Jurisdictional Separations and Referral to the Federal-State Joint Board, 18498-18503 [2014-07456]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 79, Number 63 (Wednesday, April 2, 2014)]
[Proposed Rules]
[Pages 18498-18503]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-07456]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 36

[CC Docket No. 80-286; FCC 14-27]


Jurisdictional Separations and Referral to the Federal-State 
Joint Board

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) seeks public comment on a proposal to extend the freeze of 
jurisdictional separations category relationships and cost allocation 
factors in the Commission's rules for three years, through June 30, 
2017. This document also proposes to direct the Wireline Competition 
Bureau to open a filing ``window'' to encourage (but not require) rate-
of-return incumbent LECs that desire waivers of the category 
relationships freeze to file during the window.

DATES: Comments are due on or before April 16, 2014. Reply comments are 
due on or before April 23, 2014.

ADDRESSES: You may submit comments identified by CC Docket No. 80-286 
by any of the following methods:
    [ssquf] Federal Communications Commission's Web site: https://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
    [ssquf] 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.
    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: Greg Haledjian, Wireline Competition 
Bureau, Pricing Policy Division, (202) 418-1520 or 
gregory.haledjian@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Further Notice of Proposed Rulemaking (FNPRM) in CC Docket No. 80-286, 
dated on March 26, 2014 and released on March 27, 2014. The full text 
of this document is available for public inspection during regular 
business hours in the Commission's Reference Center, 445 12th Street 
SW., Room CY-A257, Washington, DC, 20554. The full text of this 
document may be downloaded at the following Internet address: https://
www.fcc.gov/documents/

[[Page 18499]]

-----. The complete text may be purchased from Best Copy and Printing, 
Inc., 445 12th Street SW., Room CY-B402, Washington DC, 20554. To 
request alternative formats for persons with disabilities (e.g., 
accessible format documents, sign language, interpreters, CARTS, etc.), 
send an email to fcc504@fcc.gov or call the Commission's Consumer and 
Governmental Affairs Bureau at (202) 418-0530 or (202) 418-0432 (TTY).
    Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 
CFR 1.415, 1.419, interested parties may file comments and reply 
comments on or before the dates indicated on the first page of this 
document. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS). See, Electronic Filing of Documents in 
Rulemaking Proceedings, 63 FR 24121, May 1, 1998.
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: https://fjallfoss.fcc.gov/ecfs2/.
    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and one copy of each filing. If more than one docket or 
rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail. All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission.
    [cir] All hand-delivered or messenger-delivered paper filings for 
the Commission's Secretary must be delivered to FCC Headquarters at 445 
12th Street, SW., Room TW-A325, Washington, DC 20554. The filing hours 
are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together 
with rubber bands or fasteners. Any envelopes and boxes must be 
disposed of before entering the building.
    [cir] 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.
    [cir] 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).
    The proceeding this FNPRM initiates shall be treated as a ``permit-
but-disclose'' proceeding in accordance with the Commission's ex parte 
rules. Persons making ex parte presentations must file a copy of any 
written presentation or a memorandum summarizing any oral presentation 
within two business days after the presentation (unless a different 
deadline applicable to the Sunshine period applies). Persons making 
oral ex parte presentations are reminded that memoranda summarizing the 
presentation must (1) list all persons attending or otherwise 
participating in the meeting at which the ex parte presentation was 
made, and (2) summarize all data presented and arguments made during 
the presentation. If the presentation consisted in whole or in part of 
the presentation of data or arguments already reflected in the 
presenter's written comments, memoranda or other filings in the 
proceeding, the presenter may provide citations to such data or 
arguments in his or her prior comments, memoranda, or other filings 
(specifying the relevant page and/or paragraph numbers where such data 
or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with Sec.  1.1206(b). In proceedings governed by 
Sec.  . 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.

