Regulation of Business Data Services for Rate-of-Return Local Exchange Carriers; Business Data Services in an Internet Protocol Environment; Special Access for Price Cap Local Exchange Carriers, 61358-61365 [2018-25786]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 83, Number 230 (Thursday, November 29, 2018)]
[Proposed Rules]
[Pages 61358-61365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25786]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 61 and 69

[WC Docket Nos. 17-144, 16-143, 05-25; FCC 18-146]


Regulation of Business Data Services for Rate-of-Return Local 
Exchange Carriers; Business Data Services in an Internet Protocol 
Environment; Special Access for Price Cap Local Exchange Carriers

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Commission seeks comment on proposals to eliminate ex ante 
pricing regulation for price cap incumbent LECs' provision of TDM and 
other transport business data services. The Commission also seeks 
comment on the conditions under which ex ante pricing regulations 
should be eliminated for lower capacity TDM transport business data 
services offerings by rate-of-return carriers opting in to the 
Commission's new light-touch regulatory framework. With these steps, 
the Commission continues its ongoing efforts to modernize regulations 
for the dynamic and evolving business data services market.

DATES: Comments are due on or before January 14, 2019. Reply comments 
are due on or before February 12, 2019.

ADDRESSES: Federal Communications Commission, 445 12th St. SW, 
Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Justin Faulb, Wireline Competition 
Bureau, Pricing Policy Division, at 202-418-1589 or via email at 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second 
Further Notice of Proposed Rulemaking, and Further Notice of Proposed 
Rulemaking, released October 24, 2018. A full-text copy may be obtained 
at the following internet address: https://drupal7admin.fcc.gov/document/fcc-spurs-competition-rural-business-data-services-0.

Background

    1. In light of the Eighth Circuit Court's recent decision upholding 
the bulk of the Commission's price cap BDS Order,

[[Page 61359]]

but finding that the Commission provided insufficient notice of its 
decision to end ex ante pricing regulation of TDM transport services 
offered by price cap carriers, we now propose to eliminate ex ante 
pricing regulation of price cap incumbent LECs' provision of TDM 
transport and other transport (i.e., non-end user channel termination) 
business data services and seek comment on this proposal. We also take 
this opportunity to seek comment on the circumstances under which we 
should eliminate ex ante pricing regulation of lower capacity TDM 
transport services (at or below a DS3 bandwidth) offered by those rate-
of-return carriers that receive fixed high-cost universal service 
support and elect the lighter touch regulatory framework.

