Modernization of Payphone Compensation Rules; Implementation of the Pay Telephone Reclassification and Compensation Provisions of the Telecommunications Act of 1996; 2016 Biennial Review of Telecommunications Regulations, 31743-31749 [2017-14256]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 82, Number 130 (Monday, July 10, 2017)]
[Proposed Rules]
[Pages 31743-31749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14256]



[[Page 31743]]

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[WC Docket No. 17-141, CC Docket No. 96-128, WC Docket No. 16-132; FCC 
17-79]


Modernization of Payphone Compensation Rules; Implementation of 
the Pay Telephone Reclassification and Compensation Provisions of the 
Telecommunications Act of 1996; 2016 Biennial Review of 
Telecommunications Regulations

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Wireline Competition Bureau seeks 
comment on eliminating the Commission's payphone call tracking system 
annual audit requirement and associated reporting requirement. In light 
of the dramatic decline in payphone use and the high cost of compliance 
in proportion to payphone compensation at issue, the proposal will 
remove costly yet no longer necessary requirements. The Commission 
adopted the NPRM in conjunction with an Order waiving the 2017 and 2018 
audit and associated reporting requirements while it considers the 
proposals in this NPRM.

DATES: Comments are due on or before August 9, 2017, and reply comments 
are due on or before September 8, 2017. Written comments on the 
Paperwork Reduction Act proposed information collection requirements 
must be submitted by the public, Office of Management and Budget (OMB), 
and other interested parties on or before September 8, 2017.

ADDRESSES: You may submit comments, identified by WC Docket No. 17-141, 
by any of the following methods:
    [ssquf] Federal Communications Commission's Web site: https://apps.fcc.gov/ecfs/. Follow the instructions for submitting comments.
    [ssquf] Mail: 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. 
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. 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 must be addressed to 445 12th 
Street SW., Washington, DC 20554.
    [ssquf] 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).
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document. In addition to filing comments 
with the Secretary, a copy of any comments on the Paperwork Reduction 
Act information collection requirements contained herein should be 
submitted to the Federal Communications Commission via email to 
PRA@fcc.gov and to Nicole Ongele, Federal Communications Commission, 
via email to Nicole.Ongele@fcc.gov.

FOR FURTHER INFORMATION CONTACT: Wireline Competition Bureau, 
Competition Policy Division, Michele Berlove, at (202) 418-1477, 
michele.berlove@fcc.gov. For additional information concerning the 
Paperwork Reduction Act information collection requirements contained 
in this document, send an email to PRA@fcc.gov or contact Nicole Ongele 
at (202) 418-2991.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (NPRM) in WC Docket No. 17-141, adopted and 
released June 22, 2017. The full text of this document is available for 
public inspection during regular business hours in the FCC Reference 
Information Center, Portals II, 445 12th Street SW., Room CY-A257, 
Washington, DC 20554. It is available on the Commission's Web site at 
https://www.fcc.gov/document/modernization-payphone-compensation-rules-nprm-and-order.
    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), https://www.fcc.gov/Bureaus/OGC/Orders/1998/fcc98056.pdf.
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: https://www.fcc.gov/ecfs/.
    [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. 
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. 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 must be addressed to 445 12th 
Street SW., Washington, DC 20554.
    [ssquf] 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).

Synopsis

I. Introduction

    1. In this Notice of Proposed Rulemaking (NPRM), we propose 
eliminating the Commission's payphone call tracking system annual audit 
requirement and associated reporting requirement. In light of the 
dramatic decline in payphone use and the high cost of compliance in 
proportion to payphone compensation at issue, we anticipate that our 
proposal will remove

[[Page 31744]]

costly yet no longer necessary requirements.

