Common carrier services: Automated reporting management information system; reporting requirements; biennial regulatory review,

[Federal Register: August 18, 1998 (Volume 63, Number 159)]

[Proposed Rules]

[Page 44220-44224]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr18au98-37]

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 43

[CC Docket 98-117; FCC 98-147]

1998 Biennial Regulatory Review--Review of ARMIS Reporting Requirements

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Commission is required, in every even-numbered year beginning in 1998, to review its regulations applicable to providers of telecommunications service to determine whether the regulations are no longer in the public interest due to meaningful economic competition between providers of such service and whether such regulations should be repealed or modified. In this Notice of Proposed Rulemaking (``NPRM''), we propose as part of the biennial review to reduce the reporting requirements of our Automated Reporting Management Information System (``ARMIS''). These modifications are designed to minimize the reporting burden on carriers, improve the quality and use of the reported information and reduce the cost to the Commission of collection, verification, and distribution of the data. This Notice invites interested parties to comment on several modifications to the ARMIS ten reports.

DATES: Comments are to be filedon or before August 20, 1998 and reply comments are due on or before September 4, 1998. Written comments

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and reply comments by the public on the information collections are due October 19, 1998.

ADDRESSES: Federal Communications Commission, Secretary, Room 222, 1919 M Street NW., Washington, D.C. 20554. In addition to filing comments with the Commission's Secretary, a copy of any comments on the proposed information collections contained herein should be submitted to Judy Boley, Federal Communications Commission, Room 234, 1919 M Street, NW., Washington, DC 20554, or via the Internet to jboley@fcc.gov, and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street, N.W., Washington, D.C. 20503, or via the Internet to fain__t@al.eop.gov.

FOR FURTHER INFORMATION CONTACT: Anthony Dale, Common Carrier Bureau, Accounting Safeguards Division, (202) 418-2260, or via E-mail to ``adale@fcc.gov''. For additional information concerning information collections, contact Judy Boley at (202) 418-0214, or via the Internet at jboley@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice of Proposed Rulemaking in the matter of 1998 Biennial Regulatory Review--Review of ARMIS Reporting Requirements, CC Docket 98-117, adopted July 6, 1998, and released July 17, 1998. The complete text of this Notice of Proposed Rulemaking is available for inspection and copying during normal business hours in the Commission's Reference Center, Room 239, 1919 M Street, NW, Washington, DC. The NPRM is available through the Internet at http://www.fcc.gov/Bureaus/ Common__Carrier/Notices/1998/fcc98147.wp. The complete text may be purchased from the Commission's duplicating contractor, International Transcription Service, Inc. (ITS, Inc.), at 1231 20th Street NW., Washington, DC 20036 (202-857-3800).

Paperwork Reduction Act

This NPRM contains proposed information collections. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget (OMB) to comment on the information collections contained in this notice, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. Public and agency comments are due at the same time as other comments on this notice; OMB notification of action is due October 19, 1998. Comments should address: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology.

OMB Approval Number: None.

Title: 1998 Annual Biennial Review of ARMIS Reporting Requirements.

Form No.: FCC Reports 43-01 through 43-08 and FCC Reports 495A and 495B.

Type of Review: New collections.

Respondents: Business or other for profit.

No. of Estimated time Total annual Title

respondents per response burden

ARMIS Annual Summary Report.....................................

150

135

20,250 ARMIS USOA Report...............................................

50

190

9,500 ARMIS Joint Cost Report.........................................

150

110

12,450 ARMIS Access Charge Report......................................

150

621

93,150 ARMIS Service Quality Report....................................

12

625

7,500 ARMIS Customer Satisfaction Report..............................

8

675

5,400 ARMIS Infrastructure Report.....................................

8

412

3,296 ARMIS Operating Data Report.....................................

50

120

6,000 ARMIS Forecast of Investment Usage & Actual Usage Reports.......

300

21

6,300

Total Annual Burden: 163,846.

Estimated costs per respondent: $0.

