Promotion of Competitive Networks in Local Telecommunications Markets

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[CC Docket No. 96-98; FCC 99-141]

Promotion of Competitive Networks in Local Telecommunications

Markets

AGENCY: Federal Communications Commission.

ACTION: Third Further Notice of Proposed Rulemaking.

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SUMMARY: In this Third Further Notice of Proposed Rulemaking, the

Commission seeks comment on a proposed interpretation of Section 224 of

the Communications Act in order to facilitate the development of

competitive telecommunications networks that will provide consumers

with alternatives to services provided by the incumbent wireline local

exchange carriers (LECs). In particular, the Commission seeks comment

on the provision of reasonable and nondiscriminatory access to rights-

of-way and riser conduit on private premises that are under the

ownership or control of LECs or other utilities. A companion Notice of

Proposed Rulemaking and a Notice of Inquiry are summarized elsewhere in

this issue of the Federal Register.

DATES: Comments are due August 13, 1999; Reply comments are due

September 3, 1999.

ADDRESSES: Parties who choose to file comments by paper should send

comments to the Commission's Secretary, Magalie Roman Salas, Office of

the Secretary, Federal Communications Commission, 445 Twelfth Street,

SW.; TW-A325; Washington, DC 20554. Comments filed through the

Commission's Electronic Comment Filing System (ECFS) can be sent as an

electronic file via the Internet to http://www.fcc.gov/e-file/

ecfs.html>. See SUPPLEMENTARY INFORMATION for additional information

about paper and electronic filing.

FOR FURTHER INFORMATION CONTACT: Jeff Steinberg at (202) 418-0896 or

Joel Taubenblatt at (202) 418-1513 (Wireless Telecommunications

Bureau).

SUPPLEMENTARY INFORMATION: This is a summary of the Third Further

Notice of Proposed Rulemaking in CC Docket No. 96-98 (the ``Notice''),

FCC 99-141, adopted June 10, 1999 and released July 7, 1999. The

complete text of the document is available for inspection and copying

during normal business hours in the FCC Reference Center, 445 12th

Street, SW., Washington, DC and also may be purchased from the

Commission's copy contractor, International Transcription Services,

(202) 857-3800, 445 12th Street, SW., CY-B400, Washington, DC 20554.

The document is also available via the Internet at http://www.fcc.gov/

Bureaus/Wireless/Orders/1999/index.html>.

Introduction

1. This Notice is part of a larger item that seeks comments and

initiates an inquiry in order to further the Commission's ongoing

efforts to promote facilities-based competition in the local telephone

market. The larger item addresses several issues that are not squarely

before the Commission in pending proceedings. In particular, this

Notice addresses access by telecommunications and cable service

providers to rights-of-way and riser conduit on private premises that

are owned or controlled by LECs or other utilities.

Background

2. In the Telecommunications Act of 1996, codified at 47 U.S.C. 151

et seq., Congress included provisions intended to facilitate

competition with the incumbent LECs through three entry strategies:

resale of the incumbent LEC's services, leasing of unbundled network

elements, and use of a new entrant's own facilities. To date, the

Commission's efforts to facilitate local competition pursuant to these

provisions of the Act have generally encompassed all three of these

means of entry. Carriers who provide service by any of the three means

of competitive entry have the potential to bring many of the benefits

of competition to local exchange markets, and the Commission recognizes

it should continue to facilitate competitive entry by all means.

However, in the long term, the most substantial benefits to consumers

will be achieved through facilities-based

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competition. Only facilities-based competitors can break down the

incumbent LECs' bottleneck control over local networks and provide

services without having to rely on their rivals for critical components

of their offerings. Moreover, only facilities-based competition can

fully unleash competing providers' abilities and incentives to

innovate, both technologically and in service development, packaging,

and pricing.

