Common carrier services: International submarine cable systems; licensing streamlining,

[Federal Register: July 6, 2000 (Volume 65, Number 130)]

[Proposed Rules]

[Page 41613-41620]

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

[DOCID:fr06jy00-27]

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[IB Docket No. 00-106, FCC 00-210]

Review of Commission's Consideration of Applications Under the Cable Landing License Act

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document solicits comments on a proposed mechanism for streamlining the licensing of international submarine cable systems. Under the proposal, applicants would have three options to qualify for streamlined review. The Commission initiated this proceeding as a means of tailoring its licensing process to encourage rapid, facilities-based entry by multiple firms that can bring new capacity to keep up with the increased demand.

DATES: Comments are due on or before August 21, 2000, and reply comments are due on or before September 21, 2000. Written comments by the public on the proposed information collections are due on or before August 21, 2000. Written comments must be submitted by the Office of Management and Budget (OMB) on the proposed information collections before September 5, 2000.

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ADDRESSES: Federal Communications Commission, Secretary, 445 12th Street, SW., Room TW-B204F, Washington, DC 20554. In addition to filing comments with the Secretary, a copy of any comments on the proposed information collections contained herein should be submitted to Judy Boley, Federal Communications Commission, Room 1-C804, 445 12th Street, SW, Washington, DC 20554, or via the Internet to jboley@fcc.gov, and to Edward C. Springer, OMB Desk Officer, Room 10236 NEOB, 725 17th Street, NW, Washington, DC 20503 or via the Internet to edward.springer@omb.eop.gov.

FOR FURTHER INFORMATION CONTACT: Peggy Reitzel, Policy and Facilities Branch, Telecommunications Division, International Bureau, (202) 418- 1499. For additional information concerning the proposed information collections contained in this Notice of Proposed Rulemaking contact Judy Boley at (202) 418-0214, or email at jboley@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice of Proposed Rule Making, FCC 00-210, adopted on June 8, 2000, and released on June 22, 2000. The full text of this document is available for inspection and copying during normal business hours in the FCC Reference Center (Room CY-A257) of the Federal Communications Commission, 445 12th Street, SW, Washington, DC 20554. The document is also available for download over the Internet at http://www.fcc.gov/ Bureaus/International/Notices/2000/fcc00210.txt. The complete text of this document also may be purchased from the Commission's copy contractor, International Transcription Service, Inc., 1231 20th Street, N.W., Washington, D.C. 20036, (202) 857-3800.

This Notice of Proposed Rulemaking contains proposed information collections subject to the Paperwork Reduction Act of 1995 (PRA). It has been submitted to the Office of Management and Budget (OMB) for review under the PRA. OMB, the general public, and other Federal agencies are invited to comment on the proposed information collections contained in this proceeding.

Summary of Notice of Proposed Rulemaking

1. On June 8, 2000, the Commission adopted a Notice of Proposed Rulemaking (NPRM) to initiate a proceeding to establish streamlined rules for processing applications for submarine cable landing licenses. This proceeding is one of the Commission's continuing efforts to streamline the submarine cable landing licensing process. The streamlining proposal is designed to provide guidance for industry in submitting applications and for the Commission in reviewing such applications. The streamlining approach is designed to provide more certainty and flexibility for participants in the application process, to promote increased investment and infrastructure development by multiple providers, and to decrease application processing time. The approach in the NPRM reflects broad input from participants in the submarine cable industry. In November 1999, the International Bureau held a Public Forum (64 FR 56347, Oct. 19, 1999) and has held numerous informal meetings with individual industry participants to solicit views about ways the Commission might improve its regulation of the submarine cable landing licensing process to further promote consumer benefits from increased cable capacity and facilities-based competition. The Commission seeks comments on the proposals and tentative conclusions contained in this NPRM.

2. The Commission proposes a mechanism under which an applicant for a submarine cable landing license will have three options to qualify presumptively for grant on a streamlined basis. The NPRM proposes the following three streamlining options: a demonstration that the route on which the proposed cable would operate is or will become competitive; a demonstration of sufficient independence of control of the proposed cable from control of existing capacity on the route; or the existence of certain pro-competitive arrangements.

3. Under the proposal, an applicant could choose any one of the three options to qualify presumptively for grant on a streamlined basis. The Commission states that if an application does not qualify for streamlining, it will be reviewed on a non-streamlined basis without prejudice.

4. The Commission proposes that, when considering an application to land and operate a submarine cable that will connect to a non-WTO member, it would consider whether the applicant is, or is affiliated with, a carrier that has market power in a market where the cable lands. If so, the Commission proposes to consider whether that destination market offers effective competitive opportunities (ECO) for U.S. companies to land or operate a submarine cable in that country. Therefore, the Commission proposes that such a cable would not qualify presumptively for grant on a streamlined basis, and, in addition to the de jure and de facto ECO criteria, the Commission would continue to consider other factors consistent with the Commission's discretion under the Cable Landing License Act that may weigh in favor of or against grant of a license. The Commission seeks comment on this proposal.