A. Eliminating Ex Ante Pricing Regulation of TDM Transport Services 
Provided by Price Cap Carriers

    2. For the better part of the last two decades, in response to 
increasing competition for TDM transport in areas of the country served 
by price cap carriers, the Commission has consistently worked to modify 
and streamline regulation of such services. Most TDM transport offered 
by price cap carriers has been subject to some form of pricing 
flexibility as a result of the Commission's 1999 Pricing Flexibility 
Order. In adopting the Pricing Flexibility Order, the Commission 
acknowledged that, because transport services encompass higher capacity 
middle-mile segments of the network, facility-based entry was more 
likely to occur for those services than for end user channel 
terminations, and therefore set lower thresholds for carriers to 
demonstrate competition and obtain pricing flexibility. Although the 
Commission suspended further grants of pricing flexibility in 2012, it 
did not revoke any pricing flexibility previously granted.
    3. In the BDS Order, the Commission evaluated the record before it 
and concluded that there was sufficient competition to justify 
nationwide pricing relief for TDM transport offered by price cap 
carriers. The record shows, for example, that some major urban areas 
have as many as 28 transport competitors while second-tier MSAs 
commonly have more than a dozen competitors. More broadly, the record 
shows that in 2013, 92.1% of buildings served with BDS demand in price 
cap territories were within a half mile of competitive fiber transport 
facilities. Further, the record shows that 89.6% of all price cap 
census blocks with BDS demand had at least one served building within a 
half mile of competitive fiber. Thus, the Commission found that ``the 
vast majority'' of locations featuring BDS demand had competitive fiber 
within close proximity. The Commission added that its data were 
conservative given the limits of the 2015 Collection, and that the data 
in that collection are from 2013, and therefore necessarily understate 
the level of current competition.
    4. On appeal, the Eighth Circuit Court largely affirmed the BDS 
Order, but found the Commission did not provide adequate notice on the 
narrow issue of ending ex ante pricing regulation of TDM transport 
services. The court vacated those portions of the BDS Order dealing 
with TDM transport and remanded them to the Commission for further 
action, which we initiate here.
    5. The current record includes ``strong evidence of substantial 
competition'' in price cap TDM transport markets. In addition to 
showing that there is ``widespread deployment of competitive transport 
networks'' in price cap areas, the record also indicates that transport 
services are ``typically higher volume services . . . which can more 
easily justify competitive investment and deployment.''
    6. In light of the current record of substantial competition and 
competitive pressure on TDM transport services in price cap areas, we 
now propose to eliminate nationwide ex ante pricing regulation of price 
cap carriers' TDM transport services and seek comment on our proposal. 
Specifically, we propose granting price cap carriers forbearance 
pursuant to section 10 of the Communications Act of 1934, as amended 
(the Act) from section 203 tariffing requirements for their TDM 
transport business data services and other transport special access 
service offerings. Consistent with the transition adopted in the BDS 
Order for packet-based and higher capacity TDM BDS, we propose 
permissive detariffing for price cap carriers' TDM transport services 
for a transition period, followed thereafter by mandatory detariffing 
of these business data services. We propose to end the transition 
period for price cap carriers' TDM transport services on the same date 
that the transition period mandated by the BDS Order for price cap 
carriers' other BDS services is scheduled to end--August 1, 2020--to 
align these transition periods and simplify their administration. In 
addition, we propose, for six (6) months following the effective date 
of an order adopting final rules, to require price cap carriers to 
freeze the tariffed rates for their TDM transport services, as long as 
those services remain tariffed. We seek comment on these proposals.
    7. We propose that during this transition, tariffing for these 
transport services will be permissive--the Commission will accept new 
tariffs and revisions to existing tariffs for the affected services. 
Apart from the rate freeze noted above, carriers will no longer be 
required to comply with price cap regulation for these services, and 
once the rules proposed in this Second Further Notice are effective, 
carriers that wish to continue filing tariffs under the permissive 
detariffing regime would be free to modify such tariffs to reflect the 
new regulatory structure outlined in this Second Further Notice for the 
affected services. We propose allowing price cap carriers to remove the 
relevant portions of their tariffs for the affected services at any 
time during the transition, and for the rate freeze to no longer apply 
to services that are not tariffed. We propose that once the transition 
ends, no price cap carrier may file or maintain any interstate tariffs 
for affected business data services. We seek comment on these 
proposals.
    8. We also seek comment on our analysis of the TDM transport market 
for price cap carriers. To what extent does the Commission's 
competitive analysis in the BDS Order continue to represent an accurate 
assessment of the competitive nature of the TDM transport market in 
price cap areas? Has the market for TDM transport in price cap areas 
changed materially since the Commission adopted the BDS Order? Is there 
evidence that competition for TDM transport has changed in these 
markets since the Commission last analyzed this market? Are there 
providers of TDM transport that were not identified by the 2015 
Collection? How has this growth in competition impacted demand for TDM 
transport? In addition to the evidence the Commission previously 
considered in finding that there is sufficient competition to justify 
nationwide pricing relief for TDM transport offered by price cap 
carriers, there are indications that cable providers' market share of 
lower speed business data services continues to grow significantly. As 
a competitor, cable operators self-provision all aspects of their BDS, 
including transport functionality, and rarely, if ever, collocate at 
incumbent LEC end offices. This increased competition from cable 
operators is in addition to competition from other providers. Given 
that cable competition does not typically rely on the TDM transport 
provided by incumbent local exchange carriers because they have built 
out their own networks, how should we factor such competition into

