Connect America Fund, A National Broadband Plan for Our Future, High-Cost Universal Service Support, 26906-26916 [2010-11321]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 75, Number 92 (Thursday, May 13, 2010)]
[Proposed Rules]
[Pages 26906-26916]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-11321]


-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 10-90; GN Docket No. 09-51, WC Docket No. 05-337; FCC 
10-58]


Connect America Fund, A National Broadband Plan for Our Future, 
High-Cost Universal Service Support

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Communications Commission (Commission) delivered 
to Congress a National Broadband Plan recommending that the Commission 
adopt cost-cutting measures for existing voice support and create a 
Connect America Fund, without increasing the overall size of the Fund, 
to support the provision of broadband communications in areas that 
would be unserved without such support or that depend on universal 
service support for the maintenance of existing broadband service. This 
document and the companion Notice of Inquiry is the first in a series 
of proceedings to implement that vision. This proceeding will develop 
the detailed analytic foundation necessary for the Commission to 
distribute funds in an efficient, targeted manner that avoids waste and 
minimizes burdens on American consumers. This document seeks comment on 
specific common-sense reforms to cap growth and cut inefficient funding 
in the legacy high-cost support mechanisms and to shift the savings 
toward broadband communications.

DATES: Comments on the proposed rules are due on or before July 12, 
2010, and reply comments are due on or before August 11, 2010.

ADDRESSES: You may submit comments, identified by WC Docket No. 10-90, 
GN Docket No. 09-51, WC Docket No. 05-337, 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://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
     People with Disabilities: Contact the FCC to request 
reasonable

[[Page 26907]]

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: Katie King, Wireline Competition 
Bureau, Telecommunications Access Policy Division, (202) 418-7491 or 
TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Proposed Rulemaking in WC Docket No. 10-90, GN Docket No. 09-
51, WC Docket No. 05-337; FCC 10-58, adopted April 21, 2010, and 
released April 21, 2010. 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. The 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 the Internet at https://www.bcpiweb.com. It is also available on 
the Commission's Web site at https://www.fcc.gov.
    Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's rules, 
47 CFR 1.415, 1.419, interested parties may file comments and reply 
comments on or before the dates indicated on the first page of this 
document. Comments may be filed using: (1) The Commission's Electronic 
Comment Filing System (ECFS), (2) the Federal Government's eRulemaking 
Portal, or (3) by filing paper copies. See Electronic Filing of 
Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: 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.
     Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. If more than one 
docket or rulemaking number appears in the caption of this proceeding, 
filers must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail (although we continue 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.
     All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St., SW., Room TW-A325, Washington, DC 20554. The filing hours 
are 8 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.
    In addition, one copy of each pleading must be sent to each of the 
following:
     The Commission's duplicating contractor, Best Copy and 
Printing, Inc, 445 12th Street, SW., Room CY-B402, Washington, DC 
20554; Web site: https://www.bcpiweb.com; phone: 1-800-378-3160; and
     Charles Tyler, Telecommunications Access Policy Division, 
Wireline Competition Bureau, 445 12th Street, SW., Room 5-A452, 
Washington, DC 20554; e-mail: Charles.Tyler@fcc.gov.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (Braille, large print, electronic 
files, audio format), send an e-mail to fcc504@fcc.gov or call the 
Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice) or 
(202) 418-0432 (TTY). Contact the FCC to request reasonable 
accommodations for filing comments (accessible format documents, sign 
language interpreters, CART, etc.) by e-mail: fcc504@fcc.gov; phone: 
(202) 418-0530 or (202) 418-0432 (TTY).
    Filings and comments are also available for public inspection and 
copying during regular business hours at the FCC Reference Information 
Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 
20554. Copies may also be purchased from the Commission's duplicating 
contractor, BCPI, 445 12th Street, SW., Room CY-B402, Washington, DC 
20554. Customers may contact BCPI through its Web site: https://www.bcpiweb.com, by e-mail at fcc@bcpiweb.com, by telephone at (202) 
488-5300 or (800) 378-3160 (voice), (202) 488-5562 (TTY), or by 
facsimile at (202) 488-5563.

I. Notice of Proposed Rulemaking

1. Controlling the Size of the High-Cost Program

    1. As an essential first step toward repurposing the universal 
service fund to support broadband as well as voice service, we must 
ensure that the size of the fund remains reasonable. The National 
Broadband Plan recommends that the Commission take steps to manage the 
universal service fund so that its total size remains close to its 
current level (in 2010 dollars) to minimize the burden of increasing 
universal service contributions on consumers. The Commission already 
has taken action to control the overall size of the high-cost fund. In 
2008, the Commission adopted on an interim basis an overall competitive 
eligible telecommunications carrier (ETC) high-cost cap of 
approximately $1.4 billion, pending comprehensive USF reform. 
Similarly, today we seek comment on capping legacy high-cost support 
provided to incumbent telephone companies at 2010 levels, which would 
have the effect of creating an overall ceiling for the legacy high-cost 
program. Such a cap would remain in place while the Commission 
determines how to distribute funds in a more efficient, targeted manner 
to those areas of the country where no firm can operate profitably 
without government support, while minimizing burdens on American 
consumers who ultimately pay for universal service through carrier 
pass-through charges.
    2. We seek comment on how the Commission could implement such a 
cap. Alternatively, we invite other proposals that would ensure that 
the overall size of the high-cost fund stays at or below current 
levels. Should the Commission impose an overall cap on legacy high-cost 
support for incumbent LECs at 2010 levels? Should the Commission impose 
a cap on each individual high-cost mechanism (to the extent each is not 
already capped) at 2010 levels? Should the Commission freeze per-line 
support for each carrier at 2010 levels? For example, the Alliance for 
Rural CMRS Carriers proposed that incumbent LEC support amounts per 
line be capped at either March 2008 or March 2010 levels. We seek 
comment on this proposal. Alternatively, should the Commission freeze 
the total amount of support a carrier receives in a particular study 
area at 2010 levels? Are there other

[[Page 26908]]

ways to implement such a cap? What rule changes would be required to 
implement this proposal? How would the Commission implement this 
proposal in conjunction with the reforms identified in the following 
paragraphs? In addition, what implications would this proposal have for 
other Commission rules, as such the Commission's current pricing rules, 
and should the implementation of this proposal be coordinated with any 
other regulatory actions?

