# Telephone Number Portability

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A96-18479

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** July 25, 1996
- **Citation:** 61 FR 38687

## Text

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 20 and 52

[CC Docket No. 95-116; FCC 96-286]

Telephone Number Portability

AGENCY: Federal Communications Commission.

ACTION: Proposed Rule.

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SUMMARY: On July 13, 1995, the Commission issued a Notice of Proposed
Rulemaking (CC Docket No. 95-116) seeking comments on a wide variety of
policy and technical issues related to number portability. On June 27,
1996, the Commission adopted a First Report and Order which is
published elsewhere in this issue. On the same day, the Commission
adopted a Further Notice of Proposed Rulemaking (Further Notice or
FNPRM) seeking comment on the appropriate methods of cost recovery of
long-term number portability. Since the Telecommunications Act of 1996
requires that the costs of number portability be borne by all
telecommunications carriers on a competitively neutral basis, the
Commission will determine the appropriate method of cost recovery in
this proceeding.

DATES: Comments are due on or before August 16, 1996, and reply
comments are due on or before September 16, 1996.

ADDRESSES: Comments and reply comments should be sent to Office of the
Secretary, Federal Communications Commission, 1919 M Street, NW., Room
222, Washington, DC 20554, with a copy to Wanda Harris of the
Competitive Pricing Division of the Common Carrier Bureau, 1919 M
Street, NW., Room 518, Washington, DC 20554. Parties should also file
one copy of any documents filed in this docket with the Commission's
copy contractor, International Transcription Services, Inc., 2100 M
Street, NW., Suite 140, Washington, DC 20037.

FOR FURTHER INFORMATION CONTACT: Neil Fried, Attorney, Common Carrier
Bureau, Competitive Pricing Division, (202) 418-1530.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
Further Notice of Proposed Rulemaking June 27, 1996, and released July
2, 1996 (FCC 96-286). This FNPRM contains no proposed or modified
information collections subject to the Paperwork Reduction Act of 1995
(PRA). The full text of this Further Notice of Proposed Rulemaking is
available for inspection and copying during normal business hours in
the FCC Reference Center (Room 239), 1919 M St., NW., Washington, DC.
The complete text also may be obtained through the World Wide Web, at
http://www.fcc.gov/Bureaus/Common Carrier/Orders/fcc96286.wp, or may be
purchased from the Commission's copy contractor, International
Transcription Service, Inc., (202) 857-3800, 2100 M St., NW., Suite
140, Washington, DC 20037.

Initial Regulatory Flexibility Analysis

Pursuant to section 603 of the Regulatory Flexibility Act, 5 U.S.C.
603, the Commission prepared an Initial Regulatory Flexibility Analysis
(IRFA) of the expected impact on small entities of the policies and
rules proposed in the Further Notice of Proposed Rulemaking. The IRFA
is set forth in Appendix C of the FNPRM. The Commission, in compliance
with sections 251(b)(2) and 251(d)(1) of the Act, proposes rules
necessary to implement section 251(e)(2) of the Act, which requires
that the costs of number portability be borne by all telecommunications
carriers on a competitively neutral basis. The Commission's objective
in issuing the FNPRM is to propose and seek comment on rules
establishing a cost recovery mechanism for carriers to use in
implementing a long-term number portability method pursuant to the Act
and in accordance with the First Report and Order in this proceeding.
Specifically, the Commission's goal is to propose rules which implement
section 251(e)(2) of the Act, requiring that the cost of ``number
portability be borne by all telecommunications carriers on a
competitively neutral basis as determined by the Commission.'' 47
U.S.C. 251(e)(2). The legal basis for action as proposed in the FNPRM
is contained in sections 1, 4(i), 4(j), 201-205, 218, 251(b), 251(e),
and 332 of the Communications Act of 1934, as amended. 47 U.S.C. 151,
154(i), 154(j), 201-205, 218, 251(b), 251(d), 251(e), The Commission's
proposed rules governing cost recovery for long-term number portability
apply to all LECs, including incumbent LECs as well as new LEC
entrants, and also apply to cellular, broadband PCS, and covered SMR
providers. According to the SBA definition, incumbent LECs do not
qualify as small businesses because they are dominant in their field of
operation. However, the proposed rules may have a significant economic
impact on a substantial number of small businesses insofar as they may
apply to telecommunications carriers other than incumbent LECs. The
proposed rules may have such an impact upon new entrant LECs as well as
cellular, broadband PCS, and covered SMR providers. Based upon data
contained in the most recent census and a report by the Commission's
Common Carrier Bureau, the Commission estimates that 2,100 carriers
could be affected. The Commission requests comment on this estimate.
These entities could include various categories of carriers, including
competitive access providers, cellular carriers, interexchange
carriers, mobile service carriers, operator service providers, pay
telephone operators, PCS providers, covered SMR providers, and
resellers. The FNPRM requests comment on the appropriate method by
which the costs of long-term number portability should be recovered.
One possible cost recovery method would be based upon a percentage of a
carrier's gross revenues. Such a rule, if promulgated, would not impose
a reporting requirement on LECs because they already file information
about gross revenues with the Commission for other purposes. There are
no other reporting requirements contemplated by the FNPRM. There are no
federal rules