[[Page 61360]]

a comprehensive analysis of TDM transport competition in price cap 
areas? Additionally, to what extent has the increase in demand for 
packet-based business data services and the resulting decrease in 
demand for TDM services affected competition for TDM transport?
    9. We seek comment on whether we should consider any alternatives 
to removing ex ante pricing regulation for TDM transport offered by 
price cap carriers to better align our regulation with the dynamic and 
evolving nature of the business data services market. Should we, for 
example, adopt a competitive market test to measure the competitiveness 
of TDM transport offerings in areas served by price cap carriers? If 
so, how should such a test be structured? Should such a test assess 
competition using the counties served by price cap carriers as the 
relevant geographic market, as we do with the competitive market test 
for price cap carriers' lower capacity TDM end user channel 
terminations? Alternatively, should we use the same competitive market 
test for TDM transport offerings of price cap carriers as we do for 
lower capacity TDM end user channel terminations offered by price cap 
carriers? If we adopt a competitive market test for TDM transport 
offered by price cap carriers, how should we implement the results of 
such a test? Should we adopt similar transition provisions as those we 
adopted for the competitive market test for end user channel 
terminations in the BDS Order?
    10. We invite interested parties to submit any additional data or 
information regarding the state of competition for TDM transport 
services in price cap areas. Are there more current data available on 
the state of competition for TDM transport services that could enhance 
our analysis of this market? Are there any other ways of measuring or 
estimating competition for TDM transport in areas served by price cap 
carriers that have not already been used by the Commission? Are there 
other types of data that could represent a proxy for competition in the 
TDM transport market in areas served by price cap carriers? While the 
data in the 2015 Collection are not as current as some more recent 
sources, the collection nonetheless remains the most comprehensive 
source of data for business data services. We will therefore again make 
these data available to interested parties using the same procedures 
the Commission previously used.

B. Eliminating Ex Ante Pricing Regulation of Lower Capacity TDM 
Transport Provided by Carriers That Receive Fixed Universal Service 
Support and Elect Incentive Regulation for Their BDS Offerings

