1998 Biennial Regulatory ReviewReview of ARMIS Reporting Requirements

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 43

[CC Docket 98-117; FCC 98-147]

1998 Biennial Regulatory Review--Review of ARMIS Reporting

Requirements

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission is required, in every even-numbered year

beginning in 1998, to review its regulations applicable to providers of

telecommunications service to determine whether the regulations are no

longer in the public interest due to meaningful economic competition

between providers of such service and whether such regulations should

be repealed or modified. In this Notice of Proposed Rulemaking

(``NPRM''), we propose as part of the biennial review to reduce the

reporting requirements of our Automated Reporting Management

Information System (``ARMIS''). These modifications are designed to

minimize the reporting burden on carriers, improve the quality and use

of the reported information and reduce the cost to the Commission of

collection, verification, and distribution of the data. This Notice

invites interested parties to comment on several modifications to the

ARMIS ten reports.

DATES: Comments are to be filed on or before August 20, 1998 and reply

comments are due on or before September 4, 1998. Written comments

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and reply comments by the public on the information collections are due

October 19, 1998.

ADDRESSES: Federal Communications Commission, Secretary, Room 222, 1919

M Street NW., Washington, D.C. 20554. In addition to filing comments

with the Commission's Secretary, a copy of any comments on the proposed

information collections contained herein should be submitted to Judy

Boley, Federal Communications Commission, Room 234, 1919 M Street, NW.,

Washington, DC 20554, or via the Internet to [email protected], and to

Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street, N.W.,

Washington, D.C. 20503, or via the Internet to [email protected].

FOR FURTHER INFORMATION CONTACT: Anthony Dale, Common Carrier Bureau,

Accounting Safeguards Division, (202) 418-2260, or via E-mail to

``[email protected]ov''. For additional information concerning information

collections, contact Judy Boley at (202) 418-0214, or via the Internet

at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice

of Proposed Rulemaking in the matter of 1998 Biennial Regulatory

Review--Review of ARMIS Reporting Requirements, CC Docket 98-117,

adopted July 6, 1998, and released July 17, 1998. The complete text of

this Notice of Proposed Rulemaking is available for inspection and

copying during normal business hours in the Commission's Reference

Center, Room 239, 1919 M Street, NW, Washington, DC. The NPRM is

available through the Internet at http://www.fcc.gov/Bureaus/

Common__Carrier/Notices/1998/fcc98147.wp. The complete text may be

purchased from the Commission's duplicating contractor, International

Transcription Service, Inc. (ITS, Inc.), at 1231 20th Street NW.,

Washington, DC 20036 (202-857-3800).

Paperwork Reduction Act

This NPRM contains proposed information collections. The

Commission, as part of its continuing effort to reduce paperwork

burdens, invites the general public and the Office of Management and

Budget (OMB) to comment on the information collections contained in

this notice, as required by the Paperwork Reduction Act of 1995, Public

Law 104-13. Public and agency comments are due at the same time as

other comments on this notice; OMB notification of action is due

October 19, 1998. Comments should address: (a) Whether the proposed

collection of information is necessary for the proper performance of

the functions of the Commission, including whether the information

shall have practical utility; (b) the accuracy of the Commission's

burden estimates; (c) ways to enhance the quality, utility, and clarity

of the information collected; and (d) ways to minimize the burden of

the collection of information on the respondents, including the use of

automated collection techniques or other forms of information

technology.

OMB Approval Number: None.

Title: 1998 Annual Biennial Review of ARMIS Reporting Requirements.

Form No.: FCC Reports 43-01 through 43-08 and FCC Reports 495A and

495B.

Type of Review: New collections.

Respondents: Business or other for profit.

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No. of Estimated time Total annual

Title respondents per response burden

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ARMIS Annual Summary Report..................................... 150 135 20,250

ARMIS USOA Report............................................... 50 190 9,500

ARMIS Joint Cost Report......................................... 150 110 12,450

ARMIS Access Charge Report...................................... 150 621 93,150

ARMIS Service Quality Report.................................... 12 625 7,500

ARMIS Customer Satisfaction Report.............................. 8 675 5,400

ARMIS Infrastructure Report..................................... 8 412 3,296

ARMIS Operating Data Report..................................... 50 120 6,000

ARMIS Forecast of Investment Usage & Actual Usage Reports....... 300 21 6,300

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Total Annual Burden: 163,846.