II. Background

    3. Section 276 of the Communications Act of 1934, as amended (the 
Act), which was adopted in the Telecommunications Act of 1996, directs 
the Commission to implement rules to ensure that payphone service 
providers (PSPs) are fairly compensated for all completed calls made 
from their payphones. Pursuant to Congress' directive, the Commission 
adopted rules governing payphone compensation in 1996. In doing so, the 
Commission noted that fair compensation to PSPs was not possible 
without an effective per-call tracking mechanism. It thus required that 
the carriers to whom coinless access code and subscriber toll-free 
calls are routed, known as ``Completing Carriers,'' ``be responsible 
for tracking each compensable call and remitting per-call compensation 
to the PSP.''
    4. In 2003, the Commission revised its payphone compensation rules 
to require, among other things, that Completing Carriers annually must 
file an audit report prepared by an independent third-party auditor in 
order to verify ongoing compliance. Specifically, the auditor must 
``(1) [v]erify that no material changes have occurred concerning the 
Completing Carrier's compliance with the criteria of the prior year's 
System Audit Report; or (2) [i]f a material change has occurred . . . 
verify that the material changes do not affect compliance with the 
audit criteria set forth in paragraph (c) of this section.'' Completing 
Carriers are required to make all documentation underlying the audit 
report, including working papers, available to PSPs for inspection upon 
request. Completing Carriers can avoid the need to comply with the 
audit and related requirements only by entering into alternative 
compensation arrangements with PSPs.
    5. Sprint and Cincinnati Bell each recently filed petitions with 
the Commission seeking a waiver of the annual audit requirement. The 
two carriers also filed comments in response to the Commission's 2016 
Biennial Review Public Notice urging the Commission to consider 
eliminating the annual payphone call tracking system audit requirement. 
In both sets of pleadings, the carriers point to the tremendous decline 
in payphone calling, the lack of a similar decline in the cost of the 
annual audit, and the companies' consistent compliance with the 
Commission's payphone compensation rules. USTelecom, ITTA, and Puerto 
Rico Telephone each filed in support of the Waiver Petitions and 
requested that the Commission broaden the relief to encompass 
additional carriers.

III. Discussion

    6. After reviewing the record in the 2016 Biennial Review 
proceeding, the Waiver Petitions and supporting comments, and based on 
our own observations of the changing communications landscape, we find 
that the best course is to reevaluate the necessity of the annual 
payphone call tracking system audit requirement and associated 
reporting requirement on an industrywide basis. Below, we propose to 
eliminate or modify this requirement and seek comment on this proposal.
    7. We propose to eliminate the annual audit requirement and 
associated reporting requirement embodied in section 64.1320(f) of the 
rules in its entirety, and we seek detailed comment on this proposal. 
Have circumstances changed such that the benefits of these rules in 
helping to ensure PSPs are fairly compensated no longer justify the 
costs of the rule?
    8. First, we seek comment on the assertion that the precipitous 
decline in payphone usage supports modernizing our compensation 
compliance regime by eliminating the annual audit requirement. At the 
peak of payphone usage in 1999, there were over 2.1 million payphones 
in service across the United States. Since that time, however, the 
rapid growth of mobile service seems to have resulted in a dramatic 
decline in the number of payphones in service in this country. By 2013, 
more than 90 percent of payphones had been disconnected, with only 
192,286 remaining. Almost half of those were disconnected over the 
following three years, so that there were only 99,832 payphones in 
service at the end of 2016. Is there any reason to expect this 
declining trend to change in the future? We seek comment, and 
supporting data, on this issue.
    9. Second, we seek comment on the costs of compliance. Are Sprint 
and Cincinnati Bell correct that those costs have not declined over 
time and in fact may have increased? Is there other data or evidence 
establishing the costs of compliance, including evidence establishing 
whether those costs have increased or decreased over time? Is it the 
case that the costs of compliance have not declined at the same pace as 
the payphone business such that over time the compliance costs per 
payphone and per payphone call have increased?
    10. Third, we seek comment on the amount of payphone compensation 
that Completing Carriers pay relative to the cost of compliance. Not 
surprisingly, in light of declining payphone usage, the amount of 
compensation paid to PSPs has likewise significantly declined over 
time. ITTA asserts that the amount of payphone compensation paid each 
year has declined even more across the industry than the 97 percent 
decline seen by Cincinnati Bell. According to Cincinnati Bell, the 
annual audit cost is currently five times the amount of payphone 
compensation it pays annually, while Sprint projects that the cost of 
its annual audit will be approximately 15 percent of payphone 
compensation paid in 2016. We encourage commenters to provide similarly 
specific information. How has compensation paid to PSPs relative to the 
costs of compliance changed since the rule was adopted? How should we 
evaluate whether the audit costs relative to payphone compensation are 
too high? Is comparison with total payphone compensation relevant, or 
should we compare the costs of compliance against some other value(s)? 
For instance, should the costs of compliance be compared against the 
likely benefits of avoiding incorrect compensation payments? We believe 
that the existing evidence about audit costs relative to payphone 
compensation suggests the costs of the rule now outweigh the benefits, 
and we seek comment on this analysis.
    11. Fourth, we seek comment on whether section 64.1320(f) is still 
necessary to ensure compliance with the underlying payphone 
compensation requirements. What effect would elimination of this annual 
audit and associated reporting requirement have on Completing Carriers' 
compliance with our rules regarding compensation to PSPs, including, 
among other things, requirements to maintain a system for accurately 
tracking coinless access code or subscriber toll-free payphone calls to 
completion; to provide a quarterly sworn statement from the company's 
Chief Financial Officer; and, to provide quarterly reports to PSPs that 
contain information for identifying compensable and noncompensable 
calls? Importantly, relieving Completing Carriers of the audit 
requirement would not relieve them of their obligation to ensure that 
they are compensating PSPs for all compensable calls. Payphone 
compensation compliance issues occurred in years past, but we believe 
that those issues are no longer apparent. Indeed, no formal payphone 
compensation-related complaints have been brought to the Commission's 
attention since 2010, and the last informal dispute of which we are 
aware