[[Page 38688]]

which overlap, duplicate or conflict with these proposed rules.

Synopsis of Further Notice of Proposed Rulemaking

Further Notice of Proposed Rulemaking

I. Long-Term Number Portability--Costs and Cost Recovery
A. Background
1. In the NPRM (Telephone Number Portability, Notice of Proposed
Rulemaking, 60 FR 39136 (August 1, 1995)), we requested comment on
appropriate cost recovery mechanisms regarding long-term number
portability. We also sought comment, data, studies, and other
information on the costs associated with designing, building, and
deploying long-term number portability. Section 251(e)(2) of the 1996
Act requires, inter alia, that the costs of number portability be borne
by all telecommunications carriers on a competitively neutral basis.
B. Positions of the Parties
2. In response to the July NPRM, many parties assert that the costs
of number portability cannot be estimated until the industry adopts a
particular architecture. While the incumbent LECs generally urge the
Commission to continue to gather information concerning the potential
costs and impacts on existing networks from ongoing state activities, a
few parties offer rough estimates regarding the costs of implementing
long-term number portability. We note that many of these estimates
assume a significant level of location portability.
3. The incumbent LECs generally assert that the costs of providing
long-term number portability should be borne on a ``competitively
neutral'' basis by those carriers that cause or benefit from number
portability. They assert that specific cost recovery mechanisms cannot
be established until a better understanding is developed regarding how
number portability should be provided. Ameritech, however, proposes a
cost recovery structure with three categories of costs: (1)
Administrative and overhead costs for SMS/databases--to be recovered
from all providers; (2) costs directly assignable to number portability
deployment--to be recovered from all LECs, both incumbents and new
entrants, in proportion to the amount of telephone numbers that each
has transferred to its switches; and (3) costs incurred to increase the
capacity of existing infrastructure--to be borne mostly by incumbent
LECs. Some incumbent LECs also contend that the costs of deploying
long-term number portability should be allocated between state and
federal jurisdictions.
4. Most other parties generally contend that all telecommunications
carriers and their customers should bear the costs of long-term number
portability because they all benefit from the service and price
competition stimulated by portability. Non-LEC parties generally
contend that carrier-specific costs incurred in adapting existing
systems to long-term number portability should be recovered, like other
network upgrades such as AIN and SS7, through tariff and contract
mechanisms. Sprint and AT&T advocate implementing portability on a
region-by-region basis (with costs amortized over several years) to
minimize incumbent carriers' greater burdens for upgrading existing
networks. Several parties also contend that the external costs of long-
term number portability, i.e., the costs of designing, deploying, and
operating facilities common to all carriers, should be shared equitably
among all affected carriers. Parties offer several different methods of
allocating costs among the relevant carriers.
5. After passage of the 1996 Act, and in response to the March
Public Notice, several parties addressed the meaning of the statutory
language ``competitively neutral'' as set forth in section 251(e)(2).
Ameritech asserts that this standard requires that all costs be
allocated to all telecommunications carriers on a basis that is
independent of who incurred the cost or who uses portability, and that
gives no competitor an advantage. Ameritech criticizes proposals that
would limit or exclude recovery of costs incurred by incumbent LECs or
allocate costs based on lines. BellSouth urges the Commission to
consider the types of infrastructure costs that all classes of carriers
will bear in implementing number portability, not just incumbent LECs,
in order to avoid imposing large financial burdens on any particular
class of carriers, especially those not required to participate in
portability. GTE and Pacific Bell argue that requiring each carrier to
bear its own costs would result in incumbent LECs paying most of the
implementation costs, which is not competitively neutral.
6. In contrast, ALTS, Omnipoint, and Cox maintain that competitive
neutrality requires each carrier to bear its own costs, and that no
carrier should be required to pay for upgrades to another carrier's
network. Moreover, Cox argues that incumbent LEC proposals to require
that the new entrants bear all number portability costs are not
competitively neutral because it would unreasonably burden those
carriers. In addition, Cox asserts that, because new entrants will
begin providing service at different times, it would be difficult to
allocate costs on a competitively neutral basis unless each carrier
bears its own costs of implementation. Omnipoint asserts that requiring
carriers to compensate other carriers with less efficient systems and
networks is competitively unfair.
7. US West advocates permitting LECs to recover their costs using a
per-line surcharge, claiming that all carriers are entitled to recover
their implementation costs under the 1996 Act. GTE suggests
establishment of a ``cost pool,'' under which each subscriber would be
assessed an amount, regardless of which carrier it used. Bell Atlantic
claims that allowing incumbent LECs to recover their costs only from
their customers, and not from other providers, is not competitively
neutral because costs would be recovered only from those end users who
do not use or benefit from portability, and higher incumbent LEC rates
would encourage their customers to switch providers. USTA cautions that
not permitting carriers to recover their costs through separate charges
for number portability will result in an across-the-board increase in
local rates, which, for incumbent LECs, must be approved by state
regulators.
8. In contrast, MFS maintains that the competitive neutrality
requirement does not apply to end users at all, but rather requires an
analysis of charges assessed to other, competing telecommunications
carriers. Teleport argues that number portability costs should not be
recovered from customers through a number portability surcharge, as
such charges would deter customers from transferring their numbers. Cox
asserts that GTE's pooling argument is not competitively neutral
because it would create incentives for incumbents to inflate costs.
9. MFS argues that the competitive neutrality standard in the 1996
Act requires that only the shared/common costs be borne by all
telecommunications carriers, and that such allocation should be done
based on net revenues. It notes that all telecommunications users
should not be interpreted to mean only a segment of the market, a
single class of carriers, or a single class of customers. MFS further
argues that the shared/common costs could be recovered from each
carrier's customer base, but not from other carriers in the form of
increased charges. TRA contends that section 251(e)(2) contemplates a
competitively fair distribution of the common costs associated with
number portability

