Title III, Part B of the Energy Policy and Conservation Act (EPCA) of 1975, Public Law 94-163, (42 U.S.C. 6291-6309), as amended, established an energy conservation program for consumer products other than automobiles.1

The Energy Policy Act of 2005 (EPACT 2005), Public Law 109-58, amended EPCA to establish energy conservation standards for dehumidifiers2 manufactured as of October 1, 2007. (Section 135(c)(4)) EPACT 2005 also required that DOE issue a final rule by October 1, 2009, to determine whether these standards should be amended. (Id.) Compliance with any amended standards would be required for dehumidifiers manufactured as of October 1, 2012. (Id.) In the event that DOE did not publish a final rule, EPACT 2005 specified a new set of amended standards with a compliance date of October 1, 2012. (Id.)

DOE issued an Advance Notice of Proposed Rulemaking (ANOPR) to consider energy conservation standards for dehumidifiers and other products. 72 FR 64432 (Nov. 15, 2007). The Energy Independence and Security Act of 2007 (EISA 2007), Public Law 110-140 subsequently amended EPCA to prescribe new energy conservationstandards for dehumidifiers manufactured on or after October 1, 2012. DOE codified the EISA 2007 standards at 10 CFR 430.32(v)(2). 74 FR 12058 (Mar. 23, 2009).

EPCA also requires that, not later than 6 years after the issuance of a final rule establishing or amending a standard, DOE publish a notice of proposed rulemaking (NOPR) proposing new standards or a notice of determination that the existing standards do not need to be amended. (42 U.S.C. 6295(m)(1))

EPCA specifies that the test procedure for dehumidifiers must be based on the U.S. Environmental Protection Agency (EPA)'s test criteria used under the ENERGY STAR Program in effect on August 8, 2005, unless DOE revises the test procedures. (42 U.S.C. 6293(b)(13)) Those ENERGY STAR test criteria require that American National Standards Institute (ANSI)/Association of Home Appliance Manufacturers (AHAM) Standard DH-1 be used to measure capacity in pints of moisture removed per day, while Canada's CAN/Canadian Standards Association (CSA)-C749-94 is used to calculate the energy factor (EF) in terms of liters of moisture removed per kilowatt-hour (kWh). DOE codified the test procedure requirements from EPCA for dehumidifiers at 10 CFR part 430 subpart B, appendix X. 71 FR 71340 (Dec. 8, 2006).

EPCA requires that DOE amend the test procedures for certain residential products, including dehumidifiers, to incorporate measures of standby mode and off mode energy use, if technically feasible. DOE published a NOPR in which it proposed to incorporate by reference in the test procedures for dehumidifiers and other products an international test method for measuring standby mode and off mode power consumption, International Electrotechnical Commission (IEC) Standard 62301. 75 FR 75290 (Dec. 2, 2010). DOE subsequently published a Supplemental Notice of Proposed Rulemaking (SNOPR) to propose referencing the updated version of IEC Standard 62301. 76 FR 58346 (Sept. 20, 2011). In a second SNOPR, DOE proposed in relevant part to measure both capacity and EF for dehumidifiers according to the current version of AHAM Standard DH-1. 77 FR 31444 (May 25, 2012).

During this rulemaking, DOE will determine whether to further amend the energy conservation standards for residential dehumidifiers. (42 U.S.C. 6295(cc)). EPCA requires that any new or amended energy conservation standard be designed to achieve the maximum improvement in energy or water efficiency that is technologically feasible and economically justified. To determine whether a standard is economically justified, EPCA requires that DOE determine whether the benefits of the standard exceed its burdens by considering, to the greatest extent practicable, the following:

To begin the required rulemaking process, DOE has prepared a framework document to explain the issues, analyses, and processes that it is considering for the development of amended energy conservation standards for residential dehumidifiers. The framework document is available athttp://www1.eere.energy.gov/buildings/appliance_standards/residential/dehumidifiers.html.

Additionally, DOE will hold a public meeting to focus on the analyses and issues described in the framework document. DOE encourages anyone who wishes to participate in the public meeting to view the framework document and to be prepared to discuss its contents. Public meeting participants need not limit their comments to the topics identified in the framework document; DOE is also interested in receiving views on other relevant issues that participants believe would affect energy conservation standards for these products. DOE welcomes all interested parties, regardless of whether they participate in the public meeting, to submit in writing comments and information on matters addressed in the framework document and on other matters relevant to consideration of standards for residential dehumidifiers.

DOE will conduct the public meeting in an informal conference style. A court reporter will record the minutes of the meeting. The discussion will not include proprietary information, costs or prices, market shares, or other commercial matters regulated by U.S. antitrust laws.

After the public meeting and the expiration of the period for submitting written statements, DOE will begin collecting data, conducting the analyses as discussed at the public meeting, and reviewing public comments.

Anyone who wishes to participate in the public meeting, receive meeting materials, or be added to the DOE mailing list to receive future notices and information about the rulemaking process for residential dehumidifiers should contact Ms. Brenda Edwards at (202) 586-2945

See the “Additional Information” section in the NPRM (77 FR 30054) for further information on how to comment on the proposals in the NPRM and how the FAA will handle comments received. The “Additional Information” section also contains related information about the docket, privacy, and the handling of proprietary or confidential business information. In addition, there is information on obtaining copies of related rulemaking documents.

On May 21, 2012, the FAA issued Notice No. 12-03, entitled “Repair Stations” (77 FR 30054). Comments to that document were to be received on or before August 20, 2012.

By letter dated August 3, 2012, nine associations representing a large cross-section of the aviation industry jointly requested that the FAA extend the comment period for 90 days (Aeronautical Repair Station Association, Aerospace Industries Association, Aircraft Electronics Association, Aircraft Owners and Pilots Association, Airlines for America, Helicopter Association International, National Air Carrier Association, National Air Transportation Association, and Regional Airline Association). The petitioners stated that good cause and need for an extended comment period arises from the scope and extent of the proposed changes, coupled with the effects it will have between and among individual companies represented by the petitioners. Further, the petitioners noted that many repair stations are small businesses which do not have departments or personnel dedicated to reviewing regulatory changes. As such, they may not be aware of the proposals, and the petitioners need more time to reach these small businesses and gather their input. Finally, the petitioners stated that more time is needed to consolidate its members' comments and coordinate these comments among the group.

The FAA agrees with the petitioners' request for an extension of the comment period. We recognize the NPRM's contents are significant and complex. Further, we understand that it is the intention of the petitioners to continue to canvass their members for comments, and to coordinate and consolidate the additional comments.

Absent unusual circumstances, the FAA does not anticipate any further extension of the comment period for this rulemaking.

In accordance with § 11.47(c) of Title 14, Code of Federal Regulations, the FAA has reviewed the joint petition made by the nine associations for extension of the comment period to Notice No. 12-03. These petitioners have shown a substantive interest in the proposed rule and good cause for the extension. The FAA has determined that extension of the comment period is consistent with the public interest, and that good cause exists for taking this action.

Accordingly, the comment period for Notice No. 12-03 is extended to November 19, 2012.

OSHA requests comment on all issues related to the proposed rule, including economic, paperwork, or other regulatory impacts of this rule on the regulated community. If OSHA receives no significant adverse comment to either this proposal or the companion direct final rule, OSHA will publish aFederal Registerdocument confirming the effective date of the direct final rule and withdrawing this companion proposed rule. Such confirmation may include minor stylistic or technical changes to the document. For the purpose of judicial review, OSHA considers the date of confirmation of the effective date of the direct final rule as the date of promulgation.

In direct final rulemaking, an agency publishes a direct final rule in theFederal Registerwith a statement that the rule will become effective unless the agency receives significant adverse comment within a specified period. The agency may publish an identical proposed rule at the same time. If the agency receives no significant adverse comment in response to the direct final rule, the agency typically confirms the effective date of a direct final rule through a separateFederal Registernotice. If the agency receives a significant adverse comment, the agency withdraws the direct final rule and treats such comment as a response to the proposed rule. An agency uses direct final rulemaking when it anticipates that a rule will not be controversial.

OSHA is publishing a companion direct final rule along with this proposed rule in the “Final Rules” section of today'sFederal Register. For purposes of this proposed rule and the companion direct final rule, a significant adverse comment is one that explains why the amendments to OSHA's underground construction and demolition standards would be inappropriate. In determining whether a comment necessitates withdrawal of the direct final rule, OSHA will consider whether the comment raises an issue serious enough to warrant a substantive response in a notice-and-comment process. OSHA will not consider a comment recommending an additional amendment to be a significant adverse comment unless the comment states why the direct final rule would be ineffective without the addition.

The comment period for the direct final rule runs concurrently with that of this proposed rule. OSHA will treat comments received on the companion direct final rule as comments regarding the proposed rule. OSHA also will consider significant adverse comment submitted to this proposed rule as comment to the companion direct final rule. If OSHA receives a significant adverse comment on either the direct final rule or this proposed rule, it will publish a timely withdrawal of thecompanion direct final rule and proceed with this proposed rule. In the event OSHA withdraws the direct final rule because of significant adverse comment, OSHA will consider all timely comments received in response to the direct final rule when it continues with the proposed rule. After carefully considering all comments to the direct final rule and the proposal, OSHA will decide whether to publish a new final rule.

OSHA determined that the subject of this rulemaking is suitable for direct final rulemaking. Under the final rule for cranes and derricks in construction, most construction work involving cranes and derricks falls under new subpart CC of 29 CFR 1926, but underground construction and demolition remain covered under the former rule (i.e.,§ 1926.550). These proposed amendments will result in the new subpart CC covering all construction operations, thereby improving worker safety because the new rule provides better protection to workers than the former rule. Moreover, these proposed amendments will facilitate employer compliance by having all construction operations involving cranes and derricks subject to a single rule rather than by having a few operations subject to a different rule. In addition, this proposed (and the direct final) rule corrects inadvertent errors made to the standards for underground construction and demolition when OSHA issued the final cranes rule. Therefore, OSHA does not expect objections from the public to this rulemaking action. Accordingly, the Agency believes the regulated community will welcome this effort to harmonize the requirements regulating crane and derrick operations in underground construction and demolition, and to remove errors that hinder interpretation and proper application of existing standards.

OSHA designed the final rule for cranes and derricks in construction, codified at 29 CFR part 1926, subpart CC, to replace the earlier rule (§ 1926.550) for all construction work.1 In proposing the new cranes and derricks rule, OSHA explained that the rule's purpose was “to protect employees from the hazards associated with hoisting equipment when used to perform construction activities” (73 FR 59714). Because OSHA developed the new rule to supplant the former rule entirely, OSHA proposed to remove and reserve § 1926.550 (73 FR 59915). When other OSHA construction standards referred to § 1926.550 directly, or indirectly, as part of subpart N, OSHA proposed to amend those provisions to refer instead to the new requirements in subpart CC (73 FR 59914-15).

In the proposed rule for cranes and derricks in construction, OSHA inadvertently did not propose to amend three provisions that referred to subpart N and encompassed the requirements of § 1926.550. These provisions included two provisions applicable to demolition work (§ 1926.856(c) and § 1926.858(b)), and one provision applicable to underground construction work (§ 1926.800(t)). When it issued the final rule, OSHA noted concerns about potentially inadequate notice to the public regarding any effort to amend these provisions in the final rule; consequently, OSHA decided not to amend these provisions in the final rule. OSHA instead stated that it would revisit the issue later (75 FR 47920-21).

Having removed the requirements of § 1926.550 in the final rule, OSHA had to reestablish the substance of the demolition and underground construction provisions in a new subpart DD in the final rule, redesignate § 1926.550 as § 1926.1501 of subpart DD, and amend the demolition and underground construction provisions that previously referred to subpart N to refer instead to the new subpart DD. OSHA provided in § 1926.1500 of subpart DD that “[t]his subpart applies in lieu of § 1926 subpart CC.” However, in making these revisions, OSHA inadvertently made changes to the demolition and underground construction provisions that modified the meaning of these provisions. In addition, the Code of Federal Regulations eliminated all of the subparagraphs of § 1926.800(t), except for the introductory paragraph, because of a technical error in the draft regulatory language.

This proposed rule, therefore, will accomplish two goals. First, it will bring all crane and derrick use in construction work under new subpart CC. Second, it will correct the errors in the final rule that substantively altered the demolition and underground construction provisions, and replace subparagraphs § 1926.800(t)(1) through (4). Below, OSHA describes the amendments to the demolition and underground construction standards that OSHA made in the final rule for cranes and derricks in construction (including inadvertent errors), as well as the revisions and corrections to these standards that OSHA proposes.

Before OSHA issued the final rule for cranes and derricks in construction, § 1926.856(c) stated, “Mechanical equipment used shall meet the requirements specified in subparts N and O of this part,” and § 1926.858(b) read, “Cranes, derricks, and other hoisting equipment used shall meet the requirements specified in subpart N of this part.” In the final rule for cranes and derricks in construction, OSHA established a new subpart DD, redesignated the prior cranes and derricks rule (§ 1926.550) as § 1926.1501 of subpart DD, and amended § 1926.856(c) to require compliance with the new subpart DD, in addition to the remaining requirements of subparts N and O. OSHA also amended § 1926.858(b) to require compliance with new subpart DD instead of subpart N.

It was OSHA's expressed purpose not to make substantive revisions to the requirements of these two sections in the final rule.2 Nevertheless, OSHA made an inadvertent substantive change to § 1926.858(b).3 That section originally incorporated all requirements of subpart N for “cranes, derricks, and other hoisting equipment,” not just the requirements of subpart N's cranes and derricks standard at § 1926.550. However, the final rule did not reference other requirements of subpart N that pertain to demolition work, which include the requirements of § 1926.552 (Material hoists, personnel hoists, and elevators) and § 1926.554 (Overhead hoists). As a result, the amendment had the effect of deleting the requirement for employers engaged in demolition work to comply with §§ 1926.552 and 1926.554. Therefore, to cover all construction work under subpart CC, and to correct these errors, OSHA is proposing to amend §§ 1926.856(c) and 1926.858(b) by replacing the requirements to comply with subpart DD with requirements to comply with subpart CC, and is proposing to amend § 1926.858(b) byreinstating the requirement to comply with subpart N as well.

