Implementation of Section 402(b)(1)(a) of the Telecommunications Act of 1996 (Tariff Streamlining Provisions for Local Exchange Carriers)
Federal RegisterFeb 7, 1997
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 1 and 61
[CC Docket No. 96-187; FCC 97-23]
Implementation of Section 402(b)(1)(a) of the Telecommunications
Act of 1996 (Tariff Streamlining Provisions for Local Exchange
Carriers)
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In light of the passage of the Telecommunications Act of 1996
(1996 Act), which provides for streamlined tariff filings by local
exchange carriers (LECs), the Commission is issuing this Report and
Order to implement the
[[Page 5758]]
specific streamlining requirements of the Act. The Report and Order
determines that the statutory effect of LEC tariffs subject to
streamlined regulation being ``deemed lawful'' is that a LEC tariff
will be lawful upon its effective date unless it is supended by the
Commission prior to that time. In addition, the Report and Order finds
that all LEC tariff filings, not just those proposing a rate decrease
or increase, are eligible for streamlined treatment. Finally, the
Report and Order adopted additional measures to streamline the
administration of the LEC tariff review process.
EFFECTIVE DATE: February 8, 1997.
FOR FURTHER INFORMATION CONTACT: Patrick Donovan or Dan Abeyta at (202)
418-1520, Common Carrier Bureau, Competitive Pricing Division. For
additional information concerning the information collections contained
in this Report and Order, contact Dorothy Conway at (202) 418-0217, or
via the Internet at [email protected].
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order in CC Docket No. 96-187 (FCC 97-23) adopted on January 30,
1997 and released on January 31, 1997. The full text of this Report and
Order is available for inspection and copying during normal business
hours in the FCC Reference Center (Room 239), 1919 M St., N.W.,
Washington, D.C. 20037. The complete text may also be obtained through
the World Wide Web, at http:/www.fcc.gov/Bureau/Common/Carrier/Order/
fcc9723.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.
Regulatory Flexibility Analysis
As required by the Regulatory Flexibility Act, the Report and Order
contains a Final Regulatory Flexibility Analysis which is set forth in
the Report and Order. A brief description of the analysis follows.
Pursuant to section 604 of the Regulatory Flexibility Act, the
Commission performed a comprehensive analysis of the Report and Order
with regard to small entities. This analysis includes: (1) A succinct
statement of the need for; and objectives of the Commission's decisions
in the Report and Order; (2) a summary of the significant issues raised
by the public comments in response to the initial regulatory
flexibility analysis, a summary of the Commission's assessment of these
issues, and a statement of any changes made in the Report and Order as
a result of the comments; (3) a description of and estimate of the
number of small entities and small incumbent LECs to which the Report
and Order will apply; (4) a description of the projected recordkeeping
and other compliance requirements of the Report and Order, including an
estimate of the classes of small entities which will be subject to the
requirement and the type of professional skills necessary for
compliance with the requirement; (5) a description of the steps the
Commission has taken to minimize the significant economic impact on
small entities consistent with the stated objectives of applicable
statutes, including a statement of the factual, policy, and legal
reasons for selecting the alternative adopted in the Report and Order
and why one of the other significant alternatives to each of the
Commission's decisions which affect small entities was rejected.
The rules adopted in this Report and Order are necessary to
implement the provisions of the Telecommunications Act of 1996.
Paperwork Reduction Act
1. On November 27, 1996, the Office of Management and Budget (OMB)
approved all of the proposed changes to our information collection
requirements in accordance with the Paperwork Reduction Act. We have,
however, decided not to adopt several of the information collection
requirements proposed in the NPRM and we have modified others. For
example, we declined to adopt the proposal to require the LECs to
include a summary and legal analysis with their tariff filings, but we
will require that LEC tariff filings include a statement in tariff
transmittal letters clearly indicating that the tariff is being filed
on a streamlined basis under section 204(a)(3) of the Act and whether
the tariff filing contains a proposed rate increase, decrease or both
for purposes of section 204(a)(3). We conclude that these requirements
and modifications constitute a new ``collection of information,''
within the meaning of the Paperwork Reduction Act of 1995, 44 U.S.C.
Secs. 3501-3520. These requirements and modifications have been
approved by OMB. An agency may not conduct or sponsor and a person is
not required to respond to a collection of information unless it
displays a currently valid control number.
2. The Commission concurs with OMB's recommendation that we
consider input from the industry before implementing a system for the
electronic filing of tariffs and related pleadings.
OMB Approval Number: 3060-0745.
Expiration Date: August 31, 1997.
Title: Implementation of Section 402(b)(1)(A) of the
Telecommunications Act of 1996 (Tariff Streamlining Provisions for
Local Exchange Carriers) CC Docket No. 96-187.
Respondents: Business or other for-profit, including small
businesses.
------------------------------------------------------------------------
Annual
Number of hour
Proposed requirement respondents burden per
response
------------------------------------------------------------------------
Electronic filing........................... 50 72
Separate filing for rate decreases.......... 10 4
Identification/labelling of streamlined
tariffs.................................... 50 9
------------------------------------------------------------------------
Total Annual Burden: 4090.
Estimated Costs Per Respondents: $3,400.
Total Estimated Annual Reporting and Recordkeeping Costs: $170,000.
Needs and Uses: The information collections adopted in this Report
and Order will be used to ensure that affected telecommunications
carriers fulfill their obligations under the Communications Act, as
amended.
Public reporting burden for the collections of information is as
noted above. Send comments regarding the burden estimate or any other
aspect of the collection of information, including suggestions for
reducing the burden to the Record Management Branch, Washington, D.C.
20554.
Synopsis of Report and Order
I. Introduction
3. On February 8, 1996, the ``Telecommunications Act of 1996''
[[Page 5759]]
(1996 Act) became law. The intent of this legislation is ``to provide
for a pro-competitive, de-regulatory national policy framework designed
to accelerate rapid private sector deployment of advanced
telecommunications and information technologies and services to all
Americans by opening all telecommunications markets to competition.''
This Report and Order adopts rules to implement section
402(b)(1)(A)(iii) of the 1996 Act, which adds section 204(a)(3) to the
Communications Act. This section provides for streamlined tariff
filings by local exchange carriers (LECs). In the NPRM, 61 FR 49987
(September 24, 1996), we proposed measures to implement the tariff
streamlining requirements of section 204(a)(3). Twenty-nine parties
filed comments and twenty-one filed replies.
II. The 1996 Act
4. Section 402(b)(1)(A)(iii) of the 1996 Act adds new subsection 3
to section 204(a) of the Communications Act of 1934 (the Act):
(3) A local exchange carrier may file with the Commission a new or
revised charge, classification, regulation, or practice on a
streamlined basis. Any such charge, classification, regulation, or
practice shall be deemed lawful and shall be effective 7 days (in the
case of a reduction in rates) or 15 days (in the case of an increase in
rates) after the date on which it is filed with the Commission unless
the Commission takes action under paragraph (1) before the end of that
7-day or 15-day period as is appropriate.
Section 402 of the 1996 Act also amends section 204(a) of the Act
to provide that the Commission shall conclude any hearings initiated
under this section within five months after the date the charge,
classification, regulation, or practice subject to the hearing becomes
effective. Section 402(b)(4) of the 1996 Act provides that these
amendments shall apply to any charge, classification, regulation, or
practice filed on or after one year after the date of enactment of the
Act, i.e., February 8, 1997.
5. Under the 1996 Act, a LEC is defined as ``any person that is
engaged in the provision of telephone exchange service or exchange
access.'' A LEC ``does not include a person insofar as such person is
engaged in the provision of commercial mobile radio service under
section 332(c), except to the extent that the Commission finds that
such service should be included in the definition of such term.''
III. Streamlined LEC Tariff Filings Under Section 402 of the 1996 Act
A. Commission Authority Under the 1996 Act to Defer LEC Tariffs
Eligible for Streamlined Treatment
6. In the NPRM, we stated that by adopting section 204(a)(3)
Congress intended to streamline LEC tariff filings by providing that
they would become effective within seven or fifteen days notice unless
suspended and investigated by the Commission. Section 203(b)(2) of the
Act, however, provides that the Commission may defer the effective date
of tariffs for up to 120 days. In the NPRM, we tentatively concluded
that Congress intended to foreclose the exercise of our general
deferral authority under section 203(b)(2) of the Act with respect to
the tariffs eligible for streamlined treatment. We solicited comment on
this tentative conclusion.
7. ALLTEL Telephone Services Corporation (ALLTEL), Ameritech, Bell
Atlantic, BellSouth Corp. (BellSouth), Cincinnati Bell Telephone (CBT),
GTE Services Corp. (GTE), NYNEX Telephone Companies (NYNEX), Pacific
Telesis Group (Pacific Telesis), Southwestern Bell Telephone Company
(SWBT), United States Telephone Association (USTA), and US West, Inc.
(US West) agree with the tentative conclusion set out in the NPRM that
the Commission does not have discretion to defer for up to 120 days
tariffs that LECs may file under the new streamlining provisions. GTE
asserts that granting the Commission such discretion would enable
competitors to continue to use the tariff review process to delay
implementation of LEC pricing changes, a result that GTE contends would
be contrary to Congressional intent to accelerate the tariff review
process. NYNEX asserts that the Commission's deferral authority is
derived from section 203(b)(1) of the Act while section 204(a)(3)
provides for streamlined tariff filings. NYNEX concludes that, because
there is no provision in section 204(a)(3) for deferring streamlined
tariffs, Congress did not intend the deferral authority in section 203
to be applicable to tariffs filed pursuant to section 204. In contrast,
AT&T Corp. (AT&T), America's Carrier Telecommunications Association
(ACTA), and Telecommunications Resellers Association (TRA) contend that
the 1996 Act does not affect the Commission's authority to defer LEC
tariff filings. According to AT&T, Congress could not have intended to
preclude the Commission from deferring tariff filings made by monopoly
LECs while retaining the authority to defer tariff filings made by
carriers who face significant competition. MCI Communications
Corporation (MCI) states that the Commission's deferral authority is
foreclosed only for rate increases and decreases and that the
Commission may continue to exercise its deferral authority for all
other LEC tariffs. The General Services Administration (GSA) contends
that the Commission retains its deferral authority because Congress did
not amend section 203(b)(1).
8. Neither the statute nor the legislative history to the 1996 Act
directly addresses whether Congress intended to foreclose our exercise
of deferral authority with respect to LEC streamlined tariffs. We
conclude that the more recent and specific provisions of the 1996 Act
take precedence over our general deferral authority in section 203. We
believe continued application of the general deferral authority
contained in section 203 to LEC tariffs filed on a streamlined basis
under the specific provisions set out in new section 204(a)(3) would be
contrary to Congressional intent. Accordingly, we adopt our tentative
conclusion in the NPRM that we may not defer LEC tariffs filed under
the tariff streamlining provisions of the 1996 Act.
B. Effect of Streamlined LEC Tariff Filings Being ``Deemed Lawful''
9. Section 204(a)(3) of the Act provides that LEC tariffs filed on
a streamlined basis ``shall be deemed lawful.'' The 1996 Act and the
legislative history are silent regarding the specific legal
consequences of this provision. In the NPRM, we tentatively concluded
that, by specifying that LEC tariffs shall be ``deemed lawful,''
Congress intended to change the current regulatory treatment of LEC
tariff filings. The Commission set forth two possible interpretations
of ``deemed lawful.''
10. Under the first interpretation, a tariff that becomes effective
without suspension and investigation would be a ``lawful'' tariff. It
could subsequently be found unlawful in a rate prescription proceeding
under section 205, or in a complaint proceeding under section 208. The
Commission, however, could not award refunds or damages for the time
that the rate was in effect but could only order tariff revisions or
award damages on a prospective basis. This would differ radically from
the current practice, where a rate that goes into effect without
suspension and investigation is the ``legal'' rate, leaving carriers
liable for damages, for the time the tariff was in effect, subject to
the applicable two-year statute of
[[Page 5760]]
limitations set out in section 415(a) of the Act, if the tariff is
subsequently found unlawful.
11. Under the second interpretation, the statutory language would
be construed to establish higher burdens for suspension and
investigation by presuming LEC tariffs lawful. Under this
interpretation, the statutory language ``unless the Commission
[suspends and investigates the tariff] before the end of that 7-day or
15-day period,'' would not apply to the ``deemed lawful'' phrase, but
only to the ``shall be effective'' phrase of section 204(a)(3). We
noted in the NPRM that Congress did not otherwise amend the statutory
scheme for tariffs filed by interstate communications common carriers.
Therefore, the Commission or parties to a tariff proceeding could rebut
the presumption of lawfulness in the truncated pre-effective tariff
review process established by the 1996 Act. Tariffs would still be
subject to complaint and/or investigation, and refunds or damages could
be awarded for any time that the tariff was in effect, subject to the
applicable statute of limitations.
12. We also solicited comment on other possible interpretations of
``deemed lawful.'' We stated in the NPRM that we would adopt the
interpretation that would best implement the intent of the 1996 Act's
tariff streamlining provisions. We also solicited comment on the impact
of these interpretations of ``deemed lawful'' on small entities, both
LECs and other small entities, that might be customers of LEC tariffed
services. In particular, we solicited comment on the relative burdens
that would be imposed on small entities by possible interpretations of
``deemed lawful.''
13. The LECs and USTA support adoption of the first interpretation
of ``deemed lawful.'' They favor the position that tariffs filed on a
streamlined basis are lawful unless the Commission takes action prior
to the effective date of the tariffs and that retroactive damage awards
for successful challenges to LEC tariffs are prohibited by the 1996
Act. According to these parties, this interpretation of ``deemed
lawful'' is consistent with the precedent established in Arizona
Grocery. There the U.S. Supreme Court held that a tariff rate that is
allowed to become effective is considered the ``legal'' rate, that is,
the rate that the carrier is required to collect and the customer to
pay under the filed rate doctrine. The lawfulness of an effective rate,
however, remains subject to challenge either pursuant to a section
204(a)(1) hearing, a complaint proceeding initiated pursuant to section
208 of the Act, or an investigation established under section 205 of
the Act. If, after completion of one of these proceedings, the
Commission determines that some element of the effective tariff is
unlawful, the Commission may order the filing carrier to pay damages,
pursuant to section 207 of the Act, on a prospective basis only. The
Supreme Court, these commenters point out, has held that an agency
generally may not retroactively subject a carrier to refund liability
if the agency subsequently declares the tariff rate to be unreasonable.
