Telephone Number Portability

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 52

[CC Docket No. 95-116; FCC 97-74]

Telephone Number Portability

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The First Memorandum Opinion and Order on Reconsideration,

(Order) released March 11, 1997, affirms and clarifies the Commission's

rules implementing section 251(b)(2) of the Communications Act of 1934,

as amended, which requires all LECs to offer long-term number

portability in accordance with requirements prescribed by the

Commission in the First Report and Order, 61 FR 38605 (July 25, 1996).

The First Report & Order also requires all LECs to implement long-term

number portability in the 100 largest Metropolitan Statistical Areas

(MSAs) according to a five-phase deployment schedule that commences

October 1, 1997, and concludes December 31, 1998. The Commission herein

concludes, first, that Query on Release (QOR) is not an acceptable

long-term number portability method. Second, the Commission extends the

completion deadlines in the implementation schedule for wireline

carriers by three months for Phase I and by 45 days for Phase II,

clarifies the requirements imposed thereunder, concludes that LECs need

only provide number portability within the 100 largest MSAs in switches

for which another carrier has made a specific request for portability,

and addresses issues raised by rural LECs and certain other parties.

Finally, the Commission affirms and clarifies its implementation

schedule for wireless carriers.

DATES: Effective May 15, 1997. Information collections, however, which

are subject to approval by the Office of Mangement and Budget (OMB),

shall become effective upon approval by OMB, but no sooner than

September 12, 1997. A document announcing the information collections

approval by OMB will be published in the Federal Register at a later

date.

FOR FURTHER INFORMATION CONTACT: Jeannie Su, Attorney, Common Carrier

Bureau, Policy and Program Planning Division, (202) 418-1580.

SUPPLEMENTARY INFORMATION:

Regulatory Flexibility Analysis

This is a summary of the Commission's Order on Reconsideration

[[Page 18281]]

adopted March 6, 1997, and released March 11, 1997.

Synopsis of First Memorandum Opinion and Order on Reconsideration

Introduction

1. On June 27, 1996, the Commission adopted the First Report and

Order and Further Notice of Proposed Rulemaking (First Report & Order),

61 FR 38605 (July 25, 1996), in this docket implementing the

requirement under Section 251(b) of the Communications Act of 1934, as

amended (the Act), that all local exchange carriers (LECs) offer, ``to

the extent technically feasible, number portability in accordance with

requirements prescribed by the Commission.'' 47 U.S.C. 251(b). By this

action, the Commission resolves certain petitions for reconsideration

or clarification of the Commission's number portability rules adopted

in the First Report & Order. First, the Commission concludes that Query

on Release (QOR) is not an acceptable long-term number portability

method. Second, the Commission extends the completion deadlines in the

implementation schedule for wireline carriers by three months for Phase

I and by 45 days for Phase II, clarifies the requirements imposed

thereunder, concludes that LECs need only provide number portability

within the 100 largest MSAs in switches for which another carrier has

made a specific request for portability, and addresses issues raised by

rural LECs and certain other parties. Finally, the Commission affirms

and clarifies its implementation schedule for wireless carriers.

Background

2. Pursuant to the statutory requirement of section 251(b), the

First Report & Order requires all LECs to implement a long-term number

portability method in the 100 largest Metropolitan Statistical Areas

(MSAs) according to a phased deployment schedule that commences October

1, 1997, and concludes December 31, 1998. Thereafter, in areas outside

the 100 largest MSAs, each LEC must make long-term number portability

available within six months after a specific request by another

telecommunications carrier. The First Report & Order also requires all

cellular, broadband personal communications services (PCS), and covered

Specialized Mobile Radio (SMR) providers to be able to deliver calls

from their networks to ported numbers by December 31, 1998, and

requires cellular, broadband PCS, and covered SMR providers to offer

number portability throughout their networks and have the capability to

support roaming nationwide by June 30, 1999.

3. Rather than choosing a particular technology for the provision

of number portability, the Commission established performance criteria

that any long-term number portability method selected by a LEC must

meet. The Commission noted, however, that one of the criteria it

adopted effectively precludes carriers from implementing QOR. The First

Report & Order further concludes that long-term number portability

should be provided through a system of regional databases that will be

managed by one or more independent administrators selected by the North

American Numbering Council (NANC).

4. The First Report & Order also requires wireline LECs, pending

their deployment of a long-term number portability method, to provide

currently available number portability measures upon request by another

telecommunications carrier. Consistent with Section 251(e)(2) of the

Communications Act, the First Report & Order sets forth principles that

ensure that the costs of currently available measures are borne by all

telecommunications carriers on a competitively neutral basis, and

permits states to utilize various cost recovery mechanisms, so long as

they are consistent with these statutory requirements and the

Commission's principles. The Commission also concurrently adopted a

Further Notice of Proposed Rulemaking (Further NPRM), 61 FR 38687 (July

25, 1996), seeking comment on cost recovery for long-term number

portability.

Discussion

Issues Relating to Long-Term Number Portability Methods

Performance Criteria

5. Criterion Four. The Commission concludes that criterion four

should be removed from the list of minimum performance criteria

required for number portability, because all interconnected carriers

are likely to rely upon each other's networks to some extent to process

and route calls in a market in which a long-term number portability

method has been deployed. For example, under both Location Routing

Number (LRN) and Query on Release (QOR), the competitive LEC may be

dependent upon facilities provided by the original service provider for

the proper routing of all ported calls, because the original service

provider is the entity that launches a query to the number portability

database to obtain the location routing number for the dialed number.

Furthermore, the Commission finds no basis in the record for drawing a

principled distinction between permissible and impermissible levels of

reliance on the original service provider's network. For these reasons,

the Commission finds that criterion four--which requires that any

number portability method may not ``require telecommunications carriers

to rely on databases, other network facilities, or services provided by

other telecommunications carriers in order to route calls to the proper

termination point''--is, from a practical perspective, unworkable.

Moreover, many of the Commission's concerns about reliance on a

competitor's network (e.g., the possibility of service degradation and

call blocking) are addressed by criterion six. Thus, criterion four

does not appear to be necessary in order to implement the statutory

definition of number portability. In light of the Commission's decision

to eliminate criterion four, the Commission concludes that AirTouch's

requested clarification of criterion four is moot.

6. Criterion Six. With respect to criterion six, the Commission

affirms its conclusion in the First Report & Order that any long-term

number portability method must not result in any degradation of service

quality or network reliability when customers switch carriers. The

Commission further concludes, based on the record in this proceeding,

that criterion six prohibits the use of QOR as a long-term number

portability method. The Commission agrees with the commenters,

primarily potential new providers of local exchange services (also

referred to as ``competitive LECs''), that: (1) QOR results in

degradation of service by imposing post-dial delay only on calls ported

to new carriers; (2) if network reliability problems were to arise as a

result of QOR, those problems would disproportionately affect customers

who port their numbers; and (3) QOR should not be permitted on an

intranetwork basis, because it is not ``competitively neutral.'' The

Commission discusses each of these conclusions in more detail below.

Service Degradation

7. After considering petitioners' arguments and concerns, the

Commission affirms its conclusion in the First Report & Order that, in

accordance with criterion six, a long-term number portability method

may not cause customers to experience ``a greater dialing delay or call

set up time'' as compared to when the customer was with the original

carrier. Criterion six implements the statutory requirement that

consumers be able to retain their

[[Page 18282]]

numbers ``without impairment of quality, reliability, or convenience

when switching from one telecommunications carrier to another.''

8. At the outset, the Commission agrees with AT&T and Time Warner

that the time it takes to receive a call is an important factor for

many subscribers, particularly businesses that receive and respond to a

large number of calls on a daily basis. If the party making a call to a

business experiences additional delay because that business has

switched carriers, that delay may negatively impact how the business is

perceived, which, in turn, could dissuade the business from switching

carriers in the first place. Therefore, the Commission clarifies that

performance criterion six requires that calls to customers who change

carriers (not just calls from customers who change carriers) must not

take longer to complete merely because the customer has switched local

service providers. In order to implement the statutory requirement that

consumers should be able to change carriers and retain their original

phone number without impairment of quality, reliability, or

convenience, the Commission concludes that any post-dial delay imposed

by a number portability method should be roughly equivalent for all

consumers, whether they are calling to or from a ported or a non-ported

number.

9. The Commission further concludes that consumers that switch

telecommunications carriers and retain their numbers would experience

``impairment of quality'' if QOR were used, because the post-dial delay

imposed by QOR is not equivalent for all consumers. Under QOR, calls

that are placed to ported numbers must undergo a series of signalling

and routing steps that result in longer post-dial delay than occurs for

calls that are placed to non-ported numbers. No party disputes that QOR

causes additional post-dial delay. There is disagreement, however, over

the appropriate baseline for comparison. Proponents of QOR erroneously

focus on the post-dial delay of alternative number portability

technologies, comparing the incremental post-dial delay associated with

a call to a ported number using LRN with that of a call to a ported

number using QOR. That is not the statutory standard. The Commission

agrees with AT&T and MCI that the proper comparison for incremental

post-dial delay is the difference in delay between calls placed to

ported numbers and calls placed to non-ported numbers, because that is

the delay that occurs ``when switching from one telecommunications

carrier to another.'' According to the most conservative estimates,

calls to ported numbers from a network that uses QOR would experience

an additional post-dial delay of approximately 1.3 seconds as compared

to calls placed to non-ported numbers. Because the Commission finds

that post-dial delay of 1.3 seconds is significant, it concludes that

QOR violates the statutory definition of number portability and

criterion six. By contrast, under LRN, there is no differential between

ported and non-ported calls; for all calls, it takes the same amount of

time to query the database for appropriate routing instructions. LRN

therefore does not impair service quality when a customer changes

carriers. Accordingly, the Commission concludes that LRN is consistent

with the statutory definition of number portability and performance

criterion six.

10. The Commission also rejects petitioners' argument that some

degree of added post-dial delay should be acceptable, provided that it

is not ``perceptible'' to the public. First, the Commission agrees with

AT&T that the studies submitted by petitioners fail to demonstrate that

1.3 seconds of post-dial delay is imperceptible to the public. Second,

the Commission agrees with those parties that contend that, even if the

additional post-dial delay were imperceptible to the caller, QOR could

adversely affect competitors, because the incumbent LEC could

truthfully advertise the fact that calls to customers that remain on

the incumbent LEC's network are completed more quickly than calls to

customers that switch to a competitor's network. MCI points out that

this could create a marketplace perception that competitive LECs are

operating inferior networks, which could harm competition. In response,

six incumbent LECs have voluntarily committed not to mention the call

set-up time differences between LRN and QOR in their advertising

materials. As AT&T and MCI point out, however, the incumbent LECs'

voluntary commitment is limited to ``advertising materials,'' and

therefore does not preclude them from mentioning call set up in all

other aspects of their marketing, such as direct sales and

telemarketing, news releases, studies commenced to compare competitors'

service performance, and editorials. Furthermore, because only six

incumbent LECs signed the letter, the Commission has no basis on which

to conclude that all incumbent LECs will refrain from using the

differences in call set-up time to influence marketplace perceptions

and inhibit competition. Thus, the Commission declines to designate a

threshold below which added post-dial delay is permissible. Moreover,

given the Commission's concerns about these marketplace perceptions,

the Commission finds U S West's suggestion that the Commission survey

consumers to ascertain whether they can perceive the post-dial delay

associated with QOR to be unnecessary.

Network Reliability

11. QOR. As discussed above, criterion six requires that no long-

term number portability method may result in ``any degradation of

service quality or network reliability when customers switch

carriers.'' The Commission agrees with the opponents of QOR that

technical concerns raised by QOR are more likely to impact ported

numbers adversely than non-ported numbers. For example, QOR requires

fewer SS7 links to the number portability database than LRN because of

the lower number of queries to support. There is a risk, therefore,

that an SS7 network engineered to accommodate a lower traffic level

would not be able to handle an unexpected sharp increase in the number

of calls to ported numbers. Such increases could occur in response to

advertising or promotions by competitive LECs with ported numbers.

Difficulties in querying the database may result in call blockage

(i.e., lost or incomplete calls) and increased post-dial delay, but

only on calls to ported numbers. The Commission also notes that the

apparent advantage of QOR in requiring fewer queries to the database is

offset by the fact that it will require at least two additional

signalling messages for each call to a ported number before routing

instructions are obtained. This additional load on the signalling

network creates the potential for reliability problems for ported

calls. The Commission concludes that network reliability concerns posed

by QOR violate criterion six and the statutory definition of number

portability because, if any network problems arise as a result of QOR,

they would disproportionately affect consumers who port their numbers.

12. LRN. As a related matter, proponents of QOR assert that

deployment of LRN is more likely to result in network failure than if

carriers are permitted to use the QOR enhancement to LRN. Although the

proponents of QOR do not frame their arguments in terms of the

performance criteria the Commission adopted in the First Report &

Order, the thrust of their argument appears to fall within the scope of

criterion five, which requires that no number portability method

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should result in ``unreasonable degradation in service quality or

network reliability when implemented.''

13. The Commission also concludes that petitioners have not

demonstrated that LRN fails to meet criterion five. Although the

initial deployment of any new technology may pose some risk to the

network, the Commission is not persuaded that deployment of LRN will

result in unreasonable degradation of network reliability when deployed

under the revised schedule adopted in this First Reconsideration Order.

Indeed, petitioners' concerns about LRN's impact on network reliability

are mitigated by a number of factors. First, as the Commission noted

previously, LRN has been examined extensively by a number of state

commissions and industry workshops, and had been selected for

deployment by at least six states prior to the adoption of the First

Report & Order. Second, the Commission provided in the First Report &

Order for a field test of LRN in the Chicago MSA (Chicago trial), which

should help to protect against network reliability problems. If

technical problems with LRN arise with respect to the Chicago trial,

the Commission can take appropriate action at that time. Third, as

discussed in more detail below, the Commission is extending the

implementation schedule for Phase I to allow carriers additional time

to test number portability in a live environment, and to take

appropriate steps to safeguard network reliability. Indeed, the

Bellcore study submitted by SBC supports the Commission's conclusion

that additional time for testing, integration, and soaking (limited use

of the software in a live environment for a length of time sufficient

to find initial defects) will help to reduce the probability of network

failure. Fourth, as the Commission clarifies below, its implementation

schedule does not require a flashcut implementation on October 1, 1997,

for those MSAs in the first phase of the deployment schedule. Rather,

number portability may be implemented gradually throughout the initial

phase, provided that implementation in the designated markets is

completed by the end of that phase.