2. Specific Steps To Cut Legacy High-Cost Support

    3. As discussed in more detail below, the National Broadband Plan 
identifies several specific first steps that could reduce funding in 
the legacy high-cost support mechanisms and recommends that those 
savings be used to further the goals of universalizing broadband 
without increasing the overall size of the universal service fund. The 
National Broadband Plan recognizes that shifting funds could have 
transitional impacts and recommends that ``[a]s the FCC considers this 
policy shift, it should take into account the impact of potential 
changes in free cash flows on providers' ability to continue to provide 
voice service and on future broadband network deployment strategies.'' 
Below, we seek comment on the first steps set forth in the National 
Broadband Plan. To the extent that any commenter believes that these 
proposals, or the proposal to cap legacy high-cost support, would 
negatively affect affordable voice service for consumers today, we 
would encourage such a commenter to identify all assumptions and to 
provide data, including information on network investment plans over 
the next five years and free cash flows, to support that position. The 
intent of these proposals is to eliminate the indirect funding of 
broadband-capable networks today through our legacy high-cost programs, 
which is occurring without transparency or accountability for the use 
of funds to extend broadband service. We seek comment on the timing of 
implementing such reforms in conjunction with the creation of a more 
efficient and targeted framework that will provide support for 
broadband and voice. We encourage commenters to address when each rule 
change should be implemented and how specific reforms should be 
sequenced to provide regulatory clarity for ongoing private sector 
investment.
    4. In addition, we seek comment on the relationship between such 
universal service reforms and carriers' rates, including intercarrier 
compensation rates, under the Commission's current pricing rules. We 
seek comment both on the likely rate impacts under existing pricing 
rules that would arise from the possible universal service reforms and 
any appropriate responses. We also note that many rural rate-of-return 
carriers participate in the National Exchange Carrier Association 
(NECA) pooling process for their interstate access charges. If 
universal service support under the legacy programs were frozen for 
such carriers, are there special considerations resulting from 
operation of the NECA pool that would unfairly advantage or 
disadvantage certain carriers? The Commission previously has expressed 
concern about the risks of continued participation in NECA pools by 
carriers that were subject to incentive regulation. We seek comment on 
whether such concerns would remain if all rate-of-return carriers 
converted to incentive regulation. Would the pool be able to continue 
to operate pursuant to regulation other than rate-of-return?
    5. Shifting Rate-of-Return Carriers to Incentive Regulation. The 
National Broadband Plan recommends that the Commission ``require rate-
of-return carriers to move to incentive regulation.'' We seek comment 
on requiring current rate-of-return companies to convert to some form 
of incentive regulation. We note that a number of companies have 
voluntarily converted to price cap regulation in the last two years. In 
such cases, the Commission effectively converted the companies' 
interstate common line support (ICLS) to a frozen amount per line. We 
seek comment on whether the Commission should replace rate-of-return 
regulation with the price-cap framework recently adopted for voluntary 
conversions, an alternative price-cap framework, or some other form of 
incentive regulation. We seek comment on the costs and the benefits 
that would be realized by converting all rate-of-return carriers to 
price cap regulation or other incentive regulation. We seek comment on 
whether, in an increasingly competitive marketplace, and with carriers' 
service offerings expanding beyond regulated services, the current 
rate-of-return framework, which considers only regulated costs and 
revenues, has become less appropriate.
    6. We seek comment on whether we should convert ICLS to a frozen 
amount per line, which would have the effect of limiting growth in the 
legacy high-cost program. We seek comment on whether this reform should 
be implemented at the same time as any measures the Commission may 
adopt to provide targeted funding for the deployment of broadband-
capable infrastructure to areas that are unserved, or should such a 
rule change occur before the development of the CAF, or otherwise be 
coordinated with some other regulatory action such as conversion to 
incentive regulation. The National Broadband Plan recognizes that the 
savings realized by eliminating future growth in the legacy ICLS 
program represent funding that could be redirected toward achieving 
broadband-related goals. We seek comment on this proposal.
    7. Elimination of Interstate Access Support. The National Broadband 
Plan also recommends that the Commission ``redirect access replacement 
funding known as Interstate Access Support (IAS) toward broadband 
deployment.'' Thus, we now seek comment on the elimination of IAS. When 
the Commission created IAS in 2000, it said that it would revisit this 
funding mechanism ``to ensure that such funding is sufficient, yet not 
excessive.'' That re-examination has not occurred.
    8. Specifically, we now seek comment on eliminating Sec. Sec.  
54.800-54.809 of our rules and transferring any IAS funding levels as 
of the date of elimination to the new Connect America Fund to provide 
support for broadband-capable networks. We invite commenters to propose 
an appropriate timeline for the elimination of these rules and any 
glide-path that may be necessary to ensure that recipients continue to 
be able to provide voice services during the transition.
    9. Sprint and Verizon Wireless Voluntary Commitments. The National 
Broadband Plan also recommends that the Commission ``issue an order to 
implement the voluntary commitments of Sprint and Verizon Wireless to 
reduce the High-Cost funding they receive as competitive ETCs to zero 
over a five-year period as a condition of earlier merger decisions.'' 
The Commission will consider shortly an order clarifying how to 
implement Verizon Wireless's and Sprint's voluntary commitments.
    10. Elimination of Competitive ETC High-Cost Support. The National 
Broadband Plan recommends that the Commission phase out remaining 
competitive ETC funding under the existing funding mechanisms over a 
five-year period and target the savings toward the deployment of 
broadband-capable networks and other reforms in the plan. We seek 
comment on this proposal.
    11. We seek comment on whether we should ramp down competitive ETC 
support under the legacy programs, and if so, how the transition should 
occur. For example, should the Commission

