Business Data Services in an Internet Protocol Environment, 38566-38579 [2019-16897]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 84, Number 152 (Wednesday, August 7, 2019)]
[Rules and Regulations]
[Pages 38566-38579]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-16897]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 61 and 69

[WC Docket Nos. 16-143, 05-25; GN Docket No. 13-5; RM 10593; FCC 19-66]


Business Data Services in an Internet Protocol Environment

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Commission eliminates ex ante pricing regulation for lower 
speed time division multiplexing (TDM) transport services offered by 
price cap regulated carriers nationwide, finding there is widespread 
competition in the marketplace, and abundant support in the record for 
removing the Commission's pricing regulations.

DATES: This final rule is effective September 6, 2019.

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

FOR FURTHER INFORMATION CONTACT: David Zesiger, Wireline Competition 
Bureau, Pricing Policy Division at (202) 418-1540 or via email at 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order on Remand, released on July 12, 2019. A full-text copy of 
this document may be obtained at the following internet address: 
https://www.fcc.gov/document/removing-unnecessary-regulation-transport-services-and-facilities-0.

I. Background

A. BDS TDM Transport Services

    1. The term business data services refers to the ``dedicated point-
to-point transmission of data at guaranteed speeds and service 
levels.'' BDS offerings are fundamentally important to modern 
communities and economies. Over the last several decades, the 
Commission has repeatedly recognized the increasing competition for BDS 
services in areas of the country served by price cap LECs. Competition 
has grown even more markedly in recent years as cable operators 
increasingly compete for all aspects of BDS, including TDM transport. 
In response, the Commission has worked consistently to streamline 
regulation of such services to reflect this evolution.
    2. In so doing, the Commission has characterized TDM transport 
services, which ``involve carrying traffic from one point of traffic 
concentration to another,'' as ``low hanging fruit'' for competitors 
because they can more easily justify competitive investment and 
deployment. In 1999, recognizing that burdensome pricing regulation is 
unnecessary and counter-productive where competitive pressure exists, 
the Commission granted pricing flexibility to price cap carriers for 
their BDS offerings, including their TDM transport services. The 
Commission provided two levels of pricing flexibility to price cap LECs 
offering BDS, including TDM-based transport services, keyed to the 
presence of competitive providers collocated at a price cap LEC's wire 
centers. The Commission suspended further grants of pricing flexibility 
in 2012, pending the resolution of the BDS proceedings.
    3. In 2017, after more than ten years of study and a massive data 
collection (the 2015 Collection), the Commission adopted an order 
comprehensively addressing the pricing regulation of BDS in price cap 
LEC areas. In the BDS Order, the Commission found, among other things, 
that competition for BDS TDM transport services was sufficiently 
pervasive to justify elimination of ``all ex ante pricing regulation of 
price cap incumbent LEC provision of TDM transport and other transport 
(i.e., non-end user channel termination)'' services. In support of this 
conclusion, the Commission looked to the record evidence showing that 
``competitive providers have deployed competing transport networks in 
more than 95% of census blocks with [BDS] demand,'' which included 
``about 99% of business establishments.'' It also found that ``in all 
price cap territories, 92.1 percent of buildings served were within a 
half mile of competitive fiber transport facilities'' and that, ``for 
all census blocks with business data services demand, 89.6 percent have 
at least one served building within a half mile of competitive LEC 
fiber.'' This half mile is significant because, as the Commission 
concluded, most BDS providers are willing and able to profitably invest 
in and deploy facilities within a half mile of existing competitive 
facilities. In addition, the Commission found that buildings with BDS 
demand that were served only by an incumbent LEC were on average only 
364 feet from the closest competitive LEC fiber facility.
    4. After the Eighth Circuit Court's partial remand of the BDS 
Order, finding that the Commission had not provided sufficient notice 
on the issue of eliminating ex ante pricing regulation for TDM 
transport, the Commission released the Second Further Notice, proposing 
to eliminate ex ante pricing regulation of price cap LECs' BDS TDM 
transport and other transport (i.e., non-end user channel termination) 
services. The Commission received eight comments, six reply comments, 
and several filings memorializing various ex parte communications. 
Also, in the interest of ensuring a more complete analysis of 
competitive conditions affecting TDM transport services, the Commission 
conducted additional analysis of TDM transport services using data from 
the 2015 Collection. That analysis is focused on measuring the 
proximity of incumbent LEC wire centers to competitive fiber and shows 
that the vast majority of locations with BDS demand in price cap areas 
are served by wire centers that are no more than a half mile from 
competitive fiber. The Wireline Competition Bureau (Bureau) made that 
additional analysis available for public review and sought and received 
an additional seven comments and six reply comments about those data 
tables (the April Data Tables). As a result of these two additional 
rounds of comments, we now have an even more robust record.

B. Forbearance Under Section 10 of the Act

    5. Section 10 of the Communications Act of 1934 as amended by the 
Telecommunications Act of 1996 (the Act) requires the Commission to 
forbear from applying any requirement of the Act or of our regulations 
to a telecommunications carrier or telecommunications service if and 
only if the Commission determines that: (1) Enforcement of the 
requirement ``is not necessary to ensure that the charges, practices, 
classifications, or regulations by, for, or in connection with that 
telecommunications carrier or telecommunications service are just and 
reasonable and are not unjustly or unreasonably discriminatory;'' (2) 
enforcement of that requirement ``is not necessary for the protection 
of consumers;'' and (3) ``forbearance from applying that requirement is 
consistent with the public interest.'' Forbearance is warranted only if 
all three criteria are satisfied.

