Procedures for Assessment and Collection of Regulatory Fees; Assessment and Collection of Regulatory Fees for Fiscal Year 2008, 49749-49773 [2012-20203]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 77, Number 160 (Friday, August 17, 2012)]
[Proposed Rules]
[Pages 49749-49773]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-20203]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[MD Docket No. 12-201; FCC 12-77]


Procedures for Assessment and Collection of Regulatory Fees; 
Assessment and Collection of Regulatory Fees for Fiscal Year 2008

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission seeks comment on proposals to reform the 
Commission's policies and procedures for assessing and collecting 
regulatory fees. Extensive changes have occurred in the communications 
marketplace, and in the Commission's regulatory efforts, since the 
Schedule of Regulatory Fees was enacted by Congress in 1994. In the 
period directly following enactment of the Telecommunications Act of 
1996, industry development and Commission regulation centered primarily 
on wireline local and long distance communications.

[[Page 49750]]

Subsequently, however, the mobile wireless industry has grown 
exponentially, shifting Commission resources to, among other things, 
the wireless industry, while the costs of implementing the 1996 
Telecommunications Act decreased. These changes have produced 
corresponding shifts in the Commission's regulatory activity. These 
shifts in the cost of the Commission's activities are not always 
reflected in our current regulatory fees. Although the Commission has 
made a number of discrete changes to the regulatory fee program since 
1994, we have not revised the data on which our fees are based since 
1998, nor have we undertaken a comprehensive analysis of all the 
substantive and procedural aspects of our regulatory fee program in 
light of the current state of the communications industry. This 
proceeding will serve as the means by which we will seek comment on the 
issues related to how the Commission should allocate its regulatory 
costs among different segments of the communications industry.

DATES: Comments are due September 17, 2012 and reply comments are due 
October 16, 2012.

ADDRESSES: You may submit comments, identified by MD Docket No. 12-201, 
by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web Site: https://www.fcc.gov/cgb/ecfs. Follow the instructions for submitting comments.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: FCC504@fcc.gov or phone: 202-418-
0530 or TTY: 202-418-0432.
     Email: ecfs@fcc.gov. Include MD Docket No. 12-201 in the 
subject line of the message.
     Mail: 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.

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: Roland Helvajian, Office of Managing 
Director at (202) 418-0444.

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

I. Procedural Matters

A. Ex Parte Information

    1. The proceeding this NPRM initiates shall be treated as a 
``permit-but-disclose'' proceeding in accordance with the Commission's 
ex parte rules.\1\ Persons making ex parte presentations must file a 
copy of any written presentation or a memorandum summarizing any oral 
presentation within two business days after the presentation (unless a 
different deadline applicable to the Sunshine period applies). Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentation must (1) list all persons attending or 
otherwise participating in the meeting at which the ex parte 
presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule 1.1206(b). In proceedings governed by 
rule 1.49(f) or for which the Commission has made available a method of 
electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.
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    \1\ 47 CFR 1.1200 et seq.
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B. Comment Filing Procedures

    2. Comments and Replies. Pursuant to sections 1.415 and 1.419 of 
the Commission's rules, 47 CFR 1.415, 1.419, interested parties may 
file comments and reply comments on or before the dates indicated on 
the first page of this document. Comments may be filed using: (1) The 
Commission's Electronic Comment Filing System (ECFS), (2) the Federal 
Government's eRulemaking Portal, or (3) by filing paper copies. See 
Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 
(1998).
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: https://fjallfoss.fcc.gov/ecfs2/ or the Federal eRulemaking Portal: https://www.regulations.gov.
     Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. If more than one 
docket or rulemaking number appears in the caption of this proceeding, 
filers must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail. All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission.
    [dec221] All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours 
are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together 
with rubber bands or fasteners. Any envelopes must be disposed of 
before entering the building.
    [dec221] 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.

[[Page 49751]]

    [dec221] U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street SW., Washington DC 20554.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to fcc504@fcc.gov or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
    3. Availability of Documents. Comments, reply comments, and ex 
parte submissions will be available for public inspection during 
regular business hours in the FCC Reference Center, Federal 
Communications Commission, 445 12th Street SW., CY-A257, Washington, DC 
20554. These documents will also be available free online, via ECFS. 
Documents will be available electronically in ASCII, Word, and/or Adobe 
Acrobat.
    4. Accessibility Information. To request information in accessible 
formats (computer diskettes, large print, audio recording, and 
Braille), send an email to fcc504@fcc.gov or call the Commission's 
Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), 
(202) 418-0432 (TTY). This document can also be downloaded in Word and 
Portable Document Format (``PDF'') at: https://www.fcc.gov.

C. Initial Paperwork Reduction Act of 1995 Analysis

    5. This document solicits possible proposed information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the possible proposed 
information collection requirements contained in this document, as 
required by the Paperwork Reduction Act of 1995, Public Law 104-13. In 
addition, pursuant to the Small Business Paperwork Relief Act of 2002, 
Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment 
on how we might further reduce the information collection burden for 
small business concerns with fewer than 25 employees.

D. Initial Regulatory Flexibility Analysis

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

II. Introduction

    7. Today we seek comment on proposals to reform the Commission's 
policies and procedures for assessing and collecting regulatory fees. 
Extensive changes have occurred in the communications marketplace, and 
in the Commission's regulatory efforts, since the Schedule of 
Regulatory Fees was enacted by Congress in 1994. In the period directly 
following enactment of the Telecommunications Act of 1996, industry 
development and Commission regulation centered primarily on wireline 
local and long distance communications. Subsequently, however, the 
mobile wireless industry has grown exponentially, shifting Commission 
resources to, among other things, the wireless industry, while the 
costs of implementing the 1996 Telecommunications Act decreased. 
Meanwhile, digital and Internet protocol (IP)-based technologies have 
enabled wired and wireless companies, satellite companies, 
broadcasters, and cable television companies to engage in increased 
intermodal competition.
    8. These changes have produced corresponding shifts in the 
Commission's regulatory activity. These shifts in the cost of the 
Commission's activities are not always reflected in our current 
regulatory fees. Although the Commission has made a number of discrete 
changes to the regulatory fee program since 1994, we have not revised 
the data on which our fees are based since 1998, nor have we undertaken 
a comprehensive analysis of all the substantive and procedural aspects 
of our regulatory fee program in light of the current state of the 
communications industry. This proceeding will serve as the means by 
which we will undertake that comprehensive analysis.\2\
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    \2\ A number of comments on revising the regulatory fee program 
were received in MD Docket No. 08-65. See Assessment and Collection 
of Regulatory Fees for Fiscal Year 2008, MD Docket No. 08-65, Report 
and Order and Further Notice of Proposed Rulemaking, 73 FR 50285 
(August 26, 2008) (``FY 2008 Further Notice of Proposed 
Rulemaking''). We will incorporate those comments into the record of 
this proceeding.
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    9. This Notice of Proposed Rulemaking (NPRM) seeks comment on the 
issues related to how the Commission should allocate its regulatory 
costs among different segments of the communications industry. In 
particular, we seek comment on:
     What the Overarching Goals of the Regulatory Fee Program 
Should Be. We propose three goals to guide our regulatory fee 
policymaking--fairness, administrability, and sustainability--and we 
seek comment on these goals and invite commenters to propose others.
     Regulatory Costs Should Be Allocated. Section 9 of the 
Communications Act requires that regulatory fees be derived by 
determining the number of full-time equivalent employees (FTEs) 
performing certain activities. We propose to change the way we allocate 
``direct'' and ``indirect'' FTEs to calculate regulatory fees. The 
proposals on which we seek comment are based on aggregated bureau-level 
FTE data, and would allocate all FTEs in the Wireless 
Telecommunications, Media, Wireline Competition, and International 
Bureaus as ``direct'' and all FTEs in the support bureaus and offices 
as ``indirect.''
     How Current Cost Allocation Percentages Should Be Revised. 
We then look at the cost allocation percentages that we use now and 
propose to update these percentages using current FTE data derived from 
the reallocation of FTEs described above. We set out the adjustments 
projected to result from these updates, examine the impact of these 
adjustments on the categories of fee payors, ask whether and how we 
should mitigate the impact of any substantial fee increases that would 
result, and ask whether any other changes are necessary to ensure an 
equitable result.

III. Background

A. Statutory Framework

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

[[Page 49752]]

in an amount equal to the entire amount appropriated.\5\
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    \3\ 47 U.S.C. 159(a)(1).
    \4\ Id. 159(a)(2), (b)(1)(B).
    \5\ See, e.g., Consolidated Appropriations Act, 2012, Public Law 
112-74 (Dec. 23, 2011) (appropriating $339,844,000 and providing 
``[t]hat $339,844,000 of offsetting collections shall be assessed 
and collected pursuant to section 9 of title I of the Communications 
Act of 1934, [and] shall be retained and used for necessary expenses 
in this appropriation''). In prior years (FY 2004 through FY 2008), 
Congress directed the Commission to offset all but $1 million of its 
appropriation. See Consolidated Appropriations Act, 2004, Public Law 
108-99, 118 Stat. 3 (2004), Consolidated Appropriations Act, 2005, 
Public Law 108-447, 118 Stat. 2809, 2908 (2004); Science, State, 
Justice, Commerce and Related Agencies Appropriation Act, 2006, 
Public Law 109-108, 199 Stat. 2290, 2329-30 (2005); Continuing 
Appropriations Resolution, 2007, Public Law 110-5, 121 Stat. 8 
(2007); and Consolidated Appropriations Act, 2008, Public Law 110-
161, 121 Stat. 1844, 1998 (2007). In the Omnibus Appropriations Act, 
2009, Public Law 111-8, 123 Stat. 524, 657 (2009) Congress required, 
for the first time that the Commission collect fees in the full 
amount of its appropriation.
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    11. Section 9(b) states in general terms how regulatory fees are to 
be derived. Section 9(b)(1)(A) states that fees are to be calculated by 
determining the full-time equivalent number of employees (FTEs) 
performing the activities enumerated in section 9(a)(1) ``within the 
three licensing bureaus as they existed at that time and that formed 
the core of our regulatory fee assessment program, i.e. the Private 
Radio Bureau, Mass Media Bureau, and Common Carrier Bureau.\6\ FTEs in 
the other offices of the Commission are also calculated, and the fees 
that result are adjusted to take into account factors that are 
reasonably related to the benefits provided to the payor of the fee by 
the Commission's activities, including such factors as service area 
coverage, shared use versus exclusive use, and other factors that the 
Commission determines are necessary in the public interest.'' \7\ The 
Commission issues a notice of proposed rulemaking (NPRM) in the third 
quarter of each fiscal year, stating how it derives the fees for that 
fiscal year and proposing the amounts that the payors in each fee 
category will be required to pay in order to offset the amount of the 
Commission's appropriation for that fiscal year.\8\ The Commission 
issues a report and order during the fourth quarter of each fiscal 
year.\9\ The report and order sets the amounts to be paid by all fee 
payors, discusses any issues raised in response to the NPRM and sets 
out the procedures for payment of fees.
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    \6\ Subsequent to the enactment of section 9 the Commission 
reorganized and renamed the Private Radio Bureau, Mass Media Bureau, 
and Common Carrier Bureaus as the Wireless Telecommunications 
Bureau, Media Bureau, and Wireline Competition Bureau respectively. 
Regulation of international telecommunications was transferred from 
these Bureaus and consolidated into a new International Bureau. For 
simplicity and ease of reference, in this NPRM we will refer to 
these four bureaus as the ``core'' bureaus or the ``core licensing'' 
bureaus.
    \7\ 47 U.S.C. 159(b)(1)(A).
    \8\ See, e.g., Assessment and Collection of Regulatory Fees for 
Fiscal Year 2011, Notice of Proposed Rulemaking, 26 FCC Rcd 7068 
(2011) (``FY 2011 Notice of Proposed Rulemaking'').
    \9\ See, e.g., Assessment and Collection of Regulatory Fees for 
Fiscal Year 2011, Report and Order, 26 FCC Rcd 10812 (2011) (``FY 
2011 Report and Order'').
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B. Historic Regulatory Approach

    12. Section 9(b)(1)(A) states that regulatory fees are to recover 
the costs of the FTEs performing the regulatory activities set forth in 
section 9(a)(1). Consistent with this statutory requirement, the 
Commission's cost assessment methodology uses FTEs as the starting 
point in determining the fees regulatees in each fee category will pay 
each fiscal year.
    13. Although the statute specifies that FTEs are the basis for 
calculating regulatory fees, it does not specify the precise type of 
FTE data that must be used; e.g., whether the Commission must use 
employees' time cards to tally the time each employee reports as having 
been spent on regulating specific licensees or regulatees, or whether 
the Commission may aggregate the work of FTEs in some other way. In FYs 
1997-1998, the Commission based its FTE calculations on employee time 
cards. This method involved employees' tracking time by regulatory fee 
category, and regulatory fees were then allocated based on a core 
bureaus' relative share of employee time, both direct (employees within 
a core bureau working on matters related to regulatory fee categories 
within that bureau) and indirect (employees from all bureaus and 
offices providing support functions related to multiple, perhaps even 
all, regulatory fee categories). The Commission abandoned this approach 
in FY 1999 because not only did time card entries prove subjective and 
unreliable, but they also resulted in unpredictable and substantial 
shifts in regulatory fees from year to year.
    14. The allocations of direct and indirect FTEs we currently use 
are taken from FTE data compiled in FY 1998. The Commission allocates 
FTEs according to the nature of the employees' work. If the work 
performed by an employee can be assigned to a regulatory fee category 
in one of the four core licensing bureaus--Wireless Telecommunications, 
Media, Wireline Competition, and International, -- that employee's time 
is counted as a direct FTE. If the work cannot be assigned to one of 
the bureau's designated fee categories, the employee's time is counted 
as an indirect FTE. Indirect FTEs are allocated proportionally across 
the four core bureaus. Therefore, under our current system, the total 
FTEs for each fee category includes the direct FTEs associated with 
that category, plus proportional allocations of indirect FTEs from 
inside and outside the bureau. The total number of FTEs for each of the 
bureau's fee categories was then divided by the combined FTE numbers 
for all four core bureaus to produce an allocation percentage for each 
fee category, e.g., the percentage of total regulatory fee revenues 
that must be recovered from each fee category in order to collect the 
total amount specified by Congress.\10\
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    \10\ The Schedule of Regulatory Fees enacted as section 9(g) in 
1994 contained the fees to be paid by different categories of 
regulates in the (then) three named bureaus. Section 9(g) specified 
that the Commission was to use this fee schedule until the 
Commission adjusted it pursuant to section 9(b). The Commission has 
made substantial adjustments to this fee schedule since 1994, adding 
fee categories and altering others. The 46 categories of fee payors 
listed in the original fee schedule had grown to 86 in 2011.
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    15. Although the Commission has used the same allocation 
percentages every fiscal year since FY 1998, each year the Commission 
reviews the projected number of fee payors in each service category. 
These payors are referred to generically as ``units,'' because the fees 
for payors in different service categories reflect characteristics 
appropriate to each service, such as the number of licenses or number 
of subscribers the fee payor has. We look for changes in the industry, 
changes in industry segments, and various other issues as explained in 
each year's regular regulatory fee NPRM. Finally, the fee rate for each 
fee category is determined by dividing the revenue amount to be 
collected from each fee category by its projected number of units.
    16. Table 1 illustrates the process using this methodology. Each 
fiscal year Congress reviews the Commission's budget submission and 
determines the appropriation for that year. The amount Congress 
appropriates becomes the target for the aggregate amount of regulatory 
fees to be collected. Table 1 uses a hypothetical appropriation of 
$100,000,000 as the target amount of regulatory fees to be collected. 
Column 1 represents the various fee categories in which a regulatee 
will pay a fee. Column 2 shows the allocation percentages that are 
applied. And Column 3 represents the multiplication of the target 
amount by each allocation percentage.
    17. The Commission first multiplies the $100,000,000 target amount 
by the

[[Page 49753]]

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

       TABLE 1--Hypothetical $100 Million Target Goal Allocations
------------------------------------------------------------------------
                                  Starting point FTE   Expected revenue
          Fee category                allocation         amount by fee
                                    percentage (%)         category
Column One                                Column Two        Column Three
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PLMRS (Exclusive Use)...........                 .14            $140,000
PLMRS (Shared use)..............                 .67             670,000
Microwave.......................                 .66             660,000
218-219 MHz (Formerly IVDS).....                .001               1,000
Marine (Ship)...................                 .22             220,000
GMRS............................                 .08              80,000
Aviation (Aircraft).............                 .10             100,000
Marine (Coast)..................                 .04              40,000
Aviation (Ground)...............                 .04              40,000
Amateur Vanity Call Signs.......                 .06              60,000
AM Class A......................                 .07              70,000
AM Class B......................                 .87             870,000
AM Class C......................                 .31             310,000
AM Class D......................                1.03           1,030,000
FM Classes A, B1 & C3...........                2.13           2,130,000
FM Classes B, C, C0, C1 & C2....                2.62           2,620,000
AM Construction Permits.........                 .01              10,000
FM Construction Permits.........                  .1             100,000
Satellite TV....................                 .05              50,000
Satellite TV Construction Permit                .001               1,000
VHF Markets 1-10................                 .95             950,000
VHF Markets 11-25...............                 .97             970,000
VHF Markets 26-50...............                 .82             820,000
VHF Markets 51-100..............                 .79             790,000
VHF Remaining Markets...........                 .35             350,000
VHF Construction Permits........                 .01              10,000
UHF Markets 1-10................                  .6             600,000
UHF Markets 11-25...............                 .49             490,000
UHF Markets 26-50...............                 .41             410,000
UHF Markets 51-100..............                 .35             350,000
UHF Remaining Markets...........                 .11             110,000
UHF Construction Permits........                 .07              70,000
Broadcast Auxiliaries...........                 .08              80,000
LPTV/Translators/Boosters/Class                  .40             400,000
 A TV...........................
CARS Stations...................                 .05              50,000
Cable TV Systems................               16.55          16,550,000
Interstate Telecommunication                   46.66          46,660,000
 Service Providers..............
CMRS Mobile Services (Cellular/                14.33          14,330,000
 Public Mobile).................
CMRS Messaging Services.........                 .32             320,000
BRS.............................                 .16             160,000
LMDS............................                 .03              30,000
Per 64 kbps Int'l Bearer                         .32             320,000
 Circuits, Terrestrial (Common)
 & Satellite (Common & Non-
 Common)........................
Submarine Cable Providers.......                2.28           2,280,000
Earth Stations..................                 .25             250,000
Space Stations (Geostationary)..                3.23           3,230,000
Space Stations (Non-                             .24             240,000
 Geostationary).................
------------------------------------------------------------------------
    ****** Total Estimated                    100.00         100,022,000
     Revenue To Be Collected....
------------------------------------------------------------------------

C. The Problems of the Current Approach

    18. As noted previously, the changes that have occurred since 1998 
in the communications industry have caused significant shifts in the 
amount of time the Commission devotes to specific industry segments and 
activities. Therefore, FY 1998 FTE data may no longer accurately 
reflect the allocation of Commission employees' time across different 
parts of the industry. However, simply substituting current FTE data 
for the 1998 FTE data would cause fees for some classes of fee payors 
to increase significantly, so we seek to examine how best to address in 
a fair and equitable manner any significant shifts. In addition, new 
technologies have caused an exponential increase in intermodal 
competition across formerly distinct industry platforms. This has made 
it even more common today than in 1998 that a Commission employee's 
work may be attributed to more than one fee category. For example, the 
cost

[[Page 49754]]

of an employee's work in designing incentive auctions might be 
attributable to several fee categories within the media sector, but it 
would also potentially benefit providers of mobile broadband services 
who would ultimately use the reclaimed spectrum. The practical 
difficulties we would encounter today in parsing out an employee's time 
among all of the industry groups affected by his or her work would 
produce unpredictable annual changes in regulatory fees. Proposals to 
address these and related problems are presented below.

