Defining Primary Lines

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 69

[CC Docket No. 97-181; FCC 99-28]

Defining Primary Lines

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Federal Communications Commission has adopted a location-

based definition of ``primary residential line.'' Under this

definition, one residential line that a price cap local exchange

carrier (LEC) provides to a particular location will be considered

primary. Any other residential lines the price cap LEC provides to the

same location shall be deemed non-primary residential lines. This

definition will facilitate implementation of the Commission's access

charge rules, which set higher caps for the subscriber line charges

(SLCs) and presubscribed interexchange carrier charges (PICCs) that

price cap LECs may assess on non-primary residential lines and multi-

line business lines than on primary residential lines and single line

business lines. The Commission issues a Further Notice of Proposed

Rulemaking in which we tentatively conclude that individuals with

speech or hearing disabilities should have access at primary-line rates

to one residential line per location for use with a TTY, regardless of

whether another line at the location is also treated as primary for

residents without such disabilities. We seek comment on this tentative

conclusion, and several proposals for implementing it.

DATES: Comments are due on or before April 9, 1999, and reply comments

are due on or before April 26, 1999.

ADDRESSES: The entire file is available for inspection and copying

weekdays from 9:00 a.m. to 4:30 p.m. in the Commission's Reference

Center, 445 Twelfth Street SW, Washington, DC 20554. Copies may be

purchased from the Commission's duplicating contractor, ITS Inc., 1231

Twentieth St., NW, Washington, DC 20036, (202) 857-3800.

FOR FURTHER INFORMATION CONTACT: Neil Fried, Common Carrier Bureau,

(202) 418-1520; TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION:

A. Background

1. To provide interstate telecommunications services, interexchange

carriers (IXCs) usually rely on some of the telephone infrastructure

that incumbent LECs use to provide local telephone service. The

incumbent LEC's local loop, for example, connects a customer to the LEC

network so that the customer can make and receive intrastate calls. The

incumbent LEC's local loop also connects the customer to the networks

of IXCs so that the customer can make and receive interstate calls.

Consequently, a portion of the costs an incumbent LEC incurs in

providing this common infrastructure is allocated to intrastate service

and recovered pursuant to state regulation, and a portion is allocated

to interstate service and recovered pursuant to regulations of the

Federal Communications Commission.

2. The Commission adopted uniform access charge rules in 1983 to

govern the way incumbent LECs recover that portion of the costs of the

common infrastructure allocated to interstate service. Under these

rules, the Commission allows incumbent LECs to recover some of the

interstate costs of providing the local loop through a flat, monthly

end-user common line charge (EUCL)--sometimes called a SLC--that they

assess on end users. The Commission limited the amount of the SLC,

however, because of concerns that an excessively high SLC might cause

end users to disconnect their telephone service. The Commission allowed

the incumbent LECs to recover the remainder of their interstate costs

attributable to the local loop through a per-minute carrier common line

charge (CCLC) that they assess on IXCs.

3. Under principles of cost-causation, it is most economically

efficient for incumbent LECs to recover the costs of providing

interstate access in the same way that they incur them. Under such

principles, incumbent LECs should recover their traffic-sensitive costs

of interstate access through per-minute charges, and should recover

their non-traffic-sensitive costs through flat charges. The incumbent

LECs' costs of providing the local loop do not change with the number,

length, or type of telephone calls customers make, and so are non-

traffic sensitive. Because of the cap on SLCs, however, incumbent LECs

recover some of these non-traffic-sensitive loop costs through the

traffic sensitive CCLC. In its May 1997 Access Charge Reform Order, the

Commission decided to phase out the CCLC for price cap LECs on the

grounds that recovering the non-traffic-sensitive loop costs through

traffic-sensitive charges is economically inefficient.

4. To provide price cap LECs with a means to recover some of the

loop costs they previously recovered in the CCLC, the Commission raised

the price cap LECs' SLC caps for non-primary residential lines and

multi-line business lines, but chose not to raise the price cap LECs'

SLC caps for primary residential lines and single line business lines.

For 1999, the SLC cap for price cap LECs is $3.50 per month for each

primary residential and single line business line, $6.07 per month for

each non-primary residential line, and $9.20 per month for each multi-

line business line. To address concerns that charging a higher SLC for

non-primary residential lines sold by price cap LECs might encourage

subscribers to obtain their additional residential lines from

resellers, the Commission decided in

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the Access Charge Reform Order to allow price cap LECs to charge the

higher SLC to carriers that resell price-cap LECs' lines if the lines

are non-primary.

