Customer Proprietary Network Information, 13317-13323 [06-2423]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 71, Number 50 (Wednesday, March 15, 2006)]
[Proposed Rules]
[Pages 13317-13323]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-2423]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Ch. I

[FCC 06-10]


Customer Proprietary Network Information

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document the Commission considers whether to take 
additional steps to protect the privacy of customer proprietary network 
information (CPNI) that is collected and held by telecommunications 
carriers. The Commission has long been committed to safeguarding 
customer privacy, and its rules requiring carriers to take specific 
steps to ensure that CPNI is adequately protected from unauthorized 
disclosure.

DATES: Comments are due April 14, 2006. Reply comments are due May 15, 
2006. 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 May 15, 2006.

ADDRESSES: You may submit comments, identified by CC Docket No. 96-115, 
by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web site: https://
www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: FCC504@fcc.gov or phone: 202-418-
0530 or TTY: 202-418-0432.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Tim Stelzig, (202) 418-0942, 
Competition Policy Division, Wireline Competition Bureau. For 
additional information concerning the Paperwork Reduction Act 
information collection requirements contained in this document, contact 
Judith B. Herman at 202-418-0214, or via the Internet at PRA@fcc.gov.

SUPPLEMENTARY INFORMATION: Pursuant to Sec. Sec.  1.415 and 1.419 of 
the Commission's rules, 47 CFR 1.415 and 1.419, interested parties may 
file comments and reply comments regarding the NPRM. All filings 
related to this Notice of Proposed Rulemaking should refer to CC Docket 
No. 96-115. 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, May 1, 
1998. The public may view a full copy of this document at https://
hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-06-10A1.pdf.
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: https://www.fcc.gov/cgb/ecfs/ or the Federal eRulemaking Portal: https://www.regulations.gov. Filers 
should follow the instructions provided on the Web site for submitting 
comments.

[[Page 13318]]

     For ECFS filers, in completing the transmittal screen, 
filers should include their full name, U.S. Postal Service mailing 
address, and the applicable docket or rulemaking number. Parties may 
also submit an electronic comment by Internet e-mail. To get filing 
instructions, filers should send an e-mail to ecfs@fcc.gov, and include 
the following words in the body of the message, ``get form.'' A sample 
form and directions will be sent in response.
     Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. Filings can be sent by 
hand or messenger delivery, by commercial overnight courier, or by 
first-class or overnight U.S. Postal Service mail (although we continue 
to experience delays in receiving U.S. Postal Service mail). All 
filings must be addressed to the Commission's Secretary, Marlene H. 
Dortch, Office of the Secretary, Federal Communications Commission, 445 
12th Street, SW., Washington, DC 20554.
     The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE, Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Any envelopes 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 should be addressed to 445 12th Street, SW., Washington, DC 20554.
     Parties should send a copy of their filings to Janice 
Myles, Competition Policy Division, Wireline Competition Bureau, 
Federal Communications Commission, Room 5-C140, 445 12th Street, SW., 
Washington, DC 20554, or by e-mail to Janice.myles@fcc.gov. Parties 
should also serve one copy with the Commission's copy contractor, Best 
Copy and Printing, Inc. (BCPI), Portals II, 445 12th Street, SW., Room 
CY-B402, Washington, DC 20554, (202) 488-5300, or via e-mail to 
fcc@bcpiweb.com.
     Documents in CC Docket No. 96-115 will be available for 
public inspection and copying during business hours at the FCC 
Reference Information Center, Portals II, 445 12th Street, SW., Room 
CY-A257, Washington, DC 20554. The documents may also be purchased from 
BCPI, telephone (202) 488-5300, facsimile (202) 488-5563, TTY (202) 
488-5562, e-mail fcc@bcpiweb.com.
     People with Disabilities: Contact the FCC to request 
materials in accessible formats (Braille, large print, electronic 
files, audio format, etc.) by e-mail at fcc504@fcc.gov or call the 
Consumer and Governmental Affairs Bureau at (202) 418-0531 (voice), 
(202) 418-7365 (TTY).