[[Page 26909]]

reduce support on a pro rata basis (e.g., 20% reduction each year) for 
each state? Should the Commission reduce support at an accelerated rate 
of decline? Should the Commission reduce support on a proportional 
basis for all states, or in some other manner, and if so, on what 
basis? Would there be any impact on existing subscribers of competitive 
ETCs if the Commission were to reduce competitive ETC support under the 
legacy funding mechanisms? How should reductions in legacy high-cost 
support for all competitive ETCs be coordinated with implementation of 
Verizon Wireless's and Sprint's voluntary commitments to phase-out 
legacy high-cost support over a five-year period?
    12. General Proposals. Commenters are invited to submit other 
proposals to eliminate or reduce funding levels in the legacy high-cost 
support mechanisms to transition to efficient funding levels in the 
Connect America Fund. We encourage parties that submit alternative 
proposals to identify specific rule changes and quantify the impact of 
such changes.

II. Procedural Matters

A. Initial Regulatory Flexibility Analysis

    13. As required by the Regulatory Flexibility Act (``RFA''), the 
Commission prepared this Initial Regulatory Flexibility Analysis 
(``IRFA'') of the possible significant economic impact on small 
entities by the policies and rules proposed in this Notice of Proposed 
Rulemaking (NPRM). The Commission requests written public comments on 
this IRFA. Comments must be identified as responses to the IRFA and 
must be filed on or before the dates indicated on the first page of 
this NPRM. The Commission will send a copy of the NPRM, including this 
IRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration (SBA). In addition, the NPRM and IRFA (or summaries 
thereof) will be published in the Federal Register.
1. Need for, and Objectives of, the Notice
    14. On March 16, 2010, the Commission released a Joint Statement on 
Broadband stating that ``[t]he nearly $9 billion Universal Service Fund 
(USF) and the intercarrier compensation (ICC) system should be 
comprehensively reformed to increase accountability and efficiency, 
encourage targeted investment in broadband infrastructure, and 
emphasize the importance of broadband to the future of these 
programs.'' On the same day, the Commission delivered to Congress a 
National Broadband Plan recommending that the Commission adopt cost-
cutting measures for existing voice support and create a Connect 
America Fund (CAF), without increasing the overall size of the Fund, to 
support the provision of broadband communications in areas that would 
be unserved without such support or that depend on universal service 
support for the maintenance of existing broadband service.
    15. The National Broadband Plan recommends that the Commission take 
steps to manage the universal service fund so that its total size 
remains close to its current level (in 2010 dollars) to minimize the 
burden of increasing universal service contributions on consumers. The 
NPRM seeks comment on specific common-sense reforms to contain growth 
in the legacy high-cost support mechanisms and identify savings that 
can be shifted toward broadband. Specifically, the NPRM seeks comment 
on capping legacy high-cost support provided to incumbent telephone 
companies at 2010 levels; shifting rate-of-return carriers to incentive 
regulation and converting interstate common line support to a frozen 
amount per line; eliminating interstate access support; and eliminating 
high-cost support for competitive eligible telecommunications carriers.
2. Legal Basis
    16. This legal basis for any action that may be taken pursuant to 
the NPRM is contained in sections 1, 2, 4(i), 201-205, 214, 254, and 
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 
154(i), 201-205, 214, 254, and 403, and Sec.  1.411 of the Commission's 
rules, 47 CFR 1.411.
3. Description and Estimate of the Number of Small Entities to Which 
the Rules Will Apply
    17. The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules and policies, if adopted. The RFA 
generally defines the term ``small entity'' as having the same meaning 
as the terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' In addition, the term ``small business'' 
has the same meaning as the term ``small business concern'' under the 
Small Business Act. A ``small business concern'' is one which: (1) Is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria established by the 
SBA.
    18. Small Businesses. Nationwide, there are a total of 
approximately 29.6 million small businesses, according to the SBA.
    19. Small Organizations. Nationwide, as of 2002, there are 
approximately 1.6 million small organizations. A ``small organization'' 
is generally ``any not-for-profit enterprise which is independently 
owned and operated and is not dominant in its field.''
    20. 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. We estimate that, of this total, 84,377 entities were 
``small governmental jurisdictions.'' Thus, we estimate that most 
governmental jurisdictions are small.
    21. We have 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. We 
have therefore included small incumbent local exchange carriers in this 
RFA analysis, although we emphasize that this RFA action has no effect 
on Commission analyses and determinations in other, non-RFA contexts.
    22. Incumbent Local Exchange Carriers (``ILECs''). 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, 1,311 carriers have reported that they are engaged in the 
provision of incumbent local exchange services. Of these 1,311 
carriers, an estimated 1,024 have 1,500 or fewer employees and 287 have 
more than 1,500 employees. Consequently, the Commission estimates that 
most providers of incumbent local exchange