[[Page 31745]]

occurred almost four years ago. Are there any specific, recent examples 
of failure to appropriately compensate PSPs for coinless access code 
and subscriber toll-free calls originating from their payphones? Is 
ITTA correct that ``most long-distance providers use a clearinghouse . 
. . to process quarterly payments to PSPs'' and that the clearinghouses 
used by PSPs ``have effective investigation and dispute resolution 
processes in place to address any disparities between Completing 
Carrier and PSP data that may arise,'' and if so does the prevalence of 
such clearinghouses support repeal of the audit requirement? Is the 
infrequency of complaints, disputes, and disparities related to the 
existence of the audit requirement? If not, should we expect the 
frequency of such problems to change if we eliminate the audit 
requirement, or would the remaining safeguards be sufficient? If 
eliminating the audit requirement would increase such problems (e.g., 
failure to adequately compensate PSPs), we seek estimates of the likely 
annual costs the relevant parties would incur to resolve those 
increased problems or bounds around those costs.
    12. Finally, we do not believe that the option under our rules to 
enter into an alternative compensation agreement with each PSP, which 
thus removes the need to conduct an annual audit, is an economically 
feasible alternative. We believe that Sprint, Cincinnati Bell, and 
USTelecom are correct that the transaction costs of negotiating, 
implementing, and managing such alternative compensation arrangements 
with numerous PSPs would outweigh the amount of compensation to be 
paid. Consequently, the availability of this option under our rules 
appears to provide no basis to justify retention of the audit 
requirement. We seek comment on this issue.
    13. Alternatives. We propose simply eliminating the audit 
requirement and associated reporting requirement. In the alternative, 
should we instead eliminate the requirement but adopt some less 
burdensome requirement, such as a self-certification, as Sprint and 
Cincinnati Bell each offer to provide in lieu of the annual audit? If 
so, what form would such a self-certification take? Would it be 
sufficient for a Completing Carrier to self-certify that there have 
been no material changes to its payphone call tracking system, or would 
it also need to self-certify that there have been no changes to its 
network that affect the functioning or accuracy of the tracking system? 
Could such an annual self-certification replace the section 
64.1310(a)(3) quarterly sworn statement from the CFO? If we retain the 
requirement of a quarterly sworn statement, we seek comment on whether 
we should revise the requirement to allow certification by a company 
official other than the company's CFO, and, if so, which officials.
    14. Additional Reforms. Finally, we seek comment on whether the 
changing communications landscape since 2003 warrants additional 
changes to our rules governing the payphone compensation process. For 
example, does section 64.1320(a)'s initial payphone call tracking 
system audit requirement, and the attendant requirements set forth in 
sections 64.1320(b)-(e) and (g), remain relevant today? Do new carriers 
still occasionally become Completing Carriers such that we should 
retain this requirement? How often do PSPs or clearinghouses request 
underlying documents pursuant to section 64.1320(g)? Are all of the 
remaining requirements imposed by these rules still warranted to 
protect PSPs' right to full compensation for coinless access code and 
subscriber toll-free calls originating from their payphones? Can some 
of these requirements be streamlined or eliminated while still 
affording full protection to PSPs, and if so, how?
    15. In proposing to modernize specific part 64 subpart M 
requirements herein, we note that other subsections regarding the 
provision of payphone service were intended to apply solely on an 
interim basis and their terms have long since expired. For example, 
sections 64.1301(a)-(c) set forth interim per-payphone compensation 
provisions that applied only from November 7, 1996 through October 6, 
1997. Similarly, section 64.1301(d) set forth intermediate per-payphone 
compensation provisions that applied only from October 7, 1997 through 
April 20, 1999. We believe sections 64.1301(a)-(d), by their terms, no 
longer apply to any entity and can be eliminated. We further seek 
comment on whether additional provisions of part 64 subpart M that we 
have not specifically identified may similarly have expired and no 
longer apply to any entity, and if so, can be eliminated.