[[Page 38567]]

II. Eliminating Ex Ante Pricing Regulation of BDS TDM Transport 
Services Offered by Price Cap LECs (Report and Order on Remand)

    6. After careful review of the record, we reaffirm the Commission's 
previous decision to eliminate ex ante pricing regulation of TDM 
transport services in areas served by price cap LECs. The current 
record, even more so than the record that was before the Commission in 
2017, demonstrates that widespread and ever-increasing competition in 
the supply of BDS transport makes ex ante pricing regulation of TDM 
transport in price cap areas both unnecessary and unduly burdensome. We 
therefore grant nationwide relief from ex ante pricing regulation of 
BDS TDM transport services in price cap areas, forbear from applying 
Section 203 tariffing requirements to these services, and adopt 
permissive detariffing for price cap LECs' BDS TDM transport services 
for a transition period, followed by mandatory detariffing of these 
services.

A. Competition for BDS TDM Transport

    7. In finding that there is widespread and increasing competition 
for BDS TDM transport services in price cap areas, we rely in part on 
the evidence and analysis that was before the Commission in 2017 and 
also on evidence and analysis added to the record through two 
additional rounds of public comment following the Eighth Circuit 
Court's remand. Indeed, the additional submissions to the record have 
substantiated the reasonableness of the Commission's previous findings, 
and nothing in those submissions would cause us to modify the 
conclusions the Commission previously made concerning the state of 
competition for TDM transport services. As the Commission did in 2017, 
we find particularly persuasive the data that shows that as of 2013: 
(1) ``competitive providers ha[d] deployed competing transport networks 
in more than 95% of census blocks with [BDS] demand'' which included 
``about 99% of business establishments;'' (2) ``in all price cap 
territories, 92.1 percent of buildings served were within a half mile 
of competitive fiber transport facilities'' and that, ``for all census 
blocks with business data services demand, 89.6 percent have at least 
one served building within a half mile of competitive LEC fiber;'' and 
(3) buildings with BDS demand that were served only by an incumbent LEC 
were on average only 364 feet from the closest competitive LEC fiber 
facility.
    8. We continue to find that competitive suppliers with nearby fiber 
put competitive pressure on transport prices. As the Commission 
previously found, the record demonstrates that providers actively 
compete for customers located within about a half mile from their 
networks. That is because wireline providers of BDS are commonly 
willing to extend their existing networks a half mile or further to 
meet demand. Thus, the fact that 92.1% of buildings served with 
business data services in price cap areas were within a half mile of 
competitive fiber transport facilities and that, 89.6% of census blocks 
with BDS demand in price cap areas had at least one served building 
within a half mile of competitive LEC fiber, demonstrates the 
widespread competitive pressure on TDM transport in price cap areas.
    9. INCOMPAS disagrees and argues that the relevant measure of 
competition in the supply of TDM transport is the proximity of 
competitive fiber to incumbent LEC wire centers rather than the 
proximity of fiber to buildings with BDS demand. We find this argument 
to be misplaced. As the record demonstrates, while competitive LECs 
sometimes use transport links that are collocated at incumbent LEC wire 
centers, they often connect customers directly to their fiber 
facilities, effectively bypassing the incumbent LEC network. For 
example, cable operators compete with price cap incumbent LECs for 
transport services, but do not rely on interconnection with incumbent 
LEC wire centers to provide service. Commenters also observe 
competitors' increasing reliance on third party carrier hotels and data 
centers, which provide competitive LECs alternatives to incumbent LEC 
wire centers. Therefore, using the proximity of price cap LEC wire 
centers to competitive LEC fiber to measure the competitiveness of TDM 
transport would, by itself, understate the level of competition for TDM 
transport by failing to account for competition that bypasses incumbent 
LEC networks.
    10. Moreover, we agree with commenters that argue that our decision 
to measure the proximity of buildings with BDS demand to competitive 
fiber is ``both more granular and more comprehensive'' than the 
competitive LECs' alternative proposal to measure the proximity of 
incumbent LEC wire centers to competitive fiber. Our metric assesses 
competition at approximately 1.2 million locations with BDS demand 
whereas there are fewer than 16,000 price cap incumbent LEC wire 
centers.
    11. In the interest in having as complete a record as possible, 
however, earlier this year, using data from the 2015 Collection, 
Commission staff included in the record the April Data Tables that show 
that the vast majority of locations with BDS demand are served by wire 
centers that were within a half mile of competitive fiber. More 
specifically, staff analysis demonstrates that, in 2013, 75.7% of price 
cap LEC wire center locations were within a half mile of competitive 
fiber. INCOMPAS's own analysis confirms this finding. Commission staff 
determined that only 5.6% of locations with BDS demand are likely 
served by incumbent LEC wire centers without competitive LEC fiber 
within a half mile. Staff further calculated that only 2.7% of all 
locations with BDS demand were either likely served by wire centers 
without nearby competitive fiber or were themselves not within a half 
mile of such fiber.
    12. As CenturyLink explains, the ``tables confirm that competitors 
can connect to the vast majority of ILEC central offices, and 
particularly those with meaningful demand for business services, to 
supplement their own competitive networks.'' At the same time, the 
April Data Tables ``dramatically understate competition for these 
services, as cable companies and other competitors frequently bypass 
ILEC networks entirely, eliminating the need for them to connect to 
ILEC wire centers to reach end-user customers.'' Moreover, the April 
Data Tables reflect only the competitive fiber that existed in 2013; as 
the record demonstrates, however, competitive fiber providers have 
continued to build new fiber routes in part to compete with incumbent 
LECs' BDS offerings.
    13. Commenters challenge the validity of the Commission's April 
Data Tables on various grounds. For example, INCOMPAS argues that 
without information about the distance between wire centers and the 
nearest splice point or interconnection point on the competitive 
provider's network, the April Data Tables understate the barriers to 
competitive entry. INCOMPAS cites Commission precedent regarding using 
the distance to splice points to measure competition, and notes the 
lack of splice point data in the record.
    14. However, given the fact that fiber operators commonly install 
interconnection points at regular intervals on the fiber they deploy, 
measuring the distance to fiber is a reasonable proxy for measuring the 
distance to a splice point. As CenturyLink explains, installing an 
interconnection point on fiber is neither ``particularly burdensome 
[nor] otherwise unachievable . . . . If there is sufficient demand, 
carriers will