Discussion

3. In particular, this Notice seeks comment and makes tentative

conclusions regarding a Petition for Reconsideration filed by WinStar

of the Local Competition First Report and Order concerning section 224

of the Communications Act. See 61 FR 45476 (August 29, 1996); 11 FCC

Rcd 15499; 47 U.S.C. 224. The Notice tentatively concludes that section

224 encompasses access to locations on private property, including end

user premises, where a utility has established ownership or control of

a right-of-way. The Notice also tentatively concludes that section 224

includes locations on a utility's own property that are used by the

utility in the manner of a right-of-way in connection with the

utility's distribution network. In addition, the Notice tentatively

concludes that a utility must afford access consistent with section 224

to riser conduit that it may own or control. At the same time, the

Notice tentatively reaffirms the Commission's prior determination that

section 224 does not require a utility to afford access to all of its

real property, such as the roof of its corporate office, unless that

property constitutes a pole, duct, conduit, or right-of-way. The Notice

states the Commission's tentative conclusion that these interpretations

of section 224 are consistent with the plain meaning of the statute.

The Notice requests comment on these interpretations and on several

issues related to the implementation of these interpretations,

including what sets of facts would establish utility ownership or

control.

Filing Procedures

4. Pursuant to 47 CFR 1.415, 1.419, interested parties may file

comments on or before August 13, 1999, and reply comments on or before

September 3, 1999. Comments may be filed using the Commission's

Electronic Comment Filing System (ECFS) or by filing paper copies. See

Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24,121

(1998).

5. Comments filed through the ECFS can be sent as an electronic

file via the Internet to http://www.fcc.gov/e-file/ecfs.html>.

Generally, only one copy of an electronic submission must be filed. If

multiple docket or rulemaking numbers appear in the caption of this

proceeding, however, commenters must transmit one electronic copy of

the comments to each docket or rulemaking number referenced in the

caption. In completing the transmittal screen, commenters should

include their full name, Postal Service mailing address, and the

applicable docket or rulemaking number. Parties may also submit

electronic comments by Internet e-mail. To get filing instructions for

e-mail comments, commenters should send an e-mail to [email protected], and

should include the following words in the body of the message, ``get

form .'' A sample form and directions will be sent

in reply.

6. Parties who choose to file by paper must file an original and

four copies of each filing. If more than one docket or rulemaking

number appear in the caption of this proceeding, commenters must submit

two additional copies for each additional docket or rulemaking number.

All filings must be sent to the Commission's Secretary, Magalie Roman

Salas, Office of the Secretary, Federal Communications Commission, 445

12th Street, SW., TW-A325, Washington, DC 20554.

7. Regardless of whether parties choose to file electronically or

by paper, parties should also file one copy of any documents filed in

this docket with the Commission's copy contractor, International

Transcription Services, Inc., 445 12th Street, SW., CY-B400,

Washington, DC 20554. Comments and reply comments will be available for

public inspection during regular business hours in the FCC Reference

Center, 445 12th Street, SW., Washington, DC 20554.

8. Comments and reply comments must include a short and concise

summary of the substantive arguments raised in the pleading. Comments

and reply comments must also comply with 47 CFR 1.49, and all other

applicable sections of the Commission's rules. The Commission also

directs all interested parties to include the name of the filing party

and the date of the filing on each page of their comments and reply

comments. All parties are encouraged to utilize a table of contents,

regardless of the length of their submission.

Initial Regulatory Flexibility Analysis

9. As required by the Regulatory Flexibility Act (RFA), the

Commission has prepared this Initial Regulatory Flexibility Analysis

(IRFA) of the possible significant economic impact on small entities of

the policies and rules proposed in this Third Further Notice of

Proposed Rulemaking. Written public comments are requested on this

IRFA. These comments must be filed in accordance with the same filing

deadlines for comments on the rest of this Third Further Notice of

Proposed Rulemaking, as set forth in the Filing Procedures section

above, and they must have a separate and distinct heading designating

them as responses to the IRFA. The Commission's Office of Public

Affairs, Reference Operations Division, will send a copy of this Third

Further Notice of Proposed Rulemaking, including the IRFA, to the Chief

Counsel for Advocacy of the Small Business Administration, in

accordance with the RFA.