IV. Issues Raised For Comment

A. Setting Goals To Guide Our Approach to Regulatory Fees

    19. First, we seek comment on setting goals for regulatory fee 
collection that will guide the reforms that result from this NPRM and 
adjustments that the Commission will need to make from time to time 
afterwards. We are of course guided first and foremost by Congress's 
direction in section 9. At the same time, Congress has left us 
flexibility in setting the fees to take into account a variety of 
factors, including ``factors that the Commission determines are 
necessary in the public interest.'' \11\ We propose three overarching 
goals for the regulatory fees program, and we invite parties to propose 
other goals for consideration.
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    \11\ 47 U.S.C. 159(b)(1)(A).
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    20. Fairness. Allocation of regulatory fee burdens among regulatees 
should be fair. All regulatees interact with and benefit from the work 
of the Commission, but not in equal measure. For example, a very large 
company with hundreds of licenses and authorizations is likely to 
engage much more frequently with the Commission than a local company or 
cooperative. Similarly, regulatees' ability to pay varies with their 
size and revenues--imposing the same fee on a Fortune 500 company and a 
local family business would have very different effects on those 
entities. And over time, as similar services are provided over 
different technologies, regulatees may be paying different fees while 
providing similar services, not because there is a meaningful 
difference in their relationship with the Commission but simply because 
their services fall into different fee categories (or fall outside our 
established categories altogether). We propose establishing fairness as 
a goal of our regulatory fee program, so that the burdens of regulatory 
fees are borne in an equitable manner that does not distort the 
marketplace. We seek comment on this goal.
    21. Administrability. Section 9 directs that fees be set by 
reference to the number of FTEs performing enforcement activities, 
policy and rulemaking activities, user information services, and 
international activities within the Wireless Telecommunications, Media, 
Wireline Competition, and International Bureaus. A fee system that 
strictly aligned FTEs with these activities and Bureaus on an ongoing 
basis would require a complex time and accounting system like the one 
the Commission tried in 1997 and 1998 and abandoned in 1999 due in part 
to the unpredictability and rapid shifts in fee rates that it created 
for fee payors. Keeping the fee schedule up to date could result in 
large shifts in fees from year to year, as the Commission's priorities 
and areas of focus change. For example, if in one year the Public 
Safety and Homeland Security Bureau handles rulemakings related to 
broadcasting, but in the following year focuses on wireless services, 
the resulting shift in FTE allocations could have a substantial impact 
on the size of regulatory fees, which could then shift significantly 
again the very next year. We believe that the regulatory fee system 
should be administrable, both for the Commission and for payors. We 
seek comment on this goal.
    22. Sustainability. The methodology for regulatory fees should be 
flexible enough to adapt to changes in technology and marketing that 
affect how our regulatees do business. In 2007, the Commission extended 
regulatory fee obligations to providers of interconnected voice over 
Internet protocol services (VoIP), noting ``the many and increasing 
resources the Commission now dedicates to VoIP'' and that 
``[i]nterconnected VoIP service is increasingly used to replace 
traditional telephone service and . . . the interconnected VoIP service 
industry continues to grow and to attract customers who previously 
relied on traditional voice service.'' \12\ The concern the Commission 
addressed in 2007 will continue to arise as service platforms and 
models change and converge. As video, voice, and data services are 
provided in new ways, our regulatory fee system must also evolve to 
ensure that the fee burden remains equitably distributed among 
regulatees. We seek comment on this goal.
---------------------------------------------------------------------------

    \12\ Assessment and Collection of Regulatory Fees for Fiscal 
Year 2007, Report and Order, 22 FCC Rcd 15712, 15717-18 paras. 12-13 
(2007).
---------------------------------------------------------------------------

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

B. Changing the Current Cost Allocation Methodology

    24. As explained more fully below, the cost allocation data we 
currently use were derived in FY 1998 by totaling employees' time cards 
entries to arrive at the aggregate number of FTEs engaged in each 
feeable activity. The first question that arises is whether the 
Commission should aggregate employee time card entries to derive its 
FTE allocations, or whether aggregating data on a less granular basis 
would be accurate and workable. For the reasons discussed below, we 
seek comment on whether we should simplify the way direct and indirect 
FTEs are aggregated and update the FTE data that we use. We invite 
interested parties to share their views with respect to the issues set 
forth below.
1. Reallocation of FTEs Among Bureaus
    25. Although not required by section 9, our current cost assignment 
methodology is based on the presumption that work of employees in the 
four core bureaus should be treated differently depending on whether an 
employee is ``directly'' involved in a feeable activity or 
``indirectly'' involved, as in a support capacity. The costs of FTEs 
directly working on projects corresponding to a regulatory fee category 
are directly assigned to that category. By contrast, the costs of all 
FTEs in the core bureaus indirectly involved, or providing support 
functions, are treated as indirect costs and are currently distributed 
proportionally across the four core bureau. The proportional allocation 
of indirect FTEs corresponds to each core bureau's actual percentage of 
direct FTEs. The indirect work performed by FTEs within a core bureau, 
therefore, may not be attributable to a specific fee category in their 
core bureau. Nevertheless, it is clear that the work of all the FTEs in 
a core bureau, whether direct or indirect, contributes to the cost of 
regulating licensees of that bureau. Therefore, we may reasonably 
expect that the work of the FTEs in the core bureaus would remain 
focused on the industry segment regulated by each of

[[Page 49755]]

those bureaus.\13\ We seek comment on whether we should change the way 
FTEs are allocated within a bureau, and we propose that all the FTEs in 
each of the core bureaus should be considered direct FTE costs for that 
bureau.
---------------------------------------------------------------------------

    \13\ The International Bureau may be an exception to this 
expectation as discussed in Paragraphs 26--28 below.
---------------------------------------------------------------------------

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

    \14\ For example, under this approach the work of attorneys and 
support staff in Litigation and Administrative Law Divisions of the 
Office of General Counsel would fluctuate, and the corresponding 
costs would have to be continually reassigned, depending on how much 
of their work is being devoted to media, wireless, wireline and 
other matters.
    \15\ For example, the Satellite Industry Association (SIA) 
states that certain divisions in the Enforcement Bureau may not be 
relevant to regulating satellite licensees. SIA reply comments at 8, 
FY 2008 Further Notice of Proposed Rulemaking, supra n. 1. While 
that may be true at a given point in time, at another time all 
members of that division may be engaged in an investigation 
involving satellite providers, or certain members engaged in 
investigations or other activity affecting satellite providers, 
either directly or indirectly.
---------------------------------------------------------------------------

    27. Just as section 9 contains no requirement that we classify FTEs 
as ``direct'' and ``indirect,'' it does not prescribe how the 
Commission should account for the FTE costs of its support bureaus and 
offices. Consistent with our finding in paragraph 19 above that the 
work of the employees in the core bureaus and offices is primarily 
focused on the industry segment regulated by each bureau and that the 
work--and the costs--of all the employees of those bureaus would 
correctly be considered direct FTE costs of their respective bureaus, 
we seek comment on whether, because the work of employees in the non-
core bureaus supports the work of all the core bureaus, the FTE costs 
of these non-core bureaus and offices should all be treated as indirect 
costs and allocated among each of the core bureaus in the same 
percentage as that bureau's direct FTE percentage is to the total 
direct FTE costs of all the core bureaus.
2. Updating and Adjusting the Allocation Percentages Among Bureaus
    28. We have previously sought comment on whether and how to update 
our current FTE allocation percentages to reflect changes in the 
industry and in the Commission's workload that have occurred since they 
were adopted.\16\ We will resolve this issue in this proceeding, and we 
will incorporate into the record of this proceeding relevant comments 
filed in prior proceedings.\17\
---------------------------------------------------------------------------

    \16\ FY 2008 Further Notice of Proposed Rulemaking, supra n. 1, 
at paras. 27-30. We also released a Public Notice on September 3, 
2008 providing information on FTEs, direct costs, and indirect 
costs. See ``Office of Managing Director Releases Data to Assist 
Commenters on Issues Presented in Further Notice of Proposed 
Rulemaking,'' Adopted August 1, 2008, MD Docket No. 08-65, Public 
Notice, DA 08-2033 (September 3, 2008).
    \17\ To assure that all previous comments are considered, 
parties that have previously commented on any of these issues are 
requested to attach or cite their prior comments in their filings in 
this proceeding.
---------------------------------------------------------------------------

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

    \18\ See, e.g., USTA Comments at 2; AT&T Comments at 3; FIT 
Reply Comments at 5; EWA Reply Comments at 1-2; Sprint Reply 
Comments at 2; NTCA Reply Comments at 2; MetroPCS Reply Comments at 
2; CTIA Reply Comments at 3; AT&T Reply Comments, FY 2008 Further 
Notice of Proposed Rulemaking, supra n. 1.
---------------------------------------------------------------------------

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

    \19\ FTEs are based on actual end of fiscal year 2011 figures, 
the most recent data that is currently available.
    \20\ These totals represent only the number of direct FTEs 
funded by regulatory fees. They do not include direct FTEs funded by 
other revenues, e.g., by auction or USF proceeds, nor do they 
include indirect FTEs.
---------------------------------------------------------------------------

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

[[Page 49756]]

and sustainability. In this regard we note that much of the work within 
the Strategic Analysis and Negotiations Division of the International 
Bureau covers services outside of the Bureau's direct regulatory 
activities. For example, this Division has primary responsibility for 
leading the Commission's international representation in bilateral 
meetings, multilateral meetings, and cross-border spectrum negotiations 
with Canada and Mexico on spectrum sharing arrangements, and 
notifications to the International Telecommunications Union (ITU), as 
well as participation in ITU Study Groups. Though focused on the 
international community, this international work covers the entire 
gamut of the Commission's regulatory responsibilities.
    33. If such work benefits all classes of providers, should the 
associated FTEs be excluded from the International Bureau's direct 
costs and, instead, be allocated as indirect costs like a support 
bureau? Is this situation unique to the International Bureau? The 
International Bureau has estimated that as much as one half of the FTEs 
in the Bureau work on matters covering services other than 
international services. Reallocation of 50% of the FTEs in the 
International Bureau proportionately to the other core bureaus would 
the result the following allocation: International Bureau, 61 FTEs, 
representing 10.97% of total FTEs in the four core bureaus; Media 
Bureau, 208.72 (37.54%); Wireline Competition Bureau, 175.64 (31.59%); 
and Wireless Telecommunications Bureau, 110.64 (19.9%).
    34. We ask commenters to address all the issues regarding how to 
ameliorate the effect of using updated FTE data on regulatees paying 
fees in the International Bureau's service categories. Would this 
reallocation be equitable?
    35. Are there analogous groups within the other core bureaus whose 
work covers services outside of the core bureau's direct regulatory 
activities? If so, how should those FTEs be allocated, or should 
adjustments be made to our proposed allocation of FTEs for those core 
bureaus to account for such broadly cross-cutting work in a core 
bureau? We also seek comment on whether further adjustments of the 
allocation of FTEs should be made. Should adjustments be made whenever, 
as discussed above, the work of one bureau supports the work of one or 
more other bureaus? Would this be a workable and sufficient way to 
allocate regulatory fees fairly between industry sectors consistent 
with section 9, or is there a more equitable way, consistent with 
statute, to allocate regulatory fees between and/or within industry 
sectors? For example, should regulatory fee categories in section 9 be 
combined or eliminated, given the change in the telecommunications 
landscape since 1998? Should additional regulatory fee categories such 
as broadband be added to the regulatory fee schedule set forth in 
section 9? We seek comment on whether the Commission has authority, 
under section 9, to include broadband as a fee category. If additional 
fee categories are created, how should their costs be assessed? To the 
extent that licensees offer services that are regulated by more than 
one core bureau, how would the addition of new fee categories affect 
the allocation of FTEs by core bureau?
    36. We note that section 9(b)(1)(A) allows the Commission to adjust 
regulatory fees ``to take into account factors that are reasonably 
related to the benefits provided the payor of the fee by the 
Commission's activities, including such factors as service area 
coverage, shared use versus exclusive use, and other factors that the 
Commission determines to be in the public interest.'' How should 
``benefits provided to the payor'' be determined? Should such benefit 
be measured by the level of regulation of such payor, or by some 
measure of the amount of regulatory activity attributable to a specific 
payor in a given year? Or should ``benefits provide the payor'' be 
found to include all benefits received as a result of the Commission's 
work, even benefit from efforts to reduce regulation of a particular 
industry sector? How does one measure such benefit? Is relative market 
share, or total revenues, a good measure of the benefit the payor 
receives from the work of the Commission to promote competition and 
remove barriers to market entry? If so, should all payors be assessed 
based on revenues? Is it technically feasible to assess all regulatory 
fee categories based on revenues? How could the Commission ensure such 
assessment is based on accurate, reliable revenue information from all 
industry sectors? What additional reporting requirements would be 
necessary to obtain the information necessary to assess all payors on a 
revenues basis?
    37. Are there other factors the Commission should consider in 
rebalancing regulatory fees in order to achieve the goals discussed 
above? For example, does section 9 allow the Commission to mitigate the 
effects of fee increases to a particular industry segment by providing 
interim adjustments, by phasing in the new fees over a period of time, 
or by providing relief in some other way? How would the Commission 
administer any recommended mitigation?
    38. Finally, how often should the Commission revisit the allocation 
resulting from this rulemaking? Should this reexamination be undertaken 
at regular intervals, or in response to comments by fee payors in the 
annual regulatory fee collection NPRM? If such reexamination is done at 
regular intervals, for example, annually, how can we ensure continued 
predictability and collectability of fees? Would it be appropriate to 
simply update the Commission's FTE allocation each year, without regard 
to the impact of significant increases of regulatory fees on certain 
regulatory fee categories? Would such fluctuations be especially 
problematic for small service providers who are likely least able to 
absorb unpredictable changes in fees from year to year?
3. Reallocation of FTEs Within Bureaus
    39. As noted previously, our current FTE allocations and the 
resulting allocation percentages were first used in FY 1999 and are 
based on FY 1998 FTE data. We request comment on updating and 
reallocating FTEs among the fee categories within each of the core 
bureaus. For example, within the International Bureau, there are five 
fee categories: Bearer Circuits, Submarine Cable Providers, Earth 
Stations, Space Stations (Geostationary), and Space Stations (Non-
Geostationary). Regulatory fees are currently allocated among these 
five fee categories as follows: Bearer Circuits (5.1%), Submarine Cable 
Providers (36.1%), Earth Stations (3.9%), Space Stations 
(Geostationary) (51.1%), and Space Stations (Non-Geostationary) (3.8%).
    40. Although one option would be to continue using these relative 
allocation percentages among the fee categories in each of the core 
bureaus, we seek comment on whether it would better serve the public 
interest for management in each of the core bureaus to revise their 
internal FTE allocation percentages based on management's assessment of 
the current distribution of work within the bureau. We also seek 
comment on whether they should do such analysis and update of the FTE 
allocation among fee categories within the bureau every three years 
unless a substantial shift in the nature or extent of a bureau's duties 
warrants reexamination in the interim. Commenters advocating 
alternatives or modifications to this proposed approach should describe 
in specific detail how the suggested alternative or modification would 
work and why it would be preferable to allocation based

[[Page 49757]]

on assessment of the current distribution of work within the bureau 
described herein.