[[Page 26910]]

service are small businesses that may be affected by our proposed 
action.
    23. Competitive Local Exchange Carriers (``CLECs''), 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, 1,005 carriers have reported that they 
are engaged in the provision of either competitive access provider 
services or competitive local exchange carrier services. Of these 1,005 
carriers, an estimated 918 have 1,500 or fewer employees and 87 have 
more than 1,500 employees. In addition, 16 carriers have reported that 
they are ``Shared-Tenant Service Providers,'' and all 16 are estimated 
to have 1,500 or fewer employees. In addition, 89 carriers have 
reported that they are ``Other Local Service Providers.'' Of the 89, 
all have 1,500 or fewer 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 our proposed action.
    24. 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, 151 carriers have reported 
that they are engaged in the provision of local resale services. Of 
these, an estimated 149 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 
our proposed action.
    25. 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, 815 carriers have reported 
that they are engaged in the provision of toll resale services. Of 
these, an estimated 787 have 1,500 or fewer employees and 28 have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of toll resellers are small entities that may be affected by 
our proposed action.
    26. 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, 300 carriers have 
reported that they are engaged in the provision of interexchange 
service. Of these, an estimated 268 have 1,500 or fewer employees and 
32 have more than 1,500 employees. Consequently, the Commission 
estimates that the majority of IXCs are small entities that may be 
affected by our proposed action.
    27. Satellite Telecommunications and All Other Telecommunications. 
These two economic census categories address the satellite industry. 
The first category has a small business size standard of $15 million or 
less in average annual receipts, under SBA rules. The second has a size 
standard of $25 million or less in annual receipts. The most current 
Census Bureau data in this context, however, are from the (last) 
economic census of 2002, and we will use those figures to gauge the 
prevalence of small businesses in these categories.
    28. The category of Satellite Telecommunications ``comprises 
establishments primarily engaged in providing telecommunications 
services to other establishments in the telecommunications and 
broadcasting industries by forwarding and receiving communications 
signals via a system of satellites or reselling satellite 
telecommunications.'' 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, we estimate that the majority of Satellite 
Telecommunications firms are small entities that might be affected by 
our action.
    29. The second category of All Other Telecommunications comprises, 
inter alia, ``establishments primarily engaged in providing specialized 
telecommunications services, such as satellite tracking, communications 
telemetry, and radar station operation. This industry also includes 
establishments primarily engaged in providing satellite terminal 
stations and associated facilities connected with one or more 
terrestrial systems and capable of transmitting telecommunications to, 
and receiving telecommunications from, satellite systems.'' 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, 303 firms 
had annual receipts of under $10 million and 15 firms had annual 
receipts of $10 million to $24,999,999. Consequently, we estimate that 
the majority of All Other Telecommunications firms are small entities 
that might be affected by our action.
    30. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Prior to that time, such firms were 
within the now-superseded categories of ``Paging'' and ``Cellular and 
Other Wireless Telecommunications.'' Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. Because Census Bureau data are not yet 
available for the new category, we will estimate small business 
prevalence using the prior categories and associated data. For the 
category of Paging, data for 2002 show that there were 807 firms 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. For the category of Cellular and Other Wireless 
Telecommunications, data for 2002 show that there were 1,397 firms 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, we estimate that the majority of wireless 
firms are small.
    31. 2.3 GHz Wireless Communications Services. This service can be 
used for fixed, mobile, radiolocation, and digital audio broadcasting 
satellite uses. The Commission defined ``small business'' for the 
wireless communications services (``WCS'') auction as an entity with 
average gross revenues of $40 million for each of the three preceding 
years, and a ``very small business'' as an entity with average gross 
revenues of $15 million for each of the three preceding years. The SBA 
has approved these definitions. The Commission auctioned geographic 
area licenses in the WCS service. In the auction, which was conducted 
in 1997, there were seven bidders that won 31 licenses that qualified 
as very small business entities, and one bidder that won one license 
that qualified as a small business entity.
    32. 1670-1675 MHz Services. An auction for one license in the 1670-
1675 MHz band was conducted in 2003. One

[[Page 26911]]