[[Page 38689]]

among only those carriers engaged in the provision of local exchange/
exchange access services, not a general levy on all telecommunications
providers. Teleport and Time Warner Holdings propose similar cost
recovery mechanisms to MFS, but argue that the shared costs should be
allocated based on the number of lines served, rather than net
revenues. ALTS argues that, in order to expedite the implementation of
number portability, shared/common costs (e.g., costs associated with
the number portability database(s)) should be recovered by a third
party from all carriers on a per line basis, but notes that there is
considerable economic logic in recovering such costs according to net
revenues.
C. Discussion
10. We tentatively conclude that three types of costs are involved
in providing long-term service provider portability: (1) Costs incurred
by the industry as a whole, such as those incurred by the third-party
administrator to build, operate, and maintain the databases needed to
provide number portability; (2) carrier-specific costs directly related
to providing number portability (e.g., the costs to purchase the switch
software implementing number portability); and (3) carrier-specific
costs not directly related to number portability (e.g., the costs of
network upgrades necessary to implement a database method). We seek
comment on this tentative conclusion and ask whether other types of
costs are involved in the provision of long-term service provider
number portability.
11. New section 251(e)(2) of the Communications Act requires that
the costs of establishing ``number portability be borne by all
telecommunications carriers on a competitively neutral basis as
determined by the Commission.'' We tentatively conclude that the
``competitively neutral'' standard in section 251(e)(2) applies only to
number portability costs, and not to cost recovery of carrier-specific,
non-number portability-specific costs, such as upgrades to SS7 or AIN
technologies. This interpretation is borne out by the plain language of
the statute, which only requires that telecommunications carriers bear
the costs of number portability. We also tentatively conclude that
section 251(e)(2) does not address recovery of those costs from
consumers, but only the allocation of such costs among carriers. We
seek comment on these tentative conclusions. We also seek comment on
the meaning of the statutory language ``all telecommunications
carriers'' as that term is used in section 251(e)(2). We further seek
comment on whether the Commission has authority to exclude certain
groups of telecommunications carriers from the cost recovery mechanisms
for number portability, and, if so, which carriers should be excluded.
12. In determining the cost recovery mechanism for currently
available number portability measures, we set forth principles with
which any competitively neutral cost recovery mechanism should comply.
Specifically, we required that (1) a competitively neutral cost
recovery mechanism should not give one service provider an appreciable,
incremental cost advantage over another service provider, when
competing for a specific subscriber; and (2) a competitively neutral
cost recovery mechanism should not have a disparate effect on the
ability of competing service providers to earn a normal return. As in
the case of currently available number portability measures, we believe
that these principles equally apply to the allocation of costs incurred
due to the implementation of long-term number portability. We,
therefore, tentatively conclude that any long-term cost recovery method
should comply with these principles. We seek comment on this tentative
conclusion.
13. Pursuant to the requirement of section 251(e)(2) that number
portability costs be borne by all telecommunications carriers on a
competitively neutral basis as determined by this Commission, we must
establish pricing principles that are applied consistently to all
carriers. Consequently, we tentatively conclude that the pricing for
state-specific databases should be governed by the pricing principles
established in this proceeding. We believe the use of our pricing
mechanism--even in states that opt out of the regional database
system--will help to maintain consistency between states, thereby
improving the likelihood that competition will develop nationwide.
a. Costs of Facilities Shared by All Carriers for the Provision of
Number Portability
14. The costs of facilities shared by all telecommunications
carriers for providing long-term number portability include, for
example, the costs of building and administering regional databases. We
seek comment on whether the database administrator(s) selected through
the NANC should recover the costs of facilities shared by all
telecommunications carriers for the provision of long-term number
portability through a charge assessed only on those carriers using the
databases or on all carriers whether or not they use the databases. We
note that if a regional database consists only of the SMS, usage would
consist of uploading and downloading number portability routing
information. However, to the extent a database architecture is chosen
that utilizes an SMS/SCP pair, usage additionally may include carrier
queries to the regional SCP for purposes of providing routing
instructions to carriers for individual calls. We seek comment on
whether such costs, if recovered from all carriers, should be recovered
on a nationwide or regional basis, and how they should be recovered on
such bases. To the extent such costs are recovered on a nationwide
basis, and multiple entities are selected to administer the regional
databases, we seek comment on whether either one of the neutral third-
party administrators or a separate entity should be designated to
allocate the aggregate costs among each telecommunications carrier and
determine the method by which such payments should be made.
15. With regard to those carriers responsible for bearing the costs
of the shared facilities, we tentatively conclude that the recovery of
the costs associated with these databases should be allocated in
proportion to each telecommunications carrier's total gross
telecommunications revenues minus charges paid to other carriers. We
believe that the use of gross telecommunications revenues to allocate
costs best comports with our principles for competitively neutral cost
recovery set forth above. As we indicated in our discussion of
currently available number portability measures, such allocator would
not give any provider an appreciable, incremental cost advantage over
another service provider, nor have a disparate effect on the ability of
competing service providers to earn a normal return. In addition, gross
telecommunications revenues are the least distortionary, among
practical applications, of allocating costs across telecommunications
carriers. We also believe it is appropriate to subtract out charges
paid to other carriers, such as access charges, when determining the
relevant amount of each carrier's telecommunications revenues for
purposes of cost allocation. This is because the revenues attributable
to such charges effectively would be counted twice in determining the
relative number portability costs each carrier should pay--once for the
carrier

[[Page 38690]]