Section 1926.800(t) contains requirements for hoisting that are unique to underground construction. Before OSHA issued the final rule for cranes and derricks in construction, the previous version of § 1926.800(t) contained an introductory paragraph that cross-referenced other OSHA standards that apply to hoisting in underground construction; these cross-references consisted of the requirements of the prior cranes and derricks rule at § 1926.550, including most of § 1926.550(g) (the provision of the prior rule that applied to hoisting personnel), and requirements for material hoists, personnel hoists, and elevators at § 1926.552(a) through (d). Previous § 1926.800(t) included one substantive modification to the requirements of prior § 1926.550(g)(2): employers could use cranes to hoist employees for routine access to underground worksites via a shaft without showing that conventional means would be more hazardous, or not possible, for this purpose due to structural design or worksite conditions.4 When it issued the underground construction rule, OSHA included this modification because hoisting personnel for routine access to the underground worksites via a shaft occurs under more controlled, and less hazardous, conditions than hoisting personnel in general (54 FR 23824, 23845). Previous § 1926.800(t)(1) through (4) contained additional requirements for hoisting unique to underground construction. Language at the beginning of the introductory paragraph of § 1926.800(t), “Except as modified by this paragraph (t),” clarified that the requirements and exceptions in 1926.800(t)(1) through (4) take precedence over the cross-referenced requirements, including the former cranes standard under § 1926.550.

In the final cranes rule, OSHA redesignated the prior cranes and derricks rule as § 1926.1501 of subpart DD. It was OSHA's expressed purpose to preserve the existing crane requirements for underground construction by changing references in the introductory paragraph of § 1926.800(t) from § 1926.550 and § 1926.500(g)(2) to § 1926.1501 and § 1926.1501(g)(2), respectively. OSHA clarified this purpose in the preamble to the final rule by stating that the revisions to § 1926.800(t) “do not alter any of the substantive requirements of § 1926.800(t)” (75 FR 47920). However, OSHA inadvertently changed § 1926.800(t) by amending the introductory paragraph to require employers engaged in underground construction to comply only with new § 1926.1501(g) (which duplicated § 1926.550(g)), instead of preserving the former routine-access exemption by requiring compliance with § 1926.1501 in its entirety, and modifying the requirements of § 1926.1501(g)(2) (which duplicated former § 1926.550(g)(2)).5 Additionally, OSHA inadvertently moved the language “Except as modified by paragraph (t)” to the beginning of the second sentence of the introductory paragraph so that it no longer applied to the cross-referenced § 1926.1501 requirements, but instead only applied to the cross-referenced requirements in § 1926.552(a) through (d). Finally, although OSHA did not plan to alter any of the (then remaining) requirements and exemptions of § 1926.800(t)(1) through (4), but only to amend the introductory paragraph, a technical error in the instructions to theFederal Registerresulted in the deletion of subparagraphs § 1926.800(t)(1) through (4). The deletion was not mentioned in the preamble to the final cranes rule.

As amended by the final cranes rule, § 1926.800(t) presents four problems. First, the prior version of § 1926.800(t) incorporated all of § 1926.550, not just § 1926.550(g). However, the amended version of § 1926.800(t) refers only to § 1926.1501(g), the successor to § 1926.550(g). Therefore, as now written, § 1926.800(t) does not explicitly require employers to comply with either the final cranes rule or the prior rule at § 1926.550, except for § 1926.1501(g), the prior rule's provision on hoisting personnel. Second, the exception from § 1926.550(g)(2), specified in the former version of § 1926.800(t), provided that employers could use cranes to hoist personnel for routine access to underground worksites via a shaft without showing that other means of access are more hazardous or impossible. OSHA did not include this exception in the new version of § 1926.800(t). This inadvertent error places an additional and unnecessary burden on employers that use cranes for this purpose. Third, moving the text “Except as modified by paragraph (t)” to the beginning of the second sentence of the introductory paragraph of § 1926.800(t) results in ambiguity as to the relationship between incorporated crane requirements and the provisions in § 1926.800(t)(1) through (4). Finally, the inadvertent elimination of § 1926.800(t)(1) through (4) from the Code of Federal Regulations resulted in eliminating requirements that OSHA adopted in a 1989 rulemaking (54 FR 23843) to ensure that employees engaged in underground construction receive adequate protection from hazards unique to hoisting in this setting.

In this proposed rule, OSHA is proposing to amend § 1926.800(t) to extend subpart CC to underground construction, and to resolve the technical errors set forth in this section. OSHA is proposing to amend the introductory paragraph of § 1926.800(t) to restore the provision allowing employers to use cranes to hoist personnel for routine access to the underground worksites via a shaft without the need to show that conventional means of access are more hazardous or impossible for this purpose. This amendment excepts routine access of employees to an underground worksite via a shaft from the requirements of § 1926.1431(a). The requirements of § 1926.1431(a) are virtually identical to the requirements of § 1926.550(g)(2). In addition, OSHA is proposing to amend § 1926.800(t) by restoring the clause “Except as modified by this paragraph (t)” to the beginning of the introductory paragraph, and restoring § 1926.800(t)(1) through (4). OSHA is also proposing to revise the language in the introductory paragraph for clarity, and is proposing to correct three minor grammatical errors that appeared in the text of paragraphs § 1926.800(t)(3)(vi), (t)(4)(iii), and (t)(4)(iv), as previously published in the Code of Federal Regulations.

The revisions made by this proposed rule will enable OSHA to cover all cranes and derricks used in construction under subpart CC. These revisions implement the original purpose of the rule and will benefit both employees and employers. These revisions would ensure that the significant benefits of subpart CC, which include saving 22 lives per year and preventing 175 non-fatal injuries per year compared to prior § 1926.550 (75 FR 48079), extend to demolition and underground construction. Accordingly, applying subpart CC to demolition andunderground construction will ensure that construction workers in those sectors receive the same safety protections from new subpart CC as other construction workers.

The revisions also will benefit construction contractors that engage in underground construction or demolition work, in addition to other types of construction work, because these contractors will now be subject to a single standard rather than having some of their activities covered under subpart CC and other work covered by subpart DD. This action will avoid the confusion that would result if new subpart CC covers part of a project and revised § 1926.800(t) covers another part of the project. For example, in a cut-and-cover tunneling project, the underground construction standard applies only after covering the excavation in such a manner as to establish conditions characteristic of underground construction. 29 CFR 1926.800(a). Therefore, under the current requirements, subpart CC would apply to the work while the excavation is open, but after covering the excavation, subpart DD would apply, thereby resulting in the same crane or derrick being subject to different standards during different phases of the project. Finally, this action will facilitate employer compliance because demolition and underground construction contractors will no longer be subject to the outdated requirements in prior § 1926.550, which relied heavily on pre-1970 consensus standards.

When it issued the final cranes rule, OSHA prepared a final economic analysis (FEA) as required by the Occupational Safety and Health Act of 1970 (OSH Act; 29 U.S.C. 651et seq.) and Executive Order 12866 (58 FR 51735). OSHA also published a Final Regulatory Flexibility Analysis (FRFA) as required by the Regulatory Flexibility Act (5 U.S.C. 601-612). OSHA's approach to estimating costs and economic impacts in these analyses began by estimating, for all construction sectors, the total number of cranes and whether they were owned and rented; owned without rental; or leased. As a result, both analyses covered all cranes engaged in construction activities, including cranes engaged in underground construction and cranes engaged in construction work involving demolition. The FEA for the final cranes standard, which included all cranes, crane operations, and industry sectors subject to this proposed rule, found that the requirements of the rule were technologically and economically feasible.

Because the FEA drew these conclusions from calculations encompassing all of the underground construction and demolition crane operations covered by this proposed rule, the conclusions in the earlier FEA are valid for this proposed rule. The reference to the FEA for the final cranes rule, therefore, establishes that this proposed rule is technologically and economically feasible, addresses significant risks, and reduces those risks significantly. The FEA, which OMB reviewed, meets the requirements of Executive Orders 12866 and Executive Order 13563 with respect to the operations covered by this proposed rule; OSHA included these operations in the FEA for the final cranes standard. Therefore, OSHA believes that this proposed rule also complies with Executive Orders 12866 and Executive Order 13563.

To determine if this proposed rule has annual costs of greater than $100 million, or would have a significant economic impact on a substantial number of small firms, OSHA examined the sectors most affected by this proposed rule. This proposed rule affects two construction sectors: NAICS 237990 (Other Heavy and Civil Engineering Construction), which includes all establishments engaged in underground construction, and NAICS 238910 (Site Preparation Contractors), which includes all establishments engaged in demolition. This analysis, therefore, reviews the results for these two sectors reported in the final crane standard's FEA, which theFederal Registerpublished on August 9, 2010.

That FEA simply considered all cranes and crane operations in these sectors, and did not analyze separately those operations involving underground construction or demolitions because OSHA planned to apply subpart CC to these operations. OSHA will report here the results for these entire sectors, which will inevitably involve greater costs and impacts than for the activities addressed in this proposed rule because both sectors have many cranes and crane jobs that do not involve underground construction or demolition activities. Table B-9 of the FEA showed that NAICS 237990, which includes all crane operations involved in underground construction operations, had annualized compliance costs of $1,903,569 for firms that own and rent cranes, $205,532 for firms that own but do not rent cranes, and $1,151,759 for firms that lease cranes, for total annualized costs of $3,260,860 (75 FR 48102-48105). Table B-9 also showed that NAICS 238910, which contains all crane operations involving demolitions, had annualized compliance costs of $1,232,974 for firms that own and rent cranes, $292,601 for firms that own but do not rent cranes, and $1,626,463 for firms that lease cranes, for total annualized compliance costs of $3,152,038. The total annualized compliance costs for both sectors are $6,412,898. Because these two NAICS sectors include operations not involved in underground construction or demolition, the total estimated annualized compliance costs of $6,412,898 for these two sectors will be greater than the actual costs of this proposed rule. Based on these costs, OSHA concludes that this proposed rule is not a significant rule under either E.O. 12866 or the Unfunded Mandates Act.

With respect to technological feasibility, the earlier FEA, which included consideration of both underground construction and demolition operations, noted:

In Table B-12 of the FEA for the final cranes rule, OSHA examined the costs as a percentage of revenues and as a percentage of profits in these two sectors. This table shows that, for both sectors, the greatest potential impacts were on establishments that own and rent cranes with operators. This table showed that for NAICS 237990, whichincludes all underground construction operations, costs were 0.18 percent (less than 1 percent) of revenues and 3.54 percent of profits. This table also showed that for NAICS 238910, including all demolition operations involving cranes, costs were 0.18 percent of revenues and 4.05 percent of profits. (Table B-12 and the FEA as a whole provide the full calculations and derivations.) The FEA from the final cranes standard stated:

Tables B-14 and B-15 of the FEA for the cranes and derricks final rule examined the costs as a percentage of revenues and as a percentage of profits in these two sectors for small firms as defined by SBA, and very small entities with less than 20 employees, respectively. Because so many firms owning cranes are small, there is no appreciable difference between the impacts on small and very small firms versus the impacts for all firms already discussed. Comparison of the two tables shows that, for NAICS 237990, the impacts for very small firms were equal to or greater than those for small firms. Table B-15 shows that, for NAICS 237990, costs were 0.18 percent of revenues and 3.54 percent of profits. This table also shows that, for NAICS 238910, including all demolition operations involving cranes, there were no very small entities that owned and rented cranes, with the result that the greatest impacts are for small entities that own and rent crane where costs are 0.18 percent of revenues and 4.05 percent of profits.

In its regulatory flexibility analysis, OSHA generally defines a significant economic impact on small entities as one with costs in excess of one percent of revenues or five percent of profits. The possible costs of this proposed rule clearly are well below these thresholds. OSHA, therefore, certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities.

When OSHA issued the final rule on August 9, 2010, it submitted an Information Collection Request (ICR) to the Office of Management and Budget (OMB) titledCranes and Derricks in Construction (29 CFR Part 1926, Subpart CC). This ICR6 covered all establishments in the construction industry, including all of the establishments in NAICS 237990 and NAICS 238910. On November 1, 2010, OMB approved the ICR under OMB control number 1218-0261, with an expiration date of November 30, 2013. Subsequently, in December 2010, OSHA discontinued theCranes and Derricks Standard for Construction (29 CFR 1926.550)ICR (OMB Control Number 1218-0113) because the new ICR superseded the existing ICR. In addition, OSHA retitled the new ICR toCranes and Derricks in Construction (29 CFR Part 1926, Subpart CC and Subpart DD). 7

This proposed rule requires no additional collection of information.8 OMB's approval of OSHA's ICR under Control Number 1218-0261 already covers all collections of information required by this proposed rule, and OSHA does not believe it is necessary to submit a new ICR to OMB seeking to collect additional information under this proposed rule.

Interested parties who comment on OSHA's determination that this proposal contains no additional paperwork requirements must send their written comments to the Office of Management and Budget, Attn: OMB Desk Officer for OSHA, Room 10235, 726 Jackson Place, NW., Washington, DC 20503. OSHA also encourages commenters to submit their comments on this paperwork determination to it, along with their other comments on the proposed rule.

OSHA notes that a Federal agency cannot conduct or sponsor a collection of information unless OMB approves it under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501et seq.), and the agency displays a currently valid OMB control number. The public need not respond to a collection of information requirement unless the agency displays a currently valid OMB control number, and, notwithstanding any other provision of law, no person shall be subject to a penalty for failing to comply with a collection of information requirement if the requirement does not display a currently valid OMB control number.

OSHA reviewed this proposed rule in accordance with the Executive Order on Federalism (Executive Order 13132, 64 FR 43255, August 10, 1999), which requires that Federal agencies, to the extent possible, refrain from limiting state policy options, consult with states prior to taking any actions that would restrict state policy options, and take such actions only when clear constitutional authority exists and the problem is national in scope. Executive Order 13132 provides for preemption of state law only with the expressed consent of Congress. Federal agencies must limit any such preemption to the extent possible.

Under Section 18 of the OSH Act, Congress expressly provides that states may adopt, with Federal approval, a plan for the development and enforcement of occupational safety and health standards. States that obtain Federal approval for such a plan are referred to as “State Plan States.” Occupational safety and healthstandards developed by State Plan States must be at least as effective in providing safe and healthful employment and places of employment as the Federal standards. 29 U.S.C. 667. Subject to these requirements, State Plan States are free to develop and enforce under state law their own requirements for safety and health standards.

OSHA previously concluded from its analysis that promulgation of subpart CC complies with Executive Order 13132. 75 FR 48128-29. That analysis applies to the extension of subpart CC to establishments engaged in demolition work and underground construction; therefore, this proposed rule complies with Executive Order 13132. In states without an OSHA-approved State Plan, any standard developed from this proposed rule would limit state policy options in the same manner as every standard promulgated by OSHA. In states with OSHA-approved State Plans, this rulemaking does not significantly limit state policy options.