5. Because the SLC caps on residential and single line business

lines would prevent most price cap LECs from recovering through the SLC

all the costs they formerly recovered through the CCLC, the Commission

also created the PICC: a flat, per-line charge that price cap LECs may

assess on an end user's presubscribed IXC. As with the SLC, the

Commission set higher PICC caps for non-primary residential lines and

multi-line business lines than for primary residential lines and single

line business lines. Through June 30, 1999, the PICC cap is $0.53 per

month for each primary residential and single line business line, $1.50

per month for each non-primary residential line, and $2.75 per month

for each multi-line business line. As a result of the various caps, the

lines of customers that subscribe to single residential or business

lines are not assessed the entire cost of the loops. Until the access

reform rate structure is fully phased in, these lines are subsidized by

customers that subscribe to multiple business lines. The Commission has

adopted a location-based definition of ``primary residential line.''

Under this definition, one residential line that a price cap local

exchange carrier (LEC) provides to a particular location will be

considered primary. Any other residential lines the price cap LEC

provides to the same location shall be deemed non-primary residential

lines.

B. Discussion

6. In establishing different SLCs and PICCs for primary and non-

primary residential lines, we cited the important universal service

goal of subsidizing rates for at least one line so that consumers have

access to the telephone network. It has come to our attention that when

one or more members of a residence have hearing or speech disabilities,

the members of the residence often subscribe to one line dedicated for

a traditional telephone and one line for a text telephone (TTY), which

uses graphic communication in the transmission of coded signals through

a wire or radio communication system. See 47 CFR 64.601(8). The

residents can use the TTY to communicate directly with other TTYs, or

can use the TTY in conjunction with Telecommunications Relay Services

(TRS) and ``two-line'' voice or hearing carryover.

7. Telecommunications Relay Services (TRS) are telephone

transmission services that enable an individual who has a hearing or

speech disability to communicate by wire or radio with a hearing

individual in a manner that is functionally equivalent to the way an

individual who does not have a hearing or speech disability

communicates using voice telephone services by wire or radio. See 47

CFR 64.601(7). Voice carryover (VCO) is a form of TRS that allows users

with hearing disabilities to speak directly to a hearing person, while

the TRS communication assistant (CA) types what is said to the TTY

user. Hearing carryover (HCO) is a form of TRS that allows persons with

speech disabilities to listen to the person they are calling, while

typing their statements for the CA to read aloud to the voice telephone

user. See 47 CFR 64.601(6), (9). ``Two line'' VCO and HCO are versions

of these services that use two telephone lines and conference calling

functions to increase the transparency of the CA and improve the

functional equivalency of these services. Thus, in residences where one

family member has a hearing or speech disability, two lines may be

necessary for all the residents to have access to telephone service.

8. We believe that it is important to ensure that consumers with

hearing or speech disabilities have access to the telephone network at

primary-line rates, but we lack a detailed record in the present

proceeding to determine how to address this issue. We tentatively

conclude that individuals with speech or hearing disabilities served by

price cap LEC lines should have access to the telecommunications

network at primary line rates. Moreover, if we extend the non-primary

line rate structure to rate-of-return LECs, we tentatively conclude

that individuals with hearing or speech disabilities served by rate-of-

return LEC lines should receive similar treatment. We seek comment on

these tentative conclusions. In addition, we seek comment on other

technologies or services that require an additional line to permit

consumers with disabilities to access the telephone network and on

whether those additional lines should also receive primary line rates.

We believe that our tentative conclusions above are consistent with the

Commission's mandate to ensure that all Americans have access to

telecommunications services, and with the policy goals underlying the

Commission's decision to cap primary residential SLCs and PICCs at

lower levels than are applicable to other lines.

9. One way to ensure that consumers with hearing or speech

disabilities have access to the telephone network at primary-line rates

would be to treat as primary one residential line per location that is

used by such individuals in conjunction with a TTY, regardless of

whether another line at the location is also treated as primary for

residents without such disabilities. We seek comment on such an

approach, and how it might be implemented.

10. Another approach would be to subsidize more explicitly the

difference in charges that would apply when the TTY-dedicated line is

deemed non-primary as opposed to primary. We seek comment on such an

approach, and how it might be implemented. In particular, we seek

comment on whether the subsidies for such an approach should come from

the TRS Fund or the more general Universal Service Fund. We also seek

comment on the implications of section 225(d)(1)(D), which ``require[s]

that users of telecommunications relay services pay rates no greater

than the rates paid for functionally equivalent voice communication

services with respect to such factors as the duration of the call, the

time of day, and the distance from point of origination to point of

termination.'' 47 U.S.C. 225(d)(1)(D).

11. In many cases, the only change necessary to make a telephone

line more easily accessible to an individual with a disability is to

add a piece of consumer premises equipment (CPE), such as a TTY.