V. Conclusion

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

                       Table 2--List of Commenters
------------------------------------------------------------------------
              Commenter                        Abbreviated name
------------------------------------------------------------------------
American Association of Paging        AAPC.
 Carriers.
AT&T, Inc...........................  AT&T.
DirecTV, Inc. and DISH Network LLC..  DirecTV and DISH.
Enterprise Wireless Alliance........  EWA.
Independent Telephone and             ITTA.
 Telecommunications Alliance.
National Cable and                    NCTA.
 Telecommunications Association.
Personal Radio Steering Group, Inc..  PRSG.
PCIA--The Wireless Infrastructure     PCIA.
 Association.
United States Telecom Association...  USTA.
Verizon Communications, Inc.........  Verizon.
------------------------------------------------------------------------


                   List of Commenters--Reply Comments
------------------------------------------------------------------------
              Commenter                        Abbreviated name
------------------------------------------------------------------------
American Cable Association..........  ACA.
AT&T, Inc...........................  AT&T.
CTIA--The Wireless                    CTIA.
 Association[supreg].
DirecTV, Inc. and DISH Network LLC..  DirecTV and DISH.
Enterprise Wireless Alliance........  EWA.
Forest Industries Telecommunications  FIT.
MetroPCS Communications, Inc........  MetroPCS.
National Telecommunications           NTCA.
 Cooperative Association.
Satellite Industry Association......  SIA.
Sprint Nextel Corporation...........  Sprint.
Verizon Communications, Inc.........  Verizon.
Wireless Cable Coalition............  WCC.
------------------------------------------------------------------------

Initial Regulatory Flexibility Analysis

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

    \21\ 5 U.S.C. 603. The RFA, 5 U.S.C. 601-612 has been amended by 
the Contract With America Advancement Act of 1996, Public Law 104-
121, 110 Stat. 847 (1996) (``CWAAA''). Title II of the CWAAA is the 
Small Business Regulatory Enforcement Fairness Act of 1996 
(``SBREFA'').
    \22\ 5 U.S.C. 603(a).
    \23\ Id.
---------------------------------------------------------------------------

I. Need for, and Objectives of, the NPRM

    43. In this NPRM we seek public comment on approaches to update and 
reform the process by which the Commission calculates and assesses 
regulatory fees under section 9 of the Communications Act. We propose 
to be guided in this examination by the goals of fairness, 
administrability, and sustainability, and we seek comment on these 
goals. We seek comment on four key areas regarding the regulatory fee 
process: (1) revising the way in which direct and indirect FTEs (full-
time [employee]equivalents) are allocated; (2) using the current number 
of FTEs as the basis for calculating regulatory fee allocation 
percentages; (3) ameliorating the impact of fee increases that would 
otherwise result from using current FTE percentages, especially on 
entities providing international communication services; and (4) asking 
whether and how the current number of regulatory fee categories can be 
changed, for example, by adding broadband and/or by reducing the number 
of fee categories.
    44. Section 9 of the Act states that the basis for calculating 
regulatory costs is the number of FTEs performing enforcement, policy 
and rulemaking, and international activities, as well as providing user 
information services. The Commission has historically regarded the 
costs generated by individuals working specifically on those activities 
as ``direct'' costs, whereas the cost of employees providing support 
efforts have been considered ``indirect'' costs. The NPRM first seeks 
comment on whether to revise this approach. In order to provide a more 
consistent and workable way to allocate FTEs, we propose that all the 
direct and indirect FTEs in each of the four core licensing bureaus--
The Wireless Telecommunications, Wireline Competition, Media, and 
International Bureaus--be allocated to the Bureau in which they work. 
Indirect FTEs outside the core bureaus would be allocated

[[Page 49758]]

among the four core licensing bureaus in the percentage of each core 
bureau's direct FTEs to the total FTEs in the Commission.
    45. Second, we seek comment on updating the current FTE allocation 
percentages to reflect the changes in the telecommunications industry 
and in the Commission's workload since the current percentages were 
developed in FY 1998. Using current FTE data to calculate regulatory 
fees instead of FY 1998 FTE data would produce substantial increases in 
the fees paid by International Bureau regulates and correspondingly 
substantial reduction in the fees currently paid by Interstate 
Telecommunications Service Providers (ITSPs, or wireline service 
providers), whereas fees paid by Wireless Bureau regulates would remain 
the same and Media Bureau regulatees would increase only slightly.
    46. Third, we seek comment on whether and how we should ameliorate 
the impact increased fees would have on International Bureau 
regulatees. We ask whether the fact that FTEs in the International 
Bureau devote half their time to working on matters that directly 
benefit licensees in the remaining three core licensing bureaus would 
make it equitable to reallocate and redistribute half of the fee 
increases to those other bureaus. We also ask if there are other 
bureaus in which such a reallocation would be equitable.
    47. Finally, we seek comment on whether the current number of fee 
categories in the Schedule of Regulatory fees should be expanded to 
include new services such as broadband, or reduced to reflect the state 
of the telecommunications market and to simplify the administration of 
the fee program. Because the statute directs the Commission to consider 
the benefits the payors receive from Commission regulation in setting 
regulatory fees, we seek comment on how better to measure the benefits 
on which licensees currently pay fees. For example, we seek comment on 
whether total revenues, or relative market share, would be good 
measures of the benefit payors receive from the work of the Commission 
to promote competition and remove barriers to market entry. Finally, we 
specifically seek comment on the Commission's statutory authority to 
implement any of these changes.

Background

II. Legal Basis

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

    \24\ 47 U.S.C. 154(i) and (j), 159, and 303(r).
---------------------------------------------------------------------------

III. Description and Estimate of the Number of Small Entities to Which 
the Rules Will Apply

    49. The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules and policies, if adopted.\25\ The RFA 
generally defines the term ``small entity'' as having the same meaning 
as the terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' \26\ In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under the Small Business Act.\27\ A ``small business concern'' is one 
which: (1) Is independently owned and operated; (2) is not dominant in 
its field of operation; and (3) satisfies any additional criteria 
established by the SBA.\28\
---------------------------------------------------------------------------

    \25\ 5 U.S.C. 603(b)(3).
    \26\ 5 U.S.C. 601(6).
    \27\ 5 U.S.C. 601(3) (incorporating by reference the definition 
of ``small-business concern'' in the Small Business Act, 15 U.S.C. 
632). Pursuant to 5 U.S.C. 601(3), the statutory definition of a 
small business applies ``unless an agency, after consultation with 
the Office of Advocacy of the Small Business Administration and 
after opportunity for public comment, establishes one or more 
definitions of such term which are appropriate to the activities of 
the agency and publishes such definition(s) in the Federal 
Register.''
    \28\ 15 U.S.C. 632.
---------------------------------------------------------------------------

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

    \29\ See SBA, Office of Advocacy, ``Frequently Asked 
Questions,'' https://web.sba.gov/faqs (accessed Jan. 2009).
---------------------------------------------------------------------------

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

    \30\ See 5 U.S.C. 601(3)-(6).
    \31\ See SBA, Office of Advocacy, ``Frequently Asked 
Questions,'' web.sba.gov/faqs (last visited May 6, 2011; figures are 
from 2009).
    \32\ 5 U.S.C. 601(4).
    \33\ Independent Sector, The New Nonprofit Almanac & Desk 
Reference (2010).
    \34\ 5 U.S.C. 601(5).
    \35\ U.S. Census Bureau, Statistical Abstract of the United 
States: 2011, Table 427 (2007)
    \36\ The 2007 U.S Census data for small governmental 
organizations indicate that there were 89,476 ``Local Governments'' 
in 2007. (U.S. CENSUS BUREAU, STATISTICAL ABSTRACT OF THE UNITED 
STATES 2011, Table 428.) The criterion by which the size of such 
local governments is determined to be small is a population of 
50,000. However, since the Census Bureau does not specifically apply 
that criterion, it cannot be determined with precision how many of 
such local governmental organizations is small. Nonetheless, the 
inference seems reasonable that a substantial number of these 
governmental organizations has a population of less than 50,000. To 
look at Table 428 in conjunction with a related set of data in Table 
429 in the Census's Statistical Abstract of the U.S., that inference 
is further supported by the fact that in both Tables, many entities 
that may well be small are included in the 89,476 local governmental 
organizations, e.g. county, municipal, township and town, school 
district and special district entities. Measured by a criterion of a 
population of 50,000 many specific sub-entities in this category 
seem more likely than larger county-level governmental organizations 
to have small populations. Accordingly, of the 89,746 small 
governmental organizations identified in the 2007 Census, the 
Commission estimates that a substantial majority is small.
---------------------------------------------------------------------------

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

[[Page 49759]]

1,500 employees.\39\ Consequently, the Commission estimates that most 
providers of local exchange service are small entities that may be 
affected by the rules and policies proposed in the NPRM. Thus under 
this category and the associated small business size standard, the 
majority of these incumbent local exchange service providers can be 
considered small providers.\40\
---------------------------------------------------------------------------

    \37\ 13 CFR 121.201, NAICS code 517110.
    \38\ See Trends in Telephone Service, Federal Communications 
Commission, Wireline Competition Bureau, Industry Analysis and 
Technology Division at Table 5.3 (Sept. 2010) (``Trends in Telephone 
Service'').
    \39\ See id.
    \40\ See https://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0700A1&-geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en.
---------------------------------------------------------------------------

    53. Competitive Local Exchange Carriers (Competitive LECs), 
Competitive Access Providers (CAPs), Shared-Tenant Service Providers, 
and Other Local Service Providers. Neither the Commission nor the SBA 
has developed a small business size standard specifically for these 
service providers. The appropriate size standard under SBA rules is for 
the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer 
employees.\41\ Census Bureau data for 2007 show that there were 3,188 
firms in this category that operated for the entire year. Of this 
total, 3,144 had employment of 999 or fewer, and 44 firms had had 
employment of 1,000 employees or more. Thus under this category and the 
associated small business size standard, the majority of these 
Competitive LECs, CAPs, Shared-Tenant Service Providers, and Other 
Local Service Providers can be considered small entities.\42\ According 
to Commission data, 1,442 carriers reported that they were engaged in 
the provision of either competitive local exchange services or 
competitive access provider services.\43\ Of these 1,442 carriers, an 
estimated 1,256 have 1,500 or fewer employees and 186 have more than 
1,500 employees.\44\ In addition, 17 carriers have reported that they 
are Shared-Tenant Service Providers, and all 17 are estimated to have 
1,500 or fewer employees.\45\ In addition, 72 carriers have reported 
that they are Other Local Service Providers.\46\ Of the 72, seventy 
have 1,500 or fewer employees and two have more than 1,500 
employees.\47\ Consequently, the Commission estimates that most 
providers of competitive local exchange service, competitive access 
providers, Shared-Tenant Service Providers, and Other Local Service 
Providers are small entities that may be affected by rules adopted 
pursuant to the NPRM.
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    \41\ 13 CFR 121.201, NAICS code 517110.
    \42\ See https://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0700A1&-geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en.
    \43\ See Trends in Telephone Service, at Table 5.3.
    \44\ Id.
    \45\ Id.
    \46\ Id.
    \47\ Id.
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    54. Local Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees.\48\ Census data for 2007 show that 1,523 firms provided 
resale services during that year. Of that number, 1,522 operated with 
fewer than 1,000 employees and one operated with more than 1,000.\49\ 
Thus under this category and the associated small business size 
standard, the majority of these local resellers can be considered small 
entities. According to Commission data, 213 carriers have reported that 
they are engaged in the provision of local resale services.\50\ Of 
these, an estimated 211 have 1,500 or fewer employees and two have more 
than 1,500 employees.\51\ Consequently, the Commission estimates that 
the majority of local resellers are small entities that may be affected 
by rules adopted pursuant to this NPRM.
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    \48\ 13 CFR 121.201, NAICS code 517911.
    \49\ https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=800&-ds_name=EC0751SSSZ5&-_lang=en.
    \50\ See Trends in Telephone Service, at Table 5.3.
    \51\ Id.
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    55. Toll Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees.\52\ Census data for 2007 show that 1,523 firms provided 
resale services during that year. Of that number, 1,522 operated with 
fewer than 1,000 employees and one operated with more than 1,000.\53\ 
Thus under this category and the associated small business size 
standard, the majority of these resellers can be considered small 
entities. According to Commission data,\54\ 881 carriers have reported 
that they are engaged in the provision of toll resale services. Of 
these, an estimated 857 have 1,500 or fewer employees and 24 have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of toll resellers are small entities that may be affected by 
our proposed rules.
---------------------------------------------------------------------------

    \52\ 13 CFR 121.201, NAICS code 517911.
    \53\ https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=800&-ds_name=EC0751SSSZ5&-_lang=en.
    \54\ Trends in Telephone Service, at Table 5.3.
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    56. Payphone Service Providers (PSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
payphone services providers. The appropriate size standard under SBA 
rules is for the category Wired Telecommunications Carriers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees.\55\ Census Bureau data for 2007 shows that there were 3,188 
firms in this category that operated for the entire year. Of this 
total, 3,144 had employment of 999 or fewer, and 44 firms had had 
employment of 1,000 employees or more. Thus under this category and the 
associated small business size standard, the majority of these PSPs can 
be considered small entities.\56\ According to Commission data,\57\ 657 
carriers have reported that they are engaged in the provision of 
payphone services. Of these, an estimated 653 have 1,500 or fewer 
employees and four have more than 1,500 employees. Consequently, the 
Commission estimates that the majority of payphone service providers 
are small entities that may be affected by our action.
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    \55\ 13 CFR 121.201, NAICS code 517110.
    \56\ See https://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0700A1&-geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en.
    \57\ Trends in Telephone Service, at table 5.3.
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    57. Interexchange Carriers. Neither the Commission nor the SBA has 
developed a small business size standard specifically for providers of 
interexchange services. The appropriate size standard under SBA rules 
is for the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer 
employees.\58\ Census Bureau data for 2007 shows that there were 3,188 
firms in this category that operated for the entire year. Of this 
total, 3,144 had employment of 999 or fewer, and 44 firms had had 
employment of 1,000 employees or more. Thus under this category and the 
associated small business size standard, the majority of these 
Interexchange carriers can be considered small entities.\59\ According 
to Commission data, 359 companies reported that their primary 
telecommunications service activity was the provision of interexchange 
services.\60\ Of these 359 companies, an estimated 317 have 1,500 or 
fewer employees and 42 have more than 1,500 employees.\61\ 
Consequently, the

[[Page 49760]]

Commission estimates that the majority of interexchange service 
providers are small entities that may be affected by rules adopted 
pursuant to the NPRM.
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    \58\ 13 CFR 121.201, NAICS code 517110.
    \59\ See https://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0700A1&-geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en.
    \60\ See Trends in Telephone Service, at Table 5.3.
    \61\ Id.
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    58. Operator Service Providers (OSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
operator service providers. The appropriate size standard under SBA 
rules is for the category Wired Telecommunications Carriers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees.\62\ Census Bureau data for 2007 show that there were 3,188 
firms in this category that operated for the entire year. Of this 
total, 3,144 had employment of 999 or fewer, and 44 firms had had 
employment of 1,000 employees or more. Thus under this category and the 
associated small business size standard, the majority of these 
Interexchange carriers can be considered small entities.\63\ According 
to Commission data, 33 carriers have reported that they are engaged in 
the provision of operator services. Of these, an estimated 31 have 
1,500 or fewer employees and 2 have more than 1,500 employees.\64\ 
Consequently, the Commission estimates that the majority of OSPs are 
small entities that may be affected by our proposed rules.
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    \62\ 13 CFR 121.201, NAICS code 517110.
    \63\ See https://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0700A1&-geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en.
    \64\ Trends in Telephone Service, at Table 5.3.
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    59. Prepaid Calling Card Providers. Neither the Commission nor the 
SBA has developed a small business size standard specifically for 
prepaid calling card providers. The appropriate size standard under SBA 
rules is for the category Telecommunications Resellers. Under that size 
standard, such a business is small if it has 1,500 or fewer 
employees.\65\ Census data for 2007 show that 1,523 firms provided 
resale services during that year. Of that number, 1,522 operated with 
fewer than 1,000 employees and one operated with more than 1,000.\66\ 
Thus under this category and the associated small business size 
standard, the majority of these prepaid calling card providers can be 
considered small entities. According to Commission data, 193 carriers 
have reported that they are engaged in the provision of prepaid calling 
cards.\67\ Of these, all 193 have 1,500 or fewer employees and none 
have more than 1,500 employees.\68\ Consequently, the Commission 
estimates that the majority of prepaid calling card providers are small 
entities that may be affected by rules adopted pursuant to this NPRM.
---------------------------------------------------------------------------

    \65\ 13 CFR 121.201, NAICS code 517911.
    \66\ https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=800&-ds_name=EC0751SSSZ5&-_lang=en.
    \67\ See Trends in Telephone Service, at Table 5.3.
    \68\ Id.
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    60. 800 and 800-Like Service Subscribers.\69\ Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for 800 and 800-like service (``toll free'') subscribers. 
The appropriate size standard under SBA rules is for the category 
Telecommunications Resellers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees.\70\ Census data for 2007 
show that 1,523 firms provided resale services during that year. Of 
that number, 1,522 operated with fewer than 1,000 employees and one 
operated with more than 1,000.\71\ Thus under this category and the 
associated small business size standard, the majority of resellers in 
this classification can be considered small entities. To focus 
specifically on the number of subscribers than on those firms which 
make subscription service available, the most reliable source of 
information regarding the number of these service subscribers appears 
to be data the Commission collects on the 800, 888, 877, and 866 
numbers in use.\72\ According to our data for September 2009, the 
number of 800 numbers assigned was 7,860,000; the number of 888 numbers 
assigned was 5,888,687; the number of 877 numbers assigned was 
4,721,866; and the number of 866 numbers assigned was 7,867,736. The 
Commission does not have data specifying the number of these 
subscribers that are not independently owned and operated or have more 
than 1,500 employees, and thus are unable at this time to estimate with 
greater precision the number of toll free subscribers that would 
qualify as small businesses under the SBA size standard. Consequently, 
the Commission estimates that there are 7,860.000 or fewer small entity 
800 subscribers; 5,888,687 or fewer small entity 888 subscribers; 
4,721,866 or fewer small entity 877 subscribers; and 7,867,736 or fewer 
small entity 866 subscribers.
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    \69\ We include all toll-free number subscribers in this 
category, including those for 888 numbers.
    \70\ 13 CFR 121.201, NAICS code 517911.
    \71\ https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=800&-ds_name=EC0751SSSZ5&-_lang=en.
    \72\ Trends in Telephone Service, at Tables 18.4, 18.5, 18.6, 
18.7.
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    61. Satellite Telecommunications Providers. Two economic census 
categories address the satellite industry. The first category has a 
small business size standard of $15 million or less in average annual 
receipts, under SBA rules.\73\ The second has a size standard of $25 
million or less in annual receipts.\74\
---------------------------------------------------------------------------