I. Paperwork Reduction Act

    This document contains proposed information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burden, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995, Public Law 104-13. Public and agency comments 
are due May 15, 2006. Comments should address: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission's 
burden estimates; (c) ways to enhance the quality, utility, and clarity 
of the information collected; and (d) ways to minimize the burden of 
the collection of information on the respondents, including the use of 
automated collection techniques or other forms of information 
technology. In addition, pursuant to the Small Business Paperwork 
Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the 
Commission seeks specific comment on how the Commission might ``further 
reduce the information collection burden for small business concerns 
with fewer than 25 employees.''

II. Notice of Proposed Rulemaking

    In this Notice of Proposed Rulemaking (NPRM), CC Docket No. 96-115 
and RM-11277, FCC 06-10, released February 14, 2006, the Commission 
seeks comment on what additional steps, if any, the Commission should 
take to further protect the privacy of customer proprietary network 
information (CPNI) that is collected and held by telecommunications 
carriers. This NPRM directly responds to the petition filed by the 
Electronic Privacy Information Center (EPIC) expressing concerns about 
the sufficiency of carrier practices related to CPNI. As the EPIC 
petition points out, numerous websites advertise the sale of personal 
telephone records for a price. Specifically, data brokers advertise the 
availability of cell phone records, which include calls to and/or from 
a particular cell phone number, the duration of such calls, and may 
even include the physical location of the cell phone. In addition to 
selling cell phone call records, many data brokers also claim to 
provide calling records for landline and voice over Internet protocol, 
as well as non-published phone numbers. In many cases, the data brokers 
claim to be able to provide this information within fairly quick time 
frames, ranging from a few hours to a few days. The Commission finds 
this conduct to be very disturbing and, accordingly, the Commission 
grants EPIC's request and initiates a rulemaking to determine whether 
enhanced security and authentication standards for access to customer 
telephone records are warranted.
    In the NPRM, the Commission seeks comment, pursuant to the 
Commission's authority under section 222 of the Act, on the nature and 
scope of the problem identified by EPIC. The Commission seeks comment 
generally on how CPNI is maintained and secured by carriers and how 
data brokers are able to obtain CPNI from carriers. The Commission also 
seeks comment on whether the Commission's existing opt-out regime 
sufficiently protects the privacy of CPNI in the context of CPNI 
disclosed to telecommunications carriers' joint venture partners and 
independent contractors. The Commission also seeks comment on carriers' 
current practices regarding the disclosure of CPNI and whether they are 
sufficient. In particular, EPIC proposes five forms of security 
measures that it maintains would more adequately protect access to 
CPNI: consumer-set passwords, audit trails, encryption, limiting data 
retention, and notice procedures. The Commission seeks comment about 
the feasibility and advisability of these and other measures. The 
Commission also seeks comment on whether it should take steps to 
enhance its ability to enforce the requirements of section 222 and the 
Commission's regulations relating to CPNI.

III. Procedural Matters

Ex Parte Presentations

    The rulemaking this NPRM initiates shall be treated as a ``permit-
but-disclose'' proceeding in accordance with the Commission's ex parte 
rules. Persons making oral ex parte presentations are reminded that 
memoranda summarizing the presentations must contain summaries of the 
substance of the presentations and not merely a listing of the subjects 
discussed. More than a one or two sentence description of the views and 
arguments presented generally is required. Other requirements 
pertaining

[[Page 13319]]

to oral and written presentations are set forth in Sec.  1.1206(b) of 
the Commission's rules.

