect to

implementation by both the Commission and licensees.

A. Measurement Factors

23. One possible standard for size of business operation is the

Small Business Administration (SBA) definition of small entity: an

entity with a net worth not in excess of $6 million with average net

income after Federal income taxes for the two preceding years not in

excess of $2 million. The Commission relied on this standard to define

small businesses entitled to preferences under the spectrum auction

rules. The Commission believes that these criteria are appropriate for

identifying entities entitled to preferred entry into new business

ventures, as in the spectrum auction context. The Commission

tentatively finds, however, that this standard is too generous for

purposes of determining which CMRS providers are entitled to relief

from remaining title II obligations, many of which, as discussed above,

are designed to protect consumers. The Notice thus asks whether the

Commission should employ a more modest income and net worth standard.

Those commenters that nevertheless advocate use of this approach should

discuss how it would affect the different services comprising CMRS,

providing as much data as possible on the number of providers in a

particular service that would be eligible for further forbearance under

this definition, and how it would affect consumer protection. The

Commission might also measure size and scope by a number of objective

factors, such as average revenues per subscriber or percentage of

interconnected traffic, average number of customers or for part 90

licensees, number of mobile units, or average subscriber rate.

Interested parties should provide data to demonstrate whether providers

within their suggested definition would find the costs of complying

with the title II regulatory obligations burdensome and how their

recommended definition comports with the statutory factors set forth in

section 332(c) governing forbearance.

24. The Commission also seeks comment on how, if standards

applicable to individual providers are established, it should treat

affiliated corporations or operators of systems in more than one

geographic area or providers who own multiple small systems. In

addition, the Notice seeks comment on whether the Commission should

attribute ownership of systems that are operated pursuant to an

exclusive management contract, and thus not forbear when management

contracts are in force. Further, it seeks comment on the impact, if

any, of industry mergers on application of a size standard. Should a

small system's affiliation with a corporation that would yield greater

vertical integration disqualify that system from further forbearance?

Would a small mobile system necessarily enjoy benefits of scale and

scope from an affiliation with, for example, a long distance provider?

If so, would such a provider be ineligible for further forbearance?

25. Number of channels would provide an administratively

straightforward means of identifying small CMRS entities. The

Commission thus asks for comment on whether number of channels is a

workable and rational approach to measuring size of CMRS licensees.

Commenters should specify specific types of CMRS providers licensed

under parts 22 and 90 of the Commission's Rules, and suggest numbers of

channels that would identify small providers in each mobile radio

service. In responding to these questions, commenters should consider

the likelihood that channels can be aggregated to form systems that

would no longer be operated by a small provider, and how transition to

a different level of forbearance would be effectuated. Commenters

should also address how licensees conforming to this approach would be

affected by the remaining title II obligations discussed above, and

whether their users or competitors would be adversely affected by

further forbearance.

26. The character of a provider's customer base,--i.e., whether its

customers subscribe to the service to meet their business

communications requirements, or whether customers are primarily

consumers with a personal need for mobile communications service--may

be another possible factor to consider in determining whether to

undertake further forbearance. To the extent that certain types of CMRS

providers predominantly serve business customers.--such as traditional

SMR and business radio service,--rather than individual customers, such

business customers may have relatively greater bargaining power and

information concerning their telecommunications options. In addition,

the Commission asks whether it should also distinguish between large

and medium-sized and small business customers, on the assumption that

small businesses may be more like individual consumers in their

bargaining power over telecommunications services. The Commission

accordingly seeks comment on (1) whether to apply an analysis of a CMRS

provider's customer base and (2) what factors might contribute to this

analysis.

B. Case-by-Case Determination

27. The Commission might also extend further forbearance to

particular CMRS providers on a case-by-case basis. Under this approach,

providers desiring further forbearance from the remaining provisions of

title II that continue to apply could petition the Commission to

forbear in individual circumstances. To qualify for further

forbearance, petitioners would have to demonstrate that they meet the

statutory test for forbearance, as implemented by the rules and

policies established in this proceeding. The Notice seeks comment on

this approach, which is consistent with the Commission's previous

conclusion that the degree of forbearance adopted in the Second Report

and Order should not be unduly burdensome for the vast majority of CMRS

providers.