[[Page 38568]]

naturally install interconnection points nearby when they deploy fiber, 
and even if they do not, it is still possible to add new splice 
points.'' It further observes that ``[e]stablishing a splice point 
generally does not significantly increase the cost of adding a new 
customer location to CenturyLink's network . . . . As a result, the 
need for a new splice point typically does not negatively affect the 
business case for deploying a fiber lateral to serve a new customer . . 
. .'' These statements are unrebutted in the record. We believe the 
data on fiber locations represents the best data available to the 
Commission and find they provide a reasonable means by which to 
estimate competitive pressure generated by the proximity of competitive 
fiber.
    15. We also find the suggestion that it is improper to include 
cable fiber in the April Data Tables, since cable providers do not 
collocate in incumbent LEC wire centers to sell transport, to be 
premised on an unnecessarily narrow and outdated view of competition 
that requires interconnection with the incumbent LEC. It misses the 
competitive pressure that nearby cable fiber exerts on the incumbent 
LEC regardless of whether it interconnects with the incumbent LEC. 
Competitive LEC fiber, including cable fiber, remains relevant to a 
competitive analysis regardless of whether competitors connect with 
incumbent facilities or bypass them.
    16. We reaffirm the Commission's finding that the presence or 
reasonable proximity of a single competitor's facilities represents 
competition given the high sunk cost nature of BDS. At the same time, 
as some commenters have pointed out, there are major urban areas with 
as many as 28 competitive transport providers, and second tier 
metropolitan areas with more than a dozen separate competitive 
transport providers. While these data are discrete in nature, they are 
unquestionably relevant to our assessment of TDM transport competition. 
That some of these competitive providers may not currently ``offer a 
substitute for interoffice DS1 and DS3 facilities in the MSA'' is of 
limited relevance given our view that TDM transport services are 
competitive due in part to the potential for providers to deploy 
transport when competitive LEC fiber exists within a half mile of BDS 
demand. Moreover, the willingness of so many competitors to supply 
service in these markets is a general indicator of competitiveness and 
the increasing use of non-incumbent LEC networks for transport.
    17. The 2015 Collection and other data submitted into the record 
before the adoption of the 2017 BDS Order necessarily do not account 
for competitive facilities deployed over the last several years. More 
recent record submissions show that competition for BDS transport 
services has continued to grow. The current record shows, for example, 
that cable operators have ``evolved from new entrants to established 
providers of BDS . . . .'' In the BDS Order, the Commission identified 
cable service as a substitute for BDS in areas with Metro Ethernet-
enabled offerings and for lower speed TDM services but did not find 
``broad substitution'' of cable best efforts services for BDS or 
``substantial performance similarities'' between the two types of 
services. Cable now competes for the full range of BDS, and, since it 
almost always bypasses the incumbent LEC network when it provides 
service, displaces incumbent LEC transport offerings when it takes a 
customer. In recent years, cable operators have invested billions of 
dollars in their hybrid fiber coax (HFC) networks which are now 
available in most areas where there is BDS demand and which can be 
repurposed to provide various levels of BDS with only incremental 
investment. Comcast, for example, reports having invested billions of 
dollars ``to increase network capacity,'' resulting in ``the largest 
facilities-based last mile alternative to the phone company.'' Charter 
Spectrum reportedly spent over $1 billion in 2018 in new fiber 
infrastructure to increase the density of its national fiber network. 
Cox is reported to be planning to invest an additional $10 billion into 
its network over the next five years.
    18. According to a recent industry analyst report, ``[c]able 
companies are leveraging [their] ubiquitous HFC and rapidly expanding 
fiber networks to gain share in the [BDS] market.'' It states that 
``[a]ll major [cable operators] are focused on expanding their network 
footprints and speed offerings, and Comcast, Cox and other cable 
companies are working to increase the capacities of their Ethernet over 
HFC offerings.'' The report also projects that cable providers are 
``expected to see share gains across markets, with continued expansion 
and upgrades of fiber and HFC footprint and focus on growing business 
and wholesale traction.''
    19. As a result of this aggressive investment, cable's BDS revenues 
and share of BDS revenues have steadily increased. Cable operators' BDS 
revenues more than doubled from approximately $8 billion in 2013 to 
more than $18 billion in 2018 and could reach $20 billion by the end of 
2019. Atlantic-ACM projects that from 2017 to 2023, cable operators' 
share of all BDS revenues will grow from 19.7% to an estimated 30.7%. 
In 2017 alone, cable BDS revenue growth was 10.6%.
    20. Traditional competitive LEC's BDS offerings have also increased 
over the past two years. As one analyst report declares, ``CLECs are 
aggressively expanding their footprints via network builds or M&A while 
ILECs are attempting to remain competitive by making major investments 
to prepare their networks for 5G.'' Fiber-based competitive LECs such 
as Zayo and Uniti Fiber have deployed significant additional facilities 
and continue to grow their share of BDS revenues. Zayo reported a 38% 
increase in fiber route miles from December 2015 (95,000 miles) to 
November 2018 (131,100 miles). Moreover, as commenters have also 
observed the increased use of carrier-neutral facilities such as third-
party carrier hotels and data centers that bypass incumbent LEC 
facilities, further suggesting competitive pressure from competitive 
LECs.
    21. As the Commission did in the BDS Order, we consider packet-
based transport services to be broadly substitutable for TDM-based 
transport services. Substitution between these two types of services is 
generally in one direction, and we find that ``circuit- and packet-
switched business data services that offer similar speed, 
functionality, and quality of service characteristics fall within the 
same product markets'' for the purposes of the market analysis relevant 
here. Indeed, TDM transport services can be carried over fiber, so 
fiber providers can offer customers TDM services.
    22. There is an ongoing steady decline in demand for TDM transport 
and increase in demand for packet-based alternatives. One analyst 
forecasts that legacy TDM transport will decline from $3.2 billion to 
$1.2 billion from 2017 to 2023. This forecast is supported by data 
submitted to the record by BDS providers. For example, according to 
CenturyLink, between 2015 and 2018, its incumbent LEC revenues for TDM 
transport dropped 9% annually and demand for DS1 and DS3 services ``has 
been declining for years as customers migrate to Ethernet and other 
packet-based services that are easily scalable to meet their growing 
bandwidth needs.'' Similarly, AT&T reports that its ``revenues for DS1 
and D[S]3 transport have continued to decline substantially since 2015 
due to the availability of competitive alternatives and the fact that 
many competitors (e.g., cable companies) do not purchase much transport 
from ILECs at all.''