Consequently, carriers may have no readily apparent means of

determining which lines are being used by individuals with

disabilities. We seek comment on whether carrier records indicate the

presence at a location of certain CPE such as TTYs. We also seek

comment on whether self-certification would be an appropriate means for

carriers to identify the relatively small universe of customers to

which either the definitional or funding approaches would apply, and if

so, how such self-certification could be implemented. We note that many

IXCs offer qualified TTY users the opportunity to self-certify to

receive toll discounts, in recognition of the longer calling times

associated with TTY use. For the sake of a clear record and so that all

parties understand the issues involved, we also ask commenters to

describe the developments in technology and services associated with

TTYs, TRS, and ``two-line'' voice or hearing carryover. Parties should

also address the extent to which any of these proposals would affect

small business entities, including new entrants.

[[Page 16391]]

C. Procedural Matters

1. Ex Parte

12. This matter shall be treated as a ``permit-but-disclose''

proceeding in accordance with the Commission's revised ex parte rules.

Parties making oral ex parte presentations are reminded that memoranda

summarizing the presentations must contain summaries of the substance

of the presentations and not merely a listing of the subjects

discussed. More than a one or two sentence description of the views and

arguments presented is generally required. See 47 CFR 1.1206(b)(2), as

revised. Other rules pertaining to oral and written presentations are

set forth in Section 1.1206(b), as well.

2. Initial Regulatory Flexibility Act Analysis

13. As required by the RFA, the Commission has prepared an Initial

Regulatory Flexibility Analysis (IRFA) of the possible significant

economic impact on small entities by the policies and rules proposed in

the Further Notice of Proposed Rulemaking (Further Notice). Written

public comments are requested on the IRFA. These comments must be filed

in accordance with the same filing deadlines for comments on the rest

of the Further Notice, but they must have a separate and distinct

heading, designating the comments as responses to the IRFA. The

Commission will send a copy of the Further Notice, including the IRFA,

to the Chief Counsel for Advocacy of the Small Business Administration.

In addition, the Further Notice and IRFA (or summaries thereof) will be

published in the Federal Register.

14. Need for and Objectives of the Proposed Rules: In the Access

Reform Order, the Commission set lower SLC and PICC caps for primary

residential lines and single line business lines than for non-primary

residential lines and multi-line business lines. The Report and Order

in this proceeding promulgates definitions of ``primary residential

line'' and ``single line business line'' to promote uniformity in the

way price cap LECs assess SLCs and PICCs. The Further Notice seeks

comment on how to apply the primary line distinction to TTY lines used

by individuals with speech or hearing disabilities.

15. Legal Basis: The proposed action is authorized by sections 1,

2, 4(i), 4(j), 201-205, 218-220, 225, and 254 of the Communications Act

as amended, 47 U.S.C. 151, 152, 154(i), 154(j), 201-205, 218-220, 225,

and 254.

16. Description and Estimate of the Number of Small Entities To

Which the Proposed Rules Will Apply: The RFA directs agencies to

provide, where feasible, a description of the type and number of small

entities that our proposed rules may affect. See 5 U.S.C. 603(b)(3).

The proposals set forth in the proceeding may have a significant

economic impact on a substantial number of small entities identified by

the SBA. Because one of the proposals is to use a funding mechanism,

such as the Universal Service Fund, we provide estimates of the number

of small entities potentially affected across many sectors of the

telecommunications industry. A definitional approach, on the other

hand, would affect only price cap LECs. Consequently, the rules we

eventually adopt may affect significantly fewer small entities than we

describe here.

17. The most reliable source of information regarding the total

numbers of certain common carrier and related providers nationwide, as

well as the numbers of commercial wireless entities, appears to be data

the Commission publishes annually in its Telecommunications Industry

Revenue report, regarding the Telecommunications Relay Service (TRS).

According to data in the most recent report, there are 3,459 interstate

carriers. We further describe and estimate the number of small entities

that may be affected by the proposed rules, if adopted. We ask parties

to comment on the number of small carriers that they believe will be

affected by rules regarding the primary-line treatment of TTY lines

used by individuals with speech or hearing disabilities. Wherever

possible, commenters should break their estimates into categories and

subcategories similar to those we discuss here.

18. Telephone Companies (SIC 4813). We shall continue to exclude

small incumbent LECs from the definitions of ``small entity'' and

``small business concern,'' but nonetheless consider the impact on

small incumbent LECs in our IRFA. Accordingly, our use of the terms

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

incumbent LECs.'' We use the term ``small incumbent LECs'' to refer to

any incumbent LECs that arguably might be defined by SBA as ``small

business concerns.''

19. Total Number of Telephone Companies Affected. The proposals

herein may have a significant effect on a substantial number of the

small entity telephone companies identified by SBA. The U.S. Bureau of

the Census reports that, at the end of 1992, there were 3,497 firms

engaged in providing telephone services 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. Although it seems certain that some of the

3,497 telephone service firms are not ``independently owned and

operated,'' are dominant in their field, or have more than 1,500

employees, we will assume for present purposes that they qualify as

small entities or small incumbent LECs. Thus, we estimate that the

rules we eventually adopt following the Further Notice will affect no

more than 3,497 small entity telephone companies and small incumbent

LECs.