    11. We also seek comment on providing a path to eliminating ex ante 
pricing regulation of lower capacity (i.e., at or below a DS3 bandwidth 
level) TDM transport services, including other transport (i.e., non-end 
user channel termination) special access services, offered by rate-of-
return carriers that receive fixed high-cost universal service support, 
and elect our new lighter touch regulatory framework (electing 
carriers) for their BDS. In that framework, electing carriers' lower 
capacity circuit-based BDS, including their TDM transport and end user 
channel terminations, are converted to incentive regulation, and are 
offered subject to pricing flexibility that includes contract tariff 
pricing and term and volume discount plans. We also adopt a competitive 
market test for removing ex ante pricing regulation from electing 
carriers' lower capacity TDM end user channel terminations. However, 
based on the current record, we declined to adopt a competitive market 
test for electing carriers' lower capacity TDM transport, nor did we 
eliminate all ex ante pricing regulation for lower capacity TDM 
transport provided by electing carriers. As the Commission explained in 
the Notice, competition for electing carriers' lower capacity TDM 
transport may not be as robust in the less dense and more rural study 
areas that rate-of-return carriers typically serve, compared to denser 
and more populated price cap study areas.
    12. The Commission has long recognized transport is more 
competitive than end user channel terminations and required a different 
competitive showing for reduced pricing regulation. Given that we are 
proposing to eliminate ex ante pricing regulation of TDM transport 
services in price cap areas, we also seek further comment on whether, 
and under what circumstances, we should remove ex ante pricing 
regulation for electing carriers' lower capacity TDM transport. We 
previously declined to remove ex ante pricing regulation of TDM 
transport services because the record lacks data sufficient to justify 
such a step. We invite commenters to provide or identify data that 
would justify further pricing deregulation of electing carriers' lower 
capacity TDM transport.
    13. If there are such data, should we use that data to adopt a 
competitive market test for determining whether to relieve electing 
carriers' lower capacity TDM transport of ex ante pricing regulation in 
a particular study area? Were we to adopt a competitive market test for 
electing carriers' lower capacity TDM transport, how should it be 
structured? Should such a test largely mirror the structure of the 
current electing carrier competitive market test for lower capacity TDM 
end user channel terminations?
    14. If we adopt a competitive market test for lower capacity TDM 
transport offered by electing carriers, how should we implement the 
results of such a test? Should we adopt similar transition provisions 
as those we adopt for the competitive market test for electing 
carriers' lower capacity TDM end user channel terminations? Are there 
any reasons to structure the transition differently?
    15. In the alternative, we seek comment on whether we should remove 
ex ante pricing regulations for lower capacity TDM transport offered by 
electing carriers nationwide. Is there data available that would show 
nationwide competition sufficient to remove ex ante pricing regulation? 
How would we analyze the data given the variability of competition in 
areas served by electing rate-of-return carriers? Is there evidence of 
competition for lower capacity TDM transport in these areas consistent 
with the competition the Commission determined was present in price cap 
areas nationwide?
    16. We also seek comment on AT&T's recommendation that we base our 
decisions on data specific to electing carriers and their operating 
territories. We recognize that a large data collection would be a 
burden on rate-of-return carriers' limited resources, and we want to 
avoid imposing unnecessary regulatory burdens on them. We therefore 
request that commenters provide or identify additional data or other 
information relevant to the status of competition for lower capacity 
TDM transport in the study areas served by the rate-of-return carriers 
eligible to elect incentive regulation, including data on transport 
competition and competitive fiber deployment. Are there existing data 
collections that could be used as a proxy for the presence of lower 
capacity TDM transport competition in areas served by rate-of-return 
carriers eligible to elect incentive regulation? For example, in the 
BDS Order, the Commission relied in part on competitive fiber maps, 
building locations, and Census data to assess competition for TDM 
transport in price cap areas. Alternatively, Petitioners submitted a 
study in the record of this

[[Page 61361]]

proceeding that included certain types of demographic and competitive 
data that they contend are reasonable proxies for lower capacity TDM 
transport competition in their service areas. Parties should comment on 
the usefulness of these proxies and whether there are others that could 
provide a reasonable basis for Commission action.
1. Need for, and Objectives of, the Proposed Rules
    17. In the FNPRMs, we propose changes to, and seek comment on, the 
appropriate regulatory treatment of TDM transport business data 
services (BDS) offerings offered by both price cap carriers and rate-
of-return carriers that receive fixed universal service support and 
elect incentive regulation. In the FNPRMs, the Commission proposes to 
remove ex ante pricing regulation from TDM transport business data 
services offered by price cap carriers and seeks comment on doing so 
for rate-of-return carriers.
a. Legal Basis
    18. The legal basis for any action that may be taken pursuant to 
the FNPRMs is contained in sections 1, 4(i), 10, and 201(b) of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 160, and 
201(b).
2. 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 of, 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 
FNPRMs seek 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.
a. Total Small Entities
    20. 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 broad groups of small entities 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.
    21. 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 August 2016, there were approximately 356,494 small 
organizations based on registration and tax data filed by nonprofits 
with the Internal Revenue Service (IRS).
    22. 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 from 
the 2012 Census of Governments indicates that there were 90,056 local 
governmental jurisdictions consisting of general purpose governments 
and special purpose governments in the United States. Of this number 
there were 37,132 general purpose governments (county, municipal and 
town or township) with populations of less than 50,000 and 12,184 
special purpose governments (independent school districts and special 
districts) with populations of less than 50,000. The 2012 U.S. Census 
Bureau data for most types of governments in the local government 
category shows that the majority of these governments have populations 
of less than 50,000. Based on these data we estimate that at least 
49,316 local government jurisdictions fall in the category of ``small 
governmental jurisdictions.''
b. Broadband Internet Access Service Providers
    23. Internet Service Providers (Broadband). Broadband internet 
service providers include wired (e.g., cable, DSL) and VoIP service 
providers using their own operated wired telecommunications 
infrastructure fall in the category of Wired Telecommunication 
Carriers. Wired Telecommunications Carriers are comprised of 
establishments primarily engaged in operating and/or providing access 
to transmission facilities and infrastructure that they own and/or 
lease for the transmission of voice, data, text, sound, and video using 
wired telecommunications networks. Transmission facilities may be based 
on a single technology or a combination of technologies. The SBA size 
standard for this category classifies a business as small if it has 
1,500 or fewer employees. U.S. 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. Consequently, under this size standard 
the majority of firms in this industry can be considered small.
c. Wireline Providers
    24. 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.
    25. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent LEC services. The closest applicable size 
standard under SBA rules is for the category 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. A total of 
1,307 firms reported that they were incumbent local exchange service