license was awarded. The winning bidder was not a small entity.
    33. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. As noted, the SBA has developed a small business 
size standard for Wireless Telecommunications Carriers (except 
Satellite). Under the SBA small business size standard, a business is 
small if it has 1,500 or fewer employees. According to Trends in 
Telephone Service data, 434 carriers reported that they were engaged in 
wireless telephony. Of these, an estimated 222 have 1,500 or fewer 
employees and 212 have more than 1,500 employees. We have estimated 
that 222 of these are small under the SBA small business size standard.
    34. Broadband Personal Communications Service. The broadband 
personal communications services (``PCS'') spectrum is divided into six 
frequency blocks designated A through F, and the Commission has held 
auctions for each block. The Commission has created a small business 
size standard for Blocks C and F as an entity that has average gross 
revenues of less than $40 million in the three previous calendar years. 
For Block F, an additional small business size standard for ``very 
small business'' was added and is defined as an entity that, together 
with its affiliates, has average gross revenues of not more than $15 
million for the preceding three calendar years. These small business 
size standards, 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. In 1999, the Commission reauctioned 155 C, D, E, 
and F Block licenses; there were 113 small business winning bidders.
    35. In 2001, the Commission completed the auction of 422 C and F 
Broadband PCS licenses in Auction 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. In 2005, the Commission completed an auction of 
188 C block licenses and 21 F block licenses in Auction 58. There were 
24 winning bidders for 217 licenses. Of the 24 winning bidders, 16 
claimed small business status and won 156 licenses. In 2007, the 
Commission completed an auction of 33 licenses in the A, C, and F 
Blocks in Auction 71. Of the 14 winning bidders, six were designated 
entities. In 2008, the Commission completed an auction of 20 Broadband 
PCS licenses in the C, D, E and F block licenses in Auction 78.
    36. Advanced Wireless Services. In 2008, the Commission conducted 
the auction of Advanced Wireless Services (``AWS'') licenses. This 
auction, which as designated as Auction 78, offered 35 licenses in the 
AWS 1710-1755 MHz and 2110-2155 MHz bands (``AWS-1''). The AWS-1 
licenses were licenses for which there were no winning bids in Auction 
66. That same year, the Commission completed Auction 78. A bidder with 
attributed average annual gross revenues that exceeded $15 million and 
did not exceed $40 million for the preceding three years (``small 
business'') received a 15 percent discount on its winning bid. A bidder 
with attributed average annual gross revenues that did not exceed $15 
million for the preceding three years (``very small business'') 
received a 25 percent discount on its winning bid. A bidder that had 
combined total assets of less than $500 million and combined gross 
revenues of less than $125 million in each of the last two years 
qualified for entrepreneur status. Four winning bidders that identified 
themselves as very small businesses won 17 licenses. Three of the 
winning bidders that identified themselves as a small business won five 
licenses. Additionally, one other winning bidder that qualified for 
entrepreneur status won 2 licenses.
    37. 700 MHz Band Licenses. The Commission previously adopted 
criteria for defining three groups of small businesses for purposes of 
determining their eligibility for special provisions such as bidding 
credits. The Commission defined a ``small business'' as an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues not exceeding $40 million for the preceding three years. 
A ``very small business'' is defined as an entity that, together with 
its affiliates and controlling principals, has average gross revenues 
that are not more than $15 million for the preceding three years. 
Additionally, the lower 700 MHz Service had a third category of small 
business status for Metropolitan/Rural Service Area (``MSA/RSA'') 
licenses. The third category is ``entrepreneur,'' which is defined as 
an entity that, together with its affiliates and controlling 
principals, has average gross revenues that are not more than $3 
million for the preceding three years. The SBA approved these small 
size standards. The Commission conducted an auction in 2002 of 740 
licenses (one license in each of the 734 MSAs/RSAs and one license in 
each of the six Economic Area Groupings (EAGs)). Of the 740 licenses 
available for auction, 484 licenses were sold to 102 winning bidders. 
Seventy-two of the winning bidders claimed small business, very small 
business or entrepreneur status and won a total of 329 licenses. The 
Commission conducted a second auction in 2003 that included 256 
licenses: 5 EAG licenses and 476 Cellular Market Area licenses. 
Seventeen winning bidders claimed small or very small business status 
and won 60 licenses, and nine winning bidders claimed entrepreneur 
status and won 154 licenses. In 2005, the Commission completed an 
auction of 5 licenses in the lower 700 MHz band (Auction 60). There 
were three winning bidders for five licenses. All three winning bidders 
claimed small business status.
    38. In 2007, the Commission adopted the 700 MHz Second Report and 
Order. The Order revised the band plan for the commercial (including 
Guard Band) and public safety spectrum, adopted services rules, 
including stringent build-out requirements, an open platform 
requirement on the C Block, and a requirement on the D Block licensee 
to construct and operate a nationwide, interoperable wireless broadband 
network for public safety users. In 2008, the Commission commenced 
Auction 73 which offered all available, commercial 700 MHz Band 
licenses (1,099 licenses) for bidding using the Commission's standard 
simultaneous multiple-round (``SMR'') auction format for the A, B, D, 
and E block licenses and an SMR auction design with hierarchical 
package bidding (``HPB'') for the C Block licenses. Later in 2008, the 
Commission concluded Auction 73. A bidder with attributed average 
annual gross revenues that did not exceed $15 million for the preceding 
three years (very small business) qualified for a 25 percent discount 
on its winning bids. A bidder with attributed average annual gross 
revenues that exceeded $15 million, but did not exceed $40 million for 
the preceding three years, qualified for a 15 percent discount on its 
winning bids. There were 36 winning bidders (who won 330 of the 1,090 
licenses won) that identified themselves as very small businesses. 
There were 20 winning bidders that identified themselves as a small 
business that won 49 of the 1,090

[[Page 26912]]