Initial Regulatory Flexibility Analysis

    1. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), see 5 U.S.C. 603, the Commission has prepared the 
present Initial Regulatory Flexibility Analysis (IRFA) of the possible 
significant economic impact on small entities that might result from 
this 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 on the NPRM. Comments are due April 14, 2006. 
Reply comments are due May 15, 2006. The Commission will send a copy of 
the NPRM, including this IRFA, to the Chief Counsel for Advocacy of the 
Small Business Administration. 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
    2. In the NPRM, the Commission grants EPIC's petition for 
rulemaking and seeks comment on what security measures 
telecommunications carriers currently have in place for verifying the 
identity of people requesting CPNI; what inadequacies currently exist 
in those measures that allow third parties such as online data brokers 
and private investigators to access CPNI without the customer's 
knowledge or authorization; and what kind of security measures may be 
warranted to better protect telecommunications customers from 
unauthorized access to CPNI. In particular, the Commission seeks 
comment on EPIC's five proposals to address the unauthorized means of 
obtaining CPNI: (1) Consumer-set passwords; (2) audit trails; (3) 
encryption; (4) limiting data retention; and (5) procedures for notice 
to the customer on release of CPNI data. The Commission also seeks 
comment on what steps the Commission should take to enforce its CPNI 
rules and whether carriers should be required to report further on the 
release of CPNI.
B. Legal Basis
    3. The legal basis for any action that may be taken pursuant to the 
NPRM is contained in sections 1, 4(i), 4(j), and 222 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i)-(j), 222.
C. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules May Apply
    4. 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. 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 Small Business 
Administration (SBA).
    5. Small Businesses. Nationwide, there are a total of approximately 
22.4 million small businesses, according to SBA data.
    6. Small Organizations. Nationwide, there are approximately 1.6 
million small organizations.
    7. Small Governmental Jurisdictions. 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.'' Census Bureau data for 2002 
indicate that there were 87,525 local governmental jurisdictions in the 
United States. The Commission estimates that, of this total, 84,377 
entities were ``small governmental jurisdictions.'' Thus, the 
Commission estimates that most governmental jurisdictions are small.

1. Telecommunications Service Entities

a. Wireline Carriers and Service Providers

    8. The Commission has included small incumbent local exchange 
carriers 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 local exchange carriers are not dominant in 
their field of operation because any such dominance is not ``national'' 
in scope. The Commission has therefore included small incumbent local 
exchange carriers in this RFA analysis, although the Commission 
emphasizes that this RFA action has no effect on Commission analyses 
and determinations in other, non-RFA contexts.
    9. Incumbent Local Exchange Carriers (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. According to Commission data, 1,303 carriers have 
reported that they are engaged in the provision of incumbent local 
exchange services. Of these 1,303 carriers, an estimated 1,020 have 
1,500 or fewer employees and 283 have more than 1,500 employees. 
Consequently, the Commission estimates that most providers of incumbent 
local exchange service are small businesses that may be affected by the 
Commission's action.
    10. Competitive Local Exchange Carriers, 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. According 
to Commission data, 769 carriers have reported that they are engaged in 
the provision of either competitive access provider services or 
competitive local exchange carrier services. Of these 769 carriers, an 
estimated 676 have 1,500 or fewer employees and 93 have more than 1,500 
employees. In addition, 12 carriers have reported that they are 
``Shared-Tenant Service Providers,'' and all 12 are estimated to have 
1,500 or fewer employees. In addition, 39 carriers have reported that 
they are ``Other Local Service Providers.'' Of the 39, an estimated 38 
have 1,500 or fewer employees and one has more than 1,500 employees. 
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 the Commission's 
action.
    11. 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. According to Commission data, 143 carriers have reported 
that they are engaged in the provision of local resale

[[Page 13320]]

services. Of these, an estimated 141 have 1,500 or fewer employees and 
two have more than 1,500 employees. Consequently, the Commission 
estimates that the majority of local resellers are small entities that 
may be affected by the Commission's action.
    12. 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. According to Commission data, 770 carriers have reported 
that they are engaged in the provision of toll resale services. Of 
these, an estimated 747 have 1,500 or fewer employees and 23 have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of toll resellers are small entities that may be affected by 
the Commission's action.
    13. 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. According to Commission data, 613 carriers have reported 
that they are engaged in the provision of payphone services. Of these, 
an estimated 609 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 the Commission's action.
    14. Interexchange Carriers (IXCs). 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. According to Commission data, 316 carriers have 
reported that they are engaged in the provision of interexchange 
service. Of these, an estimated 292 have 1,500 or fewer employees and 
24 have more than 1,500 employees. Consequently, the Commission 
estimates that the majority of IXCs are small entities that may be 
affected by the Commission's action.
    15. 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, 23 carriers have reported that 
they are engaged in the provision of operator services. Of these, an 
estimated 20 have 1,500 or fewer employees and three have more than 
1,500 employees. Consequently, the Commission estimates that the 
majority of OSPs are small entities that may be affected by the 
Commission's action.
    16. 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. 
According to Commission data, 89 carriers have reported that they are 
engaged in the provision of prepaid calling cards. Of these, 88 are 
estimated to have 1,500 or fewer employees and one has more than 1,500 
employees. Consequently, the Commission estimates that all or the 
majority of prepaid calling card providers are small entities that may 
be affected by the Commission's action.
    17. 800 and 800-Like Service Subscribers. 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. The most reliable source 
of information regarding the number of these service subscribers 
appears to be data the Commission collects on the 800, 888, and 877 
numbers in use. According to the Commission's data, at the end of 
January 1999, the number of 800 numbers assigned was 7,692,955; the 
number of 888 numbers assigned was 7,706,393; and the number of 877 
numbers assigned was 1,946,538. 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 is 
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 7,692,955 or fewer small entity 800 subscribers; 7,706,393 or fewer 
small entity 888 subscribers; and 1,946,538 or fewer small entity 877 
subscribers.

