Customer Proprietary Network Information, 31782-31789 [E7-10734]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 72, Number 110 (Friday, June 8, 2007)]
[Proposed Rules]
[Pages 31782-31789]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-10734]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CC Docket No. 96-115, WC Docket No. 04-36; FCC 07-22]


Customer Proprietary Network Information

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Communications Commission (Commission) adopted a 
further notice of proposed rulemaking (Further NPRM) seeking comment on 
what steps the Commission should take, if any, to implement section 222 
of the Communications Act of 1934, as amended, which governs carriers' 
use and disclosure of customer proprietary network information. Through 
this Further NRPM, the Commission seeks comment on whether the 
Commission should act to expand its CPNI rules further, and whether it 
should expand the consumer protections to ensure that customer 
information and CPNI are protected in the context of mobile 
communication devices.

DATES: Comments are due on or before July 9, 2007, and reply comments 
are due on or before August 7, 2007.

ADDRESSES: You may submit comments, identified by CC Docket No. 96-115 
and WC Docket No. 04-36, by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Agency Web Site: https://www.fcc.gov. Follow the 
instructions for submitting comments on https://www.fcc.gov/cgb/ecfs/.
     E-mail: 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.
     Mail: Secretary, Federal Communications Commission, 445 
12th Street, SW., Washington DC 20554.
     Hand Delivery/Courier: 236 Massachusetts Avenue, NE., 
Suite 110, Washington, DC 20002.
    Instructions: All submissions received must include the agency name 
and docket numbers for this rulemaking, CC Docket No. 96-115 and WC 
Docket No. 04-36. All comments received will be posted without change 
to https://www.fcc.gov/cgb/ecfs/, including any personal information 
provided. For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the ``Public 
Participation'' heading of the SUPPLEMENTARY INFORMATION section of 
this document.
    Docket: For access to the docket to read background documents or 
comments received, go to https://www.fcc.gov/cgb/ecfs/.

FOR FURTHER INFORMATION CONTACT: Adam Kirschenbaum, (202) 418-7280, 
Wireline Competition Bureau.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Further Notice of Proposed Rulemaking (Further NPRM) in CC Docket No. 
96-115 and WC Docket No. 04-36, FCC 07-22, adopted March 13, 2007, and 
released April 2, 2007. The complete text of this document is available 
for inspection and copying during normal business hours in the FCC 
Reference Information Center, Portals II, 445 12th Street, SW., Room 
CY-A257, Washington, DC, 20554. This document may also be purchased 
from the Commission's duplicating contractor, Best Copy and Printing, 
Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, 
telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-2898, 
or via e-mail at https://www.bcpiweb.com. It is also available on the 
Commission's Web site at https://www.fcc.gov.

Public Participation

    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).
     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.
     For ECFS filers, if multiple docket or rulemaking numbers 
appear in the caption of this proceeding, filers must transmit one 
electronic copy of the comments for each docket or rulemaking number 
referenced in the caption. 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

[[Page 31783]]

four copies of each filing. If more than one docket or rulemaking 
number appears in the caption of this proceeding, filers must submit 
two additional copies for each additional docket or rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail (although the Commission continues to experience delays in 
receiving U.S. Postal Service mail). All filings must be addressed to 
the Commission's Secretary, Office of the Secretary, Federal 
Communications Commission.
     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.
    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. Parties must 
also send a courtesy copy of their filing to Janice Myles, Competition 
Policy Division, Wireline Competition Bureau, Federal Communications 
Commission, 445 12th Street, SW., Room 5-C140, 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., Washington, DC 20554 or via 
e-mail to fcc@bcpiweb.com.

Synopsis of the Further Notice of Proposed Rulemaking (Further NPRM)

    1. In this Further NPRM, the Commission seeks comment on what steps 
the Commission should take, if any, to secure further the privacy of 
customer information. The Commission has a duty to ensure that, as 
technologies evolve, the consumer protection objectives of the Act are 
maintained. Through this Further NRPM, the Commission seeks comment on 
whether the Commission should act to expand its CPNI rules further, and 
whether it should expand the consumer protections to ensure that 
customer information and CPNI are protected in the context of mobile 
communication devices.