When Federal OSHA promulgates a new standard or more stringent amendment to an existing standard, State Plan States must amend their standards to reflect the new standard or amendment, or show OSHA why such action is unnecessary,e.g.,because an existing state standard covering this area is “at least as effective” as the new Federal standard or amendment. 29 CFR 1953.5(a). The state standard must be at least as effective as the final Federal rule. State Plan States must adopt the Federal standard or complete their own standard within six months of the promulgation date of the final Federal rule. When OSHA promulgates a new standard or amendment that does not impose additional or more stringent requirements than an existing standard, State Plan States are not required to amend their standards, although OSHA may encourage them to do so. The 27 states and U.S. territories with OSHA-approved occupational safety and health plans are: Alaska, Arizona, California, Hawaii, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Oregon, Puerto Rico, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, and Wyoming; Connecticut, Illinois, New Jersey, New York, and the Virgin Islands have OSHA-approved State Plans that apply to state and local government employees only.

The amendments in this proposed rule will result in more stringent requirements for cranes and derricks used in demolition and underground construction work. Therefore, when OSHA promulgates a new final rule, states and territories with approved State Plans must adopt comparable amendments to their standards for cranes and derricks used in demolition and underground construction within six months of OSHA's promulgation of the final rule (i.e.,the date OSHA publishes confirmation of the effective date) unless they demonstrate that such a change is not necessary because their existing standards are already the same, or at least as effective, as OSHA's new final rule.

When OSHA issued the final rule for cranes and derricks in construction, it reviewed the rule according to the Unfunded Mandates Reform Act of 1995 (UMRA; 2 U.S.C. 1501et seq.(58 FR 58093)), and Executive Order 12875 (75 FR 48130). OSHA concluded that the final rule did not meet the definition of a “Federal intergovernmental mandate” under the UMRA because OSHA standards do not apply to state or local governments except in states that have voluntarily adopted State Plans. OSHA further noted that the rule imposed costs of over $100 million per year on the private sector and, therefore, required review under the UMRA for those costs, but that its final economic analysis met that requirement.

As discussed above in Section IV.A (Final Economic Analysis and Final Regulatory Flexibility Analysis) of this preamble, this proposed rule does not impose any costs on private-sector employers beyond those costs already taken into account in the final rule for cranes and derricks in construction. Because OSHA reviewed the total costs of this final rule under the UMRA, no further review of those costs is necessary. Therefore, for the purposes of the UMRA, OSHA certifies that this proposed rule does not mandate that state, local, or tribal governments adopt new, unfunded regulatory obligations, or increase expenditures by the private sector of more than $100 million in any year.

OSHA reviewed this proposed rule in accordance with Executive Order 13175 (65 FR 67249) and determined that it does not have “tribal implications” as defined in that order. As proposed, the rule does not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes.

The purpose of the Occupational Safety and Health Act of 1970 (29 U.S.C. 651et seq.) is “to assure so far as possible every working man and woman in the nation safe and healthful working conditions and to preserve our human resources.” 29 U.S.C. 651(b). To achieve this goal, Congress authorized the Secretary of Labor to promulgate and enforce occupational safety and health standards. 29 U.S.C. 654(b), 655(b). A safety or health standard is a standard “which requires conditions, or the adoption or use of one or more practices, means, methods, operations, or processes, reasonably necessary or appropriate to provide safe or healthful employment or places of employment.” 29 U.S.C. 652(8). A standard is reasonably necessary or appropriate within the meaning of Section 652(8) when a significant risk of material harm exists in the workplace and the standard would substantially reduce or eliminate that workplace risk. SeeIndustrial Union Department, AFL-CIOv.American Petroleum Institute,448 U.S. 607 (1980). In the cranes and derricks final rule, OSHA made such a determination with respect to the use of cranes and derricks in construction at the same time that it noted that the Agency would apply subpart CC to the activities addressed in this proposed rule (75 FR 47913, 47920-21).

This proposed rule will not reduce the employee protections put into place by the standard OSHA is updating under this rulemaking. Instead, this rulemaking likely will enhance employee safety by ensuring that the construction workers involved in demolition and underground construction receive the same safety protections from recently published subpart CC as other construction workers. The revisions also will benefit construction contractors that engage in underground construction or demolition work in addition to other types of construction work, because these contractors will now be subject to a single standard rather than having some of their construction work under subpart CC, and other work covered by existing subpart DD. This action, therefore, will clarify employer obligations by avoiding the confusion that would result if subpart CC covers part of a project and existing subpart DD covers another part of the project. Accordingly, it is unnecessary to make a separate determination of significant risk, or the extent to which this rule would reduce that risk, as typicallyrequired byIndustrial Union Department.

David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, U.S. Department of Labor, 200 Constitution Ave. NW., Washington, DC 20210, authorized the preparation of this notice. OSHA is issuing this proposed rule under the following authorities: 29 U.S.C. 653, 655, 657; 40 U.S.C. 3701et seq.;5 U.S.C. 553; Secretary of Labor's Order No. 1-2012 (77 FR 3912, Jan. 25, 2012); and 29 CFR part 1911.

For the reasons stated in the preamble of this proposed rule, OSHA proposes to amend 29 CFR part 1926 as follows:

This is a summary of the Commission's Notice of Proposed Rulemaking (NPRM), FCC 12-77, MD Docket No. 12-201, adopted on July 13, 2012 and released on July 17, 2012. The full text of this document is available for inspection and copying during normal business hours in the FCC Reference Center, 445 12th Street SW., Room CY-A257, Portals II, Washington, DC 20554, and may also be purchased from the Commission's copy contractor, BCPI, Inc., Portals II, 445 12th Street SW., Room CY-B402, Washington, DC 20554. Customers may contact BCPI, Inc. via their Web site,http://www.bcpi.com,or call 1-800-378-3160. This document is available in alternative formats (computer diskette, large print, audio record, and braille). Persons with disabilities who need documents in these formats may contact the FCC by email:FCC504@fcc.govor phone: 202-418-0530 or TTY: 202-418-0432.

1. The proceeding this NPRM initiates shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission'sex parterules.1 Persons makingex partepresentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oralex partepresentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which theex partepresentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff duringex partemeetings are deemed to be writtenex partepresentations and must be filed consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing, writtenex partepresentations and memoranda summarizing oralex partepresentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format (e.g.,.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission'sex parterules.

2.Comments and Replies.Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using: (1) The Commission's Electronic Comment Filing System (ECFS), (2) the Federal Government's eRulemaking Portal, or (3) by filing paper copies.See Electronic Filing of Documents in Rulemaking Proceedings,63 FR 24121 (1998).

•Electronic Filers:Comments may be filed electronically using the Internet by accessing the ECFS:http://fjallfoss.fcc.gov/ecfs2/or the Federal eRulemaking Portal:http://www.regulations.gov.

•Paper Filers: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 appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

■ All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed ofbeforeentering the building.

■ Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

■ U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW., Washington DC 20554.

People with Disabilities:To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email tofcc504@fcc.govor call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

3.Availability of Documents.Comments, reply comments, andex partesubmissions will be available for public inspection during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street SW., CY-A257, Washington, DC 20554. These documents will also be available free online, via ECFS. Documents will be available electronically in ASCII, Word, and/or Adobe Acrobat.

4.Accessibility Information.To request information in accessible formats (computer diskettes, large print, audio recording, and Braille), send an email tofcc504@fcc.govor call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). This document can also be downloaded in Word and Portable Document Format (“PDF”) at:http://www.fcc.gov.

5. This document solicits possible proposed information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget (OMB) to comment on the possible proposed information collection requirements contained in this document, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198,see44 U.S.C. 3506(c)(4), we seek specific comment on how we might further reduce the information collection burden for small business concerns with fewer than 25 employees.

6. An initial regulatory flexibility analysis (“IRFA”) is contained in the Initial Regulatory Flexibility Analysis section. Comments to the IRFA must be identified as responses to the IRFA and filed by the deadlines for comments on this NPRM. The Commission will send a copy of this NPRM, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration.

7. Today we seek comment on proposals to reform the Commission's policies and procedures for assessing and collecting regulatory fees. Extensive changes have occurred in the communications marketplace, and in the Commission's regulatory efforts, since the Schedule of Regulatory Fees was enacted by Congress in 1994. In the period directly following enactment of the Telecommunications Act of 1996, industry development and Commission regulation centered primarily on wireline local and long distance communications. Subsequently, however, the mobile wireless industry has grown exponentially, shifting Commission resources to, among other things, the wireless industry, while the costs of implementing the 1996 Telecommunications Act decreased. Meanwhile, digital and Internet protocol (IP)-based technologies have enabled wired and wireless companies, satellite companies, broadcasters, and cable television companies to engage in increased intermodal competition.

8. These changes have produced corresponding shifts in the Commission's regulatory activity. These shifts in the cost of the Commission's activities are not always reflected in our current regulatory fees. Although the Commission has made a number of discrete changes to the regulatory fee program since 1994, we have not revised the data on which our fees are based since 1998, nor have we undertaken a comprehensive analysis of all the substantive and procedural aspects of our regulatory fee program in light of the current state of the communications industry. This proceeding will serve as the means by which we will undertake that comprehensive analysis.2

9. This Notice of Proposed Rulemaking (NPRM) seeks comment on the issues related to how the Commission should allocate its regulatory costs among different segments of the communications industry. In particular, we seek comment on:

•What the Overarching Goals of the Regulatory Fee Program Should Be.We propose three goals to guide our regulatory fee policymaking—fairness, administrability, and sustainability—and we seek comment on these goals and invite commenters to propose others.

•Regulatory Costs Should Be Allocated.Section 9 of the Communications Act requires that regulatory fees be derived by determining the number of full-time equivalent employees (FTEs) performing certain activities. We propose to change the way we allocate “direct” and “indirect” FTEs to calculate regulatory fees. The proposals on which we seek comment are based on aggregated bureau-level FTE data, and would allocate all FTEs in the Wireless Telecommunications, Media, Wireline Competition, and International Bureaus as “direct” and all FTEs in the support bureaus and offices as “indirect.”

•How Current Cost Allocation Percentages Should Be Revised.We then look at the cost allocation percentages that we use now and propose to update these percentages using current FTE data derived from the reallocation of FTEs described above. We set out the adjustments projected to result from these updates, examine the impact of these adjustments on the categories of fee payors, ask whether and how we should mitigate the impact of any substantial fee increases that would result, and ask whether any other changes are necessary to ensure an equitable result.

10. Section 9(a)(1) of the Communications Act directs the Commission to collect regulatory fees “to recover the costs of * * * enforcement activities, policy and rulemaking activities, user information services, and international activities.”3 Section 9(a)(2) stipulates that regulatory fees for the enumerated activities “shall be collected only if, and only in the total amounts, required in Appropriations Acts,” and must “be established in amounts that will result in collection, during each fiscal year, of an amount that can reasonably be expected to equal the amount appropriated for such fiscal year for the performance of the activities described in subsection (a).”4 Since FY 2009, Congress has directed the Commission to assess and collect regulatory fees under section 9(b)(1)(B)in an amount equal to the entire amount appropriated.5

11. Section 9(b) states in general terms how regulatory fees are to be derived. Section 9(b)(1)(A) states that fees are to be calculated by determining the full-time equivalent number of employees (FTEs) performing the activities enumerated in section 9(a)(1) “within the three licensing bureaus as they existed at that time and that formed the core of our regulatory fee assessment program, i.e. the Private Radio Bureau, Mass Media Bureau, and Common Carrier Bureau.6 FTEs in the other offices of the Commission are also calculated, and the fees that result are adjusted to take into account factors that are reasonably related to the benefits provided to the payor of the fee by the Commission's activities, including such factors as service area coverage, shared use versus exclusive use, and other factors that the Commission determines are necessary in the public interest.”7 The Commission issues a notice of proposed rulemaking (NPRM) in the third quarter of each fiscal year, stating how it derives the fees for that fiscal year and proposing the amounts that the payors in each fee category will be required to pay in order to offset the amount of the Commission's appropriation for that fiscal year.8 The Commission issues a report and order during the fourth quarter of each fiscal year.9 The report and order sets the amounts to be paid by all fee payors, discusses any issues raised in response to the NPRM and sets out the procedures for payment of fees.

12. Section 9(b)(1)(A) states that regulatory fees are to recover the costs of the FTEs performing the regulatory activities set forth in section 9(a)(1). Consistent with this statutory requirement, the Commission's cost assessment methodology uses FTEs as the starting point in determining the fees regulatees in each fee category will pay each fiscal year.

13. Although the statute specifies that FTEs are the basis for calculating regulatory fees, it does not specify the precise type of FTE data that must be used;e.g.,whether the Commission must use employees' time cards to tally the time each employee reports as having been spent on regulating specific licensees or regulatees, or whether the Commission may aggregate the work of FTEs in some other way. In FYs 1997-1998, the Commission based its FTE calculations on employee time cards. This method involved employees' tracking time by regulatory fee category, and regulatory fees were then allocated based on a core bureaus' relative share of employee time, both direct (employees within a core bureau working on matters related to regulatory fee categories within that bureau) and indirect (employees from all bureaus and offices providing support functions related to multiple, perhaps even all, regulatory fee categories). The Commission abandoned this approach in FY 1999 because not only did time card entries prove subjective and unreliable, but they also resulted in unpredictable and substantial shifts in regulatory fees from year to year.

14. The allocations of direct and indirect FTEs we currently use are taken from FTE data compiled in FY 1998. The Commission allocates FTEs according to the nature of the employees' work. If the work performed by an employee can be assigned to a regulatory fee category in one of the four core licensing bureaus—Wireless Telecommunications, Media, Wireline Competition, and International, — that employee's time is counted as a direct FTE. If the work cannot be assigned to one of the bureau's designated fee categories, the employee's time is counted as an indirect FTE. Indirect FTEs are allocated proportionally across the four core bureaus. Therefore, under our current system, the total FTEs for each fee category includes the direct FTEs associated with that category, plus proportional allocations of indirect FTEs from inside and outside the bureau. The total number of FTEs for each of the bureau's fee categories was then divided by the combined FTE numbers for all four core bureaus to produce an allocation percentage for each fee category,e.g.,the percentage of total regulatory fee revenues that must be recovered from each fee category in order to collect the total amount specified by Congress.10

15. Although the Commission has used the same allocation percentages every fiscal year since FY 1998, each year the Commission reviews the projected number of fee payors in each service category. These payors are referred to generically as “units,” because the fees for payors in different service categories reflect characteristics appropriate to each service, such as the number of licenses or number of subscribers the fee payor has. We look for changes in the industry, changes in industry segments, and various other issues as explained in each year's regular regulatory fee NPRM. Finally, the fee rate for each fee category is determined by dividing the revenue amount to be collected from each fee category by its projected number of units.