Intranetwork Use of QOR

14. Incumbent LECs ask the Commission to permit them to use QOR on

all calls that originate on their network and are placed to numbers

that originally were assigned to one of their end offices (i.e., calls

``within their own network'' or ``intranetwork calls''). The Commission

concludes that their request is misleading insofar as it implies that

only calls to and from their own customers would be affected. In fact,

calls that are placed to numbers that have been ported would require a

query to the number portability database after the originating switch

is notified by the terminating switch in the incumbent LEC's service

area that the called number has been ported. The Commission agrees with

MCI that, as customers subscribe to alternative carriers, the only

calls that will remain ``within'' the incumbent LEC's network will be

calls from one of the incumbent LEC's customers to another. As

discussed above, however, the call to the ported number would

experience increased post-dial delay because of the additional

signalling and routing preparations required by QOR. Such disparity in

treatment between ported and non-ported numbers violates criterion six

and the statutory definition of number portability.

Public Interest Considerations

Overview

15. Petitioners further assert that, regardless of the Commission's

performance criteria, incumbent LECs should not be prohibited from

using QOR as a number portability method, because deployment of QOR

serves the public interest. First, they claim that QOR will result in

significant cost savings. Second, they claim that permitting incumbent

LECs to use QOR will make it easier for them to meet the Commission's

implementation schedule.

16. As an initial matter, the Commission disagrees with the

petitioners' premise that LECs should be permitted to implement QOR

regardless of the performance criteria, if the Commission determines

that QOR serves the public interest. As stated above, the Commission

concludes that QOR violates criterion six, which is required by the

statute. Thus, the Commission is not at liberty to apply a public

interest analysis that could result in an abrogation of the statutory

mandate. Nevertheless, because the parties raised public interest

concerns, the Commission addresses them in order to establish that its

decision to prohibit QOR is not contrary to the public interest.

17. Discussion. As most carriers recognize, LRN is the more

economical way to provide long term number portability once ported

numbers for a given switch reach a certain level, although the point at

which it becomes more cost-effective to use LRN rather than QOR remains

in dispute. From an economic perspective, the question is whether the

present discounted value of the cost of initially deploying LRN is less

than the present discounted value of the cost of deploying QOR

initially and LRN at some later date. Proponents of QOR contend that

the use of the QOR enhancement to LRN would result in real cost

savings, not just a short-term deferral of expenses, because the number

of ported calls in some areas will never reach the level where it is

more cost effective to disable QOR and complete the build-out necessary

to support LRN. The Commission concludes, however, that the statutory

scheme that Congress has put in place should, over time, result in

vigorous facilities-based competition in most areas, and therefore LRN

will be the most economical long-term solution. Thus, deploying QOR

would most likely result in short-term cost savings, not overall cost

savings. In fact, at least one incumbent LEC, Ameritech, has already

decided that it is beneficial to deploy LRN from the outset, rather

than converting from QOR to LRN at some later date. Even if facilities-

based competition does not develop in the immediate future, however,

the Commission concludes that the harm that QOR imposes on competitors

outweighs the benefit of allowing incumbent LECs to defer the cost of

implementing a superior long-term number portability solution.

18. Moreover, the Commission is not convinced that the incumbent

LEC's estimates of the short-term savings associated with QOR are

reliable. The Commission is particularly concerned by the fact that the

cost savings estimates submitted by incumbent LECs have varied

significantly over the course of this proceeding. In some cases,

estimates from the same carrier have changed by 100 percent or more.

Further, the changed estimates have not moved in the same direction;

some carriers' estimates of the cost savings increased drastically and

other carriers' estimates decreased equally drastically. While the

Commission recognizes that carriers have worked over time to refine

their projections, the wide variation in the estimates submitted by

individual carriers at different points in this proceeding raises

questions about the reliability of these estimates. Furthermore, the

fact that some carriers have not explained the basis for the

assumptions underlying their estimates precludes the Commission from

conducting an independent evaluation of the reasonableness and

reliability of their projected cost savings and, consequently, limits

the weight the

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Commission can reasonably assign to those estimates.

19. In addition, MCI alleges that the cost savings that would be

realized by permitting the deployment of QOR are far less than the

estimated $54 million to $136.3 million in annual savings alleged by

individual incumbent LECs. The LECs collectively estimate they would

save between $624 and $649 million if permitted to use QOR. MCI has

provided figures indicating that the LECs collectively would save only

$50 million, but that figure only includes estimated savings for four

out of the seven carriers. MCI was unable to estimate cost savings for

three carriers due to insufficient information in the record. For three

of the carriers for which MCI was able to provide estimates, however,

these estimates ranged from 20% to 23% of the corresponding LEC figure.

For the fourth carrier, MCI argued that QOR actually would cost more

than LRN.

20. MCI's calculation of the asserted cost savings associated with

QOR challenges a key assumption underlying the incumbent LECs'

estimates. Specifically, MCI claims that the LECs substantially

underestimate the number of transactions (i.e., queries) per second

(tps) that an SCP pair can perform and, consequently, their estimate of

the number of SCP pairs that must be deployed to provide LRN is

overstated. AT&T also alleges that the incumbent LECs' savings

estimates do not take into account offsetting increases in additional

switching facilities costs that would be required for QOR. MCI and AT&T

further contend that the incumbent LECs' estimates of the relative

costs of deploying LRN and QOR must be adjusted downward to account for

revenues that they will receive to perform database queries at the

request of rural and other LECs that do not have the capability to

perform such queries themselves. Although incumbent LECs would obtain

such revenues with both the LRN and QOR methodologies, the revenue

stream is likely to be significantly greater with LRN because the

number of database queries is likely to be much greater. Indeed,

Pacific, a proponent of QOR, acknowledges that its estimate of the cost

savings associated with QOR would be reduced by as much as $18 million

if such revenues were included in the estimate. In view of the

significant changes in the estimates of the cost savings associated

with QOR submitted by individual incumbent LECs over the past months, a

lack of data explaining many of the assumptions underlying their

estimates, and the questions raised by MCI and AT&T with respect to

specific aspects of the estimates, the Commission finds, on balance,

that the incumbent LECs have not substantiated their claim that

deployment of QOR will produce significant cost savings.

21. Moreover, a recent submission by Illuminet, a provider of SS7,

database, and other services to independent LECs and other entities,

casts doubt on the reasonableness of one of the most basic assumptions

underlying the incumbent LECs' estimates of the relative costs of QOR

and LRN. Incumbent LEC estimates assume that the LEC number portability

architecture will be deployed through a network of SCPs, and that a

major cost driver of LRN is the number of SCPs needed to handle

increased traffic volumes. On the other hand, Illuminet advocates using

an STP-based architecture, in which call routing information from the

regional database is transferred to a carrier's STP instead of an SCP,

and the SCP is not involved in processing the number portability query.

Illuminet asserts that STPs are designed specifically to do ten-digit

translations such as LRN query processing and can process number

portability queries at a much faster rate than SCPs. In contrast, SCPs

are designed to support multiple call processing applications and

process significantly fewer queries per second. Carriers using an STP-

based architecture, therefore, would need to purchase and install a

relatively smaller number of STPs instead of the larger number of SCPs

alleged by the LECs, and would not need to purchase and install

additional SS7 links between the SCPs and STPs. Thus, according to

Illuminet, use of an STP-based architecture would reduce dramatically

the cost of LRN. In response, Pacific acknowledges that a combined STP-

SCP approach may reduce some costs, but that expenses related to

upgrading switch processors, links, and existing STPs will still be

substantial. Although the Commission acknowledges that carriers

deploying LRN will incur costs other than those associated with SCPs,

the Commission agrees with Illuminet that an STP-based approach should

reduce the relative cost differential between LRN and QOR.

Conclusion

22. Congress recognized that there are costs associated with the

implementation of local number portability. Although carriers may

realize some short-term cost savings if permitted to use QOR instead of

LRN, the exact amount of savings from utilizing QOR is unclear. Even if

the cost savings figures submitted by the LECs were correct, the

Commission believes that the benefits to consumers of such savings do

not outweigh the harm that QOR would impose on competitive LECs, the

cost of disrupting state efforts to implement LRN, or any delay in

implementation that might result from such disruption. Thus, the

Commission concludes that permitting carriers to deploy QOR as a long-

term number portability method does not serve the public interest.

Implementation Schedule for Wireline Carriers

Background

23. In the First Report & Order, the Commission required local

exchange carriers operating in the 100 largest MSAs to offer long-term

service provider portability, according to a phased deployment schedule

commencing on October 1, 1997, and concluding on December 31, 1998. The

Commission required deployment in one specified MSA in each of the

seven BOC regions by the end of fourth quarter 1997 (``Phase I''), 16

additional specified MSAs by the end of first quarter 1998 (``Phase

II''), 22 additional specified MSAs by the end of second quarter 1998

(``Phase III''), 25 additional specified MSAs by the end of third

quarter 1998 (``Phase IV''), and 30 additional specified MSAs by the

end of fourth quarter 1998 (``Phase V''). The Commission noted that, in

establishing the deployment schedule, it relied upon representations of

switch vendors regarding the dates by which the necessary switching

software will be generally available for deployment. In particular,

vendors estimated that they could begin to make software for at least

one long-term number portability method generally available for

deployment by carriers around mid-1997. In addition, a carrier may file

a specific request for number portability beginning January 1, 1999,

for areas outside the 100 largest MSAs, and each LEC must make long-

term number portability available in that MSA within six months after

the specific request. The Commission also directed the carriers that

are members of the Illinois Commerce Commission Local Number

Portability Workshop (ICC Workshop) to conduct in the Chicago MSA,

concluding no later than August 31, 1997, a field test of LRN or

another technically feasible long-term number portability method that

comports with the performance criteria. The Commission noted that

section 251(f)(2) of the Act permits a LEC with fewer than two percent

of the country's total installed subscriber lines to petition a state

commission for suspension or

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modification of the interconnection requirements of sections 251 (b)

and (c).

24. The Commission delegated to the Chief, Common Carrier Bureau,

the authority to monitor the progress of LECs implementing number

portability, and to direct carriers to take any actions necessary to

ensure compliance with its deployment schedule. The Commission also

delegated to the Chief, Common Carrier Bureau, the authority to waive

or stay any of the dates in the implementation schedule, for a period

not to exceed nine months (i.e., no later than September 30, 1999, for

the MSAs in Phase V of the deployment schedule), as is necessary to

ensure the efficient development of number portability. In the event a

carrier is unable to meet the Commission's deadlines for implementing a

long-term number portability method, it may file with the Commission,

at least 60 days in advance of the implementation deadline, a petition

to extend the time by which implementation of long-term number

portability in its network will be completed. The Commission

emphasized, however, that carriers are expected to meet the prescribed

deadlines, and a carrier seeking relief must present extraordinary

circumstances beyond its control in order to obtain an extension of

time. The Commission required a carrier seeking such relief to

demonstrate through substantial, credible evidence the basis for its

contention that it is unable to comply with the deployment schedule.

Deployment Only in Requested Switches

25. Discussion. The Commission agrees with the majority of the

parties commenting on this issue that it is reasonable to focus initial

efforts in implementing number portability in areas where competing

carriers plan to enter. This approach will permit LECs to target their

resources where number portability is needed and avoid expenditures in

areas within an MSA in which competitors are not currently interested.

The Commission further agrees that such a procedure will foster

efficient deployment, network planning, and testing, reduce costs, and

lessen demands on software vendors. Moreover, the Commission believes

that limiting deployment to switches in which a competitor expresses

interest in number portability will address the concerns of smaller and

rural LECs with end offices within the 100 largest MSAs that they may

have to upgrade their networks at significant expense even if no

competitors desire portability. Limiting deployment to switches in

which a competitor expresses interest in deployment will be consistent

to a large extent with procedures suggested by Ameritech and BellSouth

and already considered by several state commissions, as well as the

Commission's past practice in implementing conversion to equal access

for independent telephone companies.

26. The Commission therefore concludes that LECs need only provide

number portability within the 100 largest MSAs in switches for which

another carrier has made a specific request for the provision of

portability. The Commission leaves it to the industry and to state

commissions to determine the most efficient procedure for identifying

those switches in which carriers have expressed interest and which will

be deployed with number portability according to the original

deployment schedule for the 100 largest MSAs. The Commission finds,

however, that any procedure to identify and request switches for

deployment of number portability must comply with certain minimum

criteria to ensure that minimal burden is imposed upon carriers

requesting deployment in particular switches, and that carriers that

receive requests for deployment in their switches have adequate time to

fulfill the requests. As explained below, the Commission requires that:

(1) Any wireline carrier that is certified, or has applied for

certification, to provide local exchange service in the relevant state,

or any licensed CMRS provider, must be allowed to make a request for

deployment; (2) requests for deployment must be submitted at least nine

months before the deadline in the Commission's deployment schedule for

that MSA; (3) carriers must make available lists of their switches for

which deployment has and has not been requested; and (4) additional

switches must be deployed upon request within the time frames described

below.

27. First, any wireline carrier that is certified (or has applied

for certification) to provide local exchange service in a state, or any

licensed CMRS provider, must be given a reasonable opportunity to make

a specific request for deployment of number portability in any

particular switch located in the MSAs in that state designated in the

First Report & Order. According to the Act, any carrier that desires

number portability from a LEC must be able to obtain portability, in

accordance with the requirements established by the Commission. 47

U.S.C. 251(b)(2). A state commission, however, may review whether the

requests made by a carrier are unreasonable, given the state

commission's knowledge of that carrier's plans to enter the state.

Based on the limited information available to the Commission at this

time, the states that are reviewing seemingly unreasonable requests

appear to be acting in good faith to accommodate carriers' interests in

number portability capabilities. If the Commission receives evidence in

the future that states are unreasonably limiting deployment, then it

can revisit this issue at that time.

28. Second, a carrier must make its specific requests for

deployment of number portability in particular switches at least nine

months before the deadline for completion of implementation of number

portability in that MSA. The Commission concludes that this deadline

will enable a LEC to plan ahead for the deployment of number

portability in multiple switches in a given MSA. The Commission

encourages carriers to make such requests earlier than the nine-month

deadline to give the LEC that operates the switch in which portability

is requested more time to implement number portability capabilities. In

addition, carriers may agree among themselves, or state commissions may

require carriers, to comply with a deadline for submitting requests

that is more than nine months prior to the implementation deadline.