licenses won. The provisionally winning bids for the A, B, C, and E 
Block licenses exceeded the aggregate reserve prices for those blocks. 
However, the provisionally winning bid for the D Block license did not 
meet the applicable reserve price and thus did not become a winning 
bid.
    39. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order, 
the Commission adopted size standards 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 in this service is an entity that, together 
with its affiliates and controlling principals, has average gross 
revenues not exceeding $40 million for the preceding three years. 
Additionally, a very small business is an entity that, together with 
its affiliates and controlling principals, has average gross revenues 
that are not more than $15 million for the preceding three years. SBA 
approval of these definitions is not required. In 2000, the Commission 
conducted an auction of 52 Major Economic Area (``MEA'') licenses. Of 
the 104 licenses auctioned, 96 licenses were sold to nine bidders. Five 
of these bidders were small businesses that won a total of 26 licenses. 
A second auction of 700 MHz Guard Band licenses commenced and closed in 
2001. All eight of the licenses auctioned were sold to three bidders. 
One of these bidders was a small business that won a total of two 
licenses.
    40. Specialized Mobile Radio. The Commission awards ``small 
entity'' bidding credits in auctions for Specialized Mobile Radio (SMR) 
geographic area licenses in the 800 MHz and 900 MHz bands to firms that 
had revenues of no more than $15 million in each of the three previous 
calendar years. The Commission awards ``very small entity'' bidding 
credits to firms that had revenues of no more than $3 million in each 
of the three previous calendar years. The SBA has approved these small 
business size standards for the 900 MHz Service. The Commission has 
held auctions for geographic area licenses in the 800 MHz and 900 MHz 
bands. The 900 MHz SMR auction was completed in 1996. Sixty bidders 
claiming that they qualified as small businesses under the $15 million 
size standard won 263 geographic area licenses in the 900 MHz SMR band. 
The 800 MHz SMR auction for the upper 200 channels was conducted in 
1997. Ten bidders claiming that they qualified as small businesses 
under the $15 million size standard won 38 geographic area licenses for 
the upper 200 channels in the 800 MHz SMR band. A second auction for 
the 800 MHz band was conducted in 2002 and included 23 BEA licenses. 
One bidder claiming small business status won five licenses.
    41. The auction of the 1,053 800 MHz SMR geographic area licenses 
for the General Category channels was conducted in 2000. Eleven bidders 
won 108 geographic area licenses for the General Category channels in 
the 800 MHz SMR band qualified as small businesses under the $15 
million size standard. In an auction completed in 2000, a total of 
2,800 Economic Area licenses in the lower 80 channels of the 800 MHz 
SMR service were awarded. Of the 22 winning bidders, 19 claimed small 
business status and won 129 licenses. Thus, combining all three 
auctions, 40 winning bidders for geographic licenses in the 800 MHz SMR 
band claimed status as small business.
    42. In addition, there are numerous incumbent site-by-site SMR 
licensees and licensees with extended implementation authorizations in 
the 800 and 900 MHz bands. We do not know how many firms provide 800 
MHz or 900 MHz geographic area SMR pursuant to extended implementation 
authorizations, nor how many of these providers have annual revenues of 
no more than $15 million. One firm has over $15 million in revenues. In 
addition, we do not know how many of these firms have 1500 or fewer 
employees. We assume, for purposes of this analysis, that all of the 
remaining existing extended implementation authorizations are held by 
small entities, as that small business size standard is approved by the 
SBA.
    43. Cellular Radiotelephone Service. Auction 77 was held to resolve 
one group of mutually exclusive applications for Cellular 
Radiotelephone Service licenses for unserved areas in New Mexico. 
Bidding credits for designated entities were not available in Auction 
77. In 2008, the Commission completed the closed auction of one 
unserved service area in the Cellular Radiotelephone Service, 
designated as Auction 77. Auction 77 concluded with one provisionally 
winning bid for the unserved area totaling $25,002.
    44. Private Land Mobile Radio (``PLMR''). PLMR systems serve an 
essential role in a range of industrial, business, land transportation, 
and public safety activities. These radios are used by companies of all 
sizes operating in all U.S. business categories, and are often used in 
support of the licensee's primary (non-telecommunications) business 
operations. For the purpose of determining whether a licensee of a PLMR 
system is a small business as defined by the SBA, we use the broad 
census category, Wireless Telecommunications Carriers (except 
Satellite). This definition provides that a small entity is any such 
entity employing no more than 1,500 persons. The Commission does not 
require PLMR licensees to disclose information about number of 
employees, so the Commission does not have information that could be 
used to determine how many PLMR licensees constitute small entities 
under this definition. We note that PLMR licensees generally use the 
licensed facilities in support of other business activities, and 
therefore, it would also be helpful to assess PLMR licensees under the 
standards applied to the particular industry subsector to which the 
licensee belongs.
    45. As of March 2010, there were 424,162 PLMR licensees operating 
921,909 transmitters in the PLMR bands below 512 MHz. We note that any 
entity engaged in a commercial activity is eligible to hold a PLMR 
license, and that any revised rules in this context could therefore 
potentially impact small entities covering a great variety of 
industries.
    46. Fixed Microwave Services. Fixed microwave services include 
common carrier, private operational-fixed, and broadcast auxiliary 
radio services. At present, there are approximately 22,015 common 
carrier fixed licensees and 61,670 private operational-fixed licensees 
and broadcast auxiliary radio licensees in the microwave services. The 
Commission has not created a size standard for a small business 
specifically with respect to fixed microwave services. For purposes of 
this analysis, the Commission uses the SBA small business size standard 
for the category Wireless Telecommunications Carriers (except 
Satellite), which is 1,500 or fewer employees. The Commission does not 
have data specifying the number of these licensees that have no more 
than 1,500 employees, and thus are unable at this time to estimate with 
greater precision the number of fixed microwave service licensees that 
would qualify as small business concerns under the SBA's small business 
size standard. Consequently, the Commission estimates that there are 
22,015 or fewer common carrier fixed licensees and 61,670 or fewer 
private operational-fixed licensees and broadcast auxiliary radio 
licensees in the microwave services that may be small and may be 
affected by the rules and policies proposed herein. We note, however, 
that the common carrier microwave fixed licensee category includes some 
large entities.

[[Page 26913]]

