[Federal Register Volume 82, Number 130 (Monday, July 10, 2017)]
[Proposed Rules]
[Pages 31743-31749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14256]
[[Page 31743]]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[WC Docket No. 17-141, CC Docket No. 96-128, WC Docket No. 16-132; FCC
17-79]
Modernization of Payphone Compensation Rules; Implementation of
the Pay Telephone Reclassification and Compensation Provisions of the
Telecommunications Act of 1996; 2016 Biennial Review of
Telecommunications Regulations
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Wireline Competition Bureau seeks
comment on eliminating the Commission's payphone call tracking system
annual audit requirement and associated reporting requirement. In light
of the dramatic decline in payphone use and the high cost of compliance
in proportion to payphone compensation at issue, the proposal will
remove costly yet no longer necessary requirements. The Commission
adopted the NPRM in conjunction with an Order waiving the 2017 and 2018
audit and associated reporting requirements while it considers the
proposals in this NPRM.
DATES: Comments are due on or before August 9, 2017, and reply comments
are due on or before September 8, 2017. Written comments on the
Paperwork Reduction Act proposed information collection requirements
must be submitted by the public, Office of Management and Budget (OMB),
and other interested parties on or before September 8, 2017.
ADDRESSES: You may submit comments, identified by WC Docket No. 17-141,
by any of the following methods:
[ssquf] Federal Communications Commission's Web site: http://apps.fcc.gov/ecfs/. Follow the instructions for submitting comments.
[ssquf] Mail: Parties who choose to file by paper must file an
original and one copy 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 and boxes must be disposed of
before entering 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.
[ssquf] People with Disabilities: To request materials in
accessible formats for people with disabilities (braille, large print,
electronic files, audio format), send an email to [email protected] or
call the Consumer & Governmental Affairs Bureau at 202-418-0530
(voice), 202-418-0432 (tty).
For detailed instructions for submitting comments and additional
information on the rulemaking process, see the SUPPLEMENTARY
INFORMATION section of this document. In addition to filing comments
with the Secretary, a copy of any comments on the Paperwork Reduction
Act information collection requirements contained herein should be
submitted to the Federal Communications Commission via email to
[email protected] and to Nicole Ongele, Federal Communications Commission,
via email to [email protected].
FOR FURTHER INFORMATION CONTACT: Wireline Competition Bureau,
Competition Policy Division, Michele Berlove, at (202) 418-1477,
[email protected]. For additional information concerning the
Paperwork Reduction Act information collection requirements contained
in this document, send an email to [email protected] or contact Nicole Ongele
at (202) 418-2991.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking (NPRM) in WC Docket No. 17-141, adopted and
released June 22, 2017. The full text of this document is available for
public inspection during regular business hours in the FCC Reference
Information Center, Portals II, 445 12th Street SW., Room CY-A257,
Washington, DC 20554. It is available on the Commission's Web site at
https://www.fcc.gov/document/modernization-payphone-compensation-rules-nprm-and-order.
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 the Commission's Electronic
Comment Filing System (ECFS). See Electronic Filing of Documents in
Rulemaking Proceedings, 63 FR 24121 (1998), http://www.fcc.gov/Bureaus/OGC/Orders/1998/fcc98056.pdf.
[ssquf] Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: https://www.fcc.gov/ecfs/.
[ssquf] Paper Filers: Parties who choose to file by paper must file
an original and one copy 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 and boxes must be disposed of
before entering 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.
[ssquf] People with Disabilities: To request materials in
accessible formats for people with disabilities (braille, large print,
electronic files, audio format), send an email to [email protected] or
call the Consumer & Governmental Affairs Bureau at 202-418-0530
(voice), 202-418-0432 (tty).
Synopsis
I. Introduction
1. In this Notice of Proposed Rulemaking (NPRM), we propose
eliminating the Commission's payphone call tracking system annual audit
requirement and associated reporting requirement. In light of the
dramatic decline in payphone use and the high cost of compliance in
proportion to payphone compensation at issue, we anticipate that our
proposal will remove
[[Page 31744]]
costly yet no longer necessary requirements.