IV. Initial Regulatory Flexibility Analysis

    16. As required by the Regulatory Flexibility Act (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 Notice of Proposed 
Rule Making (NPRM). Written public comments are requested on this IRFA. 
Comments must be identified as responses to the IRFA and must be filed 
by the deadlines for comments provided on the first page of this NPRM. 
The Commission will send a copy of this NPRM, including this IRFA, to 
the Chief Counsel for Advocacy of the Small Business Administration 
(SBA). In addition, the NPRM and IRFA (or summaries thereof) will be 
published in the Federal Register.

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

    17. The NPRM proposes to eliminate a burden on carriers responsible 
for completing coinless access and subscriber toll-free calls 
originating from payphones (Completing Carriers). The changing 
communications landscape has altered the balance of cost to Completing 
Carriers versus benefit to payphone service providers. Thus, the 
Commission seeks comment on a proposal to eliminate the annual payphone 
call tracking system audit and associated reporting requirement 
embodied in section 64.1320(f) of the Commission's rules, whether there 
are other steps the Commission might take to ease the burden on 
Completing Carriers, and if certain subsections of part 64 subpart M 
have expired and can be eliminated.

B. Legal Basis

    18. The proposed action is authorized under sections 1, 2, 4(i), 
11, and 276 of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 152, 154(i), 161, 276.

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

    19. The RFA directs agencies to provide a description and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules and by the rule revisions on which the 
NPRM seeks comment, if adopted. The RFA generally defines the term 
``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small-business concern'' under the Small Business 
Act. A ``small-business concern'' is one which: (1) Is independently 
owned and operated; (2) is not dominant in its field of operation; and 
(3) satisfies any additional criteria established by the SBA.
    20. The proposal on which we seek comment in the NPRM will affect 
obligations on facilities-based carriers responsible for completing 
coinless access code and subscriber toll-free calls

[[Page 31746]]