paying such charges and once for the carrier receiving them. We believe
that a reasonable, equitable, and competitively neutral measure of the
competitive benefits which will result from number portability is each
telecommunications carrier's gross telecommunications revenues minus
charges to other telecommunications carriers. We seek comment on
whether this proposal for recovery of the costs associated with
regional databases comports with the standard set forth in section
251(e)(2), and whether there exists alternative ways of allocating this
type of cost among the relevant carriers.
16. We currently require the NANPA to recover the costs of
administering the NANP, and operating databases to perform such
administration, from all telecommunications carriers. The recovery of
these costs is allocated among all telecommunications carriers based on
the carriers' gross revenues. In our recent Interconnection NPRM (61 FR
18311 (April 25, 1996)), we tentatively concluded that we need not take
any further action to comply with section 251(e)(2)'s mandate that the
cost of establishing telecommunications numbering administration
arrangements be borne by all telecommunications carriers on a
competitively neutral basis, in light of the action taken in the
Numbering Plan Order (60 FR 38737 (July 28, 1996)).
17. With the implementation of long-term number portability
measures, all carriers, including currently regulated incumbent LECs,
will incur costs specific to the deployment and usage of number
portability databases. Therefore, we seek comment on whether incumbent
LECs should be able to recover their portion of the costs of facilities
shared by all carriers in providing long-term number portability from
their end users or from other carriers, and whether the Commission
should prescribe the particular cost recovery mechanism. To the extent
parties argue that such costs should be recovered from other carriers,
we seek comment on whether such carriers should include all
telecommunications carriers, such as other local exchange providers,
CMRS providers, IXCs, and resellers, or only those carriers that have
received ported numbers. In addition, assuming that we prescribe a
particular recovery mechanism, we ask parties to identify alternative
ways carriers may recover this type of cost from carriers (or end
users).
18. We tentatively conclude the number portability costs of
facilities shared by all carriers fall into three subcategories: (a)
Non-recurring costs, including the development and implementation of
the hardware and software for the database; (b) recurring (monthly or
annually) costs, such as the maintenance, operation, security,
administration, and physical property associated with the database; and
(c) costs for uploading, downloading, and querying number portability
database information. We seek comment on this tentative conclusion and
ask whether there are other types of costs associated with the
facilities that will be shared by all carriers.
19. We seek comment on whether the first two subcategories, non-
recurring and recurring costs, should be recovered through monthly
charges to the individual carriers using the database, allocated in
proportion to each carrier's gross telecommunications revenues net of
payments to other carriers, or from all carriers operating in areas
where number portability is offered. We note that non-recurring charges
could be recovered in a one-time payment or over time.
20. We believe that there are at least two methods for recovering
the third subcategory of shared costs, i.e., the costs of uploading,
downloading, or querying the database. First, these costs could be
recovered through usage charges assessed on those carriers that either
access the database to upload number portability routing information,
download such information, or directly query the database. Those
carriers, including IXCs, could then either recover such costs from
their own customer base, or choose not to recover such costs.
21. Second, the upload, download, and/or per-query costs could be
folded into the monthly charges assessed on the carriers using the
databases, which would be allocated in proportion to each carrier's
gross telecommunications revenues. We believe this approach is most
appropriate in those instances where it is not practical to determine
the cost causer of the usage costs, e.g., per-query costs. Under
current database approaches, there is no direct correlation between the
number of queries made and the number of telephone numbers that have
been forwarded because queries will be performed on all calls to a
particular switch once any single number has been transferred from that
switch. We invite commenting parties to provide credible, substantiated
estimates of the amount of the usage costs, including upload, download,
and per-query costs, to the extent applicable, and whether such costs
will be incurred on a per-minute, per-call, or other basis. We also
seek comment on these and alternative methods for recovering per-query
costs. Parties are asked to state with specificity the advantages and
disadvantages of each.
22. In accordance with the 1996 Act, the costs of number
portability are to be recovered from all telecommunications carriers on
a competitively neutral basis. We seek comment on what steps we need to
take to ensure that this requirement is satisfied for all shared
industry costs. For instance, we seek comment on whether it is
necessary for the Commission to establish a mechanism to ensure that
the LNPA(s) recovers its costs in a competitively neutral fashion. We
also seek comment on what mechanism(s), e.g., federal tariffs, periodic
reports, etc., should be utilized to ensure compliance with the
statutory requirement and under what authority the Commission can
impose such obligations. We note that section 251(e)(1) requires the
Commission to create or designate one or more impartial entities to
administer telecommunications numbering, and provides the Commission
with exclusive jurisdiction over the NANP, and section 251(e)(2) gives
the Commission the authority to establish rules by which carriers must
bear the costs of telecommunications numbering administration and
number portability. We seek comment on the relevance of these
provisions to the Commission's authority to impose obligations on the
LNPA(s).
b. Direct Carrier-Specific Costs to Implement Number Portability
23. Carrier-specific costs directly related to number portability
include, for example, the costs of purchasing the switch software
necessary to implement a long-term number portability solution. There
are at least two ways of allocating these carrier-specific costs.
First, we could require individual carriers to bear their own costs of
deploying number portability in their networks. Second, we could
require all carriers in a given region to pool their number portability
costs, which then would be spread across all carriers providing and
using number portability based on some allocator, such as gross
telecommunications revenues or number of subscriber lines. We seek
comment on whether this proposal comports with the standard set forth
in section 251(e)(2), and whether there exist alternative ways of
allocating this type of cost among the relevant carriers.
24. We seek comment on whether we can and should mandate a
mechanism by which incumbent LECs or others then may recover these
costs, from either end users or other carriers (such as other local
exchange service

[[Page 38691]]