16. Table 1 illustrates the process using this methodology. Each fiscal year Congress reviews the Commission's budget submission and determines the appropriation for that year. The amount Congress appropriates becomes the target for the aggregate amount of regulatory fees to be collected. Table 1 uses a hypothetical appropriation of $100,000,000 as the target amount of regulatory fees to be collected. Column 1 represents the various fee categories in which a regulatee will pay a fee. Column 2 shows the allocation percentages that are applied. And Column 3 represents the multiplication of the target amount by each allocation percentage.

17. The Commission first multiplies the $100,000,000 target amount by thecurrent FTE allocation percentages in Column 2 to determine the amount of revenue to be collected from each fee category in Column 3. To determine the regulatory fee rate, the amounts in Column 3 are divided by their respective unit counts (the number of payors) to determine the fee amount that each regulatee will pay in that fee category prior to rounding pursuant to section 9(b)(2)(B). Thus, each year the regulatory fee rate is a function of (1) changes in the appropriation amount from one year to the next, and (2) changes in the unit count from the prior year for each respective fee category.

18. As noted previously, the changes that have occurred since 1998 in the communications industry have caused significant shifts in the amount of time the Commission devotes to specific industry segments and activities. Therefore, FY 1998 FTE data may no longer accurately reflect the allocation of Commission employees' time across different parts of the industry. However, simply substituting current FTE data for the 1998 FTE data would cause fees for some classes of fee payors to increase significantly, so we seek to examine how best to address in a fair and equitable manner any significant shifts. In addition, new technologies have caused an exponential increase in intermodal competition across formerly distinct industry platforms. This has made it even more common today than in 1998 that a Commission employee's work may be attributed to more than one fee category. For example, the costof an employee's work in designing incentive auctions might be attributable to several fee categories within the media sector, but it would also potentially benefit providers of mobile broadband services who would ultimately use the reclaimed spectrum. The practical difficulties we would encounter today in parsing out an employee's time among all of the industry groups affected by his or her work would produce unpredictable annual changes in regulatory fees. Proposals to address these and related problems are presented below.

19. First, we seek comment on setting goals for regulatory fee collection that will guide the reforms that result from this NPRM and adjustments that the Commission will need to make from time to time afterwards. We are of course guided first and foremost by Congress's direction in section 9. At the same time, Congress has left us flexibility in setting the fees to take into account a variety of factors, including “factors that the Commission determines are necessary in the public interest.”11 We propose three overarching goals for the regulatory fees program, and we invite parties to propose other goals for consideration.

20.Fairness.Allocation of regulatory fee burdens among regulatees should be fair. All regulatees interact with and benefit from the work of the Commission, but not in equal measure. For example, a very large company with hundreds of licenses and authorizations is likely to engage much more frequently with the Commission than a local company or cooperative. Similarly, regulatees' ability to pay varies with their size and revenues—imposing the same fee on a Fortune 500 company and a local family business would have very different effects on those entities. And over time, as similar services are provided over different technologies, regulatees may be paying different fees while providing similar services, not because there is a meaningful difference in their relationship with the Commission but simply because their services fall into different fee categories (or fall outside our established categories altogether). We propose establishing fairness as a goal of our regulatory fee program, so that the burdens of regulatory fees are borne in an equitable manner that does not distort the marketplace. We seek comment on this goal.

21.Administrability.Section 9 directs that fees be set by reference to the number of FTEs performing enforcement activities, policy and rulemaking activities, user information services, and international activities within the Wireless Telecommunications, Media, Wireline Competition, and International Bureaus. A fee system that strictly aligned FTEs with these activities and Bureaus on an ongoing basis would require a complex time and accounting system like the one the Commission tried in 1997 and 1998 and abandoned in 1999 due in part to the unpredictability and rapid shifts in fee rates that it created for fee payors. Keeping the fee schedule up to date could result in large shifts in fees from year to year, as the Commission's priorities and areas of focus change. For example, if in one year the Public Safety and Homeland Security Bureau handles rulemakings related to broadcasting, but in the following year focuses on wireless services, the resulting shift in FTE allocations could have a substantial impact on the size of regulatory fees, which could then shift significantly again the very next year. We believe that the regulatory fee system should be administrable, both for the Commission and for payors. We seek comment on this goal.

22.Sustainability.The methodology for regulatory fees should be flexible enough to adapt to changes in technology and marketing that affect how our regulatees do business. In 2007, the Commission extended regulatory fee obligations to providers of interconnected voice over Internet protocol services (VoIP), noting “the many and increasing resources the Commission now dedicates to VoIP” and that “[i]nterconnected VoIP service is increasingly used to replace traditional telephone service and . . . the interconnected VoIP service industry continues to grow and to attract customers who previously relied on traditional voice service.”12 The concern the Commission addressed in 2007 will continue to arise as service platforms and models change and converge. As video, voice, and data services are provided in new ways, our regulatory fee system must also evolve to ensure that the fee burden remains equitably distributed among regulatees. We seek comment on this goal.

23. Our goals must work within the statute, not against it. Section 9 requires that the Commission collect fees by determining “the full-time equivalent number of employees” performing specified activities in the Bureaus and Offices. We intend that the proposed goals guide our interpretation of section 9, and we seek comment on the best ways to take the goals into account as we assign FTEs to the statutory categories and establish specific fee amounts.

24. As explained more fully below, the cost allocation data we currently use were derived in FY 1998 by totaling employees' time cards entries to arrive at the aggregate number of FTEs engaged in each feeable activity. The first question that arises is whether the Commission should aggregate employee time card entries to derive its FTE allocations, or whether aggregating data on a less granular basis would be accurate and workable. For the reasons discussed below, we seek comment on whether we should simplify the way direct and indirect FTEs are aggregated and update the FTE data that we use. We invite interested parties to share their views with respect to the issues set forth below.

25. Although not required by section 9, our current cost assignment methodology is based on the presumption that work of employees in the four core bureaus should be treated differently depending on whether an employee is “directly” involved in a feeable activity or “indirectly” involved, as in a support capacity. The costs of FTEs directly working on projects corresponding to a regulatory fee category are directly assigned to that category. By contrast, the costs of all FTEs in the core bureaus indirectly involved, or providing support functions, are treated as indirect costs and are currently distributed proportionally across the four core bureau. The proportional allocation of indirect FTEs corresponds to each core bureau's actual percentage of direct FTEs. The indirect work performed by FTEs within a core bureau, therefore, may not be attributable to a specific fee category in their core bureau. Nevertheless, it is clear that the work ofallthe FTEs in a core bureau, whether direct or indirect, contributes to the cost of regulating licensees of that bureau. Therefore, we may reasonably expect that the work of the FTEs in the core bureaus would remain focused on the industry segment regulated by each ofthose bureaus.13 We seek comment on whether we should change the way FTEs are allocated within a bureau, and we propose that all the FTEs in each of the core bureaus should be considered direct FTE costs for that bureau.

26. Most of the work of the bureaus and offices outside the four core licensing bureaus is currently considered as indirect FTE costs because the work does not focus on any one industry segment; rather, these bureaus and offices support the work of all of the core bureaus. As with the indirect FTEs within the core bureaus, the work of FTEs in non-core bureaus that cannot be directly assigned to a regulatory fee category is treated as indirect costs and distributed proportionally across the core bureaus according to these bureaus' respective percentages of the Commission's total direct FTE costs. As in the case of our allocation of direct FTEs, we believe that it would serve the public interest to find a more consistent and workable way to allocate indirect FTEs. Any attempt to redistribute these indirect costs on a task-by-task basis would be neither consistent nor workable, requiring us to assign more costs to certain divisions of support bureaus or offices for certain licensees at a given point in time, and then reassign these costs as the work of that division changes from month to month, week to week, or even day to day.14 This would be far more complicated and subjective than our current approach, requiring constant recalculations as FTEs within a bureau are given different job assignments.15 Unlike the case of the FTEs in the core bureaus, the work of the FTEs in the support bureaus and offices is not primarily focused on any one bureau or regulatory fee category, but instead serves the needs of all four core bureaus.

27. Just as section 9 contains no requirement that we classify FTEs as “direct” and “indirect,” it does not prescribe how the Commission should account for the FTE costs of its support bureaus and offices. Consistent with our finding in paragraph 19 above that the work of the employees in the core bureaus and offices is primarily focused on the industry segment regulated by each bureau and that the work—and the costs—of all the employees of those bureaus would correctly be considered direct FTE costs of their respective bureaus, we seek comment on whether, because the work of employees in the non-core bureaus supports the work of all the core bureaus, the FTE costs of these non-core bureaus and offices should all be treated as indirect costs and allocated among each of the core bureaus in the same percentage as that bureau's direct FTE percentage is to the total direct FTE costs of all the core bureaus.

28. We have previously sought comment on whether and how to update our current FTE allocation percentages to reflect changes in the industry and in the Commission's workload that have occurred since they were adopted.16 We will resolve this issue in this proceeding, and we will incorporate into the record of this proceeding relevant comments filed in prior proceedings.17

29. Commenters previously addressing this issue advocated that we revise the FTE allocation percentages by using updated FTE data.18 They argued that it is inequitable to burden the licensees in the core bureaus with a larger share of regulatory fees than their respective percentage share of FTE staffing at the Commission. We seek comment on whether the FY 1998 FTE allocation percentages should be replaced with allocation percentages using up-to-date FY 2012 FTE data.

30. Reallocation of direct and indirect FTEs using aggregated FTE data involves counting the number of FTEs in each of the agency's four core licensing bureaus to determine what percentage each comprises of the total number of FTEs in all the core bureaus.19 The tentative results of this recalculation, using current FTE staffing levels, produces the following numbers and percentages of direct FTEs in the four core licensing bureaus: International Bureau, 122 FTEs (22.0% of total FTEs in the four core bureaus); Media Bureau, 183 (32.9%); Wireline Competition Bureau, 154 (27.7%); and Wireless Telecommunications Bureau, 97 (17.4%).20 These 556 FTEs constitute 36 percent of the Commission's total FTEs and we would treat them as direct FTE costs for purposes of allocating regulatory fees. There are currently 1,000 FTEs in the support bureaus and offices. As proposed in paragraph 20 above, these would all be treated as indirect FTEs and allocated proportionately across the four core bureaus. This produces the following adjusted FTE totals for each of the core bureaus: International Bureau, 221 FTEs; Media Bureau, 329 FTEs; Wireline Competition Bureau, 276 FTEs; and Wireless Telecommunications Bureau, 174 FTEs.

31. A comparison of the allocation percentages currently in use with the allocation percentages that result from the use of updated FTE figures produces mixed results. The percentage of regulatory fees currently collected from regulatees in the Wireless Telecommunications Bureau would remain unchanged at 17.4 percent. The allocation percentage would increase only slightly for fee payors in Media Bureau service categories, from 31.9 percent to 32.9 percent. However, use of the updated FTE figures would reduce the percentage of regulatory fees allocated to regulatees in the Wireline Competition Bureau from 44.0 percent to 27.7 percent and increase the percentage of fees allocated to payors in the International Bureau from 6.7 percent to 22.0 percent.

32. We seek comment on whether the projected increase in fees for International Bureau regulatees would be consistent with our goals of fairnessand sustainability. In this regard we note that much of the work within the Strategic Analysis and Negotiations Division of the International Bureau covers services outside of the Bureau's direct regulatory activities. For example, this Division has primary responsibility for leading the Commission's international representation in bilateral meetings, multilateral meetings, and cross-border spectrum negotiations with Canada and Mexico on spectrum sharing arrangements, and notifications to the International Telecommunications Union (ITU), as well as participation in ITU Study Groups. Though focused on the international community, this international work covers the entire gamut of the Commission's regulatory responsibilities.

33. If such work benefits all classes of providers, should the associated FTEs be excluded from the International Bureau's direct costs and, instead, be allocated as indirect costs like a support bureau? Is this situation unique to the International Bureau? The International Bureau has estimated that as much as one half of the FTEs in the Bureau work on matters covering services other than international services. Reallocation of 50% of the FTEs in the International Bureau proportionately to the other core bureaus would the result the following allocation: International Bureau, 61 FTEs, representing 10.97% of total FTEs in the four core bureaus; Media Bureau, 208.72 (37.54%); Wireline Competition Bureau, 175.64 (31.59%); and Wireless Telecommunications Bureau, 110.64 (19.9%).

34. We ask commenters to address all the issues regarding how to ameliorate the effect of using updated FTE data on regulatees paying fees in the International Bureau's service categories. Would this reallocation be equitable?

35. Are there analogous groups within the other core bureaus whose work covers services outside of the core bureau's direct regulatory activities? If so, how should those FTEs be allocated, or should adjustments be made to our proposed allocation of FTEs for those core bureaus to account for such broadly cross-cutting work in a core bureau? We also seek comment on whether further adjustments of the allocation of FTEs should be made. Should adjustments be made whenever, as discussed above, the work of one bureau supports the work of one or more other bureaus? Would this be a workable and sufficient way to allocate regulatory fees fairly between industry sectors consistent with section 9, or is there a more equitable way, consistent with statute, to allocate regulatory fees between and/or within industry sectors? For example, should regulatory fee categories in section 9 be combined or eliminated, given the change in the telecommunications landscape since 1998? Should additional regulatory fee categories such as broadband be added to the regulatory fee schedule set forth in section 9? We seek comment on whether the Commission has authority, under section 9, to include broadband as a fee category. If additional fee categories are created, how should their costs be assessed? To the extent that licensees offer services that are regulated by more than one core bureau, how would the addition of new fee categories affect the allocation of FTEs by core bureau?

36. We note that section 9(b)(1)(A) allows the Commission to adjust regulatory fees “to take into account factors that are reasonably related to the benefits provided the payor of the fee by the Commission's activities, including such factors as service area coverage, shared use versus exclusive use, and other factors that the Commission determines to be in the public interest.” How should “benefits provided to the payor” be determined? Should such benefit be measured by the level of regulation of such payor, or by some measure of the amount of regulatory activity attributable to a specific payor in a given year? Or should “benefits provide the payor” be found to include all benefits received as a result of the Commission's work, even benefit from efforts to reduce regulation of a particular industry sector? How does one measure such benefit? Is relative market share, or total revenues, a good measure of the benefit the payor receives from the work of the Commission to promote competition and remove barriers to market entry? If so, should all payors be assessed based on revenues? Is it technically feasible to assess all regulatory fee categories based on revenues? How could the Commission ensure such assessment is based on accurate, reliable revenue information from all industry sectors? What additional reporting requirements would be necessary to obtain the information necessary to assess all payors on a revenues basis?

37. Are there other factors the Commission should consider in rebalancing regulatory fees in order to achieve the goals discussed above? For example, does section 9 allow the Commission to mitigate the effects of fee increases to a particular industry segment by providing interim adjustments, by phasing in the new fees over a period of time, or by providing relief in some other way? How would the Commission administer any recommended mitigation?