14. Furthermore, these commenters maintain that Congress intended
to alter the regulatory treatment for LEC tariff filings by adjudging
streamlined LEC filings lawful by operation of the statute without need
for a regulatory hearing and determination. BellSouth, for example,
argues that, if the Commission does not exercise its discretion to
suspend and investigate a LEC tariff filing, then the statute deems the
filing to be lawful upon its effective date. In addition, BellSouth
maintains that the statute confers upon the tariff the same status that
previously could only be acquired through a Commission determination or
adjudication. Pacific Telesis argues that, in determining Congressional
intent, the starting point is the text of the statute and that, where
as here, the statute is clear, no further inquiry is needed. According
to Pacific Telesis, the phrase ``shall be deemed lawful'' expressly
mandates that a filed tariff be treated, by operation of law, as lawful
at the time of filing. It further states that the next phrase, ``and
shall be effective,'' states a separate requirement regarding the time
within which the tariff applies and therefore any consideration by the
Commission of the tariff, even in the pre-effective period, must
recognize this lawful status. SWBT argues that the ``shall be deemed
lawful'' language of the 1996 Act limits any subsequent Commission
review of a section 208 complaint challenging a LEC tariff filed on a
streamlined basis. According to SWBT, the complainant in a section 208
proceeding would have the insurmountable burden of overcoming the
Commission's prior determination that the tariff is lawful. Thus, SWBT
believes that a tariff revision that becomes effective under the
streamlined procedures would be the lawful rate until the Commission
concluded in a section 205 proceeding that a different charge,
classification, or regulation would be lawful in the future. In
addressing the question of limitation on damages, NYNEX asserts that
several factors should minimize customers' concern about possible
overcharges. NYNEX maintains that the Commission still has the
authority to suspend and investigate a tariff that appears unlawful and
to impose an accounting order. According to NYNEX, this action should
serve to protect customers' rights to obtain damages if the tariff is
later found to be unlawful at the conclusion of an investigation. In
addition, NYNEX contends that, even if an unlawful tariff has gone into
effect, a five-month time limit on investigations and complaint
proceedings imposed by the 1996 Act will limit the time during which
potentially unlawful rates would be in effect. Finally, NYNEX points
out that, with increased competition, customers will have other choices
if a LEC attempts to charge unlawful rates. USTA supports adoption of
the first interpretation of ``deemed lawful,'' arguing that the
statutory language provides that tariffs filed on a streamlined basis
shall be deemed lawful unless the Commission takes action pursuant to
section 204(a)(1).
15. The remainder of the commenting parties oppose adoption of the
first interpretation of ``deemed lawful.'' They are concerned that
customers would be precluded from recovering damages for overpayments
where a tariff was later found to be unlawful. MFS states that the
first interpretation would create a ``perverse incentive'' for LECs to
overcharge because they would be allowed to continue to collect such
payments for the duration of any later tariff investigation or
complaint proceeding. The only burden on the LECs would be defending
their position in a complaint or investigation proceeding. Ad Hoc
Telecommunications Users Committee (Ad Hoc) states that the LECs'
analysis of the first interpretation of ``deemed lawful'' overlooks the
Communications Act requirement that carrier rates be just and
reasonable and that consumers be protected from unjust and unreasonable
rates. Furthermore, Ad Hoc maintains that, contrary to the LECs'
position, customers are not protected from unlawful rates due to the
availability of other options because the marketplace has yet to reach
a competitive state. In addition, MCI, AT&T, and GSA contend that this
interpretation must be rejected because Congress gave no indication
that it intended to limit customers' remedies.
16. GSA notes that, in the NPRM, the Commission recognized that the
Act and its legislative history do not provide an explanation of the
term ``deemed lawful.'' According to GSA, it would be
[[Page 5761]]
unreasonable for the Commission to adopt the first interpretation of
``deemed lawful'' absent a clear indication that Congress intended to
make a fundamental change to the regulatory framework for LEC tariffs.
GSA argues as well that Congress made no corresponding changes to other
sections of the Act designed to assure that LEC rates are reasonable,
and that this interpretation of section 204(a)(3) would appear to be in
conflict with these sections. GSA maintains that, without changes to
these sections, Congress could not have intended this radical departure
from existing tariff regulatory procedures. Capital Cities/ABC, Inc.,
CBS, Inc., National Broadcasting Company, Inc., and Turner Broadcasting
System, Inc. (CapCities) contend that the new section 204(a)(3) of the
Act does not modify the long-standing statutory scheme of pre-effective
tariff review by the Commission on its own initiative or upon complaint
of interested parties, and potential refunds if carrier tariffs which
have been allowed to become effective are found unlawful after
investigation and opportunity for hearing. Rather, CapCities argues,
section 204(a)(3) serves to extend formally to dominant LECs a
variation of the streamlined tariff filing mechanism that the
Commission has applied in various forms to other tariff filings.
17. The other non-LEC parties likewise support the adoption of the
second interpretation of ``deemed lawful.'' AT&T, for example, contends
that the purpose of the ``deemed lawful'' provisions is to establish a
presumption of lawfulness for the relevant tariffs during pre-
effectiveness review. AT&T contends that this presumption is, as the
NPRM suggests, analogous to that accorded to LEC rate filings that are
within applicable price cap limits, or to filings by non-dominant
carriers under section 1.773 of the Commission rules. Therefore, AT&T
maintains that tariffs filed pursuant to Section 204(a)(3) should not
be suspended unless a petitioner makes a showing similar to the four-
part test required under section 1.773. Moreover, AT&T contends that,
because incumbent LECs retain significant market power and therefore
are more likely than carriers facing competition to charge unreasonable
rates, petitioners challenging a tariff filed pursuant to section
204(a)(3) should be required to show only that it is ``more likely than
not'' that the disputed tariff is unlawful, rather than ``a high
probability'' that the tariff will be found unlawful. Accordingly, AT&T
argues that, because of the LECs' market position, petitions
challenging their tariffs should have a lower threshold showing than
petitions filed against tariffs proposed by nondominant carriers.
18. MFS takes a position similar to AT&T, claiming that the
Commission should adopt rules that presume section 204(a)(3) filings
are lawful and assign the burden of proof to those wishing to challenge
the lawfulness of the filing. Sprint Corp (Sprint) maintains that the
second interpretation is ``clearly the correct one.'' Sprint also
states that there is nothing in the statute itself nor in the
legislative history that indicates a Congressional intent to overturn
well established precedent that holds that an effective tariff
establishes only the legal rate and not the lawful rate, citing Arizona
Grocery.
19. With respect to how the Commission should interpret ``deemed
lawful,'' KMC Telecom Inc. (KMC), ACTA, TRA and SWBT discussed the
effect the Commission's decision would have on small entities. KMC
opposes adoption of the first interpretation of ``deemed lawful''
because it states that such a finding would render the pre-effective
tariff review process meaningless for small competitors because it
would be nearly impossible for them to monitor and review all LEC
tariff filings sufficiently to overcome any presumption of lawfulness
within the limited time period for filing petitions. KMC further states
that, if the deadline for opposing tariffs is missed, then the only
relief available is the filing of a formal complaint, which involves a
lengthy and costly process that is not a practical remedy for a small
company. ACTA states that, as a practical matter, precluding damages as
a remedy will endanger the viability of small carriers because the LECs
could litigate protested issues indefinitely without any threat of
liability for damages. TRA states that LECs should not be permitted to
charge and retain unreasonable rates while being exempt from paying
damages for such unlawful charges. SWBT states that adoption of an
interpretation of ``deemed lawful'' that would limit participation in
review would not negatively impact small carriers because ``their
current participation in the tariff review process is rare, and * * *
Commission policy assumes that there is no need to allow for small
entity/customer participation in the tariff filings of non-dominant
carriers.''
20. Based on our analysis of the statute in light of the record
compiled in this proceeding and relevant judicial precedent, we adopt
the first interpretation of ``deemed lawful.'' In reaching this
conclusion, we determine that this interpretation is compelled by the
language of the statute viewed in light of relevant appellate
decisions, and that our alternative approach outlined in the NPRM is
not a permissible reading of this statutory provision.
21. The first step in statutory construction is to look at the
language of the statute. In the NPRM, we suggested that the statutory
phrase, ``deemed lawful,'' may be interpreted in two different ways.
Appellate cases, however, have consistently found that the term
``deemed,'' in this context, is not ambiguous. Developed in the context
of energy rate regulation, this precedent states that the term ``deemed
to be reasonable'' must be read to establish a conclusive presumption
of reasonableness. In addition, we note that in this context the courts
have explained that, while a rate contained in a properly filed tariff
is the legal rate, a rate is ``lawful'' only if it is reasonable.
Accordingly, we conclude that, because section 204(a)(3) uses the
phrase ``deemed lawful,'' it must be read to mean that a streamlined
tariff that takes effect without prior suspension or investigation is
conclusively presumed to be reasonable and, thus, a lawful tariff
during the period that the tariff remains in effect. For the reasons
discussed below, we do not find, however, that the Commission is
precluded from finding, under section 208, that a rate will be unlawful
if a carrier continues to charge it during a future period or from
prescribing a reasonable rate as to the future under section 205. Given
the unambiguous meaning of the term ``deemed lawful,'' we see no reason
to resort to the legislative history (although there is none on point)
in concluding that this term denotes a conclusive presumption. In light
of this statutory language as viewed under relevant appellate case law,
we find that this interpretation is required in order to give effect to
the language of the statute and therefore decline to adopt the
alternative interpretation suggested in the NPRM. We find further,
however, that the ``deemed lawful'' language does not govern
streamlined tariff filings that become effective after suspension in
those instances where the Commission suspends and initiates an
investigation of a LEC tariff within the 7 or 15 day notice periods
specified in section 204(a)(3). In those cases, the LEC streamlined
tariffs would not be ``deemed lawful'' under section 204(a)(3) because
they were suspended and set for investigation. Rather, they would be
``legal'' until the Commission
[[Page 5762]]
concluded an investigation and made a determination as to their
lawfulness. The lawfulness of such tariffs would be determined by the
orders issued by the Commission at the conclusion of those proceedings.
22. We recognize that our interpretation of section 204(a)(3) will
change significantly the legal consequences of allowing tariffs filed
under this provision to become effective without suspension. Under
current practice, a tariff filing that becomes effective without
suspension or investigation is the legal rate but is not conclusively
presumed to be lawful for the period it is in effect. Indeed, if such a
tariff filing is subsequently determined to be unlawful in a complaint
proceeding commenced under section 208 of the Act, customers who
obtained service under the tariff prior to that determination may be
entitled to damages. In contrast, tariff filings that take effect,
without suspension, under section 204(a)(3) that are subsequently
determined to be unlawful in a section 205 investigation or a section
208 complaint proceeding would not subject the filing carrier to
liability for damages for services provided prior to the determination
of unlawfulness. We find, based on the language of the statute, that
this is the balance between consumers and carriers that Congress struck
when it required eligible streamlined tariffs to be deemed lawful.
23. Further, section 204(a)(3) does not mean that tariff provisions
that are deemed lawful when they take effect may not be found unlawful
subsequently in section 205 or 208 proceedings. No language in section
204(a)(3) states or requires us to infer such a limitation, nor is
there any legislative history suggesting such a limitation. As the 1996
Act did not amend section 205 or 208, nor refer to them in amending
section 204, it did not limit our authority either to conduct tariff
investigations under section 205 or to process complaint proceedings
commenced under section 208. In fact, the language of section 205,
which was not changed by the 1996 Act, makes clear that the Commission
may find that a rate ``is or will'' be in violation of the Act and
prescribe ``what will be the just and reasonable charge'' for the
future. The ``deemed lawful'' language in section 204(a)(3) changes the
current regulatory scheme only by immunizing from challenge those rates
that are not suspended or investigated before a finding of
unlawfulness. It does nothing to change the Commission's ability to
prescribe rates as to the future under section 205 or to find under
section 208 that a rate will be unlawful if charged in the future. Even
where the agency has made an affirmative finding of lawfulness, which
would not be the case where a tariff has become effective without
suspension under section 204(a)(3), the tariff remains subject to
further review under section 205. Thus, a rate that is ``deemed
lawful'' can also be reevaluated as to its future effect under sections
205 and 208 and the Commission may prescribe a rate as to the future
under section 205.
24. In this decision, we do not adopt the view of Pacific Telesis
that the phrase ``shall be deemed lawful and shall be effective 7 days
* * * or 15 days * * * after the date on which it is filed'' mandates
that a tariff be treated as lawful at the time of filing. In our view,
the better reading of section 204(a)(3) is that a streamlined tariff
becomes both effective and ``deemed lawful'' 7 or 15 days after the
date on which it is filed. Congress did not amend the Act to eliminate
the Commission's suspension authority for LEC tariffs and therefore,
Congress did not intend that LEC tariffs be deemed lawful when filed.
Moreover, it would be illogical if, for example, a tariff could be
considered lawful before it even takes effect and while another tariff
is already in place.
25. We also conclude that the Commission may find a tariff
provision that is ``deemed lawful'' under section 204(a)(3) to be
unlawful at the conclusion of a section 205 investigation or 208
complaint proceeding based on a preponderance of the evidence presented
in either proceeding. We currently employ this standard in section 205
and 208 proceedings and find nothing in section 204(a)(3) requiring us
to establish a higher evidentiary standard for determining the
prospective lawfulness of a streamlined tariff provision. Further, we
decline to impose a higher burden as a matter of policy.
26. In adopting the first interpretation of ``deemed lawful,'' we
have considered the comments of KMC, ACTA, and TRA, which expressed a
concern that adoption of this interpretation would be unfair to small
consumers and competitors of LECs. With respect to KMC's concern that
the adoption of the first interpretation would make it difficult for
small competitors to challenge LEC tariff filings, we note that all
parties, including small entities, will have the same opportunity to
challenge tariff filings eligible for streamlined regulation before
they become effective or to initiate a section 208 complaint proceeding
after the filings become effective. These procedures will permit small
businesses to participate fully in pre-effective review of LEC tariffs
and to obtain a determination of the lawfulness of a LEC tariff after
it has gone into effect. Small businesses will be able to protect
against this possible impact on them caused by ``deemed lawful''
treatment of LEC tariffs by participating in the pre-effective tariff
review process. In addition, the program of electronic filing of
tariffs that we discuss in Section III, D, 1, infra. will facilitate
participation by small entities in the tariff review process. To the
extent that small entities will have greater difficulty than larger
entities in participating in the tariff review process, we note that
the shortened time period for pre-effective review of LEC tariffs is
required by the 1996 Act and that, as explained above, we are compelled
by the language in the statute as interpreted by relevant judicial
precedent to adopt the first interpretation of ``deemed lawful.''
C. LEC Tariffs Eligible for Filing on a Streamlined Basis
1. Types of Tariff Filings Eligible for Streamlined Filing
27. The first sentence of section 204(a)(3) provides that LECs may
file ``a new or revised charge, classification, regulation, or practice
on a streamlined basis.'' The NPRM observed that this suggests that LEC
tariff filings that propose any change, including rate increases and
decreases, may be eligible for streamlined filing. The second sentence
of section 204(a)(3) provides for specified effective dates only for
tariffs proposing rate increases or decreases. In the NPRM, we
tentatively concluded that all LEC tariff filings that involve changes
to the rates, terms, and conditions of existing service offerings,
regardless of whether they involve a rate increase or decrease, would
be eligible for streamlined treatment, with the possible exception of
tariffs for new services.
28. Concerning new services, the NPRM asked whether the phrase ``a
new or revised charge'' included tariffs introducing entirely new
services or whether the word ``new'' refers only to new charges,
classifications, regulations, or practices for existing services. The
NPRM therefore solicited comment on whether section 204(a)(3) applies
to new or revised charges associated with existing services, but not to
charges associated with new services. The NPRM stated that this
approach may be preferable as a matter of policy, to the extent
permissible under the statute, because it would permit the Commission
and interested parties
[[Page 5763]]
greater opportunity to review tariffs that propose to introduce new
services since those filings are more likely to raise sensitive pricing
issues than revisions to tariffs for services that have already been
subject to review.