20. 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 2,321 such telephone companies were in operation for at

least one year at the end of 1992. All but 26 of the 2,321 non-

radiotelephone companies listed by the Census Bureau were reported to

have fewer than 1,000 employees. Because we lack more specific data, we

will assume for present purposes that the 26 companies have fewer than

1,500 employees. Although it seems certain that some of the 2,321

carriers are not independently owned and operated, or are dominant in

their field, we are 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 the SBA's definition.

Consequently, we estimate that the rules we eventually adopt will

affect no more than 2,321 small entity wireline companies and small

incumbent LECs.

21. Local Exchange Carriers. Neither the Commission nor the SBA has

developed a definition of small LEC. The closest applicable definition

under SBA rules is for telephone communications companies other than

radiotelephone (wireless) companies. According to our most recent data,

1,371 carriers 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, are dominant in

their field, or have more than 1,500 employees, we are unable at this

time to estimate with greater precision the number of LECs that

[[Page 16392]]

would qualify as small business concerns under SBA's definition.

Consequently, we estimate that the rules we eventually adopt following

the Further Notice will affect no more than 1,371 small entity LECs and

small incumbent LECs.

22. Interexchange Carriers. Neither the Commission nor SBA has

developed a definition of small IXCs. The closest applicable definition

under SBA rules is for telephone communications companies other than

radiotelephone (wireless) companies. According to the most recent

Telecommunications Industry Revenue data, 143 carriers reported that

they were engaged in the provision of interexchange services. Although

it seems certain that some of these carriers are not independently

owned and operated, or have more than 1,500 employees, we are unable at

this time to estimate with greater precision the number of IXCs that

would qualify as small business concerns under SBA's definition.

Consequently, we estimate that the rules we eventually adopt following

the Further Notice will affect no more than 143 small entity IXCs.

23. Competitive Access Providers. Neither the Commission nor the

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. According to the most recent Telecommunications Industry

Revenue data, 109 carriers reported that they were engaged in the

provision of competitive access services. Although it seems certain

that some of these carriers are not independently owned and operated,

or have more than 1,500 employees, we are unable at this time to

estimate with greater precision the number of CAPs that would qualify

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

estimate that the rules we eventually adopt following the Further

Notice will affect no more than 109 small entity CAPs.

24. Operator Service Providers. Neither the Commission nor the SBA

has developed a definition of small entities specifically applicable to

providers of operator services. The closest applicable definition under

SBA rules is for telephone communications companies other than

radiotelephone (wireless) companies. According to the most recent

Telecommunications Industry Revenue data, 27 carriers reported that

they were engaged in the provision of operator services. Although some

of these companies may not be independently owned and operated, or may

have more than 1,500 employees, we are unable at this time to estimate

with greater precision the number of operator service providers that

would qualify as small business concerns under SBA's definition.

Consequently, we estimate that the rules we eventually adopt following

the Further Notice will affect no more than 27 small entity operator

service providers.

25. Pay Telephone Operators. Neither the Commission nor the SBA has

developed a definition of small entities specifically applicable to pay

telephone operators. The closest applicable definition under SBA rules

is for telephone communications companies other than radiotelephone

(wireless) companies. According to the most recent Telecommunications

Industry Revenue data, 441 carriers reported that they were engaged in

the provision of pay telephone services. We do not have data specifying

the number of these carriers that 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 pay telephone

operators that would qualify as small business concerns under the SBA's

definition. Consequently, we estimate that there are fewer than 441

small entity pay telephone operators that may be affected by the

proposed rules, if adopted.

26. Resellers (including debit card providers). Neither the

Commission nor the SBA has developed a definition of small entities

specifically applicable to resellers. The closest applicable SBA

definition for a reseller is a telephone communications company other

than radiotelephone (wireless) companies. According to the most recent

Telecommunications Industry Revenue data, 339 reported that they were

engaged in the resale of telephone service. We do not have data

specifying the number of these carriers that 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

resellers that would qualify as small business concerns under the SBA's

definition. Consequently, we estimate that there are fewer than 339

small entity resellers that may be affected by the proposed rules, if

adopted.

27. Radiotelephone (Wireless) Carriers. The Census Bureau reports

that there were 1,178 companies in operation for at least one year at

the end of 1992 that meet the SBA's definition of radiotelephone

company. The Census Bureau also reported that all but 12 of those

radiotelephone companies had fewer than 1,000 employees. Because we

lack more specific data, we will assume for present purposes that the

remaining 12 companies have fewer than 1,500 employees. Although it

seems certain that some of the wireless carriers are not independently

owned and operated, we are unable at this time to estimate with greater

precision the number of radiotelephone carriers and service providers

that would qualify as small business concerns under SBA's definition.