    \73\ 13 CFR 121.201, NAICS code 517410.
    \74\ 13 CFR 121.201, NAICS code 517919.
---------------------------------------------------------------------------

    62. The category of Satellite Telecommunications ``comprises 
establishments primarily engaged in providing telecommunications 
services to other establishments in the telecommunications and 
broadcasting industries by forwarding and receiving communications 
signals via a system of satellites or reselling satellite 
telecommunications.'' \75\ Census Bureau data for 2007 show that 512 
Satellite Telecommunications firms that operated for that entire 
year.\76\ Of this total, 464 firms had annual receipts of under $10 
million, and 18 firms had receipts of $10 million to $24,999,999.\77\ 
Consequently, the Commission estimates that the majority of Satellite 
Telecommunications firms are small entities that might be affected by 
our action.
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    \75\ U.S. Census Bureau, 2007 NAICS Definitions, 517410 
Satellite Telecommunications.
    \76\ See https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=900&-ds_name=EC0751SSSZ4&-_lang=en.
    \77\ See https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=900&-ds_name=EC0751SSSZ4&-_lang=en.
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    63. The second category, i.e. ``All Other Telecommunications'' 
comprises ``establishments primarily engaged in providing specialized 
telecommunications services, such as satellite tracking, communications 
telemetry, and radar station operation. This industry also includes 
establishments primarily engaged in providing satellite terminal 
stations and associated facilities connected with one or more 
terrestrial systems and capable of transmitting telecommunications to, 
and receiving telecommunications from, satellite systems. 
Establishments providing Internet services or voice over Internet 
protocol (VoIP) services via client-supplied telecommunications 
connections are also included in this industry.'' \78\ For this 
category, Census Bureau data for 2007 shows that there were a total of 
2,383 firms that operated for the entire year.\79\ Of this total, 2,347 
firms had annual receipts of under $25 million and 12 firms had annual 
receipts of $25 million to $49,999,999.\80\ Consequently, the 
Commission estimates that the majority

[[Page 49761]]

of All Other Telecommunications firms are small entities that might be 
affected by our action.
---------------------------------------------------------------------------

    \78\ https://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=517919&search=2007%20NAICS%20Search.
    \79\ https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=900&-ds_name=EC0751SSSZ4&-_lang=en.
    \80\ https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=900&-ds_name=EC0751SSSZ4&-_lang=en.
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    64. Wireless Telecommunications Carriers (except satellite). This 
industry comprises establishments engaged in operating and maintaining 
switching and transmission facilities to provide communications via the 
airwaves. Establishments in this industry have spectrum licenses and 
provide services using that spectrum, such as cellular phone services, 
paging services, wireless Internet access, and wireless video 
services.\81\ The appropriate size standard under SBA rules is for the 
category Wireless Telecommunications Carriers. The size standard for 
that category is that a business is small if it has 1,500 or fewer 
employees.\82\ Under the present and prior categories, the SBA has 
deemed a wireless business to be small if it has 1,500 or fewer 
employees.\83\ For this category, census data for 2007 show that there 
were 1,383 firms that operated for the entire year.\84\ Of this total, 
1,368 firms had employment of 999 or fewer employees and 15 had 
employment of 1,000 employees or more.\85\ Thus under this category and 
the associated small business size standard, the Commission estimates 
that the majority of wireless telecommunications carriers (except 
satellite) are small entities that may be affected by our proposed 
action.\86\
---------------------------------------------------------------------------

    \81\ https://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=517210&search=2007%20NAICS%20Search.
    \82\ 13 CFR 121.201, NAICS code 517210.
    \83\ 13 CFR 121.201, NAICS code 517210. The now-superseded, pre-
2007 CFR citations were 13 CFR 121.201, NAICS codes 517211 and 
517212 (referring to the 2002 NAICS).
    \84\ U.S. Census Bureau, Subject Series: Information, Table 5, 
``Establishment and Firm Size: Employment Size of Firms for the 
United States: 2007 NAICS Code 517210'' (issued Nov. 2010).
    \85\ Id. Available census data do not provide a more precise 
estimate of the number of firms that have employment of 1,500 or 
fewer employees; the largest category provided is for firms with 
``100 employees or more.''
    \86\ See https://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0700A1&-geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en.
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    65. Licenses Assigned by Auctions. Initially, we note that, as a 
general matter, the number of winning bidders that qualify as small 
businesses at the close of an auction does not necessarily represent 
the number of small businesses currently in service. Also, the 
Commission does not generally track subsequent business size unless, in 
the context of assignments or transfers, unjust enrichment issues are 
implicated.
    66. Paging Services. Neither the SBA nor the FCC has developed a 
definition applicable exclusively to paging services. However, a 
variety of paging services is now categorized under Wireless 
Telecommunications Carriers (except satellite).\87\This industry 
comprises establishments engaged in operating and maintaining switching 
and transmission facilities to provide communications via the airwaves. 
Establishments in this industry have spectrum licenses and provide 
services using that spectrum, such as cellular phone services, paging 
services, wireless Internet access, and wireless video services. 
Illustrative examples in the paging context include paging services, 
except satellite; two-way paging communications carriers, except 
satellite; and radio paging services communications carriers. The SBA 
has deemed a paging service in this category to be small if it has 
1,500 or fewer employees.\88\ For this category, census data for 2007 
show that there were 1,383 firms that operated for the entire year.\89\ 
Of this total, 1,368 firms had employment of 999 or fewer employees and 
15 had employment of 1,000 employees or more.\90\ Thus under this 
category and the associated small business size standard,, the 
Commission estimates that the majority of paging services in the 
category of wireless telecommunications carriers (except satellite) are 
small entities that may be affected by our proposed action.\91\
---------------------------------------------------------------------------

    \87\ U.S. Census Bureau, 2007 NAICS Definitions, ``517210 
Wireless Telecommunications Categories (Except Satellite)''; https://www.census.gov/naics/2007/def/ND517210.HTM#N517210.
    \88\ U.S. Census Bureau, 2007 NAICS Definitions, ``517210 
Wireless Telecommunications Categories (Except Satellite)''.
    \89\ U.S. Census Bureau, Subject Series: Information, Table 5, 
``Establishment and Firm Size: Employment Size of Firms for the 
United States: 2007 NAICS Code 517210'' (issued Nov. 2010).
    \90\ Id. Available census data do not provide a more precise 
estimate of the number of firms that have employment of 1,500 or 
fewer employees; the largest category provided is for firms with 
``100 employees or more.''
    \91\ See https://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0700A1&-geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en.
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    67. In addition, in the Paging Second Report and Order, the 
Commission adopted a size standard for ``small businesses'' for 
purposes of determining their eligibility for special provisions such 
as bidding credits.\92\ A small business is an entity that, together 
with its affiliates and controlling principals, has average gross 
revenues not exceeding $15 million for the preceding three years.\93\ 
The SBA has approved this definition.\94\ An initial auction of 
Metropolitan Economic Area (``MEA'') licenses was conducted in the year 
2000. Of the 2,499 licenses auctioned, 985 were sold.\95\ Fifty-seven 
companies claiming small business status won 440 licenses.\96\ A 
subsequent auction of MEA and Economic Area (``EA'') licenses was held 
in the year 2001. Of the 15,514 licenses auctioned, 5,323 were 
sold.\97\ One hundred thirty-two companies claiming small business 
status purchased 3,724 licenses. A third auction, consisting of 8,874 
licenses in each of 175 EAs and 1,328 licenses in all but three of the 
51 MEAs, was held in 2003. Seventy-seven bidders claiming small or very 
small business status won 2,093 licenses.\98\ A fourth auction of 9,603 
lower and upper band paging licenses was held in the year 2010. 29 
bidders claiming small or very small business status won 3,016 
licenses.
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    \92\ Revision of Part 22 and Part 90 of the Commission's Rules 
to Facilitate Future Development of Paging Systems, Second Report 
and Order, 12 FCC Rcd 2732, 2811-2812, paras. 178-181 (``Paging 
Second Report and Order''); see also Revision of Part 22 and Part 90 
of the Commission's Rules to Facilitate Future Development of Paging 
Systems, Memorandum Opinion and Order on Reconsideration, 14 FCC Rcd 
10030, 10085-10088, paras. 98-107 (1999).
    \93\ Paging Second Report and Order, 12 FCC Rcd at 2811, para. 
179.
    \94\ See Letter from Aida Alvarez, Administrator, SBA, to Amy 
Zoslov, Chief, Auctions and Industry Analysis Division, Wireless 
Telecommunications Bureau (``WTB''), FCC (Dec. 2, 1998) (``Alvarez 
Letter 1998'').
    \95\ See ``929 and 931 MHz Paging Auction Closes,'' Public 
Notice, 15 FCC Rcd 4858 (WTB 2000).
    \96\ See id.
    \97\ See ``Lower and Upper Paging Band Auction Closes,'' Public 
Notice, 16 FCC Rcd 21821 (WTB 2002).
    \98\ See ``Lower and Upper Paging Bands Auction Closes,'' Public 
Notice, 18 FCC Rcd 11154 (WTB 2003). The current number of small or 
very small business entities that hold wireless licenses may differ 
significantly from the number of such entities that won in spectrum 
auctions due to assignments and transfers of licenses in the 
secondary market over time. In addition, some of the same small 
business entities may have won licenses in more than one auction.
---------------------------------------------------------------------------

    68. 2.3 GHz Wireless Communications Services. This service can be 
used for fixed, mobile, radiolocation, and digital audio broadcasting 
satellite uses. The Commission defined ``small business'' for the 
wireless communications services (``WCS'') auction as an entity with 
average gross revenues of $40 million for each of the three preceding 
years, and a ``very small business'' as an entity with average gross 
revenues of $15 million for each of the three preceding years.\99\ The 
SBA approved these definitions.\100\ The Commission conducted an 
auction of geographic area licenses in the WCS service in 1997. In the 
auction, seven bidders that qualified as very small business entities 
won 31

[[Page 49762]]

licenses, and one bidder that qualified as a small business entity won 
a license.
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    \99\ Amendment of the Commission's Rules to Establish Part 27, 
the Wireless Communications Service (WCS), Report and Order, 12 FCC 
Rcd 10785, 10879, para. 194 (1997).
    \100\ See Alvarez Letter 1998.
---------------------------------------------------------------------------

    69. 1670-1675 MHz Services. This service can be used for fixed and 
mobile uses, except aeronautical mobile.\101\ An auction for one 
license in the 1670-1675 MHz band was conducted in 2003. The Commission 
defined a ``small business'' as an entity with attributable average 
annual gross revenues of not more than $40 million for the preceding 
three years, which would thus be eligible for a 15 percent discount on 
its winning bid for the 1670-1675 MHz band license. Further, the 
Commission defined a ``very small business'' as an entity with 
attributable average annual gross revenues of not more than $15 million 
for the preceding three years, which would thus be eligible to receive 
a 25 percent discount on its winning bid for the 1670-1675 MHz band 
license. The winning bidder was not a small entity.
---------------------------------------------------------------------------

    \101\ 47 CFR 2.106; see generally 47 CFR 27.1-.70.
---------------------------------------------------------------------------

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

    \102\ 13 CFR 121.201, NAICS code 517210.
    \103\ Id.
    \104\ U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 
NAICS code 517210 (rel. Oct. 20, 2009), https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&-ds_name=EC0751SSSZ5&-_lang=en.
    \105\ Trends in Telephone Service, at Table 5.3.
    \106\ Id.
    \107\ See Trends in Telephone Service, at Table 5.3.
    \108\ See id.
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    71. Broadband Personal Communications Service. Broadband Personal 
Communications Service. The broadband personal communications services 
(PCS) spectrum is divided into six frequency blocks designated A 
through F, and the Commission has held auctions for each block. The 
Commission initially defined a ``small business'' for C- and F-Block 
licenses as an entity that has average gross revenues of $40 million or 
less in the three previous years.\109\ For F-Block licenses, an 
additional small business size standard for ``very small business'' was 
added and is defined as an entity that, together with its affiliates, 
has average gross revenues of not more than $15 million for the 
preceding three years.\110\ These small business size standards, in the 
context of broadband PCS auctions, have been approved by the SBA.\111\ 
No small businesses within the SBA-approved small business size 
standards bid successfully for licenses in Blocks A and B. There were 
90 winning bidders that claimed small business status in the first two 
C-Block auctions. A total of 93 bidders that claimed small and very 
small business status won approximately 40 percent of the 1,479 
licenses in the first auction for the D, E, and F Blocks.\112\ On April 
15, 1999, the Commission completed the re-auction of 347 C-, D-, E-, 
and F-Block licenses in Auction No. 22.\113\ Of the 57 winning bidders 
in that auction, 48 claimed small business status and won 277 licenses.
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    \109\ See Amendment of Parts 20 and 24 of the Commission's 
Rules--Broadband PCS Competitive Bidding and the Commercial Mobile 
Radio Service Spectrum Cap; Amendment of the Commission's Cellular/
PCS Cross-Ownership Rule, WT Docket No. 96-59, GN Docket No. 90-314, 
Report and Order, 11 FCC Rcd 7824, 7850-52 paras. 57-60 (1996) 
(``PCS Report and Order''); see also 47 CFR 24.720(b).
    \110\ See PCS Report and Order, 11 FCC Rcd at 7852 para. 60.
    \111\ See Alvarez Letter 1998.
    \112\ See Broadband PCS, D, E and F Block Auction Closes, Public 
Notice, Doc. No. 89838 (released Jan. 14, 1997).
    \113\ See C, D, E, and F Block Broadband PCS Auction Closes, 
Public Notice, 14 FCC Rcd 6688 (WTB 1999). Before Auction No. 22, 
the Commission established a very small standard for the C Block to 
match the standard used for F Block. Amendment of the Commission's 
Rules Regarding Installment Payment Financing for Personal 
Communications Services (PCS) Licensees, WT Docket No. 97-82, Fourth 
Report and Order, 13 FCC Rcd 15743, 15768 para. 46 (1998).
---------------------------------------------------------------------------

    72. On January 26, 2001, the Commission completed the auction of 
422 C and F Block Broadband PCS licenses in Auction No. 35. Of the 35 
winning bidders in that auction, 29 claimed small business status.\114\ 
Subsequent events concerning Auction 35, including judicial and agency 
determinations, resulted in a total of 163 C and F Block licenses being 
available for grant. On February 15, 2005, the Commission completed an 
auction of 242 C-, D-, E-, and F-Block licenses in Auction No. 58. Of 
the 24 winning bidders in that auction, 16 claimed small business 
status and won 156 licenses.\115\ On May 21, 2007, the Commission 
completed an auction of 33 licenses in the A, C, and F Blocks in 
Auction No. 71.\116\ Of the 14 winning bidders in that auction, six 
claimed small business status and won 18 licenses.\117\ On August 20, 
2008, the Commission completed the auction of 20 C-, D-, E-, and F-
Block Broadband PCS licenses in Auction No. 78.\118\ Of the eight 
winning bidders for Broadband PCS licenses in that auction, six claimed 
small business status and won 14 licenses.\119\
---------------------------------------------------------------------------

    \114\ See C and F Block Broadband PCS Auction Closes; Winning 
Bidders Announced, Public Notice, 16 FCC Rcd 2339 (2001).
    \115\ See Broadband PCS Spectrum Auction Closes; Winning Bidders 
Announced for Auction No. 58, Public Notice, 20 FCC Rcd 3703 (2005).
    \116\ See Auction of Broadband PCS Spectrum Licenses Closes; 
Winning Bidders Announced for Auction No. 71, Public Notice, 22 FCC 
Rcd 9247 (2007).
    \117\ Id.
    \118\ See Auction of AWS-1 and Broadband PCS Licenses Closes; 
Winning Bidders Announced for Auction 78, Public Notice, 23 FCC Rcd 
12749 (WTB 2008).
    \119\ Id.
---------------------------------------------------------------------------

    73. Advanced Wireless Services. In 2006, the Commission conducted 
its first auction of Advanced Wireless Services licenses in the 1710-
1755 MHz and 2110-2155 MHz bands (``AWS-1''), designated as Auction 
66.\120\ For the AWS-1 bands, the Commission has defined a ``small 
business'' as an entity with average annual gross revenues for the 
preceding three years not exceeding $40 million, and a ``very small 
business'' as an entity with average annual gross revenues for the 
preceding three years not exceeding $15

[[Page 49763]]

million.\121\ In 2006, the Commission conducted its first auction of 
AWS-1 licenses.\122\ In that initial AWS-1 auction, 31 winning bidders 
identified themselves as very small businesses won 142 licenses.\123\ 
Twenty-six of the winning bidders identified themselves as small 
businesses and won 73 licenses.\124\ In a subsequent 2008 auction, the 
Commission offered 35 AWS-1 licenses.\125\ Four winning bidders 
identified themselves as very small businesses, and three of the 
winning bidders identifying themselves as a small businesses won five 
AWS-1 licenses.\126\
---------------------------------------------------------------------------