providers, CMRS providers, IXCs, and resellers), and ask that parties
identify the jurisdictional basis for such authority.
25. If the Commission were to permit costs to be recovered from
consumers, there are at least two options. One option would be to allow
carriers the flexibility to recover their number portability-specific
costs from their customers in whatever manner the carrier chooses. A
second option would be to require carriers to recover their number
portability-specific costs through a number portability charge assessed
on their end user customers located in areas where number portability
is available. We seek comment on the advantages and disadvantages of
these proposals and any alternative mechanisms for recovering these
costs from consumers. Parties favoring a specific option should comment
on whether their preferred approach is consistent with principles of
competitive neutrality.
26. We note that several additional issues are raised if the
carrier-specific, number portability-specific costs are to be passed on
to consumers. Therefore, we seek comment on whether, under any cost
recovery mechanism, the cost to consumers should: (1) Vary among
carriers in a given geographic region; (2) remain constant among all
carriers in a given geographic region; or (3) vary among different
geographic regions, e.g., states or LATAs (while remaining constant
within that region, i.e., state or LATA). For each of these approaches,
we ask whether the costs to consumers should be permitted to change,
for example, on a monthly or annual basis. We also seek comment on
whether carriers should charge their customers a single, one-time
charge, a monthly fee, or some percentage of the customer's monthly
bill, to recover their carrier-specific number portability-specific
costs. To the extent this Commission permits carriers to recover their
costs through use of a number portability charge, we seek comment on
whether such a charge should be specifically identified on consumer
bills from those carriers as a separate line item. We seek comment on
whether any such charge should be filed as a tariff at either the
federal or state level.
27. Finally, we seek comment on whether carriers should be
permitted to recover carrier-specific, number portability-specific
costs from other carriers, through increases in charges for regulated
services. Parties that advocate increases in charges for regulated
services are asked to specify which charges should be increased and
under what jurisdictional authority the Commission can prescribe such
increases.
c. Indirect Carrier-Specific Costs to Implement Number Portability
28. We tentatively conclude that carrier-specific costs not
directly related to number portability should be borne by individual
carriers as network upgrades. As such, carrier-specific costs not
directly related to number portability are not subject to the
requirements set forth in section 251. We seek comment on this
tentative conclusion and on alternative methods for recovering this
type of cost.
29. Carrier-specific costs that are not directly related to the
provision of number portability include, for example, the costs of
upgrading SS7 capabilities or adding intelligent network (IN) or
advanced intelligent network (AIN) capabilities. These costs are
associated with the provision of a wide variety of services unrelated
to the provision of number portability, such as CLASS features.
Provision of these services will facilitate the ability of incumbent
carriers to compete with the offerings of new entrants.
30. Incumbent LECs, as well as new entrants, will be required to
incur these costs to support the provision of number portability and
other services. While some incumbent LECs may have to upgrade existing
networks and infrastructure, new entrants will need to design their
networks from the outset to include these capabilities. Many incumbent
LECs, though, may already have the necessary network capabilities to
support the provision of long-term number portability, thus minimizing
the need to incur upgrade costs. By limiting the deployment of long-
term portability to those geographic areas where carriers are already
offering, or are likely to offer, competing telephone exchange and
exchange access services, we limit these expenditures and their
recovery to areas where the incumbent carriers would, solely for
competitive reasons, likely upgrade their networks. We note that this
approach is also consistent with that taken in implementing 800 number
portability, where LECs recovered the core costs of deploying SS7
capabilities as network upgrades from all end users.
31. We seek comment on whether we should specify a particular
recovery mechanism for carrier-specific costs not directly related to
number portability, and on alternative methods of recovering such costs
from consumers or other carriers. In addition, we believe that due to
the inevitable implementation of switch and other network upgrades to
support long-term number portability and other AIN capabilities,
networks will operate with greater efficiencies, resulting in increased
productivity. We seek comment on whether such future network design
modifications should be considered in determining the extent to which
carriers may recover carrier-specific, non-number portability-specific
costs, and if so, how they should be considered.
d. Price Cap Treatment
32. If this Commission were to specify a particular method of cost
recovery from end users, such requirement would include companies that
are subject to price cap treatment. Price cap regulation may affect
carriers' ability to recover their costs under the methods described
above, or other possible methods, because it restricts the flexibility
with which price cap carriers may price various services. We
tentatively conclude that price cap carriers should be permitted to
treat as an exogenous cost any carrier-specific, number portability-
specific costs they incur, but that such carriers should not be
permitted to treat as an exogenous cost any carrier-specific, non-
number portability-specific costs. These conclusions are consistent
with our 800 Access proceeding where costs specific to 800 access were
accorded exogenous cost treatment, while core SS7 costs were treated as
general network upgrades. We, therefore, seek comment specifically on
how price cap companies should be permitted to recover costs for
facilities shared by all carriers; carrier-specific, number
portability-specific costs; and carrier-specific, non-number
portability-specific costs. In particular, we seek comment on whether
price cap companies should be permitted to treat exogenously any of the
above number portability-specific cost categories. We also seek comment
on whether these costs, alternatively, should be placed in a new price
cap basket or an existing basket. If parties recommend that such costs
are to be placed in an existing basket, we ask parties to identify
which basket would be most appropriate.
II. Procedural Matters
A. Ex Parte
33. This is a non-restricted notice and comment rulemaking. Ex
parte presentations are permitted, except during the Sunshine period,
provided they are disclosed as provided in the Commission's rules.
B. Regulatory Flexibility Act
34. As required by section 603 of the Regulatory Flexibility Act, 5
U.S.C. 601