I. Further Notice of Proposed Rulemaking

A. Introduction

    1. In this Further Notice of Proposed Rulemaking, we propose to 
extend the freeze of jurisdictional separations category relationships 
and cost allocation factors in part 36 of the Commission's rules for 
three years, through June 30, 2017. We also propose to direct the 
Wireline Competition Bureau (Bureau) to open a filing ``window'' for 
rate-of-return incumbent local exchange carriers (LECs) to file waiver 
requests to unfreeze their jurisdictional separations category 
relationships. That filing window would invite and encourage any rate-
of-return incumbent LEC that opted, in 2001, to freeze its category 
relationships and no longer wishes to continue the freeze to submit its 
waiver petition within the filing window, so that such requests may be 
considered in a consistent and coordinated manner. We seek comment on 
these proposals.
    2. The Commission notes the need for expediency in completing this 
rulemaking because the freeze of our separations rules expires on July 
1, 2014. In addition, interested parties are familiar with the issues 
involved in extending the freeze of our separations rules as the 
Commission has previously extended them multiple times.

B. Background

    3. Jurisdictional separations is the process by which incumbent 
LECs apportion regulated costs between the intrastate and interstate 
jurisdictions. Incumbent LECs record their costs pursuant to part 32 of 
the Commission's regulations. These costs are then divided between 
regulated and unregulated costs pursuant to part 64 of the Commission's 
regulations. Incumbent LECs then perform the jurisdictional separations 
process pursuant to part 36 of the Commission's rules.
    4. The jurisdictional separations process itself has two parts. 
First, incumbent LECs assign regulated costs to various categories of 
plant and expenses. In certain instances, costs are further 
disaggregated among service categories. Second, the costs in each 
category are apportioned between the intrastate and interstate 
jurisdictions. These jurisdictional apportionments of categorized costs 
are based upon either a relative use factor, a fixed allocator, or, 
when specifically allowed in the part 36 of the Commission's rules, by 
direct assignment.
    5. The statute requires the Commission to refer to the Federal-
State Joint Board on Jurisdictional Separations (Joint Board) 
proceeding regarding ``the jurisdictional separations of common carrier 
property and expenses between interstate and intrastate operations'' 
that the Commission institutes pursuant to a notice of proposed 
rulemaking. In 1997, the Commission initiated a proceeding seeking 
comment on the extent to which legislative, technological, and market 
changes warranted comprehensive reform of the separations process. The 
Commission also invited the State

[[Page 18500]]