29. The Commission encourages carriers, before requests for

deployment are submitted, to seek to reach a consensus on the

particular switches that initially will be deployed with number

portability. The Commission notes, moreover, that the state commission

may decide, or carriers affected in the state may agree, that it would

be preferable for the state commission to aggregate the requests to

produce a master list of requested switches. In addition, the

Commission concludes that carriers may negotiate private agreements

specifying that a carrier will not request that certain switches be

deployed according to the Commission's schedule if the LEC from which

deployment is requested agrees to deploy other number portability-

capable switches, either inside or outside the 100 largest MSAs, at an

earlier date than the deadlines in the Commission's schedule. For

example, NEXTLINK suggests waiving the scheduled deployment deadlines

for switches in the 100 largest MSAs for which no competitor expresses

interest in deployment, and allowing carriers instead to deploy

switches outside the 100 largest MSAs in which a competitor expresses

interest, according to the deadlines for those unrequested switches

within the 100 largest MSAs.

[[Page 18286]]

30. Third, after carriers have submitted their requests, a carrier

must make readily available upon request to any interested parties a

list of its switches for which number portability has been requested

and a list of its switches for which number portability has not been

requested. The Commission finds that simplifying the task of

identifying the switches in each MSA in which number portability is

initially scheduled to be deployed is consistent with its policy of

facilitating the deployment of number portability in areas where new

competitors plan to enter.

31. Fourth, carriers must be able to request at any time that

number portability be deployed in additional switches. LECs must

provide portability in these additional switches upon request, after

the deployment deadline mandated by the Commission's schedule for that

MSA, within the time frames that the Commission adopts here, unless

requesting carriers specify a later date. Although carriers may make

specific requests for deployment in additional switches in a particular

MSA at any time, the time frames set forth below will commence after

the deadline for deployment in that particular MSA in the

implementation schedule. The Commission agrees with Sprint and Time

Warner that specific time frames within which number portability must

be deployed in all switches that were not initially requested are

necessary to ensure that competitive LECs can be certain that

portability will be available in areas in which they plan to compete

and can formulate their business plans accordingly. Absent this

certainty, competing carriers would have an incentive to request more

switches during the initial request process, including those serving

markets which they do not plan to enter in the near future, in order to

ensure deployment of portability in any switch in which they might ever

want portability. The Commission finds, therefore, that establishing

specific time frames for deployment in all additional switches will

benefit competitive LECs by ensuring that portability will be available

to them at a designated future time, and will benefit incumbent LECs by

reducing their initial deployment burdens.

32. The Commission finds that the time frames developed by the

carriers participating in the ICC Workshop generally successfully

balance the needs of competitive LECs for certainty of deployment and

the burdens faced by incumbent LECs in deploying number portability in

additional switches that require different levels of upgrades. The

Commission therefore adopts, with slight modification, the time frames

developed by the ICC Workshop for the conversion of additional

exchanges: (1) Equipped Remote Switches within 30 days; (2) Hardware

Capable Switches within 60 days; (3) Capable Switches Requiring

Hardware within 180 days; and (4) Non-Capable Switches within 180 days.

For example, if carriers request deployment in a certain number of

switches in the Pittsburgh, PA MSA nine months before that MSA's Phase

III deadline of June 30, 1998 (i.e., they make requests by September

30, 1998), and a carrier requests on April 1, 1998, deployment in an

additional Equipped Remote Switch in Pittsburgh, then the additional

switch must be equipped with number portability capability on or before

July 30, 1998 (i.e., 30 days after June 30, 1998). The Commission notes

that the ICC Workshop developed the time frames for the first three

switch categories, but did not reach agreement on a time frame for

converting a Non-Capable Switch. Since the Commission finds, as

discussed above, that specific time frames for deployment of all

additional switches are necessary, the Commission finds that it is

reasonable to allow no more time for deployment of any switches within

the 100 largest MSAs than is allowed for deployment of switches outside

the 100 largest MSAs. Deployment in additional switches will be less

burdensome for carriers with networks within the 100 largest MSAs that

have already made network-wide upgrades, e.g., SCP hardware and OSS

modifications, to support number portability in the initially requested

switches.

33. Carriers seeking relief from these deadlines may file a

petition for waiver under the procedures set forth in the First Report

& Order. The Commission notes that the deadlines for switches in

categories (1) and (2) are shorter than switches in categories (3) and

(4) because the former require less extensive upgrades. The Commission

realizes that the shorter deadlines for switches in categories (1) and

(2) do not allow time for carriers to file a petition for waiver under

the procedure established in the First Report & Order on the grounds of

extraordinary circumstances that prevent it from complying with the

Commission's deployment requirements. The Commission therefore will

suspend the deadlines for switches in categories (1) and (2) during the

period that the Commission is considering a carrier's petition for

waiver. For example, if a LEC receives a request for deployment in an

additional switch that is an Equipped Remote Switch, and five days

later the LEC files a petition for waiver, then the LEC need not deploy

number portability in the switch until 25 days after the Commission

denies its petition, or until the date specified in the Commission's

grant of the petition.

34. The Commission agrees with MCI that, after portability has been

introduced in an MSA, the incremental cost and resources needed to add

additional end offices are relatively minor because most costs, e.g.,

SCP hardware and signalling links, OSS modifications, and shared

regional database costs, will have already been incurred. Number

portability, consequently, can be deployed more quickly in the switches

for which number portability is requested after the initial deployment

of number portability. The Commission therefore declines to adopt

suggestions by USTA and GTE to allow a longer time after receipt of a

request for deployment of number portability capability in switches not

in the initial deployment.

35. The Commission emphasizes that a carrier operating a non-

portability-capable switch must still properly route calls originated

by customers served by that switch to ported numbers. When the switch

operated by the carrier designated to perform the number portability

database query is non-portability-capable, that carrier could either

send it to a portability-capable switch operated by that carrier to do

the database query, or enter into an arrangement with another carrier

to do the query.

36. The Commission concludes that permitting carriers to specify

those switches within the 100 largest MSAs in which they desire

portability is more workable than the procedures proposed by some

petitioners that would require incumbent LECs to file waiver requests

for specific switches for which the incumbent LECs believe that no

competitor is interested. A waiver procedure would create a period of

uncertainty for both the incumbent LEC and the competitive LEC as to

whether portability would actually be deployed in that switch.

Moreover, a waiver procedure would burden the incumbent LEC with

preparing and filing the petition for waiver, require that the

Commission review the petition, and potentially burden the state

commission with determining whether there is actual competitive

interest in the switch. In addition, these proposals by petitioners

appear to assume generally that no competitive LEC would oppose the

waiver petition; if this is not the case, then a waiver procedure would

burden competing carriers with

[[Page 18287]]

challenging the waiver. A waiver procedure would also burden both

competing carriers and consumers by hampering competitive entry into

the market while waiting for a determination by the Commission or a

state commission.

37. The Commission believes that the criteria set forth above

adequately address MCI's concern that requesting carriers would bear an

unnecessary burden of justifying deployment in each end office and

endure uncertainty as to deployment. The only burden on requesting

carriers is to identify and request their preferred switches. In

addition, carriers have a time frame for deployment of the initially

unrequested switches within the 100 largest MSAs. Competitive LECs can

thus market their services as widely as they desire with assurance that

number portability will be available in the areas where, and at the

times when, they desire to compete. As an additional safeguard against

anticompetitive abuses of the procedures to identify and request those

switches for which a carrier desires deployment of number portability,

the Commission delegates authority to the Chief, Common Carrier Bureau,

to take action to address any problems that arise over any specific

procedures.

Extension of Implementation Schedule

38. Discussion. The Commission grants, with some modifications, the

requests by BellSouth and other parties to extend the deadlines for

completion of deployment of long-term number portability for Phases I

and II, as set forth in appendix E of this First Reconsideration Order.

On reconsideration, the Commission extends the end date for Phase I by

three months. Thus, deployment in Phase I will now take place from

October 1, 1997, through March 31, 1998. The Commission takes this

action because it is now persuaded that initial implementation of this

new number portability technology is likely to require more time than

subsequent deployment once the technology has been thoroughly tested

and used in a live environment. For example, initial implementation of

this new technology is likely to involve more extensive testing, and

may require extra time to resolve any problems that may arise during

the testing. It therefore is appropriate that Phase I be longer than

subsequent phases in the schedule to allow carriers to take appropriate

steps to safeguard network reliability.

39. The Commission also notes that the participants in the Chicago

trial have recently informed it that the completion date of the Chicago

trial, previously scheduled for August 31, 1997, has been postponed by

approximately one month until September 26, 1997. While the Chicago

trial participants have committed to providing the Commission with

weekly updates on trial progress, the full report on the Chicago trial

that participants had planned to file September 30, 1997, is now

scheduled to be filed October 17, 1997. Consistent with this

notification by the Chicago trial participants, the Commission hereby

extends the deadline for carriers that are members of the ICC Workshop

to conduct a field test of any technically feasible long-term database

method for number portability in the Chicago, Illinois, MSA and to

report the results of that trial. While the Commission understands that

participants in the Chicago trial are prepared to commence

implementation in Chicago immediately upon conclusion of the trial and

still expect to meet the original December 31, 1997, deadline, the

Commission recognizes that carriers operating in other MSAs may require

additional time to interpret the results of the Chicago trial in light

of their individual network configurations. Finally, the Commission

finds some merit in CBT's argument that an extra 90 days for initial

implementation may permit small and mid-size LECs to reduce their

testing costs by allowing time for larger LECs to test and resolve the

problems of new technology. Given all the factors listed above, the

Commission concludes that a three-month extension of the time period

for initial deployment in Phase I markets appropriately safeguards

network reliability, and therefore is warranted.

40. The Commission also extends the end date for Phase II by 45

days. Thus, deployment in Phase II will now take place from January 1,

1998, through May 15, 1998. The Commission extends Phase II to

alleviate potential problems that may arise if deployment in markets in

Phase I and II must be completed on the same date. Requiring that

implementation be completed in a greater number of markets by a

specific deadline may make that deadline more difficult to meet (e.g.,

by straining vendor resources to perform software upgrades in any given

period of time). For the same reason, the Commission declines to extend

Phase II by 90 days as requested by BellSouth, as such an extension

would establish the same deadline for completion of deployment for

Phases II and III. The Commission concludes that the modest adjustment

of the deadline for Phase II adopted in this First Reconsideration

Order will more effectively stagger the deadlines for deployment in

different markets than BellSouth's proposal.

41. The Commission clarifies, per BellSouth's request, that

implementation of number portability for a phase may begin at any time

during that phase, provided that implementation in the designated

markets is completed by the end of that phase. Contrary to the

allegations of Pacific and other parties, number portability thus need

not be introduced ``on virtually the same day'' in the seven of the

largest MSAs, especially because it may now be phased into the first

markets more gradually over six months, instead of three.

42. The Commission strongly advises carriers to begin

implementation early in each phase, however, as they will not be able

to obtain a waiver of the schedule if they cannot demonstrate, through

substantial, credible evidence, at least sixty days before the

completion deadline, the extraordinary circumstances beyond their

control that leave them unable to comply with the schedule, including

``a detailed explanation of the activities that the carrier has

undertaken to meet the implementation schedule prior to requesting an

extension of time.'' This is especially applicable to Phases I and II,

given that the Commission now is granting carriers additional time

during those phases specifically so that they can implement number

portability more gradually. The Commission will not look favorably upon

a waiver request if the carrier has not taken significant action to

implement portability, if the carrier does not place orders with switch

manufacturers in a timely manner, or, for example, if the carrier

requests a waiver for a Phase II market because it only began preparing

for implementation for a Phase I market in the first quarter of 1998,

and then claims that it has too many software upgrades to perform from

January through May 15, 1998. Carriers should be able to identify any

specific technical problems that may necessitate an extension of the

deployment deadline for Phase I during the four months between the

scheduled end of the Chicago trial and the deadline for requesting an

extension for Phase I, especially because carriers will be receiving

initial feedback from testing in Chicago far in advance of the Chicago

trial's conclusion. As noted above, the participants in the Chicago

trial have committed to providing weekly progress reports as the trial

progresses. Initial tests of LRN hardware and software on a subset of

switches in the Chicago MSA began in January 1997. Intra-network and

database testing

[[Page 18288]]

in Chicago is scheduled to take place for several months before the

start of the Chicago trial mandated by the Commission.

43. The Commission's decision to extend the deadlines for

completing Phases I and II of its deployment schedule reflects the fact

that the Commission considers network reliability to be of paramount

importance. Consistent with that commitment, in the First Report &

Order the Commission delegated authority to the Chief, Common Carrier

Bureau, to monitor generally the progress of number portability

implementation and take appropriate action, as well as establishing a

procedure for individual LECs to obtain an extension of the deployment

deadlines as necessary for their specific markets. The Chief, Common

Carrier Bureau, will monitor the weekly reports from the Chicago trial

and any other pertinent developments. The Commission finds that further

adjustment of the deployment schedule in response to these developments

is more properly a matter for the Chief, Common Carrier Bureau, to

handle as number portability technology is tested and carriers discover

any actual, specific difficulties. If significant problems arise during

the Chicago trial, or other significant implementation problems arise

during Phase I, the Chief, Common Carrier Bureau, has the authority to

adjust the schedule for the Chicago trial or the deadline for Phase I

implementation, as appropriate, to ensure network reliability.

44. Although the findings of the Bellcore study submitted by SBC

were vigorously challenged by AT&T and MCI, it bears mention that

extending the Phase I completion date by three months is responsive to

the recommendation in the Bellcore study that the Commission should

allow additional ``time for testing, integration, and soaking (limited

use of the software in a live environment for a length of time

sufficient to find initial defects) of the software.'' In fact, the

Bellcore study specifically recommended that the Commission ``(e)xtend

the time interval for introduction of (number portability) by 3

months.'' The Commission's extension of Phase I, in combination with

its conclusion that carriers need provide portability only in requested

switches, also allows carriers the flexibility to introduce portability

more gradually, beginning with a subset of switches within the MSA.