A. Additional CPNI Protective Measures

    2. Password Protection. In light of the rules the Commission adopts 
in the Order (FCC 07-22) and the recent enactment of criminal penalties 
against pretexters, the Commission seeks comment on whether it should 
adopt any further carrier requirements to protect CPNI. Specifically, 
while the Commission limited its rules to password protecting call 
detail information for customer-initiated telephone contact, it seeks 
comment on whether to extend these rules to include optional or 
mandatory password protection for non-call detail CPNI. Should this 
password protection be for all non-call detail CPNI or should it only 
include certain account changes? Further, if the Commission were to 
adopt password protection for certain account changes, what should that 
include (e.g., changes in the address of record, account plans, or 
billing methods)? Would requiring these forms of password protection 
place an undue burden on carriers, customers, or others, including any 
burdens placed on small carriers? The Commission solicits further 
comment on any other modifications to its rules that the Commission 
should adopt in light of pretexting activity, and a carrier's duty to 
protect CPNI.
    3. Audit Trails. While the Commission does not adopt rules 
requiring audit trails at this time, in light of its new rules and the 
recent enactment of criminal penalties against pretexters, the 
Commission seeks comment on whether it should adopt rules pertinent to 
audit trails. Are audit trails generally used by carriers to track 
customer contact? The Commission asks carriers to assess the benefits 
and burdens, including the burdens on small carriers, of recording the 
disclosure of CPNI and customer contact. The Commission's current 
record indicates that the broad use of audit trails likely would be of 
limited value in ending pretexting because such a log would record 
enormous amounts of data, the vast majority of it being legitimate 
customer inquiry. Commenters also report that implementing and 
maintaining audit trails would be costly with little to no 
corresponding benefit to the consumer. However, would an audit trail 
assist law enforcement with its criminal investigations against 
pretexters? Further, in the interim period since the Commission sought 
comment on this issue, have carriers' reactions to audit trails changed 
or has the technology changed such that audit trails are now an 
economically feasible option?
    4. Physical Safeguards. The Commission also seeks comment on 
whether the Commission, in light of the rules it adopts in its Order 
(FCC 07-22) and the recent enactment of criminal penalties against 
pretexters, should adopt rules that govern the physical transfer of 
CPNI among companies, such as between a carrier and its affiliates, or 
the transfer of CPNI to any other third party authorized to access or 
maintain CPNI, including a carrier's joint venture partners and 
independent contractors. Specifically, the Commission seeks comment on 
what physical safeguards carriers currently are using when they 
transfer, or allow access to, CPNI to ensure that they maintain the 
security and confidentiality of CPNI? The Commission also seeks comment 
on whether these safeguards for the physical transfer of, or for access 
to, CPNI are sufficient? Further, the Commission seeks comment on what 
steps it should require of a carrier to protect CPNI when CPNI is being 
transferred or accessed by the carrier, its affiliates, or its third 
parties (e.g., encryption, audit trails, logs, etc.). Additionally, the 
Commission seeks comment on the benefits and burdens, including the 
burdens on small carriers, of requiring carriers to physically 
safeguard the security and confidentiality of CPNI.
    5. Limiting Data Retention. The Commission also seeks comment on 
whether the Commission, in light of the rules it adopts in its Order 
(FCC 07-22) and the recent enactment of criminal penalties against 
pretexters, should adopt rules that require carriers to limit data 
retention. If the Commission did adopt such a rule, what should be the 
maximum amount of time that a carrier should be able to retain customer 
records? Additionally, should all customer records be eliminated or is 
there a subset of customer records that are more susceptible to abuse 
and should be destroyed? Also, should the Commission define exceptions 
where a carrier is permitted to retain certain records (e.g., for the 
length of carrier-carrier or carrier-customer disputes)? The Department 
of Justice argues that destruction of CPNI after a specified period 
would hamper law enforcement efforts by destroying data sometimes 
needed for criminal and other lawful investigations. The Commission 
also seeks comment on whether there are any state or Commission data 
retention requirements that might conflict with a

[[Page 31784]]

carrier's data limitation. Additionally, does a limitation on data 
retention enhance protection of CPNI? Alternatively, should the 
Commission require carriers to de-identify customer records after a 
certain period? The Commission seeks comment on the benefits and 
burdens, including the burdens on small carriers, of requiring carriers 
to limit their data retention or to de-identify customer records.