[[Page 38692]]

et seq. (1981), the Commission prepared an Initial Regulatory
Flexibility Analysis (IRFA) of the expected impact on small entities
resulting from the policies and proposals set forth in this FNPRM. The
IRFA appears at Appendix C of the FNPRM. Written public comments are
requested on the IRFA. These comments must be filed in accordance with
the same filing deadlines as comments on the remainder of the FNPRM,
but they must have a separate and distinct heading designating them as
responses to the regulatory flexibility analysis. The Secretary shall
cause a copy of the FNPRM, including the IRFA, to be sent to the Chief
Counsel for Advocacy of the Small Business Administration in accordance
with section 603(a) of the Regulatory Flexibility Act.
35. Reason for Action: The Commission, in compliance with sections
251(b)(2) and 251(d)(1) of the Act, proposes rules and procedures
intended to ensure the prompt implementation of telephone number
portability with the minimum regulatory and administrative burden on
telecommunications carriers. The rules proposed in the FNPRM are
necessary to implement section 251(e)(2) of the Act, which requires
that the costs of number portability be borne by all telecommunications
carriers on a competitively neutral basis.
36. Objectives and Legal Basis for Proposed Rules: The Commission's
objective in issuing the FNPRM is to propose and seek comment on rules
establishing a cost recovery mechanism for carriers to use in
implementing a long-term number portability method pursuant to the Act
and in accordance with our Report and Order in this proceeding.
Specifically, our goal is to propose rules which implement section
251(e)(2) of the Act, requiring that the cost of ``number portability
be borne by all telecommunications carriers on a competitively neutral
basis as determined by the Commission.'' 47 U.S.C. 251(e)(2). The legal
basis for action as proposed in the FNPRM is contained in sections 1,
4(i), 4(j), 201-205, 218, 251(b), 251(e), and 332 of the Communications
Act of 1934, as amended. 47 U.S.C. 151, 154(i), 154(j), 201-205, 218,
251(b), 251(d), 251(e), 332.
37. Description and Estimated Number of Small Entities Affected:
The rules governing long-term number portability apply to all LECs,
including incumbent LECs as well as new LEC entrants, and also apply to
cellular, broadband PCS, and covered SMR providers. According to the
SBA definition, incumbent LECs do not qualify as small businesses
because they are dominant in their field of operation. Accordingly, we
will not address the impact of these rules on incumbent LECs.
38. However, our rules may have a significant economic impact on a
substantial number of small businesses insofar as they apply to
telecommunications carriers other than incumbent LECs. The rules may
have such an impact upon new entrant LECs as well as cellular,
broadband PCS, and covered SMR providers. Based upon data contained in
the most recent census and a report by the Commission's Common Carrier
Bureau, we estimate that 2,100 carriers could be affected. We have
derived this estimate based on the following analysis:
39. According to the 1992 Census of Transportation, Communications,
and Utilities, there were approximately 3,469 firms with under 1,000
employees operating under the Standard Industrial Classification (SIC)
category 481--Telephone. See U.S. Dept. of Commerce, Bureau of the
Census, 1992 Census of Transportation, Communications, and Utilities
(issued May 1995). Many of these firms are the incumbent LECs and, as
noted above, would not satisfy the SBA definition of a small business
because of their market dominance. There were approximately 1,350 LECs