Needs and Uses: As part of the biennial regulatory review, we are required to review our regulation applicable to providers of telecommunications service to determine whether the regulations are no longer in the public interest due to meaningful economic competition between providers of such service and whether such regulations should be repealed or modified. In this NPRM we propose as part of the biennial review to reduce the reporting requirements of our ARMIS. ARMIS is needed to administer our accounting, jurisdictional separations, access charges and joint cost rules and rules to analyze revenue requirements and rates of reform, service quality and infrastructure development. It collects financial and operating data from certain local exchange carriers. The information contained in the reports provide the necessary detail to enable this Commission to fulfill its regulatory responsibilities. These proposed modifications will reduce the reporting burdens on carriers, improve the quality and use of the reported information. If adopted the proposed modifications will reduce public burden by approximately 50% for the ARMIS reports.

Synopsis of Notice of Proposed Rulemaking

1. Eliminating Paper Filing Requirement

   1. The Common Carrier Bureau (``the Bureau'') currently requires carriers to submit both paper and electronic copies of the ARMIS reports. The Commission has, in recent years, relied increasingly on the data filedelectronically to maintain internal databases and generate meaningful reports for policy making. We tentatively conclude that paper versions of the ARMIS reports do not significantly contribute to the Commission's current efforts or future goals in administering its accounting, joint cost, jurisdictional separations, access charge rules, or in monitoring the quality of service and infrastructure development in the public network. Therefore, we tentatively conclude that we should eliminate the paper filing requirement. We anticipate that the transition to an electronic-only reporting program will represent a substantial cost savings for all carriers that file ARMIS reports. We seek comment on this tentative conclusion and request suggestions for improving the electronic filing system for ARMIS reports.

   2. The paper versions of the ARMIS reports, however, are our primary means for distributing ARMIS data to the public. To satisfy the frequent requests

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   from the public for ARMIS data, we plan to meet the demand by making it available through the Internet. This will require Commission staff to develop software that will allow interested parties to obtain ARMIS reports over the Internet, which we anticipate to be a costly process. We seek comment on this proposal and request parties to provide information on the costs of filing paper copies of ARMIS data so that we can assess the utility of eliminating the paper filing requirement. In considering whether to make ARMIS data available on the Internet, we plan to balance the benefits of such availability, in particular the frequency of requests from the public and the reduced administrative burden on Commission staff, against the costs of this course of action.

2. Equal Access, Payphone, and Inside Wire Data

   3. The ARMIS 43-04 Access Report provides jurisdictional separations and access charge data by part 36 category at the study area level. The data collected in this report are used by Commission staff to verify cost information filedin tariffs. We propose to modify the ARMIS 43-04 Access Report by eliminating 114 rows and three columns in which carriers report data pertaining to equal access, inside wire, and payphone investment. We tentatively conclude that the equal access information is no longer necessary because the nearly complete transition to equal access has reduced our need to monitor its deployment. We tentatively conclude that we can eliminate the inside wire and payphone investment columns because these two categories are no longer regulated. In the NPRM, Appendix A presents the specific row and column deletions and our reasons for their removal. We solicit comment on these tentative conclusions and seek additional suggestions from interested parties on streamlining the ARMIS 43-04 Access Report.

   4. The ARMIS 43-01 Annual Summary Report summarizes the carriers' accounting, rate base, and cost allocation data prescribed in parts 32, 36, 64, 65, and 69 of the Commission's rules (See 47 CFR 32, 36, 64, 65, and 69). The Annual Summary Report consists of two tables: (1) Table I, the ``Cost and Revenue Table;'' and (2) Table II, the ``Demand Analysis Table.'' In order to make the ARMIS 43-01 Annual Summary Report consistent with the streamlined version of the ARMIS 43-04 Access Report, we tentatively conclude that we should eliminate the corresponding rows and columns pertaining to equal access, inside wire, and payphone investment. Appendix B presents the specific row and column deletions and our reasons for their removal. We seek comment on this proposal and ask whether any additional streamlining or consolidation of these reports should be made.