29. The LECs, Ad Hoc, TRA, Sprint, USTA, AT&T, National Exchange
Carrier Association (NECA), and GSA support our tentative conclusion
that the streamlining provisions of the 1996 Act apply to tariffs
proposing changes to a rate, term, or condition as well as to rate
increases and decreases. Generally, these commenters contend that
almost any change in the terms and conditions of an existing service,
regardless of whether the change involves a rate increase or decrease,
will affect the overall rate or cost to the consumer and therefore
should be subject to streamlining. Ameritech contends that the plain
meaning of the first sentence of section 204(a)(3) clearly states that
LECs may file a new or revised charge, classification, regulation, or
practice on a streamlined basis. Ameritech concludes from this language
that Congress intended streamlining to apply to all tariff revisions,
not just those involving rate increases or decreases. While AT&T and
NECA agree with the Commission's tentative conclusion that streamlining
should apply to changes in rates, terms, and conditions of existing
services, as well as to rate increases and decreases, they note that
the statute does not specify time periods for consideration of
suspension or deferral in the case of changes to a ``classification,
regulation, or practice'' to an existing service. AT&T recommends that
the Commission require LECs to file such tariffs thirty days prior to
the tariff's proposed effective date. NECA suggests that the Commission
adopt a rule that permits tariff filings containing only terms and
conditions only to be filed on seven days' notice.
30. Time Warner Communications Holdings, Inc. (TW Comm), MCI, and
the Association for Local Telecommunications Services (ALTS) disagree
with the tentative conclusion in the NPRM, arguing that the statute is
clear that streamlining applies only to rate increases and decreases to
existing services. MCI, for example, argues that changes to terms and
conditions should not be eligible for streamlined treatment because the
second sentence of section 204(a)(3) applies reduced notice periods
only to rate increases or decreases. In addition, MCI contends that,
given the LECs' continued market share, there is still a ``substantial
possibility'' that any proposed terms and conditions in LEC tariffs
will result in unreasonable discrimination in violation of section 202
of the Act. MCI asserts that proposed changes to LEC tariffs that do
not include rate increases or decreases should be subject to more
thorough scrutiny than would be possible under the streamlining
provisions of the 1996 Act.
31. While the LECs, USTA, the Competitive Telecommunications
Association (CompTel), and GTE support the Commission's tentative
conclusion that section 204(a)(3) should be construed to include
changes to existing rates, they disagree with the Commission's stated
inclination to exclude new services from streamlined treatment. NYNEX
maintains that the terms ``new or revised charge, classification or
practice'' in section 204(a)(1) are repeated in section 204(a)(3) and
that the Commission has consistently interpreted the former section as
giving it authority to investigate and impose an accounting order for
all types of tariffs, including those for new services and revised
rates for existing services. If the Commission interpreted the terms
``new'' and ``revised'' for purposes of section 204(a)(3) to exclude
tariffs proposing new services, NYNEX argues that it would imply that
the Commission does not have authority under section 204(a)(1) to order
investigations or conduct complaint proceedings of any tariffs
proposing new services. US West argues that streamlining new services
will facilitate competition by allowing the LECs to respond quickly to
changing market conditions, such as the introduction of new services by
their competitors, and to reward innovation. Ameritech and USTA further
argue that it would not be in the public interest to permit LECs'
competitors, but not the LECs, to introduce new services on an
expedited basis. GTE maintains that, when the first two sentences of
the statute are considered together, it is clear that tariffs proposing
new services, as described in the first sentence, are to be afforded
the streamlined treatment described in the second sentence.
32. A number of commenters believe that new services should be
excluded from eligibility for streamlined treatment. ALTS argues that
tariffs for new services should not be eligible for streamlined
treatment because they do not involve changes in rates and they are
more likely to raise policy questions than rate changes. MCI takes a
similar position, stating that the statute is clear that the
streamlining provisions apply only to ``a new or revised charge,
classification, regulation, or practice'' associated with existing
services. Both ALTS and MCI maintain that the current 45-day notice
period for new services is reasonable and should be retained. Sprint
believes that new services are not covered by the streamlining
provisions because the word ``new'' in the statute does not modify or
relate to a new service, but rather relates to a new charge, term,
condition, or practice for an existing service. In addition, Sprint
maintains that charges for new services are neither rate reductions nor
rate increases and, thus, are not eligible for streamlining under the
language of the statute. Ad Hoc asserts that, because LECs have market
power, the Commission should construe the statute narrowly to ensure
that LEC tariffs for new services are thoroughly reviewed. GSA is in
favor of excluding new services from streamlining because of the
complexity of new service offerings. GSA supports a policy of giving
such tariffs a higher level of scrutiny.
33. We find that all LEC tariffs involving rate increases,
decreases, and/or changes to the rates, terms, and conditions of
existing services are eligible for streamlining. We also conclude that
LEC tariffs introducing new services are eligible for streamlined
filing. Making all LEC tariffs eligible for streamlining will provide a
consistent reading of section 204(a)(3) and section 204(a)(1) by
establishing that all tariff filings are subject to the provisions of
section 204. We agree with NYNEX that we have consistently interpreted
section 204(a)(1) as giving the Commission authority to investigate and
impose an accounting order on all types of tariffs, including those for
new services. Making all LEC tariffs eligible for streamlining will
continue this practice as well as give greatest effect to Congressional
intent to streamline the LEC tariff process. In addition, we find that
this interpretation will simplify the administration of the LEC tariff
process by making it unnecessary for the Commission, carriers, or
interested persons to determine whether a particular tariff qualifies
for streamlining. Accordingly, we determine that all LEC tariffs are
eligible for streamlined filing.
2. Optional Nature of LEC Streamlined Tariff Filings
34. Section 204(a)(3) states that LECs ``may'' file under
streamlined provisions. In the NPRM, we tentatively concluded that LECs
may elect to file on longer notice periods than those provided for in
section 204(a)(3), but that, if they chose to do so, such tariffs would
not be ``deemed lawful.''
35. SWBT, ALLTEL, USTA, NYNEX, NECA, and GTE disagree with the
Commission's tentative conclusion and
[[Page 5764]]
contend that tariffs should be deemed lawful whether or not they are
filed on a streamlined basis. USTA and SWBT, for example, maintain
that, while the statute may give LECs the option to file their tariffs
on a streamlined basis, a determination that the tariff is ``deemed
lawful'' is not dependant on whether the LEC filed on a streamlined
basis. ACTA and TRA support the Commission's tentative conclusion.
36. We determine, as set out in the NPRM, that LECs may, but are
not required to, file tariffs on a streamlined basis. As noted above,
the first sentence of section 204(a)(3) states that LECs ``may'' file a
tariff on a streamlined basis. We also interpret this section to mean
that, if a LEC chooses not to avail itself of the streamlining
provisions, then the tariff would be filed pursuant to the general
tariffing requirements set out in section 203 of the Act and governed
by the notice periods set out in section 61.58 of our rules. In
addition, LEC tariffs filed outside the scope of section 204(a)(3)
shall not be ``deemed lawful'' because, by definition, they are not
filed pursuant to that section and are not, therefore, accorded the
treatment provided for in that section. We also conclude that we may
exercise our deferral authority with respect to such tariffs.
37. In the NPRM, we tentatively concluded that section 204(a)(3)
does not preclude the Commission from exercising its forbearance
authority under section 10(a) of the Act to establish permissive or
complete detariffing of LEC tariffs.
38. Most of the commenters agree with the tentative conclusion set
out in the NPRM that the Commission has forbearance authority to reduce
or eliminate filing requirements for LEC tariffs. Pacific Telesis
believes that the Commission has forbearance authority to remove tariff
filing requirements when competition develops to the point where
regulation is unnecessary. GSA states that nothing in either section
204(a)(3) or section 10(a) of the 1996 Act restricts the Commission
from applying its forbearance authority to LEC tariff filings. CompTel
and ACTA, on the other hand, argue that the general provisions of
section 10(a) are overridden by the specific language of new section
204(a)(3), which requires LECs to file tariffs. They contend that this
interpretation is consistent with general statutory construction
principles mandating that specific provisions take precedence over more
general ones. They further argue that any interpretation of the statute
that gave the Commission authority to eliminate LEC tariff filing
requirements entirely would void the new streamlining provisions.
39. We affirm our tentative conclusion that we may exercise
forbearance authority to reduce or eliminate tariff filing requirements
for LECs, including the filing of tariffs eligible for streamlined
treatment. Section 10(a) accords the Commission general authority to
forbear from enforcing almost any provision of the Act applicable to
common carriers if specific preconditions are met. The only limitation
on this authority is provided in subsection 10(d), which states that
the Commission may not forbear from applying certain interconnection
requirements on incumbent LECs set out in section 251(c) of the 1996
Act or from authorizing Bell Operating Company interLATA entry pursuant
to section 271 of the 1996 Act until ``those requirements have been
fully implemented.'' Absent any express limitation on our authority to
forbear from applying tariffing requirements of section 203 of the Act,
we conclude that we have authority to do so under section 10(a). In
addition, we find it difficult to construe section 204(a)(3), which
states that LECs ``may'' file streamlined tariffs, and our section 10
forbearance authority to mean that the statute imposes a requirement
that LECs ``must'' file tariffs. Rather, we find that Congress intended
to reduce or eliminate regulation as competition develops and to
provide for the detariffing of LEC services under appropriate
conditions.
4. Applications of Section 204(a)(3) of the Act to Tariff Filings of
Nondominant LECs
40. As noted above, under the 1996 Act, a LEC is defined as ``any
person that is engaged in the provision of telephone exchange service
or exchange access.'' The NPRM did not address the application of
section 204 to nondominant LECs.
41. Several of the commenters assert that the 1996 Act's
streamlined tariffing provisions should not apply to nondominant LECs.
They argue that there is nothing in the 1996 Act or its legislative
history to suggest that Congress intended to increase the current one-
day's notice period for nondominant LECs. In any event, MCI asserts
that, if the Commission determines that Section 204(a)(3) applies to
nondominant LECs, it should forbear from applying Section 204 (a)(3) to
nondominant providers of interstate access service that do not have
market power.
42. The statute does not distinguish between incumbent LEC and
competitive LECs for purposes of Section 204. Therefore, we conclude
that all LECs, including nondominant LECs, to the extent they file
tariffs, are eligible to file tariffs on a streamlined basis. At this
time, we have not addressed the extent to which nondominant LECs are
required to comply with our tariffing rules. Two petitions before the
Commission will provide an opportunity for us to do so. As noted above,
the statute also provides that LECs ``may'' file under streamlined
provisions. We have interpreted this section to mean that LECs may
choose to use these streamlined provisions, but that tariffs filed
outside of the scope of these provisions are governed by the general
tariffing provisions of section 203. Accordingly, we also conclude that
Section 204(a)(3) does not limit the ability of nondominant LECs to
file tariffs on one-day's notice under Sec. 61.23(c) of our rules. We
also conclude that such tariffs would not be eligible for ``deemed
lawful'' treatment, but that such tariffs would continue to enjoy the
presumption of lawfulness accorded all nondominant carrier filings
under Sec. 1.773(a)(ii) of our rules.
D. Streamlined Administration of LEC Tariffs
1. Electronic Filing
43. In the NPRM, we proposed establishing a program for electronic
filing of tariffs and associated documents. We sought comment on: (a)
whether or not to establish an electronic filing program; (b) whether
such a system should be operated by the Commission or carriers; (c)
whether tariffs should be filed in a specified database format; and (d)
what system security measures should be adopted.
44. Nearly every commenter supports establishing an electronic
filing system. Many commenters suggest, however, that, before we
implement a mandatory system of electronic filing, we initiate either
an industry working group or issue a further NPRM to ensure the
security of the program and to discuss its functional requirements.
Sprint asserts that the industry is not ready to participate in an
electronic filing system because there are no industry standards
regarding systems, format, or software. There is also disagreement
regarding whether participation in the system should be mandatory or
not. None of the commenters includes a precise time frame for
implementing such a system, although Frontier Corp. (Frontier) states
that it should be implemented before the LEC streamlining provisions
take effect.
[[Page 5765]]
45. Commenters are divided on who should design and maintain the
system. Some commenters support having the Commission maintain and
control the system. Other commenters support a system designed by the
Commission but run by carriers subject to Commission oversight over
access and security. MFS and McLeod Telemanagement, Inc. (McLeod)
suggest that a third-party contractor should maintain the system.
46. Most commenters advocate the use of an Internet-based system.
Some of these commenters support a system of dial-up access in addition
to the Internet-based system. USTA favors utilization of the World Wide
Web over the use of bulletin boards or dial-in databases. It argues
that bulletin boards are slower than the World Wide Web, and dial-in
databases require specific software, which are difficult to administer.
Ameritech, BellSouth, and CITI propose specific systems, such as EDGAR,
the electronic filing system of the SEC. NYNEX, SWBT, and ACTA propose
that the Commission post notices of tariff filings on its Web page,
which would be linked to LEC Web pages where the LECs would post their
tariffs. USTA proposes a system with company-specific sections on the
FCC's Web page. NECA proposes that the Commission set up separate
servers for providing information and posting of tariffs for public
review, which would permit anonymous log-ons to the public server.
47. Ameritech suggests that the system adopted by the Commission
should accommodate multiple platforms and software packages rather than
specify a database that would require re-drafting tariffs into a
standardized system. GSA and CITI, however, contend that the Commission
should prescribe a standardized format for tariff filings. AT&T and
USTA suggest that the system be structured to allow carriers to
download tariffs in spreadsheet formats and as ASCII text files.
48. Many commenters suggest methods to prevent unauthorized changes
to tariffs, such as using: password or PIN number protection;
electronic signatures; and encryption devices. NTCA recommends that the
Commission ensure that a permanent record of historically filed tariffs
is maintained. Ad Hoc and AT&T urge that the notice period not begin to
run until the filing is posted. GSA and AT&T propose that we establish
a return receipt confirmation to specify the date of filing and
commencement of the notice period. Several commenters urge the
Commission to require that filings be posted on the system at a
specified time early in the day of filing, i.e., 10 a.m. Pacific
Telesis and U.S. West oppose this suggestion.
49. We find that a program for the electronic filing of tariffs and
associated documents would facilitate administration of tariffs. An
electronic filing program could afford filing parties a quick and
economical means to file tariffs while giving interested parties
virtually instant notification and access to the tariffs. In addition,
we conclude that participation in such a system should be mandatory for
all LECs, because, if some LECs are allowed to continue to file on
paper, we would not realize the full benefit of electronic filing. An
electronic filing system also should not impose undue burdens on LECs,
but rather reduce their overall administrative burdens. Accordingly,
subject to the availability of adequate funding, we will establish a
program for the electronic filing of tariffs and associated documents,
such as transmittal letters, requests for special permission, and cost
support documents. We will require LECs to file this information
electronically. Our program will also permit filing of petitions to
suspend and investigate and responsive documents electronically and we
encourage parties to do so. Because a database system would place
significant strictures on filing, including a significant alteration of
the format of current tariffs, we will not require that tariffs and
associated documents be filed in a database format. Instead, our
electronic filing program will permit entities to file electronically
consistent with their current formats. We further determine that the
Commission, at least at the initial stage of implementation, will be
responsible for administering the electronic filing program. We may
consider other alternatives at a later time.
50. We delegate authority to the Chief, Common Carrier Bureau to
establish this program including determinations concerning transition
mechanisms, establishment of procedures to assure security, when the
program should be initiated, and any other issues that may arise
regarding the initiation of the electronic filing program. We direct
the Bureau to consult with industry and potential users informally and
share plans for its proposed implementation and make any necessary
adjustments in light of industry and user views, as appropriate. We
also direct the Bureau to permit filing of, and access to, LEC tariffs
and associated documents by means of the Internet. We direct the Bureau
to implement this program in coordination with other electronic filing
initiatives within the agency.