    \120\ See Auction of Advanced Wireless Services Licenses 
Scheduled for June 29, 2006; Notice and Filing Requirements, Minimum 
Opening Bids, Upfront Payments and Other Procedures for Auction No. 
66, AU Docket No. 06-30, Public Notice, 21 FCC Rcd 4562 (2006) 
(``Auction 66 Procedures Public Notice'');
    \121\ See Service Rules for Advanced Wireless Services in the 
1.7 GHz and 2.1 GHz Bands, Report and Order, 18 FCC Rcd 25,162, App. 
B (2003), modified by Service Rules for Advanced Wireless Services 
In the 1.7 GHz and 2.1 GHz Bands, Order on Reconsideration, 20 FCC 
Rcd 14,058, App. C (2005).
    \122\ See Auction of Advanced Wireless Services Licenses 
Scheduled for June 29, 2006; Notice and Filing Requirements, Minimum 
Opening Bids, Upfront Payments and Other Procedures for Auction No. 
66, AU Docket No. 06-30, Public Notice, 21 FCC Rcd 4562 (2006) 
(``Auction 66 Procedures Public Notice'').
    \123\ See Auction of Advanced Wireless Services Licenses Closes; 
Winning Bidders Announced for Auction No. 66, Public Notice, 21 FCC 
Rcd 10,521 (2006) (``Auction 66 Closing Public Notice'').
    \124\ See id.
    \125\ See AWS-1 and Broadband PCS Procedures Public Notice, 23 
FCC Rcd at 7499. Auction 78 also included an auction of broadband 
PCS licenses.
    \126\ See Auction of AWS-1 and Broadband PCS Licenses Closes, 
Winning Bidders Announced for Auction 78, Down Payments Due 
September 9, 2008, FCC Forms 601 and 602 Due September 9, 2008, 
Final Payments Due September 23, 2008, Ten-Day Petition to Deny 
Period, Public Notice, 23 FCC Rcd 12,749 (2008).
---------------------------------------------------------------------------

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

    \127\ Implementation of Section 309(j) of the Communications 
Act--Competitive Bidding Narrowband PCS, Third Memorandum Opinion 
and Order and Further Notice of Proposed Rulemaking, 10 FCC Rcd 175, 
196, para. 46 (1994).
    \128\ See ``Announcing the High Bidders in the Auction of Ten 
Nationwide Narrowband PCS Licenses, Winning Bids Total 
$617,006,674,'' Public Notice, PNWL 94-004 (released Aug. 2, 1994); 
``Announcing the High Bidders in the Auction of 30 Regional 
Narrowband PCS Licenses; Winning Bids Total $490,901,787,'' Public 
Notice, PNWL 94-27 (released Nov. 9, 1994).
    \129\ Amendment of the Commission's Rules to Establish New 
Personal Communications Services, Narrowband PCS, Second Report and 
Order and Second Further Notice of Proposed Rule Making, 15 FCC Rcd 
10456, 10476, para. 40 (2000) (``Narrowband PCS Second Report and 
Order'').
    \130\ Narrowband PCS Second Report and Order, 15 FCC Rcd at 
10476, para. 40.
    \131\ Id.
    \132\ See Alvarez Letter 1998.
    \133\ See ``Narrowband PCS Auction Closes,'' Public Notice, 16 
FCC Rcd 18663 (WTB 2001).
---------------------------------------------------------------------------

    75. Lower 700 MHz Band Licenses. The Commission previously adopted 
criteria for defining three groups of small businesses for purposes of 
determining their eligibility for special provisions such as bidding 
credits.\134\ The Commission defined a ``small business'' as an entity 
that, together with its affiliates and controlling principals, has 
average gross revenues not exceeding $40 million for the preceding 
three years.\135\ A ``very small business'' is defined as an entity 
that, together with its affiliates and controlling principals, has 
average gross revenues that are not more than $15 million for the 
preceding three years.\136\ Additionally, the Lower 700 MHz Service had 
a third category of small business status for Metropolitan/Rural 
Service Area (``MSA/RSA'') licenses--``entrepreneur''--which is defined 
as an entity that, together with its affiliates and controlling 
principals, has average gross revenues that are not more than $3 
million for the preceding three years.\137\ The SBA approved these 
small size standards.\138\ An auction of 740 licenses was conducted in 
2002 (one license in each of the 734 MSAs/RSAs and one license in each 
of the six Economic Area Groupings (EAGs)). Of the 740 licenses 
available for auction, 484 licenses were won by 102 winning bidders. 
Seventy-two of the winning bidders claimed small business, very small 
business, or entrepreneur status and won a total of 329 licenses.\139\ 
A second auction commenced on May 28, 2003, closed on June 13, 2003, 
and included 256 licenses.\140\ Seventeen winning bidders claimed small 
or very small business status and won 60 licenses, and nine winning 
bidders claimed entrepreneur status and won 154 licenses.\141\ In 2005, 
the Commission completed an auction of 5 licenses in the lower 700 MHz 
band (Auction 60). All three winning bidders claimed small business 
status.
---------------------------------------------------------------------------

    \134\ See Reallocation and Service Rules for the 698-746 MHz 
Spectrum Band (Television Channels 52-59), Report and Order, 17 FCC 
Rcd 1022 (2002) (``Channels 52-59 Report and Order'').
    \135\ See Channels 52-59 Report and Order, 17 FCC Rcd at 1087-
88, para. 172.
    \136\ See id.
    \137\ See id, 17 FCC Rcd at 1088, para. 173.
    \138\ See Letter from Aida Alvarez, Administrator, SBA, to 
Thomas Sugrue, Chief, WTB, FCC (Aug. 10, 1999) (``Alvarez Letter 
1999'').
    \139\ See ``Lower 700 MHz Band Auction Closes,'' Public Notice, 
17 FCC Rcd 17272 (WTB 2002).
    \140\ See Lower 700 MHz Band Auction Closes, Public Notice, 18 
FCC Rcd 11873 (WTB 2003).
    \141\ See id.
---------------------------------------------------------------------------

    76. In 2007, the Commission reexamined its rules governing the 700 
MHz band in the 700 MHz Second Report and Order.\142\ An auction of A, 
B and E block licenses in the Lower 700 MHz band was held in 2008.\143\ 
Twenty winning bidders claimed small business status (those with 
attributable average annual gross revenues that exceed $15 million and 
do not exceed $40 million for the preceding three years). Thirty three 
winning bidders claimed very small business status (those with 
attributable average annual gross revenues that do not exceed $15 
million for the preceding three years). In 2011, the Commission 
conducted Auction 92, which offered 16 lower 700 MHz band licenses that 
had been made available in Auction 73 but either remained unsold or 
were licenses on which a winning bidder defaulted. Two of the seven

[[Page 49764]]

winning bidders in Auction 92 claimed very small business status, 
winning a total of four licenses.
---------------------------------------------------------------------------

    \142\ Service Rules for the 698-746, 747-762 and 777-792 MHz 
Band, WT Docket No. 06-150, Revision of the Commission's Rules to 
Ensure Compatibility with Enhanced 911 Emergency Calling Systems, CC 
Docket No. 94-102, Section 68.4(a) of the Commission's Rules 
Governing Hearing Aid-Compatible Telephone, WT Docket No. 01-309, 
Biennial Regulatory Review--Amendment of Parts 1, 22, 24, 27, and 90 
to Streamline and Harmonize Various Rules Affecting Wireless Radio 
Services, WT Docket No. 03-264, Former Nextel Communications, Inc. 
Upper700 MHz Guard Band Licenses and Revisions to Part 27 of the 
Commission's Rules, WT Docket No. 06-169, Implementing a Nationwide, 
Broadband Interoperable Public Safety Network in the 700 MHz Band, 
PS Docket No. 06-229, Development of Operational, Technical and 
Spectrum Requirements for Meeting Federal, State, and Local Public 
Safety Communications Requirements Through the Year 2010, WT Docket 
No. 96-86, Second Report and Order, 22 FCC Rcd 15289 (2007) (``700 
MHz Second Report and Order'').
    \143\ See Auction of 700 MHz Band Licenses Closes, Public 
Notice, 23 FCC Rcd 4572 (WTB 2008).
---------------------------------------------------------------------------

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

    \144\ 700 MHz Second Report and Order, 22 FCC Rcd 15289.
    \145\ See Auction of 700 MHz Band Licenses Closes, Public 
Notice, 23 FCC Rcd 4572 (WTB 2008).
---------------------------------------------------------------------------

    78. 700 MHz Guard Band Licenses. In 2000, the Commission adopted 
the 700 MHz Guard Band Report and Order, in which it established rules 
for the A and B block licenses in the Upper 700 MHz band, including 
size standards for ``small businesses'' and ``very small businesses'' 
for purposes of determining their eligibility for special provisions 
such as bidding credits.\146\ A small business in this service is an 
entity that, together with its affiliates and controlling principals, 
has average gross revenues not exceeding $40 million for the preceding 
three years.\147\ Additionally, a very small business is an entity 
that, together with its affiliates and controlling principals, has 
average gross revenues that are not more than $15 million for the 
preceding three years.\148\ SBA approval of these definitions is not 
required.\149\ An auction of these licenses was conducted in 2000.\150\ 
Of the 104 licenses auctioned, 96 licenses were won by nine bidders. 
Five of these bidders were small businesses that won a total of 26 
licenses. A second auction of 700 MHz Guard Band licenses was held in 
2001. All eight of the licenses auctioned were sold to three bidders. 
One of these bidders was a small business that won a total of two 
licenses.\151\
---------------------------------------------------------------------------

    \146\ See Service Rules for the 746-764 MHz Bands, and Revisions 
to Part 27 of the Commission's Rules, Second Report and Order, 15 
FCC Rcd 5299 (2000) (``700 MHz Guard Band Report and Order'').
    \147\ See 700 MHz Guard Band Report and Order, 15 FCC Rcd at 
5343, para. 108.
    \148\ See id.
    \149\ See id., 15 FCC Rcd 5299, 5343, para. 108 n.246 (for the 
746-764 MHz and 776-794 MHz bands, the Commission is exempt from 15 
U.S.C. 632, which requires Federal agencies to obtain SBA approval 
before adopting small business size standards).
    \150\ See ``700 MHz Guard Bands Auction Closes: Winning Bidders 
Announced,'' Public Notice, 15 FCC Rcd 18026 (2000).
    \151\ See ``700 MHz Guard Bands Auction Closes: Winning Bidders 
Announced,'' Public Notice, 16 FCC Rcd 4590 (WTB 2001).
---------------------------------------------------------------------------

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

    \152\ 47 CFR 90.810, 90.814(b), 90.912.
    \153\ 47 CFR 90.810, 90.814(b), 90.912.
    \154\ See Alvarez Letter 1999.
    \155\ See 900 MHz Specialized Mobile Radio Service Spectrum 
Auction Closes: Winning Bidders Announced,'' Public Notice, 19 FCC 
Rcd. 3921 (WTB 2004).
    \156\ See ``Correction to Public Notice DA 96-586 `FCC Announces 
Winning Bidders in the Auction of 1020 Licenses to Provide 900 MHz 
SMR in Major Trading Areas,''' Public Notice, 18 FCC Rcd 18367 (WTB 
1996).
    \157\ See ``Multi-Radio Service Auction Closes,'' Public Notice, 
17 FCC Rcd 1446 (WTB 2002).
---------------------------------------------------------------------------

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

    \158\ See ``800 MHz Specialized Mobile Radio (SMR) Service 
General Category (851-854 MHz) and Upper Band (861-865 MHz) Auction 
Closes; Winning Bidders Announced,'' Public Notice, 15 FCC Rcd 17162 
(2000).
    \159\ See, ``800 MHz SMR Service Lower 80 Channels Auction 
Closes; Winning Bidders Announced,'' Public Notice, 16 FCC Rcd 1736 
(2000).
---------------------------------------------------------------------------

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

    \160\ See generally 13 CFR 121.201, NAICS code 517210.
---------------------------------------------------------------------------

    82. 220 MHz Radio Service--Phase I Licensees. The 220 MHz service 
has both Phase I and Phase II licenses. Phase I licensing was conducted 
by lotteries in 1992 and 1993. There are approximately 1,515 such non-
nationwide licensees and four nationwide licensees currently authorized 
to operate in the 220 MHz band. The Commission has not developed a 
small business size standard for small entities specifically applicable 
to such incumbent 220 MHz Phase I licensees. To estimate the number of 
such licensees that are small businesses, the Commission applies the 
small business size standard under the SBA rules applicable. The SBA 
has deemed a wireless business to be small if it has 1,500 or fewer 
employees.\161\ For this service, the SBA uses the category of Wireless 
Telecommunications Carriers (except Satellite). Census data for 2007, 
which supersede data contained in the 2002

[[Page 49765]]

Census, show that there were 1,383 firms that operated that year.\162\ 
Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had 
more than 100 employees. Thus under this category and the associated 
small business size standard, the majority of firms can be considered 
small.
---------------------------------------------------------------------------

    \161\ 13 CFR 121.201, NAICS code 517210 (2007 NAICS). The now-
superseded, pre-2007 C.F.R. citations were 13 CFR 121.201, NAICS 
codes 517211 and 517212 (referring to the 2002 NAICS).
    \162\ U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 
NAICS code 517210 (rel. Oct. 20, 2009), https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&-ds_name=EC0751SSSZ5&-_lang=en.
---------------------------------------------------------------------------

    83. 220 MHz Radio Service--Phase II Licensees. The 220 MHz service 
has both Phase I and Phase II licenses. The Phase II 220 MHz service 
licenses are assigned by auction, where mutually exclusive applications 
are accepted. In the 220 MHz Third Report and Order, the Commission 
adopted a small business size standard for defining ``small'' and 
``very small'' businesses for purposes of determining their eligibility 
for special provisions such as bidding credits.\163\ This small 
business standard indicates that a ``small business'' is an entity 
that, together with its affiliates and controlling principals, has 
average gross revenues not exceeding $15 million for the preceding 
three years.\164\ A ``very small business'' is defined as an entity 
that, together with its affiliates and controlling principals, has 
average gross revenues that do not exceed $3 million for the preceding 
three years.\165\ The SBA has approved these small size standards.\166\ 
Auctions of Phase II licenses commenced on and closed in 1998.\167\ In 
the first auction, 908 licenses were auctioned in three different-sized 
geographic areas: three nationwide licenses, 30 Regional Economic Area 
Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908 
licenses auctioned, 693 were sold.\168\ Thirty-nine small businesses 
won 373 licenses in the first 220 MHz auction. A second auction 
included 225 licenses: 216 EA licenses and 9 EAG licenses. Fourteen 
companies claiming small business status won 158 licenses.\169\ A third 
auction included four licenses: 2 BEA licenses and 2 EAG licenses in 
the 220 MHz Service. No small or very small business won any of these 
licenses.\170\ In 2007, the Commission conducted a fourth auction of 
the 220 MHz licenses, designated as Auction 72.\171\ Auction 72, which 
offered 94 Phase II 220 MHz Service licenses, concluded in 2007.\172\ 
In this auction, five winning bidders won a total of 76 licenses. Two 
winning bidders identified themselves as very small businesses won 56 
of the 76 licenses. One of the winning bidders that identified 
themselves as a small business won 5 of the 76 licenses won.
---------------------------------------------------------------------------

    \163\ Amendment of Part 90 of the Commission's Rules to Provide 
For the Use of the 220-222 MHz Band by the Private Land Mobile Radio 
Service, Third Report and Order, 12 FCC Rcd 10943, 11068-70 paras. 
291-295 (1997).
    \164\ Id. at 11068 para. 291.
    \165\ Id.
    \166\ See Letter to Daniel Phythyon, Chief, Wireless 
Telecommunications Bureau, Federal Communications Commission, from 
Aida Alvarez, Administrator, Small Business Administration, dated 
January 6, 1998 (Alvarez to Phythyon Letter 1998).
    \167\ See generally 220 MHz Service Auction Closes, Public 
Notice, 14 FCC Rcd 605 (WTB 1998).
    \168\ See FCC Announces It is Prepared to Grant 654 Phase II 220 
MHz Licenses After Final Payment is Made, Public Notice, 14 FCC Rcd 
1085 (WTB 1999).
    \169\ See Phase II 220 MHz Service Spectrum Auction Closes, 
Public Notice, 14 FCC Rcd 11218 (WTB 1999).
    \170\ See Multi-Radio Service Auction Closes, Public Notice, 17 
FCC Rcd 1446 (WTB 2002).
    \171\ See ``Auction of Phase II 220 MHz Service Spectrum 
Scheduled for June 20, 2007, Notice and Filing Requirements, Minimum 
Opening Bids, Upfront Payments and Other Procedures for Auction 72, 
Public Notice, 22 FCC Rcd 3404 (2007).
    \172\ See Auction of Phase II 220 MHz Service Spectrum Licenses 
Closes, Winning Bidders Announced for Auction 72, Down Payments due 
July 18, 2007, FCC Forms 601 and 602 due July 18, 2007, Final 
Payments due August 1, 2007, Ten-Day Petition to Deny Period, Public 
Notice, 22 FCC Rcd 11573 (2007).
---------------------------------------------------------------------------

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

    \173\ See 13 CFR 121.201, NAICS code 517210.
    \174\ See generally 13 CFR 121.201.
---------------------------------------------------------------------------