[[Page 38569]]

    23. In light of the record of continued aggressive deployment by 
competitors of BDS-capable network facilities since the BDS Order, we 
find unpersuasive arguments that our analysis fails to sufficiently 
consider the barriers to supplying TDM transport and whether those 
barriers identified are significant enough to prevent robust 
competition. As the Commission previously explained, while entry 
barriers to BDS supply may seem high, competitors nonetheless 
frequently choose to make significant investment to enter these 
markets. And, given that transport services typically connect points of 
traffic aggregation and therefore offer relatively greater revenue 
opportunity than end user channel terminations, barriers to entry to 
supply transport are lower than for other types of BDS. Additionally, 
because fiber connections are a sunk cost, and it is efficient to 
deploy many more strands than are initially used, once competitors 
deploy facilities, they have every incentive to price competitively (as 
do the incumbents against whom they compete).
    24. Some commenters' arguments about barriers to entry are based on 
an unjustifiably narrow view of BDS transport competition which is 
premised on competition that is interconnected with, and therefore 
dependent on, incumbent LEC infrastructure. This argument ignores 
substantial and growing evidence that competitors often bypass the 
incumbent LEC network entirely. Indeed, as the Commission has 
previously recognized, ``cable operators self-provision all aspects of 
their BDS, including transport functionality,'' and therefore do not 
rely on incumbent LEC central offices to offer competitive TDM 
transport services and competitive LECs are increasingly bypassing 
incumbent LEC infrastructure. As AT&T explains, ``CLECs do not need to 
collocate in ILEC central offices, or to replicate ILEC transport 
paths, in order to provide a competitive alternative that disciplines 
ILEC rates.''
    25. Finally, we find unpersuasive the assertion by some commenters 
that incumbent LECs retain market power over DS1 and DS3 channel 
terminations, which they contend extends to TDM transport, thus 
rendering some TDM transport markets noncompetitive. As an initial 
matter, the Commission's competitive market test in the BDS Order, 
which was upheld on appeal by the Eighth Circuit, determined that 91.1% 
of locations with DS1 and DS3 end user channel termination demand were 
competitive. In support of their position, these commenters argue that 
the market analysis conducted by Dr. Marc Rysman on behalf of the 
Commission showed that incumbent LECs exercised some market power over 
DS1 and DS3 services. The conclusions they cite from the Rysman study, 
however, were specific to DS1 and DS3 channel terminations. Moreover, 
as the Commission explained in the BDS Order, the data used in Dr. 
Rysman's analysis were examined by peer reviewers and were found to be 
``too noisy to draw any firm conclusions,'' and therefore the 
Commission chose not to rely on these to draw conclusions about markets 
for DS1 and DS3 services. Additionally, Dr. Rysman's analysis was based 
on pricing data for full circuit service which combined data for 
channel termination, transport, and other services. Dr. Rysman did not 
attempt to draw conclusions specific to TDM transport. In fact, Dr. 
Rysman removed from his study all data specific to standalone transport 
services ``because the cost structure behind providing transport is 
likely to be substantially different from providing service to end-user 
premises and therefore would make comparisons of prices less 
meaningful.''

B. Removing Ex Ante Pricing Regulation

    26. Given our finding that the supply of TDM transport services is 
sufficiently competitive across the country that the continued 
application of ex ante pricing regulation would do more harm than good, 
and consistent with the recommendation made by numerous commenters, we 
reaffirm the Commission's decision in the BDS Order to remove ex ante 
pricing regulation of BDS TDM transport and other transport (i.e., non-
end user channel termination) services in price cap areas nationwide. 
The record does not support allegations made by some commenters that 
``stark differences'' in competitive conditions in different areas 
preclude the nationwide removal of ex ante pricing regulation. It does 
demonstrate, as the Commission recognized in the BDS Order, that an 
extremely small percentage of buildings with BDS demand in price cap 
areas may face the prospect of no regulatory constraint on incumbent 
LEC prices for TDM transport and no immediate prospect of a competitive 
alternative. We believe, however, that the costs of imposing ex ante 
pricing regulation far exceed the benefits of continued regulation of 
price cap LECs' TDM transport services. Imposing inflexible and 
burdensome ex ante pricing regulation on TDM transport services would 
harm the dynamic competitive nature of these markets, could lead to a 
decrease in new entrants, and would likely delay the transition from 
TDM- to IP-based offerings. To the limited extent there remain 
locations where there is not an immediate competitive threat, the 
Commission has previously explained that we anticipate reasonably 
competitive outcomes in the short- to medium-term (i.e., over several 
years) will discipline prices. As a result, we find that such locations 
do not preclude our adoption of a nationwide solution. Moreover, as the 
Commission previously recognized, ``our goal is not absolute 
mathematical precision but an administratively feasible approach that 
avoids imposing undue regulatory burdens on this highly competitive 
segment of the market.'' Refraining from pricing regulation for TDM 
transport services in price cap areas nationally achieves the proper 
balance between precision and administrability, particularly given the 
fact that parties continue to be able to file complaints with the 
Commission pursuant to section 208 of the Act.
    27. As a result, we do not support proposals that we adopt a 
competitive market test for TDM transport services. The fact that the 
Commission adopted a competitive market test for TDM channel 
terminations in price cap areas does not compel the adoption of a 
competitive market test for TDM transport services. The Commission has 
always distinguished its analysis and regulation of these markets and 
presuming that a test for one set of services means that a competitive 
market test for the other is necessary or even possible, wrongly 
conflates the two. Indeed, commenters that support a competitive market 
test for TDM transport concede that a ``competitive market test for 
transport should be distinct from that used for channel termination 
given the differences between the two types of services.'' Moreover, 
they claim that the record ``does not[ ] contain data on the extent of 
competition by different transport service providers'' and urge the 
Commission to ``further develop the record.''
    28. We see no benefit to prolonging this long-running proceeding to 
conduct a further data collection for TDM transport services. Given the 
very significant burdens and delays involved in the Commission's 2015 
Collection, the benefits of collecting additional data on TDM transport 
competition to develop a separate TDM transport competitive market test 
would need to be substantial to justify the burdens of such a 
collection. Commission staff analysis of the 2015 Collection shows that 
only 2.7% of locations with BDS