45. The Commission denies the petitions to extend the deployment

deadlines for all markets or otherwise provide wireline carriers

greater flexibility in the schedule to implement long-term number

portability. Although the Commission concludes that initial

implementation of this new number portability technology may require

additional time, the Commission is not persuaded that implementation in

subsequent phases, after the technology has already been tested and

installed in the initial markets, need be delayed to the extent

requested by some petitioners. The Commission finds on the basis of the

record in this proceeding that the implementation schedule as revised

in this First Reconsideration Order is reasonable, and that granting

any further delay of the schedule at this time is premature and

unnecessary, especially because there is still approximately one year

before LECs must complete deployment for the earliest phase.

Petitioners have only speculated that unpredictable events may, at some

point in the future, generally delay implementation, and have not shown

that a specific factor will render the later schedule impossible to

meet for any particular reason, much less for any particular LEC.

46. Petitioners' arguments are even more speculative given that

their implementation obligations are likely to be significantly lighter

than they assume, because, as the Commission discusses above, LECs are

required to deploy number portability only in switches for which they

receive requests for number portability capability. Moreover, even if

the problems identified by petitioners do in fact develop, in the First

Report & Order the Commission established a procedure for LECs to

obtain an extension of the deployment deadlines as necessary, and

delegated authority to the Chief, Common Carrier Bureau, to monitor the

progress of number portability implementation.

47. Furthermore, the Commission finds it unnecessary to act on

GTE's request that it clarify that LECs may obtain a waiver if they

cannot meet the schedule for reasons beyond their control. The waiver

procedure established in the First Report & Order for extending

deployment deadlines as necessary provides an effective vehicle for

addressing any problems in implementing number portability that LECs

can document. In particular, if problems necessitating delay do arise,

the Chief of the Common Carrier Bureau may waive or stay any of the

dates in the implementation schedule, as the Chief determines is

necessary to ensure the efficient development of number portability,

for a period not to exceed nine months. In the event a carrier is

unable to meet the deadlines for implementing a long-term number

portability method, it may file with the Commission, at least 60 days

in advance of the deadline, a petition to extend the time by which

implementation in its network will be completed. See ALTS Opposition at

6 n.7 (arguing that incumbent LECs should try to settle their claims

with carriers and vendors and develop a record before challenging the

schedule); Sprint Opposition at 13-14. The Commission notes that

carriers may file petitions for waiver of the deployment schedule more

than 60 days in advance of an implementation deadline, and thus receive

relief earlier, if they are able to present substantial, credible

evidence at that time establishing their inability to comply with the

deadlines.

48. The Commission rejects USTA's proposal to give every state

commission and/or workshop the authority to extend independently the

deployment deadlines according to their assessments of the level of

local competition in an area. As set forth above, the Commission

requires carriers to identify the switches in which they desire number

portability capability well before the deadline for deployment in a

particular MSA. The Commission finds that this requirement will enable

LECs to deploy number portability in areas in which local competition

is likely to develop at an early stage, while relieving LECs of the

obligation to install the capability in areas that competitive LECs

have no initial interest in serving. This requirement, in the

Commission's view, addresses USTA's concerns by striking a reasonable

balance between a LEC's interest in avoiding unnecessary switch

upgrades, and a competitive LEC's interest in having assurances that

number portability will be available in areas where it plans to compete

to serve existing LEC customers.

49. The Commission declines to expedite the Chicago trial, as

requested by NYNEX. The First Report & Order scheduled the completion

date for the Chicago trial for as early as appeared reasonably possible

at that time. Given the record before it now, the Commission concludes

that it would not be possible to accelerate the commencement of that

trial. Moreover, the Commission agrees with the Chicago trial

participants that it would be inappropriate to shorten or delete any of

the planned testing.

50. The Commission also declines to order additional field tests,

as requested by NYNEX. The requirement that there be a field trial in

Chicago is only intended to ensure that at least one field trial is

held to identify technical

[[Page 18289]]

problems in advance of widespread deployment, which will provide all

carriers, as well as the Commission, with information on

implementation. All carriers will have an opportunity to monitor

testing in Chicago and evaluate the results of the testing on an

ongoing basis. The Commission finds, moreover, that LECs currently have

access to additional information concerning the impact of number

portability on their systems, because many LECs are, and have been for

some time, analyzing extensively implementation and inter-carrier OSS

impact of number portability under the auspices of state and industry

fora. As the Commission stated in the First Report & Order, it does not

routinely schedule field trials in rulemaking proceedings; its

requiring a field trial in the Chicago MSA is an exceptional step that

the Commission adopted to safeguard against any risk to the public

switched telephone network. The need for any further trials should be

determined by the industry.

51. To the extent that other networks differ in design or switch

use or other relevant variables, the Commission does not preclude the

testing of either software or hardware in other areas or by other

carriers, either contemporaneously with the Chicago trial or even

before that trial begins. Indeed, the Commission encourages carriers to

test portability within their own networks as early as possible. For

example, Bell Atlantic plans to do ``first office application'' testing

in Gaithersburg, Maryland, from July 15, 1997, to August 30, 1997. The

Gaithersburg test, therefore, will have been completed seven months

before Bell Atlantic's March 31, 1998, deadline to complete

implementation in Philadelphia, the market in which it must deploy

long-term number portability in Phase I under the revised schedule. In

any event, carriers should have the opportunity to perform their own

testing, including on ``live traffic,'' well before the date by which

they must request any waiver of the Phase I implementation

requirements.

52. The Commission also declines to adopt NYNEX's proposal to

deploy portability in smaller MSAs instead of the largest ones during

Phase I of the deployment schedule. At this time, there is only

speculation that starting with the most populous MSAs will result in

technical problems. Indeed, carriers are further ahead in preparing for

number portability in many of the larger MSAs than in the smaller ones;

for example, several state commissions that had addressed the issue of

number portability before issuance of the First Report & Order had

ordered that deployment begin in several major cities that are

currently in Phases I or II of the schedule. Therefore, switching the

deadlines of those larger MSAs with other, smaller MSAs now would, at a

minimum, disrupt planning by competitive LECs and state commissions in

those jurisdictions. Moreover, the three-month extension of the end

date of Phase I, in combination with the Commission's conclusion that

carriers need provide portability only in requested switches, will

serve much the same purpose as NYNEX's request by allowing carriers the

flexibility to begin deployment in a subset of switches within each of

the Phase I MSAs and gradually increase coverage over the six-month

period. In addition, the Commission does not prohibit, but rather

encourages, carriers to take whatever additional actions they believe

are necessary to safeguard their networks, including testing deployment

of portability in one of their smaller MSAs before or during Phase I of

the deployment schedule. For example, Bell Atlantic is testing number

portability in the smaller market of Gaithersburg, MD before Phase I.

53. The Commission also denies NYNEX's request that it explicitly

encourage states to be flexible in opting out of the regional database

or choosing to construct joint databases, or to work with less active

neighboring states to establish regional databases. The Commission

finds that the First Report & Order allows sufficient flexibility for

states to opt out of the regional databases. In addition, NYNEX's

concern that the NANC would not resolve the database issues in time for

carriers to meet the deployment schedule is now largely moot, given the

recent activities of the NANC. The NANC has committed to making its

final recommendations to the Commission on the database system by May

1, 1997. The NANC's working groups and task forces relating to number

portability are already organized and holding regular meetings to

resolve the database issues. The Local Number Portability

Administration Selection Working Group projects that all seven regional

databases will be ready for testing on dates ranging from April 18,

1997, to July 1, 1997, and will be ready to support number portability

deployment on or before October 1, 1997, in accordance with the

deployment schedule set forth in the First Report & Order.

54. Finally, the Commission clarifies that the first performance

criterion, that any method ``support existing network services,

features, and capabilities,'' refers only to services existing at the

time of the First Report & Order. The Commission cautions LECs that

problems in implementing their chosen number portability method due to

modifications necessitated by the introduction of a new service or

technology will not justify a delay of the deployment schedule. The

Commission declines, however, specifically to prohibit the introduction

of any new service that is incompatible with LRN, as the First Report &

Order did not adopt LRN or mandate use of any specific long-term number

portability method.

Acceleration of Implementation Schedule

55. Discussion. The Commission denies the petitions for

reconsideration that advocate: (1) Accelerating deadlines for certain

MSAs; (2) allowing carriers with operational networks in the 100

largest MSAs and the authority to provide local exchange service to

request portability in any MSA in the 100 largest MSAs beginning July

1, 1997, and requiring LECs to fulfill such requests on a specified

date six or more months in the future; (3) adding MSAs outside the

largest 100 MSAs to the initial deployment schedule; or (4) combining

the deadlines of consolidated MSAs. The current schedule is based on

the projected availability of switch software, and recognizes the

burden on carriers serving multiple regions and the fact that more

significant upgrades may be necessary for carriers operating in smaller

areas. Petitioners have not made a showing that the necessary software,

hardware, and other resources will be available earlier in areas

originally scheduled for later deployment, or will be available in

quantities sufficient to support deployment in additional areas,

particularly in areas outside the 100 largest MSAs. If such hardware

and software is not available for deployment early enough or in

sufficient quantities to support deployment in additional areas, then

accelerating deployment deadlines for smaller MSAs may divert these

limited resources from deployment in other, larger MSAs, and thus delay

deployment of number portability where a greater population might

benefit from competition.

56. For the reasons stated above, the Commission also rejects

ACSI's request to require deployment in Phase I in certain additional

markets in which the incumbent LECs are not BOCs. In addition, the

Commission continues to believe that non-BOC incumbent LECs, most of

which have more limited resources than the BOCs, should have additional

time to upgrade and test their networks. Moreover, the Commission

[[Page 18290]]

concludes above that LECs need deploy number portability in the 100

largest MSAs only in switches for which another carrier has made a

specific request for the provision of portability. Requiring that

additional MSAs be deployed in Phase I does not give sufficient notice

to carriers or states to establish switch-requesting procedures in MSAs

for which they had no previous notice that deployment was required in

Phase I. The Commission also declines to adopt USTA's proposal that

state commissions be free to accelerate the deployment schedule. While

the Commission is sympathetic to the desires of some states to advance

deployment where actual competitive interest exists, it concludes that

the schedule adopted in the First Report & Order, as modified in this

First Reconsideration Order, represents a reasonable balancing of

competing interests, and carriers need to have certainty that these are

the requirements with which they must comply. The Commission's First

Report & Order was silent on the issue of whether states could

accelerate the deployment schedule. The Commission therefore

grandfathers any state decisions to accelerate deployment for a

particular market from one phase to an earlier phase that were adopted

prior to release of this First Reconsideration Order.

57. The Commission does not prohibit LECs from agreeing to

accelerate implementation, either for specific MSAs or specific

switches within MSAs. The Commission finds, however, that acceleration

of the schedule is more properly determined by private agreements among

carriers. Competitive LECs are free to negotiate with incumbent LECs

for deployment of number portability ahead of the Commission's

schedule. Moreover, to the extent that carriers agree to ``swap'' the

implementation deadlines for specific MSAs or switches within MSAs,

they can jointly file specific waiver petitions to do so.

58. The Commission grants in part the petitions of ACSI, KMC, and

NEXTLINK to allow requests for deployment of number portability in

areas outside the 100 largest MSAs to be submitted earlier than January

1, 1999. The Commission therefore modifies its rules to permit carriers

to submit requests for deployment of number portability in areas

outside the 100 largest MSAs at any time. The Commission declines,

however, to require that deployment be completed within six months of

request for requests filed prior to January 1, 1999. This modification

to the rules will benefit all parties, because receiving earlier notice

to upgrade switches will likely ease a LEC's compliance burden and help

to ensure that competing carriers will receive portability within the

time requested. Finally, the Commission clarifies that, contrary to KMC

and ACSI's view, the current schedule does not leave an implementation

gap between December 31, 1998, and July 1, 1999, since implementation

of requests for deployment of number portability in areas outside the

100 largest MSAs filed on or before January 1, 1999, will occur during

the first six months of 1999. KMC and ACSI's suggestion that the

Commission permit requests for markets outside the 100 largest MSAs

beginning July 1, 1998, and require fulfillment of those requests

within six months, would actually require that those smaller markets be

completed at the same time as the MSAs in the last phase of the

deployment schedule, thus sharply increasing the burden on carriers

during that phase.

Exemptions for Rural and/or Smaller LECs

59. Discussion. As set forth above, the Commission grants the

petitions to limit deployment of portability to those switches for

which a competitor has expressed interest in deployment by concluding

that LECs need only provide number portability within the 100 largest

MSAs in switches for which another carrier has made a specific request

for the provision of portability. The Commission finds that this

modification to the rules should address the concerns of parties that

urge it to waive number portability requirements for rural and/or

smaller LECs serving areas in the largest 100 MSAs until receipt of a

request.

60. The Commission denies the petitions that request a blanket

waiver of the number portability requirements for rural and/or smaller

LECs that receive a request for deployment in one of their switches.

The Commission finds that such a blanket waiver is unnecessary and may

hamper the development of competition in areas served by smaller and

rural LECs that competing carriers want to enter. If, as petitioners

allege, competition is not imminent in the areas covered by rural/

smaller LEC switches, then the rural or smaller LEC will not receive

requests from competing carriers to implement portability, and thus

will not need to expend its resources, until competition actually

develops in its service area. In addition, by that time extensive non-

carrier-specific testing will likely have been done, and carriers'

testing costs will likely be smaller.

61. Further, to the extent that portability is requested in a rural

or smaller LEC's switch, and that LEC has difficulty complying with the

request, it has two avenues for relief. Pursuant to the First Report &

Order, a LEC may apply for an extension of time on the basis of

extraordinary circumstances beyond its control that prevent it from

complying with the Commission's deployment schedule. In addition, under

section 251(f)(2), a LEC with fewer than two percent of the nation's

subscriber lines installed in the aggregate nationwide (an ``eligible

LEC'') may petition the appropriate state commission for suspension or

modification of the requirements of section 251(b). The state

commission shall grant such petition to the extent that, and for as

long as, the state commission determines that such suspension or

modification: (A) Is necessary to avoid a significant adverse economic

impact on end users, to avoid imposing an unduly economically

burdensome requirement, or to avoid imposing a technically infeasible

requirement; and (B) is consistent with the public interest,

convenience and necessity. 47 U.S.C. 251(f)(2). The state commission is

required to act on the petition within 180 days. 47 U.S.C. 251(f)(2).