in 1995. Industry Analysis Division, FCC, Carrier Locator: Interstate
Service Providers at Table 1 (Number of Carriers Reporting by Type of
Carrier and Type of Revenue) (December 1995). Subtracting this number
from the total number of firms leaves approximately 2,119 entities
which potentially are small businesses which may be affected. This
number contains various categories of carriers, including competitive
access providers, cellular carriers, interexchange carriers, mobile
service carriers, operator service providers, pay telephone operators,
PCS providers, covered SMR providers, and resellers. Some of these
carriers--although not dominant--may not meet the other requirement of
the definition of a small business because they are not ``independently
owned and operated.'' See 15 U.S.C. 632. For example, a PCS provider
which is affiliated with a long distance company with more than 1,000
employees would be disqualified from being considered a small business.
Another example would be if a cellular provider is affiliated with a
dominant LEC. Thus, a reasonable estimate of the number of ``small
businesses'' affected by this Order would be approximately 2,100. We
request comment on this estimate. These entities could include various
categories of carriers, including competitive access providers,
cellular carriers, interexchange carriers, mobile service carriers,
operator service providers, pay telephone operators, PCS providers,
covered SMR providers, and resellers. The SIC codes which describe
these groups are 4812 and 4813.
40. Reporting, Recordkeeping and Other Compliance Requirements: The
FNPRM requests comment on the appropriate method by which the costs of
long-term number portability should be recovered. One possible cost
recovery method would be based upon a percentage of a carrier's gross
revenues. Such a rule, if promulgated, would not impose a reporting
requirement on LECs because they already file information about gross
revenues with the Commission for other purposes. There are no other
reporting requirements contemplated by the FNPRM.
41. Federal Rules Which Overlap, Duplicate or Conflict with these
Rules: None.
C. Notice and Comment Provision
42. Pursuant to applicable procedures set forth in sections
Secs. 1.415 and 1.419 of the Commission's Rules, 47 CFR 1.415 and
1.419, interested parties may file comments on this FNPRM on or before
August 16, 1996, and reply comments on or before September 16, 1996. To
file formally in this proceeding, parties must file an original and
twelve copies of all comments, reply comments, and supporting comments.
Parties wanting each Commissioner to receive a personal copy of their
comments must file an original plus sixteen copies. Comments and reply
comments should be sent to the Office of the Secretary, Federal
Communications Commission, 1919 M Street, NW., Room 222, Washington, DC
20554. In addition, parties should file two copies of any such
pleadings with the Competitive Pricing Division, Common Carrier Bureau,
Room 518, 1919 M Street, NW., Washington, DC 20554. Parties should also
file one copy of any documents filed in this docket with the
Commission's copy contractor, International Transcription Services,
Inc. (ITS, Inc.), 2100 M Street, NW., Suite 140, Washington, DC 20037
(202/857-3800). Comments and reply comments will be available for
public inspection during regular business hours in the FCC Reference
Center, Room 239, 1919 M Street, NW., Washington, DC 20554.
43. In order to facilitate review of comments and reply comments,
both by parties and by Commission staff, we require that comments be no
longer than forty (40) pages and reply comments be no longer than
twenty five (25) pages.