C. Implementation

28. If the Commission exercises further forbearance with respect to

individual providers, how should the Commission enforce its standards

efficiently, in terms of both identifying eligible entities and

deterring evasive behavior? One option would be to amend application

forms to require certification of compliance with specific standards as

part of our revised application form for the mobile services. The

Commission could use random staff audits of licensees to determine

whether they in fact quality for further forbearance. A second

alternative would be to impose affirmative reporting requirements on

small providers. A third option would be to rely on complaints alleging

violations of our further forbearance standards. Commenters should

discuss these and any alternative enforcement methods. The Notice also

seeks comment on whether existing licensees should have to file a

separate certification to be eligible for further forbearance.

Procedural Matters

Ex Parte Consideration

29. This is a non-restricted proceeding. Ex parte presentations are

permitted, except during the Sunshine Agenda period, provided they are

disclosed as provided in the Commission's rules. See generally 47 CFR

1.1202, 1.203 and 1.206(a).

Comment Information

30. Pursuant to applicable procedures set forth in Sections 1.415

and 1.419 of the Commission's Rules, 47 CFR Secs. 1.415, 1.419,

interested parties may file comments on or before June 27, 1994 and

reply comments on or before July 12, 1994. All relevant and timely

comments will be considered by the Commission before final action is

taken in this proceeding.

Initial Regulatory Flexibility Statement

I. Reason for Action. In an effort to avoid the imposition of

unwarranted costs or other burdens upon carriers, the Second Report and

Order determined that the Commission would initiate a rule making (the

instant proceeding) to determine whether further forbearance from

application of Title II provisions to CMRS was necessary.

II. Objectives of the Action. We seek here to determine whether to

forbear further from the imposition of Title II regulation on certain

types of CMRS providers, particularly small providers, and how to

define small CMRS providers.

III. Legal Basis. Communications Act, section 332, 47 U.S.C. 332.

IV. Description, potential impact, and number of small entities

affected. We do not have the data at this time to estimate the number

of CMRS providers affected by this rule making, but we are herein

proposing to reduce regulatory burdens for these providers.

V. Reporting, record keeping and other compliance requirements. The

proposals under consideration in this Notice include the possibility of

new reporting and record keeping requirements for small CMRS providers;

however, one of the objectives in this proceeding is to minimize such

burdens.

VI. Federal rules which overlap, duplicate or conflict with these

rules. If adopted, the proposals here in would modify existing rules

codified at 47 CFR part 20 and 47 CFR 1.728-1.734.

VII. Any significant alternatives minimizing the impact on small

entities and consistent with stated objectives. This Notice proposes to

reduce the administrative burdens and costs of compliance with Title II

regulation on small CMRS providers. As required by Section 603 of the

Regulatory Flexibility Act, the Commission has prepared an Initial

Regulatory Flexibility Analysis (IRFA) of the expected impact on small

entities of the proposals suggested in this document. Written public

comments are requested on the IFRA. These comments must be filed in

accordance with the same filing deadlines as comments on the rest of

the Notice, but they must have a separate and distinct heading

designating them as responses to the IRFA. The Secretary shall send a

copy of this Notice, including the IRFA, to the Chief Counsel for

Advocacy of the Small Business Administration in accordance with

paragraph 603(a) of the Regulatory Flexibility Act. Pub. L. No. 96-354,

94 Stat. 1164, 5 U.S.C. 601 et seq. (1981).

Paperwork Reduction Act Statement

The proposal contained herein has been analyzed with respect to the

Paperwork Reduction Act of 1980 and found to impose a new or modified

information collection requirement on the public. This proposed

requirement would, however, reduce information collection requirements

otherwise applicable to small CMRS providers. Implementation of any new

or modified requirement will be subject to approval by the Office of

Management and Budget as prescribed by the Act.

Ordering Clauses

Accordingly, the Commission adopts this Notice pursuant to the

authority contained in Section 332 of the Communications Act of 1934,

as amended, 47 U.S.C. Sec. 332.

List of Subjects in 47 CFR Part 20

Commercial mobile radio services, Radio.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 94-11750 Filed 5-13-94; 8:45 am]

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