I. Need for and Objectives of the Proposed Rules

10. We are issuing this Third Further Notice of Proposed Rulemaking

to seek comment on proposals to facilitate competition with the

incumbent local exchange carriers (LECs) by competitors who use their

own end-to-end facilities. Extensive facilities-based competition will

provide consumers with a choice of telecommunications providers that

will compete to offer traditional, voice-grade telephone service, as

well as high-speed data and other advanced services, at reasonable

prices and with reasonable terms and conditions--a major goal of the

Telecommunications Act of 1996. We particularly expect this proceeding

to further the availability of competition to the many consumers and

businesses that are located in multiple tenant environments, such as

apartment and office buildings.

11. Specifically, this Third Further Notice of Proposed Rulemaking

seeks comment on the following issue: the tentative conclusion that, to

the extent that LECs or other utilities own or control rooftop and

other rights-of-way or riser conduit in multiple tenant environments,

47 U.S.C. 224 requires that they permit competing providers access to

such rights-of-way or conduit under just, reasonable and

nondiscriminatory rates, terms, and conditions.

II. Legal Basis

12. The potential actions on which comment is sought in this Third

Further Notice of Proposed Rulemaking would be authorized under

sections 1, 2(a), 4(i), 4(j), 201(b), 224, 303(r), and 332 of the

Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i),

154(j), 201(b), 224, 303(r), and 332, and 47 CFR 1.411 and 1.412.

[[Page 41886]]

III. Description and Estimate of the Number of Small Entities to

Which the Proposed Rules Will Apply

13. The RFA 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.'' The RFA generally defines ``small entity'' as having the

same meaning as the terms ``small business,'' ``small organization,''

and ``small governmental jurisdiction.'' 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). For many of the

entities described below, the SBA has defined small business categories

through Standard Industrial Classification (``SIC'') codes.

14. This Third Further Notice of Proposed Rulemaking could result

in rule changes that, if adopted, would impose requirements on local

exchange carriers and other utilities. To assist the Commission in

analyzing the total number of potentially affected small entities,

commenters are requested to provide estimates of the number of small

entities that may be affected by any rule changes resulting from this

Third Further Notice of Proposed Rulemaking.

a. Local Exchange Carriers

15. The proposal on which comment is sought in this Third Further

Notice of Proposed Rulemaking, if adopted, would affect small LECs.

Neither the Commission nor the SBA has developed a small business

definition specifically for small LECs. The closest applicable

definition under the SBA rules is for those telephone communications

companies that are not radiotelephone (wireless) companies. The SBA has

defined establishments engaged in providing ``Telephone Communications,

Except Radiotelephone'' to be small businesses when they have no more

than 1,500 employees. According to November 1997 Telecommunications

Industry Revenue data, 1,371 carriers reported that they were engaged

in the provision of local exchange services. We do not have data

specifying the number of these carriers that are either dominant in

their field of operations, are not independently owned and operated, or

have more than 1,500 employees, and thus are unable at this time to

estimate with greater precision the number of LECs that would qualify

as small business concerns under the SBA's definition. Consequently, we

estimate that fewer than 1,371 providers of local exchange service are

small entities or small incumbent LECs that may be affected by the

potential actions discussed in this Third Further Notice of Proposed

Rulemaking, if adopted.

16. Above, we have included smaller incumbent LECs in our analysis.

Although some incumbent LECs may have 1,500 or fewer employees, we do

not believe that such entities should be considered small entities

within the meaning of the RFA because they are either dominant in their

field of operations or are not independently owned and operated, and

therefore by definition not ``small entities'' or ``small business

concerns'' under the RFA. Accordingly, our use of the terms ``small

entities'' and ``small businesses'' does not encompass small incumbent

LECs. Out of an abundance of caution, however, for regulatory

flexibility analysis purposes, we will separately consider small

incumbent LECs within this analysis and use the term ``small incumbent

LECs'' to refer to any incumbent LECs that arguably might be defined by

the SBA as ``small business concerns.''

b. Other Utilities

17. The proposal in this Third Further Notice of Proposed

Rulemaking with respect to 47 U.S.C. 224, if adopted, would affect

utilities other than LECs. Section 224 defines a ``utility'' as ``any

person who is a local exchange carrier or an electric, gas, water,

steam, or other public utility, and who owns or controls poles, ducts,

conduits, or rights-of-way used, in whole or in part, for any wire

communications. Such term does not include any railroad, any person who

is cooperatively organized, or any person owned by the Federal

Government or any State.'' The Commission anticipates that, to the

extent its section 224 proposal affects non-LEC utilities, the effect

would be concentrated on electric utilities.