[[Page 38570]]

demand in price cap areas in 2013 were neither served by a wire center 
that was within a half mile of competitive fiber nor were themselves 
within a half mile of competitive fiber. With competition this 
extensive, the burdens of a major data collection and of developing and 
administering a competitive market test for TDM transport services 
clearly outweigh the benefits.
    29. This is particularly true because some commenters arguing for a 
competitive market test urge us to adopt a route-based test for TDM 
transport services based on transport routes connecting incumbent LEC 
wire centers. They argue that the relevant geographic market for TDM 
transport services is ``the route between two ILEC end offices and not 
the area within a given distance from a customer's location.'' The 
providers that suggest adoption of such a test do not explain--even in 
broad terms--how it would be structured, on what evidence it could be 
based, or how it could be feasibly administered. Neither do they 
acknowledge that the incumbent LEC-centric nature of such a test would 
not account for competitors that bypass incumbent LEC infrastructure. 
Nor do they take into account the fact that price cap LECs ``generally 
do not price their transport services on a route-by-route basis.'' 
Given the evidence of extensive and still growing competition for 
transport services in the vast majority of the areas served by price 
cap carriers where there is BDS demand, we cannot justify imposing 
burdensome new ex ante pricing regulation on BDS offerings based on the 
results of a test that will not actually be able to identify where 
there are failures in the transport market, but could inhibit 
investment in this dynamic marketplace.
    30. We also reject arguments made by some commenters that 
nationwide deregulation of TDM transport will have secondary 
consequences for the pricing of channel terminations in those price cap 
counties that the BDS Order deemed insufficiently competitive to 
warrant removal of ex ante pricing regulation. These parties argue that 
eliminating pricing regulations for TDM transport would allow price cap 
LECs to evade the price caps that remain on channel terminations in 
areas deemed non-competitive by allowing them to impose offsetting rate 
increases on TDM transport services in those counties. We find this 
reasoning flawed. The argument assumes that, if a provider tried to 
charge supracompetitive rates on transport services to compensate for 
price-capped channel terminations, competitors would not respond to 
such increased transport prices with additional investment in transport 
facilities. However, given the evidence of widespread competitive entry 
for BDS transport, there is reason to believe that the likely result of 
a price cap LEC charging supracompetitive rates on transport services 
would be the entry of a competitor with the capacity to bypass 
facilities being added in response. The competitive LECs' view of the 
BDS marketplace ignores the evidence of competitive pressure in the 
record. Moreover, in the more than two years since the adoption of the 
BDS Order, ex ante pricing regulation of TDM transport has been largely 
removed in price cap areas, even in counties where the Commission 
retained price cap regulation over price cap LECs' DS1 and DS3 channel 
terminations. Yet, competitive LECs cite no instance where deregulating 
transport rates has undercut price cap regulation of channel 
terminations. In light of this experience, the competitive LECs' 
concern seems speculative.
    31. Refraining from pricing regulation for TDM transport services 
nationwide achieves the proper balance between precision and 
administrability. It also avoids unnecessary disruption of existing BDS 
transport sales arrangements. And, as one commenter explains, the 
``risks of overregulation of these services would outweigh any marginal 
benefit from'' reinstating ex ante pricing regulation ``in this highly 
competitive sector, by artificially tamping down TDM transport rates, 
thereby deterring competitive entry and slowing the IP migration.'' 
Instead, we believe that providing regulatory relief in this market 
segment will foster conditions that will continue to encourage 
competitive entry and provide incentive for further investment in fiber 
transport facilities.
    32. Finally, as we previously observed in the BDS Order, price cap 
LECs' TDM transport services continue to be subject to sections 201, 
202 and 208 of the Communications Act. These statutory provisions 
prohibit carriers from imposing rates, terms, and conditions that are 
unjust, unreasonable, or unreasonably discriminatory.

C. Forbearance From Tariffing

    33. To effectuate the approach we take to TDM transport, and 
consistent with the approach the Commission took in the BDS Order, 
pursuant to section 10 of the Communications Act, we forbear from 
applying section 203 of the Act and our tariffing requirements to price 
cap incumbent LECs in their provision of BDS TDM transport services. 
This forbearance relieves price cap LECs of the requirement to file 
interstate tariffs for these services nationwide.
    34. The Commission has a long history of granting price cap LECs 
forbearance from tariffing requirements for various of their BDS 
offerings. More than a decade ago, the Commission provided grants of 
forbearance to price cap LECs for their packet-switched and optical 
transmission BDS. Two years ago, in the BDS Order, the Commission 
granted price cap LECs forbearance from the Act's tariffing obligations 
with respect to the provision of packet-based and higher speed TDM BDS, 
lower speed TDM transport, and DS1 and DS3 end user channel termination 
services in counties deemed competitive by the Commission's competitive 
market test. Based on the record before us, we find that the statutory 
test for granting forbearance from tariffing obligations for price cap 
LECs' TDM transport services has been met.
    35. First, we find that the widespread existence of competitive 
alternatives to incumbent LECs' BDS TDM transport offerings means that 
the application of section 203 of the Act is not necessary to ensure 
that the charges and practices for price cap LECs' transport services 
are just and reasonable and not unreasonably discriminatory. Congress 
enacted section 203 of the Act in an era when tariffs ``were required 
to protect consumers from unjust, unreasonable, and discriminatory 
rates in a virtually monopolistic market.'' Over time, the Commission 
progressively modified its regulation of price cap LECs' BDS to reflect 
increasing levels of competition in the supply of BDS, and therefore, 
the reduced need for the protections tariffs that provide. The record 
demonstrates that current market forces will better ensure that prices 
for TDM transport offered by price cap LECs are just and reasonable and 
not unreasonably discriminatory than (necessarily) blunt regulatory 
measures.
    36. Second, for many of the same reasons, we find that enforcement 
of our tariffing requirements for price cap LECs' BDS TDM transport 
services is ``not necessary for the protection of consumers,'' and 
forbearance will benefit consumers. Widespread and increasing 
competition to BDS services will drive down prices and provide 
competitive alternatives to those services, which in turn benefits 
consumers. Moreover, forbearance from tariffing will allow price cap 
carriers to respond more quickly to competition and be more innovative 
in the services they offer, also benefitting consumers. Additionally, 
price cap LEC BDS TDM transport offerings will remain subject to 
sections 201, 202, and 208 of the Act