    47. 39 GHz Service. The Commission created a special small business 
size standard for 39 GHz licenses--an entity that has average gross 
revenues of $40 million or less in the three previous calendar years. 
An additional size standard for ``very small business'' is: An entity 
that, together with affiliates, has average gross revenues of not more 
than $15 million for the preceding three calendar years. The SBA has 
approved these small business size standards. The auction of the 2,173, 
39 GHz licenses, began and closed in 2000. The 18 bidders who claimed 
small business status won 849 licenses.
    48. Local Multipoint Distribution Service. Local Multipoint 
Distribution Service (``LMDS'') is a fixed broadband point-to-
multipoint microwave service that provides for two-way video 
telecommunications. The auction of the 986 LMDS licenses began and 
closed in 1998. The Commission established a small business size 
standard for LMDS licenses as an entity that has average gross revenues 
of less than $40 million in the three previous calendar years. An 
additional small business size standard for ``very small business'' was 
added as an entity that, together with its affiliates, has average 
gross revenues of not more than $15 million for the preceding three 
calendar years. The SBA has approved these small business size 
standards in the context of LMDS auctions. There were 93 winning 
bidders that qualified as small entities in the LMDS auctions. A total 
of 93 small and very small business bidders won approximately 277 A 
Block licenses and 387 B Block licenses. In 1999, the Commission re-
auctioned 161 licenses; there were 32 small and very small businesses 
winning that won 119 licenses.
    49. 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''). In the present 
context, we will use the SBA's small business size standard applicable 
to Wireless Telecommunications Carriers (except Satellite), 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 proposed herein.
    50. 1.4 GHz Band Licensees. The Commission conducted an auction of 
64 1.4 GHz band licenses in 2007. In that auction, the Commission 
defined ``small business'' as an entity that, together with its 
affiliates and controlling interests, had average gross revenues that 
exceed $15 million but do not exceed $40 million for the preceding 
three years, and a ``very small business'' as an entity that, together 
with its affiliates and controlling interests, has had average annual 
gross revenues not exceeding $15 million for the preceding three years. 
Neither of the two winning bidders sought designated entity status.
    51. Incumbent 24 GHz Licensees. This analysis may affect incumbent 
licensees who were relocated to the 24 GHz band from the 18 GHz band, 
and applicants who wish to provide services in the 24 GHz band. The 
applicable SBA small business size standard is that of Wireless 
Telecommunications Carriers (except Satellite). This category provides 
that such a company is small if it employs no more than 1,500 persons. 
The broader census data notwithstanding, we believe that there are only 
two licensees in the 24 GHz band that were relocated from the 18 GHz 
band, Teligent and TRW, Inc. It is our understanding that Teligent and 
its related companies have fewer than 1,500 employees, though this may 
change in the future. TRW is not a small entity. There are 
approximately 122 licensees in the Rural Radiotelephone Service, and 
the Commission estimates that there are 122 or fewer small entity 
licensees in the Rural Radiotelephone Service that may be affected by 
the rules and policies proposed herein.
    52. Future 24 GHz Licensees. With respect to new applicants in the 
24 GHz band, we have defined ``small business'' as an entity that, 
together with controlling interests and affiliates, has average annual 
gross revenues for the three preceding years not exceeding $15 million. 
``Very small business'' in the 24 GHz band is defined as an entity 
that, together with controlling interests and affiliates, has average 
gross revenues not exceeding $3 million for the preceding three years. 
The SBA has approved these definitions. The Commission will not know 
how many licensees will be small or very small businesses until the 
auction, if required, is held.
    53. Broadband Radio Service and Educational Broadband Service. 
Broadband Radio Service systems, previously referred to as Multipoint 
Distribution Service (``MDS'') and Multichannel Multipoint Distribution 
Service (``MMDS'') systems, and ``wireless cable,'' transmit video 
programming to subscribers and provide two-way high speed data 
operations using the microwave frequencies of the Broadband Radio 
Service (``BRS'') and Educational Broadband Service (``EBS'') 
(previously referred to as the Instructional Television Fixed Service 
(``ITFS'')). In connection with the 1996 BRS auction, the Commission 
established a small business size standard as an entity that had annual 
average gross revenues of no more than $40 million in the previous 
three calendar years. The BRS auctions resulted in 67 successful 
bidders obtaining licensing opportunities for 493 Basic Trading Areas 
(``BTAs''). Of the 67 auction winners, 61 met the definition of a small 
business. BRS also includes licensees of stations authorized prior to 
the auction. At this time, we estimate that of the 61 small business 
BRS auction winners, 48 remain small business licensees. In addition to 
the 48 small businesses that hold BTA authorizations, there are 
approximately 392 incumbent BRS licensees that are considered small 
entities. After adding the number of small business auction licensees 
to the number of incumbent licensees not already counted, we find that 
there are currently approximately 440 BRS licensees that are defined as 
small businesses under either the SBA or the Commission's rules. In 
2009, the Commission conducted Auction 86, the sale of 78 licenses in 
the BRS areas. The Commission offered three levels of bidding credits: 
(i) A bidder with attributed average annual gross revenues that exceed 
$15 million and do not exceed $40 million for the preceding three years 
(small business) will receive a 15 percent discount on its winning bid; 
(ii) a bidder with attributed average annual gross revenues that exceed 
$3 million and do not exceed $15 million for the preceding three years 
(very small business) will receive a 25 percent discount on its winning 
bid; and (iii) a bidder with attributed average annual gross revenues 
that do not exceed $3 million for the preceding three years 
(entrepreneur) will receive a 35 percent discount on its winning bid. 
Auction 86 concluded in 2009 with the sale of 61 licenses. Of the ten 
winning bidders, two bidders that claimed small business status won 4 
licenses; one bidder that claimed very small business status won three 
licenses; and two bidders that claimed entrepreneur status won six 
licenses.
    54. In addition, the SBA's Cable Television Distribution Services 
small business size standard is applicable to EBS. There are presently 
2,032 EBS licensees. All but 100 of these licenses are held by 
educational institutions. Educational institutions are included in this 
analysis as small entities. Thus, we estimate that at least 1,932 
licensees are small businesses. Since 2007, Cable

[[Page 26914]]