    85. As of March 2010, there were 424,162 PLMR licensees operating 
921,909 transmitters in the PLMR bands below 512 MHz. We note that any 
entity engaged in a commercial activity is eligible to hold a PLMR 
license, and that any revised rules in this context could therefore 
potentially impact small entities covering a great variety of 
industries.
    86. Fixed Microwave Services. Microwave services include common 
carrier,\175\ private-operational fixed,\176\ and broadcast auxiliary 
radio services.\177\ They also include the Local Multipoint 
Distribution Service (``LMDS''),\178\ the Digital Electronic Message 
Service (``DEMS''),\179\ and the 24 GHz Service,\180\ where licensees 
can choose between common carrier and non-common carrier status.\181\ 
The Commission has not yet defined a small business with respect to 
microwave services. For purposes of this IRFA, the Commission will use 
the SBA's definition applicable to Wireless Telecommunications Carriers 
(except satellite)--i.e., an entity with no more than 1,500 persons is 
considered small.\182\ For the category of Wireless Telecommunications 
Carriers (except Satellite), Census data for 2007 shows that there were 
1,383 firms that operated that year.\183\ Of those 1,383, 1,368 had 
fewer than 100 employees, and 15 firms had more than 100 employees. 
Thus under this category and the associated small business size 
standard, the majority of firms can be considered small. The Commission 
notes that the number of firms does not necessarily track the number of 
licensees. The Commission estimates that virtually all of the Fixed 
Microwave licensees (excluding broadcast auxiliary licensees) would 
qualify as small entities under the SBA definition.
---------------------------------------------------------------------------

    \175\ See 47 CFR Part 101, subparts C and I.
    \176\ See id. subparts C and H.
    \177\ Auxiliary Microwave Service is governed by part 74 of 
Title 47 of the Commission's rules. See 47 CFR part 74. Available to 
licensees of broadcast stations and to broadcast and cable network 
entities, broadcast auxiliary microwave stations are used for 
relaying broadcast television signals from the studio to the 
transmitter, or between two points such as a main studio and an 
auxiliary studio. The service also includes mobile TV pickups, which 
relay signals from a remote location back to the studio.
    \178\ See 47 CFR part 101, subpart L.
    \179\ See id. subpart G.
    \180\ See id.
    \181\ See 47 CFR 101.533, 101.1017.
    \182\ 13 CFR 121.201, NAICS code 517210.
    \183\ U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 
NAICS code 517210 (rel. Oct. 20, 2009), https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&-ds_name=EC0751SSSZ5&-_lang=en.
---------------------------------------------------------------------------

    87. 39 GHz Service. The Commission adopted small business size 
standards for 39 GHz licenses. A ``small business''

[[Page 49766]]

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

    \184\ See Amendment of the Commission's Rules Regarding the 
37.0-38.6 GHz and 38.6-40.0 GHz Bands, ET Docket No. 95-183, Report 
and Order, 12 FCC Rcd 18600 (1997).
    \185\ Id.
    \186\ See Letter from Aida Alvarez, Administrator, SBA, to 
Kathleen O'Brien Ham, Chief, Auctions and Industry Analysis 
Division, WTB, FCC (Feb. 4, 1998); see Letter from Hector Barreto, 
Administrator, SBA, to Margaret Wiener, Chief, Auctions and Industry 
Analysis Division, WTB, FCC (Jan. 18, 2002).
---------------------------------------------------------------------------

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

    \187\ See Rulemaking to Amend Parts 1, 2, 21, 25, of the 
Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band, 
Reallocate the 29.5-30.5 Frequency Band, to Establish Rules and 
Policies for Local Multipoint Distribution Service and for Fixed 
Satellite Services, CC Docket No. 92-297, Second Report and Order, 
Order on Reconsideration, and Fifth Notice of Proposed Rule Making, 
12 FCC Rcd 12545, 12689-90, para. 348 (1997) (``LMDS Second Report 
and Order'').
    \188\ See LMDS Second Report and Order, 12 FCC Rcd at 12689-90, 
para. 348.
    \189\ See id.
    \190\ See Alvarez to Phythyon Letter 1998.
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    89. 218-219 MHz Service. The first auction of 218-219 MHz Service 
(previously referred to as the Interactive and Video Data Service or 
IVDS) licenses resulted in 170 entities winning licenses for 594 
Metropolitan Statistical Areas (``MSAs'').\191\ Of the 594 licenses, 
557 were won by 167 entities qualifying as a small business. For that 
auction, the Commission defined a small business as an entity that, 
together with its affiliates, has no more than a $6 million net worth 
and, after federal income taxes (excluding any carry over losses), has 
no more than $2 million in annual profits each year for the previous 
two years.\192\ In the 218-219 MHz Report and Order and Memorandum 
Opinion and Order, the Commission revised its small business size 
standards for the 218-219 MHz Service and defined a small business as 
an entity that, together with its affiliates and persons or entities 
that hold interests in such an entity and their affiliates, has average 
annual gross revenues not exceeding $15 million for the preceding three 
years.\193\ The Commission defined a ``very small business'' as an 
entity that, together with its affiliates and persons or entities that 
hold interests in such an entity and its affiliates, has average annual 
gross revenues not exceeding $3 million for the preceding three 
years.\194\ The SBA has approved these definitions.\195\
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    \191\ See ``Interactive Video and Data Service (IVDS) 
Applications Accepted for Filing,'' Public Notice, 9 FCC Rcd 6227 
(1994).
    \192\ Implementation of Section 309(j) of the Communications 
Act--Competitive Bidding, Fourth Report and Order, 9 FCC Rcd 2330 
(1994).
    \193\ Amendment of Part 95 of the Commission's Rules to Provide 
Regulatory Flexibility in the 218-219 MHz Service, Report and Order 
and Memorandum Opinion and Order, 15 FCC Rcd 1497 (1999).
    \194\ Id.
    \195\ See Alvarez to Phythyon Letter 1998.
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    90. Location and Monitoring Service (``LMS''). Multilateration LMS 
systems use non-voice radio techniques to determine the location and 
status of mobile radio units. For auctions of LMS licenses, the 
Commission has defined a ``small business'' as an entity that, together 
with controlling interests and affiliates, has average annual gross 
revenues for the preceding three years not exceeding $15 million.\196\ 
A ``very small business'' is defined as an entity that, together with 
controlling interests and affiliates, has average annual gross revenues 
for the preceding three years not exceeding $3 million.\197\ These 
definitions have been approved by the SBA.\198\ An auction of LMS 
licenses was conducted in 1999. Of the 528 licenses auctioned, 289 
licenses were sold to four small businesses.
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    \196\ Amendment of Part 90 of the Commission's Rules to Adopt 
Regulations for Automatic Vehicle Monitoring Systems, Second Report 
and Order, 13 FCC Rcd 15182, 15192, para. 20 (1998) (``Automatic 
Vehicle Monitoring Systems Second Report and Order''); see also 47 
CFR 90.1103.
    \197\ Automatic Vehicle Monitoring Systems Second Report and 
Order, 13 FCC Rcd at 15192, para. 20; see also 47 CFR 90.1103.
    \198\ See Alvarez Letter 1998.
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    91. Rural Radiotelephone Service. The Commission has not adopted a 
size standard for small businesses specific to the Rural Radiotelephone 
Service.\199\ A significant subset of the Rural Radiotelephone Service 
is the Basic Exchange Telephone Radio System (``BETRS'').\200\ For 
purposes of its analysis of the Rural Radiotelephone Service, the 
Commission uses the SBA small business size standard for the category 
Wireless Telecommunications Carriers (except satellite),'' which is 
1,500 or fewer employees.\201\ Census data for 2007 shows that there 
were 1,383 firms that operated that year.\202\ Of those 1,383, 1,368 
had fewer than 100 employees, and 15 firms had more than 100 employees. 
Thus under this category and the associated small business size 
standard, the majority of firms in the Rural Radiotelephone Service can 
be considered small.
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    \199\ The service is defined in section 22.99 of the 
Commission's rules, 47 CFR 22.99.
    \200\ BETRS is defined in sections 22.757 and 22.759 of the 
Commission's rules, 47 CFR 22.757 and 22.759.
    \201\ 13 CFR 121.201, NAICS code 517210.
    \202\ U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 
NAICS code 517210 (rel. Oct. 20, 2009), https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&-ds_name=EC0751SSSZ5&-_lang=en.
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    92. Air-Ground Radiotelephone Service.\203\ The Commission has 
previously used the SBA's small business definition applicable to 
Wireless Telecommunications Carriers (except Satellite), i.e., an 
entity employing no more than 1,500 persons.\204\ There are 
approximately 100 licensees in the Air-Ground Radiotelephone Service, 
and under that definition, we estimate that almost all of them qualify 
as small entities under the SBA definition. For purposes of assigning 
Air-Ground Radiotelephone Service licenses through competitive bidding, 
the Commission has defined ``small business'' as an entity that, 
together with controlling interests and affiliates, has average annual 
gross revenues for the preceding three years not exceeding $40 
million.\205\ A ``very

[[Page 49767]]

small business'' is defined as an entity that, together with 
controlling interests and affiliates, has average annual gross revenues 
for the preceding three years not exceeding $15 million.\206\ These 
definitions were approved by the SBA.\207\ In 2006, the Commission 
completed an auction of nationwide commercial Air-Ground Radiotelephone 
Service licenses in the 800 MHz band (Auction 65). The auction closed 
with two winning bidders winning two Air-Ground Radiotelephone Services 
licenses. Neither of the winning bidders claimed small business status.
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    \203\ The service is defined in section 22.99 of the 
Commission's rules, 47 CFR 22.99.
    \204\ 13 CFR 121.201, NAICS codes 517210.
    \205\ Amendment of Part 22 of the Commission's Rules to Benefit 
the Consumers of Air-Ground Telecommunications Services, Biennial 
Regulatory Review--Amendment of Parts 1, 22, and 90 of the 
Commission's Rules, Amendment of Parts 1 and 22 of the Commission's 
Rules to Adopt Competitive Bidding Rules for Commercial and General 
Aviation Air-Ground Radiotelephone Service, WT Docket Nos. 03-103 
and 05-42, Order on Reconsideration and Report and Order, 20 FCC Rcd 
19663, paras. 28-42 (2005).
    \206\ Id.
    \207\ See Letter from Hector V. Barreto, Administrator, SBA, to 
Gary D. Michaels, Deputy Chief, Auctions and Spectrum Access 
Division, WTB, FCC (Sept. 19, 2005).
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    93. Aviation and Marine Radio Services. Small businesses in the 
aviation and marine radio services use a very high frequency (``VHF'') 
marine or aircraft radio and, as appropriate, an emergency position-
indicating radio beacon (and/or radar) or an emergency locator 
transmitter. The Commission has not developed a small business size 
standard specifically applicable to these small businesses. For 
purposes of this analysis, the Commission uses the SBA small business 
size standard for the category Wireless Telecommunications Carriers 
(except satellite),'' which is 1,500 or fewer employees.\208\ Census 
data for 2007 shows that there were 1,383 firms that operated that 
year.\209\ Of those 1,383, 1,368 had fewer than 100 employees, and 15 
firms had more than 100 employees. Thus under this category and the 
associated small business size standard, the majority of firms can be 
considered small.
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    \208\ 13 CFR 121.201, NAICS code 517210.
    \209\ U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 
NAICS code 517210 (rel. Oct. 20, 2009), https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&-ds_name=EC0751SSSZ5&-_lang=en.
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    94. Offshore Radiotelephone Service. This service operates on 
several UHF television broadcast channels that are not used for 
television broadcasting in the coastal areas of states bordering the 
Gulf of Mexico.\210\ There are presently approximately 55 licensees in 
this service. The Commission is unable to estimate at this time the 
number of licensees that would qualify as small under the SBA's small 
business size standard for the category of Wireless Telecommunications 
Carriers (except Satellite). Under that standard.\211\ Under that SBA 
small business size standard, a business is small if it has 1,500 or 
fewer employees.\212\ Census data for 2007 shows that there were 1,383 
firms that operated that year.\213\ Of those 1,383, 1,368 had fewer 
than 100 employees, and 15 firms had more than 100 employees. Thus 
under this category and the associated small business size standard, 
the majority of firms can be considered small.
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    \210\ This service is governed by subpart I of part 22 of the 
Commission's rules. See 47 CFR 22.1001-22.1037.
    \211\ 13 CFR 121.201, NAICS code 517210.
    \212\ Id.
    \213\ U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 
NAICS code 517210 (rel. Oct. 20, 2009), https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&-ds_name=EC0751SSSZ5&-_lang=en.
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    95. Multiple Address Systems (``MAS''). Entities using MAS 
spectrum, in general, fall into two categories: (1) those using the 
spectrum for profit-based uses, and (2) those using the spectrum for 
private internal uses. The Commission defines a small business for MAS 
licenses as an entity that has average gross revenues of less than $15 
million in the preceding three years.\214\ A very small business is 
defined as an entity that, together with its affiliates, has average 
gross revenues of not more than $3 million for the preceding three 
years.\215\ The SBA has approved these definitions.\216\ The majority 
of these entities will most likely be licensed in bands where the 
Commission has implemented a geographic area licensing approach that 
would require the use of competitive bidding procedures to resolve 
mutually exclusive applications. The Commission's licensing database 
indicates that, as of March 5, 2010, there were over 11,500 MAS station 
authorizations. In 2001, an auction of 5,104 MAS licenses in 176 EAs 
was conducted.\217\ Seven winning bidders claimed status as small or 
very small businesses and won 611 licenses. In 2005, the Commission 
completed an auction (Auction 59) of 4,226 MAS licenses in the Fixed 
Microwave Services from the 928/959 and 932/941 MHz bands. Twenty-six 
winning bidders won a total of 2,323 licenses. Of the 26 winning 
bidders in this auction, five claimed small business status and won 
1,891 licenses.
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    \214\ See Amendment of the Commission's Rules Regarding Multiple 
Address Systems, Report and Order, 15 FCC Rcd 11956, 12008, para. 
123 (2000).
    \215\ Id.
    \216\ See Alvarez Letter 1999.
    \217\ See ``Multiple Address Systems Spectrum Auction Closes,'' 
Public Notice, 16 FCC Rcd 21011 (2001).
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    96. With respect to entities that use, or seek to use, MAS spectrum 
to accommodate internal communications needs, we note that MAS serves 
an essential role in a range of industrial, safety, business, and land 
transportation activities. MAS radios are used by companies of all 
sizes, operating in virtually all U.S. business categories, and by all 
types of public safety entities. For the majority of private internal 
users, the small business size standard developed by the SBA would be 
more appropriate. The applicable size standard in this instance appears 
to be that of Wireless Telecommunications Carriers (except Satellite). 
This definition provides that a small entity is any such entity 
employing no more than 1,500 persons.\218\ The Commission's licensing 
database indicates that, as of January 20, 1999, of the 8,670 total MAS 
station authorizations, 8,410 authorizations were for private radio 
service, and of these, 1,433 were for private land mobile radio 
service.
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    \218\ See 13 CFR 121.201, NAICS code 517210.
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    97. 1.4 GHz Band Licensees. The Commission conducted an auction of 
64 1.4 GHz band licenses in the paired 1392-1395 MHz and 1432-1435 MHz 
bands, and in the unpaired 1390-1392 MHz band in 2007.\219\ For these 
licenses, the Commission defined ``small business'' as an entity that, 
together with its affiliates and controlling interests, had average 
gross revenues not exceeding $40 million for the preceding three years, 
and a ``very small business'' as an entity that, together with its 
affiliates and controlling interests, has had average annual gross 
revenues not exceeding $15 million for the preceding three years.\220\ 
Neither of the two winning bidders claimed small business status.\221\
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    \219\ See ``Auction of 1.4 GHz Band Licenses Scheduled for 
February 7, 2007,'' Public Notice, 21 FCC Rcd 12393 (WTB 2006); 
``Auction of 1.4 GHz Band Licenses Closes; Winning Bidders Announced 
for Auction No. 69,'' Public Notice, 22 FCC Rcd 4714 (2007) 
(``Auction No. 69 Closing PN'').
    \220\ Auction No. 69 Closing PN, Attachment C.
    \221\ See Auction No. 69 Closing PN.
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    98. Incumbent 24 GHz Licensees. This analysis may affect incumbent 
licensees who were relocated to the 24 GHz band from the 18 GHz band, 
and applicants who wish to provide services in the 24 GHz band. For 
this service, the Commission uses the SBA small business size standard 
for the category ``Wireless Telecommunications Carriers (except 
satellite),'' which is 1,500 or fewer employees.\222\ To gauge small 
business prevalence for these cable services we must, however, use the 
most