The Commission believes eligible LECs will have sufficient time to

obtain any appropriate section 251(f)(2) relief as provided by the

statute, especially since the state commission can suspend the

application of the deployment deadlines to that LEC while it is

considering the LEC's petition for suspension or modification of the

requirements. Section 251(f)(2) provides that ``[t]he State commission

shall act upon any petition filed under (section 251(f)(2)) within 180

days after receiving such petition. Pending such action, the State

commission may suspend enforcement of the requirement or requirements

to which the petition applies with respect to the petitioning carrier

or carriers.'' 47 U.S.C. 251(f)(2).

62. If, however, a competitor is interested in number portability

in a particular switch operated by a rural or smaller LEC, and the LEC

cannot demonstrate extraordinary circumstances justifying an extension

of the deployment requirements, and the state commission denies a

Section 251(f)(2) request for suspension or modification, the

Commission finds no statutory basis for excusing such a LEC from its

obligations to provide number portability. In addition, issuance of a

blanket exemption in this proceeding would be inconsistent with the

Local Competition Order, 61 FR 45476

[[Page 18291]]

(August 29, 1996), in which the Commission generally declined to adopt

national rules regarding Section 251(f), or provide for different

treatment of rural and smaller carriers. Rather, Congress established a

specific procedure under which state commissions are empowered to make

case-by-case decisions on the application of number portability

requirements to eligible LECs pursuant to Section 251(f)(2), based on

the particular facts and circumstances presented. Eligible LECs that

have been granted suspension or modification of number portability

requirements under Section 251(f)(2) are not bound by the

implementation schedule until the state commission removes the

suspension.

63. The comments of some parties in this proceeding appear to

reflect a misapprehension of the scope of section 251(f). Sections

251(f)(1) and 251(f)(2) apply to different classes of carriers, and

provide different types of relief. Section 251(f)(1) applies only to

rural LECs, and offers an exemption only from the requirements of

section 251(c). In contrast, section 251(f)(2) applies to all LECs with

less than two percent of the nation's subscriber lines. In addition,

section 251(f)(2) establishes a procedure for requesting suspension or

modification of the requirements of sections 251(b) and 251(c). Number

portability is an obligation imposed by section 251(b). Because section

251(f)(1) does not exempt rural LECs from the requirements of section

251(b), there is no exemption for rural LECs of their number

portability obligations under section 251(f)(1). The only statutory

avenue for relief from the section 251(b) requirements specifically for

eligible LECs is to request suspension or modification of the number

portability requirements under the procedure established by section

251(f)(2).

64. The plain text of the statute refutes JSI's argument that

section 251(f)(1) exempts rural LECs from number portability

requirements. JSI states that the section 251(f)(1) exemption from

interconnection requirements permits the Commission to impose number

portability requirements upon rural LECs only to the extent it is

technically feasible for rural LECs to provide portability without

having to upgrade their networks to utilize databases, install SS7 or

AIN capabilities, or install and furnish functions requiring new

switching software. JSI adds that this exemption may be terminated only

by a state commission.

65. Because sections 251(b) and 251(c) are separate statutory

mandates, the requirements of section 251(b) apply to a rural LEC even

if section 251(f)(1) exempts such LECs from a concurrent section 251(c)

requirement. To interpret section 251(f)(1) otherwise would undercut

section 251(b) and, in this case, would effectively preclude any

provision of long-term number portability by rural LECs until

termination of the section 251(f)(1) exemption by a state commission.

The Commission finds such an interpretation to be contrary to

Congress's mandate that all LECs provide number portability, and

Congress's exclusion of the section 251(b) obligations, including the

duty to provide number portability, from the section 251(f)(1)

exemption for rural LECs.

66. Moreover, under JSI's interpretation, the only carriers that

would have to provide number portability would be incumbent LECs that

are not exempt under section 251(f)(1). Non-incumbent LECs, as well as

rural incumbent LECs that are exempt under section 251(f)(1), would not

have to satisfy the requirements of section 251(b) and, consequently,

would not have to provide number portability. This directly contradicts

section 251(b)(2), which specifically requires ``all local exchange

carriers'' to provide number portability. 47 U.S.C. 251(b)(2). Section

251(c) sets forth ``additional obligations'' that apply only to

incumbent LECs, whereas section 251(b) sets forth obligations that

apply to all LECs.

67. Even if the Commission were to agree with JSI's statutory

interpretation that rural LECs that are exempt from the section 251(c)

requirements are also exempt from any requirements of sections 251 (b)

and (c) that overlap, petitioners have not demonstrated that the

section 251 (b) and (c) obligations in fact overlap. To provide long-

term number portability under section 251(b)(2), LECs obviously must

install and use any necessary databases, SS7 or AIN capabilities, or

switching software. Section 251(c), in contrast, requires incumbent

LECs to provide unbundled access to network elements, including call-

related databases. See 47 U.S.C. 251(c)(3). Number portability does not

require any provision of unbundled access to these elements. Moreover,

to provide number portability, carriers can interconnect either

directly or indirectly as required under section 251(a)(1). See 47

U.S.C. 251(a)(1). For example, a smaller rural carrier and a competing

carrier might interconnect indirectly by both establishing direct

connections with a third carrier and routing calls to each other

through that third carrier. The smaller rural carrier could then

provide portability by performing its own database queries and then

routing the call to the competing carrier through that third carrier.

Another option would be for the smaller rural LEC to contract with that

third carrier to perform its queries and the necessary routing. Section

251(c), in contrast, imposes an additional requirement on incumbent

LECs to provide ``equal'' interconnection at ``any technically feasible

point within the carrier's network,'' which a carrier does not need to

provide number portability. See 47 U.S.C. 251(c)(2). Thus, sections

251(a) and (b), not section 251(c), require that carriers interconnect

and install and use necessary network elements to provide number

portability. Rural LECs are not exempt from section 251(a) or (b)

requirements under section 251(f)(1). See 47 U.S.C. 251(f)(1). The

Commission therefore denies JSI and USTA's request to ``automatically

exempt'' rural LECs from the number portability requirements to the

extent that they are exempt from the requirements of section 251(c)

under the provisions of section 251(f)(1).

68. The Commission also denies the requests that it clarify that

smaller and/or rural LECs serving areas that only partially overlap one

of the 100 largest MSAs need not deploy number portability until

receipt of a bona fide request. The Commission believes that, when

determining whether a suspension or modification is necessary to avoid

imposing an unduly economically burdensome requirement, pursuant to

section 251(f)(2), state commissions would likely consider whether an

eligible LEC's presence in the MSA is truly de minimus and whether such

a LEC is entitled to a suspension or modification of the number

portability requirements on this basis.

69. Finally, NTCA/OPASTCO erroneously claims that the First Report

& Order violates the Regulatory Flexibility Act (RFA) because its Final

Regulatory Flexibility Analysis (FRFA) does not address the impact of

the rules on small incumbent LECs, and is, therefore, inconsistent with

the Local Competition Order. As the Commission stated in the First

Report & Order's FRFA, small incumbent LECs do not qualify as small

businesses because they are dominant in their field of operation. The

Local Competition Order's FRFA likewise set forth the Commission's view

that small incumbent LECs are not subject to regulatory flexibility

analyses because they are not small businesses due to their dominance

in their field of operation. The Commission in that proceeding

specifically stated that it

[[Page 18292]]

was including small incumbent LECs in its FRFA only because two parties

had especially questioned that conclusion in that proceeding's Initial

Regulatory Flexibility Analysis (IRFA), and it wanted to ``remove any

possible issue of RFA compliance.'' In contrast, no party commented on

the IRFA in this proceeding. The Commission attaches, nevertheless, a

Supplemental Final Regulatory Flexibility Analysis that further

explains its analysis of the rules' impact upon rural and smaller

carriers and the basis for selecting the particular options that the

Commission has selected. This analysis takes into account NTCA/

OPASTCO's specific claim raised in its petition for reconsideration, in

order to ``remove any possible issue of RFA compliance.'' The

Commission also notes that its establishment of a procedure whereby

number portability would only be deployed in requested switches

effectively grants the relief sought by NTCA/OPASTCO, the sole

petitioner on this issue.

Implementation Requirements for Intermediate (N-1) Carriers

70. Discussion. The Commission denies Pacific's request that it

require all N-1 carriers, including interexchange carriers, to meet the

implementation schedule the Commission established for LECs. Such a

requirement is not mandated by the 1996 Act, which subjects only LECs,

not interexchange carriers engaged in the provision of interexchange

service, to the number portability requirements. 47 U.S.C. 251(b)(2).

Moreover, petitioners have not demonstrated a need for the Commission

to impose such requirements under its independent rulemaking authority

under sections 1, 2, and 4(i) of the Communications Act of 1934, as

amended. 47 U.S.C. 151, 152, 154(i). In that regard, the Commission is

not convinced that Pacific's hypothetical situation, whereby the N-1

carrier would not perform any queries and the original terminating LEC

would thus have to perform all the queries not performed by the

originating LEC, will arise often. The industry already appears to

favor using the N-1 scenario, under which the N-1 carrier performs the

database query, as indicated in the majority of comments on call

processing scenario issues received pursuant to the original Notice of

Proposed Rulemaking. The vast majority of interLATA calls are routed

through the major interexchange carriers, and the two largest

interexchange carriers, at least, claim they plan to deploy portability

as soon as possible. Therefore, most interLATA calls will be queried by

the major interexchange carriers, not the incumbent LECs. Moreover, as

the Commission stated in the First Report & Order, it wishes to allow

carriers the flexibility to choose and negotiate among themselves which

carrier shall perform the database query, according to what best suits

their individual networks and business plans. Finally, the Commission

declines to address Pacific's argument that, if the terminating carrier

is forced to perform queries, that would violate the fourth performance

criterion. Since the Commission is eliminating the fourth performance

criterion, Pacific's argument is moot.

71. The Commission clarifies, however, per NYNEX's request, that if

an N-1 carrier is designated to perform the query, and that N-1 carrier

requires the original terminating LEC to perform the query, then the

LEC may charge the N-1 carrier for performing the query, pursuant to

guidelines the Commission will establish in the order addressing long-

term number portability cost allocation and recovery.

Implementation Schedule for Wireless Carriers

72. Background. In the First Report & Order, the Commission

required all cellular, broadband PCS, and covered SMR carriers to have

the capability of querying the appropriate number portability database

systems in order to deliver calls from their networks to ported numbers

anywhere in the country by December 31, 1998. The term ``covered SMR''

means either 800 MHz or 900 MHz SMR licensees that hold geographic area

licenses or incumbent wide area SMR licensees that offer real-time,

two-way switched voice service that is interconnected with the public

switched network, either on a stand-alone basis or packaged with other

telecommunications services. This term does not include local SMR

licensees offering mainly dispatch services to specialized customers in

a non-cellular system configuration, licensees offering only data, one-

way, or stored voice services on an interconnected basis, or any SMR

provider that is not interconnected to the public switched network. 47

CFR 52.1(c). The Commission notes that several parties have petitioned

for reconsideration of the definition of ``covered SMR.'' The

Commission will address this issue in a subsequent order. These

wireless carriers may implement the upgrades necessary to accomplish

the queries themselves, or they may make arrangements with other

carriers to provide that capability. In addition, wireless carriers

subject to these rules are required to offer service provider

portability throughout their networks, including the ability to support

roaming, by June 30, 1999. In the First Report & Order, the Commission

delegated authority to the Chief, Wireless Telecommunications Bureau,

to waive or stay any of the dates in the implementation schedule for a

period not to exceed nine months, and to establish reporting

requirements in order to monitor the progress of wireless carriers. 47

CFR 52.11 (c), (e). In the event a carrier subject to these

requirements is unable to meet the Commission's deadlines for

implementing a long-term number portability method, it must file a

petition to extend the time by which implementation must be completed

with the Commission at least 60 days in advance of the deadline, along

with an explanation of the circumstances and the need for such an

extension. 47 CFR 52.11(d).

73. Discussion. The Commission declines at this time to alter the

implementation schedule imposed by the First Report & Order for

wireless carriers. The Commission recognizes that the wireless industry

has lagged behind the wireline industry in developing a method for

providing number portability, and that the wireless industry faces

special technical challenges in doing so. Nonetheless, the Commission

finds that the schedule for implementation of number portability by

cellular, broadband PCS, and covered SMR providers is reasonable and

takes into account the current stage of development for wireless number

portability. The Commission finds that a period of nearly two years is

sufficient for wireless carriers either to implement the upgrades

necessary to perform the database queries themselves, or to make

arrangements with other carriers to provide that capability. The

Commission also believes it is reasonable to expect wireless carriers

to implement long-term service provider portability, including roaming,

in their networks in a period of more than two years. The Commission

continues to believe the monitoring and reporting mechanism established

in the First Report & Order will ensure that wireless carriers will

continue to work together to find solutions to technical problems

associated with number portability, and to address quickly any

implementation issues which may arise. As the Commission provided in

the First Report & Order, in the event a wireless carrier is unable to

meet the Commission's deadlines for implementing a long-term number

[[Page 18293]]

portability method, it may file a request for extension with the

Commission. If it becomes apparent that the wireless industry is not

progressing as quickly as necessary to meet the deadlines for providing

querying capability and service provider portability, the Wireless

Telecommunications Bureau Chief may waive or stay the implementation

dates for a period of up to nine months. The Commission finds that

enough flexibility has been incorporated into the implementation

schedule for wireless carriers, and that no modification is needed.

74. The Commission also declines to establish target dates in lieu

of actual deadlines or to defer imposing number portability

requirements on wireless carriers, as some petitioners have suggested.

As the Commission stated in the First Report & Order, requiring

cellular, broadband PCS, and covered SMR providers to provide number

portability is in the public interest because these entities are

expected to compete in the local exchange market, and number

portability will enhance competition among wireless service providers,

as well as between wireless service providers and wireline service

providers. Service provider portability offered by wireless service

providers will enable customers to switch carriers more readily and

encourage the successful entry of new service providers into wireless

markets. Removing barriers, such as the requirement that customers must

change phone numbers when changing providers, is likely to foster the

development of new services and create incentives for carriers to lower

prices and costs. In light of these positive competitive results that

are likely to be produced, the Commission continues to believe that

number portability should be provided by wireless carriers with as

little delay as possible. Setting specific deadlines, rather than

amorphous ``target dates,'' is consistent with this goal.