[[Page 61362]]

providers. Of this total, an estimated 1,006 have 1,500 or fewer 
employees.
    26. 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.
    27. 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.
    28. 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 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.
    29. Local Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. The 
Telecommunications Resellers industry comprises establishments engaged 
in purchasing access and network capacity from owners and operators of 
telecommunications networks and reselling wired and wireless 
telecommunications services (except satellite) to businesses and 
households. Establishments in this industry resell telecommunications; 
they do not operate transmission facilities and infrastructure. Mobile 
virtual network operators (MVNOs) are included in this industry. Under 
that size standard, such a business is small if it has 1,500 or fewer 
employees. Census data for 2012 show that 1,341 firms provided resale 
services during that year. Of that number, all operated with fewer than 
1,000 employees. Thus, under this category and the associated small 
business size standard, the majority of these prepaid calling card 
providers can be considered small entities.
    30. Toll Resellers. The Commission has not developed a definition 
for Toll Resellers. The closest NAICS Code Category is 
Telecommunications Resellers. The Telecommunications Resellers industry 
comprises establishments engaged in purchasing access and network 
capacity from owners and operators of telecommunications networks and 
reselling wired and wireless telecommunications services (except 
satellite) to businesses and households. Establishments in this 
industry resell telecommunications; they do not operate transmission 
facilities and infrastructure. Mobile virtual network operators (MVNOs) 
are included in this industry. 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. Census data for 2012 show that 1,341 firms provided resale 
services during that year. Of that number, 1,341 operated with fewer 
than 1,000 employees. 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, 881 carriers 
have reported that they are engaged in the provision of toll resale 
services. Of this total, an estimated 857 have 1,500 or fewer 
employees. Consequently, the Commission estimates that the majority of 
toll resellers are small entities.
    31. 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 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 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 Second Further 
Notice.
    32. 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.

[[Page 61363]]