[[Page 49768]]

current census data. Census data for 2007 shows that there were 1,383 
firms that operated that year.\223\ Of those 1,383, 1,368 had fewer 
than 100 employees, and 15 firms had more than 100 employees. Thus 
under this category and the associated small business size standard, 
the majority of firms can be considered small. The Commission notes 
that the Census' use of the classifications ``firms'' does not track 
the number of ``licenses''. The Commission believes that there are only 
two licensees in the 24 GHz band that were relocated from the 18 GHz 
band, Teligent \224\ and TRW, Inc. It is our understanding that 
Teligent and its related companies have less than 1,500 employees, 
though this may change in the future. TRW is not a small entity. Thus, 
only one incumbent licensee in the 24 GHz band is a small business 
entity.
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    \222\ 13 CFR 121.201, NAICS code 517210.
    \223\ U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 
NAICS code 517210 (rel. Oct. 20, 2009), https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&-ds_name=EC0751SSSZ5&-_lang=en.
    \224\ Teligent acquired the DEMS licenses of FirstMark, the only 
licensee other than TRW in the 24 GHz band whose license has been 
modified to require relocation to the 24 GHz band.
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    99. Future 24 GHz Licensees. With respect to new applicants for 
licenses in the 24 GHz band, for the purpose of determining eligibility 
for bidding credits, the Commission established three small business 
definitions. An ``entrepreneur'' is defined as an entity that, together 
with controlling interests and affiliates, has average annual gross 
revenues for the three preceding years not exceeding $40 million.\225\ 
A ``small business'' is defined as an entity that, together with 
controlling interests and affiliates, has average annual gross revenues 
for the three preceding years not exceeding $15 million.\226\ A ``very 
small business'' in the 24 GHz band is defined as an entity that, 
together with controlling interests and affiliates, has average gross 
revenues not exceeding $3 million for the preceding three years.\227\ 
The SBA has approved these small business size standards.\228\ In a 
2004 auction of 24 GHz licenses, three winning bidders won seven 
licenses.\229\ Two of the winning bidders were very small businesses 
that won five licenses.
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    \225\ Amendments to Parts 1, 2, 87 and 101 of the Commission's 
Rules To License Fixed Services at 24 GHz, Report and Order, 15 FCC 
Rcd 16934, 16967 para 77 (2000) (``24 GHz Report and Order''); see 
also 47 CFR 101.538(a)(3).
    \226\ 24 GHz Report and Order, 15 FCC Rcd at 16967 para. 77; see 
also 47 CFR 101.538(a)(2).
    \227\ 24 GHz Report and Order, 15 FCC Rcd at 16967 para. 77; see 
also 47 CFR 101.538(a)(1).
    \228\ See Letter to Margaret W. Wiener, Deputy Chief, Auctions 
and Industry Analysis Division, Wireless Telecommunications Bureau, 
FCC, from Gary M. Jackson, Assistant Administrator, SBA (July 28, 
2000).
    \229\ Auction of 24 GHz Service Spectrum Auction Closes, Winning 
Bidders Announced for Auction 56, Down Payments Due August 16, 2004, 
Final Payments Due August 30, 2004, Ten-Day Petition to Deny Period, 
Public Notice, 19 FCC Rcd 14738 (2004).
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    100. Broadband Radio Service and Educational Broadband Service. 
Broadband Radio Service systems, previously referred to as Multipoint 
Distribution Service (``MDS'') and Multichannel Multipoint Distribution 
Service (``MMDS'') systems, and ``wireless cable,'' transmit video 
programming to subscribers and provide two-way high speed data 
operations using the microwave frequencies of the Broadband Radio 
Service (``BRS'') and Educational Broadband Service (``EBS'') 
(previously referred to as the Instructional Television Fixed Service 
(``ITFS'').\230\ In connection with the 1996 BRS auction, the 
Commission established a small business size standard as an entity that 
had annual average gross revenues of no more than $40 million in the 
previous three years.\231\ The BRS auctions resulted in 67 successful 
bidders obtaining licensing opportunities for 493 Basic Trading Areas 
(``BTAs''). Of the 67 auction winners, 61 met the definition of a small 
business. BRS also includes licensees of stations authorized prior to 
the auction. At this time, we estimate that of the 61 small business 
BRS auction winners, 48 remain small business licensees. In addition to 
the 48 small businesses that hold BTA authorizations, there are 
approximately 392 incumbent BRS licensees that are considered small 
entities.\232\ After adding the number of small business auction 
licensees to the number of incumbent licensees not already counted, we 
find that there are currently approximately 440 BRS licensees that are 
defined as small businesses under either the SBA or the Commission's 
rules. In 2009, the Commission conducted Auction 86, the sale of 78 
licenses in the BRS areas.\233\ The Commission offered three levels of 
bidding credits: (i) A bidder with attributed average annual gross 
revenues that exceed $15 million and do not exceed $40 million for the 
preceding three years (small business) will receive a 15 percent 
discount on its winning bid; (ii) a bidder with attributed average 
annual gross revenues that exceed $3 million and do not exceed $15 
million for the preceding three years (very small business) will 
receive a 25 percent discount on its winning bid; and (iii) a bidder 
with attributed average annual gross revenues that do not exceed $3 
million for the preceding three years (entrepreneur) will receive a 35 
percent discount on its winning bid.\234\ Auction 86 concluded in 2009 
with the sale of 61 licenses.\235\ Of the ten winning bidders, two 
bidders that claimed small business status won 4 licenses; one bidder 
that claimed very small business status won three licenses; and two 
bidders that claimed entrepreneur status won six licenses.
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    \230\ Amendment of Parts 21 and 74 of the Commission's Rules 
with Regard to Filing Procedures in the Multipoint Distribution 
Service and in the Instructional Television Fixed Service and 
Implementation of Section 309(j) of the Communications Act--
Competitive Bidding, MM Docket No. 94-131, PP Docket No. 93-253, 
Report and Order, 10 FCC Rcd 9589, 9593 para. 7 (1995).
    \231\ 47 CFR 21.961(b)(1).
    \232\ 47 U.S.C. 309(j). Hundreds of stations were licensed to 
incumbent MDS licensees prior to implementation of Section 309(j) of 
the Communications Act of 1934, 47 U.S.C. 309(j). For these pre-
auction licenses, the applicable standard is SBA's small business 
size standard of 1500 or fewer employees.
    \233\ Auction of Broadband Radio Service (BRS) Licenses, 
Scheduled for October 27, 2009, Notice and Filing Requirements, 
Minimum Opening Bids, Upfront Payments, and Other Procedures for 
Auction 86, Public Notice, 24 FCC Rcd 8277 (2009).
    \234\ Id. at 8296.
    \235\ Auction of Broadband Radio Service Licenses Closes, 
Winning Bidders Announced for Auction 86, Down Payments Due November 
23, 2009, Final Payments Due December 8, 2009, Ten-Day Petition to 
Deny Period, Public Notice, 24 FCC Rcd 13572 (2009).
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    101. In addition, the SBA's Cable Television Distribution Services 
small business size standard is applicable to EBS. There are presently 
2,032 EBS licensees. All but 100 of these licenses are held by 
educational institutions. Educational institutions are included in this 
analysis as small entities.\236\ Thus, we estimate that at least 1,932 
licensees are small businesses. Since 2007, Cable Television 
Distribution Services have been defined within the broad economic 
census category of Wired Telecommunications Carriers; that category is 
defined as follows: ``This industry comprises establishments primarily 
engaged in operating and/or providing access to transmission facilities 
and infrastructure that they own and/or lease for the transmission of 
voice, data, text, sound, and video using wired telecommunications 
networks. Transmission facilities may be based on a single technology 
or a combination of

[[Page 49769]]

technologies.'' \237\ For these services, the Commission uses the SBA 
small business size standard for the category ``Wireless 
Telecommunications Carriers (except satellite),'' which is 1,500 or 
fewer employees.\238\ To gauge small business prevalence for these 
cable services we must, however, use the most current census data. 
According to Census Bureau data for 2007, there were a total of 955 
firms in this previous category that operated for the entire year.\239\ 
Of this total, 939 firms employed 999 or fewer employees, and 16 firms 
employed 1,000 employees or more.\240\ Thus, the majority of these 
firms can be considered small.
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    \236\ The term ``small entity'' within SBREFA applies to small 
organizations (nonprofits) and to small governmental jurisdictions 
(cities, counties, towns, townships, villages, school districts, and 
special districts with populations of less than 50,000). 5 U.S.C. 
601(4)-(6). We do not collect annual revenue data on EBS licensees.
    \237\ U.S. Census Bureau, 2007 NAICS Definitions, 517110 Wired 
Telecommunications Carriers, (partial definition), www.census.gov/naics/2007/def/ND517110.HTM#N517110.
    \238\ 13 CFR 121.201, NAICS code 517210.
    \239\ U.S. Census Bureau, 2007 Economic Census, Subject Series: 
Information, Table 5, Employment Size of Firms for the United 
States: 2007, NAICS code 5171102 (issued November 2010).
    \240\ Id.
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    102. Television Broadcasting. This Economic Census category 
``comprises establishments primarily engaged in broadcasting images 
together with sound. These establishments operate television 
broadcasting studios and facilities for the programming and 
transmission of programs to the public.'' \241\ The SBA has created the 
following small business size standard for Television Broadcasting 
firms: those having $14 million or less in annual receipts.\242\ The 
Commission has estimated the number of licensed commercial television 
stations to be 1,387.\243\ In addition, according to Commission staff 
review of the BIA Advisory Services, LLC's Media Access Pro Television 
Database on March 28, 2012, about 950 of an estimated 1,300 commercial 
television stations (or approximately 73 percent) had revenues of $14 
million or less.\244\ We therefore estimate that the majority of 
commercial television broadcasters are small entities.
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    \241\ U.S. Census Bureau, 2007 NAICS Definitions, ``515120 
Television Broadcasting'' (partial definition); https://www.census.gov/naics/2007/def/ND515120.HTM#N515120.
    \242\ 13 CFR 121.201, NAICS code 515120 (updated for inflation 
in 2010).
    \243\ See FCC News Release, ``Broadcast Station Totals as of 
December 31, 2011,'' dated January 6, 2012; https://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-311837A1.pdf.
    \244\ We recognize that BIA's estimate differs slightly from the 
FCC total given supra.
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    103. We note, however, that in assessing whether a business concern 
qualifies as small under the above definition, business (control) 
affiliations \245\ must be included. Our estimate, therefore, likely 
overstates the number of small entities that might be affected by our 
action because the revenue figure on which it is based does not include 
or aggregate revenues from affiliated companies. In addition, an 
element of the definition of ``small business'' is that the entity not 
be dominant in its field of operation. We are unable at this time to 
define or quantify the criteria that would establish whether a specific 
television station is dominant in its field of operation. Accordingly, 
the estimate of small businesses to which rules may apply does not 
exclude any television station from the definition of a small business 
on this basis and is therefore possibly over-inclusive to that extent.
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    \245\ ``[Business concerns] are affiliates of each other when 
one concern controls or has the power to control the other or a 
third party or parties controls or has to power to control both.'' 
13 CFR 21.103(a)(1).
---------------------------------------------------------------------------

    104. In addition, the Commission has estimated the number of 
licensed noncommercial educational (NCE) television stations to be 
396.\246\ These stations are non-profit, and therefore considered to be 
small entities.\247\
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    \246\ See FCC News Release, ``Broadcast Station Totals as of 
December 31, 2011,'' dated January 6, 2012; https://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0106/DOC-311837A1.pdf.
    \247\ See generally 5 U.S.C. 601(4), (6).
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    105. In addition, there are also 2,528 low power television 
stations, including Class A stations (LPTV).\248\ Given the nature of 
these services, we will presume that all LPTV licensees qualify as 
small entities under the above SBA small business size standard.
---------------------------------------------------------------------------

    \248\ See FCC News Release, ``Broadcast Station Totals as of 
December 31, 2011,'' dated January 6, 2012; https://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0106/DOC-311837A1.pdf.
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    106. Radio Broadcasting. This Economic Census category ``comprises 
establishments primarily engaged in broadcasting aural programs by 
radio to the public. Programming may originate in their own studio, 
from an affiliated network, or from external sources.'' \249\ The SBA 
has established a small business size standard for this category, which 
is: such firms having $7 million or less in annual receipts.\250\ 
According to Commission staff review of BIA Advisory Services, LLC's 
Media Access Pro Radio Database on March 28, 2012, about 10,759 (97%) 
of 11,102 commercial radio stations had revenues of $7 million or less. 
Therefore, the majority of such entities are small entities.
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    \249\ U.S. Census Bureau, 2007 NAICS Definitions, ``515112 Radio 
Stations''; https://www.census.gov/naics/2007/def/ND515112.HTM#N515112.
    \250\ 13 CFR 121.201, NAICS code 515112 (updated for inflation 
in 2010).
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    107. We note, however, that in assessing whether a business concern 
qualifies as small under the above size standard, business affiliations 
must be included.\251\ In addition, to be determined to be a ``small 
business,'' the entity may not be dominant in its field of 
operation.\252\ We note that it is difficult at times to assess these 
criteria in the context of media entities, and our estimate of small 
businesses may therefore be over-inclusive.
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    \251\ ``Concerns and entities are affiliates of each other when 
one controls or has the power to control the other, or a third party 
or parties controls or has the power to control both. It does not 
matter whether control is exercised, so long as the power to control 
exists.'' 13 CFR 121.103(a)(1) (an SBA regulation).
    \252\ 13 CFR 121.102(b) (an SBA regulation).
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    108. Auxiliary, Special Broadcast and Other Program Distribution 
Services. This service involves a variety of transmitters, generally 
used to relay broadcast programming to the public (through translator 
and booster stations) or within the program distribution chain (from a 
remote news gathering unit back to the station). The Commission has not 
developed a definition of small entities applicable to broadcast 
auxiliary licensees. The applicable definitions of small entities are 
those, noted previously, under the SBA rules applicable to radio 
broadcasting stations and television broadcasting stations.\253\
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    \253\ 13 CFR 121.201, NAICS codes 515112 and 515120.
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    109. The Commission estimates that there are approximately 6,099 FM 
translators and boosters.\254\ The Commission does not collect 
financial information on any broadcast facility, and the Department of 
Commerce does not collect financial information on these auxiliary 
broadcast facilities. We believe that most, if not all, of these 
auxiliary facilities could be classified as small businesses by 
themselves. We also recognize that most commercial translators and 
boosters are owned by a parent station which, in some cases, would be 
covered by the revenue definition of small business entity discussed 
above. These stations would likely have annual revenues that exceed the 
SBA maximum to be designated as a small business ($7.0 million for a 
radio station or $14.0 million for a TV station). Furthermore, they do 
not meet the Small Business Act's definition of a ``small business 
concern'' because they are not independently owned and operated.\255\
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    \254\ See FCC News Release, ``Broadcast Station Totals as of 
December 31, 2011,'' dated January 6, 2012; https://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0106/DOC-311837A1.pdf.
    \255\ See 15 U.S.C. 632.
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    110. Cable Television Distribution Services. Since 2007, these 
services have been defined within the broad

[[Page 49770]]

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.'' \256\ The 
SBA has developed a small business size standard for this category, 
which is: all such firms having 1,500 or fewer employees. Census data 
for 2007 shows that there were 1,383 firms that operated that 
year.\257\ Of those 1,383, 1,368 had fewer than 100 employees, and 15 
firms had more than 100 employees. Thus under this category and the 
associated small business size standard, the majority of such firms can 
be considered small.
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    \256\ U.S. Census Bureau, 2007 NAICS Definitions, 517110 Wired 
Telecommunications Carriers, (partial definition), https://www.census.gov/naics/2007/def/ND517110.HTM#N517110 (last visited 
Oct. 21, 2009).
    \257\ U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 
NAICS code 517210 (released Oct. 20, 2009), https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&-ds_name=EC0751SSSZ5&-_lang=en.
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    111. Cable Companies and Systems. The Commission has also developed 
its own small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rules, a ``small cable company'' is 
one serving 400,000 or fewer subscribers, nationwide.\258\ Industry 
data indicate that, of 1,076 cable operators nationwide, all but eleven 
are small under this size standard.\259\ In addition, under the 
Commission's rules, a ``small system'' is a cable system serving 15,000 
or fewer subscribers.\260\ Industry data indicate that, of 6,635 
systems nationwide, 5,802 systems have under 10,000 subscribers, and an 
additional 302 systems have 10,000-19,999 subscribers.\261\ Thus, under 
this second size standard, most cable systems are small.
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    \258\ 47 CFR 76.901(e). The Commission determined that this size 
standard equates approximately to a size standard of $100 million or 
less in annual revenues. Implementation of Sections of the 1992 
Cable Act: Rate Regulation, Sixth Report and Order and Eleventh 
Order on Reconsideration, 10 FCC Rcd 7393, 7408 (1995).
    \259\ These data are derived from: R.R. Bowker, Broadcasting & 
Cable Yearbook 2006, ``Top 25 Cable/Satellite Operators,'' pages A-8 
& C-2 (data current as of June 30, 2005); Warren Communications 
News, Television & Cable Factbook 2006, ``Ownership of Cable Systems 
in the United States,'' pages D-1805 to D-1857.
    \260\ 47 CFR 76.901(c).
    \261\ Warren Communications News, Television & Cable Factbook 
2008, ``U.S. Cable Systems by Subscriber Size,'' page F-2 (data 
current as of Oct. 2007). The data do not include 851 systems for 
which classifying data were not available.
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    112. Cable System Operators. The Communications Act of 1934, as 
amended, also contains a size standard for small cable system 
operators, which is ``a cable operator that, directly or through an 
affiliate, serves in the aggregate fewer than 1 percent of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' \262\ The Commission has determined that an operator 
serving fewer than 677,000 subscribers shall be deemed a small 
operator, if its annual revenues, when combined with the total annual 
revenues of all its affiliates, do not exceed $250 million in the 
aggregate.\263\ Industry data indicate that, of 1,076 cable operators 
nationwide, all but ten are small under this size standard.\264\ We 
note that the Commission neither requests nor collects information on 
whether cable system operators are affiliated with entities whose gross 
annual revenues exceed $250 million,\265\ and therefore we are unable 
to estimate more accurately the number of cable system operators that 
would qualify as small under this size standard.
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    \262\ 47 U.S.C. 543(m)(2); see 47 CFR 76.901(f) & nn. 1-3.
    \263\ 47 CFR 76.901(f); see Public Notice, FCC Announces New 
Subscriber Count for the Definition of Small Cable Operator, DA 01-
158 (Cable Services Bureau, Jan. 24, 2001).
    \264\ These data are derived from: R.R. Bowker, Broadcasting & 
Cable Yearbook 2006, ``Top 25 Cable/Satellite Operators,'' pages A-8 
& C-2 (data current as of June 30, 2005); Warren Communications 
News, Television & Cable Factbook 2006, ``Ownership of Cable Systems 
in the United States,'' pages D-1805 to D-1857.
    \265\ The Commission does receive such information on a case-by-
case basis if a cable operator appeals a local franchise authority's 
finding that the operator does not qualify as a small cable operator 
pursuant to section 76.901(f) of the Commission's rules. See 47 CFR 
76.909(b).
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    113. Open Video Systems. Open Video Service (OVS) systems provide 
subscription services.\266\ The open video system (``OVS'') framework 
was established in 1996, and is one of four statutorily recognized 
options for the provision of video programming services by local 
exchange carriers.\267\ The OVS framework provides opportunities for 
the distribution of video programming other than through cable systems. 
Because OVS operators provide subscription services,\268\ OVS falls 
within the SBA small business size standard covering cable services, 
which is ``Wired Telecommunications Carriers.'' \269\ The SBA has 
developed a small business size standard for this category, which is: 
all such firms having 1,500 or fewer employees. To gauge small business 
prevalence for the OVS service, the Commission relies on data currently 
available from the U.S. Census for the year 2007. According to that 
source, there were 3,188 firms that in 2007 were Wired 
Telecommunications Carriers. Of these, 3,144 operated with less than 
1,000 employees, and 44 operated with more than 1,000 employees. 
However, as to the latter 44 there is no data available that shows how 
many operated with more than 1,500 employees. Based on this data, the 
majority of these firms can be considered small.\270\ In addition, we 
note that the Commission has certified some OVS operators, with some 
now providing service.\271\ Broadband service providers (``BSPs'') are 
currently the only significant holders of OVS certifications or local 
OVS franchises.\272\ The Commission does not have financial or 
employment information regarding the entities authorized to provide 
OVS, some of which may not yet be operational. Thus, at least some of 
the OVS operators may qualify as small entities. The Commission further 
notes that it has certified approximately 45 OVS operators to serve 75 
areas, and some of these are currently providing service.\273\ 
Affiliates of Residential Communications Network, Inc. (RCN) received 
approval to operate OVS systems in New York City, Boston, Washington, 
DC, and other areas. RCN has sufficient revenues to assure that they do 
not qualify as a small business entity. Little financial information is 
available for the other entities that are authorized to provide OVS and 
are not yet operational. Given that some entities authorized to provide 
OVS service have not yet begun to generate revenues, the Commission 
concludes that up to 44 OVS operators (those remaining) might qualify 
as small businesses that may be