Consequently, we estimate that the rules we eventually adopt following

the Further Notice will affect no more than 1,178 small entity

radiotelephone companies.

28. Cellular Licensees. Neither the Commission nor the SBA has

developed a definition of small entities applicable to cellular

licensees. Therefore, the applicable definition of small entity is the

definition under the SBA rules applicable to radiotelephone (wireless)

companies, as discussed. We note that there are 1,758 cellular

licenses, although a cellular licensee may own several licenses.

According to the most recent Telecommunications Industry Revenue data,

804 carriers reported that they were engaged in the provision of either

cellular service or Personal Communications Service (PCS) services,

which are placed together in the data. We do not have data specifying

the number of these carriers that 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 cellular service

carriers that would qualify as small business concerns under the SBA's

definition. Consequently, we estimate that there are fewer than 804

small cellular service carriers that may be affected by the proposed

rules, if adopted.

29. Mobile Service Carriers. Neither the Commission nor the SBA has

developed a definition of small entities applicable to mobile service

carriers. Therefore, the applicable definition of small entity is the

definition under the SBA rules applicable to radiotelephone (wireless)

companies. The most recent Telecommunications Industry Revenue data

shows that 172 carriers reported that they were engaged in the

provision of either paging or ``other mobile'' services. Consequently,

we estimate that there are fewer than 172 small mobile service carriers

that may be affected by the proposed rules, if adopted.

30. Paging Services. The Commission has adopted a two-tier

definition of small businesses in the context of auctioning licenses in

the paging

[[Page 16393]]

service. A small business is defined as either (1) a entity that,

together with its affiliates and controlling principals, has average

gross revenues for the three preceding years of not more than $3

million; or (2) an entity that, together with affiliates and

controlling principals, has average gross revenues for the three

preceding calendar years of not more than $15 million. The SBA has

approved this definition for paging companies. The Commission estimates

that the total current number of paging carriers is approximately 600.

In addition, the Commission anticipates that a total of 16,630 non-

nationwide geographic area licenses will be granted or auctioned. The

geographic area licenses will consist of 2,550 Major Trading Area (MTA)

licenses and 14,080 Economic Area (EA) licenses. In addition to the 47

Rand McNally MTAs, the Commission is licensing Alaska as a separate MTA

and adding three MTAs for the U.S. territories, for a total of 51 MTAs.

No auctions of paging licenses have been held yet, and there is no

basis to determine the number of licenses that will be awarded to small

entities. Given the fact that no reliable estimate of the number of

paging licensees can be made, we assume, for purposes of the IRFA, that

all of the current licensees and the 16,630 geographic area paging

licensees either are or will consist of small entities, as that term is

defined by the SBA.

31. 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, the Commission added a classification for ``very small

business,'' which the Commission defined as an entity that, together

with its affiliates, has average gross revenues of not more than $15

million for the preceding three calendar years. The SBA has approved

these regulations defining ``small entity'' in the context of broadband

PCS auctions. We do not have sufficient data to determine how many

small entities under the SBA-approved definition bid successfully for

licenses in Blocks A and B. As of now there are 90 non-defaulting

winning bidders that qualified as small entities in the Block C

auctions. A total of 93 small and very small business bidders qualify

as small entities for Blocks D, E, and F. Based on this information, we

conclude that the rules we eventually adopt following the Further

Notice will affect no more than 183 non-defaulting winning bidders that

qualify as small entities in the C, D, E, and F Block broadband PCS

auctions.

32. Narrowband PCS. The Commission has auctioned nationwide and

regional licenses for narrowband PCS. There are 11 nationwide and 30

regional licensees for narrowband PCS. The Commission does not have

sufficient information to determine whether any of these licensees are

small businesses within the SBA-approved definition for radiotelephone

companies. At present, there have been no auctions held for the major

trading area (MTA) and basic trading area (BTA) narrowband PCS

licenses. The Commission anticipates a total of 561 MTA licenses and

2,958 BTA licenses will be awarded by auction. Such auctions have not

yet been scheduled, however. Given that nearly all radiotelephone

companies have no more than 1,500 employees and that no reliable

estimate of the number of prospective MTA and BTA narrowband licensees

can be made, we assume, for purposes of the IRFA, that all of the

licenses will be awarded to small entities, as that term is defined by

the SBA.

33. Rural Radiotelephone Service. The Commission has not adopted a

definition of small entity specific to the Rural Radiotelephone

Service. A significant subset of the Rural Radiotelephone Service is

the Basic Exchange Telephone Radio Systems (BETRS). We will use the

SBA's definition applicable to radiotelephone companies. There are

approximately 1,000 licensees in the Rural Radiotelephone Service, and

we estimate that almost all of them qualify as small entities under the

SBA's definition.