Estimated costs per respondent: $0.

Needs and Uses: As part of the biennial regulatory review, we are

required to review our regulation applicable to providers of

telecommunications service to determine whether the regulations are no

longer in the public interest due to meaningful economic competition

between providers of such service and whether such regulations should

be repealed or modified. In this NPRM we propose as part of the

biennial review to reduce the reporting requirements of our ARMIS.

ARMIS is needed to administer our accounting, jurisdictional

separations, access charges and joint cost rules and rules to analyze

revenue requirements and rates of reform, service quality and

infrastructure development. It collects financial and operating data

from certain local exchange carriers. The information contained in the

reports provide the necessary detail to enable this Commission to

fulfill its regulatory responsibilities. These proposed modifications

will reduce the reporting burdens on carriers, improve the quality and

use of the reported information. If adopted the proposed modifications

will reduce public burden by approximately 50% for the ARMIS reports.

Synopsis of Notice of Proposed Rulemaking

A. Eliminating Paper Filing Requirement

1. The Common Carrier Bureau (``the Bureau'') currently requires

carriers to submit both paper and electronic copies of the ARMIS

reports. The Commission has, in recent years, relied increasingly on

the data filed electronically to maintain internal databases and

generate meaningful reports for policy making. We tentatively conclude

that paper versions of the ARMIS reports do not significantly

contribute to the Commission's current efforts or future goals in

administering its accounting, joint cost, jurisdictional separations,

access charge rules, or in monitoring the quality of service and

infrastructure development in the public network. Therefore, we

tentatively conclude that we should eliminate the paper filing

requirement. We anticipate that the transition to an electronic-only

reporting program will represent a substantial cost savings for all

carriers that file ARMIS reports. We seek comment on this tentative

conclusion and request suggestions for improving the electronic filing

system for ARMIS reports.

2. The paper versions of the ARMIS reports, however, are our

primary means for distributing ARMIS data to the public. To satisfy the

frequent requests

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from the public for ARMIS data, we plan to meet the demand by making it

available through the Internet. This will require Commission staff to

develop software that will allow interested parties to obtain ARMIS

reports over the Internet, which we anticipate to be a costly process.

We seek comment on this proposal and request parties to provide

information on the costs of filing paper copies of ARMIS data so that

we can assess the utility of eliminating the paper filing requirement.

In considering whether to make ARMIS data available on the Internet, we

plan to balance the benefits of such availability, in particular the

frequency of requests from the public and the reduced administrative

burden on Commission staff, against the costs of this course of action.

B. Equal Access, Payphone, and Inside Wire Data

3. The ARMIS 43-04 Access Report provides jurisdictional

separations and access charge data by part 36 category at the study

area level. The data collected in this report are used by Commission

staff to verify cost information filed in tariffs. We propose to modify

the ARMIS 43-04 Access Report by eliminating 114 rows and three columns

in which carriers report data pertaining to equal access, inside wire,

and payphone investment. We tentatively conclude that the equal access

information is no longer necessary because the nearly complete

transition to equal access has reduced our need to monitor its

deployment. We tentatively conclude that we can eliminate the inside

wire and payphone investment columns because these two categories are

no longer regulated. In the NPRM, Appendix A presents the specific row

and column deletions and our reasons for their removal. We solicit

comment on these tentative conclusions and seek additional suggestions

from interested parties on streamlining the ARMIS 43-04 Access Report.

4. The ARMIS 43-01 Annual Summary Report summarizes the carriers'

accounting, rate base, and cost allocation data prescribed in parts 32,

36, 64, 65, and 69 of the Commission's rules (See 47 CFR 32, 36, 64,

65, and 69). The Annual Summary Report consists of two tables: (1)

Table I, the ``Cost and Revenue Table;'' and (2) Table II, the ``Demand

Analysis Table.'' In order to make the ARMIS 43-01 Annual Summary

Report consistent with the streamlined version of the ARMIS 43-04

Access Report, we tentatively conclude that we should eliminate the

corresponding rows and columns pertaining to equal access, inside wire,

and payphone investment. Appendix B presents the specific row and

column deletions and our reasons for their removal. We seek comment on

this proposal and ask whether any additional streamlining or

consolidation of these reports should be made.