3. Reduced Reporting Requirements for Mid-Sized Incumbent LECs

   5. Incumbent LECs whose annual operating revenues exceed an indexed revenue threshold are required to file ARMIS reports (See Reform of Filing Requirements and Carrier Classifications; Anchorage Telephone Utility, Petition for Withdrawal of Cost Allocation Manual, Report and Order, (FR cite 62 FR 39776 (July 24,1997) 12 FCC Rcd 8071)). The indexed revenue threshold, which has recently been increased to $112 million, is based on annual operating revenues for both regulated and nonregulated activities and is adjusted for inflation. (See 47 CFR 32.9000). Based on our experience with administering the ARMIS reporting system, it appears that the carriers' costs of implementing that system are largely fixed with respect to the number of access lines served. This implies that, on a per-access-line basis, the cost of complying with the full ARMIS reporting requirements is substantially higher for mid-size incumbent LECs than for large incumbent LECs, because the large incumbent LECs are able to average their fixed reporting costs over a larger number of access lines. Reducing the reporting requirements on mid-sized carriers would eliminate a costly reporting burden on those carriers that must recover the cost from a smaller number of customers.

   6. We propose to streamline the ARMIS reporting requirements for certain mid-sized incumbent LECs based on the aggregate revenues of the incumbent LEC and any LEC that it controls, is controlled by, or with which it is under common control (See 47 CFR 32.9000). If the aggregate revenues of these affiliated incumbent LECs are less than $7 billion, then each LEC within that group would be eligible for the streamlined reporting requirements described below. Incumbent LECs with individual annual operating revenues below the indexed revenue threshold would continue to be exempt from all ARMIS reporting requirements. The $7 billion threshold will still provide the Commission with data for nearly 90% of the industry for local exchange telecommunications, as measured by annual operating revenues. We seek comment on our proposal to streamline the reporting requirements for mid-sized LECs and on utility of this threshold mechanism. In addition to the reporting requirements detailed below, we seek comment on other suggestions for reducing the reporting burden on mid-sized incumbent LECs while still collecting the information needed to perform our oversight functions and protect ratepayers from the effects of improper cost allocations.

   7. The ARMIS 43-02 USOA Report provides the annual operating results of carriers' activities for every account in the Uniform System of Accounts (``USOA''), which we use to review the operations of communications common carriers subject to our jurisdiction. The USOA encompasses both balance sheet and income statement accounts that we use to review overall investment and expense levels, affiliate transactions, property valuation, and depreciation rates. The ARMIS 43- 02 USOA Report collects accounting and financial data in 27 tables. We tentatively conclude that we should reduce the filing burden of eligible reporting carriers by eliminating the requirement to file 21 tables in the ARMIS 43-02 USOA Report. Our experience administering the ARMIS reporting system and our accounting rules suggests that routine reporting of the balance sheet information contained in tables B-3 and B-5 through B-15 may not be crucial for eligible reporting carriers to report on a regular basis. Because we will continue to have access to the underlying data and source documents, we tentatively conclude that eliminating these reporting requirements will not impair our ability to perform necessary oversight functions.

   8. This tentative conclusion, if adopted, would result in eligible reporting carriers filing only six tables in the USOA Report: (1) Table B-1, ``Balance Sheet Accounts;'' (2) Table B-2, ``Statement of Cash Flows;'' (3) Table B-4, ``Analysis of Assets Purchased from or Sold to an Affiliate;'' (4) Table C-3, ``Board of Directors and General Officers;'' (5) Table I-1, ``Income Statement Accounts;'' and (6) Table I-2, ``Analysis of Services Provided from or Sold to an Affiliate.'' Together, these tables provide the information, such as the complete financial statements, needed to perform our audit and other oversight functions. In addition, we tentatively conclude that we should allow eligible reporting carriers to file the Class B level of detail for applicable schedules. (See 47 CFR 32.11) This proposed modification would not relieve eligible reporting carriers of their responsibility to maintain their books of accounts in accordance with part 32 of the Commission's rules, but would reduce the filing burden imposed on

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      eligible reporting carriers that file ARMIS reports. We seek comment on this tentative conclusion.