(1) Electric Utilities (SIC 4911, 4931 and 4939)

18. Electric Services (SIC 4911). The SBA has developed a

definition for small electric utility firms. The Census Bureau reports

that a total of 1,379 electric utilities were in operation for at least

one year at the end of 1992. According to SBA, a small electric utility

is an entity whose gross revenues do not exceed five million dollars.

The Census Bureau reports that 447 of the 1,379 firms listed had total

revenues below five million dollars in 1992.

19. Electric and Other Services Combined (SIC 4931). The SBA has

classified this entity as a utility whose business is less than 95%

electric in combination with some other type of service. The Census

Bureau reports that a total of 135 such firms were in operation for at

least one year at the end of 1992. The SBA's definition of a small

electric and other services combined utility is a firm whose gross

revenues do not exceed five million dollars. The Census Bureau reported

that 45 of the 135 firms listed had total revenues below five million

dollars in 1992.

20. Combination Utilities, Not Elsewhere Classified (SIC 4939). The

SBA defines this type of utility as providing a combination of

electric, gas, and other services which are not otherwise classified.

The Census Bureau reports that a total of 79 such utilities were in

operation for at least one year at the end of 1992. According to SBA's

definition, a small combination utility is a firm whose gross revenues

do not exceed five million dollars. The Census Bureau reported that 63

of the 79 firms listed had total revenues below five million dollars in

1992.

(2) Gas Production and Distribution (SIC 4922, 4923, 4924, 4925 and

4932)

21. Natural Gas Transmission (SIC 4922). The SBA's definition of a

natural gas transmitter is an entity that is engaged in the

transmission and storage of natural gas. The Census Bureau reports that

a total of 144 such firms were in operation for at least one year at

the end of 1992. According to SBA's definition, a small natural gas

transmitter is an entity whose gross revenues do not exceed five

million dollars. The Census Bureau reported that 70 of the 144 firms

listed had total revenues below five million dollars in 1992.

22. Natural Gas Transmission and Distribution (SIC 4923). The SBA

has classified this type of entity as a utility that transmits and

distributes natural gas for sale. The Census Bureau reports that a

total of 126 such entities were in operation for at least one year at

the end of 1992. The SBA's definition of a small natural gas

transmitter and distributor is a firm whose gross revenues do not

exceed five million dollars. The Census Bureau reported that 43 of the

126 firms listed had total revenues below five million dollars in 1992.

23. Natural Gas Distribution (SIC 4924). The SBA defines a natural

gas distributor as an entity that distributes natural gas for sale. The

Census Bureau

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reports that a total of 478 such firms were in operation for at least

one year at the end of 1992. According to the SBA, a small natural gas

distributor is an entity whose gross revenues do not exceed five

million dollars. The Census Bureau reported that 267 of the 478 firms

listed had total revenues below five million dollars in 1992.

24. Mixed, Manufactured, or Liquefied Petroleum Gas Production and/

or Distribution (SIC 4925). The SBA has classified this type of entity

as a utility that engages in the manufacturing and/or distribution of

the sale of gas. These mixtures may include natural gas. The Census

Bureau reports that a total of 43 such firms were in operation for at

least one year at the end of 1992. The SBA's definition of a small

mixed, manufactured or liquefied petroleum gas producer or distributor

is a firm whose gross revenues do not exceed five million dollars. The

Census Bureau reported that 31 of the 43 firms listed had total

revenues below five million dollars in 1992.

25. Gas and Other Services Combined (SIC 4932). The SBA has

classified this entity as a gas company whose business is less than 95%

gas, in combination with other services. The Census Bureau reports that

a total of 43 such firms were in operation for at least one year at the

end of 1992. According to the SBA, a small gas and other services

combined utility is a firm whose gross revenues do not exceed five

million dollars. The Census Bureau reported that 24 of the 43 firms

listed had total revenues below five million dollars in 1992.