C. Reduced Reporting Requirements for Mid-Sized Incumbent LECs

5. Incumbent LECs whose annual operating revenues exceed an indexed

revenue threshold are required to file ARMIS reports (See Reform of

Filing Requirements and Carrier Classifications; Anchorage Telephone

Utility, Petition for Withdrawal of Cost Allocation Manual, Report and

Order, (FR cite 62 FR 39776 (July 24,1997) 12 FCC Rcd 8071)). The

indexed revenue threshold, which has recently been increased to $112

million, is based on annual operating revenues for both regulated and

nonregulated activities and is adjusted for inflation. (See 47 CFR

32.9000). Based on our experience with administering the ARMIS

reporting system, it appears that the carriers' costs of implementing

that system are largely fixed with respect to the number of access

lines served. This implies that, on a per-access-line basis, the cost

of complying with the full ARMIS reporting requirements is

substantially higher for mid-size incumbent LECs than for large

incumbent LECs, because the large incumbent LECs are able to average

their fixed reporting costs over a larger number of access lines.

Reducing the reporting requirements on mid-sized carriers would

eliminate a costly reporting burden on those carriers that must recover

the cost from a smaller number of customers.

6. We propose to streamline the ARMIS reporting requirements for

certain mid-sized incumbent LECs based on the aggregate revenues of the

incumbent LEC and any LEC that it controls, is controlled by, or with

which it is under common control (See 47 CFR 32.9000). If the aggregate

revenues of these affiliated incumbent LECs are less than $7 billion,

then each LEC within that group would be eligible for the streamlined

reporting requirements described below. Incumbent LECs with individual

annual operating revenues below the indexed revenue threshold would

continue to be exempt from all ARMIS reporting requirements. The $7

billion threshold will still provide the Commission with data for

nearly 90% of the industry for local exchange telecommunications, as

measured by annual operating revenues. We seek comment on our proposal

to streamline the reporting requirements for mid-sized LECs and on

utility of this threshold mechanism. In addition to the reporting

requirements detailed below, we seek comment on other suggestions for

reducing the reporting burden on mid-sized incumbent LECs while still

collecting the information needed to perform our oversight functions

and protect ratepayers from the effects of improper cost allocations.

7. The ARMIS 43-02 USOA Report provides the annual operating

results of carriers' activities for every account in the Uniform System

of Accounts (``USOA''), which we use to review the operations of

communications common carriers subject to our jurisdiction. The USOA

encompasses both balance sheet and income statement accounts that we

use to review overall investment and expense levels, affiliate

transactions, property valuation, and depreciation rates. The ARMIS 43-

02 USOA Report collects accounting and financial data in 27 tables. We

tentatively conclude that we should reduce the filing burden of

eligible reporting carriers by eliminating the requirement to file 21

tables in the ARMIS 43-02 USOA Report. Our experience administering the

ARMIS reporting system and our accounting rules suggests that routine

reporting of the balance sheet information contained in tables B-3 and

B-5 through B-15 may not be crucial for eligible reporting carriers to

report on a regular basis. Because we will continue to have access to

the underlying data and source documents, we tentatively conclude that

eliminating these reporting requirements will not impair our ability to

perform necessary oversight functions.

8. This tentative conclusion, if adopted, would result in eligible

reporting carriers filing only six tables in the USOA Report: (1) Table

B-1, ``Balance Sheet Accounts;'' (2) Table B-2, ``Statement of Cash

Flows;'' (3) Table B-4, ``Analysis of Assets Purchased from or Sold to

an Affiliate;'' (4) Table C-3, ``Board of Directors and General

Officers;'' (5) Table I-1, ``Income Statement Accounts;'' and (6) Table

I-2, ``Analysis of Services Provided from or Sold to an Affiliate.''