   9. We note that our pole attachment formulas are based on the Class A level of accounting detail. If the Commission adopts Class B accounts for mid-sized LECs as proposed herein, the ARMIS reports of the mid- sized LECs would no longer provide the details needed to calculate pole attachment fees using the pole attachment formulas. The details provided in eight Class A accounts are needed to provide data for the pole attachment formulas: six accounts associated with cable and wire facilities investment and expenses, and two accounts associated with network operations expenses. We seek comment on whether mid-sized LECs should be required to maintain subsidiary record categories to provide the data now provided in the eight Class A accounts and to report in ARMIS the information in the noted accounts as well as other information required by the pole attachment formulas.

   10. The ARMIS 43-03 Joint Cost Report details the regulated and nonregulated cost and revenue allocations by study area in accordance with the Commission's rules (See 47 CFR 64.901-904). In order to be consistent with the modifications to the USOA Report, we tentatively conclude that we should allow eligible reporting carriers to file only the Class B level of detail. This proposal, if adopted, would eliminate roughly two-thirds of the entries for eligible reporting carriers. We seek comment on this proposal.

   11. The ARMIS 495A Forecast Report and the ARMIS 495B Actual Usage Report provide the information needed to monitor our requirement that incumbent LECs allocate the costs of certain telephone plant investment used for both regulated and nonregulated activities on the basis of forecasted regulated and nonregulated usage. Carriers file these reports at the same time as their annual access tariff filing. The ARMIS 495A Forecast Report displays forecasts of expected regulated and nonregulated investment usage at the study area level. The ARMIS 495B Actual Usage Report displays the actual usage of regulated and nonregulated investment at the study area level. We tentatively conclude to allow eligible reporting carriers to report the data in the ARMIS 495A Forecast Report and the ARMIS 495B Actual Usage Report at the Class B level of detail. This tentative conclusion, if adopted, will provide flexibility for eligible reporting carriers to aggregate types of equipment and to forecast the regulated and nonregulated usage of such equipment. We seek comment on this tentative conclusion.

4. ARMIS Reporting Requirements for Large Incumbent LECs

   12. For the largest incumbent LECs, we tentatively conclude that we should maintain the Class A level of detail for their ARMIS reporting requirements. The more detailed reporting requirements are necessary for the Commission to uphold our statutory obligations to prevent cross-subsidization and discrimination under sections 254(k), 260, 271, 272, 273, 274, 275, and 276 of the Act. See 47 USC 254(k), 260, 271- 276. The Class A level of detail specified in the part 32 accounting rules allows us to identify potential cost misallocations beyond those revealed by the Class B system of accounts. In addition, the Class A level of detail is critical for monitoring large incumbent LECs because such carriers typically conduct a higher volume of transactions involving competitive services. We need sufficient detail to adequately perform audit and verification functions of the largest incumbent LECs that represent nearly 90% of the local exchange industry as measured by annual revenues. Moreover, the Class A level of detail is required to monitor the large incumbent LECs as competition begins to develop in local telephony markets. Therefore, we tentatively conclude that any further reduction in reporting requirements for ARMIS financial, cost allocation, and access charge data would impair our ability to guard against improper cost allocations, to assess the impact of our policies on incumbent LECs, and to monitor the development of competition in the telecommunications marketplace. We have long recognized that, for managerial decision-making and other purposes, incumbent LECs maintain their financial records in significantly more detail than that required for Class A carriers in our part 32 rules. Because incumbent LECs disaggregate their financial records into much greater detail than our Class A requirements, we tentatively conclude that the burden on the largest incumbent LECs resulting from Class A accounting and reporting requirements does not outweigh our needs for collecting financial information. We seek comment on these tentative conclusions to maintain the Class A accounting requirements for the largest incumbent LECs, and, alternatively, on whether there are certain ARMIS reporting requirements we could eliminate or streamline for the largest LECs.