2. Exclusive Reliance on Post-Effective Tariff Review
51. We currently rely on pre- and post-effective review of tariffs
to ensure LEC compliance with Title II of the Communications Act. In
the NPRM, we solicited comment on whether we can, and should, in
implementing the streamlined tariff provisions of the 1996 Act, adopt a
policy of relying exclusively on post-effective tariff review, at least
for certain types of tariff filings, to oversee LEC compliance with the
Act. In the NPRM, we asked whether exclusive reliance on post-effective
review could significantly streamline the tariff review process while
continuing to provide an opportunity for evaluation of the lawfulness
of tariffs. We sought comment on whether, under such a policy, we
should retain the discretion to conduct a pre-effective tariff review
in individual cases. We also solicited comment on the extent to which
section 204(a), which provides that when a tariff is filed, the
Commission may either on its own initiative or ``upon complaint''
suspend and investigate the tariff, limits our ability to rely
exclusively on post-effective tariff review.
52. Commenters generally oppose relying exclusively on post-
effective tariff review. AT&T states that Congress did not intend to
eliminate pre-effective review of LEC tariffs. To find otherwise, AT&T
explains, would permit LECs to impose rates and terms on customers that
would stay in effect until such time as the Commission could conclude
an investigation. In addition, AT&T contends that such a finding would
negate section 204(a), which authorizes the Commission to initiate an
investigation when a complaint is filed or upon its own initiative
``whenever there is filed any new or revised charge, classification,
regulation or practice.'' CompTel points out that reliance solely on
post-effective review would be particularly inappropriate if the
Commission interprets the term ``deemed lawful'' as changing the legal
status of tariffs. Under this scenario, CompTel claims that consumers
would be denied any protection from LEC tariff filings that are given
the force of an affirmative finding of lawfulness and reviewed only
after taking effect. According to CompTel, consumer remedies would be
further limited by the Commission's inability to suspend a tariff after
it has become effective.
53. Sprint, Frontier, and NECA are the only commenters that favor
our proposal to rely solely on post-effective review of tariffs.
According to NECA, relying on post-effective tariff review
[[Page 5766]]
would eliminate the need for filing of petitions and allow tariffs to
go into effect within the streamlined notice periods, thereby
furthering the intent of the 1996 Act to accelerate the tariff review
process. Sprint asserts that post-effective review of LEC tariffs will
suffice, provided that the Commission adopts the position that ``deemed
lawful'' only creates a rebuttable presumption of lawfulness. The
remedies provided under sections 205 and 208 of the Act would still be
available, and LEC customers could recover damages for tariffs found to
be unlawful as of the effective date of the tariff filing, according to
Sprint.
54. We conclude that pre-effective tariff review is required by the
statute which contemplates pre-effective tariff review by identifying
specific actions that we can take, i.e., suspension and investigation,
prior to the effective date of the tariff. In addition, eliminating
pre-effective tariff review would restrict the opportunity for
interested parties to obtain review of potentially unlawful tariffs. We
further find that pre-effective review is a useful tool to assure
carriers' compliance with sections 201 through 203 of the Act.
Therefore, we will retain our practice of pre-effective review. We will
continue to rely additionally on post-effective tariff review,
including the section 208 complaint process and in section 205 tariff
investigations.
3. Pre-Effective Tariff Review of Streamlined Tariff Filings
55. In the NPRM, we solicited comment on what measures, if any, the
Commission should take to facilitate decision-making within seven or
fifteen days concerning whether to suspend and investigate tariffs
filed pursuant to section 204(a)(3).
a. Summaries and Legal Analyses
56. In the NPRM, we solicited comment on whether we should
establish requirements that LECs file summaries of proposed tariff
revisions with their streamlined tariff filings in order to provide a
more complete description than under current requirements, and that LEC
tariffs filed on a streamlined basis be accompanied by an analysis
showing that they are lawful under applicable rules.
57. With the exception of Ameritech, the LECs unanimously oppose
the Commission's proposal to require them to file a summary with tariff
filings. All of the LECs also oppose a requirement that they file an
analysis demonstrating that the tariff filing is lawful. LECs argue
that these requirements would impose increased burdens, contrary to the
deregulatory goals of the 1996 Act. They also argue that the
information contained in the proposed summaries is already provided in
the Description and Justification (D&J) section of tariff transmittals.
Ameritech further states that requiring a legal analysis is
inconsistent with the directive in section 204(a)(3) that LEC tariffs
are deemed lawful and that the burden of demonstrating otherwise should
rest on parties opposing the filing. NYNEX states that the Commission
should adopt reduced tariff support requirements for streamlined tariff
filings. Finally, CBT states that the legal analysis requirement would
have a chilling effect on small and mid-size LECs that may be sensitive
to legal fees.
58. Non-LEC commenters support these possible requirements, stating
that they would assist the Commission and the public in reviewing
tariff filings without imposing a significant burden on the LECs.
CapCities suggests that the summaries include details, on a service-by-
service basis, of the rate or service impact of the proposed tariff and
the reasons in support of the proposed changes.
59. We will not impose any additional requirements for supporting
information concerning LEC tariff filings at this time. Although a
summary and legal analysis could be useful to the Commission and the
public, we find that it is not necessary to require it as part of our
initial implementation of streamlined LEC tariff filings because we are
not convinced that it would expedite the tariff review process.
Instead, we will gain experience from our initial administration of
streamlined LEC tariffs and revisit this issue if necessary.
b. Presumptions of Unlawfulness
60. In the NPRM, we solicited comment on whether it would be
consistent with the 1996 Act to establish presumptions of unlawfulness
for narrow categories of tariffs, such as tariffs facially not in
compliance with our price cap rules, that would permit suspension and
designation of issues for investigation through abbreviated orders or
public notices. We solicited comment on what kinds of tariffs could be
accorded this presumption.
61. All LECs oppose establishing presumptions of unlawfulness. They
argue that these presumptions would be contrary to section 204(a)(3).
For example, Bell Atlantic argues that, ``[t]here is no way to
reconcile [establishing presumptions of unlawfulness] with the
statutory mandate, that absent direct action by the Commission, tariff
filings are `deemed lawful' within 7 to 15 days.'' Pacific Telesis
explained that, ``[b]y deeming LEC tariffs lawful at the time of
filing, Congress created a presumption of continuing lawfulness which
puts the burden on the party challenging the tariff to overcome the
presumption.''
62. The Interexchange Carriers (IXCs) support the proposal,
suggesting further that the Commission should reject any tariff filing
that is facially inconsistent with any existing rule or regulation.
CompTel states that the presumptions would help the Commission serve
its dual mandates of protecting consumer interests and expediting the
tariff review process.
63. We will not establish presumptions of unlawfulness for any
categories of tariffs. Such presumptions would be inconsistent with the
legislative intent of this provision. Instead, consistent with our
current practice, we intend to utilize the tariff review process to
identify problematic tariffs that warrant suspension. We note, however,
that tariffs that facially do not comply with our rules, such as out-
of-band price cap filings, will, for that reason, continue to have a
high probability of rejection or suspension and investigation.
c. Treatment of Tariffs Containing Both Rate Increases and Decreases
64. The 1996 Act provides that LEC tariffs that propose to decrease
rates shall be effective in 7 days and tariffs proposing rate increases
shall be effective in 15 days. The statute is silent on which notice
period will apply to tariffs that contain both increases and decreases.
In the NPRM, we tentatively concluded that the 15-day notice period
should apply to such tariffs and that carriers wishing to take
advantage of the 7-day notice period should file rate decreases in
separate transmittals.
65. Non-LEC commenters support the Commission's proposal. They
argue that it is necessary to protect the interest of customers to
challenge rate increases, and that, therefore, the longer notice period
shall apply. All the LECs, except BellSouth, oppose this requirement
because requiring separate transmittals would purportedly increase the
regulatory burden on LECs. As an alternative, NYNEX, SWBT, and Pacific
Telesis suggest that the Commission look at the overall effect on the
Actual Price Index (API) for a service category to determine if a
tariff filing should be classified as an increase or a decrease. They
explain that most access services contain numerous individual rate
elements, so that a tariff that reduces most rate elements for a
particular service may nonetheless contain rate increases for
individual elements. ALLTEL suggests that small and mid-
[[Page 5767]]
sized companies be permitted to define rate increases and decreases at
the access category level. CBT suggests that all of the increases and
decreases in a given transmittal be aggregated and the applicable
notice period determined by the net overall change.
66. USTA states that price cap LECs should continue to identify
increases or decreases at the rate element level pursuant to the
current Part 61 rules. It further proposes that the Commission ensure a
streamlined approach for small and mid-sized LECs by permitting rate-
of-return LECs to define rate increases or decreases at the access
category level and file accordingly. USTA also proposes that LECs under
Optional Incentive Regulation be permitted to define rate increases at
the basket level. Finally, USTA proposes the elimination of those Part
61 rules that require non-price cap LECs to list increases or decreases
in specific rate elements in tariff transmittals.
67. Ad Hoc opposes the LECs' suggestion that the Commission use API
calculations to determine whether the tariff should be considered a
rate increase or decrease because section 204(a)(3) of the Act
specifically provides for a fifteen-day notice period whenever a LEC
files a tariff with a rate increase. Ad Hoc argues that, with the use
of the API, there may be significant increases that are balanced out by
decreases, thereby shortening the time interested members of the public
would otherwise have to review the proposed rate increase. Ad Hoc also
states that customers typically purchase only some of the services made
available in a carrier's tariff offering so there is the risk that
members of the public could be subjected to rate increases without
proper time to respond.
68. Several commenters also address the need for establishing new
notice periods for streamlined tariffs that propose changes in terms
and conditions and for new services. AT&T proposes that the Commission
require that LECs file tariffs proposing changes in terms and condition
30 days prior to the tariff's proposed effective date. GTE states that,
because there is ``no functional difference'' between an increase in
rates and a new service, new services should be subject to the same 15-
day notice period as price increases. Pacific Telesis suggests that the
Commission treat new services as rate reductions and apply the 7-day
notice period. Pacific Telesis maintains that new services, like rate
reductions, benefit the public and therefore should be implemented as
quickly as possible.
69. We conclude that the 15-day notice period will apply whenever a
tariff filing includes both rate increases and rate decreases and limit
the application of the 7-day notice period to tariffs that only contain
a rate decrease. Therefore, whenever a tariff transmittal includes an
increase to any rate element, the longer notice period will apply even
if other rates in the same transmittal are simultaneously decreased.
Our conclusion is supported by the statute, which specifically provides
for a 15 day notice period whenever a LEC files a tariff with a rate
increase. We reject arguments advanced by the LECs that this approach
is contrary to the concept of streamlining or that this will increase
the regulatory burden on them. Rather, this result will permit LECs to
propose rate increases and decreases in the same tariff filing. All of
the carriers' rate changes will still receive streamlined treatment.
Rate decreases will be subject to the longer notice period because of
the carriers' decision to include them in the same tariff filing as a
rate increase. Carriers are free to take full advantage of the shorter
7 day notice period by transmitting rate decreases in a separate
filing. We also reject the LECs' various suggestions to base the
applicable notice period on the net effect of changes to rate elements
either at the access category level, basket level, or API. This will
assure that customers that purchase only some elements of a tariff will
receive the 15-days' notice that Congress intended for rate increases,
even though rates for other elements decrease and even though rates
measured at some aggregate level may decrease. In addition, we find
that review of such calculations would unnecessarily complicate the
tariff review process.
70. We further determine that the 15-day notice period shall also
apply to tariffs that change terms and conditions or apply to new
services even where there is no rate increase or decrease. This will
result in the most efficient implementation of section 204(a)(3) by
minimizing analysis of each filing to determine whether or not it
should be considered a rate increase, decrease, or a change in terms
and conditions. Thus, under the rules we establish, all LEC tariff
transmittals, other than those that solely reduce rates, shall be filed
on 15-days' notice. If there are other significant changes, the tariff
transmittal will be subject to a 15-day notice period.
d. Mechanisms to Identify Contents of Filings
71. In the NPRM, we proposed requiring carriers to identify
specifically tariffs filed pursuant to section 204(a)(3) and whether
the transmittal contains a rate increase, decrease or both. We
solicited comment on requiring either a label or a statement in the
transmittal letter to achieve this result.
72. Only SWBT opposes our proposal. It explains that the proposal
is unnecessary because the LECs currently provide this information by
making a notation on tariff pages indicating that it contains either an
increase or reduction, and through the Description and Justification
(D&J) accompanying a new or restructured tariff. USTA also states that
the D&J accompanying LEC tariffs adequately informs interested parties
of the contents of a filing. USTA argues, however, that, should the
Commission adopt such a requirement, it should apply to tariff filings
of LEC competitors as well. Ad Hoc, ALLTEL, BellSouth, and TRA support
the proposal to require LECs to identify such tariffs in the
transmittal letter.
73. We will require that all LECs display prominently in the upper
right hand corner of the tariff transmittal letters a statement
indicating that the tariff is being filed on a streamlined basis under
section 204(a)(3) of the Act and whether it is being filed on 7- or 15-
days' notice. While review of the LEC tariff including notations on
tariff pages and the D&J would inform interested parties of the
contents of the filing, this statement by the carrier will allow the
Commission and the public to identify quickly whether the tariff is
eligible for streamlined treatment and the notice period to be applied
to the filing, without imposing any undue burdens on carriers. Without
such a statement, we will treat a tariff transmittal as filed outside
of section 204(a)(3), i.e., not on a streamlined basis.
e. Commission Notification to Interested Parties
74. In the NPRM, we sought comment on the best mechanism for
alerting Commission staff and interested parties about the contents of
LEC tariff filings. The NPRM proposed that we provide affirmative
notice of LEC tariff filings to interested parties via e-mail. We
sought comment on whether we should adopt the proposal before, or, only
when, electronic filing of tariffs is implemented.
75. Most commenters support the proposal. McLeod suggests that the
Commission require LECs to send notification to interested parties in
order to preserve Commission resources. CapCities suggests that the
LECs notify interested parties by facsimile as well as by e-mail. Only
NECA and SWBT oppose the proposal. They argue that e-mail notification
will be unnecessary upon implementation of an electronic filing system,
and that parties already
[[Page 5768]]
have procedures in place to monitor filings.
76. Several supporters of the proposal suggest that additional
notification requirements be placed on the LECs. MCI, KMC, and MFS urge
the Commission to require that a carrier provide advance public notice
of its intention to transmit a tariff filing and identify the service
that would be affected. The LECs express strong opposition to these
suggestions, stating that requiring advance notice would violate the
Congressional mandate to streamline the tariff review process. TRA, the
only commenter to address whether the proposal should be implemented
immediately or upon implementation of the electronic filing system,
advocated the former.
77. We find that e-mail notification is a simple, informal method
of assisting parties in complying with the expedited notice periods
required under the 1996 Act. Affirmative notice of tariff filings for
the convenience of interested parties is possible without expending
significant Commission resources. Despite the assertions from SWBT and
NECA that parties have other means of learning of tariff filings,
affirmative notice by e-mail will provide a useful way for interested
parties to learn of tariff filings. Accordingly, we will notify by e-
mail interested persons who request such notice of LEC tariff filings
eligible for streamlined treatment. We delegate to the Chief, Common
Carrier Bureau authority to establish this mechanism and to institute a
means of receiving requests from interested persons. We envision that
this e-mail notification will be provided on the day after the filing
is made with the Commission. We emphasize that notice by e-mail will
not constitute legal notice of filings, and failure of the Commission
to provide the affirmative notice for any reason will not extend
comment periods. In view of our decision, we see no benefit in
requiring LECs to send e-mail notification of filings to interested
parties. We also reject suggestions that we establish an additional
requirement that LECs furnish advance notice of tariff filings. That
requirement is not necessary to provide adequate notice to interested
parties of LEC tariff filings.