II. Background
3. Section 276 of the Communications Act of 1934, as amended (the
Act), which was adopted in the Telecommunications Act of 1996, directs
the Commission to implement rules to ensure that payphone service
providers (PSPs) are fairly compensated for all completed calls made
from their payphones. Pursuant to Congress' directive, the Commission
adopted rules governing payphone compensation in 1996. In doing so, the
Commission noted that fair compensation to PSPs was not possible
without an effective per-call tracking mechanism. It thus required that
the carriers to whom coinless access code and subscriber toll-free
calls are routed, known as ``Completing Carriers,'' ``be responsible
for tracking each compensable call and remitting per-call compensation
to the PSP.''
4. In 2003, the Commission revised its payphone compensation rules
to require, among other things, that Completing Carriers annually must
file an audit report prepared by an independent third-party auditor in
order to verify ongoing compliance. Specifically, the auditor must
``(1) [v]erify that no material changes have occurred concerning the
Completing Carrier's compliance with the criteria of the prior year's
System Audit Report; or (2) [i]f a material change has occurred . . .
verify that the material changes do not affect compliance with the
audit criteria set forth in paragraph (c) of this section.'' Completing
Carriers are required to make all documentation underlying the audit
report, including working papers, available to PSPs for inspection upon
request. Completing Carriers can avoid the need to comply with the
audit and related requirements only by entering into alternative
compensation arrangements with PSPs.
5. Sprint and Cincinnati Bell each recently filed petitions with
the Commission seeking a waiver of the annual audit requirement. The
two carriers also filed comments in response to the Commission's 2016
Biennial Review Public Notice urging the Commission to consider
eliminating the annual payphone call tracking system audit requirement.
In both sets of pleadings, the carriers point to the tremendous decline
in payphone calling, the lack of a similar decline in the cost of the
annual audit, and the companies' consistent compliance with the
Commission's payphone compensation rules. USTelecom, ITTA, and Puerto
Rico Telephone each filed in support of the Waiver Petitions and
requested that the Commission broaden the relief to encompass
additional carriers.
III. Discussion
6. After reviewing the record in the 2016 Biennial Review
proceeding, the Waiver Petitions and supporting comments, and based on
our own observations of the changing communications landscape, we find
that the best course is to reevaluate the necessity of the annual
payphone call tracking system audit requirement and associated
reporting requirement on an industrywide basis. Below, we propose to
eliminate or modify this requirement and seek comment on this proposal.
7. We propose to eliminate the annual audit requirement and
associated reporting requirement embodied in section 64.1320(f) of the
rules in its entirety, and we seek detailed comment on this proposal.
Have circumstances changed such that the benefits of these rules in
helping to ensure PSPs are fairly compensated no longer justify the
costs of the rule?
8. First, we seek comment on the assertion that the precipitous
decline in payphone usage supports modernizing our compensation
compliance regime by eliminating the annual audit requirement. At the
peak of payphone usage in 1999, there were over 2.1 million payphones
in service across the United States. Since that time, however, the
rapid growth of mobile service seems to have resulted in a dramatic
decline in the number of payphones in service in this country. By 2013,
more than 90 percent of payphones had been disconnected, with only
192,286 remaining. Almost half of those were disconnected over the
following three years, so that there were only 99,832 payphones in
service at the end of 2016. Is there any reason to expect this
declining trend to change in the future? We seek comment, and
supporting data, on this issue.
9. Second, we seek comment on the costs of compliance. Are Sprint
and Cincinnati Bell correct that those costs have not declined over
time and in fact may have increased? Is there other data or evidence
establishing the costs of compliance, including evidence establishing
whether those costs have increased or decreased over time? Is it the
case that the costs of compliance have not declined at the same pace as
the payphone business such that over time the compliance costs per
payphone and per payphone call have increased?
10. Third, we seek comment on the amount of payphone compensation
that Completing Carriers pay relative to the cost of compliance. Not
surprisingly, in light of declining payphone usage, the amount of
compensation paid to PSPs has likewise significantly declined over
time. ITTA asserts that the amount of payphone compensation paid each
year has declined even more across the industry than the 97 percent
decline seen by Cincinnati Bell. According to Cincinnati Bell, the
annual audit cost is currently five times the amount of payphone
compensation it pays annually, while Sprint projects that the cost of
its annual audit will be approximately 15 percent of payphone
compensation paid in 2016. We encourage commenters to provide similarly
specific information. How has compensation paid to PSPs relative to the
costs of compliance changed since the rule was adopted? How should we
evaluate whether the audit costs relative to payphone compensation are
too high? Is comparison with total payphone compensation relevant, or
should we compare the costs of compliance against some other value(s)?