Members of the Joint Board to develop a report that would identify 
additional issues that should be addressed by the Commission in its 
comprehensive separations reform effort. The State Members filed a 
report setting forth additional issues that they believed should be 
addressed by the Joint Board and proposing an interim freeze, among 
other things, to reduce the impact of changes in telephone usage 
patterns and resulting cost shifts from year to year. The Commission 
noted that the current network infrastructure was vastly different from 
the network and services used to define the cost categories appearing 
in the Commission's part 36 rules.
    6. On July 21, 2000, the Joint Board issued its 2000 Separations 
Recommended Decision, recommending that, until comprehensive reform 
could be achieved, the Commission: (i) freeze part 36 category 
relationships and jurisdictional allocation factors for incumbent LECs 
subject to price cap regulation (price cap incumbent LECs); and (ii) 
freeze the allocation factors for incumbent LECs subject to rate-of-
return regulation (rate-of-return incumbent LECs). In the 2001 
Separations Freeze Order, the Commission generally adopted the Joint 
Board's recommendation. The Commission concluded that the freeze would 
provide stability and regulatory certainty for incumbent LECs by 
minimizing any impacts on separations results that might occur due to 
circumstances not contemplated by the Commission's part 36 rules, such 
as growth in local competition and new technologies. Further, the 
Commission found that a freeze of the separations process would reduce 
regulatory burdens on incumbent LECs during the transition from a 
regulated monopoly to a deregulated, competitive environment in the 
local telecommunications marketplace. Under the freeze, price cap 
incumbent LECs calculate: (1) the relationships between categories of 
investment and expenses within part 32 accounts; and (2) the 
jurisdictional allocation factors, as of a specific point in time, and 
then lock or ``freeze'' those category relationships and allocation 
factors in place for a set period of time. The carriers use the 
``frozen'' category relationships and allocation factors for their 
calculations of separations results and therefore are not required to 
conduct separations studies for the duration of the freeze. Rate-of-
return incumbent LECs are only required to freeze their allocation 
factors, but were given the option of also freezing their category 
relationships at the outset of the freeze.
    7. The Commission ordered that the freeze would be in effect for a 
five-year period beginning July 1, 2001, or until the Commission 
completed comprehensive separations reform, whichever came first. In 
addition, the Commission stated that, prior to the expiration of the 
separations freeze, the Commission would, in consultation with the 
Joint Board, determine whether the freeze period should be extended. 
The Commission further stated that any decision to extend the freeze 
beyond the five-year period in the 2001 Separations Freeze Order would 
be based ``upon whether, and to what extent, comprehensive reform of 
separations has been undertaken by that time.''
    8. On May 16, 2006, in the 2006 Separations Freeze Extension and 
FNPRM, the Commission extended the freeze for three years or until 
comprehensive reform could be completed, whichever came first. The 
Commission concluded that extending the freeze would provide stability 
to LECs that must comply with the Commission's jurisdictional 
separations rules pending further Commission action to reform the part 
36 rules, and that more time was needed to study comprehensive reform. 
The freeze was subsequently extended by one year in 2009, 2010, and 
2011 and by two years in 2012.
    9. When it extended the freeze in 2009, the Commission referred a 
number of issues to the Joint Board and asked the Joint Board to 
prepare a recommended decision. The Commission asked the Joint Board to 
consider comprehensive jurisdictional separations reform, as well as an 
interim adjustment of the current jurisdictional separations freeze, 
and whether, how, and when the Commission's jurisdictional separations 
rules should be modified. On March 30, 2010, the State Members of the 
Joint Board released a proposal for interim and comprehensive 
separations reform. The Joint Board sought comment on the proposal. On 
September 24, 2010, the Joint Board held a roundtable meeting with 
consumer groups, industry representatives, and state regulators to 
discuss interim and comprehensive jurisdictional separations reform. 
The Joint Board staff conducted an extensive analysis of various 
approaches to separations reform, and the Joint Board is evaluating 
that analysis.
    10. In addition, in 2011, the Commission comprehensively reformed 
the universal service and intercarrier compensation systems and 
proposed additional reforms. The Joint Board is considering the impact 
of the reforms proposed by the USF/ICC Transformation Order and any 
subsequent changes on its analysis of the various approaches to 
separations reform.

C. Discussion

1. Jurisdictional Separations Freeze Extension
    11. We believe that the Commission's fundamental reform of the 
universal support and intercarrier compensation systems in the USF/ICC 
Transformation Order and the ongoing reform we proposed in the FNPRM 
significantly affect the Joint Board's analysis of interim and 
comprehensive separations reform. We therefore propose extending the 
freeze to allow the Joint Board to consider these recent and proposed 
reforms before it issues a Recommended Decision. We propose to extend 
the freeze for three years, through June 30, 2017.
    12. We also believe that a three-year freeze extension serves the 
public interest. The Commission has observed that, if the frozen 
separations rules were to take effect again, incumbent LECs would be 
required to reinstitute their separations processes that have not been 
used since the inception of the freeze more than twelve years ago. 
Reinstating these requirements would require substantial training and 
investment. Moreover, given the significant changes in technologies and 
investment decisions, as well as changes in regulatory approaches at 
both the State and federal levels, the existing separations rules are 
likely outdated. We thus question whether reinstating the rules would 
serve the public interest. The Joint Board on Jurisdictional 
Separations has a pending referral to consider broadly what changes to 
the separations rules are appropriate. It will take significant time to 
address any recommendations that the Joint Board may ultimately 
propose. We thus believe that a three-year extension is appropriate. We 
seek comment on these proposals.
    13. We seek comment on the effect that our proposal to extend the 
freeze would have on small entities, and whether any rules that we 
adopt should apply differently to small entities. We seek comment on 
the costs and burdens of an extension on small incumbent LECs and 
whether the extension would disproportionately affect specific types of 
carriers or ratepayers.
    14. We anticipate that extending the jurisdictional separations 
freeze would provide rate-of-return incumbent LECs with a reasonable 
methodology to