4. NPRM Period and Filing Procedures
a. Deadlines for Petitions and Replies
78. As indicated in the NPRM, we need to establish new filing
periods for petitions to suspend and reject LEC transmittals filed on
7- or 15-days' notice. The current pleading cycles listed in section
1.773 of our rules will not accommodate the filing of petitions and
replies in response to LEC tariff changes made on 7-days' notice. In
the NPRM, we proposed to require that petitions against those LEC
tariff filings that are effective within 7 or 15 days of filing must be
filed within 3 days after the date of the tariff filing and replies 2
days after service of the petition.
79. Most of the commenting LECs, as well as GSA, support the
Commission's proposal to require that petitions be filed within 3 days
of the tariff filing and that replies be filed within 2 days of service
of the petition. NYNEX, MCI, AT&T, CapCities, and Ad Hoc state there is
no reason to have the same filing periods for both tariffs filed on 15-
days' notice and tariffs filed on 7-days' notice. AT&T and SWBT suggest
shorter notice periods for replies than the Commission's proposal.
Ameritech and Pacific Telesis sharply criticize AT&T's proposal for
replies as one-sided and overly restrictive.
80. We agree with commenters who recommend establishing different
filing periods for petitions and replies based on whether the tariff
filing at issue was filed on 7-days' notice or 15-days' notice. We
require that petitions against LEC tariff transmittals that are
effective 7 days from filing must be filed within 3 calendar days from
the date of tariff filing, and replies must be filed within 2 calendar
days of service of petition. We reject SWBT's suggestion that petitions
be required on the business day following the filing, as well as AT&T's
suggestion that replies be required on the calendar day following
service of the petition, because these proposals unreasonably
abbreviate the amount of time within which to submit filings.
81. With respect to LEC tariff filings that are effective on 15-
days' notice, we agree with NYNEX, CapCities, and Ad Hoc, that the
current filing schedule set forth in sections 1.773(a)(2)(ii) and
1.773(b)(1)(ii) is sufficient. These rules require petitions to be
filed within 7 calendar days of the tariff filing. Replies must be
filed within 4 days of service of the petition.
b. Other Issues Relating to Computation of Time
82. The Act is silent on whether the new statutory notice periods
refer to calendar days or working days. In the NPRM, we tentatively
concluded that the statutory notice periods refer to calendar days, not
working days. All the LECs, except Bell Atlantic, and USTA, agree that
calendar days should be used in computing notice periods. Bell Atlantic
argues that filings should not be calculated on a calendar day basis
because this would leave inadequate time for the Commission to review
the tariff. ACTA also disagrees with the Commission's tentative
conclusion because of concerns that LECs will strategically submit
tariffs at times that limit the ability of interested parties to review
them. We interpret the statutory notice periods set out in section
204(a)(3) of the Act to refer to calendar days. This interpretation is
consistent with the present computation of time set forth in section
1.773(a)(3) of the rules, which uses calendar days when calculating
dates for filing petitions to suspend or reject a tariff. We find that
using calendar days is consistent with existing Commission practice and
best fulfills the intent of Congress to shorten the tariff review
process.
83. The NPRM proposed that, when a due date falls on a holiday or
weekend, the document shall be filed on the next business day. The
LECs, the only parties to address this issue, support this proposal. We
adopt the proposal as stated in the NPRM. This is consistent with
sections 1.4(g) and 1.773(a)(3) of the Commission's rules. Therefore,
when a due date falls on a holiday or weekend, the document shall be
filed on the next business day.
84. The NPRM also proposed including intermediate holidays and
weekends in computing time periods for petitions and replies. All
comments received support this proposal. We adopt the proposal as
stated in the NPRM, which is consistent with existing Commission
practice set forth in section 1.773(a)(3). Therefore, intermediate
holidays and weekends will be included in computing time periods.
c. Hand Delivery
85. Section 61.33(d) requires the transmittal letter of any tariff
filing made on less than 15-days' notice to include the name, address,
and facsimile number of the person designated to receive service of
petitions against the filing. Section 1.773(a)(4) of the Commission's
rules requires that petitions against a filing made on less than 15-
days' notice be served personally or by facsimile. The NPRM proposed
requiring that petitions and replies be hand-delivered to all affected
parties where the filing party is a commercial entity.
86. NECA, GSA, and Pacific Telesis support the Commission's
proposal. USTA and SWBT support requiring hand delivery of petitions,
but not replies. CBT and MCI state that facsimile service is sufficient
with confirmed receipt. In the alternative, MCI suggests that required
hand delivery be limited to parties with a
[[Page 5769]]
representative in Washington, D.C. TRA states that facsimile
transmissions should be added to hand delivery requirements as a
consideration for small carriers with limited budgets. BellSouth states
that only minor changes to sections 61.33 and 1.773(a)(4) are necessary
to carry out the goals of the Commission. BellSouth proposes changing
these rules to apply to tariffs and petitions filed on 15-days' notice
or less.
87. We find that in-hand service of petitions and reply pleadings
will facilitate full participation by carriers and interested persons
in the Commission's review of LEC tariffs, particularly in view of the
shortened statutory notice periods in section 204(a)(3) and the
implementing rules adopted here. In light of the comments of TRA, we
also find that it is important to provide for service by facsimile
transmission as an alternative to hand delivery. Therefore, we will
amend sections 61.33 and 1.773(a)(4) to apply to tariffs and to all
associated documents filed on 15-days' notice or less, and require that
such tariff filings include, among other things, the facsimile number
of the individual designated by the filing carrier to receive personal
or facsimile service of petitions and that petitions and replies in
connection with such tariff filings be served by hand or by facsimile.
d. Elimination of Public Comment Period
88. In the NPRM, we sought comment on whether we should eliminate
the public comment period during the 7- or 15-days' notice period. Only
CBT supports our proposal to eliminate the public comment period. MCI,
NYNEX, Ad Hoc, and Pacific Telesis all oppose the proposal as contrary
to the right of the public to seek suspension and investigation of a
tariff under section 204(a) of the Act. As discussed above, we will
retain pre-effective tariff review as a useful tool for ensuring that
LEC tariffs are just and reasonable. Public participation in tariff
proceedings serve the public interest. Accordingly, we will not
eliminate the public comment period for LEC tariffs filed on 7- or 15-
days' notice.
e. Protective Orders
89. We regularly receive requests by carriers for confidential
treatment of cost data filed with tariff transmittals. In many cases,
we also receive requests under the Freedom of Information Act (FOIA)
for cost information for which a filing carrier has requested
confidential treatment. As a practical matter, we frequently will be
unable to respond to these requests within the 7- and 15-days tariff
review periods established by the 1996 Act. In the NPRM, we sought
comment on whether we should routinely impose a standard protective
order whenever a carrier claims in good faith that information
qualifies as confidential under relevant Commission precedent. We also
solicited comment regarding the terms that we should include in a
standard protective order and the types of data that should be eligible
for confidential treatment.
90. The majority of the parties commenting on this proposal oppose
the use of a standard protective order, albeit for conflicting reasons.
AT&T contends that we do not have the authority to issue a standard
protective order because nothing in the FOIA or in the 1996 Act
relieves us of our obligation to determine whether information in our
possession may properly be withheld from the public despite the
shortened tariff review process. AT&T states that, although Exemption 4
of the FOIA protects certain trade secrets and financial data from
disclosure, it is well-settled that an agency invoking a FOIA exemption
bears the burden of establishing its right to withhold information from
the public. Therefore, AT&T concludes, we cannot simply accept a
submitting party's assertion that tariff support materials are
confidential. Moreover, AT&T asserts, data that are subject to a
protective order are not automatically covered by Exemption 4. An
agency still must demonstrate that the information in question is
exempt from FOIA disclosure. Bell Atlantic takes the position that
there is no legal requirement that cost support data must be available
to the public. Moreover, even if there were such a requirement, Bell
Atlantic contends, there would be no reason to continue following such
a rule given the current level of competition. USTA also favors
elimination of cost support data for streamlined tariff filings and
states that, if this proposal were adopted, there would be no need for
protective orders. In the alternative, USTA favors the use of standard
protective agreements on a case-by-case basis. Ad Hoc maintains that
the openness of the tariff review process would be compromised if data
are routinely withheld from disclosure.
91. Ameritech, NYNEX, and TW Comm support, to some extent, the
routine use of standard protective orders. Ameritech first argues that
it supports elimination of the requirement to file cost support data.
To the extent, however, that this requirement is retained, Ameritech
favors the use of standard protective orders. Ameritech contends that
the use of protective orders provides protection to data that in its
view are intrinsically proprietary while enabling the tariff review
process to go forward. Ameritech supports using the model protective
order it submitted with a number of other parties in GC Docket No. 96-
55. While NYNEX supports the use of a standard protective order, it
also wants carriers to have the option of seeking nondisclosure of
highly sensitive data under certain circumstances. TW Comm states that
the use of protective orders should be limited to those circumstances
where a LEC demonstrates that confidential treatment of its data is
necessary to prevent competitive harm. If the LEC makes such a showing,
TW Comm suggests, the data should be made available to interested
persons under a narrowly-drawn protective order. TW Comm states that
the terms of the protective order should be limited only to protecting
the legitimate competitive interests of the LEC. TW Comm maintains that
this goal could be accomplished by narrowly limiting access to the
material to those persons who are preparing petitions in opposition to
the tariff or participating in a tariff investigation.
92. TRA contends that, if a carrier chooses to use streamlined
tariff procedures, it forfeits its right to request confidential
treatment of its cost support data. SWBT opposes this position. CBT
argues that, while it generally supports the use of protective orders,
it recognizes that they do not afford absolute protection against
disclosure of data. CBT maintains that it would be preferable for us to
determine that the new competitive environment has caused a fundamental
change in the nature of tariff proceedings and that the public interest
in open tariff proceedings is now outweighed by the submitting party's
need to protect competitively sensitive information. CBT suggests,
therefore, that competitors' requests to review competitively sensitive
information be rejected. GSA maintains that standard protective orders
should be imposed on a routine basis. It contends that LECs should be
able to prevent disclosure of their data and that interested parties
should be able to petition the Commission for access. Further, GSA
proposes that the Commission establish standards for a LEC to prevent
disclosure of its cost support data, but GSA does not suggest what
these standards should be.
93. It is evident that existing procedures for responding to
requests for confidential treatment or for disclosing supporting cost
data under
[[Page 5770]]
the FOIA cannot be completed in the limited time available for
streamlined tariff review. We find that use of standard protective
orders for purposes of streamlined LEC tariff review will properly
serve the dual purpose of permitting limited access to important
information by interested persons while protecting proprietary
information from public disclosure. We have used protective orders in a
variety of proceedings to protect competitively sensitive material from
public disclosure while allowing interested parties to have access to
potentially decisional documents. In so doing, the Common Carrier
Bureau stated that * * * the competitive threat posed by widespread
disclosure under FOIA may outweigh the public benefit in disclosure. In
such instances, disclosure under a protective order or agreement may
serve the dual purpose of protecting competitively valuable information
while still permitting limited disclosure for a specific public
purpose.
Accordingly, we are issuing, in this Report and Order, a standard
protective order for use in review of LEC tariff filings submitted
pursuant to section 204(a)(3). The Bureau will use the protective order
where the submitting party includes with the tariff filing a showing by
a preponderance of the evidence to support its case that the data
should be accorded confidential treatment consistent with the
provisions of the FOIA or makes a sufficient showing that the
information should be subject to a protective order. This is the
standard applicable in section 0.459 of our rules to requests that
materials or information submitted to us be withheld from public
disclosure. Therefore, at a minimum, the submitting party must comply
with Section 0.459 (b) and (c) of the rules regarding the supporting
information that must be included in its request for confidentiality.
Because of the shortened LEC tariff notice periods in the 1996 Act, the
Bureau will not have time to issue written determinations concerning
whether the data are entitled to confidential treatment and still
complete the tariff review process. Instead, it will routinely employ
the standard protective order in the pre-effective tariff review
process to permit meaningful participation by interested parties, so
long as the carrier has made a good faith showing in support of
confidential treatment. During the course of any follow-on
investigation of tariffs filed under section 204(a)(3), the Bureau can
make any further determination as necessary concerning a carrier's
entitlement to confidentiality. We can and will employ appropriate
sanctions against any carriers that abuse opportunities to obtain
confidential treatment.
94. This will fully comport with our obligations under the FOIA. We
are not, as AT&T suggests, ignoring our obligation to determine whether
information qualifies for nondisclosure under either the FOIA or our
confidentiality rules as submitting parties will continue to be
required to make a persuasive showing that the data in question meet
these standards. Moreover, the use of protective orders will prevent
the unlimited disclosure of sensitive financial data, and will thereby
protect the competitive interests of the filing party. Thus, this
approach appropriately balances the competing interests at stake. We,
therefore, decline to adopt the approaches proposed by CBT and TRA that
propose either that all tariff support material be made public or that,
alternatively all such material should be held in absolute confidence.
We also believe that protective orders will afford adequate protection
to even the highly sensitive data referenced by NYNEX. In addition, we
find that ruling on individual requests, as NYNEX proposes, will cause
unacceptable delays during a very short tariff review process and our
goal in using standard protective orders is to eliminate the
opportunity for such delays. Accordingly, we find that the routine use
of a standard protective order in LEC streamlined tariff proceedings
will eliminate delay during this shortened tariff review process as
well as address the concerns of various parties concerning the
protection of competitively sensitive financial data. Routine use of a
standard protective order will also serve the public interest by
enabling interested parties to comment, as provided for in the rules,
in LEC streamlined tariff review proceedings. The NPRM in this
proceeding only proposed use of a standard protective order in the pre-
effective review of streamlined tariffs filed pursuant to section
204(a)(3). Thus, the standard protective order adopted here is not
required to be used in tariff investigations, although its use is not
precluded in those investigations where we find it appropriate.
95. As noted above, the NPRM sought comment on whether the
Commission should routinely impose a protective order and what terms
should be included in such a standard protective order. The NPRM also
cited to GC Docket No. 96-55, 61 FR 16424 (April 15, 1996) in which a
model protective order has been released for public comment. While, as
described below, the standard protective order adopted herein is
similar to the standard protective order released for public comment in
that proceeding, our decision here is not binding upon any final
Commission decision in GC Docket No. 96-55, which is intended to create
a standard protective order for use in Commission proceedings
generally. We note, however, that a number of the commenters in this
proceeding incorporated by reference their comments submitted in GC
Docket No. 96-55.
96. The standard protective order we adopt is similar to the model
protective order in GC Docket No. 96-55, but includes several changes
that were suggested by comments in this proceeding, as well as
additional clarifying changes that we are adopting sua sponte.