38. Finally, how often should the Commission revisit the allocation resulting from this rulemaking? Should this reexamination be undertaken at regular intervals, or in response to comments by fee payors in the annual regulatory fee collection NPRM? If such reexamination is done at regular intervals, for example, annually, how can we ensure continued predictability and collectability of fees? Would it be appropriate to simply update the Commission's FTE allocation each year, without regard to the impact of significant increases of regulatory fees on certain regulatory fee categories? Would such fluctuations be especially problematic for small service providers who are likely least able to absorb unpredictable changes in fees from year to year?

39. As noted previously, our current FTE allocations and the resulting allocation percentages were first used in FY 1999 and are based on FY 1998 FTE data. We request comment on updating and reallocating FTEs among the fee categories within each of the core bureaus. For example, within the International Bureau, there are five fee categories: Bearer Circuits, Submarine Cable Providers, Earth Stations, Space Stations (Geostationary), and Space Stations (Non-Geostationary). Regulatory fees are currently allocated among these five fee categories as follows: Bearer Circuits (5.1%), Submarine Cable Providers (36.1%), Earth Stations (3.9%), Space Stations (Geostationary) (51.1%), and Space Stations (Non-Geostationary) (3.8%).

40. Although one option would be to continue using these relative allocation percentages among the fee categories in each of the core bureaus, we seek comment on whether it would better serve the public interest for management in each of the core bureaus to revise their internal FTE allocation percentages based on management's assessment of the current distribution of work within the bureau. We also seek comment on whether they should do such analysis and update of the FTE allocation among fee categories within the bureau every three years unless a substantial shift in the nature or extent of a bureau's duties warrants reexamination in the interim. Commenters advocating alternatives or modifications to this proposed approach should describe in specific detail how the suggested alternative or modification would work and why it would be preferable to allocation basedon assessment of the current distribution of work within the bureau described herein.

41. Fundamental to this NPRM is the Commission's desire to assure that the methodology we use to derive regulatory fees is consistent with statutory requirements, fair, efficiently administered, and sustainable. This NPRM proposes a number of innovative alternatives designed to achieve those goals. Interested parties are invited to comment on the suitability of these goals, the effectiveness of the alternatives proposed in this NPRM in meeting these or other appropriate goals, and the Commission's jurisdiction to adopt any of the alternatives discussed in the NPRM or proposed in response to it.

42. As required by the Regulatory Flexibility Act (RFA),21 the Commission prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities by the policies and rules proposed in this Notice of Proposed Rulemaking (NPRM). Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed on or before the dates indicated on the first page of this Notice of Proposed Rulemaking. The Commission will send a copy of this NPRM, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA).22 In addition, the NPRM and IRFA (or summaries thereof) will be published in theFederal Register.23

43. In this NPRM we seek public comment on approaches to update and reform the process by which the Commission calculates and assesses regulatory fees under section 9 of the Communications Act. We propose to be guided in this examination by the goals of fairness, administrability, and sustainability, and we seek comment on these goals. We seek comment on four key areas regarding the regulatory fee process: (1) revising the way in which direct and indirect FTEs (full-time [employee]equivalents) are allocated; (2) using the current number of FTEs as the basis for calculating regulatory fee allocation percentages; (3) ameliorating the impact of fee increases that would otherwise result from using current FTE percentages, especially on entities providing international communication services; and (4) asking whether and how the current number of regulatory fee categories can be changed, for example, by adding broadband and/or by reducing the number of fee categories.

44. Section 9 of the Act states that the basis for calculating regulatory costs is the number of FTEs performing enforcement, policy and rulemaking, and international activities, as well as providing user information services. The Commission has historically regarded the costs generated by individuals working specifically on those activities as “direct” costs, whereas the cost of employees providing support efforts have been considered “indirect” costs. The NPRM first seeks comment on whether to revise this approach. In order to provide a more consistent and workable way to allocate FTEs, we propose that all the direct and indirect FTEs in each of the four core licensing bureaus—The Wireless Telecommunications, Wireline Competition, Media, and International Bureaus—be allocated to the Bureau in which they work. Indirect FTEs outside the core bureaus would be allocatedamong the four core licensing bureaus in the percentage of each core bureau's direct FTEs to the total FTEs in the Commission.

45. Second, we seek comment on updating the current FTE allocation percentages to reflect the changes in the telecommunications industry and in the Commission's workload since the current percentages were developed in FY 1998. Using current FTE data to calculate regulatory fees instead of FY 1998 FTE data would produce substantial increases in the fees paid by International Bureau regulates and correspondingly substantial reduction in the fees currently paid by Interstate Telecommunications Service Providers (ITSPs, or wireline service providers), whereas fees paid by Wireless Bureau regulates would remain the same and Media Bureau regulatees would increase only slightly.

46. Third, we seek comment on whether and how we should ameliorate the impact increased fees would have on International Bureau regulatees. We ask whether the fact that FTEs in the International Bureau devote half their time to working on matters that directly benefit licensees in the remaining three core licensing bureaus would make it equitable to reallocate and redistribute half of the fee increases to those other bureaus. We also ask if there are other bureaus in which such a reallocation would be equitable.

47. Finally, we seek comment on whether the current number of fee categories in the Schedule of Regulatory fees should be expanded to include new services such as broadband, or reduced to reflect the state of the telecommunications market and to simplify the administration of the fee program. Because the statute directs the Commission to consider the benefits the payors receive from Commission regulation in setting regulatory fees, we seek comment on how better to measure the benefits on which licensees currently pay fees. For example, we seek comment on whether total revenues, or relative market share, would be good measures of the benefit payors receive from the work of the Commission to promote competition and remove barriers to market entry. Finally, we specifically seek comment on the Commission's statutory authority to implement any of these changes.

48. This action, including publication of proposed rules, is authorized under Sections (4)(i) and (j), 9, and 303(r) of the Communications Act of 1934, as amended.24

49. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the proposed rules and policies, if adopted.25 The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.”26 In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act.27 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 SBA.28

50.Small Businesses.Nationwide, there are a total of approximately 29.6 million small businesses, according to the SBA.29

51.Small Businesses, Small Organizations, and Small Governmental Jurisdictions.Our action may, over time, affect small entities that are not easily categorized at present. We therefore describe here, at the outset, three comprehensive, statutory small entity size standards.30 First, nationwide, there are a total of approximately 27.5 million small businesses, according to the SBA.31 In addition, a “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.”32 Nationwide, as of 2007, there were approximately 1,621,315 small organizations.33 Finally, the term “small governmental jurisdiction” is defined generally as “governments of cities, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.”34 Census Bureau data for 2011 indicate that there were 89,476 local governmental jurisdictions in the United States.35 We estimate that, of this total, as many as 88, 506 entities may qualify as “small governmental jurisdictions.”36 Thus, we estimate that most governmental jurisdictions are small.

52.Incumbent Local Exchange Carriers (Incumbent LECs).Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.37 Census Bureau data for 2007, which now supersede data from the 2002 Census, show that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had had employment of 1,000 or more. According to Commission data, 1,307 carriers reported that they were incumbent local exchange service providers.38 Of these 1,307 carriers, an estimated 1,006 have 1,500 or fewer employees and 301 have more than1,500 employees.39 Consequently, the Commission estimates that most providers of local exchange service are small entities that may be affected by the rules and policies proposed in theNPRM.Thus under this category and the associated small business size standard, the majority of these incumbent local exchange service providers can be considered small providers.40

53.Competitive Local Exchange Carriers (Competitive LECs), Competitive Access Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers.Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.41 Census Bureau data for 2007 show that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had had employment of 1,000 employees or more. Thus under this category and the associated small business size standard, the majority of these Competitive LECs, CAPs, Shared-Tenant Service Providers, and Other Local Service Providers can be considered small entities.42 According to Commission data, 1,442 carriers reported that they were engaged in the provision of either competitive local exchange services or competitive access provider services.43 Of these 1,442 carriers, an estimated 1,256 have 1,500 or fewer employees and 186 have more than 1,500 employees.44 In addition, 17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or fewer employees.45 In addition, 72 carriers have reported that they are Other Local Service Providers.46 Of the 72, seventy have 1,500 or fewer employees and two have more than 1,500 employees.47 Consequently, the Commission estimates that most providers of competitive local exchange service, competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are small entities that may be affected by rules adopted pursuant to the NPRM.

54.Local Resellers.The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.48 Census data for 2007 show that 1,523 firms provided resale services during that year. Of that number, 1,522 operated with fewer than 1,000 employees and one operated with more than 1,000.49 Thus under this category and the associated small business size standard, the majority of these local resellers can be considered small entities. According to Commission data, 213 carriers have reported that they are engaged in the provision of local resale services.50 Of these, an estimated 211 have 1,500 or fewer employees and two have more than 1,500 employees.51 Consequently, the Commission estimates that the majority of local resellers are small entities that may be affected by rules adopted pursuant to this NPRM.

55.Toll Resellers.The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.52 Census data for 2007 show that 1,523 firms provided resale services during that year. Of that number, 1,522 operated with fewer than 1,000 employees and one operated with more than 1,000.53 Thus under this category and the associated small business size standard, the majority of these resellers can be considered small entities. According to Commission data,54 881 carriers have reported that they are engaged in the provision of toll resale services. Of these, an estimated 857 have 1,500 or fewer employees and 24 have more than 1,500 employees. Consequently, the Commission estimates that the majority of toll resellers are small entities that may be affected by our proposed rules.

56.Payphone Service Providers (PSPs).Neither the Commission nor the SBA has developed a small business size standard specifically for payphone services providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.55 Census Bureau data for 2007 shows that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had had employment of 1,000 employees or more. Thus under this category and the associated small business size standard, the majority of these PSPs can be considered small entities.56 According to Commission data,57 657 carriers have reported that they are engaged in the provision of payphone services. Of these, an estimated 653 have 1,500 or fewer employees and four have more than 1,500 employees. Consequently, the Commission estimates that the majority of payphone service providers are small entities that may be affected by our action.

57.Interexchange Carriers.Neither the Commission nor the SBA has developed a small business size standard specifically for providers of interexchange services. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.58 Census Bureau data for 2007 shows that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had had employment of 1,000 employees or more. Thus under this category and the associated small business size standard, the majority of these Interexchange carriers can be considered small entities.59 According to Commission data, 359 companies reported that their primary telecommunications service activity was the provision of interexchange services.60 Of these 359 companies, an estimated 317 have 1,500 or fewer employees and 42 have more than 1,500 employees.61 Consequently, theCommission estimates that the majority of interexchange service providers are small entities that may be affected by rules adopted pursuant to the NPRM.

58.Operator Service Providers (OSPs) .Neither the Commission nor the SBA has developed a small business size standard specifically for operator service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.62 Census Bureau data for 2007 show that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had had employment of 1,000 employees or more. Thus under this category and the associated small business size standard, the majority of these Interexchange carriers can be considered small entities.63 According to Commission data, 33 carriers have reported that they are engaged in the provision of operator services. Of these, an estimated 31 have 1,500 or fewer employees and 2 have more than 1,500 employees.64 Consequently, the Commission estimates that the majority of OSPs are small entities that may be affected by our proposed rules.

59.Prepaid Calling Card Providers.Neither the Commission nor the SBA has developed a small business size standard specifically for prepaid calling card providers. The appropriate size standard under SBA rules is for the category Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.65 Census data for 2007 show that 1,523 firms provided resale services during that year. Of that number, 1,522 operated with fewer than 1,000 employees and one operated with more than 1,000.66 Thus under this category and the associated small business size standard, the majority of these prepaid calling card providers can be considered small entities. According to Commission data, 193 carriers have reported that they are engaged in the provision of prepaid calling cards.67 Of these, all 193 have 1,500 or fewer employees and none have more than 1,500 employees.68 Consequently, the Commission estimates that the majority of prepaid calling card providers are small entities that may be affected by rules adopted pursuant to this NPRM.

60.800 and 800-Like Service Subscribers. 69 Neither the Commission nor the SBA has developed a small business size standard specifically for 800 and 800-like service (“toll free”) subscribers. The appropriate size standard under SBA rules is for the category Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.70 Census data for 2007 show that 1,523 firms provided resale services during that year. Of that number, 1,522 operated with fewer than 1,000 employees and one operated with more than 1,000.71 Thus under this category and the associated small business size standard, the majority of resellers in this classification can be considered small entities. To focus specifically on the number of subscribers than on those firms which make subscription service available, the most reliable source of information regarding the number of these service subscribers appears to be data the Commission collects on the 800, 888, 877, and 866 numbers in use.72 According to our data for September 2009, the number of 800 numbers assigned was 7,860,000; the number of 888 numbers assigned was 5,888,687; the number of 877 numbers assigned was 4,721,866; and the number of 866 numbers assigned was 7,867,736. The Commission does not have data specifying the number of these subscribers 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 toll free subscribers that would qualify as small businesses under the SBA size standard. Consequently, the Commission estimates that there are 7,860.000 or fewer small entity 800 subscribers; 5,888,687 or fewer small entity 888 subscribers; 4,721,866 or fewer small entity 877 subscribers; and 7,867,736 or fewer small entity 866 subscribers.

61.Satellite Telecommunications Providers.Two economic census categories address the satellite industry. The first category has a small business size standard of $15 million or less in average annual receipts, under SBA rules.73 The second has a size standard of $25 million or less in annual receipts.74

62. The category of Satellite Telecommunications “comprises establishments primarily engaged in providing telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite telecommunications.”75 Census Bureau data for 2007 show that 512 Satellite Telecommunications firms that operated for that entire year.76 Of this total, 464 firms had annual receipts of under $10 million, and 18 firms had receipts of $10 million to $24,999,999.77 Consequently, the Commission estimates that the majority of Satellite Telecommunications firms are small entities that might be affected by our action.

63. The second category,i.e.“All Other Telecommunications” comprises “establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing Internet services or voice over Internet protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry.”78 For this category, Census Bureau data for 2007 shows that there were a total of 2,383 firms that operated for the entire year.79 Of this total, 2,347 firms had annual receipts of under $25 million and 12 firms had annual receipts of $25 million to $49,999,999.80 Consequently, the Commission estimates that the majorityof All Other Telecommunications firms are small entities that might be affected by our action.