For instance, should the costs of compliance be compared against the
likely benefits of avoiding incorrect compensation payments? We believe
that the existing evidence about audit costs relative to payphone
compensation suggests the costs of the rule now outweigh the benefits,
and we seek comment on this analysis.
11. Fourth, we seek comment on whether section 64.1320(f) is still
necessary to ensure compliance with the underlying payphone
compensation requirements. What effect would elimination of this annual
audit and associated reporting requirement have on Completing Carriers'
compliance with our rules regarding compensation to PSPs, including,
among other things, requirements to maintain a system for accurately
tracking coinless access code or subscriber toll-free payphone calls to
completion; to provide a quarterly sworn statement from the company's
Chief Financial Officer; and, to provide quarterly reports to PSPs that
contain information for identifying compensable and noncompensable
calls? Importantly, relieving Completing Carriers of the audit
requirement would not relieve them of their obligation to ensure that
they are compensating PSPs for all compensable calls. Payphone
compensation compliance issues occurred in years past, but we believe
that those issues are no longer apparent. Indeed, no formal payphone
compensation-related complaints have been brought to the Commission's
attention since 2010, and the last informal dispute of which we are
aware
[[Page 31745]]
occurred almost four years ago. Are there any specific, recent examples
of failure to appropriately compensate PSPs for coinless access code
and subscriber toll-free calls originating from their payphones? Is
ITTA correct that ``most long-distance providers use a clearinghouse .
. . to process quarterly payments to PSPs'' and that the clearinghouses
used by PSPs ``have effective investigation and dispute resolution
processes in place to address any disparities between Completing
Carrier and PSP data that may arise,'' and if so does the prevalence of
such clearinghouses support repeal of the audit requirement? Is the
infrequency of complaints, disputes, and disparities related to the
existence of the audit requirement? If not, should we expect the
frequency of such problems to change if we eliminate the audit
requirement, or would the remaining safeguards be sufficient? If
eliminating the audit requirement would increase such problems (e.g.,
failure to adequately compensate PSPs), we seek estimates of the likely
annual costs the relevant parties would incur to resolve those
increased problems or bounds around those costs.
12. Finally, we do not believe that the option under our rules to
enter into an alternative compensation agreement with each PSP, which
thus removes the need to conduct an annual audit, is an economically
feasible alternative. We believe that Sprint, Cincinnati Bell, and
USTelecom are correct that the transaction costs of negotiating,
implementing, and managing such alternative compensation arrangements
with numerous PSPs would outweigh the amount of compensation to be
paid. Consequently, the availability of this option under our rules
appears to provide no basis to justify retention of the audit
requirement. We seek comment on this issue.
13. Alternatives. We propose simply eliminating the audit
requirement and associated reporting requirement. In the alternative,
should we instead eliminate the requirement but adopt some less
burdensome requirement, such as a self-certification, as Sprint and
Cincinnati Bell each offer to provide in lieu of the annual audit? If
so, what form would such a self-certification take? Would it be
sufficient for a Completing Carrier to self-certify that there have
been no material changes to its payphone call tracking system, or would
it also need to self-certify that there have been no changes to its
network that affect the functioning or accuracy of the tracking system?
Could such an annual self-certification replace the section
64.1310(a)(3) quarterly sworn statement from the CFO? If we retain the
requirement of a quarterly sworn statement, we seek comment on whether
we should revise the requirement to allow certification by a company
official other than the company's CFO, and, if so, which officials.
14. Additional Reforms. Finally, we seek comment on whether the
changing communications landscape since 2003 warrants additional
changes to our rules governing the payphone compensation process. For
example, does section 64.1320(a)'s initial payphone call tracking
system audit requirement, and the attendant requirements set forth in
sections 64.1320(b)-(e) and (g), remain relevant today? Do new carriers
still occasionally become Completing Carriers such that we should
retain this requirement? How often do PSPs or clearinghouses request
underlying documents pursuant to section 64.1320(g)? Are all of the
remaining requirements imposed by these rules still warranted to
protect PSPs' right to full compensation for coinless access code and
subscriber toll-free calls originating from their payphones? Can some
of these requirements be streamlined or eliminated while still
affording full protection to PSPs, and if so, how?