75. In response to requests by CTIA and BANM, the Commission agrees

that some clarification of the requirements under the schedule is

necessary. Contrary to the petitioners' claims, the schedule for CMRS

providers is not stricter than the schedule for wireline service

providers. Some carriers apparently misunderstood the First Report &

Order to require wireless providers to provide number portability in

areas outside the largest 100 MSAs, even if number portability is not

requested in those areas. The Commission requires cellular, broadband

PCS, and covered SMR providers to have the capability to query the

number portability databases nationwide, or arrange with other carriers

to perform the queries, by December 31, 1998, in order to route calls

from wireless customers to customers who have ported their numbers. The

Commission clarifies that, by June 30, 1999, CMRS providers must (1)

offer service provider portability in the 100 largest MSAs, and (2) be

able to support nationwide roaming. Although the Commission has not

provided a specific phased deployment schedule for CMRS providers as it

has for wireline carriers, the Commission expects that CMRS providers

will phase in implementation in selected switches over a number of

months prior to the June 30, 1999, deadline for deployment.

76. In addition, consistent with the modification to the wireline

schedule deployment requirements, CMRS carriers need only deploy local

number portability by this deadline in the 100 largest MSAs in which

they have received a specific request at least nine months before the

deadline (i.e., a request has been received by September 30, 1998). As

in the wireline context, any wireline carrier that is certified, or has

applied for certification, to provide local exchange service in the

relevant state, or any licensed CMRS provider, must be allowed to make

a request for deployment; and cellular, broadband PCS, and covered SMR

providers must make available lists of their switches for which

deployment has and has not been requested. Additional switches within

the 100 largest MSAs (i.e., those that are not requested initially)

must be deployed upon request, after the June 30, 1999, deadline for

wireless carriers, within the same time frames that the Commission

adopts here for wireline carriers, unless requesting carriers specify a

later date. The time frames for deployment of additional wireless

switches are as follows: (1) Equipped Remote Switches within 30 days;

(2) Hardware Capable Switches within 60 days; (3) Capable Switches

Requiring Hardware within 180 days; and (4) Non-Capable Switches within

180 days. As in the wireline context, carriers may submit requests for

deployment of number portability in areas outside the 100 largest MSAs

at any time. CMRS providers must provide number portability in those

smaller areas within six months after receiving a request or within six

months after June 30, 1999, whichever is later. As a result, the

schedule for wireless providers is comparable to the one for wireline

carriers in terms of timing.

77. The Commission adds one further requirement for any procedures

that limit deployment in such fashion to requested wireless switches.

The existing state procedures for limiting deployment of number

portability capabilities within one of the 100 largest MSAs to

requested wireline switches generally appear to require carriers to

specify which switches located within the MSA the carrier wishes to be

deployed. The Commission does not wish to disturb a number of state

decisions concluding that it is preferable to limit the selection of

wireline switches for deployment to switches located within the MSA

rather than switches serving subscribers within the MSA. The Commission

recognizes, however, that the wireless switches that provide service to

areas within a particular MSA are more likely to be located outside the

perimeter of that MSA than the wireline switches that provide service

to areas within the MSA. The Commission concludes, therefore, that,

when limiting deployment within one of the 100 largest MSAs to

particular requested wireless switches, carriers must be able to

request deployment in any wireless switch that provides service to any

area within that MSA, even if the wireless switch is located outside of

the perimeter of that MSA, or outside any of the 100 largest MSAs.

78. By June 30, 1999, the Commission expects that regional or

statewide local number portability databases containing both wireless

and wireline numbers will be widely available; therefore, the

Commission does not anticipate a need to condition the requirement that

number portability be required on request after June 30, 1999, upon the

existence of regional or statewide databases. If there is a delay in

the development of the databases, the Wireless Telecommunications

Bureau Chief has been delegated authority to waive or stay the deadline

for CMRS providers.

79. In its petition for reconsideration, BANM questions the

Commission's authority and its basis in the record for imposing number

portability obligations upon CMRS providers. Specifically, BANM claims

that the Commission has previously held that its regulatory authority

over CMRS providers is limited to instances in which there is a ``clear

cut need'' for doing so, and that regulation of number portability is

not clearly necessary in the CMRS market. BANM advanced essentially the

same argument previously in this proceeding, and its reconsideration

petition raises no new issues. Accordingly, the Commission affirms its

prior rejection of this argument. As the Commission stated in the First

Report & Order, the CT DPUC Petition does not limit its

[[Page 18294]]

authority to require CMRS providers to provide number portability to

other CMRS or wireline carriers because that proceeding was restricted

to the question of state authority to regulate rates of CMRS providers.

The CT DPUC Petition did not reach the question of the Commission's

authority to impose number portability requirements on CMRS providers.

The Commission affirms its determination that it has authority to

impose number portability obligations on CMRS providers based on the

findings that this requirement will result in pro-competitive effects,

and furthers its CMRS regulatory policy of establishing moderate,

symmetrical regulation of all services.

80. BANM has not introduced any new evidence or arguments that

cause the Commission to reconsider its conclusion in the First Report &

Order that provision of number portability by CMRS carriers is

important to competition. Previously in this proceeding, several PCS

providers attested to the importance of number portability in fostering

competition in the CMRS industry. The record in this proceeding

contains convincing evidence that service provider portability would

enhance competition between wireless service providers, as well as

between wireless and wireline service providers, by removing the

requirement that a customer must change numbers when changing service

providers. The Commission also rejects BANM's argument that it failed

to make a determination on the technical feasibility of wireless number

portability. The record in this proceeding supports the prior

conclusion that cellular, broadband PCS, and covered SMR providers will

be able to resolve any technical issues necessary to implement number

portability.

Deferral of Implementation Until Resolution of Cost Recovery Issues

81. Background. Section 251(e)(2) of the Act requires that the

costs of establishing number portability ``be borne by all

telecommunications carriers on a competitively neutral basis as

determined by the Commission.'' In conjunction with the First Report &

Order, the Commission adopted a Further Notice of Proposed Rulemaking

(Further NPRM) that seeks comment on appropriate cost recovery

mechanisms for long-term number portability. The Commission has not yet

issued the Second Report & Order addressing these issues, although it

intends to do so in the near future.

82. Discussion. The Commission is not persuaded by the requests of

U S West and JSI that LECs should be permitted to suspend ongoing

preparations to meet the deployment schedule until the Commission has

acted on the issues raised in the Further NPRM in this proceeding that

involve the LECs' recovery of their costs of providing number

portability. As stated above, the Commission plans to adopt a Second

Report & Order in this proceeding in the near future implementing the

statutory provision that expenses incurred as a result of number

portability be ``borne by all telecommunications carriers on a

competitively neutral basis.'' U S West appears to suggest that it

necessarily will be barred from assessing charges in the future that

are intended to recover costs that it incurs in connection with the

implementation of long-term number portability prior to its resolution

of the cost recovery issues posed in the Further NPRM. That speculative

assertion is unfounded. The Commission anticipates that the Second

Report & Order will be adopted well before a LEC is required by the

deployment schedule to commence the provision of long-term number

portability to the public in the Phase I markets. Moreover, the

Commission expects that LECs will maintain records of the costs that

they incur in implementing the requirements of the First Report & Order

in this proceeding. Those records will enable the LECs to comply with

the decisions the Commission reaches in the Second Report & Order with

respect to their recovery of long-term number portability costs. The

Act does not mandate that the Commission complete action on cost

recovery issues prior to the LECs' commencement of the planning and

other steps required to deploy long-term number portability consistent

with the schedule adopted in the First Report & Order. Indeed,

permitting carriers to suspend their ongoing preparations to meet the

deployment schedule for number portability until the Commission has

adopted specific cost recovery rules may be inconsistent with the

statutory mandate that carriers must provide number portability ``to

the extent technically feasible.''

83. The Commission also concludes that U S West has not described,

much less documented, the specific ``distorting effects'' on investment

decisions, the use of number portability facilities, and the

relationships among providers and between providers and their customers

that it claims will ensue from the Commission's brief deferral of long-

term number portability cost recovery issues. The Commission further

agrees with ALTS that U S West's constitutional claim is premature,

because it is impossible for any party to establish that a cost

recovery mechanism that has not yet been adopted is unconstitutional.

Finally, because the arguments advanced by JSI on behalf of rural

carriers with respect to these cost recovery issues repeat the points

asserted by U S West, the Commission reaches the same conclusions.

Ordering Clauses

84. Accordingly, it is ordered that, pursuant to the authority

contained in Sections 1, 4(i), 4(j), 201-205, 218, 251, and 332 of the

Communications Act as amended, 47 U.S.C. 151, 154(i), 154(j), 201-205,

218, 251, and 332, Part 52 of the Commission's rules, 47 CFR 52, is

amended as set forth in Appendix B hereto.

85. It is further ordered that the Petitions for Reconsideration

and/or Clarification are granted to the extent indicated herein and

otherwise are denied.

86. It is further ordered that the policies, rules, and

requirements set forth herein are adopted, effective May 15, 1997,

except for collections of information subject to approval by the Office

of Management and Budget (OMB), which are effective September 12, 1997.

87. It is further ordered that the Motion to Accept Late-Filed

Comments of Telecommunications Resellers Association and the Motion to

Accept Late-Filed Reply Comments of U S West are granted.

Federal Communications Commission

William F. Caton,

Acting Secretary.

Rule Changes

Part 52 of Title 47 of the Code of Federal Regulations is amended

as follows:

PART 52--NUMBERING

1. Section 52.23 is amended by revising paragraphs (a)(4) through

(a)(8), removing paragraph (a)(9), and revising paragraphs (b) and (g)

to read as follows:

Sec. 52.23 Deployment of long-term database methods for number

portability by LECs.

(a) * * *

(4) Does not result in unreasonable degradation in service quality

or network reliability when implemented;

(5) Does not result in any degradation in service quality or

network reliability when customers switch carriers;

(6) Does not result in a carrier having a proprietary interest;

[[Page 18295]]

(7) Is able to migrate to location and service portability; and

(8) Has no significant adverse impact outside the areas where

number portability is deployed.

(b) (1) All LECs must provide a long-term database method for

number portability in the 100 largest Metropolitan Statistical Areas

(MSAs) by December 31, 1998, in accordance with the deployment schedule

set forth in the Appendix to this part, in switches for which another

carrier has made a specific request for the provision of number

portability, subject to paragraph (b)(2) of this section.

(2) Any procedure to identify and request switches for deployment

of number portability must comply with the following criteria:

(i) Any wireline carrier that is certified (or has applied for

certification) to provide local exchange service in a state, or any

licensed CMRS provider, must be permitted to make a request for

deployment of number portability in that state;

(ii) Carriers must submit requests for deployment at least nine

months before the deployment deadline for the MSA;

(iii) A LEC must make available upon request to any interested

parties a list of its switches for which number portability has been

requested and a list of its switches for which number portability has

not been requested; and

(iv) After the deadline for deployment of number portability in an

MSA in the 100 largest MSAs, according to the deployment schedule set

forth in the Appendix to this part, a LEC must deploy number

portability in that MSA in additional switches upon request within the

following time frames:

(A) For remote switches supported by a host switch equipped for

portability (``Equipped Remote Switches''), within 30 days;

(B) For switches that require software but not hardware changes to

provide portability (``Hardware Capable Switches''), within 60 days;

(C) For switches that require hardware changes to provide

portability (``Capable Switches Requiring Hardware''), within 180 days;

and

(D) For switches not capable of portability that must be replaced

(``Non-Capable Switches''), within 180 days.

* * * * *

(g) Carriers that are members of the Illinois Local Number

Portability Workshop must conduct a field test of any technically

feasible long-term database method for number portability in the

Chicago, Illinois, area. The carriers participating in the test must

jointly file with the Common Carrier Bureau a report of their findings

within 30 days following completion of the test. The Chief, Common

Carrier Bureau, shall monitor developments during the field test, and

may adjust the field test completion deadline as necessary.

2. Section 52.31 is amended by revising paragraph (a) to read as

follows:

Sec. 52.31 Deployment of long-term database methods for number

portability by CMRS Providers.

(a) By June 30, 1999, all cellular, broadband PCS, and covered SMR

providers must provide a long-term database method for number

portability, in the MSAs identified in the Appendix to this part in

compliance with the performance criteria set forth in Sec. 52.23(a), in

switches for which another carrier has made a specific request for the

provision of number portability, subject to paragraph (a)(1) of this

section.

(1) Any procedure to identify and request switches for deployment

of number portability must comply with the following criteria:

(i) Any wireline carrier that is certified (or has applied for

certification) to provide local exchange service in a state, or any

licensed CMRS provider, must be permitted to make a request for

deployment of number portability in that state;

(ii) For the MSAs identified in the Appendix to this part, carriers

must submit requests for deployment by September 30, 1998;

(iii) A cellular, broadband PCS, or covered SMR provider must make

available upon request to any interested parties a list of its switches

for which number portability has been requested and a list of its

switches for which number portability has not been requested;

(iv) After June 30, 1999, a cellular, broadband PCS, or covered SMR

provider must deploy additional switches serving the MSAs identified in

the Appendix to this part upon request within the following time

frames:

(A) For remote switches supported by a host switch equipped for

portability (``Equipped Remote Switches''), within 30 days;

(B) For switches that require software but not hardware changes to

provide portability (``Hardware Capable Switches''), within 60 days;

(C) For switches that require hardware changes to provide

portability (``Capable Switches Requiring Hardware''), within 180 days;

and

(D) For switches not capable of portability that must be replaced

(``Non-Capable Switches''), within 180 days.

(v) Carriers must be able to request deployment in any wireless

switch that serves any area within that MSA, even if the wireless

switch is outside that MSA, or outside any of the MSAs identified in

the Appendix to this part.

(2) By June 30, 1999, all cellular, broadband PCS, and covered SMR

providers must be able to support roaming nationwide.