34. Specialized Mobile Radio. Pursuant to Section 90.814(b)(1) of

the Commission's Rules, the Commission has defined ``small entity'' for

geographic area 800 MHz and 900 MHz SMR licenses as firms that had

average gross revenues of no more than $15 million in the three

previous calendar years. This regulation defining ``small entity'' in

the context of 800 MHz and 900 MHz SMR has been approved by the SBA. We

do not know how many firms provide 800 MHz or 900 MHz geographic area

SMR service, nor how many of these providers have annual revenues of no

more than $15 million. The Commission recently held auctions for

geographic area licenses in the 900 MHz SMR band. There were 60 winning

bidders who qualified as small entities under the Commission's

definition in the 900 MHz auction. Based on this information, we

conclude that the rules we eventually adopt following the Further

Notice will affect no more than 60 small entity geographic area SMR

licensees. A total of 525 licenses were auctioned for the upper 200

channels in the 800 MHz geographic area SMR auction. There were 62

qualifying bidders, of which 52 were small businesses. 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 to estimate, moreover, how many small entities within the SBA's

definition will win these lower channel licenses. We assume that, for

purposes of our evaluations in the IRFA, all of the current specialized

mobile radio licensees are small entities, as the SBA defines that

term.

35. 220 MHz Service. The 220 MHz service has both Phase I and Phase

II licenses. Phase I licensing was conducted by lotteries in 1992 and

1993. There are approximately 1,515 such non-nationwide licensees and

four nationwide licensees currently authorized to operate in the 220

MHz band. The Commission has not developed a definition of small

entities specifically applicable to such incumbent 220 MHz Phase I

licensees. To estimate the number of such licensees that are small

businesses, we apply the definition under the SBA rules applicable to

Radiotelephone Communications companies. According to the Bureau of the

Census, only 12 radiotelephone firms out of a total of 1,178 such firms

that operated during 1992 had 1,000 or more employees. Therefore, if

this general ratio continues to 1999 in the context of Phase I 220 MHz

licensees, we estimate that nearly all such licensees are small

businesses under the SBA's definition.

36. The Phase II 220 MHz service is a new service, and is subject

to spectrum auctions. In the 220 MHz Third Report and Order we adopted

criteria for defining small businesses and very small businesses for

purposes of determining their eligibility for special provisions such

as bidding credits and installment payments. We have defined a small

business as an entity that, together with its affiliates and

controlling principals, has average gross revenues not exceeding $15

million for the preceding three years. Additionally, a very small

business is defined as an entity that, together with its affiliates and

controlling principals, has average gross revenues that are not more

than $3 million for the preceding

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three years. The SBA has approved these definitions. An auction of

Phase II licenses commenced on September 15, 1998, and closed on

October 22, 1998. 908 licenses were auctioned in 3 different-sized

geographic areas: three nationwide licenses, 30 Regional Economic Area

Group Licenses, and 875 Economic Area (EA) Licenses. Of the 908

licenses auctioned, 693 were sold. Companies claiming small business

status won: one of the Nationwide licenses, 67% of the Regional

licenses, and 54% of the EA licenses. As of January 22, 1999, the

Commission announced that it was prepared to grant 654 of the Phase II

licenses won at auction. A re-auction of the remaining, unsold licenses

is likely to take place during calendar year 1999.

37. Mobile Satellite Services (MSS). 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 the definition under the SBA rules applicable to

Communications Services, Not Elsewhere Classified (NEC). This

definition provides that a small entity is one with $11.0 million or

less in annual receipts. According to the Census Bureau, there were a

total of 848 communications services, NEC, in operation in 1992, and a

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

Satellite Services or Mobile Satellite Earth Stations are intended to

be used while in motion or during halts at unspecified points. These

stations operate as part of a network that includes a fixed hub or

stations. The stations that are capable of transmitting while a

platform is moving are included under section 20.7(c) of the

Commission's rules as mobile services within the meaning of sections

3(27) and 332 of the Communications Act. Those MSS services are treated

as CMRS if they connect to the Public Switched Network (PSN) and also

satisfy other criteria of Section 332. Facilities provided through a

transportable platform that cannot move when the communications service

is offered are excluded from Section 20.7(c). The MSS networks may

provide a variety of land, maritime and aeronautical voice and data

services. There are eight mobile satellite licensees. At this time, we

are unable to make a precise estimate of the number of small businesses

that are mobile satellite earth station licensees.

38. Air-Ground Radiotelephone Service. The Commission has not

adopted a definition of small business specific to the Air-Ground

Radiotelephone Service, which is defined in section 22.99 of the

Commission's rules. Accordingly, we will use the SBA's definition

applicable to radiotelephone companies. There are approximately 100

licensees in the Air-Ground Radiotelephone Service, and we estimate

that almost all of them qualify as small under the SBA definition.