15. In proposing to modernize specific part 64 subpart M
requirements herein, we note that other subsections regarding the
provision of payphone service were intended to apply solely on an
interim basis and their terms have long since expired. For example,
sections 64.1301(a)-(c) set forth interim per-payphone compensation
provisions that applied only from November 7, 1996 through October 6,
1997. Similarly, section 64.1301(d) set forth intermediate per-payphone
compensation provisions that applied only from October 7, 1997 through
April 20, 1999. We believe sections 64.1301(a)-(d), by their terms, no
longer apply to any entity and can be eliminated. We further seek
comment on whether additional provisions of part 64 subpart M that we
have not specifically identified may similarly have expired and no
longer apply to any entity, and if so, can be eliminated.
IV. Initial Regulatory Flexibility Analysis
16. As required by the Regulatory Flexibility Act (RFA), the
Commission has prepared this present 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
Rule Making (NPRM). Written public comments are requested on this IRFA.
Comments must be identified as responses to the IRFA and must be filed
by the deadlines for comments provided on the first page of this NPRM.
The Commission will send a copy of this NPRM, including this IRFA, to
the Chief Counsel for Advocacy of the Small Business Administration
(SBA). In addition, the NPRM and IRFA (or summaries thereof) will be
published in the Federal Register.
A. Need for, and Objectives of, the Proposed Rules
17. The NPRM proposes to eliminate a burden on carriers responsible
for completing coinless access and subscriber toll-free calls
originating from payphones (Completing Carriers). The changing
communications landscape has altered the balance of cost to Completing
Carriers versus benefit to payphone service providers. Thus, the
Commission seeks comment on a proposal to eliminate the annual payphone
call tracking system audit and associated reporting requirement
embodied in section 64.1320(f) of the Commission's rules, whether there
are other steps the Commission might take to ease the burden on
Completing Carriers, and if certain subsections of part 64 subpart M
have expired and can be eliminated.
B. Legal Basis
18. The proposed action is authorized under sections 1, 2, 4(i),
11, and 276 of the Communications Act of 1934, as amended, 47 U.S.C.
151, 152, 154(i), 161, 276.
C. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply
19. The RFA directs agencies to provide a description and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules and by the rule revisions on which the
NPRM seeks comment, if adopted. The RFA generally defines the term
``small entity'' as having the same meaning as the terms ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small-business concern'' under the Small Business
Act. A ``small-business concern'' is one which: (1) Is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the SBA.
20. The proposal on which we seek comment in the NPRM will affect
obligations on facilities-based carriers responsible for completing
coinless access code and subscriber toll-free calls
[[Page 31746]]
originating from payphones, including incumbent LECs, competitive LECs,
and interexchange carriers.
1. Total Small Entities
21. Small Businesses, Small Organizations, Small Governmental
Jurisdictions. Our actions, over time, may affect small entities that
are not easily categorized at present. We therefore describe here, at
the outset, three comprehensive small entity size standards that could
be directly affected herein. First, while there are industry specific
size standards for small businesses that are used in the regulatory
flexibility analysis, according to data from the SBA's Office of
Advocacy, in general a small business is an independent business having
fewer than 500 employees. These types of small businesses represent
99.9% of all businesses in the United States which translates to 28.8
million businesses. Next, the type of small entity described as a
``small organization'' is generally ``any not-for-profit enterprise
which is independently owned and operated and is not dominant in its
field.'' Nationwide, as of 2007, there were approximately 1,621,215
small organizations. Finally, the small entity described as a ``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.'' U.S. Census
Bureau data published in 2012 indicate that there were 89,476 local
governmental jurisdictions in the United States. We estimate that, of
this total, as many as 88,761 entities may qualify as ``small
governmental jurisdictions.'' Thus, we estimate that most governmental
jurisdictions are small.
2. Wireline Providers
22. Wired Telecommunications Carriers. The U.S. Census Bureau
defines this industry as ``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 communications
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.'' The SBA has developed a small business size standard
for Wired Telecommunications Carriers, which consists of all such
companies having 1,500 or fewer employees. Census data for 2012 show
that there were 3,117 firms that operated that year. Of this total,
3,083 operated with fewer than 1,000 employees. Thus, under this size
standard, the majority of firms in this industry can be considered
small.
23. Local Exchange Carriers (LECs). Neither the Commission nor the
SBA has developed a size standard for small businesses specifically
applicable to local exchange services. The closest applicable NAICS
Code category is Wired Telecommunications Carriers as defined above.