d. Wireless Providers--Fixed and Mobile
    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 1,000 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.
e. Cable Service Providers
    37. Because section 706 requires us to monitor the deployment of 
broadband using any technology, we anticipate that some broadband 
service providers may not provide telephone service. Accordingly, we 
describe below other types of firms that may provide broadband 
services, including cable companies, MDS providers, and utilities, 
among others.
    38. Cable and Other Subscription Programming. This industry 
comprises establishments primarily engaged in operating studios and 
facilities for the broadcasting of programs on a subscription or fee 
basis. The broadcast programming is typically narrowcast in nature 
(e.g. limited format, such as news, sports, education, or youth-
oriented). These establishments produce programming in their own 
facilities or acquire programming from external sources. The 
programming material is usually delivered to a third party, such as 
cable systems or direct-to-home satellite systems, for transmission to 
viewers. The SBA has established a size standard for this industry 
stating that a business in this industry is small if it has 1,500 or 
fewer employees. The 2012 Economic Census indicates that 367 firms were 
operational for that entire year. Of this total, 357 operated with less 
than 1,000 employees. Accordingly, we conclude that a substantial 
majority of firms in this industry are small under the applicable SBA 
size standard.
    39. Cable Companies and Systems (Rate Regulation). The Commission 
has developed its own small business size standards for the purpose of 
cable rate regulation. Under the Commission's rules, a ``small cable 
company'' is one serving 400,000 or fewer subscribers nationwide. 
Industry data indicate that there are currently 4,600 active cable 
systems in the United States. Of this total, all but eleven cable 
operators nationwide are small under the 400,000-subscriber size 
standard. In addition, under the Commission's rate regulation rules, a 
``small system'' is a cable system serving 15,000 or fewer subscribers. 
Current Commission records show 4,600 cable systems nationwide. Of this 
total, 3,900 cable systems have fewer than 15,000 subscribers, and 700 
systems have 15,000 or more subscribers, based on the same records. 
Thus, under this standard as well, we estimate that most cable systems 
are small entities.
    40. Cable System Operators (Telecom Act Standard). The 
Communications Act 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% 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.'' 
There are approximately 52,403,705 cable video subscribers in the 
United States today. Accordingly, an operator serving fewer than 
524,037 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. Based on 
available data, we find that all but nine incumbent cable operators are 
small entities under this size standard. The Commission neither 
requests nor collects information on whether cable system operators are 
affiliated with entities whose gross annual revenues exceed $250 
million. Although it seems certain that some of these cable system 
operators are affiliated with entities whose gross annual revenues 
exceed $250 million, we are unable at this time to estimate with 
greater precision the number of cable system operators that would 
qualify as small cable operators under the definition in the 
Communications Act.
    41. All Other Telecommunications. ``All Other Telecommunications'' 
is defined as follows: This U.S. industry is comprised of 
establishments that are 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. The SBA has developed a 
small business size standard for ``All

[[Page 61364]]

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.
3. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities
    42. The FNPRMs propose changes to, and seek comment on, the 
Commission's regulatory treatment of lower capacity TDM transport 
business data services offered by price cap and certain rate-of-return 
carriers. The objective of the proposed modifications is to reduce the 
unnecessary regulatory burdens and inflexibility of BDS regulation for 
both price cap and for rate-of-return carriers, which are for the most 
part small businesses, when competition justifies reduced regulation. 
These proposed rule modifications would provide additional incentives 
for competitive entry, network investment and the migration to IP-based 
network technologies and services.
    43. Specifically, the FNPRMs propose to eliminate ex ante pricing 
regulation and tariffing requirements for price cap carriers' TDM 
transport BDS. This will eliminate reporting, recordkeeping, and other 
compliance requirements for any price cap carrier. They also seek 
comment on whether to remove ex ante pricing regulation and tariffing 
requirements of TDM transport services offered by rate-of-return 
carriers that received fixed universal service support and elect 
incentive regulation. This change would impact the reporting, 
recordkeeping, and other compliance requirements for these rate-of-
return carriers, nearly all of which are small entities.
4. Steps Taken To Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    44. 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 and reporting requirements under the rules for such 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 
such small entities.
    45. The rule changes proposed by the FNPRMs would reduce the 
economic impact of the Commission's rules on price cap carriers and 
rate-of-return carriers that elect incentive regulation in the 
following ways. The Second Further Notice of Proposed Rulemaking 
proposes to free price cap carriers from ex ante pricing regulation for 
their TDM transport offerings, including the requirement to tariff 
their TDM transport services. The Further Notice of Proposed Rulemaking 
seeks comment on whether the Commission should do the same for TDM 
transport offered by rate-of-return carriers that received fixed 
universal support, or if the Commission should adopt a competitive 
market test for these carriers' TDM transport services. These rule 
changes would represent alternatives to the Commission's current rules 
that would significantly minimize the economic impact of those rules on 
price cap carriers and electing rate-of-return carriers. Finally, we 
seek comment as to any additional economic burden incurred by small 
entities that may result from the rule changes proposed in the FNPRMs.
5. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules
    46. None.