[[Page 38571]]

and to our enforcement of those provisions through the section 208 
complaint process.
    37. Third, we find that granting forbearance for price cap LECs' 
BDS TDM transport services from section 203 of the Act is consistent 
with the public interest and will promote competitive market 
conditions. As the Commission found in the BDS Order, forbearance from 
tariffing obligations for TDM transport will promote further BDS 
competition and deployment in price cap LEC areas. Moreover, tariffing 
can adversely impact competitive markets by reducing a carrier's 
incentives to offer price discounts, delaying and increasing the costs 
of innovation, and inhibiting a carrier from tailoring services to best 
meet customers' needs. Further, tariffing itself is not without its 
costs. Forbearing from section 203 and our tariffing rules will reduce 
unnecessary administrative costs, which can be significant, and allow 
carriers to redirect their resources to deploying service capabilities 
and providing service. We continue to adhere to our view that disparate 
forbearance treatment of carriers providing the same or similar 
services is not in the public interest, as it creates distortions in 
the marketplace that may harm consumers. Accordingly, the continued 
application of section 203 is unnecessary under sections 10(a)(3) and 
10(b). Because we find that each of the elements of the section 10 
forbearance analysis is satisfied, we must grant forbearance from 
section 203 tariffing requirements.

D. Transition to Mandatory Detariffing

    38. To ensure an orderly transition to a fully detariffed 
regulatory regime for price cap LECs' TDM transport offerings, we adopt 
mechanisms that align with those the Commission adopted in the BDS 
Order. As in the BDS Order, we also require competitive LECs, which are 
subject to permissive detariffing, to detariff their remaining 
transport BDS offerings by the end of this transition. In so doing, we 
recognize that many price cap LECs have already detariffed their TDM 
transport in response to the BDS Order and these services have remained 
detariffed given the Eighth Circuit's temporary stay of its partial 
remand. For those price cap LECs that have not already detariffed their 
TDM transport, we adopt a new transition period that will begin on the 
effective date of this Order (which will be 30 days after publication 
of this Order in the Federal Register) and will end on August 1, 2020, 
the date of the transition period mandated by the BDS Order for 
mandatory detariffing.
    39. During this transition, tariffing for TDM transport services by 
carriers will be permissive--we will accept new tariffs and revisions 
to existing tariffs for the affected services. Price cap LECs will no 
longer be required to comply with price cap regulation for their TDM 
transport services, and once these rules are effective, carriers that 
wish to continue filing tariffs under the permissive detariffing regime 
are free to modify such tariffs consistent with this Order. Carriers, 
including non-incumbent LECs, may remove the relevant portions of their 
tariffs for the affected services at any time during the transition. 
Once the transition ends, no price cap carrier may file or maintain any 
interstate tariffs for affected business data services.
    40. Price cap incumbent LECs and competitive LECs may not file or 
maintain any interstate tariffs for affected business data services 
once the transition ends. This will prevent carriers from obtaining 
``deemed lawful'' status for tariff filings that are not accompanied by 
cost support and invoking the filed-rate doctrine in contractual 
disputes with customers. Business data service providers will also be 
prevented from picking and choosing when they are able to invoke the 
protections of tariffs.
    41. We do not intend our actions to disturb existing contractual or 
other long-term arrangements--a contract tariff remains a contract even 
if it is no longer tariffed. As we stated in the BDS Order, contract 
tariffs, term and volume discount plans, and individual circuit plans 
do not become void upon detariffing. All carriers are to act in good 
faith to develop solutions to ensure rates remain just and reasonable.
    42. The rule amendments we adopt today relating to TDM transport 
are substantively the same as those the Commission adopted in the BDS 
Order, and as such, impose the same obligations on carriers as the 
existing rules. We make only minor clarifying changes to the rules. For 
example, we amend the rules to specify that competitive LECs must 
detariff their business data services by August 1, 2020.

III. Procedural Matters

    43. Paperwork Reduction Act Analysis--This document does not 
contain proposed information collection(s) subject to the Paperwork 
Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, 
it does not contain any new or modified information collection burden 
for small business concerns with fewer than 25 employees, pursuant to 
the Small Business Paperwork Relief Act of 2002, Public Law 107-198, 
see 44 U.S.C. 3506(c)(4).
    44. Congressional Review Act--The Commission will send a copy of 
this Report and Order to Congress and the Government Accountability 
Office pursuant to the Congressional Review Act, see 5 U.S.C. 
801(a)(1)(A).
    45. Final Regulatory Flexibility Analysis--As required by the 
Regulatory by the Regulatory Flexibility Act of 1980, as amended (RFA) 
an Initial Regulatory Flexibility Analysis (IRFA) was incorporated into 
the Second Further Notice of Proposed Rulemaking and Further Notice of 
Proposed Rulemaking (Second Further Notice) for the Time Division 
Multiplexing (TDM) transport business data services (BDS). The 
Commission sought written public comment on the proposals in the Second 
Further Notice, including comment on the IRFA. The Commission received 
no comments on the IRFA. Because the Commission amends its rules in 
this Report and Order, the Commission has included this Final 
Regulatory Flexibility Analysis (FRFA). This present FRFA conforms to 
the RFA.