Significant modifications to the draft model protective order in GC
Docket No. 96-55 include: (i) clarifying that consultants under
contract to the Commission must execute a Declaration that they will
abide by the protective order, unless they have signed a general non-
disclosure agreement as part of their agreement with the Commission;
(ii) clarifying that unauthorized use of Confidential Information, as
well as unauthorized disclosure, is prohibited and subject to
sanctions; (iii) clarifying that the prohibition on the unauthorized
disclosure or use of the Confidential Information remains binding
indefinitely unless the Submitting Party otherwise agrees; (iv)
specifying that possible sanctions for violation of a protective order
include disbarment from Commission proceedings, forfeitures, cease and
desist orders, and a denial of access to Confidential Information in
that and other Commission proceedings; (v) clarifying that the
Protective Order is also an agreement between the Reviewing Parties and
the Submitting Party; and (vi) clarifying that the Submitting Party
retains all rights and remedies available at law or equity against any
party using confidential information in a manner not authorized by the
protective order. We note that the model protective order, as
originally proposed, already contains the requirement proposed by the
Joint Parties to require each person examining Confidential Information
to execute a declaration agreeing to be bound by the terms of the
protective order. Finally, because of the requirement for expedited
tariff review, we have modified the provision in paragraph 7(b), which
would have permitted parties to give certain entities access to
confidential material if the Commission gave its approval. Because
[[Page 5771]]
of the shortened time periods for tariff review, we do not have time to
entertain and rule on such requests.
97. The Commission has, however, declined to adopt certain
modifications proposed by commenters. The Joint Parties' proposed to
limit the number of authorized representatives able to examine
Confidential Information to a maximum of seven with various sub-limits,
such as one inside counsel and one outside counsel per party. We
believe such a limitation would unduly limit the ability of, for
example, a partner in a law firm to obtain the counsel of associates
and that the serious consequences of violating a Commission protective
order make this limitation unnecessary. We also decline to adopt the
Joint Party's suggestion to bar the copying of Confidential
Information, because we believe that the proposal imposes an
unnecessary burden on the review of such information. We will, however,
modify the Protective Order to require a Reviewing Party to keep a
written record of all copies made and to provide this record to the
Submitting Party on reasonable request.
5. Annual Access Tariff Filings
98. Section 69.3(a) of the Commission's rules requires LECs and the
National Exchange Carrier Association (NECA) to submit revisions to
their annual access tariffs on 90-days' notice to be effective on July
1 of each year. We indicated in the NPRM that these filings are limited
to changes in rate levels, and therefore, are eligible for filing on a
streamlined basis. As part of the annual access tariff filings, LECs
are required to file summary material, known as tariff review plans
(TRPs), to support the revisions to rates in the annual access tariffs.
The TRPs partially fulfill the requirements of sections 61.38, 61.39,
and 61.41 through 61.50 of the Commission's rules regarding the
supporting information that LECs must provide with their tariff
filings. We use the TRPs to monitor the LECs' compliance with Part 61
of the rules.
99. In the NPRM, we proposed to modify the annual access filing
process in light of requirements of the 1996 Act. With respect to
carriers subject to price cap regulation, we proposed to require
carriers that elect to file under streamlined procedures to file a TRP
prior to the filing of the annual tariff revisions that excluded
information regarding the carriers' proposed rates but included
information regarding the carriers' pricing indices, and to make it
available to the public. Under this approach, this agency and
interested parties could examine the carriers' current and proposed
price cap indices, exogenous cost adjustments, and supporting
information in advance of the LECs' submissions of their prospective
rates and required supporting documents. We sought comment on this
approach and on whether we may, under the 1996 Act, require price cap
LECs to submit their TRPs prior to the date that they file their annual
access tariffs. Because the price cap TRP would not include information
regarding a LEC's tariffed rates, charges, classifications, or
practices, we tentatively concluded that the TRP would not trigger
application of the notice periods of section 204(a)(3) and that we
could require its submission prior to the filing of the annual access
tariffs. We also solicited comment on the filing date we should
establish for the related TRP if we adopt this approach. With respect
to carriers subject to rate-of-return regulation, we proposed to
require them to file their TRPs and annual access filings that propose
rate increases fifteen days prior to the scheduled effective date of
July 1. With respect to each of these proposals, we proposed in the
NPRM that LECs may nevertheless elect to file under existing rules, and
therefore, file their TRPs with the annual access tariffs.
100. Frontier, CompTel, GSA, MCI, AT&T, ACTA, and, to some extent,
Ameritech support the Commission's proposal to require the LECs to file
their TRPs in advance of their annual access charge filing. They
contend that it is within our jurisdiction as part of our regulatory
oversight of access tariffs to require the advance filing of TRPs, and
that this requirement will enable both this agency and consumers to
review the support information fully before reviewing the access
tariffs. While AT&T concurs with the NPRM's finding that revisions to
annual access tariffs involve changes in rate levels and therefore
qualify for streamlined treatment, it claims there is nothing in the
1996 Act that prevents us from requiring that TRPs and cost support
data be filed in advance of the access tariff filings. AT&T therefore
recommends that we retain our current timetable, under which LECs are
to file their TRPs 90 days prior to the effective date of their annual
access tariffs. CompTel urges that we treat annual access tariffs filed
without proper prior notice of the TRP as presumed unlawful.
101. USTA and the LECs generally oppose requiring advance
submission of the TRPs. They argue that the adoption of this proposal
would impose an unnecessary burden on LECs, and would be inconsistent
with the LEC tariff streamlining requirements of section 402 of the
1996 Act. Furthermore, they contend that the TRPs have no significance
without the inclusion of the proposed rates. For example, Sprint states
that, without the rates, the TRP is pointless because the rates drive
the indices. USTA contends that the EXG-1 chart and the PCI-1 chart are
the only pages that do not reference rates and, therefore, could be
submitted early. These pages, however, cannot be completed until NECA
calculates Long Term Support, which is contained in the Common Line
Basket. USTA further argues that none of the TRP information can even
be filed until the LECs' and NECA's tariffs are completed. These
parties argue, therefore, that the annual access filing and the TRP
should be filed on the shortened statutory notice periods. CBT
recommends that the TRP should be eliminated for all LEC carriers in
order to establish symmetrical regulation for all types of carriers.
102. Sprint and Ameritech acknowledge that at least some part of
the TRP could be completed before the annual access tariff would
actually be filed and that the information would be valuable to
potential customers. Sprint argues that the LECs could be required to
file their exogenous cost changes and PCI development 15 days prior to
the filing of the annual access tariffs. Ameritech favors the
submission of a modified TRP 15 days before the annual filing.
Specifically, Ameritech suggests that price cap LECs file the following
information for each price cap basket other than the common line
basket: the PCI form showing the existing and proposed PCI; a
description and explanation of any exogenous cost adjustments being
made; and the proposed upper and lower bounds for the Service Band
Indices. Ameritech states that, pending access reform, price cap LECs
cannot file this information for the common line basket prior to their
annual filings because of the interrelationship of NECA's calculation
of long-term support and exogenous cost adjustments. Ameritech proposes
that the price cap and rate-of-return LECs file a full TRP at the time
of their annual filing. NYNEX suggests that the Commission use this
proceeding to further streamline annual access tariff filings by
eliminating the requirement for a detailed list of demand by rate
elements, a discussion of how the indices were developed, and other
required information.
103. The chief purposes of TRPs are to: (i) justify LECs' exogenous
cost adjustments to their PCIs; (ii) verify revisions to the price cap
indices; and
[[Page 5772]]
(iii) verify that the proposed rates are within the established price
caps. We find that the first two purposes can be accomplished through
early filing of TRPs that do not contain proposed rates. Early filing
of information concerning exogenous costs and recalculation of PCIs
would facilitate review of price cap LECs' annual access filings. We
disagree with the LECs' arguments that this information cannot be filed
until the tariff is submitted and that the information will have no
significance without the proposed rates. Price cap indices are a
function of inflation, productivity, and exogenous cost changes. None
of these factors is dependent on a LEC's specific rates. Early filing
of changes in these areas would facilitate review of the annual access
filings within the streamlined notice periods by resolving most of the
major issues currently raised in the annual access proceedings.
104. We also disagree with the arguments that the early submission
of this TRP information is inconsistent with the streamlined notice
provisions; to the contrary, as the statute contemplates, the actual
tariff with rates will be filed on 7- or 15-days' notice. In addition,
this submission of TRP information does not impose an unnecessary
burden on price cap LECs. LEC are currently required to file TRPs at
the time they file their annual access tariffs in order to comply with
the cost support requirements of our rules. Early filing of the TRPs,
absent rate information, will result in the filing of supporting
information at the same time as under current rules, while allowing
actual rates to be filed later on 7 or 15 days' notice. Accordingly, we
will continue to require price cap LECs to file the TRP for their
annual access filing, 90 days prior to July 1 of each year, but rate
information need not be included. In view of the volume and complexity
of the information submitted in the price cap carriers' TRPs, we
conclude that any notice period less than 90 days would be inadequate
to allow interested parties to review these filings carefully.
Therefore, we reject Sprint's and Ameritech's proposals to file the TRP
in 15 days. Finally, we conclude that NYNEX's suggestion to further
streamline the annual access filing process is outside the scope of
this proceeding. Non-price-cap LECs will be required to file their TRPs
at the same time that they file their annual access tariffs. The notice
period for non-price-cap annual access filings will be governed by the
rules we adopt generally governing LEC streamlined filings. Thus, only
annual access filings that solely decrease rates may be filed on 7-
days' notice. As stated above, LECs may elect to file under existing
rules and, therefore, file their TRPs with annual access tariffs that
are filed subject to the applicable notice periods of our rules.
6. Tariff Investigations
105. Section 402 of the 1996 Act amends section 204(a) of the Act,
effective February 8, 1997, to provide that the Commission shall
conclude all hearings initiated under this section within five months
after the date the charge, classification, regulation, or practice
subject to the hearing becomes effective. Currently, we do not have
procedural rules governing tariff investigations; instead, the
procedures are established in the orders designating issues for
investigation. We solicited comment on whether we should establish
procedural rules to expedite the hearing process in light of the
shortened period in which the Commission must complete tariff
investigations. Specifically, we sought comment on whether we should
establish time periods for pleading cycles, and page limits for
pleadings and exhibits, and whether we should require the filing of
proposed orders. We also noted that, while section 204 investigations
may be initiated by the Bureau, they must be terminated by the full
Commission under section 5(c) of the Communications Act. We solicited
suggestions for reforms that will permit more expeditious termination
of tariff investigations, such as the use of abbreviated orders without
extensive findings, especially where we find that the tariff under
investigation is lawful. We also solicited comment on whether we can,
consistent with section 5(c) of the 1934 Act, as amended, terminate
investigations by a pro forma order that adopts a decisional memorandum
or order of the Common Carrier Bureau. Finally, we solicited comment on
whether we should establish procedures for informal mediation of tariff
investigation issues.
106. Ad Hoc, USTA, NECA, Bell Atlantic, US West, and NYNEX support
the adoption of procedural rules that would expedite the completion of
tariff investigations within the five-month statutory deadline. NECA
and Bell Atlantic support the use of abbreviated orders where we make a
finding that a tariff is lawful. NYNEX proposed that we adopt the
following filing schedule for investigations, calculated from the
tariff's effective date: 21 days for the LECs to file the direct case;
35 days for comments/oppositions to the direct case; and 49 days for
replies. Under this schedule, we would have over three months to
conclude the investigation. MCI favors the establishment of time
periods for pleading cycles and page limits in the designation order.
In addition, MCI suggests that the designation order could specify that
the parties should file proposed orders. CBT, US West, and Ameritech
support the use of pro forma orders to terminate investigations. US
West supports the use of pro forma orders, provided that they are in
fact full Commission determinations of the lawfulness of tariffs and
thus final appealable orders. Ameritech opposes the imposition of
mandatory informal mediation.
107. GSA, AT&T, Bell Atlantic, and SWBT do not support the
establishment of expedited procedures for investigations. GSA points
out that section 204(a)(1) places the burden of proof for any rate
changes or revisions on the carriers. In addition, GSA contends that we
have the authority to reject a tariff if we find by our investigation
that the proposed tariff is unjust and unreasonable. AT&T and Bell
Atlantic suggest that we maintain our flexibility in conducting
investigations so we may tailor procedures according to the
requirements of a particular proceeding, rather than commit ourselves
to any particular procedural rules.
108. We agree with the commenters that oppose the establishment of
specific rules for expediting tariff investigations at this time.
Rather, we will continue to set out procedures in designation orders
that best meet the needs of a particular proceeding. We have the
discretion, for example, to set page limits, establish pleading cycles,
or use pro forma designation orders. We find that retaining the
flexibility to tailor each investigation individually is the best means
of ensuring that tariff investigations are completed within the five
month time limit. We also intend, to the extent we may do so while
giving full consideration to all issues, to use abbreviated orders for
terminating tariff investigations, subject to the new requirements of
the 1996 Act. We also favor encouraging parties to use informal
mediation to resolve tariff disputes, but will not impose such a
requirement at this time. Moreover, in order to expedite the tariff
review process and ensure that we conclude all tariff investigations
within the five month statutory period, we delegate authority to the
Chief, Common Carrier Bureau to work within the cost support rules to
establish format requirements for cost data that must be submitted by
carriers with certain tariffs. We note that we recently proposed rules
to improve
[[Page 5773]]
the speed and effectiveness of the formal complaint process. In
constrast to formal complaints, we can better provide for expedited
tariff investigations by establishing procedural requirements on a
case-by-case basis because those requirements can be closely tailored
to the issues that have been revealed in the tariff review process.
7. Requirements
109. Existing rules specifying notice periods for LEC tariffs must
be amended to conform to the streamlined notice periods for LEC tariffs
established in section 204(a)(3). For example, section 61.58 of our
rules specifies the notice requirements for dominant carriers before
new tariff proposals can go into effect. In particular, section 61.58
states that carriers subject to rate-of-return regulation must file a
tariff on either 15- 35-, or 45-days' notice, depending on the type of
tariff at issue. Section 61.58(e) states that carriers subject to
optional incentive regulation pursuant to section 61.50 of our rules
must file a tariff on either 15- or 90-days' notice, depending on the
type of tariff at issue. Finally, section 61.58(c) states that carriers
subject to price cap regulation must file a tariff on either 14-, 45-,
or 120-days' notice, depending on the type of tariff change. Therefore,
in the NPRM we proposed to change section 61.58 of the Commission's
existing rules governing notice periods for LEC tariff filings to make
this section consistent with the streamlined notice periods of 7 and 15
days required by the 1996 Act. The few comments filed regarding this
section of the rules support our proposal. Accordingly, we are amending
section 61.58 of the rules to establish notice periods consistent with
the 1996 Act.
IV. Effective Date
110. Section 402(b)(4) of the 1996 Act provides that the LEC tariff
streamlining provisions shall apply to any charge, classification,
regulation, or practice filed on or after one year after the effective
date of the 1996 Act, i.e., February 8, 1997. Section 553(d) of the
Administrative Procedure Act (APA) provides that the required
publication in the Federal Register of changes to the Code of Federal
Regulations shall not be made less than thirty days before the
effective date except, inter alia, as otherwise provided by the agency
for good cause found and published with the rule. We find that it is
necessary for our rules implementing the LEC streamlined tariff
provisions of the 1996 Act to be effective at the time those statutory
provisions become effective. Section 402(b)(4) of the 1996 Act is self-
effectuating and will become effective on February 8, 1997, regardless
of whether the rules adopted in this proceeding have become effective.
Making these rules effective by February 8, 1997 will assist parties in
complying with the LEC tariff streamlining provisions of the 1996 Act
and will avoid possible confusion to LECs and their customers that
could result if the Commission's existing LEC tariffing rules remain in
effect after February 8, 1997. This constitutes good cause for making
these rules effective earlier than thirty days prior to their
publication in the Federal Register. We note as well, that much of this
order is devoted to interpretation of the statute and promulgation of
procedural rules, subject matters that are not subject to the thirty
day period mandated by section 553(d) of the APA. Accordingly, we are
making the rules adopted in this proceeding effective February 8, 1997.