39. Fixed Microwave Services. Microwave services include common

carrier, private-operational fixed, and broadcast auxiliary radio

services. At present, there are approximately 22,015 common carrier

fixed licensees and 61,670 private operational-fixed licensees and

broadcast auxiliary radio licensees in the microwave services. The

Commission has not yet defined a small business with respect to

microwave services. For purposes of the IRFA, we will use the SBA's

definition applicable to radiotelephone companies. We estimate, for

this purpose, that all of the Fixed Microwave licensees (excluding

broadcast auxiliary licensees) would qualify as small entities under

the SBA definition for radiotelephone companies, and may be affected by

the rules we eventually adopt to the extent that they contribute to the

Universal Service or TRS funds.

40. Wireless Communications Services. This service can be used for

fixed, mobile, radiolocation and digital audio broadcasting satellite

uses. The Commission defined ``small business'' for the wireless

communications services (WCS) auction as an entity with average gross

revenues of $40 million for each of the three preceding years, and a

``very small business'' as an entity with average gross revenues of $15

million for each of the three preceding years. The Commission auctioned

geographic area licenses in the WCS service. In the auction, there were

seven winning bidders that qualified as very small business entities,

and one that qualified as a small business entity. We conclude that the

number of geographic area WCS licensees affected includes these eight

entities.

41. Cable System Operators (SIC 4841). The SBA has developed a

definition of small entities for cable and other pay television

services that 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 1,758 total cable and other pay television

services and 1,423 had less than $11 million in revenue. We note that

cable system operators are included in our analysis due to their

ability to provide telephony.

42. The Commission has developed with the SBA's approval our 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. Based on our

most recent information, we estimate 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, we estimate that there are fewer than 1,439 small entity

cable system operators that may be affected by the decisions and rules

adopted in the Order. We conclude that only a small percentage of these

entities currently provide qualifying ``telecommunications services''

required by the Act and, therefore, estimate that the number of such

entities affected are significantly fewer than noted.

43. The Act also contains a definition of 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.'' The Commission has determined that there are 61,700,000

subscribers in the United States. Therefore, we found that an operator

serving fewer than 617,000 subscribers shall be deemed a small

operator, if its annual revenues, when combined with the total annual

revenues of all of its affiliates, do not exceed $250 million in the

aggregate. Based on available data, we find that the number of cable

operators serving 617,000 subscribers or fewer total 1,450. We do not

request nor do we collect information concerning whether cable system

operators are affiliated with entities whose gross annual revenues

exceed $250,000,000, and thus are 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 Act.

44. Direct Broadcast Satellites (DBS). Because DBS provides

subscription services, DBS falls within the SBA definition of Cable and

Other Pay Television Services (SIC 4841). As of

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December 1996, there were eight DBS licensees. The Commission, however,

does not collect annual revenue data for DBS and, therefore, is unable

to ascertain the number of small DBS licensees that could be impacted

by these rules. Although DBS service requires a great investment of

capital for operation, we acknowledge that there are several new

entrants in this field that may not yet have generated $11 million in

annual receipts, and therefore may be categorized as a small business,

if independently owned and operated.

45. International Services. 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 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

million or less in annual receipts. According to the Census Bureau,

there were a total of 848 communications services, NEC in operation in

1992, and a total of 775 had annual receipts of less than $9,999

million. We note that those entities providing only international

service will not be affected by our rules. We do not, however, have

sufficient data to estimate with greater detail those providing both

international and interstate services. Consequently, we estimate that

there are fewer than 775 small international service entities

potentially impacted by our rules.

46. International Broadcast Stations. Commission records show that

there are 20 international broadcast station licensees. We do not

request or collect annual revenue information, and thus are unable to

estimate the number of international broadcast licensees that would

constitute a small business under the SBA definition. We note that

those entities providing only international service will not be

affected by our rules. We do not, however, have sufficient data to

estimate with greater detail those providing both international and

interstate services. Consequently, we estimate that there are fewer

than 20 international broadcast stations potentially impacted by our

rules.

47. Description of Projected Reporting, Recordkeeping, and Other

Compliance Requirements: Once we adopt rules regarding the primary-line

treatment of TTY lines used by individuals with speech or hearing

disabilities, carriers will need to identify such individuals. To do

so, carriers may be able to rely on existing mechanisms, such as the

toll discount program. If carriers are unable to use existing

mechanisms, they may need to implement a self-certification mechanism.

If the Commission adopts a funding approach, carriers may also need to

report revenues for the administration of the funding mechanism.

Carriers may, however, already be providing some of the necessary

information in conjunction with existing funding mechanisms, such as

the one currently in place for TRS. Under the funding approach,

carriers may also need to provide data on the revenues attributable to

TTY lines used by speech or hearing-impaired individuals as primary

lines and as non-primary lines. We ask parties to comment on the

reporting, recordkeeping, and other compliance requirements they

believe will be necessary to implement rules regarding the primary-line

treatment of TTY lines used by individuals with speech or hearing

disabilities.