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

    46. In the Second Further Notice, the Commission proposed changes 
to, and sought comment on, the appropriate regulatory treatment of TDM 
transport BDS offerings offered by price cap local exchange carriers 
(LECs). The Commission proposed to remove ex ante pricing regulation 
from TDM transport business data services offered by price cap LECs. In 
this Order, we promote competition in the market for BDS TDM transport 
services by adopting a regulatory framework for those services that 
better reflects the dynamic competitive nature of price cap LECs' TDM 
transport markets.

B. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    47. We analyze the market for TDM transport in areas served by 
price cap incumbent local exchange carriers and conclude that the 
record in this proceeding demonstrates widespread, significant and 
growing competition in this segment of the BDS market. We therefore 
grant nationwide relief from ex ante pricing regulation of these 
carriers' TDM transport services, forbear from applying Section 203 
tariffing requirements to these services, and adopt permissive 
detariffing for price cap LECs' TDM transport services for a

[[Page 38572]]

transition period, followed by mandatory detariffing of these services.
    48. The Commission did not receive comments specifically addressing 
the rules and policies proposed in the IRFA.

C. Response to Comments by the Chief Counsel for Advocacy of the Small 
Business Administration

    49. The Chief Counsel did not file any comments in response to this 
proceeding.

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

    50. 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.
1. Total Small Entities
    51. 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.
    52. 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).
    53. 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.''
2. Broadband Internet Access Service Providers
    54. 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.
3. Wireline Providers
    55. 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.
    56. 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 
providers. Of this total, an estimated 1,006 have 1,500 or fewer 
employees.
    57. 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

[[Page 38573]]

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.
    58. We have included small incumbent LECs in this present RFA 
analysis. As mentioned 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.
    59. 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.
    60. 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.
    61. 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.
    62. 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.
    63. 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.
4. Wireless Providers--Fixed and Mobile
    64. Wireless Telecommunications Carriers (except Satellite). This 
industry comprises establishments engaged in operating and maintaining 
switching and transmission facilities to provide communications via the 
airwaves. Establishments in this industry have spectrum licenses and 
provide services using that spectrum, such as cellular 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

[[Page 38574]]

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.
    65. 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.
    66. 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.
    67. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. As explained, 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.
5. Cable Service Providers
    68. 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.
    69. 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.
    70. 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.
    71. 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.
    72. 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 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.

E. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities

    73. The rule changes in the Order include reducing the unnecessary 
regulatory burdens and inflexibility of ex ante pricing regulation and 
tariffing requirements for price cap LECs' TDM

[[Page 38575]]

transport services since the Commission has found there is sufficient 
competition to justify reduced regulation. These rule changes provide 
additional incentives for competitive entry, network investment and the 
migration to IP-based network technologies and services.
    74. The transition period for detariffing price cap LECs' TDM 
transport services will begin on the effective date of this Order 
(thirty (30) days after Federal Register publication). Given our desire 
to align the transition periods we adopt here with those the Commission 
already adopted in the BDS Order, the transition periods for 
detariffing TDM transport services will end on the same date that the 
transition period mandated by the BDS Order for price cap LECs' other 
BDS services is scheduled to end--August 1, 2020.
    75. Specifically, the Order eliminates ex ante pricing regulation 
and tariffing requirements for price cap LECs' TDM transport BDS. This 
will eliminate reporting, recordkeeping, and other compliance 
requirements for any price cap LEC.

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

    76. 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.
    77. The rule changes in this Order reduce the economic impact of 
the Commission's rules on price cap LECs by freeing price cap LECs from 
ex ante pricing regulation for their TDM transport offerings, including 
the requirement to tariff their TDM transport services. These rule 
changes will significantly minimize the economic impact of our rules on 
price cap LECs.

G. Report to Congress

    78. The Commission will send a copy of the Report and Order, 
including this FRFA, in a report to be sent to Congress pursuant to the 
Congressional Review Act. In addition, the Commission will send a copy 
of the Report and Order, including this FRFA, to the Chief Counsel for 
Advocacy of the SBA. A copy of the Order and FRFA (or summaries 
thereof) will also be published in the Federal Register. Final 
Regulatory Flexibility Analysis.
    79. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA) an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated into the Second Further Notice of Proposed Rulemaking and 
Further Notice of Proposed Rulemaking (Second Further Notice) for the 
Time Division Multiplexing (TDM) transport business data services 
(BDS). The Commission sought written public comment on the proposals in 
the Second Further Notice, including comment on the IRFA. The 
Commission received no comments on the IRFA. Because the Commission 
amends its rules in this Report and Order, the Commission has included 
this Final Regulatory Flexibility Analysis (FRFA). This present FRFA 
conforms to the RFA.

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

    80. In the Second Further Notice, the Commission proposed changes 
to, and sought comment on, the appropriate regulatory treatment of TDM 
transport BDS offerings offered by price cap local exchange carriers 
(LECs). The Commission proposed to remove ex ante pricing regulation 
from TDM transport business data services offered by price cap LECs. In 
this Order, we promote competition in the market for BDS TDM transport 
services by adopting a regulatory framework for those services that 
better reflects the dynamic competitive nature of price cap LECs' TDM 
transport markets.

B. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    81. We analyze the market for TDM transport in areas served by 
price cap incumbent local exchange carriers and conclude that the 
record in this proceeding demonstrates widespread, significant and 
growing competition in this segment of the BDS market. We therefore 
grant nationwide relief from ex ante pricing regulation of these 
carriers' TDM transport services, forbear from applying Section 203 
tariffing requirements to these services, and adopt permissive 
detariffing for price cap LECs' TDM transport services for a transition 
period, followed by mandatory detariffing of these services.
    82. The Commission did not receive comments specifically addressing 
the rules and policies proposed in the IRFA.