Together, these tables provide the information, such as the complete

financial statements, needed to perform our audit and other oversight

functions. In addition, we tentatively conclude that we should allow

eligible reporting carriers to file the Class B level of detail for

applicable schedules. (See 47 CFR 32.11) This proposed modification

would not relieve eligible reporting carriers of their responsibility

to maintain their books of accounts in accordance with part 32 of the

Commission's rules, but would reduce the filing burden imposed on

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eligible reporting carriers that file ARMIS reports. We seek comment on

this tentative conclusion.

9. We note that our pole attachment formulas are based on the Class

A level of accounting detail. If the Commission adopts Class B accounts

for mid-sized LECs as proposed herein, the ARMIS reports of the mid-

sized LECs would no longer provide the details needed to calculate pole

attachment fees using the pole attachment formulas. The details

provided in eight Class A accounts are needed to provide data for the

pole attachment formulas: six accounts associated with cable and wire

facilities investment and expenses, and two accounts associated with

network operations expenses. We seek comment on whether mid-sized LECs

should be required to maintain subsidiary record categories to provide

the data now provided in the eight Class A accounts and to report in

ARMIS the information in the noted accounts as well as other

information required by the pole attachment formulas.

10. The ARMIS 43-03 Joint Cost Report details the regulated and

nonregulated cost and revenue allocations by study area in accordance

with the Commission's rules (See 47 CFR 64.901-904). In order to be

consistent with the modifications to the USOA Report, we tentatively

conclude that we should allow eligible reporting carriers to file only

the Class B level of detail. This proposal, if adopted, would eliminate

roughly two-thirds of the entries for eligible reporting carriers. We

seek comment on this proposal.

11. The ARMIS 495A Forecast Report and the ARMIS 495B Actual Usage

Report provide the information needed to monitor our requirement that

incumbent LECs allocate the costs of certain telephone plant investment

used for both regulated and nonregulated activities on the basis of

forecasted regulated and nonregulated usage. Carriers file these

reports at the same time as their annual access tariff filing. The

ARMIS 495A Forecast Report displays forecasts of expected regulated and

nonregulated investment usage at the study area level. The ARMIS 495B

Actual Usage Report displays the actual usage of regulated and

nonregulated investment at the study area level. We tentatively

conclude to allow eligible reporting carriers to report the data in the

ARMIS 495A Forecast Report and the ARMIS 495B Actual Usage Report at

the Class B level of detail. This tentative conclusion, if adopted,

will provide flexibility for eligible reporting carriers to aggregate

types of equipment and to forecast the regulated and nonregulated usage

of such equipment. We seek comment on this tentative conclusion.

D. ARMIS Reporting Requirements for Large Incumbent LECs

12. For the largest incumbent LECs, we tentatively conclude that we

should maintain the Class A level of detail for their ARMIS reporting

requirements. The more detailed reporting requirements are necessary

for the Commission to uphold our statutory obligations to prevent

cross-subsidization and discrimination under sections 254(k), 260, 271,

272, 273, 274, 275, and 276 of the Act. See 47 USC 254(k), 260, 271-

276. The Class A level of detail specified in the part 32 accounting

rules allows us to identify potential cost misallocations beyond those

revealed by the Class B system of accounts. In addition, the Class A

level of detail is critical for monitoring large incumbent LECs because

such carriers typically conduct a higher volume of transactions

involving competitive services. We need sufficient detail to adequately

perform audit and verification functions of the largest incumbent LECs

that represent nearly 90% of the local exchange industry as measured by

annual revenues. Moreover, the Class A level of detail is required to

monitor the large incumbent LECs as competition begins to develop in

local telephony markets. Therefore, we tentatively conclude that any

further reduction in reporting requirements for ARMIS financial, cost

allocation, and access charge data would impair our ability to guard

against improper cost allocations, to assess the impact of our policies

on incumbent LECs, and to monitor the development of competition in the

telecommunications marketplace. We have long recognized that, for

managerial decision-making and other purposes, incumbent LECs maintain

their financial records in significantly more detail than that required

for Class A carriers in our part 32 rules. Because incumbent LECs

disaggregate their financial records into much greater detail than our

Class A requirements, we tentatively conclude that the burden on the

largest incumbent LECs resulting from Class A accounting and reporting

requirements does not outweigh our needs for collecting financial

information. We seek comment on these tentative conclusions to maintain

the Class A accounting requirements for the largest incumbent LECs,

and, alternatively, on whether there are certain ARMIS reporting

requirements we could eliminate or streamline for the largest LECs.