originating from payphones, including incumbent LECs, competitive LECs, 
and interexchange carriers.
1. Total Small Entities
    21. Small Businesses, Small Organizations, Small Governmental 
Jurisdictions. Our actions, over time, may affect small entities that 
are not easily categorized at present. We therefore describe here, at 
the outset, three comprehensive small entity size standards that could 
be directly affected herein. First, while there are industry specific 
size standards for small businesses that are used in the regulatory 
flexibility analysis, according to data from the SBA's Office of 
Advocacy, in general a small business is an independent business having 
fewer than 500 employees. These types of small businesses represent 
99.9% of all businesses in the United States which translates to 28.8 
million businesses. Next, the type of small entity described as a 
``small organization'' is generally ``any not-for-profit enterprise 
which is independently owned and operated and is not dominant in its 
field.'' Nationwide, as of 2007, there were approximately 1,621,215 
small organizations. Finally, the small entity described as a ``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.'' U.S. Census 
Bureau data published in 2012 indicate that there were 89,476 local 
governmental jurisdictions in the United States. We estimate that, of 
this total, as many as 88,761 entities may qualify as ``small 
governmental jurisdictions.'' Thus, we estimate that most governmental 
jurisdictions are small.
2. Wireline Providers
    22. Wired Telecommunications Carriers. The U.S. Census Bureau 
defines this industry as ``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 communications 
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.'' The SBA has developed a small business size standard 
for Wired Telecommunications Carriers, which consists of all such 
companies having 1,500 or fewer employees. Census data for 2012 show 
that there were 3,117 firms that operated that year. Of this total, 
3,083 operated with fewer than 1,000 employees. Thus, under this size 
standard, the majority of firms in this industry can be considered 
small.
    23. Local Exchange Carriers (LECs). Neither the Commission nor the 
SBA has developed a size standard for small businesses specifically 
applicable to local exchange services. The closest applicable NAICS 
Code category is Wired Telecommunications Carriers as defined above. 
Under the applicable SBA size standard, such a business is small if it 
has 1,500 or fewer employees. According to Commission data, census data 
for 2012 shows that there were 3,117 firms that operated that year. Of 
this total, 3,083 operated with fewer than 1,000 employees. The 
Commission therefore estimates that most providers of local exchange 
carrier service are small entities that may be affected by the rules 
adopted.
    24. Incumbent LECs. Neither the Commission nor the SBA has 
developed a small business size standard specifically for incumbent 
local exchange services. The closest applicable NAICS Code category is 
Wired Telecommunications Carriers as defined above. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 3,117 firms operated in that year. Of 
this total, 3,083 operated with fewer than 1,000 employees. 
Consequently, the Commission estimates that most providers of incumbent 
local exchange service are small businesses that may be affected by the 
rules and policies adopted. Three hundred and seven (307) Incumbent 
Local Exchange Carriers reported that they were incumbent local 
exchange service providers. Of this total, an estimated 1,006 have 
1,500 or fewer employees.
    25. 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 NAICS Code category is Wired 
Telecommunications Carriers, as defined above. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
U.S. Census data for 2012 indicate that 3,117 firms operated during 
that year. Of that number, 3,083 operated with fewer than 1,000 
employees. Based on this data, the Commission concludes that the 
majority of Competitive LECS, CAPs, Shared-Tenant Service Providers, 
and Other Local Service Providers, are small entities. 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. Of these 1,442 carriers, an estimated 1,256 
have 1,500 or fewer employees. 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. Also, 72 carriers have reported that 
they are Other Local Service Providers. Of this total, 70 have 1,500 or 
fewer employees. Consequently, based on internally researched FCC data, 
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.
    26. We have included small incumbent LECs in this present RFA 
analysis. As noted above, a ``small business'' under the RFA is one 
that, inter alia, meets the pertinent small business size standard 
(e.g., a telephone communications business having 1,500 or fewer 
employees), and ``is not dominant in its field of operation.'' The 
SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent LECs are not dominant in their field of operation because any 
such dominance is not ``national'' in scope. We have therefore included 
small incumbent LECs in this RFA analysis, although we emphasize that 
this RFA action has no effect on Commission analyses and determinations 
in other, non-RFA contexts.
    27. Interexchange Carriers (IXCs). Neither the Commission nor the 
SBA has developed a definition for Interexchange Carriers. The closest 
NAICS Code category is Wired Telecommunications Carriers as defined 
above. The applicable size standard under SBA rules is that such a 
business is small if it has 1,500 or fewer employees. U.S. Census data 
for 2012 indicates that 3,117 firms operated during that year. Of that 
number, 3,083 operated with fewer than 1,000 employees. According to 
internally developed Commission data, 359 companies reported that their 
primary telecommunications service activity was

[[Page 31747]]