* * * * *

3. The Appendix to part 52 is revised to read as follows:

Appendix to Part 52--Deployment Schedule for Long-Term Database

Methods for Local Number Portability

Implementation must be completed by the carriers in the relevant

MSAs during the periods specified below:

Phase I--10/1/97-3/31/98

Chicago, IL................................................... 3

Philadelphia, PA.............................................. 4

Atlanta, GA................................................... 8

New York, NY.................................................. 2

Los Angeles, CA............................................... 1

Houston, TX................................................... 7

Minneapolis, MN............................................... 12

Phase II--1/1/98-5/15/98

Detroit, MI................................................... 6

Cleveland, OH................................................. 20

Washington, DC................................................ 5

Baltimore, MD................................................. 18

Miami, FL..................................................... 24

Fort Lauderdale, FL........................................... 39

Orlando, FL................................................... 40

Cincinnati, OH................................................ 30

Tampa, FL..................................................... 23

Boston, MA.................................................... 9

Riverside, CA................................................. 10

San Diego, CA................................................. 14

Dallas, TX.................................................... 11

St. Louis, MO................................................. 16

Phoenix, AZ................................................... 17

Seattle, WA................................................... 22

Phase III--4/1/98-6/30/98

Indianapolis, IN.............................................. 34

Milwaukee, WI................................................. 35

Columbus, OH.................................................. 38

Pittsburgh, PA................................................ 19

Newark, NJ.................................................... 25

Norfolk, VA................................................... 32

New Orleans, LA............................................... 41

Charlotte, NC................................................. 43

Greensboro, NC................................................ 48

Nashville, TN................................................. 51

Las Vegas, NV................................................. 50

Nassau, NY.................................................... 13

Buffalo, NY................................................... 44

Orange Co, CA................................................. 15

Oakland, CA................................................... 21

San Francisco, CA............................................. 29

Rochester, NY................................................. 49

Kansas City, KS............................................... 28

Fort Worth, TX................................................ 33

Hartford, CT.................................................. 46

Denver, CO.................................................... 26

Portland, OR.................................................. 27

Phase IV--7/1/98-9/30/98

Grand Rapids, MI.............................................. 56

Dayton, OH.................................................... 61

Akron, OH..................................................... 73

Gary, IN...................................................... 80

Bergen, NJ.................................................... 42

[[Page 18296]]

Middlesex, NJ................................................. 52

Monmouth, NJ.................................................. 54

Richmond, VA.................................................. 63

Memphis, TN................................................... 53

Louisville, KY................................................ 57

Jacksonville, FL.............................................. 58

Raleigh, NC................................................... 59

West Palm Beach, FL........................................... 62

Greenville, SC................................................ 66

Honolulu, HI.................................................. 65

Providence, RI................................................ 47

Albany, NY.................................................... 64

San Jose, CA.................................................. 31

Sacramento, CA................................................ 36

Fresno, CA.................................................... 68

San Antonio, TX............................................... 37

Oklahoma City, OK............................................. 55

Austin, TX.................................................... 60

Salt Lake City, UT............................................ 45

Tucson, AZ.................................................... 71

Phase V--10/1/98-12/31/98

Toledo, OH.................................................... 81

Youngstown, OH................................................ 85

Ann Arbor, MI................................................. 95

Fort Wayne, IN................................................ 100

Scranton, PA.................................................. 78

Allentown, PA................................................. 82

Harrisburg, PA................................................ 83

Jersey City, NJ............................................... 88

Wilmington, DE................................................ 89

Birmingham, AL................................................ 67

Knoxville, KY................................................. 79

Baton Rouge, LA............................................... 87

Charleston, SC................................................ 92

Sarasota, FL.................................................. 93

Mobile, AL.................................................... 96

Columbia, SC.................................................. 98

Tulsa, OK..................................................... 70

Syracuse, NY.................................................. 69

Springfield, MA............................................... 86

Ventura, CA................................................... 72

Bakersfield, CA............................................... 84

Stockton, CA.................................................. 94

Vallejo, CA................................................... 99

El Paso, TX................................................... 74

Little Rock, AR............................................... 90

Wichita, KS................................................... 97

New Haven, CT................................................. 91

Omaha, NE..................................................... 75

Albuquerque, NM............................................... 76

Tacoma, WA.................................................... 77

Supplemental Final Regulatory Flexibility Analysis

1. As required by section 603 of the Regulatory Flexibility Act

(RFA), 5 U.S.C. 603, an Initial Regulatory Flexibility Analysis

(IRFA) was incorporated in the Notice of Proposed Rulemaking (NPRM).

The Commission sought written public comment on the proposals in the

NPRM. In addition, pursuant to section 603, a Final Regulatory

Flexibility Analysis (FRFA) was incorporated in the First Report &

Order. That FRFA conformed to the RFA, as amended by the Small

Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) 5

U.S.C. 601 et seq. The SBREFA is title II of the Contract With

America Advancement Act of 1996 (CWAAA), Public Law 104-121, 110

Stat. 847 (1996). The Supplemental Final Regulatory Flexibility

Analysis in this First Memorandum Opinion and Order on

Reconsideration (First Reconsideration Order) (Supplemental FRFA)

also conforms to the RFA.

A. Need for and Objectives of this First Reconsideration Order and

the Rules Adopted Herein

2. The need for and objectives of the rules adopted in this

First Reconsideration Order are the same as those discussed in the

FRFA in the First Report & Order. In general, the rules implement

the statutory requirement that all LECs provide telephone number

portability when technically feasible. In this First Reconsideration

Order, the Commission grants in part and denies in part several of

the petitions filed for reconsideration and/or clarification of the

First Report & Order, in order to further the same needs and

objectives. First, the Commission concludes that QOR is not an

acceptable long-term number portability method. Second, the

Commission extends the implementation schedule for wireline

carriers, clarifies the requirements imposed thereunder, and

addresses issues raised by rural LECs and certain other parties. The

Commission concludes that LECs need only provide number portability

within the 100 largest MSAs in switches for which another carrier

has made a specific request for the provision of portability.

Finally, the Commission affirms and clarifies the implementation

schedule for wireless carriers.

B. Analysis of Significant Issues Raised in Response to the FRFA

3. Summary of the FRFA. In the FRFA, the Commission concluded

that incumbent LECs do not qualify as small businesses because they

are dominant in their field of operation, and, accordingly, the

Commission did not address the impact of the rules on incumbent

LECs. The Commission noted that the RFA generally defines the term

``small business'' as having the same meaning as the term ``small

business concern'' under the Small Business Act. 15 U.S.C. 632. A

small business concern is one that (1) is independently owned and

operated; (2) is not dominant in its field of operation; and (3)

satisfies any additional criteria established by the Small Business

Administration (SBA). 15 U.S.C. 632. According to the SBA's

regulations, entities engaged in the provision of telephone service

may have a maximum of 1,500 employees in order to qualify as a small

business concern. 13 CFR 121.201. This standard also applies in

determining whether an entity is a small business for purposes of

the Regulatory Flexibility Act.

4. The Commission did recognize that these rules may have a

significant economic impact on a substantial number of small

businesses insofar as they apply to telecommunications carriers

other than incumbent LECs, including competitive LECs, as well as

cellular, broadband PCS, and covered SMR providers. Based upon data

contained in the most recent census and a report by the Commission's

Common Carrier Bureau, the Commission estimated that 2,100 carriers

could be affected. The Commission also discussed the reporting

requirements imposed by the First Report & Order.

5. Finally, the Commission discussed the steps it had taken to

minimize the impact on small entities, consistent with stated

objectives. The Commission concluded that the actions in the First

Report & Order would benefit small entities by facilitating their

entry into the local exchange market. The Commission found that the

record in this proceeding indicated that the lack of number

portability would deter entry by competitive providers of local

service because of the value customers place on retaining their

telephone numbers. These competitive providers, many of which may be

small entities, may find it easier to enter the market as a result

of number portability, which will eliminate this barrier to entry.

The Commission noted that, in general, it attempted to keep burdens

on local exchange carriers to a minimum. For example, the Commission

adopted a phased deployment schedule for implementation in the 100

largest MSAs, and then elsewhere upon a carrier's request; the

Commission conditioned the provision of currently available measures

upon request only; the Commission did not require cellular,

broadband PCS, and covered SMR providers, which may be small

businesses, to offer currently available number portability

measures; and it did not require paging and messaging service

providers, which may be small entities, to provide any number

portability.

1. Treatment of Small Incumbent LECs

6. Comments. NTCA/OPASTCO claims that the First Report & Order's

Final Regulatory Flexibility Analysis does not address the impact of

the rules on small incumbent LECs, and is thus inconsistent with the

Local Competition Order. NTCA/OPASTCO suggests that exempting rural

LECs from number portability requirements absent a bona fide request

would fulfill the Commission's responsibility under the Regulatory

Flexibility Act.

7. Discussion. 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 the Commission's

prior practice, they are excluded from the definition of ``small

entity'' and ``small business concerns.'' As the Commission stated

in the Local Competition Order, it has found incumbent LECs to be

``dominant in their field of operation'' since the early 1980's, and

that it consistently has certified under the RFA (5 U.S.C. 605(b))

that incumbent LECs are not subject to regulatory flexibility

analyses because they are not small businesses. The Commission has

made similar determinations in other areas. Accordingly, the use of

the terms ``small entities'' and ``small businesses'' does not

encompass small incumbent LECs. Although the Commission is not fully

persuaded on the basis of this record that the prior practice has

been incorrect, in light of the special concerns raised by NTCA/

OPASTCO in this proceeding, for regulatory flexibility analysis

purposes, the Commission will include small incumbent LECs in this

Supplemental FRFA and use the term ``small incumbent LECs'' to refer

to any incumbent LECs that arguably might be defined by SBA as

``small business concerns.'' Out of an abundance of caution,

therefore, the Commission will include small incumbent LECs in the

Supplemental FRFA in this First Reconsideration Order to remove any

possible issue of RFA compliance.

[[Page 18297]]

2. Other Issues

8. Although not in response to the FRFA, certain parties urge

the Commission to waive number portability requirements for rural

and/or smaller LECs serving areas in the largest 100 MSAs until

receipt of a bona fide request, or to grant an exemption from the

Commission's rules on the basis of rural and/or smaller LEC status.

The Commission discusses these issues above in the First

Reconsideration Order.

C. Description and Estimates of the Number of Small Entities

Affected by this First Reconsideration Order

9. For the purposes of this First Reconsideration Order, the RFA

defines a ``small business'' to be the same as a ``small business

concern'' under the Small Business Act, 15 U.S.C. 632, unless the

Commission has developed one or more definitions that are

appropriate to its activities. See 5 U.S.C. 601(3) (incorporating by

reference the definition of ``small business concern'' in 15 U.S.C.

632). Under the Small Business Act, a ``small business concern'' is

one that: (1) Is independently owned and operated; (2) is not

dominant in its field of operation; and (3) meets any additional

criteria established by the SBA. 15 U.S.C. 632. SBA has defined a

small business for Standard Industrial Classification (SIC)

categories 4812 (Radiotelephone Communications) and 4813 (Telephone

Communications, Except Radiotelephone) to be small entities with

fewer than 1,500 employees. The Commission first discusses generally

the total number of small telephone companies falling within both of

those SIC categories. Then, the Commission discusses the number of

small businesses within the two subcategories that may be affected

by these rules, and attempt to refine further those estimates to

correspond with the categories of telephone companies that are

commonly used under the rules.

10. Consistent with the prior practice, the Commission shall

continue to exclude small incumbent LECs from the definition of a

small entity for the purpose of this Supplemental FRFA.

Nevertheless, as mentioned above, the Commission includes small

incumbent LECs in this Supplemental FRFA. Accordingly, the use of

the terms ``small entities'' and ``small businesses'' does not

encompass ``small incumbent LECs.'' The Commission uses the term

``small incumbent LECs'' to refer to any incumbent LECs that

arguably might be defined by SBA as ``small business concerns.'' See

13 CFR Sec. 121.201 (SIC 4813).

11. Total Number of Telephone Companies Affected. Many of the

decisions and rules adopted herein may have a significant effect on

a substantial number of the 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 services, as defined therein, for at least one

year. This number contains a variety of different categories 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.'' 15 U.S.C. 632(a)(1). For

example, a PCS provider that is affiliated with an interexchange

carrier having more than 1,500 employees would not meet the

definition of a small business. The Commission believes that these

rules may affect certain subcategories within that estimate, i.e.,

wireline carriers and service providers, including local exchange

carriers and competitive access providers; and wireless carriers,

including cellular service carriers, broadband PCS licensees, and

SMR licensees. The Commission discusses those subcategories below in

further detail. The Commission believes, on the other hand, that

these rules will not affect certain subcategories within that

estimate, i.e., interexchange carriers, operator service providers,

pay telephone operators, mobile service carriers, and resellers,

and, moreover, will not affect small cable system operators.

12. Wireline Carriers and Service Providers. SBA has developed a

definition of small entities for telephone communications companies

other than radiotelephone (wireless) companies. The Census Bureau

reports that, there were 2,321 such telephone companies in operation

for at least one year at the end of 1992. According to SBA's

definition, a small business telephone company other than a

radiotelephone company is one employing fewer than 1,500 persons. 13

CFR 121.201. Standard Industrial Classification (SIC) Code 4812. All

but 26 of the 2,321 non-radiotelephone companies listed by the

Census Bureau were reported to have fewer than 1,000 employees.

Thus, even if all 26 of those companies had more than 1,500

employees, there would still be 2,295 non-radiotelephone companies

that might qualify as small entities or small incumbent LECs.

Although it seems certain that some of these carriers are not

independently owned and operated, the Commission is unable at this

time to estimate with greater precision the number of wireline

carriers and service providers that would qualify as small business

concerns under SBA's definition. Consequently, the Commission

estimates that there are fewer than 2,295 small entity telephone

communications companies other than radiotelephone companies that

may be affected by the decisions and rules adopted in this First

Reconsideration Order.

13. Local Exchange Carriers. Neither the Commission nor SBA has

developed a definition of small providers of local exchange services

(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 the Commission is

aware appears to be the data that the Commission collects annually

in connection with the Telecommunications Relay Service (TRS).

According to the Commission's most recent data, 1,347 companies

reported that they were engaged in the provision of local exchange

services. Although it seems certain that some of these carriers are

not independently owned and operated, or have more than 1,500

employees, the Commission is unable at this time to estimate with

greater precision the number of LECs that would qualify as small

business concerns under SBA's definition. Consequently, the

Commission estimates that there are fewer than 1,347 small incumbent

LECs that may be affected by the decisions and rules adopted in this

First Reconsideration Order.

