Biennial Review

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 3

[IB Docket No. 98-96, FCC 99-150]

Biennial Review

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document further streamlines the authorization and

regulation of privately owned accounting authorities that settle

accounts for maritime mobile, maritime satellite, aircraft and hand-

held terminal radio services. The Commission concluded that there is no

need for the Commission to act as an accounts clearinghouse for

maritime and satellite communications and that the private authorities

that the Commission has certified, acting under regulations prescribed

by the Commission and under its oversight, can successfully settle all

accounts for U.S. users of these radio services. The Commission also

concluded that Commission withdrawal as an accounting authority will

promote competition among private authorities. The Commission initiated

this proceeding pursuant to the Telecommunications Act of 1996, which

directs the Commission to undertake a review every even-numbered year

of all regulations that apply to providers of telecommunications

services to determine whether any such regulation is no longer

necessary.

DATES: Effective August 27, 1999.

FOR FURTHER INFORMATION CONTACT: John Copes, Attorney-Advisor,

Multilateral and Development Branch, Telecommunications Division,

International Bureau, (202) 418-1478.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's R&O,

FCC 99-150, adopted on June 21, 1999, and released on July 13, 1999.

The full text of this R&O is available for inspection and copying

during normal business hours in the Federal Communications Commission,

Reference Information Center (Room CY-A257), 445 12th St., SW,

Washington, DC 20554 The complete text of the R&O may also be purchased

from the Commission's copy contractor, International Transcription

Service, Inc., 1231 20th St., NW, Washington, DC 20036, (202) 857-3800.

Summary of R&O

1. In July 1998, the Commission adopted a Notice of Proposed

Rulemaking (63 FR 39800, July 24, 1998) (NPRM) to streamline further

the regulations and authorization of privately owned accounting

authorities that settle accounts in the maritime mobile and maritime

mobile-satellite radio services. Maritime mobile satellites are also

used to provide satellite-based aviation services and services to hand-

held radio terminals. In that connection the Commission proposed to

withdraw from performing the functions of an accounting authority and,

instead, to rely solely upon the private accounting authorities to

settle accounts for U.S. users of maritime and satellite

communications. The Commission also proposed to amend its rules to make

explicit the fact that certified accounting authorities are required,

in settling accounts, to deal with the public on a reasonable and

nondiscriminatory basis. The Commission also inquired into whether it

should designate a new entity to perform the function of ``accounting

authority of last resort'' the Commission has traditionally performed

whereby it settles accounts for all users who have not designated an

accounting authority at the time they made the radio communication.

2. On June 21, 1999, the Commission adopted a Report and Order and

Further Notice of Proposed Rulemaking (FCC 99-150) to make final the

proposals in its July 1999 NPRM and to institute a transition period

leading to the handing over of its functions to private accounting

authorities. A proposed rule relating to this proceeding is published

elsewhere in this issue of the Federal Register. In the R&O portion of

the document, the Commission affirmed its proposal to withdraw from

performing the functions of an accounting authority and to rely solely

upon the private accounting authorities to provide account-settlement

services for maritime and satellite communications. The Commission made

clear that it will continue to operate as administrator of all U.S.-

certified accounting authorities and the basic rules and procedures for

certifying accounting authorities and will continue to oversee the

operation of all certified accounting authorities.

3. The Commission has also made final its proposal to amend section

3.10(e) of its rules (47 CFR 3.10(e)) to make clear that private

accounting authorities are required to serve the public on a reasonable

and

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nondiscriminatory basis in their performance of their accounts-

settlement services. The rules had already required private accounting

authorities to deal with their customers in a reasonable manner. The

Commission concluded, however, that it would be desirable upon its

withdrawal as an accounting authority to make explicit the fact that

such reasonable treatment requires accounting authorities to offer

their services to the public upon a reasonable request therefore,

without undue discrimination against any customer or class of customer,

and to charge reasonable and nondiscriminatory fees for service.

4. The Commission, however, concluded that, notwithstanding the

general requirement for nondiscriminatory treatment, it should continue

to exempt one ``grandfathered'' entity from the requirement to serve

all comers. Prior to 1996, when the Commission adopted formal rules

governing the certification and authorization of private accounting

authorities, the Commission had certified a variety of such entities on

an interim basis. Under those interim certification procedures, the

Commission had allowed one entity to become an accounting authority to

provide account-settlements services solely for its own ships. At the

time the Commission adopted formal certification rules that imposed

upon private authorities the requirement to treat all users in a

reasonable manner (section 3.10(e)), the Commission decided to exempt

that entity from the obligation of section 3.10(e) to allow it to

continue to provide services only for its own ships. The Commission

noted that the grandfathered entity had become an accounting authority

solely to serve its own ships and had stated that it has no interest in

providing account-settlement services as a business. The Commission

concluded that, because it had become an accounting authority before

there was a requirement to serve all users, it would be a hardship to

require the entity to change its operation under the 1996 rules.