Procedural Matters

13. Ex Parte Presentations. This is a permit-but-disclose

proceeding. Ex parte presentations are permitted, except during the

Sunshine Agenda period, provided that they are disclosed as provided in

the Commission's rules (See 47 U.S.C. 1.102, 1.203 and 1.206).

14. Initial Regulatory Flexibility Analysis. The Regulatory

Flexibility Act (``RFA'') (See 5 U.S.C. 601) requires that an initial

regulatory flexibility analysis be prepared for notice-and-comment

rulemaking proceedings, unless the agency certifies that ``the rule

will not, if promulgated, have a significant economic impact on a

substantial number of small entities.'' (See 5 U.S.C. 605(b)). The RFA

generally defines ``small entity'' as having the same meaning as the

terms ``small business,'' ``small organization,'' and ``small

governmental jurisdiction'' ( See U.S.C. 601(b)). In addition, the term

``small business'' has the same meaning as the term ``small business

concern'' under the Small Business Act. A small business concern is one

which: (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'') (See 15

U.S.C. 632).

15. This NPRM proposes to eliminate the requirement to file paper

versions of ARMIS reports, to reduce the specific reporting

requirements on all incumbent LECs that file ARMIS reports, and to

further reduce the reporting requirements for certain mid-sized

incumbent LECs. Neither the Commission nor SBA has developed a

definition of ``small entity'' specifically applicable to LECs. The

closest definition under SBA rules is that for establishments providing

``Telephone Communications, Except Radiotelephone,'' which is Standard

Industrial Classification (SIC) code 4813. Under this definition, a

small entity is one employing no more than 1,500 persons.

16. We certify that the proposals in this NPRM, if adopted, will

not have a significant economic impact on a substantial number of small

entities. Pursuant to long-standing rules, incumbent LECs with annual

operating revenues exceeding the indexed revenue threshold must report

financial and operating data to the Commission. This NPRM proposes to

reduce certain of these reporting requirements and eliminate the

subject paper filing requirement. These changes should be easy and

inexpensive for incumbent LECs to implement and will not require

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costly or burdensome procedures. We therefore expect that the potential

impact of the proposal rules, if such are adopted, is beneficial and

does not amount to a possible significant economic impact on affected

entities. If commenters believe that the proposals discussed in the

NPRM require additional RFA analysis, they should include a discussion

of these issues in their comments.

17. The Commission's Office of Public Affairs, Reference Operations

Division, will send a copy of this NPRM, including this initial

certification, to the Chief Counsel for Advocacy of the Small Business

Administration. (See 5 USC 605(b)).

Comment Filing Procedures

18. Interested parties may file comments no later than August 20,

1998 and reply comments may be filed no later than September 4, 1998.

All pleadings should reference CC Docket No. 98-117. A copy of each

pleading should be sent to Anthony Dale, Accounting Safeguards

Division, Common Carrier Bureau, FCC, 2000 L Street, Suite 201,

Washington, DC 20554, and another copy should be sent to International

Transcription Services (ITS), the Commission's duplicating contractor,

at its office at 1231 20th Street, NW, Washington, D.C. 20036, (202)

857-3800. All pleadings will be made available for public inspection

and copying in the Accounting Safeguards Division public reference

room, 2000 L Street, NW, Suite 812, Washington, DC 20554.

19. Comments and replies must also comply with Sec. 1.49 and all

other applicable sections of the Commission's rules. We also direct all

interested parties to include the name of the filing party and the date

of the filing on each page of their comments and replies. In addition,

one copy of each pleading must be filed with International

Transcription Services (ITS), the Commission's duplicating contractor,

at its office at 1231 20th Street, NW, Washington, DC 20037, (202) 857-

3800. All pleadings are available for public inspection and copying in

the Accounting and Audits public reference room.

List of Subject in 47 CFR Part 43

Communications common carriers, Radio, Reporting and recordkeeping

requirements, Telegraph and Telephone.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

[FR Doc. 98-22162 Filed 8-17-98; 8:45 am]

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