14. 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 the Commission is aware appears

to be the data that the Commission collects annually in connection

with the TRS. According to the Commission's most recent data, 57

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, the Commission is 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, the Commission estimates that there are fewer than 57

small entity CAPs that may be affected by the decisions and rules

adopted in this First Reconsideration Order.

15. Wireless (Radiotelephone) Carriers. SBA has developed a

definition of small entities for radiotelephone (wireless)

companies. The Census Bureau 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. 13 CFR 121.201,

Standard Industrial Classification (SIC) Code 4812. 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 and operated. Although it seems

certain that some of these carriers are not independently owned and

operated, the Commission is 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, the Commission estimates that there are

fewer than 1,164 small entity radiotelephone companies that may be

affected by the decisions and rules adopted in this First

Reconsideration Order.

16. 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

[[Page 18298]]

companies other than radiotelephone (wireless) companies. The most

reliable source of information regarding the number of cellular

service carriers nationwide of which the Commission is aware appears

to be the data that the Commission collects annually in connection

with the TRS. According to the Commission's most recent data, 792

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, the Commission is 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, the Commission estimate that there are fewer than 792

small entity cellular service carriers that may be affected by the

decisions and rules adopted in this First Reconsideration Order.

17. Broadband PCS Licensees. The broadband PCS spectrum is

divided into six frequency blocks designated A through F, and the

Commission has held auctions for each block. The Commission defined

``small entity'' for Blocks C and F as an entity that has average

gross revenues of less than $40 million in the three previous

calendar years. For Block F, an additional classification for ``very

small business'' was added and is defined as an entity that,

together with their affiliates, has average gross revenues of not

more than $15 million for the preceding three calendar years. These

regulations defining ``small entity'' in the context of broadband

PCS auctions have been approved by the SBA. No small businesses

within the SBA-approved definition bid successfully for licenses in

Blocks A and B. There were 90 winning bidders that qualified as

small entities in the Block C auctions. A total of 93 small and very

small business bidders won approximately 40 percent of the 1,479

licenses for Blocks D, E, and F. However, licenses for blocks C

through F have not been awarded fully; therefore, there are few, if

any, small businesses currently providing PCS services. Based on

this information, the Commission concludes that the number of small

broadband PCS licensees will include the 90 winning C Block bidders

and the 93 qualifying bidders in the D, E, and F blocks, for a total

of 183 small PCS providers as defined by the SBA and the

Commission's auction rules.

18. SMR Licensees. Pursuant to 47 CFR 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 First Reconsideration 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. The Commission does 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. The Commission assumes,

for purposes of this Supplemental FRFA, that all of the extended

implementation authorizations may be held by small entities, which

may be affected by the decisions and rules adopted in this First

Reconsideration Order.

19. The Commission's auctions for geographic area licenses in

the 900 MHz SMR band concluded in April of 1996. There were 60

winning bidders who qualified as small entities in the 900 MHz

auction. Based on this information, the Commission concludes that

the number of geographic area SMR licensees affected by the rules

adopted in this First Reconsideration 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. There is no basis, moreover, on which to estimate 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, the Commission assumes, for purposes of this Supplemental

FRFA, that all of the licenses may be awarded to small entities who,

thus, may be affected by the decisions in this First Reconsideration

Order.

20. Cable System Operators. SBA has developed a definition of

small entities for cable and other pay television services, which

includes all such companies generating less than $11 million in

revenue annually. This definition includes cable systems operators,

closed circuit television services, direct broadcast satellite

services, multipoint distribution systems, satellite master antenna

systems and subscription television services. According to the

Census Bureau, there were 1,432 such cable and other pay television

services generating $11 million or less in annual receipts that were

in operation for at least one year at the end of 1992.

21. The Commission has developed its own definition of a small

cable system operator for the purposes of rate regulation. Under the

Commission's rules, a ``small cable company,'' is one serving fewer

than 400,000 subscribers nationwide. 47 CFR 76.901(e). Based on the

Commission's most recent information, the Commission estimates that

there were 1,439 cable operators that qualified as small cable

system operators at the end of 1995. Since then, some of those

companies may have grown to serve over 400,000 subscribers, and

others may have been involved in transactions that caused them to be

combined with other cable operators. Consequently, the Commission

estimates that there are fewer than 1,468 small entity cable system

operators that may be affected by the decisions and rules adopted in

this First Reconsideration Order.

22. The Communications Act also contains a definition of a small

cable system operator, which is ``a cable operator that, directly or

through an affiliate, serves in the aggregate fewer than 1 percent

of all subscribers in the United States and is not affiliated with

any entity or entities whose gross annual revenues in the aggregate

exceed $250,000,000.'' 47 U.S.C. 543(m)(2). There were 63,196,310

basic cable subscribers at the end of 1995, and 1,450 cable system

operators serving fewer than one percent (631,960) of subscribers.

Although it seems certain that some of these cable system operators

are affiliated with entities whose gross annual revenues exceed

$250,000,000, the Commission is unable at this time to estimate with

greater precision the number of cable system operators that would

qualify as small cable operators under the definition in the

Communications Act.

D. Summary Analysis of the Projected Reporting, Recordkeeping, and

Other Compliance Requirements and Steps Taken to Minimize the

Significant Economic Impact of this First Reconsideration Order on

Small Entities and Small Incumbent LECs, Including the Significant

Alternatives Considered and Rejected

23. Structure of the Analysis. In this Section of the

Supplemental FRFA, the Commission analyzes the projected reporting,

recordkeeping, and other compliance requirements that may apply to

small entities and small incumbent LECs as a result of this First

Reconsideration Order. See 5 U.S.C. 604(a)(4). As a part of this

discussion, the Commission mentions some of the types of skills that

will be needed to meet the new requirements. The Commission also

describes the steps taken to minimize the economic impact of its

decisions on small entities and small incumbent LECs, including the

significant alternatives considered and rejected. See 5 U.S.C.

604(a)(5).

24. The Commission provides this summary analysis to provide

context for the analysis in this Supplemental FRFA. To the extent

that any statement contained in this Supplemental FRFA is perceived

as creating ambiguity with respect to the rules or statements made

in the First Report & Order or preceding Sections of this First

Reconsideration Order, the rules and statements set forth in the

First Report & Order and those preceding Sections of this First

Reconsideration Order shall be controlling.

1. Implementation Schedule

25. Summary of Projected Reporting, Recordkeeping and Other

Compliance Requirements. In the First Report & Order, the Commission

required local exchange carriers operating in the 100 largest MSAs

to offer long-term service provider portability, according to a

phased deployment schedule commencing on October 1, 1997, and

concluding by December 31, 1998, set forth in appendix F of the

First Report & Order. In this First Reconsideration Order, the

Commission extends the end dates for Phase I of the deployment

schedule by three months, and for Phase II by 45 days. Thus,

deployment will now take place in Phase I from October 1, 1997,

through March 31,

[[Page 18299]]

1998, and in Phase II from January 1, 1998, through May 15, 1998.

The Commission also clarifies that LECs need only provide number

portability within the 100 largest MSAs in switches for which

another carrier has made a specific request for the provision of

portability. LECs must make available lists of their switches for

which deployment has and has not been requested. The parties

involved in such requests identifying preferred switches may need to

use legal, accounting, economic and/or engineering services.

26. Steps Taken to Minimize Significant Economic Impact on Small

Entities and Small Incumbent LECs, and Alternatives Considered. In

this First Reconsideration Order, the Commission lightens the

burdens on rural and smaller LECs by establishing a procedure

whereby, within as well as outside the 100 largest MSAs, portability

need only be implemented in the switches for which another carrier

has made a specific request for the provision of portability. If, as

petitioners allege, competition is not imminent in the areas covered

by rural/small LEC switches, then the rural or smaller LEC should

not receive requests from competing carriers to implement

portability, and thus need not expend its resources until

competition does develop. By that time, extensive non-carrier-

specific testing will likely have been done, and rural and small

LECs need not expend their resources on such testing. The Commission

notes that the majority of parties representing small or rural LECs

specified as the relief sought that the Commission only impose

implementation requirements where competing carriers have shown

interest in portability. Moreover, the Commission's extension of

Phases I and II of the deployment schedule may permit smaller LECs

to reduce their testing costs by allowing time for larger LECs to

test and resolve the problems of this new technology.

27. Indeed, in this First Reconsideration Order, the Commission

rejects several alternatives put forth by parties that might impose

greater burdens on small entities and small incumbent LECs. The

Commission rejects requests put forth by ACSI, KMC, ICG, NEXTLINK,

and ALTS to accelerate the deployment schedule for areas both within

and outside the 100 largest MSAs. The Commission also rejects the

procedures proposed by some parties that would require LECs to file

waiver requests for their specific switches if they believe there is

no competitive interest in those switches, instead of requiring LECs

to identify in which switches of other LECs they wish portability

capabilities. The suggested waiver procedures would burden the LEC

from whom portability is requested with preparing and filing the

petition for waiver. In addition, a competing carrier that opposes

the waiver petition would be burdened with challenging the waiver.

In contrast, under the procedure the Commission establishes, the

only reporting burden on requesting carriers is to identify and

request their preferred switches. Carriers from which portability is

being requested, which may be small incumbent LECs, only incur a

reporting burden if they wish to lessen their burdens further by

requesting more time in which to deploy portability. Finally, the

Commission clarifies that CMRS providers, like wireline providers,

need only provide portability in requested switches, both within and

outside the 100 largest MSAs.

2. Exemptions for Rural or Small LECs

28. Summary of Projected Reporting, Recordkeeping and Other

Compliance Requirements. Section 251(f)(2) provides that LECs with

fewer than two percent of the nation's subscriber lines may petition

a state commission for a suspension or modification of any

requirements of sections 251(b) and 251(c). Section 251(f)(2) is

available to all LECs, including competitive LECs, which may be

small entities. A small incumbent LEC or a competitive LEC, which

may be a small entity, seeking under 251(f)(2) to modify or suspend

the number portability requirements imposed by section 251(b)(2),

bears the burden of proving that the number portability requirements

would: (1) Create a significant adverse economic impact on

telecommunications users; (2) be unduly economically burdensome; or

(3) be technically infeasible. The parties involved in such a

proceeding may need to use legal, accounting, economic and/or

engineering services.

29. Steps Taken to Minimize Significant Economic Impact on Small

Entities and Small Incumbent LECs, and Alternatives Considered. As

explained above in the First Reconsideration Order, the Commission

considers it unnecessary to create a general exemption for all small

and/or rural LECs, as suggested by some parties. The Commission has

effectively granted the small and rural LEC petitioners' requests

that it waive number portability requirements for rural and/or small

LECs serving areas in the largest 100 MSAs until receipt of a bona

fide request, since the Commission now requires all competing

carriers specifically to request, of any LEC, the particular

switches in which they desire portability. To the extent that

portability is requested in a rural or small LEC's switch, and that

LEC has difficulty complying with the request, it may apply for an

extension of time on the basis of extraordinary circumstances beyond

its control that prevent it from complying with the Commission's

deployment schedule or, if eligible, it may petition the appropriate

state commission for suspension or modification of the requirements

of section 251(b). 47 U.S.C. 251(f)(2). The Commission's grant of

petitioners' requests to limit deployment to requested switches,

however, decreases the likelihood that smaller and rural LECs will

have to apply for extensions of time or file petitions under section

251(f)(2).

30. As the Commission stated in the Local Competition Order, the

determination whether a section 251(f)(2) suspension or modification

should be continued or granted lies primarily with the relevant

state commission. By largely leaving this determination to the

states, the Local Competition Order stated, the Commission's

decisions permit this fact-specific inquiry to be administered in a

manner that minimizes regulatory burdens and the economic impact on

small entities and small incumbent LECs. However, to minimize

further regulatory burdens and minimize the economic impact of the

Commission's decision, in the Local Competition Order the Commission

adopted several rules that may facilitate the efficient resolution

of such inquiries, provide guidance, and minimize uncertainty. In

the Local Competition Order, the Commission found that the rural LEC

or smaller LEC must prove to the state commission that the financial

harm shown to justify a suspension or modification would be greater

than the harm that might typically be expected as a result of

competition. Finally, the Commission concluded that section 251(f)

adequately provides for varying treatment for smaller or rural LECs

where such variances are justified. As a result, the Commission

stated, it expects that section 251(f) will significantly minimize

regulatory burdens and economic impacts from the rules adopted in

the First Report & Order and this First Reconsideration Order.

3. Reporting Requirements by the Chief, Wireless Telecommunications

Bureau, on Carriers' Progress

31. Summary of Projected Reporting, Recordkeeping and Other

Compliance Requirements. In the First Report & Order, the Commission

delegated authority to the Chief, Wireless Telecommunications

Bureau, to require reports from cellular, PCS, and covered SMR

providers in order to monitor the progress of these providers toward

implementing long-term number portability. These reporting

requirements were not defined in sufficient detail in the First

Report & Order to obtain approval from the Office of Management and

Budget. Separate approval will be requested when the specific

requirements are imposed by the Wireless Telecommunications Bureau.

32. Steps Taken to Minimize Significant Economic Impact on Small

Entities and Small Incumbent LECs, and Alternatives Considered.

Although no party to this proceeding suggested that changes to these

reporting requirements would affect small entities or small

incumbent LECs, several parties requested that the Chief, Wireless

Telecommunications Bureau, be given greater authority to act to

increase flexibility in the schedule. As explained above in this

First Reconsideration Order, the Commission lightens the burden on

smaller and rural wireless carriers by modifying these rules so that

CMRS providers, like wireline providers, need only provide

portability in requested switches, both within and outside the 100

largest MSAs. The Commission also declines at this time to alter

further the implementation schedule imposed by the First Report &

Order for wireless carriers because the Commission finds that enough

flexibility has been incorporated into the implementation schedule

for wireless carriers, and that no modification is needed.

E. Report to Congress

33. The Commission shall send a copy of this Supplemental FRFA,

along with this First Reconsideration Order, in a report to Congress

pursuant to the Small Business Regulatory Enforcement Fairness Act

of 1996, 5 U.S.C. 801(a)(1)(A). A copy of this Supplemental FRFA

will also be published in the Federal Register.

[FR Doc. 97-8483 Filed 4-14-97; 8:45 am]

BILLING CODE 6712-01-P