[[Page 38693]]

Empirical economic studies, copies of relevant state orders, and
proposed rule text will not be counted against these page limits.
Specific rule proposals should be filed as an appendix to a party's
comments or reply comments. Such appendices may include only proposed
text for rules that would implement proposals set forth in the parties'
comments and reply comments in this proceeding, and may not include any
comments or arguments. Proposed rules should be provided in the format
used for rules in the Code of Federal Regulations and should otherwise
conform to the Comment Filing Procedures set forth in this order.
Comments and reply comments must include a short and concise summary of
the substantive arguments raised in the pleading. Comments and reply
comments also must clearly identify the specific portion of this FNPRM
to which a particular comment or set of comments is responsive. Parties
will not be permitted to file more than a total of ten (10) pages of ex
parte submissions, excluding cover letters, except in response to
direct requests from Commission staff. This would not include written
ex parte filings made solely to disclose an oral ex parte contact. Ex
parte filings in excess of this limit will not be considered as part of
the record in this proceeding.
44. Parties also are asked to submit comments and reply comments on
diskette. Such diskette submissions would be in addition to and not a
substitute for the formal filing requirements addressed above. Parties
submitting diskettes should submit them to Wanda M. Harris, Competitive
Pricing Division of the Common Carrier Bureau, 1919 M Street, NW., Room
518, Washington, DC., 20554. Such a submission should be on a 3.5 inch
diskette formatted in an IBM compatible form using MS DOS 5.0 and
WordPerfect 5.1 software. The diskette should be submitted in ``read
only'' mode. The diskette should be clearly labelled with the party's
name, proceeding, type of pleading (comment or reply comments) and date
of submission. The diskette should be accompanied by a cover letter.
D. Ordering Clause
It is ordered that, pursuant to the authority contained in sections
1, 4(i), 4(j), 201-205, 218, 251, and 332 of the Communications Act as
amended, 47 U.S.C. Secs. 151, 154(i), 154(j), 201-205, 218, 251, and
332, a further notice of proposed rulemaking is hereby adopted.

List of Subjects

47 CFR Part 20

Federal Communications Commission, Local number portability, Radio,
Telecommunications.

47 CFR Part 52

Federal Communications Commission, Cost recovery, Local exchange
carrier, Local number portability, Long-term database methods,
Numbering, Telecommunications.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-18479 Filed 7-24-96; 8:45 am]
BILLING CODE 6712-01-P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A96-18479. Public record. Not legal advice.