b. International Service Providers

    18. The Commission has not developed a small business size standard 
specifically for providers of international service. The appropriate 
size standards under SBA rules are for the two broad census categories 
of ``Satellite Telecommunications'' and ``Other Telecommunications.'' 
Under both categories, such a business is small if it has $12.5 million 
or less in average annual receipts.
    19. The first category of Satellite Telecommunications ``comprises 
establishments primarily engaged in providing point-to-point 
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.'' For this category, Census 
Bureau data for 2002 show that there were a total of 371 firms that 
operated for the entire year. Of this total, 307 firms had annual 
receipts of under $10 million, and 26 firms had receipts of $10 million 
to $24,999,999. Consequently, the Commission estimates that the 
majority of Satellite Telecommunications firms are small entities that 
might be affected by the Commission's action.
    20. The second category of Other Telecommunications ``comprises 
establishments primarily engaged in (1) Providing specialized 
telecommunications applications, such as satellite tracking, 
communications telemetry, and radar station operations; or (2) 
providing satellite terminal stations and associated facilities 
operationally connected with one or more terrestrial communications 
systems and capable of transmitting telecommunications to or receiving 
telecommunications from satellite systems.'' For this category, Census 
Bureau data for 2002 show that there were a total of 332 firms that 
operated for the entire year. Of this total, 259 firms had annual 
receipts of under $10 million and 15 firms had annual receipts of $10 
million to $24,999,999. Consequently, the Commission estimates that the 
majority of Other Telecommunications firms are small entities that 
might be affected by the Commission's action.

c. Wireless Telecommunications Service Providers

    21. Below, for those services subject to auctions, the Commission 
notes that, as a general matter, the number of winning bidders that 
qualify as small businesses at the close of an auction

[[Page 13321]]