Under the applicable SBA size standard, such a business is small if it
has 1,500 or fewer employees. According to Commission data, census data
for 2012 shows that there were 3,117 firms that operated that year. Of
this total, 3,083 operated with fewer than 1,000 employees. The
Commission therefore estimates that most providers of local exchange
carrier service are small entities that may be affected by the rules
adopted.
24. Incumbent LECs. Neither the Commission nor the SBA has
developed a small business size standard specifically for incumbent
local exchange services. The closest applicable NAICS Code category is
Wired Telecommunications Carriers as defined above. Under that size
standard, such a business is small if it has 1,500 or fewer employees.
According to Commission data, 3,117 firms operated in that year. Of
this total, 3,083 operated with fewer than 1,000 employees.
Consequently, the Commission estimates that most providers of incumbent
local exchange service are small businesses that may be affected by the
rules and policies adopted. Three hundred and seven (307) Incumbent
Local Exchange Carriers reported that they were incumbent local
exchange service providers. Of this total, an estimated 1,006 have
1,500 or fewer employees.
25. 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 NAICS Code category is Wired
Telecommunications Carriers, as defined above. Under that size
standard, such a business is small if it has 1,500 or fewer employees.
U.S. Census data for 2012 indicate that 3,117 firms operated during
that year. Of that number, 3,083 operated with fewer than 1,000
employees. Based on this data, the Commission concludes that the
majority of Competitive LECS, CAPs, Shared-Tenant Service Providers,
and Other Local Service Providers, are small entities. 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. Of these 1,442 carriers, an estimated 1,256
have 1,500 or fewer employees. 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. Also, 72 carriers have reported that
they are Other Local Service Providers. Of this total, 70 have 1,500 or
fewer employees. Consequently, based on internally researched FCC data,
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.
26. We have included small incumbent LECs in this present RFA
analysis. As noted above, a ``small business'' under the RFA is one
that, inter alia, meets the pertinent small business size standard
(e.g., a telephone communications business having 1,500 or fewer
employees), and ``is not dominant in its field of operation.'' The
SBA's Office of Advocacy contends that, for RFA purposes, small
incumbent LECs are not dominant in their field of operation because any
such dominance is not ``national'' in scope. We have therefore included
small incumbent LECs in this RFA analysis, although we emphasize that
this RFA action has no effect on Commission analyses and determinations
in other, non-RFA contexts.
27. Interexchange Carriers (IXCs). Neither the Commission nor the
SBA has developed a definition for Interexchange Carriers. The closest
NAICS Code category is Wired Telecommunications Carriers as defined
above. The applicable size standard under SBA rules is that such a
business is small if it has 1,500 or fewer employees. U.S. Census data
for 2012 indicates that 3,117 firms operated during that year. Of that
number, 3,083 operated with fewer than 1,000 employees. According to
internally developed Commission data, 359 companies reported that their
primary telecommunications service activity was
[[Page 31747]]
the provision of interexchange services. Of this total, an estimated
317 have 1,500 or fewer employees. Consequently, the Commission
estimates that the majority of IXCs are small entities that may be
affected by our proposed rules.
28. 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. 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 two have more than 1,500
employees. Consequently, the Commission estimates that the majority of
OSPs are small entities that may be affected by our proposed rules.
29. Other Toll Carriers. Neither the Commission nor the SBA has
developed a definition for small businesses specifically applicable to
Other Toll Carriers. This category includes toll carriers that do not
fall within the categories of interexchange carriers, operator service
providers, prepaid calling card providers, satellite service carriers,
or toll resellers. The closest applicable NAICS Code category is for
Wired Telecommunications Carriers as defined above. Under the
applicable SBA size standard, such a business is small if it has 1,500
or fewer employees. Census data for 2012 shows that there were 3,117
firms that operated that year. Of this total, 3,083 operated with fewer
than 1,000 employees. Thus, under this category and the associated
small business size standard, the majority of Other Toll Carriers can
be considered small. According to internally developed Commission data,
284 companies reported that their primary telecommunications service
activity was the provision of other toll carriage. Of these, an
estimated 279 have 1,500 or fewer employees. Consequently, the
Commission estimates that most Other Toll Carriers are small entities
that may be affected by rules adopted pursuant to the NPRM.