B. Protection of Information Stored in Mobile Communications Devices

    6. The Commission seeks comment on what steps it should take, if 
any, to secure the privacy of customer information stored in mobile 
communications devices. Specifically, the Commission seeks comment on 
what methods carriers currently use, if any, for erasing customer 
information on mobile equipment prior to refurbishing the equipment, 
and the extent to which carriers enable customers to permanently erase 
their personal information prior to discarding the device. The 
Commission also seeks comment on whether it should require carriers to 
permanently erase, or allow customers to permanently erase, customer 
information in such circumstances. Should the Commission require 
manufacturers to configure wireless devices so consumers can easily and 
permanently delete personal information from those devices? Further, 
the Commission seeks comment on the burdens, including those placed on 
small carriers, associated with a Commission rule requiring carriers 
and manufacturers to fully expunge existing customer data from a mobile 
device at the customer's request.

Paperwork Reduction Act

    7. This Further NPRM contains proposed information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invited the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this Further NPRM, as required by the 
Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. Public and 
agency comments are due August 7, 2007. 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 comment on how it might 
``further reduce the information collection burden for small business 
concerns with fewer than 25 employees.''

Initial Regulatory Flexibility Analysis

    8. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), 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 Further 
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 Further NPRM provided above. The 
Commission will send a copy of the Further NPRM, including this IRFA, 
to the Chief Counsel for Advocacy of the Small Business Administration. 
In addition, the Further NPRM and the IRFA (or summaries thereof) will 
be published in the Federal Register.

A. Need for, and Objectives of, the Proposed Rules

    9. In the Further NPRM, the Commission seeks comment on what steps 
the Commission should take, if any, to expand its CPNI rules further, 
and whether it should expand the consumer protections to ensure that 
customer information and CPNI are protected in the context of mobile 
communications devices. In particular, the Commission seeks comment on 
whether it should adopt any further carrier requirements to protect 
CPNI, including password protection, audit trails, physical security, 
and limits on data retention. Further, the Commission seeks comment on 
what methods carriers currently use, if any, for erasing customer 
information on mobile equipment prior to refurbishing the equipment, 
and the extent to which carriers enable customers to permanently erase 
their personal information prior to discarding the device. The 
Commission also seeks comment on whether it should require carriers or 
manufacturers to permanently erase, or allow customers to permanently 
erase, customer information in such circumstances. For each of these 
issues, the Commission seeks comment on the burdens, including those 
placed on small carriers, associated with corresponding Commission 
rules related to each issue.

B. Legal Basis

    10. The legal basis for any action that may be taken pursuant to 
this Further 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

    11. 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).
    12. Small Businesses. Nationwide, there are a total of 
approximately 22.4 million small businesses, according to SBA data.
    13. Small Organizations. Nationwide, there are approximately 1.6 
million small organizations.
    14. 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
    15. 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

[[Page 31785]]

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.
    16. 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 its action.
    17. 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 its action.
    18. 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 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 
its action.
    19. 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 
its action.
    20. 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 its action.
    21. 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 its action.
    22. 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 its action.
    23. 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 its action.
    24. 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 are 
unable at

[[Page 31786]]

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
    25. 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.
    26. 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 its action.
    27. 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 its action.
c. Wireless Telecommunications Service Providers
    28. 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 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.
    29. 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.
    30. 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.
    31. 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.
    32. 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

[[Page 31787]]

of wireless telephony. The Commission has estimated that 245 of these 
are small under the SBA small business size standard.
    33. 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.
    34. 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 
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.
    35. 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.
    36. 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.
    37. 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
    38. 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 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.
    39. 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.
    40. 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

[[Page 31788]]