Because it believes that the amendment of Section 3.10(e) does not

substantively alter the obligations contained in the prior wording of

Section 3.10(e), the Commission had proposed to continue the exemption

under the amended rule section.

Regulatory Flexibility Act

5. As required by the Regulatory Flexibility Act, 5 U.S.C. 603, we

prepared an Initial Regulatory Flexibility Analysis (IRA) of the

possible impact on small entities of the proposals contained in the

July 1999 NPRM in this proceeding. We received no comments on the IRFA.

After reviewing comments on the proposals in the NPRM, we have prepared

a Final Regulatory Flexibility Analysis (FRFA) on the rules adopted by

the R&O. The FRFA is contained in Attachment B.

6. Accordingly, it is ordered, pursuant to Sections 4(i), 4(j), 11,

201-205 and 303(r) of the Communications Act of 1934, as amended, 47

U.S.C. 154(i), 154(j), 161, 201-205 and 303(r), that this R&O is hereby

adopted.

7. It is further ordered that section 3.10(e) is amended to read as

shown in Attachment A.

8. It is further ordered that the Office of Public Affairs,

Reference Operations Division, shall send a Copy of this R&O, including

the regulatory flexibility certification, to the Chief Counsel for

Advocacy of the Small Business Administration.

Final Regulatory Flexibility Analysis

9. As required by the RFA, 5 U.S.C, 603, the Commission included an

Initial Regulatory Flexibility Analysis (IRFA) in the NPRM in this

proceeding. The Commission sought written public comment on the

proposals in the NPRM, including comment on the IRFA. This FRFA

conforms to the RFA.

A. Need for, and Objectives of, the Rule Adopted Here

10. This R&O adopts an amendment to Section 3.10 of the

Commission's Rules and Regulations to clarify that the section

obligates private accounting authorities certified by the Federal

Communications Commission to deal with the public on a non-

discriminatory basis. We do not believe that this amendment changes the

substance of the rule that the Commission adopted in 1996, which

implicitly required such non-discriminatory treatment, but believe that

it is desirable to make private accounting authorities' obligations as

clear as possible.

11. The R&O also adopts the proposal in the NPRM to continue the

exemption for one entity that had previously been certified as a

private accounting authority on an interim basis that allows it to

provide account-settlement services only for its own vessels. This

entity had obtained interim certification before the Commission imposed

an obligation for private accounting authorities to provide service to

all customers requesting it, and the Commission believes that it would

work an undue hardship to require it to change the scope of its

operations. We believe that the public has adequate opportunity to

obtain service from other private accounting authorities the Commission

has certified and that there is no reason at this time to require this

entity to serve all comers.

12. Finally, this R&O adopts the proposal in the NPRM that the

Commission will cease to act as an accounting authority, leaving the

settlement of maritime and satellite accounts to the private accounting

authorities the Commission has certified. We believe that withdrawal of

the Commission as an accounting authority will strengthen the system of

private accounting authorities the Commission has created over the

years and allow such private authorities to become more competitive. We

do not see a need for a governmental body to perform account-settlement

functions, because these functions have been performed without

difficulty by a variety of private authorities, operating under FCC

rules for many years. The Commission has concluded that there is no

reason for the FCC to continue to settle the accounts for other U.S.

government agencies. We find that the agencies have not argued that

they have any special needs with respect to the settlement of their

radio accounts that cannot be met by private accounting authorities.

The Commission did, however, note that the agencies have relied upon

the Commission to settle their accounts and conclude that the immediate

withdrawal of the Commission as an accounting authority could cause

some temporary disruption or curtailment of service to government

users. The Commission, therefore, concluded to delay its departure and

to institute a transition period. The Commission believes that such

transition period will give that agencies time to make all

preparations, including any budgetary adjustments, for shift to a

private accounting authority. The nature of the transition period will

be addressed by the FNPRM.

B. Summary of Significant Issues Raised by Public Comments in Response

to the IRFA

13. There were no comments submitted in response to the IRFA.

Because the proposed amendment of Section 3.10 made no substantive

change to the current obligation of private accounting authorities, the

adoption of the proposed amendment will have no significant impact upon

any small business entities. Similarly, the proposal to continue to

exempt one entity from the obligation to provide service to all users

on a non-discriminatory basis does not make a change from the present

situation, adoption of the proposal will not have

[[Page 40776]]

a significant impact upon a small business. The entity that was

exempted is not itself a small business. Because there are many other

private accounting authorities who are obligated to serve users on a

non-discriminatory basis, allowing the one entity to provide services

only to its own vessels will not adversely affect any small businesses

that are customers of private accounting authorities. Finally, the

decision for the FCC to withdraw as an accounting authority should not

have any significant impact upon small business entities. Even without

the FCC to settle accounts for users, there will be a sizeable number

of private accounting authorities to take over FCC functions.