64.Wireless Telecommunications Carriers (except satellite).This industry comprises establishments engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular phone services, paging services, wireless Internet access, and wireless video services.81 The appropriate size standard under SBA rules is for the category Wireless Telecommunications Carriers. The size standard for that category is that a business is small if it has 1,500 or fewer employees.82 Under the present and prior categories, the SBA has deemed a wireless business to be small if it has 1,500 or fewer employees.83 For this category, census data for 2007 show that there were 1,383 firms that operated for the entire year.84 Of this total, 1,368 firms had employment of 999 or fewer employees and 15 had employment of 1,000 employees or more.85 Thus under this category and the associated small business size standard, the Commission estimates that the majority of wireless telecommunications carriers (except satellite) are small entities that may be affected by our proposed action.86

65.Licenses Assigned by Auctions.Initially, we note that, as a general matter, the number of winning bidders that qualify as small businesses at the close of an auction does not necessarily represent the number of small businesses currently in service. Also, the Commission does not generally track subsequent business size unless, in the context of assignments or transfers, unjust enrichment issues are implicated.

66.Paging Services.Neither the SBA nor the FCC has developed a definition applicable exclusively to paging services. However, a variety of paging services is now categorized under Wireless Telecommunications Carriers (except satellite).87 This industry comprises establishments engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular phone services, paging services, wireless Internet access, and wireless video services. Illustrative examples in the paging context include paging services, except satellite; two-way paging communications carriers, except satellite; and radio paging services communications carriers. The SBA has deemed a paging service in this category to be small if it has 1,500 or fewer employees.88 For this category, census data for 2007 show that there were 1,383 firms that operated for the entire year.89 Of this total, 1,368 firms had employment of 999 or fewer employees and 15 had employment of 1,000 employees or more.90 Thus under this category and the associated small business size standard,, the Commission estimates that the majority of paging services in the category of wireless telecommunications carriers (except satellite) are small entities that may be affected by our proposed action.91

67. In addition, in the Paging Second Report and Order, the Commission adopted a size standard for “small businesses” for purposes of determining their eligibility for special provisions such as bidding credits.92 A small business is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years.93 The SBA has approved this definition.94 An initial auction of Metropolitan Economic Area (“MEA”) licenses was conducted in the year 2000. Of the 2,499 licenses auctioned, 985 were sold.95 Fifty-seven companies claiming small business status won 440 licenses.96 A subsequent auction of MEA and Economic Area (“EA”) licenses was held in the year 2001. Of the 15,514 licenses auctioned, 5,323 were sold.97 One hundred thirty-two companies claiming small business status purchased 3,724 licenses. A third auction, consisting of 8,874 licenses in each of 175 EAs and 1,328 licenses in all but three of the 51 MEAs, was held in 2003. Seventy-seven bidders claiming small or very small business status won 2,093 licenses.98 A fourth auction of 9,603 lower and upper band paging licenses was held in the year 2010. 29 bidders claiming small or very small business status won 3,016 licenses.

68.2.3 GHz 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.99 The SBA approved these definitions.100 The Commission conducted an auction of geographic area licenses in the WCS service in 1997. In the auction, seven bidders that qualified as very small business entities won 31licenses, and one bidder that qualified as a small business entity won a license.

69.1670-1675 MHz Services.This service can be used for fixed and mobile uses, except aeronautical mobile.101 An auction for one license in the 1670-1675 MHz band was conducted in 2003. The Commission defined a “small business” as an entity with attributable average annual gross revenues of not more than $40 million for the preceding three years, which would thus be eligible for a 15 percent discount on its winning bid for the 1670-1675 MHz band license. Further, the Commission defined a “very small business” as an entity with attributable average annual gross revenues of not more than $15 million for the preceding three years, which would thus be eligible to receive a 25 percent discount on its winning bid for the 1670-1675 MHz band license. The winning bidder was not a small entity.

70.Wireless Telephony.Wireless telephony includes cellular, personal communications services, and specialized mobile radio telephony carriers. As noted, the SBA has developed a small business size standard for Wireless Telecommunications Carriers (except Satellite).102 Under the SBA small business size standard, a business is small if it has 1,500 or fewer employees.103 Census data for 2007 shows that there were 1,383 firms that operated that year.104 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of firms can be considered small. According to Trends in Telephone Service data, 434 carriers reported that they were engaged in wireless telephony.105 Of these, an estimated 222 have 1,500 or fewer employees and 212 have more than 1,500 employees.106 Therefore, approximately half of these entities can be considered small. Similarly, according to Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony, including cellular service, Personal Communications Service (PCS), and Specialized Mobile Radio (SMR) Telephony services.107 Of these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees.108 Consequently, the Commission estimates that approximately half or more of these firms can be considered small. Thus, using available data, we estimate that the majority of wireless firms can be considered small.

71.Broadband Personal Communications Service. Broadband Personal Communications Service.The broadband personal communications services (PCS) spectrum is divided into six frequency blocks designated A through F, and the Commission has held auctions for each block. The Commission initially defined a “small business” for C- and F-Block licenses as an entity that has average gross revenues of $40 million or less in the three previous years.109 For F-Block licenses, an additional small business size standard for “very small business” was added and is defined as an entity that, together with its affiliates, has average gross revenues of not more than $15 million for the preceding three years.110 These small business size standards, in the context of broadband PCS auctions, have been approved by the SBA.111 No small businesses within the SBA-approved small business size standards bid successfully for licenses in Blocks A and B. There were 90 winning bidders that claimed small business status in the first two C-Block auctions. A total of 93 bidders that claimed small and very small business status won approximately 40 percent of the 1,479 licenses in the first auction for the D, E, and F Blocks.112 On April 15, 1999, the Commission completed the re-auction of 347 C-, D-, E-, and F-Block licenses in Auction No. 22.113 Of the 57 winning bidders in that auction, 48 claimed small business status and won 277 licenses.

72. On January 26, 2001, the Commission completed the auction of 422 C and F Block Broadband PCS licenses in Auction No. 35. Of the 35 winning bidders in that auction, 29 claimed small business status.114 Subsequent events concerning Auction 35, including judicial and agency determinations, resulted in a total of 163 C and F Block licenses being available for grant. On February 15, 2005, the Commission completed an auction of 242 C-, D-, E-, and F-Block licenses in Auction No. 58. Of the 24 winning bidders in that auction, 16 claimed small business status and won 156 licenses.115 On May 21, 2007, the Commission completed an auction of 33 licenses in the A, C, and F Blocks in Auction No. 71.116 Of the 14 winning bidders in that auction, six claimed small business status and won 18 licenses.117 On August 20, 2008, the Commission completed the auction of 20 C-, D-, E-, and F-Block Broadband PCS licenses in Auction No. 78.118 Of the eight winning bidders for Broadband PCS licenses in that auction, six claimed small business status and won 14 licenses.119

73.Advanced Wireless Services.In 2006, the Commission conducted its first auction of Advanced Wireless Services licenses in the 1710-1755 MHz and 2110-2155 MHz bands (“AWS-1”), designated as Auction 66.120 For the AWS-1 bands, the Commission has defined a “small business” as an entity with average annual gross revenues for the preceding three years not exceeding $40 million, and a “very small business” as an entity with average annual gross revenues for the preceding three years not exceeding $15million.121 In 2006, the Commission conducted its first auction of AWS-1 licenses.122 In that initial AWS-1 auction, 31 winning bidders identified themselves as very small businesses won 142 licenses.123 Twenty-six of the winning bidders identified themselves as small businesses and won 73 licenses.124 In a subsequent 2008 auction, the Commission offered 35 AWS-1 licenses.125 Four winning bidders identified themselves as very small businesses, and three of the winning bidders identifying themselves as a small businesses won five AWS-1 licenses.126

74.Narrowband Personal Communications Services.In 1994, the Commission conducted two auctions of Narrowband PCS licenses. For these auctions, the Commission defined a “small business” as an entity with average annual gross revenues for the preceding three years not exceeding $40 million.127 Through these auctions, the Commission awarded a total of 41 licenses, 11 of which were obtained by four small businesses.128 To ensure meaningful participation by small business entities in future auctions, the Commission adopted a two-tiered small business size standard in theNarrowband PCS Second Report and Order. 129 A “small business” is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $40 million.130 A “very small business” is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $15 million.131 The SBA has approved these small business size standards.132 A third auction of Narrowband PCS licenses was conducted in 2001. In that auction, five bidders won 317 (Metropolitan Trading Areas and nationwide) licenses.133 Three of the winning bidders claimed status as a small or very small entity and won 311 licenses.

75.Lower 700 MHz Band Licenses.The Commission previously adopted criteria for defining three groups of small businesses for purposes of determining their eligibility for special provisions such as bidding credits.134 The Commission defined a “small business” as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $40 million for the preceding three years.135 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 $15 million for the preceding three years.136 Additionally, the Lower 700 MHz Service had a third category of small business status for Metropolitan/Rural Service Area (“MSA/RSA”) licenses—“entrepreneur”—which 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 three years.137 The SBA approved these small size standards.138 An auction of 740 licenses was conducted in 2002 (one license in each of the 734 MSAs/RSAs and one license in each of the six Economic Area Groupings (EAGs)). Of the 740 licenses available for auction, 484 licenses were won by 102 winning bidders. Seventy-two of the winning bidders claimed small business, very small business, or entrepreneur status and won a total of 329 licenses.139 A second auction commenced on May 28, 2003, closed on June 13, 2003, and included 256 licenses.140 Seventeen winning bidders claimed small or very small business status and won 60 licenses, and nine winning bidders claimed entrepreneur status and won 154 licenses.141 In 2005, the Commission completed an auction of 5 licenses in the lower 700 MHz band (Auction 60). All three winning bidders claimed small business status.

76. In 2007, the Commission reexamined its rules governing the 700 MHz band in the700 MHz Second Report and Order. 142 An auction of A, B and E block licenses in the Lower 700 MHz band was held in 2008.143 Twenty winning bidders claimed small business status (those with attributable average annual gross revenues that exceed $15 million and do not exceed $40 million for the preceding three years). Thirty three winning bidders claimed very small business status (those with attributable average annual gross revenues that do not exceed $15 million for the preceding three years). In 2011, the Commission conducted Auction 92, which offered 16 lower 700 MHz band licenses that had been made available in Auction 73 but either remained unsold or were licenses on which a winning bidder defaulted. Two of the sevenwinning bidders in Auction 92 claimed very small business status, winning a total of four licenses.

77.Upper 700 MHz Band Licenses.In the700 MHz Second Report and Order,the Commission revised its rules regarding Upper 700 MHz licenses.144 On January 24, 2008, the Commission commenced Auction 73 in which several licenses in the Upper 700 MHz band were available for licensing: 12 Regional Economic Area Grouping licenses in the C Block, and one nationwide license in the D Block.145 The auction concluded on March 18, 2008, with 3 winning bidders claiming very small business status (those with attributable average annual gross revenues that do not exceed $15 million for the preceding three years) and winning five licenses.

78.700 MHz Guard Band Licenses.In 2000, the Commission adopted the700 MHz Guard Band Report and Order,in which it established rules for the A and B block licenses in the Upper 700 MHz band, including size standards for “small businesses” and “very small businesses” for purposes of determining their eligibility for special provisions such as bidding credits.146 A small business in this service is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $40 million for the preceding three years.147 Additionally, a very small business is an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $15 million for the preceding three years.148 SBA approval of these definitions is not required.149 An auction of these licenses was conducted in 2000.150 Of the 104 licenses auctioned, 96 licenses were won by nine bidders. Five of these bidders were small businesses that won a total of 26 licenses. A second auction of 700 MHz Guard Band licenses was held in 2001. All eight of the licenses auctioned were sold to three bidders. One of these bidders was a small business that won a total of two licenses.151

79.Specialized Mobile Radio.The Commission adopted small business size standards for the purpose of determining eligibility for bidding credits in auctions of Specialized Mobile Radio (SMR) geographic area licenses in the 800 MHz and 900 MHz bands. The Commission 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.152 The Commission defined a “very small business” as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $3 million for the preceding three years.153 The SBA has approved these small business size standards for both the 800 MHz and 900 MHz SMR Service.154 The first 900 MHz SMR auction was completed in 1996. Sixty bidders claiming that they qualified as small businesses under the $15 million size standard won 263 licenses in the 900 MHz SMR band. In 2004, the Commission held a second auction of 900 MHz SMR licenses and three winning bidders identifying themselves as very small businesses won 7 licenses.155 The auction of 800 MHz SMR licenses for the upper 200 channels was conducted in 1997. Ten bidders claiming that they qualified as small or very small businesses under the $15 million size standard won 38 licenses for the upper 200 channels.156 A second auction of 800 MHz SMR licenses was conducted in 2002 and included 23 BEA licenses. One bidder claiming small business status won five licenses.157

80. The auction of the 1,053 800 MHz SMR licenses for the General Category channels was conducted in 2000. Eleven bidders who won 108 licenses for the General Category channels in the 800 MHz SMR band qualified as small or very small businesses.158 In an auction completed in 2000, a total of 2,800 Economic Area licenses in the lower 80 channels of the 800 MHz SMR service were awarded.159 Of the 22 winning bidders, 19 claimed small or very small business status and won 129 licenses. Thus, combining all four auctions, 41 winning bidders for geographic licenses in the 800 MHz SMR band claimed to be small businesses.

81. In addition, there are numerous incumbent site-by-site SMR licensees and licensees with extended implementation authorizations in the 800 and 900 MHz bands. We do not know how many firms provide 800 MHz or 900 MHz geographic area SMR pursuant to extended implementation authorizations, nor how many of these providers have annual revenues not exceeding $15 million. One firm has over $15 million in revenues. In addition, we do not know how many of these firms have 1500 or fewer employees.160 We assume, for purposes of this analysis, that all of the remaining existing extended implementation authorizations are held by small entities, as that small business size standard is approved by the SBA.

82.220 MHz Radio Service—Phase I Licensees.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 small business size standard for small entities specifically applicable to such incumbent 220 MHz Phase I licensees. To estimate the number of such licensees that are small businesses, the Commission applies the small business size standard under the SBA rules applicable. The SBA has deemed a wireless business to be small if it has 1,500 or fewer employees.161 For this service, the SBA uses the category of Wireless Telecommunications Carriers (except Satellite). Census data for 2007, which supersede data contained in the 2002Census, show that there were 1,383 firms that operated that year.162 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of firms can be considered small.