the provision of interexchange services. Of this total, an estimated 
317 have 1,500 or fewer employees. Consequently, the Commission 
estimates that the majority of IXCs are small entities that may be 
affected by our proposed rules.
    28. Operator Service Providers (OSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
operator service providers. The appropriate size standard under SBA 
rules is for the category Wired Telecommunications Carriers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. According to Commission data, 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 two have more than 1,500 
employees. Consequently, the Commission estimates that the majority of 
OSPs are small entities that may be affected by our proposed rules.
    29. Other Toll Carriers. Neither the Commission nor the SBA has 
developed a definition for small businesses specifically applicable to 
Other Toll Carriers. This category includes toll carriers that do not 
fall within the categories of interexchange carriers, operator service 
providers, prepaid calling card providers, satellite service carriers, 
or toll resellers. The closest applicable NAICS Code category is for 
Wired Telecommunications Carriers as defined above. Under the 
applicable SBA size standard, such a business is small if it has 1,500 
or fewer employees. Census data for 2012 shows that there were 3,117 
firms that operated that year. Of this total, 3,083 operated with fewer 
than 1,000 employees. Thus, under this category and the associated 
small business size standard, the majority of Other Toll Carriers can 
be considered small. According to internally developed Commission data, 
284 companies reported that their primary telecommunications service 
activity was the provision of other toll carriage. Of these, an 
estimated 279 have 1,500 or fewer employees. Consequently, the 
Commission estimates that most Other Toll Carriers are small entities 
that may be affected by rules adopted pursuant to the NPRM.
    30. Payphone Service Providers. Neither the Commission nor the SBA 
has developed a definition of small entities specifically applicable to 
payphone service providers (PSPs). The closest applicable definition 
under the SBA rules is for Wired Telecommunications Carriers. Under 
that SBA definition, such a business is small if it has 1,500 or fewer 
employees. According to the Commission's Form 499 Filer Database, 1100 
PSPs reported that they were engaged in the provision of payphone 
services. The Commission does not have data regarding how many of these 
1100 companies have 1,500 or fewer employees. The Commission does not 
have data specifying the number of these payphone service providers 
that are not independently owned and operated, and thus is unable at 
this time to estimate with greater precision the number of PSPs that 
would qualify as small business concerns under the SBA's definition. 
Consequently, the Commission estimates that there are 1100 or fewer 
PSPs that may be affected by the rules.
    31. Prepaid Calling Card Providers. The SBA has developed a 
definition for small businesses within the category of 
Telecommunications Resellers. Under that SBA definition, such a 
business is small if it has 1,500 or fewer employees. According to the 
Commission's Form 499 Filer Database, 500 companies reported that they 
were engaged in the provision of prepaid calling cards. The Commission 
does not have data regarding how many of these 500 companies have 1,500 
or fewer employees. Consequently, the Commission estimates that there 
are 500 or fewer prepaid calling card providers that may be affected by 
the rules.
3. Wireless Providers--Fixed and Mobile
    32. For wireless services subject to auctions, we note that, as a 
general matter, the number of winning bidders that claim to 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 and transfers or reportable 
eligibility events, unjust enrichment issues are implicated.
    33. 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 services, paging 
services, wireless internet access, and wireless video services. The 
appropriate size standard under SBA rules is that such a business is 
small if it has 1,500 or fewer employees. For this industry, U.S. 
Census data for 2012 show that there were 967 firms that operated for 
the entire year. Of this total, 955 firms had employment of 999 or 
fewer employees and 12 had employment of 1000 employees or more. Thus 
under this category and the associated size standard, the Commission 
estimates that the majority of wireless telecommunications carriers 
(except satellite) are small entities.
    34. The Commission's own data--available in its Universal Licensing 
System--indicate that, as of October 25, 2016, there are 280 Cellular 
licensees that will be affected by our actions today. The Commission 
does not know how many of these licensees are small, as the Commission 
does not collect that information for these types of entities. 
Similarly, according to internally developed Commission data, 413 
carriers reported that they were engaged in the provision of wireless 
telephony, including cellular service, Personal Communications Service, 
and Specialized Mobile Radio Telephony services. Of this total, an 
estimated 261 have 1,500 or fewer employees, and 152 have more than 
1,500 employees. Thus, using available data, we estimate that the 
majority of wireless firms can be considered small.
    35. Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation, and digital audio broadcasting satellite 
uses. The Commission defined ``small business'' for the wireless 
communications services (WCS) auction as an entity with average gross 
revenues of $40 million for each of the three preceding years, and a 
``very small business'' as an entity with average gross revenues of $15 
million for each of the three preceding years. The SBA has approved 
these definitions.
    36. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. As noted, the SBA has developed a small business 
size standard for Wireless Telecommunications Carriers (except 
Satellite). Under the SBA small business size standard, a business is 
small if it has 1,500 or fewer employees. According to Commission data, 
413 carriers reported that they were engaged in wireless telephony. Of 
these, an estimated 261 have 1,500 or fewer employees and 152 have more 
than 1,500 employees. Therefore, a little less than one third of these 
entities can be considered small.
4. All Other Telecommunications
    37. ``All Other Telecommunications'' is defined as follows: This 
U.S. industry is comprised of establishments that are primarily engaged 
in providing

[[Page 31748]]

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. The SBA has developed a 
small business size standard for ``All Other Telecommunications,'' 
which consists of all such firms with gross annual receipts of $32.5 
million or less. For this category, census data for 2012 show that 
there were 1,442 firms that operated for the entire year. Of these 
firms, a total of 1,400 had gross annual receipts of less than $25 
million. Consequently, we estimate that the majority of All Other 
Telecommunications firms are small entities that might be affected by 
our action.