(3) Water Supply (SIC 4941)

26. The SBA defines a water utility as a firm who distributes and

sells water for domestic, commercial and industrial use. The Census

Bureau reports that a total of 3,169 water utilities were in operation

for at least one year at the end of 1992. According to SBA's

definition, a small water utility is a firm whose gross revenues do not

exceed five million dollars. The Census Bureau reported that 3,065 of

the 3,169 firms listed had total revenues below five million dollars in

1992.

(4) Sanitary Systems (SIC 4952, 4953 and 4959)

27. Sewerage Systems (SIC 4952). The SBA defines a sewage firm as a

utility whose business is the collection and disposal of waste using

sewage systems. The Census Bureau reports that a total of 410 such

firms were in operation for at least one year at the end of 1992.

According to SBA's definition, a small sewerage system is a firm whose

gross revenues did not exceed five million dollars. The Census Bureau

reported that 369 of the 410 firms listed had total revenues below five

million dollars in 1992.

28. Refuse Systems (SIC 4953). The SBA defines a firm in the

business of refuse as an establishment whose business is the collection

and disposal of refuse ``by processing or destruction or in the

operation of incinerators, waste treatment plants, landfills, or other

sites for disposal of such materials.'' The Census Bureau reports that

a total of 2,287 such firms were in operation for at least one year at

the end of 1992. According to SBA's definition, a small refuse system

is a firm whose gross revenues do not exceed six million dollars. The

Census Bureau reported that 1,908 of the 2,287 firms listed had total

revenues below six million dollars in 1992.

29. Sanitary Services, Not Elsewhere Classified (SIC 4959). The SBA

defines these firms as engaged in sanitary services. The Census Bureau

reports that a total of 1,214 such firms were in operation for at least

one year at the end of 1992. According to SBA's definition, a small

sanitary service firm's gross revenues do not exceed five million

dollars. The Census Bureau reported that 1,173 of the 1,214 firms

listed had total revenues below five million dollars in 1992.

(5) Steam and Air Conditioning Supply (SIC 4961)

30. The SBA defines a steam and air-conditioning supply utility as

a firm who produces and/or sells steam and heated or cooled air. The

Census Bureau reports that a total of 55 such firms were in operation

for at least one year at the end of 1992. According to SBA's

definition, a steam and air conditioning supply utility is a firm whose

gross revenues do not exceed nine million dollars. The Census Bureau

reported that 30 of the 55 firms listed had total revenues below nine

million dollars in 1992.

(6) Irrigation Systems (SIC 4971)

31. The SBA defines irrigation systems as firms who operate water

supply systems for the purpose of irrigation. The Census Bureau reports

that a total of 297 firms were in operation for at least one year at

the end of 1992. According to SBA's definition, a small irrigation

service is a firm whose gross revenues do not exceed five million

dollars. The Census Bureau reported that 286 of the 297 firms listed

had total revenues below five million dollars in 1992.

IV. Description of Projected Reporting, Recordkeeping, and Other

Compliance Requirements

32. This Third Further Notice of Proposed Rulemaking proposes no

additional reporting, recordkeeping or other compliance measures.

V. Steps Taken To Minimize Significant Economic Impact on Small

Entities, and Significant Alternatives Considered

33. This Third Further Notice of Proposed Rulemaking seeks comment

on how the proposals set forth could impact regulated entities,

including small entities. For example, we seek comment on whether an

overly broad construction of utility ownership or control would impose

unreasonable burdens on building owners, including small building

owners, or compromise their ability to ensure the safe use of rights-

of-way or conduit, or engender other practical difficulties. Commenters

are invited to address the economic impact of all of our proposals on

small entities and offer any alternatives.

VI. Federal Rules That May Duplicate, Overlap, or Conflict With the

Proposed Rules

34. None.

List of Subjects in 47 CFR Part 1

Communications common carriers, Telecommunications.

Federal Communications Commission.

William F. Caton,

Deputy Secretary.

[FR Doc. 99-19634 Filed 7-30-99; 8:45 am]

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