83.220 MHz Radio Service—Phase II Licensees.The 220 MHz service has both Phase I and Phase II licenses. The Phase II 220 MHz service licenses are assigned by auction, where mutually exclusive applications are accepted. In the220 MHz Third Report and Order,the Commission adopted a small business size standard for defining “small” and “very small” businesses for purposes of determining their eligibility for special provisions such as bidding credits.163 This small business standard indicates that a “small business” is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years.164 A “very small business” is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that do not exceed $3 million for the preceding three years.165 The SBA has approved these small size standards.166 Auctions of Phase II licenses commenced on and closed in 1998.167 In the first auction, 908 licenses were auctioned in three different-sized geographic areas: three nationwide licenses, 30 Regional Economic Area Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908 licenses auctioned, 693 were sold.168 Thirty-nine small businesses won 373 licenses in the first 220 MHz auction. A second auction included 225 licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies claiming small business status won 158 licenses.169 A third auction included four licenses: 2 BEA licenses and 2 EAG licenses in the 220 MHz Service. No small or very small business won any of these licenses.170 In 2007, the Commission conducted a fourth auction of the 220 MHz licenses, designated as Auction 72.171 Auction 72, which offered 94 Phase II 220 MHz Service licenses, concluded in 2007.172 In this auction, five winning bidders won a total of 76 licenses. Two winning bidders identified themselves as very small businesses won 56 of the 76 licenses. One of the winning bidders that identified themselves as a small business won 5 of the 76 licenses won.

84.Private Land Mobile Radio (“PLMR”).PLMR systems serve an essential role in a range of industrial, business, land transportation, and public safety activities. These radios are used by companies of all sizes operating in all U.S. business categories, and are often used in support of the licensee's primary (non-telecommunications) business operations. For the purpose of determining whether a licensee of a PLMR system is a small business as defined by the SBA, we use the broad census category, Wireless Telecommunications Carriers (except Satellite). This definition provides that a small entity is any such entity employing no more than 1,500 persons.173 The Commission does not require PLMR licensees to disclose information about number of employees, so the Commission does not have information that could be used to determine how many PLMR licensees constitute small entities under this definition. We note that PLMR licensees generally use the licensed facilities in support of other business activities, and therefore, it would also be helpful to assess PLMR licensees under the standards applied to the particular industry subsector to which the licensee belongs.174

85. As of March 2010, there were 424,162 PLMR licensees operating 921,909 transmitters in the PLMR bands below 512 MHz. We note that any entity engaged in a commercial activity is eligible to hold a PLMR license, and that any revised rules in this context could therefore potentially impact small entities covering a great variety of industries.

86.Fixed Microwave Services.Microwave services include common carrier,175 private-operational fixed,176 and broadcast auxiliary radio services.177 They also include the Local Multipoint Distribution Service (“LMDS”),178 the Digital Electronic Message Service (“DEMS”),179 and the 24 GHz Service,180 where licensees can choose between common carrier and non-common carrier status.181 The Commission has not yet defined a small business with respect to microwave services. For purposes of this IRFA, the Commission will use the SBA's definition applicable to Wireless Telecommunications Carriers (except satellite)—i.e.,an entity with no more than 1,500 persons is considered small.182 For the category of Wireless Telecommunications Carriers (except Satellite), Census data for 2007 shows that there were 1,383 firms that operated that year.183 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of firms can be considered small. The Commission notes that the number of firms does not necessarily track the number of licensees. The Commission estimates that virtually all of the Fixed Microwave licensees (excluding broadcast auxiliary licensees) would qualify as small entities under the SBA definition.

87.39 GHz Service.The Commission adopted small business size standards for 39 GHz licenses. A “small business”is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $40 million in the preceding three years.184 A “very small business” is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues of not more than $15 million for the preceding three years.185 The SBA has approved these small business size standards.186 In 2000, the Commission conducted an auction of 2,173 39 GHz licenses. A total of 18 bidders who claimed small or very small business status won 849 licenses.

88.Local Multipoint Distribution Service.Local Multipoint Distribution Service (“LMDS”) is a fixed broadband point-to-multipoint microwave service that provides for two-way video telecommunications.187 The Commission established a small business size standard for LMDS licenses as an entity that has average gross revenues of less than $40 million in the three previous years.188 An additional small business size standard for “very small business” was added as an entity that, together with its affiliates, has average gross revenues of not more than $15 million for the preceding three years.189 The SBA has approved these small business size standards in the context of LMDS auctions.190 There were 93 winning bidders that qualified as small entities in the LMDS auctions. A total of 93 small and very small business bidders won approximately 277 A Block licenses and 387 B Block licenses. In 1999, the Commission re-auctioned 161 licenses; there were 32 small and very small businesses winning that won 119 licenses.

89.218-219 MHz Service.The first auction of 218-219 MHz Service (previously referred to as the Interactive and Video Data Service or IVDS) licenses resulted in 170 entities winning licenses for 594 Metropolitan Statistical Areas (“MSAs”).191 Of the 594 licenses, 557 were won by 167 entities qualifying as a small business. For that auction, the Commission defined a small business as an entity that, together with its affiliates, has no more than a $6 million net worth and, after federal income taxes (excluding any carry over losses), has no more than $2 million in annual profits each year for the previous two years.192 In the218-219 MHz Report and Order and Memorandum Opinion and Order,the Commission revised its small business size standards for the 218-219 MHz Service and defined a small business as an entity that, together with its affiliates and persons or entities that hold interests in such an entity and their affiliates, has average annual gross revenues not exceeding $15 million for the preceding three years.193 The Commission defined a “very small business” as an entity that, together with its affiliates and persons or entities that hold interests in such an entity and its affiliates, has average annual gross revenues not exceeding $3 million for the preceding three years.194 The SBA has approved these definitions.195

90.Location and Monitoring Service (“LMS”).Multilateration LMS systems use non-voice radio techniques to determine the location and status of mobile radio units. For auctions of LMS licenses, the Commission has defined a “small business” as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the preceding three years not exceeding $15 million.196 A “very small business” is defined as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the preceding three years not exceeding $3 million.197 These definitions have been approved by the SBA.198 An auction of LMS licenses was conducted in 1999. Of the 528 licenses auctioned, 289 licenses were sold to four small businesses.

91.Rural Radiotelephone Service.The Commission has not adopted a size standard for small businesses specific to the Rural Radiotelephone Service.199 A significant subset of the Rural Radiotelephone Service is the Basic Exchange Telephone Radio System (“BETRS”).200 For purposes of its analysis of the Rural Radiotelephone Service, the Commission uses the SBA small business size standard for the category Wireless Telecommunications Carriers (except satellite),” which is 1,500 or fewer employees.201 Census data for 2007 shows that there were 1,383 firms that operated that year.202 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of firms in the Rural Radiotelephone Service can be considered small.

92.Air-Ground Radiotelephone Service. 203 The Commission has previously used the SBA's small business definition applicable to Wireless Telecommunications Carriers (except Satellite),i.e.,an entity employing no more than 1,500 persons.204 There are approximately 100 licensees in the Air-Ground Radiotelephone Service, and under that definition, we estimate that almost all of them qualify as small entities under the SBA definition. For purposes of assigning Air-Ground Radiotelephone Service licenses through competitive bidding, the Commission has defined “small business” as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the preceding three years not exceeding $40 million.205 A “verysmall business” is defined as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the preceding three years not exceeding $15 million.206 These definitions were approved by the SBA.207 In 2006, the Commission completed an auction of nationwide commercial Air-Ground Radiotelephone Service licenses in the 800 MHz band (Auction 65). The auction closed with two winning bidders winning two Air-Ground Radiotelephone Services licenses. Neither of the winning bidders claimed small business status.

93.Aviation and Marine Radio Services.Small businesses in the aviation and marine radio services use a very high frequency (“VHF”) marine or aircraft radio and, as appropriate, an emergency position-indicating radio beacon (and/or radar) or an emergency locator transmitter. The Commission has not developed a small business size standard specifically applicable to these small businesses. For purposes of this analysis, the Commission uses the SBA small business size standard for the category Wireless Telecommunications Carriers (except satellite),” which is 1,500 or fewer employees.208 Census data for 2007 shows that there were 1,383 firms that operated that year.209 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of firms can be considered small.

94.Offshore Radiotelephone Service.This service operates on several UHF television broadcast channels that are not used for television broadcasting in the coastal areas of states bordering the Gulf of Mexico.210 There are presently approximately 55 licensees in this service. The Commission is unable to estimate at this time the number of licensees that would qualify as small under the SBA's small business size standard for the category of Wireless Telecommunications Carriers (except Satellite). Under that standard.211 Under that SBA small business size standard, a business is small if it has 1,500 or fewer employees.212 Census data for 2007 shows that there were 1,383 firms that operated that year.213 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of firms can be considered small.

95.Multiple Address Systems (“MAS”).Entities using MAS spectrum, in general, fall into two categories: (1) those using the spectrum for profit-based uses, and (2) those using the spectrum for private internal uses. The Commission defines a small business for MAS licenses as an entity that has average gross revenues of less than $15 million in the preceding three years.214 A very small business is defined as an entity that, together with its affiliates, has average gross revenues of not more than $3 million for the preceding three years.215 The SBA has approved these definitions.216 The majority of these entities will most likely be licensed in bands where the Commission has implemented a geographic area licensing approach that would require the use of competitive bidding procedures to resolve mutually exclusive applications. The Commission's licensing database indicates that, as of March 5, 2010, there were over 11,500 MAS station authorizations. In 2001, an auction of 5,104 MAS licenses in 176 EAs was conducted.217 Seven winning bidders claimed status as small or very small businesses and won 611 licenses. In 2005, the Commission completed an auction (Auction 59) of 4,226 MAS licenses in the Fixed Microwave Services from the 928/959 and 932/941 MHz bands. Twenty-six winning bidders won a total of 2,323 licenses. Of the 26 winning bidders in this auction, five claimed small business status and won 1,891 licenses.

96. With respect to entities that use, or seek to use, MAS spectrum to accommodate internal communications needs, we note that MAS serves an essential role in a range of industrial, safety, business, and land transportation activities. MAS radios are used by companies of all sizes, operating in virtually all U.S. business categories, and by all types of public safety entities. For the majority of private internal users, the small business size standard developed by the SBA would be more appropriate. The applicable size standard in this instance appears to be that of Wireless Telecommunications Carriers (except Satellite). This definition provides that a small entity is any such entity employing no more than 1,500 persons.218 The Commission's licensing database indicates that, as of January 20, 1999, of the 8,670 total MAS station authorizations, 8,410 authorizations were for private radio service, and of these, 1,433 were for private land mobile radio service.

97.1.4 GHz Band Licensees.The Commission conducted an auction of 64 1.4 GHz band licenses in the paired 1392-1395 MHz and 1432-1435 MHz bands, and in the unpaired 1390-1392 MHz band in 2007.219 For these licenses, the Commission defined “small business” as an entity that, together with its affiliates and controlling interests, had average gross revenues not exceeding $40 million for the preceding three years, and a “very small business” as an entity that, together with its affiliates and controlling interests, has had average annual gross revenues not exceeding $15 million for the preceding three years.220 Neither of the two winning bidders claimed small business status.221

98.Incumbent 24 GHz Licensees.This analysis may affect incumbent licensees who were relocated to the 24 GHz band from the 18 GHz band, and applicants who wish to provide services in the 24 GHz band. For this service, the Commission uses the SBA small business size standard for the category “Wireless Telecommunications Carriers (except satellite),” which is 1,500 or fewer employees.222 To gauge small business prevalence for these cable services we must, however, use the mostcurrent census data. Census data for 2007 shows that there were 1,383 firms that operated that year.223 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of firms can be considered small. The Commission notes that the Census' use of the classifications “firms” does not track the number of “licenses”. The Commission believes that there are only two licensees in the 24 GHz band that were relocated from the 18 GHz band, Teligent224 and TRW, Inc. It is our understanding that Teligent and its related companies have less than 1,500 employees, though this may change in the future. TRW is not a small entity. Thus, only one incumbent licensee in the 24 GHz band is a small business entity.

99.Future 24 GHz Licensees.With respect to new applicants for licenses in the 24 GHz band, for the purpose of determining eligibility for bidding credits, the Commission established three small business definitions. An “entrepreneur” is defined as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the three preceding years not exceeding $40 million.225 A “small business” is defined as an entity that, together with controlling interests and affiliates, has average annual gross revenues for the three preceding years not exceeding $15 million.226 A “very small business” in the 24 GHz band is defined as an entity that, together with controlling interests and affiliates, has average gross revenues not exceeding $3 million for the preceding three years.227 The SBA has approved these small business size standards.228 In a 2004 auction of 24 GHz licenses, three winning bidders won seven licenses.229 Two of the winning bidders were very small businesses that won five licenses.

100.Broadband Radio Service and Educational Broadband Service.Broadband Radio Service systems, previously referred to as Multipoint Distribution Service (“MDS”) and Multichannel Multipoint Distribution Service (“MMDS”) systems, and “wireless cable,” transmit video programming to subscribers and provide two-way high speed data operations using the microwave frequencies of the Broadband Radio Service (“BRS”) and Educational Broadband Service (“EBS”) (previously referred to as the Instructional Television Fixed Service (“ITFS”).230 In connection with the 1996 BRS auction, the Commission established a small business size standard as an entity that had annual average gross revenues of no more than $40 million in the previous three years.231 The BRS auctions resulted in 67 successful bidders obtaining licensing opportunities for 493 Basic Trading Areas (“BTAs”). Of the 67 auction winners, 61 met the definition of a small business. BRS also includes licensees of stations authorized prior to the auction. At this time, we estimate that of the 61 small business BRS auction winners, 48 remain small business licensees. In addition to the 48 small businesses that hold BTA authorizations, there are approximately 392 incumbent BRS licensees that are considered small entities.232 After adding the number of small business auction licensees to the number of incumbent licensees not already counted, we find that there are currently approximately 440 BRS licensees that are defined as small businesses under either the SBA or the Commission's rules. In 2009, the Commission conducted Auction 86, the sale of 78 licenses in the BRS areas.233 The Commission offered three levels of bidding credits: (i) A bidder with attributed average annual gross revenues that exceed $15 million and do not exceed $40 million for the preceding three years (small business) will receive a 15 percent discount on its winning bid; (ii) a bidder with attributed average annual gross revenues that exceed $3 million and do not exceed $15 million for the preceding three years (very small business) will receive a 25 percent discount on its winning bid; and (iii) a bidder with attributed average annual gross revenues that do not exceed $3 million for the preceding three years (entrepreneur) will receive a 35 percent discount on its winning bid.234 Auction 86 concluded in 2009 with the sale of 61 licenses.235 Of the ten winning bidders, two bidders that claimed small business status won 4 licenses; one bidder that claimed very small business status won three licenses; and two bidders that claimed entrepreneur status won six licenses.