[[Page 49771]]

affected by the rules and policies adopted herein.
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    \266\ See 47 U.S.C. 573.
    \267\ 47 U.S.C. 571(a)(3)-(4). See 13th Annual Report, 24 FCC 
Rcd at 606, para. 135.
    \268\ See 47 U.S.C. 573.
    \269\ U.S. Census Bureau, 2007 NAICS Definitions, 517110 Wired 
Telecommunications Carriers, https://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
    \270\ See https://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0700A1&-geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en.
    \271\ A list of OVS certifications may be found at https://www.fcc.gov/mb/ovs/csovscer.html.
    \272\ See 13th Annual Report, 24 FCC Rcd at 606-07 para. 135. 
BSPs are newer firms that are building state-of-the-art, facilities-
based networks to provide video, voice, and data services over a 
single network.
    \273\ See https://www.fcc.gov/mb/ovs/csovscer.html (current as of 
February 2007).
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    114. Cable Television Relay Service. The industry in which Cable 
Television Relay Services operate comprises establishments primarily 
engaged in operating and/or providing access to transmission facilities 
and infrastructure that they own and/or lease for the transmission of 
voice, data, text, sound, and video using wired telecommunications 
networks. Transmission facilities may be based on a single technology 
or a combination of technologies. Establishments in this industry use 
the wired telecommunications network facilities that they operate to 
provide a variety of services, such as wired telephony services, 
including VoIP services; wired (cable) audio and video programming 
distribution; and wired broadband Internet services. By exception, 
establishments providing satellite television distribution services 
using facilities and infrastructure that they operate are included in 
this industry.\274\ The category designated by the SBA for this 
industry is ``Wired Telecommunications Carriers.'' \275\ The SBA has 
developed a small business size standard for this category, which is: 
all such firms having 1,500 or fewer employees. According to Census 
Bureau data for 2007, Census data for 2007 shows 3,188 firms in this 
category.\276\ Of these 3,188 firms, only 44 had 1,000 or more 
employees. While we could not find precise Census data on the number of 
firms with in the group with 1,500 or fewer employees, it is clear that 
at least 3,144 firms with fewer than 1,000 employees would be in that 
group. On this basis, the Commission estimates that a substantial 
majority of the providers of interconnected VoIP, non-interconnected 
VoIP, or both in this category, are small.\277\
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    \274\ U.S. Census Bureau, 2007 NAICS Definitions, ``517110 Wired 
Telecommunications Carriers'' (partial definition); https://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
    \275\ 13 CFR 121.201, NAICS code 517110.
    \276\ https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en.
    \277\ Id. As noted in para. 18 above with regard to the 
distinction between manufacturers of equipment used to provide 
interconnected VoIP and manufactures of equipment to provide non-
interconnected VoIP, our estimates of the number of providers of 
non-interconnected VoIP (and the number of small entities within 
that group) are likely overstated because we could not draw in the 
data a distinction between such providers and those that provide 
interconnected VoIP. However, in the absence of more accurate data, 
we present these figures to provide as thorough an analysis of the 
impact on small entities as we can at this time.
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    115. Multichannel Video Distribution and Data Service. MVDDS is a 
terrestrial fixed microwave service operating in the 12.2-12.7 GHz 
band. The Commission adopted criteria for defining three groups of 
small businesses for purposes of determining their eligibility for 
special provisions such as bidding credits. It defines a very small 
business as an entity with average annual gross revenues not exceeding 
$3 million for the preceding three years; a small business as an entity 
with average annual gross revenues not exceeding $15 million for the 
preceding three years; and an entrepreneur as an entity with average 
annual gross revenues not exceeding $40 million for the preceding three 
years.\278\ These definitions were approved by the SBA.\279\ On January 
27, 2004, the Commission completed an auction of 214 MVDDS licenses 
(Auction No. 53). In this auction, ten winning bidders won a total of 
192 MVDDS licenses.\280\ Eight of the ten winning bidders claimed small 
business status and won 144 of the licenses. The Commission also held 
an auction of MVDDS licenses on December 7, 2005 (Auction 63). Of the 
three winning bidders who won 22 licenses, two winning bidders, winning 
21 of the licenses, claimed small business status.\281\
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    \278\ Amendment of Parts 2 and 25 of the Commission's Rules to 
Permit Operation of NGSO FSS Systems Co-Frequency with GSO and 
Terrestrial Systems in the Ku-Band Frequency Range; Amendment of the 
Commission's Rules to Authorize Subsidiary Terrestrial Use of the 
12.2-12.7 GHz Band by Direct Broadcast Satellite Licenses and their 
Affiliates; and Applications of Broadwave USA, PDC Broadband 
Corporation, and Satellite Receivers, Ltd. to provide A Fixed 
Service in the 12.2-12.7 GHz Band, ET Docket No. 98-206, Memorandum 
Opinion and Order and Second Report and Order, 17 FCC Rcd 9614, 
9711, para. 252 (2002).
    \279\ See Letter from Hector V. Barreto, Administrator, U.S. 
Small Business Administration, to Margaret W. Wiener, Chief, 
Auctions and Industry Analysis Division, WTB, FCC (Feb.13, 2002).
    \280\ See ``Multichannel Video Distribution and Data Service 
Auction Closes,'' Public Notice, 19 FCC Rcd 1834 (2004).
    \281\ See ``Auction of Multichannel Video Distribution and Data 
Service Licenses Closes; Winning Bidders Announced for Auction No. 
63,'' Public Notice, 20 FCC Rcd 19807 (2005).
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    116. Amateur Radio Service. These licensees are held by individuals 
in a noncommercial capacity; these licensees are not small entities.
    117. Personal Radio Services. Personal radio services provide 
short-range, low power radio for personal communications, radio 
signaling, and business communications not provided for in other 
services. The Personal Radio Services include spectrum licensed under 
Part 95 of our rules.\282\ These services include Citizen Band Radio 
Service (``CB''), General Mobile Radio Service (``GMRS''), Radio 
Control Radio Service (``R/C''), Family Radio Service (``FRS''), 
Wireless Medical Telemetry Service (``WMTS''), Medical Implant 
Communications Service (``MICS''), Low Power Radio Service (``LPRS''), 
and Multi-Use Radio Service (``MURS'').\283\ There are a variety of 
methods used to license the spectrum in these rule parts, from 
licensing by rule, to conditioning operation on successful completion 
of a required test, to site-based licensing, to geographic area 
licensing. Under the RFA, the Commission is required to make a 
determination of which small entities are directly affected by the 
rules being proposed. Since all such entities are wireless, we apply 
the definition of Wireless Telecommunications Carriers (except 
Satellite), pursuant to which a small entity is defined as employing 
1,500 or fewer persons.\284\ Many of the licensees in these services 
are individuals, and thus are not small entities. In addition, due to 
the mostly unlicensed and shared nature of the spectrum utilized in 
many of these services, the Commission lacks direct information upon 
which to base an estimation of the number of small entities under an 
SBA definition that might be directly affected by our action.
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    \282\ 47 CFR part 90.
    \283\ The Citizens Band Radio Service, General Mobile Radio 
Service, Radio Control Radio Service, Family Radio Service, Wireless 
Medical Telemetry Service, Medical Implant Communications Service, 
Low Power Radio Service, and Multi-Use Radio Service are governed by 
subpart D, subpart A, subpart C, subpart B, subpart H, subpart I, 
subpart G, and subpart J, respectively, of part 95 of the 
Commission's rules. See generally 47 CFR part 95.
    \284\ 13 CFR 121.201, NAICS Code 517210.
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    118. Public Safety Radio Services. Public Safety radio services 
include police, fire, local government, forestry conservation, highway 
maintenance, and emergency medical services.\285\

[[Page 49772]]

There are a total of approximately 127,540 licensees in these services. 
Governmental entities \286\ as well as private businesses comprise the 
licensees for these services. All governmental entities with 
populations of less than 50,000 fall within the definition of a small 
entity.\287\
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    \285\ With the exception of the special emergency service, these 
services are governed by subpart B of part 90 of the Commission's 
rules, 47 CFR 90.15-90.27. The police service includes approximately 
27,000 licensees that serve state, county, and municipal enforcement 
through telephony (voice), telegraphy (code) and teletype and 
facsimile (printed material). The fire radio service includes 
approximately 23,000 licensees comprised of private volunteer or 
professional fire companies as well as units under governmental 
control. The local government service is presently comprised of 
approximately 41,000 licensees that are state, county, or municipal 
entities that use the radio for official purposes not covered by 
other public safety services. There are approximately 7,000 
licensees within the forestry service which is comprised of 
licensees from state departments of conservation and private forest 
organizations who set up communications networks among fire lookout 
towers and ground crews. The approximately 9,000 state and local 
governments are licensed for highway maintenance service to provide 
emergency and routine communications to aid other public safety 
services to keep main roads safe for vehicular traffic. The 
approximately 1,000 licensees in the Emergency Medical Radio Service 
(``EMRS'') use the 39 channels allocated to this service for 
emergency medical service communications related to the delivery of 
emergency medical treatment. 47 CFR 90.15-90.27. The approximately 
20,000 licensees in the special emergency service include medical 
services, rescue organizations, veterinarians, handicapped persons, 
disaster relief organizations, school buses, beach patrols, 
establishments in isolated areas, communications standby facilities, 
and emergency repair of public communications facilities. 47 CFR 
90.33-90.55.
    \286\ 47 CFR 1.1162.
    \287\ 5 U.S.C. 601(5).
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    119. Internet Service Providers. Internet Service Providers, Web 
Portals and Other Information Services. In 2007, the SBA recognized two 
new small business economic census categories. They are (1) Internet 
Publishing and Broadcasting and Web Search Portals,\288\ and (2) All 
Other Information Services.\289\
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    \288\ 13 CFR 121.201, NAICS code 519130 (establishing a $500,000 
revenue ceiling).
    \289\ 13 CFR 121.201, NAICS code 519190 (establishing a $6.5 
million revenue ceiling).
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    120. Internet Service Providers. The 2007 Economic Census places 
these firms, whose services might include voice over Internet protocol 
(VoIP), in either of two categories, depending on whether the service 
is provided over the provider's own telecommunications facilities 
(e.g., cable and DSL ISPs), or over client-supplied telecommunications 
connections (e.g., dial-up ISPs). The former are within the category of 
Wired Telecommunications Carriers,\290\ which has an SBA small business 
size standard of 1,500 or fewer employees.\291\ These are also labeled 
``broadband.'' The latter are within the category of All Other 
Telecommunications,\292\ which has a size standard of annual receipts 
of $25 million or less.\293\ These are labeled non-broadband.
---------------------------------------------------------------------------

    \290\ U.S. Census Bureau, 2007 NAICS Definitions, 517110 Wired 
Telecommunications Carriers, https://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
    \291\ 13 CFR 121.201, NAICS code 517110.
    \292\ U.S. Census Bureau, 2007 NAICS Definitions, ``517919 All 
Other Telecommunications,'' https://www.census.gov/naics/2007/def/ND517919.HTM#N517919.
    \293\ 13 CFR 121.201, NAICS code 517919 (updated for inflation 
in 2008).
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    121. The most current Economic Census data for all such firms are 
2007 data, which are detailed specifically for ISPs within the 
categories above. For the first category, the data show that 396 firms 
operated for the entire year, of which 159 had nine or fewer 
employees.\294\ For the second category, the data show that 1,682 firms 
operated for the entire year.\295\ Of those, 1,675 had annual receipts 
below $25 million per year, and an additional two had receipts of 
between $25 million and $ 49,999,999. Consequently, we estimate that 
the majority of ISP firms are small entities.
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    \294\ U.S. Census Bureau, 2007 Economic Census, Subject Series: 
Information, ``Establishment and Firm Size,'' NAICS code 5171103 
(rel. Nov. 19, 2010) (employment size). The data show only two 
categories within the whole: the categories for 1-4 employees and 
for 5-9 employees.
    \295\ U.S. Census Bureau, 2007 Economic Census, Subject Series: 
Information, ``Establishment and Firm Size,'' NAICS code 5179191 
(rel. Nov. 19, 2010) (receipts size).
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    122. Internet Publishing and Broadcasting and Web Search Portals. 
This industry comprises establishments primarily engaged in 1) 
publishing and/or broadcasting content on the Internet exclusively or 
2) operating Web sites that use a search engine to generate and 
maintain extensive databases of Internet addresses and content in an 
easily searchable format (and known as Web search portals). The 
publishing and broadcasting establishments in this industry do not 
provide traditional (non-Internet) versions of the content that they 
publish or broadcast. They provide textual, audio, and/or video content 
of general or specific interest on the Internet exclusively. 
Establishments known as Web search portals often provide additional 
Internet services, such as email, connections to other web sites, 
auctions, news, and other limited content, and serve as a home base for 
Internet users. \296\ The SBA deems businesses in this industry with 
500 or fewer employees small.\297\ According to Census Bureau data for 
2007, there were 2,705 firms that provided one or more of these 
services for that entire year. Of these, 2,682 operated with less than 
500 employees and 13 operated with to 999 employees.\298\ Consequently, 
we estimate the majority of these firms are small entities that may be 
affected by our proposed actions.
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    \296\ https://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=519130&search=2007%20NAICS%20Search
    \297\ https://www.sba.gov/sites/default/files/Size_Standards_Table.pdf.
    \298\ https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=1000&-ds_name=EC0751SSSZ5&-_lang=en.
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IV. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements:

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

V. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    124. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its approach, which may 
include the following four alternatives, among others: (1) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.\299\
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    \299\ 5 U.S.C. 603.
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    125. In Section I of this NPRM, we seek comment on whether and how 
the Commission should adjust the revised cost allocation percentages 
that would otherwise result from using updated FTE data and 
implementing the new cost allocation proposals.
    126. In particular, as stated supra in Section I, our concern with 
minimizing any adverse economic impact of our proposed rules on small 
entities is guided by our goals of fairness, administrability, and 
sustainability. Accordingly, we believe that adjustments to fees paid 
by fee payors should be consistent with those goals. Specifically, we 
intend to mitigate any inequities that might result from imposition of 
substantial fee increases.
    127. In keeping with the requirements of the Regulatory Flexibility 
Act, we have considered certain alternative means of mitigating the 
effects of fee increases to a particular industry segment. One option 
is to make all or most fee adjustments at one time. Another option is 
to provide interim adjustments, by phasing in the new fees over a 
period of time.
    128. On the issue of revisiting the allocation resulting from this 
rulemaking, the Commission is considering undertaking this 
reexamination at regular intervals. Alternatively, such reexamination 
could be undertaken in response to comments by fee payors in the annual 
regulatory fee collection NPRM. Regardless of the method chosen, one 
underlying concern we have is to mitigate any adverse economic impact 
on small service providers who are likely least able to

[[Page 49773]]

absorb unpredictable changes in fees from year to year.
    129. In light of our stated goals, the Commission seeks comment on 
the abovementioned, and any other, means and methods that would 
minimize any significant economic impact of our proposed rules on small 
entities.

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

    130. None.

VI. Ordering Clauses

    41. Accordingly, it is ordered that, pursuant to Sections 4(i) and 
(j), 9, and 303(r) of the Communications Act of 1934, as amended, 47 
U.S.C. 154(i), 154(j), 159, and 303(r), this Notice of Proposed 
Rulemaking is hereby adopted.
    42. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Notice of Proposed Rulemaking, including the Initial 
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of 
the U.S. Small Business Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2012-20203 Filed 8-16-12; 8:45 am]
BILLING CODE 6712-01-P