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.
    22. Wireless Service Providers. The SBA has developed a small 
business size standard for wireless firms within the two broad economic 
census categories of ``Paging'' and ``Cellular and Other Wireless 
Telecommunications.'' Under both SBA categories, a wireless business is 
small if it has 1,500 or fewer employees. For the census category of 
Paging, Census Bureau data for 2002 show that there were 807 firms in 
this category that operated for the entire year. Of this total, 804 
firms had employment of 999 or fewer employees, and three firms had 
employment of 1,000 employees or more. Thus, under this category and 
associated small business size standard, the majority of firms can be 
considered small. For the census category of Cellular and Other 
Wireless Telecommunications, Census Bureau data for 2002 show that 
there were 1,397 firms in this category that operated for the entire 
year. Of this total, 1,378 firms had employment of 999 or fewer 
employees, and 19 firms had employment of 1,000 employees or more. 
Thus, under this second category and size standard, the majority of 
firms can, again, be considered small.
    23. Cellular Licensees. The SBA has developed a small business size 
standard for wireless firms within the broad economic census category 
``Cellular and Other Wireless Telecommunications.'' Under this SBA 
category, a wireless business is small if it has 1,500 or fewer 
employees. For the census category of Cellular and Other Wireless 
Telecommunications, Census Bureau data for 2002 show that there were 
1,397 firms in this category that operated for the entire year. Of this 
total, 1,378 firms had employment of 999 or fewer employees, and 19 
firms had employment of 1,000 employees or more. Thus, under this 
category and size standard, the great majority of firms can be 
considered small. Also, according to Commission data, 437 carriers 
reported that they were engaged in the provision of cellular service, 
Personal Communications Service (PCS), or Specialized Mobile Radio 
(SMR) Telephony services, which are placed together in the data. The 
Commission has estimated that 260 of these are small, under the SBA 
small business size standard.
    24. Common Carrier Paging. The SBA has developed a small business 
size standard for wireless firms within the broad economic census 
category, ``Cellular and Other Wireless Telecommunications.'' Under 
this SBA category, a wireless business is small if it has 1,500 or 
fewer employees. For the census category of Paging, Census Bureau data 
for 2002 show that there were 807 firms in this category that operated 
for the entire year. Of this total, 804 firms had employment of 999 or 
fewer employees, and three firms had employment of 1,000 employees or 
more. Thus, under this category and associated small business size 
standard, the majority of firms can be considered small. In the Paging 
Third Report and Order, the Commission developed a small business size 
standard for ``small businesses'' and ``very small businesses'' for 
purposes of determining their eligibility for special provisions such 
as bidding credits and installment payments. 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. 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 $3 million for the preceding 
three years. The SBA has approved these small business size standards. 
An auction of Metropolitan Economic Area licenses commenced on February 
24, 2000, and closed on March 2, 2000. Of the 985 licenses auctioned, 
440 were sold. Fifty-seven companies claiming small business status 
won. Also, according to Commission data, 375 carriers reported that 
they were engaged in the provision of paging and messaging services. Of 
those, the Commission estimates that 370 are small, under the SBA-
approved small business size standard.
    25. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services (PCS), and specialized mobile radio 
(SMR) telephony carriers. As noted earlier, the SBA has developed a 
small business size standard for ``Cellular and Other Wireless 
Telecommunications'' services. Under that SBA small business size 
standard, a business is small if it has 1,500 or fewer employees. 
According to Commission data, 445 carriers reported that they were 
engaged in the provision of wireless telephony. The Commission has 
estimated that 245 of these are small under the SBA small business size 
standard.
    26. Broadband Personal Communications Service. The broadband 
Personal Communications Service (PCS) spectrum is divided into six 
frequency blocks designated A through F, and the Commission has held 
auctions for each block. The Commission defined ``small entity'' for 
Blocks C and F as an entity that has average gross revenues of $40 
million or less in the three previous calendar years. For Block F, an 
additional classification 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 
calendar years.'' These standards defining ``small entity'' in the 
context of broadband PCS auctions have been approved by the SBA. 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 qualified as small entities in the Block C auctions. A 
total of 93 small and very small business bidders won approximately 40 
percent of the 1,479 licenses for Blocks D, E, and F. On March 23, 
1999, the Commission re-auctioned 347 C, D, E, and F Block licenses. 
There were 48 small business winning bidders. On January 26, 2001, the 
Commission completed the auction of 422 C and F Broadband PCS licenses 
in Auction No. 35. Of the 35 winning bidders in this auction, 29 
qualified as ``small'' or ``very small'' businesses. 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.
    27. Narrowband Personal Communications Services. To date, two 
auctions of narrowband personal communications services (PCS) licenses 
have been conducted. For purposes of the two auctions that have already 
been held, ``small businesses'' were entities with average gross 
revenues for the prior three calendar years of $40 million or less. 
Through these auctions, the Commission has awarded a total of 41 
licenses, out of which 11 were obtained by small businesses. To ensure 
meaningful participation of small business entities in future auctions, 
the Commission has adopted a two-tiered small business size standard in 
the Narrowband PCS Second Report and Order. 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. 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. The SBA has 
approved these small business size standards. In the future, the

[[Page 13322]]