C. Response to Comments by the Chief Counsel for Advocacy of the Small 
Business Administration

    83. The Chief Counsel did not file any comments in response to this 
proceeding.

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

    84. 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.
1. Total Small Entities
    85. 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.
    86. 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).
    87. 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

[[Page 38576]]

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.''
2. Broadband Internet Access Service Providers
    88. 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.
3. Wireline Providers
    89. 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.
    90. 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 
providers. Of this total, an estimated 1,006 have 1,500 or fewer 
employees.
    91. 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.
    92. We have included small incumbent LECs in this present RFA 
analysis. As mentioned 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.
    93. 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.
    94. 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

[[Page 38577]]

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.
    95. 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.
    96. 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.
    97. 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.
4. Wireless Providers--Fixed and Mobile
    98. 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.
    99. 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.
    100. 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.
    101. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. As explained, 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.
5. Cable Service Providers
    102. 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.

[[Page 38578]]

    103. 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.
    104. 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.
    105. 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.
    106. 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 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.

E. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities

    107. The rule changes in the Order include reducing the unnecessary 
regulatory burdens and inflexibility of ex ante pricing regulation and 
tariffing requirements for price cap LECs' TDM transport services since 
the Commission has found there is sufficient competition to justify 
reduced regulation. These rule changes provide additional incentives 
for competitive entry, network investment and the migration to IP-based 
network technologies and services.
    108. The transition period for detariffing price cap LECs' TDM 
transport services will begin on the effective date of this Order 
(thirty (30) days after Federal Register publication). Given our desire 
to align the transition periods we adopt here with those the Commission 
already adopted in the BDS Order, the transition periods for 
detariffing TDM transport services will end on the same date that the 
transition period mandated by the BDS Order for price cap LECs' other 
BDS services is scheduled to end--August 1, 2020.
    109. Specifically, the Order eliminates ex ante pricing regulation 
and tariffing requirements for price cap LECs' TDM transport BDS. This 
will eliminate reporting, recordkeeping, and other compliance 
requirements for any price cap LEC.

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

    110. 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.
    111. The rule changes in this Order reduce the economic impact of 
the Commission's rules on price cap LECs by freeing price cap LECs from 
ex ante pricing regulation for their TDM transport offerings, including 
the requirement to tariff their TDM transport services. These rule 
changes will significantly minimize the economic impact of our rules on 
price cap LECs.

G. Report to Congress

    112. The Commission will send a copy of the Report and Order, 
including this FRFA, in a report to be sent to Congress pursuant to the 
Congressional Review Act. In addition, the Commission will send a copy 
of the Report and Order, including this FRFA, to the Chief Counsel for 
Advocacy of the SBA. A copy of the Order and FRFA (or

[[Page 38579]]

summaries thereof) will also be published in the Federal Register.

IV. Ordering Clauses

    113. Accordingly, it is ordered that, pursuant to sections 1, 2, 
4(i)-(j), 10, 201(b), 202(a), 403, of the Communications Act of 1934, 
as amended, and section 706 of the Telecommunications Act of 1996, 47 
U.S.C. 151, 152, 154(i)-(j), 160, 201(b), 202(a), 403, 1302, this 
Report and Order on Remand in WC Docket No. 16-143, GN Docket No. 13-5, 
WC Docket No. 05-25, and RM-10593 is adopted and shall be effective 
thirty (30) days after publication in the Federal Register.
    114. It is further ordered that Parts 61 and 69 of the Commission's 
rules, 47 CFR parts 61 and 69, are amended as set forth in Appendix A, 
and that such rule amendments shall be effective thirty (30) days after 
publication of this Report and Order on Remand in the Federal Register.
    115. It is further ordered that, pursuant to sections 402 and 405 
of the Communications Act, 47 U.S.C. 402, 405, the date of ``public 
notice'' with respect to this Report and Order on Remand of all actions 
taken herein shall be the date that a summary of this Report and Order 
on Remand is published in the Federal Register. The period for filing 
petitions for reconsideration or petitions for judicial review of all 
actions taken herein shall commence on that date. Section 1.4 of the 
Commission's rules, 47 CFR 1.4, is hereby waived to the extent 
inconsistent with this paragraph.
    116. It is further ordered that the Commission's Consumer & 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Report and Order on Remand to Congress and the Government 
Accountability Office pursuant to the Congressional Review Act, see 5 
U.S.C. 801(a)(1)(A).
    117. It is further ordered, that the Commission's Consumer & 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Report and Order on Remand, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects

47 CFR Part 61

    Communications, Common carriers, Reporting and recordkeeping 
requirements, Telephone.

47 CFR Part 69

    Communications, Common carriers, Reporting and recordkeeping 
requirements, Telephone.

Federal Communications Commission.
Marlene Dortch,
Secretary.

Final Rules

    For the reasons set forth in the preamble, the Federal 
Communications Commission amends parts 61 and 69 of title 47 of the 
CFR, 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 as 
follows:


Sec.  61.201  Detariffing of price cap local exchange carriers.

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

0
3. Section 61.203 is amended by revising paragraph (b) to read as 
follows:


Sec.  61.203  Detariffing of competitive local exchange carriers.

* * * * *
    (b) The detariffing must be completed by August 1, 2020.

PART 69--ACCESS CHARGES

0
4. 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, unless otherwise noted.


0
5. Section 69.807 is amended by revising paragraph (a) to read as 
follows:


Sec.  69.807  Regulatory relief.

    (a) Price cap local exchange carrier TDM transport, end user 
channel terminations in markets deemed competitive, and end user 
channel terminations in grandfathered markets for a price cap local 
exchange 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 contained 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. 2019-16897 Filed 8-6-19; 8:45 a.m.]
BILLING CODE 6712-01-P