V. Final Regulatory Flexibility Analysis
111. As required by section 603 of the Regulatory Flexibility Act,
5 U.S.C. 603 (RFA), an Initial Regulatory Flexibility Analysis (IRFA)
was incorporated in the NPRM to implement section 402(b)(1)(a) of the
Telecommunications Act of 1996, which provides for streamlined tariff
filings by local exchange carriers. We sought written public comment on
the IRFA proposals in the NPRM. Our Final Regulatory Flexibility
Analysis (FRFA) in this Report and Order conforms to the RFA, as
amended by the Small Business Regulatory Enforcement Fairness Act of
1996 (SBREFA). None of the comments specifically addressed IRFA.
112. Need for and Objectives of the Proposed Rule: We promulgate
the rules in this Report and Order to implement section 204(a) of the
Communications Act of 1934, as amended by section 402 of the
Telecommunications Act of 1996. Section 402 provides for streamlined
tariff filings by local exchange carriers. In accordance with section
204(a), our implementing rules will implement streamlined tariff filing
requirements by LECs with the minimum regulatory and administrative
burden on telecommunications carriers. The objective of these rules is
to ``streamline the procedures for revision by local exchange carriers
of charges, classifications and practices.''
113. Summary of Significant Issues Raised by the Public Comments In
Response to the IRFA: While none of the commenters specifically
addressed the Commission's IRFA, we received several comments regarding
the impact that the various alternatives facing the Commission would
have on small companies. For instance, with respect to how the
Commission should interpret ``deemed lawful,'' commenters including
KMC, ACTA, TRA, and SWBT discussed the effect the Commission's decision
would have on small entities.
114. With respect to treatment of tariff filings that include both
increases and decreases, ALLTEL suggests that small and mid-sized
companies be permitted to define rate increases and decreases at the
access category level, and CBT suggests that all of the increases and
decreases in a given transmittal be aggregated with the applicable
notice period based on the net change. USTA proposes that the
Commission ensure a streamlined approach for small and mid-sized LECs
by permitting rate-of-return LECs to define rate increases or decreases
at the access category level and file accordingly. USTA also proposes
that LECs under Optional Incentive Regulation be permitted to define
rate increases at the basket level.
115. We have also received comments from various parties regarding
several discrete issues. For example, with respect to electronic
filing, USTA states that the Commission must consider the impact on
small LECs who may wish to file their own tariffs but do not have the
resources to implement electronic filing at this time. Hence, USTA
maintains that electronic filing should not be mandatory. Regarding our
proposal in the NPRM that each LEC submit an analysis accompanying its
tariff filing demonstrating that the transmittal is lawful, CBT states
that this requirement would have a chilling effect on small and mid-
size LECs that are sensitive to increased legal fees. TRA states that
facsimile transmissions should be added to hand delivery requirements
as a consideration for small carriers with limited budgets.
116. Description and Estimate of the Number of Small Entities To
Which the Proposed Rules Will Apply: The RFA defines a ``small
business'' to be the same as a ``small business concern'' under the
Small Business Act (SBA), 15 U.S.C. Sec. 632, unless the Commission has
developed one or more definitions that are appropriate to its
activities. Under the SBA, 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 SBA. SBA has defined a small business for Standard Industrial
Classification (SIC) category 4813 (Telephone Communications, Except
Radiotelephone) to be small entities when they have fewer than 1500
employees.
[[Page 5774]]
117. Total Number of Telephone Companies Affected. Many of the
decisions and rules adopted herein may have a significant economic
impact on a substantial number of small telephone companies identified
by SBA. The United States Bureau of the Census (``the Census Bureau'')
reports that, at the end of 1992, there were 3,497 firms engaged in
providing telephone service, as defined therein, for at least one year.
This number contains a variety of different category of carriers,
including local exchange carriers, interexchange carriers, competitive
access providers, cellular carriers, mobile service carriers, operator
service providers, pay telephone operators, PCS providers, covered SMR
providers, and resellers. It seems certain that some of those 3,497
telephone service firms may not qualify as small entities or small
incumbent LECs because they are not ``independently owned and
operated.''
118. Our rules governing the streamlining of the LEC tariff process
apply to all LECs. These companies may have fewer than 1,500 employees
and thus fall within the SBA's definition of small telecommunications
entity, we do not believe that such entities should be considered small
entities within the meaning of the RFA. Because the small incumbent
LECs subject to these rules are either dominant in their field of
operations or are not independently owned and operated, consistent with
our prior practices, they are excluded from the definition of ``small
entity'' and ``small business concerns.'' Accordingly, our use of the
terms ``small entities'' and ``small businesses'' does not encompass
small incumbent LECs. Out of an abundance of caution, however, for
regulatory flexibility analysis purposes, we will consider small
incumbent LECs that arguably might be defined by SBA as ``small
business concerns.''
119. Local Exchange Carriers. Neither this agency nor SBA has
developed a definition of small providers of local exchange service
(LECs). The closest applicable definition under SBA rules is for
telephone communications companies other than radiotelephone (wireless)
companies. The most reliable source of information regarding the number
of LECs nationwide of which we are aware appears to be the data that we
collect annually in connection with Telecommunications Relay Service
(TRS). According to our most recent data, 1,347 companies reported that
they were engaged in the provision of local exchange service. Although
it seems certain that some of these carriers are not independently
owned and operated, or have fewer than 1,500 employees, we are unable
at this time to estimate with greater precision the number of LECs that
would qualify as small business concerns under SBA's definition. We
conclude that there are fewer than 1,347 small incumbent LECs that may
be affected by the proposals in this Report and Order.
120. Potential Petitioners Subject to 47 CFR 1.773: Section 1.773
of the Commission's rules apply to any entity who files a petition to
suspend or reject a new tariff filing. Petitioners may be other
telecommunications businesses, competitors of LECs or end users (i.e.,
consumers). It is not possible to determine with any specificity the
primary field of business of an end user, nor is it possible to
determine whether they may be a small entity. Therefore, for purposes
of this FRFA, we have included general information about small
businesses, small governmental jurisdictions, and small not-for-profit
establishments, as well as telecommunications entities as potential
petitioners that may be impacted by this R & O. An individual
petitioner is not considered a small business under the RFA.
121. Small Businesses (Workplaces). Workplaces encompass
establishments for profit and nonprofit, plus local, state and federal
governmental entities. SBA guidelines to the SBREFA state that about
99.7 percent of all firms are small and have fewer than 500 employees
and less than $25 million in sales or assets. There are approximately
6.3 million establishments in the SBA database.
122. Governmental Jurisdictions. The definition of a small
governmental jurisdiction is one with a population of less than 50,000.
There are 85,006 governmental jurisdictions in the nation. This number
includes such jurisdictions as states, counties, cities, utility
districts and school districts. There are no figures available on what
portion of this number has populations of fewer than 50,000. However,
this number includes 38,978 counties, cities and towns, and of those,
37,566, or 96 percent, 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
jurisdictions, we estimate that 96 percent, or 81,600, are small
jurisdictions.
123. Small Organizations. The Commission has not established a
definition of small organization therefore, we will use the definition
under the RFA. The RFA defines a small organization as any not-for-
profit enterprise which is independently owned and operated and is not
dominant in its field. There are approximately 257,038 total non-profit
organizations in the United States.
124. Total Number of Telephone Companies Affected. See supra para.
115.
125. Local Exchange Carriers. See supra para. 117.
126. Interexchange Carriers. Neither the Commission nor SBA has
developed a definition of small entities specifically applicable to
providers of interexchange services (IXCs). The closest applicable
definition under SBA rules is for telephone communications companies
other than radiotelephone (wireless) companies. The most reliable
source of information regarding the number of IXCs nationwide of which
we are aware appears to be the data that we collect annually in
connection with TRS. According to our most recent data, 97 companies
reported that they were engaged in the provision of interexchange
services. Although it seems certain that some of these carriers are not
independently owned and operated, or have more than 1,500 employees, we
are unable at this time to estimate with greater precision the number
of IXCs that would qualify as small business concerns under SBA's
definition. Consequently, we estimate that there are fewer than 97
small entity IXCs that may be affected by the decisions and rules
adopted in this Order.
127. Competitive Access Providers. Neither the Commission nor SBA
has developed a definition of small entities specifically applicable to
providers of competitive access services (CAPs). The closest applicable
definition under SBA rules is for telephone communications companies
other than radiotelephone (wireless) companies. The most reliable
source of information regarding the number of CAPs nationwide of which
we are aware appears to be the data that we collect annually in
connection with the TRS. According to our most recent data, 30
companies reported that they were engaged in the provision of
competitive access services. Although it seems certain that some of
these carriers are not independently owned and operated, or have more
than 1,500 employees, we are unable at this time to estimate with
greater precision the number of CAPs that would qualify as small
business concerns under SBA's definition. Consequently, we estimate
that there are fewer than 30 small entity CAPs.
128. Wireless (Radiotelephone) Carriers. SBA has developed a
definition of small entities for radiotelephone (wireless) companies
(SIC 4812) as an entity with 1,500 or less employees. The Census Bureau
[[Page 5775]]
reports that there were 1,176 such companies in operation for at least
one year at the end of 1992. According to SBA's definition, a small
business radiotelephone company is one employing fewer than 1,500
persons. The Census Bureau also reported that 1,164 of those
radiotelephone companies had fewer than 1,000 employees. Thus, even if
all of the remaining 12 companies had more than 1,500 employees, there
would still be 1,164 radiotelephone companies that might qualify as
small entities if they are independently owned are operated. Although
it seems certain that some of these carriers are not independently
owned and operated, we are unable at this time to estimate with greater
precision the number of radiotelephone carriers and service providers
that would qualify as small business concerns under SBA's definition.
Consequently, we estimate that there are fewer than 1,164 small entity
radiotelephone companies.
129. Cellular Service Carriers. Neither the Commission nor SBA has
developed a definition of small entities specifically applicable to
providers of cellular services. The closest applicable definition under
SBA rules is for telephone communications companies other than
radiotelephone (wireless) companies (SIC 4812). The most reliable
source of information regarding the number of cellular service carriers
nationwide of which we are aware appears to be the data that we collect
annually in connection with the TRS. According to our most recent data,
789 companies reported that they were engaged in the provision of
cellular services. Although it seems certain that some of these
carriers are not independently owned and operated, or have more than
1,500 employees, we are unable at this time to estimate with greater
precision the number of cellular service carriers that would qualify as
small business concerns under SBA's definition. Consequently, we
estimate that there are fewer than 789 small entity cellular service
carriers.
130. Mobile Service Carriers. Neither the Commission nor SBA has
developed a definition of small entities specifically applicable to
mobile service carriers, such as paging companies. The closest
applicable definition under SBA rules is for radiotelephone (wireless)
companies (SIC 4812). The most reliable source of information regarding
the number of mobile service carriers nationwide of which we are aware
appears to be the data that we collect annually in connection with the
TRS. According to our most recent data, 117 companies reported that
they were engaged in the provision of mobile services. Although it
seems certain that some of these carriers are not independently owned
and operated, or have more than 1,500 employees, we are unable at this
time to estimate with greater precision the number of mobile service
carriers that would qualify under SBA's definition. Consequently, we
estimate that there are fewer than 117 small entity mobile service
carriers.
131. Broadband PCS Licensees. The broadband PCS spectrum is divided
into six frequency blocks designated A through F. As set forth in 47
CFR section 24.720(b), the Commission has defined ``small entity'' in
the auctions for Blocks C and F as a firm that had average gross
revenues of less than $40 million in the three previous calendar years.
Our definition of a ``small entity'' in the context of broadband PCS
auctions has been approved by SBA. The Commission has auctioned
broadband PCS licenses in Blocks A, B, and C. We do not have sufficient
data to determine how many small businesses bid successfully for
licenses in Blocks A and B. There were 90 winning bidders that
qualified as small entities in the Block C auctions. Based on this
information, we conclude that the number of broadband PCS licensees
affected by the decisions in this Order includes, at a minimum, the 90
winning bidders that qualified as small entities in the Block C
broadband PCS auctions.
132. At present, no licenses have been awarded for Blocks D, E, and
F of broadband PCS spectrum. Therefore, there are no small businesses
currently providing these services. However, a total of 1,479 licenses
will be awarded in the D, E, and F Block broadband PCS auctions, which
commenced on August 26, 1996. Eligibility for the 493 F Block licenses
is limited to entrepreneurs with average gross revenues of less than
$125 million. We cannot estimate, however, the number of these licenses
that will be won by small entities under our definition, nor how many
small entities will win D or E Block licenses. Given that nearly all
radiotelephone companies have fewer than 1,000 employees and that no
reliable estimate of the number of prospective D, E, and F Block
licensees can be made, we assume for purposes of this FRFA, that a
majority of the licenses in the D, E, and F Block Broadband PCS
auctions.
133. SMR Licensees. Pursuant to 47 CFR section 90.814(b)(1), the
Commission has defined ``small entity'' in auctions for geographic area
800 MHz and 900 MHz SMR licenses as a firm that had average annual
gross revenues of less than $15 million in the three previous calendar
years. This definition of a ``small entity'' in the context of 800 MHz
and 900 MHz SMR has been approved by the SBA. The rules adopted in this
Order may apply to SMR providers in the 800 MHz and 900 MHz bands that
either hold geographic area licenses or have obtained extended
implementation authorizations. We do not know how many firms provide
800 MHz or 900 MHz geographic area SMR service pursuant to extended
implementation authorizations, nor how many of these providers have
annual revenues of less than $15 million. We assume, for purposes of
this FRFA, that all of the extended implementation authorizations may
be held by small entities.
134. The Commission recently held auctions for geographic area
licenses in the 900 MHz SMR band. There were 60 winning bidders who
qualified as small entities in the 900 MHz auction. Based on this
information, we conclude that the number of geographic area SMR
licensees affected by the rule adopted in this Order includes these 60
small entities. No auctions have been held for 800 MHz geographic area
SMR licenses. Therefore, no small entities currently hold these
licenses. A total of 525 licenses will be awarded for the upper 200
channels in the 800 MHz geographic area SMR auction. However, the
Commission has not yet determined how many licenses will be awarded for
the lower 230 channels in the 800 MHz geographic area SMR auction. It
is not possible to ascertain how many small entities will win these
licenses. Given that nearly all radiotelephone companies have fewer
than 1,000 employees and that no reliable estimate of the number of
prospective 800 MHz licensees can be made, we assume, for purposes of
this FRFA, that a majority of the licenses may be awarded to small
entities.
135. Resellers. Neither the Commission nor SBA has developed a
definition of small entities specifically applicable to resellers. The
closest applicable definition under SBA rules is for all telephone
communications companies (SIC 4812 and 4813 combined). The most
reliable source of information regarding the number of resellers
nationwide of which we are aware appears to be the data that we collect
annually in connection with the TRS. According to our most recent data,
206 companies reported that they were engaged in the resale of
telephone services. Although it seems certain that some of these
carriers are not independently owned and operated, or have more than
1,500 employees, we are unable at this time to estimate with greater
precision the number of resellers
[[Page 5776]]
that would qualify as small business concerns under SBA's definition.
Consequently, we estimate that there are fewer than 206 small
resellers.
136. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements: LECs subject to price cap regulation and LECs
that elect to file tariffs subject to price cap regulation will be
required to file their tariff review plans (TRP) prior to the filing of
their annual tariff revisions. This requirement will not impose a
significant burden on the LECs because they currently file TRPs at the
time they file their annual access tariffs. Adoption of this proposal
will require that the carriers allocate the resources needed to
complete the TRPs prior to their filing of the annual access tariffs.
In order to comply with this filing requirement, LECs will need to
utilize tariff analysts and legal and accounting personnel. LECs have
the personnel necessary to meet these requirements since they are
already required to utilize staff with skills necessary to establish
tariffs that comply with sections 201-205 of the Communications Act.
Although this requirement that price cap LECs file their TRP prior to
the filing of their annual tariff revisions will establish a new TRP
filing deadline, we believe it is justified under the new streamlined
tariff filing procedures. To date, we are not aware of any small
entities that have elected to be subject to price cap regulation.
Therefore, at the time these rules become effective, no small carriers
will be required to file their TRPs prior to the filing of their annual
tariff revisions. In the future, however, small entities that elect to
be subject to price cap regulation pursuant to section 61.41(a)(3) of
our rules will be required to comply with this reporting requirement.
137. In addition, our requirement that all petitions and reply
pleadings be hand served or served by facsimile transmission will not
impose a significant burden on small entities. Facsimile and hand
delivery service are readily available throughout the country for any
entities that may not have their own capabilities in these areas.
138. Significant Alternatives and Steps Taken By Agency to Minimize
Significant Economic Impact on a Substantial Number of Small Entities
and Small Incumbent LECs Consistent with Stated Objectives: We believe
that our proposed actions to implement the specific streamlining
requirements of section 204(a)(3) of the Communications Act, as well as
additional steps for streamlining the tariff process, minimize the
economic impact on small carriers that are eligible to file tariffs on
a streamlined basis. For example, our proposal to establish a program
for the electronic filing of tariffs will reduce the existing economic
burden on carriers who are now required to file paper tariffs with the
Commission. To the extent that specific concerns have been expressed
regarding the ability of smaller companies to comply with electronic
filing requirements, we conclude that this issue can be addressed by
the Bureau in consultation with the industry when establishing the
system.
139. Under the new competitive provisions of the 1996 Act, there
could be a number of new LECs entering the local exchange market that
would be considered small businesses. To the extent that such carriers
file tariffs and would be considered non-dominant, we conclude that our
rules would not create any additional burdens because under section
63.23(c), 47 CFR section 63.23(c), non-dominant carriers are permitted
to file tariffs on one day's notice. Further, our determinations in
this proceeding that will apply to such carriers will reduce
administrative burdens for these carriers, to the extent they file
tariffs pursuant to section 204(a)(3) of the Act.
140. In adopting the first interpretation of ``deemed lawful,'' we
have considered the comments of KMC, ACTA, and TRA which expressed a
concern that adoption of this interpretation would be unfair to small
consumers and competitors of LECs. With respect to KMC's concern that
the adoption of the first interpretation would make it difficult for
small competitors to challenge LEC tariff filings, as discussed above
in Section III., B, all parties, including small entities, will have
the same opportunity to challenge tariff filings eligible for
streamlined regulation before they become effective or to initiate a
section 208 complaint proceeding after the filings become effective.
These procedures will permit small businesses to fully participate in
pre-effective review of LEC tariffs and to obtain a determination of
the lawfulness of a LEC tariff after it has gone into effect. To the
extent that small entities will have greater difficulty than larger
entities in participating in the tariff review process, we note that
the shortened time period for pre-effective review of LEC tariffs is
required by the 1996 Act and that, as explained above, we are compelled
by the language in the statute as interpreted by relevant judicial
precedent to adopt the first interpretation of ``deemed lawful.''
Similarly, as to ACTA's and TRA's concern that the adoption of the
first interpretation will adversely affect small carriers and consumers
by precluding damages as a remedy for the period that tariffs are
effective but have been found unlawful subsequently in a section 205 or
208 proceeding, we are compelled by the language in the statute as
interpreted by relevant judicial precedent to adopt the first
interpretation of ``deemed lawful.'' Small businesses will be able to
protect against this possible impact on them caused by ``deemed
lawful'' treatment of LEC tariffs by participating in the pre-effective
tariff review process. Our program of electronic filing of tariffs will
facilitate participation of small entities in the tariff review
process.
141. In choosing not to impose a requirement that carriers submit
an analysis accompanying their tariff filings demonstrating that the
filing is lawful, we have addressed the concerns of CBT that this
requirement might have a chilling effect on small and mid-size LECs
that are sensitive to increased legal fees.
142. Finally, we have addressed the concern expressed by TRA that
requiring hand delivery of petitions and replies could be prejudicial
to small companies which may not be able to afford such service by
adopting TRA's suggestion that facsimile transmission be added as an
alternative to required hand delivery.
143. With respect to treatment of tariff filings that include both
increases and decreases, we have considered the various alternative
suggestions provided by ALLTEL, CBT, and USTA to permit small LECs to
aggregate the rate increases and decreases in their filings, and file
those with a net rate decrease on 7 days' notice. As stated above, we
have rejected these suggestions because we believe that this approach
would be contrary to the plain language of the statute which clearly
states that the longer, 15 days' notice period will apply ``in the case
of an increase in rates.'' Moreover, we have concluded that by
requiring tabulation of net increases and decreases, this approach
would create confusion and add another step to an already brief review
process.
144. Report to Congress: The Commission shall send a copy of this
Final Regulatory Flexibility Analysis, along with this Report and
Order, in a report to Congress pursuant to the Small Business
Regulatory Enforcement Fairness Act of 1996, 5 U.S.C.
Sec. 801(a)(1)(A). A copy of this FRFA will also be published in the
Federal Register.
[[Page 5777]]
VI. Final Paperwork Reduction Analysis
145. On November 27, 1996, the Office of Management and Budget
(OMB) approved all of the proposed changes to our information
collection requirements in accordance with the Paperwork Reduction Act.
We have, however, decided not to adopt several of the information
collection requirements proposed in the NPRM and we have modified
others. For example, we declined to adopt the proposal to require the
LECs to include a summary and legal analysis with their tariff filings,
but we will require that LEC tariff filings include a statement in
tariff transmittal letters clearly indicating that the tariff is being
filed on a streamlined basis under section 204(a)(3) of the Act and
whether the tariff filing contains a proposed rate increase, decrease
or both for purposes of section 204(a)(3). We conclude that these
requirements and modifications constitute a new ``collection of
information,'' within the meaning of the Paperwork Reduction Act of
1995, 44 U.S.C. Secs. 3501-3520. These requirements and modifications
are subject to OMB review and the Commission has requested emergency
approval of these modifications to ensure that the requirements may be
effective on February 8, 1997.
146. The Commission concurs with OMB's recommendation that we
consider input from the industry before implementing a system for the
electronic filing of tariffs and related pleadings.
VII. Ordering Clauses
147. Accordingly, It is ordered that pursuant to authority
contained in sections 1,4(i), and 204(a)(3) of the Communications Act
of 1934, as amended, 47 U.S.C. Secs. 151, 154(i) and 204(a)(3), Parts 1
and 61 of the Commission's rules are amended as set forth below.
148. It is further ordered that the policies, rules, and
requirements set forth herein are adopted.
149. It is further ordered that the policies, rules and
requirements adopted herein shall be effective February 8, 1997.
150. It is further ordered that authority is delegated to the
Chief, Common Bureau, as set forth supra in paras. 48, 75 and 106.
List of Subjects in 47 CFR Parts 1 and 61.
Communications common carriers, Reporting and recordkeeping
requirements, Telephone.
Federal Communications Commission
William F. Caton,
Acting Secretary.
Rule Changes
Parts 1 and 61 of Title 47 of the Code of Federal Regulations are
amended as follows:
PART 1--PRACTICE AND PROCEDURE
1. The authority citation for part 1 continues to read as follows:
Authority: 47 U.S.C. 151, 154, 204(a)(3), 303, and 309(j),
unless otherwise noted.
2. In Sec. 1.773, paragraphs (a)(2)(i) through (a)(2)(iv) are
redesignated as paragraphs (a)(2)(ii) through (a)(2)(v), paragraphs
(b)(1)(i) through (b)(1)(v) are redesignated as paragraphs (b)(1)(ii)
through (b)(1)(vi), new paragraphs (a)(2)(i) and (b)(1)(i) are added,
paragraphs (a)(4) and (b)(3) are revised to read as follows:
Sec. 1.773 Petitions for suspension or rejection of new tariff
filings.
(a) * * *
(2) * * *
(i) Petitions seeking investigation, suspension, or rejection of a
new or revised tariff filed pursuant to section 204(a)(3) of the
Communications Act made on 7 days notice shall be filed and served
within 3 calendar days after the date of the tariff filing.
* * * * *
(4) Copies, service. An original and four copies of each petition
shall be filed with the Commission as follows: the original and three
copies of each petition shall be filed with the Secretary, FCC room
222, 1991 M Street, NW., Washington, DC 20554; one copy must be
delivered directly to the Commission's copy contractor, International
Transcription Service, Inc., 2100 M St., NW., Suite 140, Washington,
DC. Additional, separate copies shall be served simultaneously upon the
Chief, Common Carrier Bureau; the Chief, Competitive Pricing Division;
and the Chief, Tariff and Price Analysis Branch of the Competitive
Pricing Division. Petitions seeking investigation, suspension, or
rejection of a new or revised tariff made on 15 days or less notice
shall be served either personally or via facsimile on the filing
carrier. If a petition is served via facsimile, a copy of the petition
must also be sent to the filing carrier via first class mail on the
same day of the facsimile transmission. Petitions seeking
investigation, suspension, or rejection of a new or revised tariff
filing made on more than 15 days notice may be served on the filing
carrier by mail.
(b)(1) * * *
(i) Replies to petitions seeking investigation, suspension, or
rejection of a new or revised tariff filed pursuant to section
204(a)(3) of the Act made on 7 days notice shall be filed and served
within 2 days after the date the petition is filed with the Commission.
* * * * *
(3) Copies, service. An original and four copies of each reply
shall be filed with the Commission, as follows: the original and three
copies must be filed with the Secretary, FCC room 222, 1919 M Street,
NW., Washington, DC 20554; one copy must be delivered directly to the
Commission's Copy contractor, International Transcription Service,
Inc., 2100 M St., NW/. Suite 140, Washington, DC. Additional separate
copies shall be served simultaneously upon the Chief, Common Carrier
Bureau; the Chief, Competitive Division; and the Chief, Tariff and
Price Analysis Branch of the Competitive Pricing Division and the
petitioner. Replies to petitions seeking investigation, suspension, or
rejection of a new or revised tariff made on 15 days or less notice
shall be served on petitioners personally or via facsimile. Replies to
petitions seeking investigation, suspension, or rejection of a new or
revised tariff made on more than 15 days notice may be served upon
petitioner personally, by mail or via facsimile.
PART 61--TARIFFS
3. The authority citation for part 61 continues to read as follows:
Authority: Sections 1, 4(i), 4(j), 201-205, and 403 of the
Communications Act of 1934, as amended; 47 U.S.C. 151, 154(i),
154(j), 201-205, and 403, unless otherwise noted.
4. Section 61.3(s) is revised to read as follows:
Sec. 61.3 Definitions.
* * * * *
(s) Local Exchange Carrier. Any person that is engaged in the
provision of telephone exchange service or exchange access as defined
in section 3(26) of the Act.
* * * * *
5. In section 61.33, paragraphs (d), (e), (f), and (g) are
redesignated as paragraphs (e), (f), (g), and (h), new paragraph (d) is
added and newly redesignated paragraph (e) is revised to read as
follows:
Sec. 61.33 Letters of transmittal.
* * * * *
(d) Tariffs filed pursuant to section 204(a)(3) of the
Communications Act
[[Page 5778]]
shall display prominently in the upper right hand corner of the letter
of transmittal a statement that the filing is made pursuant to that
section and whether it is being filed on 7- or 15-days' notice.
(e) In addition to the requirements set forth in paragraph (a) of
this section, any carrier filing a new or revised tariff made on 15
days' notice or less shall include in the letter of transmittal, the
name, room number, street address, telephone number, and facsimile
number of the individual designated by the filing carrier to receive
personal or facsimile service of petitions against the filing as
required under Sec. 1.773(a)(4) of this chapter.
6. Section 61.49 is amended by adding new paragraph (l) to read as
follows:
Sec. 61.49 Supporting information to be submitted with letters of
transmittal for tariffs of carriers subject to price cap regulation.
* * * * *
(l) In accordance with Secs. 61.41 through 61.49, local exchange
carriers subject to price cap regulation that elect to file their
annual access tariff pursuant to section 204(a)(3) of the
Communications Act shall submit supporting material for their
interstate annual access tariffs, absent rate information, 90 days
prior to July 1 of each year.
7. New section 61.51 is added to part 61 under the heading
``Specific Rules for Tariff Publications'' to read as follows:
Sec. 61.51 LEC tariff filings requirements pursuant to section
204(a)(3) of the Communications Act.
(a) Local exchange carriers may file tariffs pursuant to section
204(a)(3) of the Communications Act. Such tariffs shall be filed in
accordance with the notice periods set forth in Sec. 61.58(d).
(b) Local exchange carriers may elect not to file any tariffs
pursuant to section 204(a)(3) of the Communications Act that may be
eligible for filing under that section. Any such tariffs not filed
pursuant to section 204(a)(3) of the Communications Act shall be filed
in accordance with the notice requirements of Secs. 61.23 and 61.58.
(c) Local exchange carrier tariff filings pursuant to section
204(a)(3) must comply with the requirements of Secs. 61.38, 61.39, and
61.41 through 61.50.
(d) Local exchange carriers subject to price cap regulation that
elect to file their annual access tariff pursuant to section 204(a)(3)
of the Communications Act shall submit support material for their
interstate annual access tariffs, in accordance with Sec. 61.49(l).
8. Section 61.52 is amended by adding new paragraph (c) to read as
follows:
Sec. 61.52 Form, size, type, legibility, etc.
* * * * *
(c) Local exchange carriers shall file all tariff publications and
associated documents, such as transmittal letters, requests for special
permission, and cost support documents, electronically in accordance
with the requirements established by the Chief, Common Carrier Bureau.
9. Section 61.58 is amended by revising paragraph (a)(2),
redesignating paragraphs (d) and (e) as paragraphs (e) and (f), and
adding new paragraph (d) to read as follows:
Sec. 61.58 Notice requirements.
(a) * * *
(2) Except for tariffs filed pursuant to section 204(a)(3) of the
Communications Act, the Chief, Common Carrier Bureau, may require the
deferral of the effective date of any tariff filing made on less than
120-days' notice, so as to provide for a maximum of 120-days' notice,
or of such other maximum period of notice permitted by section 203(b)
of the Communications Act, regardless of whether petitions under
Sec. 1.773 of this chapter have been filed.
* * * * *
(d) Tariffs filed pursuant to section 204(a)(3) of the
Communications Act. Local exchange carriers filing tariffs pursuant to
section 204(a)(3) of the Communications Act may file the tariff on 7-
days' notice if it proposes only rate decreases. Any other tariff filed
pursuant to section 204(a)(3) of the Communications Act, including
those that propose a rate increase or any change in terms and
conditions of service other than a rate change, shall be filed on 15-
days' notice.
[FR Doc. 97-3113 Filed 2-6-97; 8:45 am]
BILLING CODE 6712-01-P
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.