[[Page 18501]]

apportion costs and--due to the burden it would impose on incumbent 
LECs--would be preferable to allowing the previous separations 
requirements to resume. We seek comment on this matter. In addition, we 
propose that the freeze extension be implemented as described in the 
2001 Separations Freeze Order. Specifically, price cap incumbent LECs 
will use the same relationships between categories of investment and 
expenses within part 32 accounts and the same jurisdictional allocation 
factors that have been in place since the inception of the current 
freeze on July 1, 2001. Rate-of-return incumbent LECs will use the same 
frozen jurisdictional allocation factors, and will (absent a waiver) 
use the same frozen category relationships if they had opted previously 
to freeze those. We seek comment on these proposals.

B. Filing Window for Rate-of-Return Incumbent LECs To Petition To 
Unfreeze Their Cost Category Relationships

    15. In 2001, when the Commission initiated the freeze, rate-of-
return incumbent LECs were given the option of freezing their cost 
category relationships. Fewer than 100 rate-of-return incumbent LECs 
elected to freeze their category relationships. Some of those incumbent 
LECs have since converted to price cap regulation. Since 2006, four 
rate-of-return incumbent LECs have sought waivers to unfreeze their 
category relationships. We granted two waiver petitions and two remain 
pending.
    16. Rate-of-return incumbent LECs that elected to freeze their cost 
category relationships did so with the expectation that the freeze 
would likely last only five years. Instead the freeze has remained in 
effect for 13 years. Since 2006, there have been many changes in 
technology, customer demand and investment decisions that could not 
have been anticipated in 2001 when rate-of-return carriers had to 
decide whether to elect the cost category relationships freeze. In 
addition, the USF/ICC Transformation Order modified rules that affect 
rate-of-return incumbent LECs' opportunities to recover costs assigned 
to switched services.
    17. We thus recognize that rate-of-return carriers that elected to 
freeze their cost category relationships did so with the expectation 
that the election would be limited in duration. Because the freeze has 
been extended multiple times, those carriers may be at a disadvantage 
relative to rate-of-return carriers that did not elect the freeze. 
Based on these facts, we propose to direct the Bureau to provide 
``frozen'' rate-of-return incumbent LECs a specific opportunity (a 
filing window) to request approval to unfreeze their cost category 
relationships. Such petitions must contain the necessary documentation 
to support a waiver, including: the unique circumstances of 
petitioner's service area, such as size and configuration; changes made 
to petitioner's network since initiation of the 2001 freeze and the 
reasons for those changes; and demonstration of the impact that a 
waiver would have on petitioner's rates, revenue recovery and the 
Universal Service Fund. To prevent overrecovery, the Bureau will also 
require, as a condition of receiving a waiver, that the carrier file 
certain revised 2011 rate-of-return Base Period Revenue data reflecting 
changes in category relationships the carrier makes pursuant to any 
relief granted. Opening a filing window would permit the Bureau to 
consider waivers in a consistent and coordinated manner. Carriers would 
not be required to seek waivers during the window nor barred from 
filing waivers after the window has closed, but we believe that a 
filing window would create a more efficient process for all interested 
parties. We seek comment on this proposal.