Commission will auction 459 licenses to serve Metropolitan Trading 
Areas (MTAs) and 408 response channel licenses. There is also one 
megahertz of narrowband PCS spectrum that has been held in reserve and 
that the Commission has not yet decided to release for licensing. The 
Commission cannot predict accurately the number of licenses that will 
be awarded to small entities in future auctions. However, four of the 
16 winning bidders in the two previous narrowband PCS auctions were 
small businesses, as that term was defined. The Commission assumes, for 
purposes of this analysis that a large portion of the remaining 
narrowband PCS licenses will be awarded to small entities. The 
Commission also assumes that at least some small businesses will 
acquire narrowband PCS licenses by means of the Commission's 
partitioning and disaggregation rules.
    28. Rural Radiotelephone Service. The Commission has not adopted a 
size standard for small businesses specific to the Rural Radiotelephone 
Service. A significant subset of the Rural Radiotelephone Service is 
the Basic Exchange Telephone Radio System (BETRS). The Commission uses 
the SBA's small business size standard applicable to ``Cellular and 
Other Wireless Telecommunications,'' i.e., an entity employing no more 
than 1,500 persons. There are approximately 1,000 licensees in the 
Rural Radiotelephone Service, and the Commission estimates that there 
are 1,000 or fewer small entity licensees in the Rural Radiotelephone 
Service that may be affected by the rules and policies adopted herein.
    29. Air-Ground Radiotelephone Service. The Commission has not 
adopted a small business size standard specific to the Air-Ground 
Radiotelephone Service. The Commission will use SBA's small business 
size standard applicable to ``Cellular and Other Wireless 
Telecommunications,'' i.e., an entity employing no more than 1,500 
persons. There are approximately 100 licensees in the Air-Ground 
Radiotelephone Service, and the Commission estimates that almost all of 
them qualify as small under the SBA small business size standard.
    30. 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. 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 ``Cellular and Other Wireless Telecommunications'' 
services. Under that SBA small business size standard, a business is 
small if it has 1,500 or fewer employees.

2. Cable and OVS Operators

    31. Cable and Other Program Distribution. This category includes 
cable systems operators, closed circuit television services, direct 
broadcast satellite services, multipoint distribution systems, 
satellite master antenna systems, and subscription television services. 
The SBA has developed a small business size standard for this census 
category, which includes all such companies generating $12.5 million or 
less in revenue annually. According to Census Bureau data for 2002, 
there were a total of 1,191 firms in this category that operated for 
the entire year. Of this total, 1,087 firms had annual receipts of 
under $10 million, and 43 firms had receipts of $10 million or more but 
less than $25 million. Consequently, the Commission estimates that the 
majority of providers in this service category are small businesses 
that may be affected by the rules and policies adopted herein.
    32. Cable System Operators. The Commission has developed its own 
small business size standards for cable system operators, for purposes 
of rate regulation. Under the Commission's rules, a ``small cable 
company'' is one serving fewer than 400,000 subscribers nationwide. In 
addition, a ``small system'' is a system serving 15,000 or fewer 
subscribers.
    33. Cable System Operators (Telecom Act Standard). 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.'' The Commission has determined that 
there are approximately 67,700,000 subscribers in the United States. 
Therefore, 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. Based on available data, the Commission estimates 
that the number of cable operators serving 677,000 subscribers or 
fewer, totals 1,450. The Commission neither requests nor collects 
information on whether cable system operators are affiliated with 
entities whose gross annual revenues exceed $250 million, and therefore 
is unable, at this time, to estimate more accurately the number of 
cable system operators that would qualify as small cable operators 
under the size standard contained in the Communications Act of 1934.
    34. Open Video Services. Open Video Service (OVS) systems provide 
subscription services. The SBA has created a small business size 
standard for Cable and Other Program Distribution. This standard 
provides that a small entity is one with $12.5 million or less in 
annual receipts. The Commission has certified approximately 25 OVS 
operators to serve 75 areas, and some of these are currently providing 
service. 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 24 OVS operators (those 
remaining) might qualify as small businesses that may be affected by 
the rules and policies adopted herein.

3. Internet Service Providers

    35. Internet Service Providers. The SBA has developed a small 
business size standard for Internet Service Providers (ISPs). ISPs 
``provide clients access to the Internet and generally provide related 
services such as Web hosting, Web page designing, and hardware or 
software consulting related to Internet connectivity.'' Under the SBA 
size standard, such a business is small if it has average annual 
receipts of $21 million or less. According to Census Bureau data for 
2002, there were 2,529 firms in this category that operated for the 
entire year. Of these, 2,437 firms had annual receipts of under $10 
million, and 47 firms had receipts of $10 million or more but less then 
$25 million. Consequently, the Commission estimates that the majority 
of these firms are small entities that may be affected by the 
Commission's action.
    36. All Other Information Services. ``This industry comprises 
establishments primarily engaged in providing other information 
services (except new syndicates and libraries and archives).'' The 
Commission's action pertains to VoIP services, which could be provided 
by entities that provide other services such as e-mail,