       Procedural Matters

   13. Ex Parte Presentations. This is a permit-but-disclose proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided that they are disclosed as provided in the Commission's rules (See 47 U.S.C. 1.102, 1.203 and 1.206).

   14. Initial Regulatory Flexibility Analysis. The Regulatory Flexibility Act (``RFA'') (See 5 U.S.C. 601) requires that an initial regulatory flexibility analysis be prepared for notice-and-comment rulemaking proceedings, unless the agency certifies that ``the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.'' (See 5 U.S.C. 605(b)). The RFA generally defines ``small entity'' as having the same meaning as the terms ``small business,'' ``small organization,'' and ``small governmental jurisdiction'' ( See U.S.C. 601(b)). In addition, the term ``small business'' has the same meaning as the term ``small business concern'' under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (``SBA'') (See 15 U.S.C. 632).

   15. This NPRM proposes to eliminate the requirement to file paper versions of ARMIS reports, to reduce the specific reporting requirements on all incumbent LECs that file ARMIS reports, and to further reduce the reporting requirements for certain mid-sized incumbent LECs. Neither the Commission nor SBA has developed a definition of ``small entity'' specifically applicable to LECs. The closest definition under SBA rules is that for establishments providing ``Telephone Communications, Except Radiotelephone,'' which is Standard Industrial Classification (SIC) code 4813. Under this definition, a small entity is one employing no more than 1,500 persons.

   16. We certify that the proposals in this NPRM, if adopted, will not have a significant economic impact on a substantial number of small entities. Pursuant to long-standing rules, incumbent LECs with annual operating revenues exceeding the indexed revenue threshold must report financial and operating data to the Commission. This NPRM proposes to reduce certain of these reporting requirements and eliminate the subject paper filing requirement. These changes should be easy and inexpensive for incumbent LECs to implement and will not require

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       costly or burdensome procedures. We therefore expect that the potential impact of the proposal rules, if such are adopted, is beneficial and does not amount to a possible significant economic impact on affected entities. If commenters believe that the proposals discussed in the NPRM require additional RFA analysis, they should include a discussion of these issues in their comments.

   17. The Commission's Office of Public Affairs, Reference Operations Division, will send a copy of this NPRM, including this initial certification, to the Chief Counsel for Advocacy of the Small Business Administration. (See 5 USC 605(b)).

       Comment Filing Procedures

   18. Interested parties may file comments no later than August 20, 1998 and reply comments may be filedno later than September 4, 1998. All pleadings should reference CC Docket No. 98-117. A copy of each pleading should be sent to Anthony Dale, Accounting Safeguards Division, Common Carrier Bureau, FCC, 2000 L Street, Suite 201, Washington, DC 20554, and another copy should be sent to International Transcription Services (ITS), the Commission's duplicating contractor, at its office at 1231 20th Street, NW, Washington, D.C. 20036, (202) 857-3800. All pleadings will be made available for public inspection and copying in the Accounting Safeguards Division public reference room, 2000 L Street, NW, Suite 812, Washington, DC 20554.

   19. Comments and replies must also comply with Sec. 1.49 and all other applicable sections of the Commission's rules. We also direct all interested parties to include the name of the filing party and the date of the filing on each page of their comments and replies. In addition, one copy of each pleading must be filedwith International Transcription Services (ITS), the Commission's duplicating contractor, at its office at 1231 20th Street, NW, Washington, DC 20037, (202) 857- 3800. All pleadings are available for public inspection and copying in the Accounting and Audits public reference room.

       List of Subject in 47 CFR Part 43

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

       Federal Communications Commission. Magalie Roman Salas, Secretary.

       [FR Doc. 98-22162Filed8-17-98; 8:45 am]

       BILLING CODE 6712-01-P