Television Distribution Services have been defined within the broad 
economic census category of Wired Telecommunications Carriers; that 
category is defined as follows: ``This industry comprises 
establishments primarily engaged in operating and/or providing access 
to transmission facilities and infrastructure that they own and/or 
lease for the transmission of voice, data, text, sound, and video using 
wired telecommunications networks. Transmission facilities may be based 
on a single technology or a combination of technologies.'' The SBA has 
developed a small business size standard for this category, which is: 
All such firms having 1,500 or fewer employees. To gauge small business 
prevalence for these cable services we must, however, use current 
census data that are based on the previous category of Cable and Other 
Program Distribution and its associated size standard; that size 
standard was: All such firms having $13.5 million or less in annual 
receipts. According to Census Bureau data for 2002, there were a total 
of 1,191 firms in this previous 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. Thus, the majority of these firms can be considered small.
    55. Cable Television Distribution Services. Since 2007, these 
services have been defined within the broad economic census category of 
Wired Telecommunications Carriers; that category is defined as follows: 
``This industry comprises establishments primarily engaged in operating 
and/or providing access to transmission facilities and infrastructure 
that they own and/or lease for the transmission of voice, data, text, 
sound, and video using wired telecommunications networks. Transmission 
facilities may be based on a single technology or a combination of 
technologies.'' The SBA has developed a small business size standard 
for this category, which is: All such firms having 1,500 or fewer 
employees. To gauge small business prevalence for these cable services 
we must, however, use current census data that are based on the 
previous category of Cable and Other Program Distribution and its 
associated size standard; that size standard was: All such firms having 
$13.5 million or less in annual receipts. According to Census Bureau 
data for 2002, there were a total of 1,191 firms in this previous 
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. Thus, the majority of 
these firms can be considered small.
    56. Cable Companies and Systems. The Commission has also developed 
its own small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rules, a ``small cable company'' is 
one serving 400,000 or fewer subscribers, nationwide. Industry data 
indicate that, of 1,076 cable operators nationwide, all but eleven are 
small under this size standard. In addition, under the Commission's 
rules, a ``small system'' is a cable system serving 15,000 or fewer 
subscribers. Industry data indicate that, of 6,635 systems nationwide, 
5,802 systems have under 10,000 subscribers, and an additional 302 
systems have 10,000-19,999 subscribers. Thus, under this second size 
standard, most cable systems are small.
    57. Cable System Operators. The Communications Act of 1934, as 
amended, also contains a size standard for small cable system 
operators, which is ``a cable operator that, directly or through an 
affiliate, serves in the aggregate fewer than 1 percent of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' The Commission has determined that an operator serving 
fewer than 677,000 subscribers shall be deemed a small operator, if its 
annual revenues, when combined with the total annual revenues of all 
its affiliates, do not exceed $250 million in the aggregate. Industry 
data indicate that, of 1,076 cable operators nationwide, all but ten 
are small under this size standard. We note that the Commission neither 
requests nor collects information on whether cable system operators are 
affiliated with entities whose gross annual revenues exceed $250 
million, and therefore we are unable to estimate more accurately the 
number of cable system operators that would qualify as small under this 
size standard.
    58. Open Video Systems. The open video system (``OVS'') framework 
was established in 1996, and is one of four statutorily recognized 
options for the provision of video programming services by local 
exchange carriers. The OVS framework provides opportunities for the 
distribution of video programming other than through cable systems. 
Because OVS operators provide subscription services, OVS falls within 
the SBA small business size standard covering cable services, which is 
``Wired Telecommunications Carriers.'' The SBA has developed a small 
business size standard for this category, which is: All such firms 
having 1,500 or fewer employees. To gauge small business prevalence for 
such services we must, however, use current census data that are based 
on the previous category of Cable and Other Program Distribution and 
its associated size standard; that size standard was: All such firms 
having $13.5 million or less in annual receipts. According to Census 
Bureau data for 2002, there were a total of 1,191 firms in this 
previous 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. Thus, the 
majority of cable firms can be considered small. In addition, we note 
that the Commission has certified some OVS operators, with some now 
providing service. Broadband service providers (``BSPs'') are currently 
the only significant holders of OVS certifications or local OVS 
franchises. The Commission does not have financial or employment 
information regarding the entities authorized to provide OVS, some of 
which may not yet be operational. Thus, again, at least some of the OVS 
operators may qualify as small entities.
    59. Cable Television Relay Service. This service includes 
transmitters generally used to relay cable programming within cable 
television system distribution systems. This cable service is defined 
within the broad economic census category of Wired Telecommunications 
Carriers; that category is defined as follows: ``This industry 
comprises establishments primarily engaged in operating and/or 
providing access to transmission facilities and infrastructure that 
they own and/or lease for the transmission of voice, data, text, sound, 
and video using wired telecommunications networks. Transmission 
facilities may be based on a single technology or a combination of 
technologies.'' The SBA has developed a small business size standard 
for this category, which is: All such firms having 1,500 or fewer 
employees. To gauge small business prevalence for cable services we 
must, however, use current census data that are based on the previous 
category of Cable and Other Program Distribution and its associated 
size standard; that size standard was: All such firms having $13.5 
million or less in annual receipts. According to Census Bureau data for 
2002, there were a total of 1,191 firms in this previous 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

[[Page 26915]]

million. Thus, the majority of these firms can be considered small.
    60. Multichannel Video Distribution and Data Service. MVDDS is a 
terrestrial fixed microwave service operating in the 12.2-12.7 GHz 
band. The Commission adopted criteria for defining three groups of 
small businesses for purposes of determining their eligibility for 
special provisions such as bidding credits. It defined a very small 
business as an entity with average annual gross revenues not exceeding 
$3 million for the preceding three years; a small business as an entity 
with average annual gross revenues not exceeding $15 million for the 
preceding three years; and an entrepreneur as an entity with average 
annual gross revenues not exceeding $40 million for the preceding three 
years. These definitions were approved by the SBA. On January 27, 2004, 
the Commission completed an auction of 214 MVDDS licenses (Auction No. 
53). In this auction, ten winning bidders won a total of 192 MVDDS 
licenses. Eight of the ten winning bidders claimed small business 
status and won 144 of the licenses. The Commission also held an auction 
of MVDDS licenses on December 7, 2005 (Auction 63). Of the three 
winning bidders who won 22 licenses, two winning bidders, winning 21 of 
the licenses, claimed small business status.
    61. Internet Service Providers. The 2007 Economic Census places 
these firms, whose services might include voice over Internet protocol 
(VoIP), in either of two categories, depending on whether the service 
is provided over the provider's own telecommunications connections 
(e.g. cable and DSL, ISPs), or over client-supplied telecommunications 
connections (e.g. dial-up ISPs). The former are within the category of 
Wired Telecommunications Carriers, which has an SBA small business size 
standard of 1,500 or fewer employees. The latter are within the 
category of All Other Telecommunications, which has a size standard of 
annual receipts of $25 million