II. Procedural Matters

A. Filing Instructions

    18. Comment Filing Procedures. Pursuant to sections 1.415 and 1.419 
of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may 
file comments and reply comments on or before the dates indicated on 
the first page of this document. Comments may be filed using the 
Commission's Electronic Comment Filing System (ECFS). See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
    19. Electronic Filers: Comments may be filed electronically using 
the Internet by accessing the ECFS: https://fjallfoss.fcc.gov/ecfs2/.
    20. Paper Filers: Parties who choose to file by paper must file an 
original and one copy of each filing. If more than one docket or 
rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
    21. 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.
    22. All hand-delivered or messenger-delivered paper filings for the 
Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St., SW., Room TW-A325, Washington, DC 20554. The filing hours are 
8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with 
rubber bands or fasteners. Any envelopes and boxes must be disposed of 
before entering the building.
    23. 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.
    24. U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street, SW., Washington DC 20554.
    25. Accessible Formats. 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).
    26. Ex Parte Presentations. The proceeding this FNPRM initiates 
shall be treated as a ``permit-but-disclose'' proceeding in accordance 
with the Commission's ex parte rules. Persons making ex parte 
presentations must file a copy of any written presentation or a 
memorandum summarizing any oral presentation within two business days 
after the presentation (unless a different deadline applicable to the 
Sunshine period applies). Persons making oral ex parte presentations 
are reminded that memoranda summarizing the presentation must (1) list 
all persons attending or otherwise participating in the meeting at 
which the ex parte presentation was made, and (2) summarize all data 
presented and arguments made during the presentation. If the 
presentation consisted in whole or in part of the presentation of data 
or arguments already reflected in the presenter's written comments, 
memoranda or other filings in the proceeding, the presenter may provide 
citations to such data or arguments in his or her prior comments, 
memoranda, or other filings (specifying the relevant page and/or 
paragraph numbers where such data or arguments can be found) in lieu of 
summarizing them in the memorandum. Documents shown or given to 
Commission staff during ex parte meetings are deemed to be written ex 
parte presentations and must be filed consistent with Sec.  1.1206(b). 
In proceedings governed by Sec.  1.49(f) or for which the Commission 
has made available a method of electronic filing, written ex parte

[[Page 18502]]

presentations and memoranda summarizing oral ex parte presentations, 
and all attachments thereto, must be filed through the electronic 
comment filing system available for that proceeding, and must be filed 
in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). 
Participants in this proceeding should familiarize themselves with the 
Commission's ex parte rules.

B. Paperwork Reduction Act

    27. This document does not contain proposed information 
collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. In addition, therefore, it does not contain any new 
or modified information collection burden for small business concerns 
with fewer than 25 employees, pursuant to the Small Business Paperwork 
Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

C. Initial Regulatory Flexibility Analysis

    28. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this present Initial 
Regulatory Flexibility Analysis (IRFA) of the possible significant 
economic impact on small entities by the policies and rules proposed in 
this Further Notice of Proposed Rulemaking (FNPRM). Written public 
comments are requested on this IRFA. Comments must be identified as 
responses to the IRFA and must be filed by the deadlines for comments 
on the FNPRM provided above. The Commission will send a copy of the 
FNPRM, including this IRFA, to the Chief Counsel for Advocacy of the 
Small Business Administration (SBA). In addition, the FNPRM and the 
IRFA (or summaries thereof) will be published in the Federal Register.

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

    29. In the 1997 Separations Notice, the Commission noted that the 
network infrastructure by that time had become vastly different from 
the network and services used to define the cost categories appearing 
in the Commission's part 36 jurisdictional separations rules, and that 
the separations process codified in part 36 was developed during a time 
when common carrier regulation presumed that interstate and intrastate 
telecommunications service must be provided through a regulated 
monopoly. Thus, the Commission initiated a proceeding with the goal of 
reviewing comprehensively the Commission's part 36 procedures to ensure 
that they meet the objectives of the Telecommunications Act of 1996 
(1996 Act). The Commission sought comment on the extent to which 
legislative changes, technological changes, and market changes might 
warrant comprehensive reform of the separations process. More than 
fourteen years have elapsed since the closing of the comment cycle on 
the 1997 Separations Notice, and over twelve years have elapsed since 
the imposition of the freeze. The industry has experienced myriad 
changes during that time, including reform of universal service and 
intercarrier compensation; therefore, we ask for comment on the impact 
of a further extension of the freeze.
    30. The purpose of the proposed extension of the freeze is to 
ensure that the Commission's separations rules meet the objectives of 
the 1996 Act, and to allow the Commission additional time to consider 
changes that may need to be made to the separations process in light of 
changes in the law, technology, and market structure of the 
telecommunications industry.