C. Description and Estimate of the Number of Small Entities to Which

Rules Will Apply

14. The Commission has not developed a definition of small entities

applicable to licensees in the international services. Therefore, the

applicable definition of small entity is generally the definition under

the SBA rules applicable to Communications Services, Not Elsewhere

Classified (NEC). This definition provides that a small entity is

expressed as one with $11.0 million or less in annual receipts.

15. According to the Census Bureau, there were a total of 848

communications services providers, NEC, in operation in 1992, and a

total of 775 had annual receipts of less than $9.999 million. The

Census report does not provide more precise data. The rules proposed in

this Notice of Proposed Rulemaking, however, apply only to entities

providing account-settlement services for maritime mobile and maritime

mobile-satellite radio services. As noted, there are currently only 17

such entities. Small businesses may be able to become accounting

clearinghouses, as the establishment of such a function does not appear

to involve high implementation costs.

D. Description of Projected Recordkeeping and Other Compliance

Requirements

16. The rule amendment adopted in this R&O merely clarifies an

existing requirement imposed on accounting authorities. It, therefore,

does not alter the reporting, recordkeeping or other compliance

requirements of certified accounting authorities in the maritime

mobile, maritime mobile-satellite, aeronautical and other satellite-

based radio services. The decision to continue the exemption of one

currently certified accounting authority from the requirement to serve

the public on a non-discriminatory basis affects only that entity.

Further, because it continues the current exemption, it will not alter

that entity's recordkeeping or compliance activities. The decision of

the Commission to withdraw as an accounting authority will affect both

those now certified as accounting authorities and those who may apply

for certification in the future. The withdrawal of the Commission will

result in the transfer of the accounts that the Commission now settles

to the private accounting authorities. This should give each such

accounting authority the opportunity to compete for increased business.

The withdrawal of the Commission , however, should not increase the

recordkeeping and compliance efforts of private accounting authorities.

E. Steps Taken To Minimize Significant Economic Impact on Small

Entities, and Significant Alternatives Considered

17. Because the rule amendment adopted in this R&O did not alter

the obligations of any present or future certified private accounting

authority, there was no need to take any steps to minimize the impact

of the rule. Similarly, the decision of the Commission to continue the

exemption for one entity from the obligation to serve the public on a

non-discriminatory basis did not change that entity's current

obligations, there was no need to take steps to minimize the impact of

the exemption on small entities. The decision of the Commission to

withdraw as an accounting authority will increase the potential

business of currently certified accounting authorities. It also may

make additional entities decide that they would like to seek

certification as a private accounting authority. Commission withdrawal

as an accounting authority will require those who currently rely upon

the FCC to settle their maritime and satellite radio accounts will be

required to select new accounting authority from among certified

accounting authorities. It is conceivable that selection of such an

accounting authority may be more difficult for some small entities than

others. Because the Commission has delayed the effectiveness of its

withdrawal as an accounting authority until the completion of a

transition plan, small entities will not have to choose a new authority

immediately. Small entities will be able to bring any special needs to

the attention of the Commission during the preparation of the

transition plan that will be undertaken pursuant to the FNPRM.

Report to Congress

18. The Commission will send a copy of this R&O, including this

FRFA, in a report to be sent to Congress pursuant to the Small Business

Regulatory Enforcement Fairness Act of 1996, see 5 U.S.C. 801(a)(1)(A).

In addition, the Commission will send a copy of the R&O, including this

FRFA to the Chief Counsel for Advocacy of the Small Business

Administration. A copy of the R&O and FRFA (or summaries thereof) will

be Published in the Federal Register. See 5 U.S.C. 604(b).

List of Subjects in 47 CFR Part 3

Accounting.

Federal Communications Commission.

William F. Caton,

Deputy Secretary.

Rule Changes

Part 3 of the Commission's Rules and Regulations Title 47 of the

Code of Federal Regulations is amended as follows:

PART 3--AUTHORIZATION AND ADMINISTRATION OF ACCOUNTING AUTHORITIES

IN MARITIME AND MARITIME MOBILE-SATELLITE RADIO SERVICES

1. The authority citation for Part 3 continues to read as follows:

Authority: 47 U.S.C. 154(i), 154(j) and 303(r).

2. Section 3.10 is amended by revising the first sentence of

paragraph (e) to read as follows:

Sec. 3.10 Basic requirements.

* * * * *

(e) Applicants must offer their services to any member of the

public making a reasonable request therefor, without undue

discrimination against any customer or class of customer, and fees

charged for providing such services shall be reasonable and non-

discriminatory. * * *

* * * * *

[FR Doc. 99-19065 Filed 7-27-99; 8:45 am]

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