48. Steps Taken to Minimize Significant Economic Impact on Small

Entities, and Significant Alternatives Considered: We have outlined and

sought comment on what we believe are the significant possible

alternatives for implementing a primary-line definition with respect to

TTY lines used by speech-or hearing-disabled individuals. We note that

small entities will be largely unaffected by the rules we promulgate

following the Further Notice because the distinction between primary

and non-primary lines applies only to price cap LECs. Depending on the

funding mechanism--if any--chosen, however, some small entities may

have contribution requirements. We seek comment on any significant

alternative compliance or reporting requirements or timetables that

take into account the resources available to small entities and

accomplish our stated objectives.

49. Federal Rules that May Overlap, Duplicate, or Conflict with the

Proposed Rules. Because this is the first occasion in which the

Commission has attempted to define primary lines, we do not believe

that the proposals in the Further Notice overlap with or duplicate any

existing federal rules. We ask parties to comment on any federal rules

that they believe may overlap with, duplicate, or conflict with the

approaches we discuss in the Further Notice.

3. Initial Paperwork Reduction Act Analysis

50. Certain proposals contained in the Further Notice may require

an information collection. As part of our continuing effort to reduce

paperwork burdens, and as required by the Paperwork Reduction Act of

1995, Public Law No. 104-13, we invite the general public and the OMB

to take this opportunity to comment on those information collections.

Public and agency comments are due at the same time as other comments

on the Further Notice; OMB comments are due 60 days from date of

publication of the Further Notice in the Federal Register. Comments

should address: (a) whether the proposed information collections are

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.

4. Notice and Comment Procedures

51. Pursuant to sections 1.415 and 1.419 of the Commission's Rules,

47 CFR 1.415, 1.419, interested parties may file comments on or before

April 9, 1999, and reply comments on or before April 26, 1999. Comments

may be filed using the Commission's Electronic Comment Filing System

(ECFS) or by filing paper copies.

52. 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 an

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

e-mail comments, commenters should send an e-mail message 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.

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

four copies of each filing. All filings must be sent to the

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

Federal Communications Commission, 445 Twelfth Street SW, Room TW-A325,

Washington, DC 20554. In addition, one copy of each

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pleading must be filed with the Commission's duplicating contractor,

International Transcription Services (ITS), 1231 Twentieth Street, NW,

Washington, DC 20036, and one copy with the Chief, Competitive Pricing

Division, 445 Twelfth St. SW, Fifth Floor, Washington, DC 20554.

54. Parties are also asked to submit comments and reply comments on

diskette. Such diskette submission would be in addition to and not a

substitute for the formal filling requirements addressed above. Such a

submission should be on a 3.5-inch diskette formatted in an IBM

compatible form using MS Dos 5.0 and WordPerfect 5.1 software. The

diskette should be submitted in ``read only'' mode. The diskette should

be clearly labeled with the party's name, proceeding, type of pleading

(comment or reply comments), and date of submission. The diskette

should be accompanied by a cover letter.

55. Written comments by the public on the proposed information

collections are due April 9, 1999, and replies are due on or before

April 26, 1999. The Office of Management and Budget (OMB) must submit

written comments on the proposed information collections on or before

60 days after date of publication in the Federal Register. In addition

to filing comments with the Secretary, a copy of any comments on the

information collections contained herein should be submitted to Judy

Boley, Federal Communications Commission, 445 Twelfth St. SW,

Washington, DC 20554, Room 1-C804, or via the Internet to

[email protected], and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725

Seventeenth Street NW, Washington, DC 20503, or via the Internet to

[email protected].

56. Alternative formats (computer diskette, large print, audio

cassette and Braille) of the Report and Order and Further Notice of

Proposed Rulemaking are available to persons with disabilities by

contacting Martha Contee at (202) 418-0260 voice, (202) 418-2555 TTY,

or [email protected]. The Notice can also be downloaded at: http://

www.fcc.gov/dtf/.

57. Accordingly, It is ordered, pursuant to the authority contained

in sections 1, 2, 4(i), 4(j), 201-205, 218-220, 225, and 254 of the

Communications Act as amended, 47 U.S.C. 151, 152, 154(i), 154(j), 201-

205, 218-220, 225, and 254, a Further Notice of Proposed Rulemaking Is

hereby adopted.

58. It is further ordered that the Commission's Office of Public

Affairs, References Operations Division, Shall send a copy of the

Further Notice of Proposed Rulemaking, including the Initial Regulatory

Flexibility Analysis, to the Chief Counsel for Advocacy of the Small

Business Administration.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

[FR Doc. 99-7788 Filed 4-2-99; 8:45 am]

BILLING CODE 6712-01-P