[[Page 13323]]

online gaming, Web browsing, video conferencing, instant messaging, and 
other, similar IP-enabled services. The SBA has developed a small 
business size standard for this category; that size standard is $6 
million or less in average annual receipts. According to Census Bureau 
data for 1997, there were 195 firms in this category that operated for 
the entire year. Of these, 172 had annual receipts of under $5 million, 
and an additional nine firms had receipts of between $5 million and 
$9,999,999. Consequently, the Commission estimates that the majority of 
these firms are small entities that may be affected by the Commission's 
action.
D. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements
    37. Should the Commission decide to adopt any regulations to ensure 
that all providers of telecommunications services meet consumer 
protection needs in regard to CPNI, the associated rules potentially 
could modify the reporting and recordkeeping requirements of certain 
telecommunications providers. The Commission could, for instance, 
require that telecommunications providers require customer password-
related security procedures to access CPNI data and/or encrypt CPNI 
data. The Commission could also require that telecommunications 
providers maintain more extensive records regarding CPNI data and 
report additional CPNI information to their customers and the 
Commission. The Commission tentatively concludes that the Commission 
should amend its rules to require carriers to certify as to established 
operating procedures no later than January 1st (or other date specified 
by the Commission) of each year, covering the preceding calendar year, 
and to file the compliance certificate with the Commission within 30 
days. The Commission further tentatively concludes that carriers should 
attach to this annual Sec.  64.2009(e) certification an explanation of 
any actions taken against data brokers and a summary of all consumer 
complaints received in the past year concerning the unauthorized 
release of CPNI. These proposals may impose additional reporting or 
recordkeeping requirements on entities. The Commission seeks comment on 
the possible burden these requirements would place on small entities. 
Also, the Commission seeks comment on whether a special approach toward 
any possible compliance burdens on small entities might be appropriate. 
Entities, especially small businesses, are encouraged to quantify the 
costs and benefits of any reporting requirement that may be established 
in this proceeding.
E. Steps Taken to Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    38. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include (among others) the following four alternatives: (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.
    39. The Commission's primary objective is to develop a framework 
for protecting a customer's CPNI, regardless of the customer's 
underlying technology. The Commission seeks comment here on the effect 
the various proposals described in the NPRM will have on small 
entities, and on what effect alternative rules would have on those 
entities. The Commission invites comment on ways in which the 
Commission can achieve its goal of protecting consumers while at the 
same time impose minimal burdens on small telecommunications service 
providers. With respect to any of the Commission's consumer protection 
regulations already in place, has the Commission adopted any provisions 
for small entities that the Commission should similarly consider here? 
Specifically, the Commission invites comment on whether the problems 
identified by EPIC are better or worse at smaller carriers. The 
Commission invites comment on whether small carriers should be exempt 
from password-related security procedures to protect CPNI. The 
Commission invites comment on the benefits and burdens of recording 
audit trails for the disclosure of CPNI on small carriers. The 
Commission invites comment on whether requiring a small carrier to 
encrypt its stored data would be unduly burdensome. The Commission 
solicits comment on the cost to a small carrier of notifying a customer 
upon release of CPNI. The Commission seeks comment on whether the 
Commission should amend its rules to require carriers to file annual 
certifications concerning CPNI and whether this requirement should 
extend to only telecommunications carriers that are not small telephone 
companies as defined by the Small Business Administration, and whether 
small carriers should be subject to different CPNI-related obligations.
F. Federal Rules that May Duplicate, Overlap, or Conflict with the 
Proposed Rules
    40. None.

Ordering Clauses

    Accordingly, it is ordered, pursuant to sections 1, 4(i), 4(j), and 
222 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 
154(i)-(j), 222, that this NPRM in CC Docket No. 96-115 and RM-11277 is 
adopted.
    It is further ordered that the Petition for Rulemaking of the 
Electronic Privacy Information Center is granted to the extent 
described herein.
    It is further ordered that the proceeding in RM-11277 is hereby 
terminated.
    It is further ordered that the Commission's Consumer & Governmental 
Affairs Bureau, Reference Information Center, shall send a copy of this 
NPRM, including the Initial Regulatory Flexibility Analysis, to the 
Chief Counsel for Advocacy of the Small Business Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 06-2423 Filed 3-14-06; 8:45 am]
BILLING CODE 6712-01-P