101. In addition, the SBA's Cable Television Distribution Services small business size standard is applicable to EBS. There are presently 2,032 EBS licensees. All but 100 of these licenses are held by educational institutions. Educational institutions are included in this analysis as small entities.236 Thus, we estimate that at least 1,932 licensees are small businesses. Since 2007, Cable Television Distribution Services have been defined within the broad economic census category of Wired Telecommunications Carriers; that category is defined as follows: “This industry comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or a combination oftechnologies.”237 For these services, the Commission uses the SBA small business size standard for the category “Wireless Telecommunications Carriers (except satellite),” which is 1,500 or fewer employees.238 To gauge small business prevalence for these cable services we must, however, use the most current census data. According to Census Bureau data for 2007, there were a total of 955 firms in this previous category that operated for the entire year.239 Of this total, 939 firms employed 999 or fewer employees, and 16 firms employed 1,000 employees or more.240 Thus, the majority of these firms can be considered small.

102.Television Broadcasting.This Economic Census category “comprises establishments primarily engaged in broadcasting images together with sound. These establishments operate television broadcasting studios and facilities for the programming and transmission of programs to the public.”241 The SBA has created the following small business size standard for Television Broadcasting firms: those having $14 million or less in annual receipts.242 The Commission has estimated the number of licensed commercial television stations to be 1,387.243 In addition, according to Commission staff review of the BIA Advisory Services, LLC'sMedia Access Pro Television Databaseon March 28, 2012, about 950 of an estimated 1,300 commercial television stations (or approximately 73 percent) had revenues of $14 million or less.244 We therefore estimate that the majority of commercial television broadcasters are small entities.

103. We note, however, that in assessing whether a business concern qualifies as small under the above definition, business (control) affiliations245 must be included. Our estimate, therefore, likely overstates the number of small entities that might be affected by our action because the revenue figure on which it is based does not include or aggregate revenues from affiliated companies. In addition, an element of the definition of “small business” is that the entity not be dominant in its field of operation. We are unable at this time to define or quantify the criteria that would establish whether a specific television station is dominant in its field of operation. Accordingly, the estimate of small businesses to which rules may apply does not exclude any television station from the definition of a small business on this basis and is therefore possibly over-inclusive to that extent.

104. In addition, the Commission has estimated the number of licensed noncommercial educational (NCE) television stations to be 396.246 These stations are non-profit, and therefore considered to be small entities.247

105. In addition, there are also 2,528 low power television stations, including Class A stations (LPTV).248 Given the nature of these services, we will presume that all LPTV licensees qualify as small entities under the above SBA small business size standard.

106.Radio Broadcasting.This Economic Census category “comprises establishments primarily engaged in broadcasting aural programs by radio to the public. Programming may originate in their own studio, from an affiliated network, or from external sources.”249 The SBA has established a small business size standard for this category, which is: such firms having $7 million or less in annual receipts.250 According to Commission staff review of BIA Advisory Services, LLC'sMedia Access Pro Radio Databaseon March 28, 2012, about 10,759 (97%) of 11,102 commercial radio stations had revenues of $7 million or less. Therefore, the majority of such entities are small entities.

107. We note, however, that in assessing whether a business concern qualifies as small under the above size standard, business affiliations must be included.251 In addition, to be determined to be a “small business,” the entity may not be dominant in its field of operation.252 We note that it is difficult at times to assess these criteria in the context of media entities, and our estimate of small businesses may therefore be over-inclusive.

108.Auxiliary, Special Broadcast and Other Program Distribution Services.This service involves a variety of transmitters, generally used to relay broadcast programming to the public (through translator and booster stations) or within the program distribution chain (from a remote news gathering unit back to the station). The Commission has not developed a definition of small entities applicable to broadcast auxiliary licensees. The applicable definitions of small entities are those, noted previously, under the SBA rules applicable to radio broadcasting stations and television broadcasting stations.253

109. The Commission estimates that there are approximately 6,099 FM translators and boosters.254 The Commission does not collect financial information on any broadcast facility, and the Department of Commerce does not collect financial information on these auxiliary broadcast facilities. We believe that most, if not all, of these auxiliary facilities could be classified as small businesses by themselves. We also recognize that most commercial translators and boosters are owned by a parent station which, in some cases, would be covered by the revenue definition of small business entity discussed above. These stations would likely have annual revenues that exceed the SBA maximum to be designated as a small business ($7.0 million for a radio station or $14.0 million for a TV station). Furthermore, they do not meet the Small Business Act's definition of a “small business concern” because they are not independently owned and operated.255

110.Cable Television Distribution Services.Since 2007, these services have been defined within the broadeconomic census category of Wired Telecommunications Carriers; that category is defined as follows: “This industry comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies.”256 The SBA has developed a small business size standard for this category, which is: all such firms having 1,500 or fewer employees. Census data for 2007 shows that there were 1,383 firms that operated that year.257 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of such firms can be considered small.

111.Cable Companies and Systems.The Commission has also developed its own small business size standards, for the purpose of cable rate regulation. Under the Commission's rules, a “small cable company” is one serving 400,000 or fewer subscribers, nationwide.258 Industry data indicate that, of 1,076 cable operators nationwide, all but eleven are small under this size standard.259 In addition, under the Commission's rules, a “small system” is a cable system serving 15,000 or fewer subscribers.260 Industry data indicate that, of 6,635 systems nationwide, 5,802 systems have under 10,000 subscribers, and an additional 302 systems have 10,000-19,999 subscribers.261 Thus, under this second size standard, most cable systems are small.

112.Cable System Operators.The Communications Act of 1934, as amended, also contains a size standard for small cable system operators, 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.”262 The Commission has determined that an operator serving fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate.263 Industry data indicate that, of 1,076 cable operators nationwide, all but ten are small under this size standard.264 We note that the Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million,265 and therefore we are unable to estimate more accurately the number of cable system operators that would qualify as small under this size standard.

113.Open Video Systems.Open Video Service (OVS) systems provide subscription services.266 The open video system (“OVS”) framework was established in 1996, and is one of four statutorily recognized options for the provision of video programming services by local exchange carriers.267 The OVS framework provides opportunities for the distribution of video programming other than through cable systems. Because OVS operators provide subscription services,268 OVS falls within the SBA small business size standard covering cable services, which is “Wired Telecommunications Carriers.”269 The SBA has developed a small business size standard for this category, which is: all such firms having 1,500 or fewer employees. To gauge small business prevalence for the OVS service, the Commission relies on data currently available from the U.S. Census for the year 2007. According to that source, there were 3,188 firms that in 2007 were Wired Telecommunications Carriers. Of these, 3,144 operated with less than 1,000 employees, and 44 operated with more than 1,000 employees. However, as to the latter 44 there is no data available that shows how many operated with more than 1,500 employees. Based on this data, the majority of these firms can be considered small.270 In addition, we note that the Commission has certified some OVS operators, with some now providing service.271 Broadband service providers (“BSPs”) are currently the only significant holders of OVS certifications or local OVS franchises.272 The Commission does not have financial or employment information regarding the entities authorized to provide OVS, some of which may not yet be operational. Thus, at least some of the OVS operators may qualify as small entities. The Commission further notes that it has certified approximately 45 OVS operators to serve 75 areas, and some of these are currently providing service.273 Affiliates of Residential Communications Network, Inc. (RCN) received approval to operate OVS systems in New York City, Boston, Washington, DC, and other areas. RCN has sufficient revenues to assure that they do not qualify as a small business entity. Little financial information is available for the other entities that are authorized to provide OVS and are not yet operational. Given that some entities authorized to provide OVS service have not yet begun to generate revenues, the Commission concludes that up to 44 OVS operators (those remaining) might qualify as small businesses that may beaffected by the rules and policies adopted herein.

114.Cable Television Relay Service.The industry in which Cable Television Relay Services operate comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services; wired (cable) audio and video programming distribution; and wired broadband Internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry.274 The category designated by the SBA for this industry is “Wired Telecommunications Carriers.”275 The SBA has developed a small business size standard for this category, which is: all such firms having 1,500 or fewer employees. According to Census Bureau data for 2007, Census data for 2007 shows 3,188 firms in this category.276 Of these 3,188 firms, only 44 had 1,000 or more employees. While we could not find precise Census data on the number of firms with in the group with 1,500 or fewer employees, it is clear that at least 3,144 firms with fewer than 1,000 employees would be in that group. On this basis, the Commission estimates that a substantial majority of the providers of interconnected VoIP, non-interconnected VoIP, or both in this category, are small.277

115.Multichannel Video Distribution and Data Service.MVDDS is a terrestrial fixed microwave service operating in the 12.2-12.7 GHz band. The Commission adopted criteria for defining three groups of small businesses for purposes of determining their eligibility for special provisions such as bidding credits. It defines a very small business as an entity with average annual gross revenues not exceeding $3 million for the preceding three years; a small business as an entity with average annual gross revenues not exceeding $15 million for the preceding three years; and an entrepreneur as an entity with average annual gross revenues not exceeding $40 million for the preceding three years.278 These definitions were approved by the SBA.279 On January 27, 2004, the Commission completed an auction of 214 MVDDS licenses (Auction No. 53). In this auction, ten winning bidders won a total of 192 MVDDS licenses.280 Eight of the ten winning bidders claimed small business status and won 144 of the licenses. The Commission also held an auction of MVDDS licenses on December 7, 2005 (Auction 63). Of the three winning bidders who won 22 licenses, two winning bidders, winning 21 of the licenses, claimed small business status.281

116.Amateur Radio Service.These licensees are held by individuals in a noncommercial capacity; these licensees are not small entities.

117.Personal Radio Services.Personal radio services provide short-range, low power radio for personal communications, radio signaling, and business communications not provided for in other services. The Personal Radio Services include spectrum licensed under Part 95 of our rules.282 These services include Citizen Band Radio Service (“CB”), General Mobile Radio Service (“GMRS”), Radio Control Radio Service (“R/C”), Family Radio Service (“FRS”), Wireless Medical Telemetry Service (“WMTS”), Medical Implant Communications Service (“MICS”), Low Power Radio Service (“LPRS”), and Multi-Use Radio Service (“MURS”).283 There are a variety of methods used to license the spectrum in these rule parts, from licensing by rule, to conditioning operation on successful completion of a required test, to site-based licensing, to geographic area licensing. Under the RFA, the Commission is required to make a determination of which small entities are directly affected by the rules being proposed. Since all such entities are wireless, we apply the definition of Wireless Telecommunications Carriers (except Satellite), pursuant to which a small entity is defined as employing 1,500 or fewer persons.284 Many of the licensees in these services are individuals, and thus are not small entities. In addition, due to the mostly unlicensed and shared nature of the spectrum utilized in many of these services, the Commission lacks direct information upon which to base an estimation of the number of small entities under an SBA definition that might be directly affected by our action.

118.Public Safety Radio Services.Public Safety radio services include police, fire, local government, forestry conservation, highway maintenance, and emergency medical services.285 There are a total of approximately 127,540 licensees in these services. Governmental entities286 as well as private businesses comprise the licensees for these services. All governmental entities with populations of less than 50,000 fall within the definition of a small entity.287

119.Internet Service Providers. Internet Service Providers, Web Portals and Other Information Services.In 2007, the SBA recognized two new small business economic census categories. They are (1) Internet Publishing and Broadcasting and Web Search Portals,288 and (2) All Other Information Services.289

120.Internet Service Providers.The 2007 Economic Census places these firms, whose services might include voice over Internet protocol (VoIP), in either of two categories, depending on whether the service is provided over the provider's own telecommunications facilities (e.g., cable and DSL ISPs), or over client-supplied telecommunications connections (e.g.,dial-up ISPs). The former are within the category of Wired Telecommunications Carriers,290 which has an SBA small business size standard of 1,500 or fewer employees.291 These are also labeled “broadband.” The latter are within the category of All Other Telecommunications,292 which has a size standard of annual receipts of $25 million or less.293 These are labeled non-broadband.

121. The most current Economic Census data for all such firms are 2007 data, which are detailed specifically for ISPs within the categories above. For the first category, the data show that 396 firms operated for the entire year, of which 159 had nine or fewer employees.294 For the second category, the data show that 1,682 firms operated for the entire year.295 Of those, 1,675 had annual receipts below $25 million per year, and an additional two had receipts of between $25 million and $ 49,999,999. Consequently, we estimate that the majority of ISP firms are small entities.

122.Internet Publishing and Broadcasting and Web Search Portals.This industry comprises establishments primarily engaged in 1) publishing and/or broadcasting content on the Internet exclusively or 2) operating Web sites that use a search engine to generate and maintain extensive databases of Internet addresses and content in an easily searchable format (and known as Web search portals). The publishing and broadcasting establishments in this industry do not provide traditional (non-Internet) versions of the content that they publish or broadcast. They provide textual, audio, and/or video content of general or specific interest on the Internet exclusively. Establishments known as Web search portals often provide additional Internet services, such as email, connections to other web sites, auctions, news, and other limited content, and serve as a home base for Internet users.296 The SBA deems businesses in this industry with 500 or fewer employees small.297 According to Census Bureau data for 2007, there were 2,705 firms that provided one or more of these services for that entire year. Of these, 2,682 operated with less than 500 employees and 13 operated with to 999 employees.298 Consequently, we estimate the majority of these firms are small entities that may be affected by our proposed actions.

123. ThisNotice of Proposed Rulemakingdoes not propose any changes to the Commission's current compliance rules, but may include possible proposed information collection, reporting, and recordkeeping requirements.

124. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its approach, which may include the following four alternatives, among others: (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.299

125. In Section I of thisNPRM,we seek comment on whether and how the Commission should adjust the revised cost allocation percentages that would otherwise result from using updated FTE data and implementing the new cost allocation proposals.

126. In particular, as stated supra in Section I, our concern with minimizing any adverse economic impact of our proposed rules on small entities is guided by our goals of fairness, administrability, and sustainability. Accordingly, we believe that adjustments to fees paid by fee payors should be consistent with those goals. Specifically, we intend to mitigate any inequities that might result from imposition of substantial fee increases.

127. In keeping with the requirements of the Regulatory Flexibility Act, we have considered certain alternative means of mitigating the effects of fee increases to a particular industry segment. One option is to make all or most fee adjustments at one time. Another option is to provide interim adjustments, by phasing in the new fees over a period of time.

128. On the issue of revisiting the allocation resulting from this rulemaking, the Commission is considering undertaking this reexamination at regular intervals. Alternatively, such reexamination could be undertaken in response to comments by fee payors in the annual regulatory fee collection NPRM. Regardless of the method chosen, one underlying concern we have is to mitigate any adverse economic impact on small service providers who are likely least able toabsorb unpredictable changes in fees from year to year.

129. In light of our stated goals, the Commission seeks comment on the abovementioned, and any other, means and methods that would minimize any significant economic impact of our proposed rules on small entities.

130. None.

41. Accordingly,it is orderedthat, pursuant to Sections 4(i) and (j), 9, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 159, and 303(r), this Notice of Proposed Rulemakingis hereby adopted.

42.It is further orderedthat the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center,shall senda copy of this Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the U.S. Small Business Administration.