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

    38. The NPRM proposes and seeks comment on a rule change that will 
affect reporting, recordkeeping, and other compliance requirements. We 
expect the rule revision proposed in the NPRM to reduce reporting, 
recordkeeping, and other compliance requirements. The rule revision 
should have a beneficial reporting, recordkeeping, or compliance impact 
on small entities because all carriers will be subject to fewer such 
burdens. This change is described below.
    39. The NPRM proposes to eliminate section 64.1320(f) of the 
Commission's rules and, thus, the annual payphone call tracking system 
audit and associated reporting requirement. Should the Commission adopt 
this proposal, such action would result in reduced reporting, 
recordkeeping, or other compliance requirements for Completing 
Carriers, as that term is defined in section 64.1300(a) of the 
Commission's rules.

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

    40. 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 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.
    41. The Commission proposes to eliminate the annual payphone call 
tracking system audit requirement for Completing Carriers. The 
Commission believes that its proposal upon which the NPRM seeks comment 
will benefit all carriers, regardless of size. The proposal would 
further the goal of reducing unnecessary regulatory burdens on affected 
carriers. We anticipate that a more modernized regulatory scheme with 
the associated reduction in compliance costs will allow carriers to 
invest their resources elsewhere to the benefit of consumers.

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

    42. None.

V. Procedural Matters

A. Ex Parte Rules

    43. This proceeding 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 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.

B. Initial Regulatory Flexibility Analysis

    44. Pursuant to the Regulatory Flexibility Act (RFA), the 
Commission has prepared an Initial Regulatory Flexibility Analysis 
(IRFA) of the possible significant economic impact on small entities of 
the policies and actions considered in this NPRM. The text of the IRFA 
is set forth above. Written public comments are requested on this IRFA. 
Comments must be identified as responses to the IRFA and must be filed 
by the deadlines for comments on the NPRM. The Commission's Consumer 
and Governmental Affairs Bureau, Reference Information Center, will 
send a copy of the NPRM, including the IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration.

C. Paperwork Reduction Act

    45. This document contains proposed new and modified 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 to comment on the 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. Filing of Comments and Reply Comments

    46. 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

[[Page 31749]]

Electronic Comment Filing System (ECFS). See Electronic Filing of 
Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: https://www.fcc.gov/ecfs/.
    [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.
    [ssquf] 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.
    [ssquf] 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.
    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW., Washington, DC 20554.
    [ssquf] 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).

E. Contact Person

    47. For further information about this proceeding, please contact 
Michele Berlove, FCC Wireline Competition Bureau, Competition Policy 
Division, Room 5-C313, 445 12th Street SW., Washington, DC 20554 (202) 
418-1477, Michele.Berlove@fcc.gov.

VI. Ordering Clauses

    48. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1-4, 11, and 276 of the Communications Act of 
1934, as amended, 47 U.S.C. 151-154, 161, 276, this Notice of Proposed 
Rulemaking is adopted.
    49. It is further ordered that the Commission's Consumer & 
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 Small Business Administration.

List of Subjects in 47 CFR Part 64

    Common Carriers, Communications, Telecommunications, Telephone.


Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Proposed Rules

    For the reasons set forth in the preamble, the Federal 
Communications Commission proposes to amend CFR part 64 as follows:

PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS

0
1. The authority citation for part 64 continues to read as follows:

    Authority: 47 U.S.C. 154, 225, 254(k); 403(b)(2)(B), (c), 715, 
Pub.L. 104-104, 110 Stat. 56. Interpret or apply 47 U.S.C. 201, 218, 
222, 225, 226, 227, 228, 254(k), 616, 620, and the Middle Class Tax 
Relief and Job Creation Act of 2012, Pub.L. 112-96, unless otherwise 
noted.

Sec.  64.1320  [Amended]

0
2. In Sec.  64.1320, remove paragraph (f).

[FR Doc. 2017-14256 Filed 7-7-17; 8:45 am]
 BILLING CODE 6712-01-P