B. Legal Basis

    31. The legal basis for the Further Notice of Proposed Rulemaking 
is contained in sections 1, 2, 4(i), 201-205, 215, 218, 220, and 410 of 
the Communications Act of 1934, as amended.

C. Description and Estimate of the Number of Small Entities to Which 
Rules May Apply

    32. 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, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A ``small business concern'' is one which: (1) is independently 
owned and operated; (2) is not dominant in its field of operation; and 
(3) satisfies any additional criteria established by the Small Business 
Administration (SBA). Nationwide, there are a total of approximately 
27.9 million small businesses, according to the SBA.
    33. Incumbent Local Exchange Carriers (incumbent LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for providers of incumbent local exchange services. The 
closest applicable size standard under the SBA rules is for Wired 
Telecommunications Carriers. Under the SBA definition, a carrier is 
small if it has 1,500 or fewer employees. According to the FCC's 
Telephone Trends Report data, 1,307 incumbent LECs reported that they 
were engaged in the provision of local exchange services. Of these 
1,307 carriers, an estimated 1,006 have 1,500 or fewer employees and 
301 have more than 1,500 employees. Consequently, the Commission 
estimates that most incumbent LECs are small entities that may be 
affected by the rules and policies adopted herein.
    34. We have included small incumbent LECs in this RFA analysis. As 
noted above, a ``small business'' under the RFA is one that, inter 
alia, meets the pertinent small business size standard (e.g., a 
telephone communications business having 1,500 or fewer employees), and 
``is not dominant in its field of operation.'' The SBA's Office of 
Advocacy contends that, for RFA purposes, small incumbent LECs are not 
dominant in their field of operation because any such dominance is not 
``national'' in scope. Because our proposals concerning the Part 36 
separations process will affect all incumbent LECs providing interstate 
services, some entities employing 1,500 or fewer employees may be 
affected by the proposals made in this FNPRM. We have therefore 
included small incumbent LECs in this RFA analysis, although we 
emphasize that this RFA action has no effect on the Commission's 
analyses and determinations in other, non-RFA contexts.

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

    35. None.

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

    36. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): (1) 
the establishment of differing compliance and 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 part thereof, for small 
entities.

[[Page 18503]]

    37. As described above, more than twelve years have elapsed since 
the imposition of the freeze, thus, we are seeking comment on the 
impact of a further extension of the freeze. We seek comment on the 
effects our proposals would have on small entities, and whether any 
rules that we adopt should apply differently to small entities. We 
direct commenters to consider the costs and burdens of an extension on 
small incumbent LECs and whether the extension would disproportionately 
affect specific types of carriers or ratepayers.
    38. We believe that implementation of the proposed freeze extension 
would ease the administrative burden of regulatory compliance for LECs, 
including small incumbent LECs. The freeze has eliminated the need for 
all incumbent LECs, including incumbent LECs with 1,500 employees or 
fewer, to complete certain annual studies formerly required by the 
Commission's rules. If an extension of the freeze can be said to have 
any effect under the RFA, it is to reduce a regulatory compliance 
burden for small incumbent LECs by relieving these carriers from the 
burden of preparing separations studies and providing these carriers 
with greater regulatory certainty.

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

    39. None.

III. Ordering Clauses

    40. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1, 2, 4(i), 201-205, 215, 218, 220, and 410 of 
the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 
201-205, 215, 218, 220, 410, this Further Notice of Proposed Rulemaking 
is adopted.
    41. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Further Notice of Proposed Rulemaking, including the 
Initial Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.
    42. It is further ordered, pursuant to sections 1.4(b)(1) and 
1.103(a) of the Commission's rules, 47 CFR 1.4(b)(1), 1.103(a), that 
this Further Notice of Proposed Rulemaking shall be effective on the 
date of publication in the Federal Register.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2014-07456 Filed 4-1-14; 8:45 am]
BILLING CODE 6712-01-P