30. Payphone Service Providers. Neither the Commission nor the SBA
has developed a definition of small entities specifically applicable to
payphone service providers (PSPs). The closest applicable definition
under the SBA rules is for Wired Telecommunications Carriers. Under
that SBA definition, such a business is small if it has 1,500 or fewer
employees. According to the Commission's Form 499 Filer Database, 1100
PSPs reported that they were engaged in the provision of payphone
services. The Commission does not have data regarding how many of these
1100 companies have 1,500 or fewer employees. The Commission does not
have data specifying the number of these payphone service providers
that are not independently owned and operated, and thus is unable at
this time to estimate with greater precision the number of PSPs that
would qualify as small business concerns under the SBA's definition.
Consequently, the Commission estimates that there are 1100 or fewer
PSPs that may be affected by the rules.
31. Prepaid Calling Card Providers. The SBA has developed a
definition for small businesses within the category of
Telecommunications Resellers. Under that SBA definition, such a
business is small if it has 1,500 or fewer employees. According to the
Commission's Form 499 Filer Database, 500 companies reported that they
were engaged in the provision of prepaid calling cards. The Commission
does not have data regarding how many of these 500 companies have 1,500
or fewer employees. Consequently, the Commission estimates that there
are 500 or fewer prepaid calling card providers that may be affected by
the rules.
3. Wireless Providers--Fixed and Mobile
32. For wireless services subject to auctions, we note that, as a
general matter, the number of winning bidders that claim to 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 and transfers or reportable
eligibility events, unjust enrichment issues are implicated.
33. 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 services, paging
services, wireless internet access, and wireless video services. The
appropriate size standard under SBA rules is that such a business is
small if it has 1,500 or fewer employees. For this industry, U.S.
Census data for 2012 show that there were 967 firms that operated for
the entire year. Of this total, 955 firms had employment of 999 or
fewer employees and 12 had employment of 1000 employees or more. Thus
under this category and the associated size standard, the Commission
estimates that the majority of wireless telecommunications carriers
(except satellite) are small entities.
34. The Commission's own data--available in its Universal Licensing
System--indicate that, as of October 25, 2016, there are 280 Cellular
licensees that will be affected by our actions today. The Commission
does not know how many of these licensees are small, as the Commission
does not collect that information for these types of entities.
Similarly, according to internally developed Commission data, 413
carriers reported that they were engaged in the provision of wireless
telephony, including cellular service, Personal Communications Service,
and Specialized Mobile Radio Telephony services. Of this total, an
estimated 261 have 1,500 or fewer employees, and 152 have more than
1,500 employees. Thus, using available data, we estimate that the
majority of wireless firms can be considered small.
35. Wireless Communications Services. This service can be used for
fixed, mobile, radiolocation, and digital audio broadcasting satellite
uses. The Commission defined ``small business'' for the wireless
communications services (WCS) auction as an entity with average gross
revenues of $40 million for each of the three preceding years, and a
``very small business'' as an entity with average gross revenues of $15
million for each of the three preceding years. The SBA has approved
these definitions.
36. 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). Under the SBA small business size standard, a business is
small if it has 1,500 or fewer employees. According to Commission data,
413 carriers reported that they were engaged in wireless telephony. Of
these, an estimated 261 have 1,500 or fewer employees and 152 have more
than 1,500 employees. Therefore, a little less than one third of these
entities can be considered small.
4. All Other Telecommunications
37. ``All Other Telecommunications'' is defined as follows: This
U.S. industry is comprised of establishments that are primarily engaged
in providing
[[Page 31748]]
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. The SBA has developed a
small business size standard for ``All Other Telecommunications,''
which consists of all such firms with gross annual receipts of $32.5
million or less. For this category, census data for 2012 show that
there were 1,442 firms that operated for the entire year. Of these
firms, a total of 1,400 had gross annual receipts of less than $25
million. Consequently, we estimate that the majority of All Other
Telecommunications firms are small entities that might be affected by
our action.
D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
38. The NPRM proposes and seeks comment on a rule change that will
affect reporting, recordkeeping, and other compliance requirements. We
expect the rule revision proposed in the NPRM to reduce reporting,
recordkeeping, and other compliance requirements. The rule revision
should have a beneficial reporting, recordkeeping, or compliance impact
on small entities because all carriers will be subject to fewer such
burdens. This change is described below.
39. The NPRM proposes to eliminate section 64.1320(f) of the
Commission's rules and, thus, the annual payphone call tracking system
audit and associated reporting requirement. Should the Commission adopt
this proposal, such action would result in reduced reporting,
recordkeeping, or other compliance requirements for Completing
Carriers, as that term is defined in section 64.1300(a) of the
Commission's rules.
E. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
40. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed 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.
41. The Commission proposes to eliminate the annual payphone call
tracking system audit requirement for Completing Carriers. The
Commission believes that its proposal upon which the NPRM seeks comment
will benefit all carriers, regardless of size. The proposal would
further the goal of reducing unnecessary regulatory burdens on affected
carriers. We anticipate that a more modernized regulatory scheme with
the associated reduction in compliance costs will allow carriers to
invest their resources elsewhere to the benefit of consumers.
F. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rule
42. None.
V. Procedural Matters
A. Ex Parte Rules
43. This proceeding shall be treated as a ``permit-but-disclose''
proceeding in accordance with the Commission's ex parte rules. Persons
making ex parte presentations 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 oral ex
parte presentations are reminded that memoranda summarizing the
presentation must (1) list all persons attending or otherwise
participating in the meeting at which the ex parte presentation 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 during ex
parte meetings are deemed to be written ex parte presentations 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, written ex parte presentations and memoranda
summarizing oral ex parte presentations, 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's ex parte rules.
B. Initial Regulatory Flexibility Analysis
44. Pursuant to the Regulatory Flexibility Act (RFA), the
Commission has prepared an Initial Regulatory Flexibility Analysis
(IRFA) of the possible significant economic impact on small entities of
the policies and actions considered in this NPRM. The text of the IRFA
is set forth above. Written public comments are requested on this IRFA.
Comments must be identified as responses to the IRFA and must be filed
by the deadlines for comments on the NPRM. The Commission's Consumer
and Governmental Affairs Bureau, Reference Information Center, will
send a copy of the NPRM, including the IRFA, to the Chief Counsel for
Advocacy of the Small Business Administration.
C. Paperwork Reduction Act
45. This document contains proposed new and modified 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 to comment on the 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, see 44 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.
D. Filing of Comments and Reply Comments
46. 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 the Commission's
[[Page 31749]]
Electronic Comment Filing System (ECFS). See Electronic Filing of
Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
[ssquf] Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: https://www.fcc.gov/ecfs/.
[ssquf] Paper Filers: Parties who choose to file by paper must file
an original and one copy 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.
[ssquf] 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 and boxes must be disposed of
before entering the building.
[ssquf] 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.
[ssquf] U.S. Postal Service first-class, Express, and Priority mail
must be addressed to 445 12th Street SW., Washington, DC 20554.
[ssquf] People with Disabilities: To request materials in
accessible formats for people with disabilities (braille, large print,
electronic files, audio format), send an email to [email protected] or
call the Consumer & Governmental Affairs Bureau at 202-418-0530
(voice), 202-418-0432 (tty).
E. Contact Person
47. For further information about this proceeding, please contact
Michele Berlove, FCC Wireline Competition Bureau, Competition Policy
Division, Room 5-C313, 445 12th Street SW., Washington, DC 20554 (202)
418-1477, [email protected].
VI. Ordering Clauses
48. Accordingly, it is ordered that, pursuant to the authority
contained in sections 1-4, 11, and 276 of the Communications Act of
1934, as amended, 47 U.S.C. 151-154, 161, 276, this Notice of Proposed
Rulemaking is adopted.
49. It is further ordered that the Commission's Consumer &
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Notice of Proposed Rulemaking, including the Initial
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of
the Small Business Administration.
List of Subjects in 47 CFR Part 64
Common Carriers, Communications, Telecommunications, Telephone.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Proposed Rules
For the reasons set forth in the preamble, the Federal
Communications Commission proposes to amend CFR part 64 as follows:
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
0
1. The authority citation for part 64 continues to read as follows:
Authority: 47 U.S.C. 154, 225, 254(k); 403(b)(2)(B), (c), 715,
Pub.L. 104-104, 110 Stat. 56. Interpret or apply 47 U.S.C. 201, 218,
222, 225, 226, 227, 228, 254(k), 616, 620, and the Middle Class Tax
Relief and Job Creation Act of 2012, Pub.L. 112-96, unless otherwise
noted.
Sec. 64.1320 [Amended]
0
2. In Sec. 64.1320, remove paragraph (f).
[FR Doc. 2017-14256 Filed 7-7-17; 8:45 am]
BILLING CODE 6712-01-P