II. Procedural Matters

    47. Deadlines and 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 in Dockets WC 17-144, 16-
143, 05-25. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS).
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: https://apps.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 9050 Junction Drive, 
Annapolis Junction, MD 20701.
    [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 [email protected] or 
call the Consumer & Governmental Affairs Bureau at 202-418-0530 
(voice), 202-418-0432 (TTY).
    48. 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

[[Page 61365]]

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.
    49. Paperwork Reduction Act Analysis. This document may contain 
proposed new or modified information collection requirements subject to 
the PRA. 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 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.
    50. Initial Regulatory Flexibility Analysis. As required by the 
Regulatory Flexibility Act of 1980, as amended (RFA), the Commission 
has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the 
possible significant economic impact on small entities by the policies 
and rules proposed in this Second Further Notice of Proposed Rulemaking 
and Further Notice of Proposed Rulemaking (FNPRMs). The Commission 
requests written public comments 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 the FNPRMs. The Commission 
will send a copy of the FNPRMs, including this IRFA, to the Chief 
Counsel for Advocacy of the Small Business Administration (SBA). In 
addition, the FNPRMs and IRFA (or summaries thereof) will be published 
in the Federal Register.

III. Ordering Clauses

    51. Accordingly, it is ordered, pursuant to sections 1, 4(i), 10, 
and 201(b) of the Communication Act of 1934, as amended, 47 U.S.C. 151, 
154(i), 160, and 201(b) that this Second Further Notice of Proposed 
Rulemaking and Further Notice of Proposed Rulemaking are adopted.
    52. It is further ordered, that the Commission's Consumer & 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Second Further Notice of Proposed Rulemaking, and Further 
Notice of Proposed Rulemaking, including the Initial Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects

47 CFR Part 61--Tariffs

    Communications common carriers, Radio, Reporting and recordkeeping 
requirements, Telegraph, Telephone.

47 CFR Part 69--Access Charges

    Communications common carriers, Reporting and recordkeeping 
requirements, Telephone.

Federal Communications Commission.
Katura Jackson,
Federal Register Liaison Officer, Office of the Secretary.

Proposed Rules

    The Federal Communications Commission seeks comment on a proposal 
to amend 47 CFR parts 61 and 69, as follows:

PART 61--TARIFFS

0
1. The authority citation for part 61 continues to read as follows:

    Authority: 47 U.S.C. 151, 154(i), 154(j), 201-205, 403, unless 
otherwise noted.

0
2. Section 61.201 is amended by revising paragraph (a)(3) to read:


Sec.  61.201  Detariffing of price cap local exchange carriers.

* * * * *
    (a)(3) Transport services as defined in Sec.  69.801 of this 
chapter;
* * * * *

PART 69--ACCESS CHARGES

0
3. The authority citation for part 69 continues to read as follows:

    Authority: 47 U.S.C. 154, 201, 202, 203, 205, 218, 220, 254, 
403.

0
4. Section 69.807 paragraph (a) is revised to read as follows:


Sec.  69.807  Regulatory relief.

    (a) Price cap local exchange carrier transport and end user channel 
terminations in markets deemed competitive and in grandfathered markets 
for a price cap carrier that was granted Phase II pricing flexibility 
prior to June 2017 are granted the following regulatory relief:
    (1) Elimination of the rate structure requirements in subpart B of 
this part;
    (2) Elimination of price cap regulation; and
    (3) Elimination of tariffing requirements as specified in Sec.  
61.201 of this chapter.
* * * * *
[FR Doc. 2018-25786 Filed 11-28-18; 8:45 am]
BILLING CODE 6712-01-P