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.
    41. 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
    42. 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 its action.
    43. All Other Information Services. ``This industry comprises 
establishments primarily engaged in providing other information 
services (except new syndicates and libraries and archives).'' 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 its action.
4. Equipment Manufacturers
    44. Wireless Communications Equipment Manufacturers. The SBA has 
established a small business size standard for Radio and Television 
Broadcasting and Wireless Communications Equipment Manufacturing. 
Examples of products in this category include ``transmitting and 
receiving antennas, cable television equipment, GPS equipment, pagers, 
cellular phones, mobile communications equipment, and radio and 
television studio and broadcasting equipment'' and may include other 
devices that transmit and receive IP-enabled services, such as personal 
digital assistants (PDAs). Under the SBA size standard, firms are 
considered small if they have 750 or fewer employees. According to 
Census Bureau data for 1997, there were 1,215 establishments in this 
category that operated for the entire year. Of those, there were 1,150 
that had employment of under 500, and an additional 37 that had 
employment of 500 to 999. The percentage of wireless equipment 
manufacturers in this category was approximately 61.35%, so the 
Commission estimates that the number of wireless equipment 
manufacturers with employment of under 500 was actually closer to 706, 
with and additional 23 establishments having employment of between 500 
and 999. Consequently, the Commission estimates that the majority of 
wireless communications equipment manufacturers are small entities that 
may be affected by its action.
    45. Telephone Apparatus Manufacturing. This category ``comprises 
establishments primarily engaged primarily in manufacturing wire 
telephone and data communications equipment.'' Examples of pertinent 
products are ``central office switching equipment, cordless telephones 
(except cellular), PBX equipment, telephones, telephone answering 
machines, and data communications equipment, such as bridges, routers, 
and gateways.'' The SBA has developed a small business size standard 
for this category of manufacturing; that size standard is 1,000 or 
fewer employees. According to Census Bureau data for 1997, there were 
598 establishments in this category that operated for the entire year. 
Of these, 574 had employment of under 1,000, and an additional 17 
establishments had employment of 1,000 to 2,499. Consequently, the 
Commission estimates that the majority of these establishments are 
small entities that may be affected by its action.
    46. Semiconductor and Related Device Manufacturing. These 
establishments manufacture ``computer storage devices that allow the 
storage and retrieval of data from a phase change, magnetic, optical, 
or magnetic/optical media.'' The SBA has developed a small business 
size standard for this category of manufacturing; that size standard is 
500 or fewer employees. According to Census Bureau data for 1997, there 
were 1,082 establishments in this category that operated for the entire 
year. Of these, 987 had employment of under 500, and 52 establishments 
had employment of 500 to 999.
    47. Computer Storage Device Manufacturing. These establishments 
manufacture ``computer storage devices that allow the storage and 
retrieval of data from a phase change, magnetic, optical, or magnetic/
optical media.'' The SBA has developed a small business size standard 
for this category of manufacturing; that size standard is 1,000 or 
fewer employees. According to Census Bureau data for 1997, there were 
209 establishments in this category that operated for the entire year. 
Of these, 197 had employment of under 500, and eight establishments had 
employment of 500 to 999.

D. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements

    48. Should the Commission decide to adopt any further regulations 
to ensure that all providers of telecommunication services meet 
consumer protection needs in regard to CPNI, including the security of 
the privacy of customer information stored in mobile communications 
devices, the associated rules potentially could modify the reporting 
and recordkeeping requirements of certain telecommunications providers. 
The Commission could, for instance, require

[[Page 31789]]

that telecommunications providers require further customer password-
related security procedures to access CPNI data. The Commission could 
also require telecommunications providers to track customer contact 
through the use of audit trails or to limit their retention of data 
related to CPNI. Additionally, the Commission could require additional 
physical safeguards be implemented to protect the transfer of CPNI. 
Further, the Commission could require telecommunications providers and/
or manufacturers to configure wireless devices so consumers can easily 
and permanently delete personal information from mobile communications 
devices. These proposals may impose additional reporting and 
recordkeeping requirements on entities. Also, the Commission seeks 
comment on whether any of these proposals places burdens on small 
entities. Entities, especially small businesses, are encouraged to 
quantify the costs and benefits or 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

    49. 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.
    50. The Commission's primary objective is to secure the privacy of 
customer information collected by telecommunications carriers and 
stored in mobile communications devices. The Commission seeks comment 
on the burdens, including those placed on small carriers, associated 
with related Commission rules and whether the Commission should adopt 
different requirements for small businesses.

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

    51. None.

Ordering Clauses

    52. Accordingly, IT IS ORDERED that pursuant to sections 1, 4(i), 
4(j), 222, and 303(r) of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 154(i)-(j), 222, 303(r), this Report and Order and Further 
Notice of Proposed Rulemaking in CC Docket No. 96-115 and WC Docket No. 
04-36 IS ADOPTED, and that Part 64 of the Commission's rules, 47 CFR 
part 64, is amended as set forth in Appendix B. The Order shall become 
effective upon publication in the Federal Register subject to OMB 
approval for new information collection requirements or six months 
after the Order's effective date, whichever is later.
    53. It Is Further Ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, Shall Send a 
copy of this Report and Order and Further Notice of Proposed 
Rulemaking, including the Final Regulatory Flexibility Analysis and 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. E7-10734 Filed 6-7-07; 8:45 am]
BILLING CODE 6712-01-P