5. The Commission seeks comment on control of three key submarine facilities: the wet link of a submarine cable system; cable landing stations serving a submarine cable system; and exclusive backhaul facilities associated with the landing stations of a submarine cable system. The Commission tentatively concludes that an examination of a firm's influence over these three key facilities is necessary to determine whether a cable project raises competitive concerns. The Commission seeks comment on this tentative conclusion.

6. In the NPRM, the Commission proposes that, to meet any of the three streamlining options, an applicant must provide sufficient documentation. The Commission states that such documentation should include, for example, cable landing license applications, Commission Orders, the International Bureau's Circuit Status Report, the various Construction & Maintenance Agreements (C&MAs) or capacity purchase agreements for the cables, and industry press releases. The Commission seeks comment on other types of documentation that would be useful for applicants seeking to qualify for the streamlining options. The Commission also proposes that the streamlining options should apply equally for initial applications to land and operate submarine cables and to applications to assign or transfer control of existing submarine cable landing licenses. The Commission seeks comment on this proposal.

7. The first proposed streamlining option is a demonstration that the route in question is, or will become, competitive because there are multiple, independently controlled cables serving the route. The Commission proposes that, when an applicant seeks to make a competitive route demonstration, the Commission would consider a ``route'' to be the connection between the U.S. and a landing point in a foreign country. The Commission also notes that an applicant could choose to show that there are other economically comparable means to access the destination route through a landline or submarine connection using another cable or facility stemming from a point-to-point route other than the destination route, i.e., hubbing. The Commission

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   seeks comment on these methods of defining a route. The Commission also notes that in the context of reviewing certain mergers, the Commission has chosen to adopt a regional approach to analyzing the international transport market. The Commission seeks comment on whether it should instead consider adopting a regional route approach in determining whether there are sufficient competitive options within the submarine cable market. The Commission notes that commenters advocating a regional route approach should address how the Commission might define ``region.''

8. To satisfy the option that the route is or will become competitive, the Commission proposes that an applicant demonstrate that there are at least three independently controlled cables, including the applicant's proposed cable, serving the route on which the applicant wishes to operate the proposed cable. The Commission proposes that an applicant rely only on cables that have become operational within 36 months of the filing of the current application. The Commission seeks comment on whether 36 months is the appropriate cut-off period for cables becoming operational. The Commission also seeks comment on whether three is the appropriate minimum number of independent cables and states that commenters arguing that three is not the appropriate minimum should suggest and support an alternate minimum number.

9. For purposes of the competitive route streamlining option, the NPRM seeks comment on how to attribute control of proposed and existing cables. Specifically, the NPRM seeks comment on the extent of ownership in the three key submarine cable facilities (wet link, cable landing stations, and exclusive backhaul facilities) that would give a firm control of proposed or existing cables for purposes of this streamlining option. The NPRM states that, for example, one approach would be to attribute control of an entire cable to any entity that: owns 50 percent or more of the equity in the wet link of the cable; owns 50 percent or more of the equity in a landing station on the cable; is the exclusive backhaul provider at a landing station of the cable; or exercises de facto control over the wet link of the cable or a landing station on the cable. Alternatively, the NPRM seeks comment on whether there may be other options to consider in determining what level of ownership of key submarine cable facilities would give a firm control of a cable system for purposes of this streamlining option. With regard to the landing station element, the NPRM states that the Commission would not propose to attribute control of any of the cable system to an entity controlling fewer than all of the landing stations in a particular country.

10. Stating that it is concerned that including these demonstrations for all landing points for a proposed cable may create a disincentive for cable landing license applicants seeking to qualify for the competitive route streamlining option to include a loop on the cable that serves a previously underserved country, the Commission seeks comment on whether the Commission should adopt an exception under which a landing point on the route of a proposed cable would not need to be included in the competitive route analysis.

11. The NPRM also seeks comment on whether the Commission should entertain petitions for declaratory ruling regarding the competitiveness of certain routes in lieu of the case-by-case showings as proposed in the NPRM. The NPRM asks commenters to identify specific showings that a petitioner would need to make in order for the Commission to declare a particular route competitive in this manner. The NPRM also asks commenters to address whether the benefits of the proposed 36-month cut-off are so significant that the Commission should not entertain petitions for declaratory ruling regarding the competitiveness of particular routes. The Commission also seeks comment on whether a declaratory ruling should remain effective, if, subsequent to the declaratory ruling, two or more firms that control facilities on the route have merged.

12. The second proposed streamlining option is a demonstration that the proposed cable system will be controlled predominantly by new entrants. For purposes of this streamlining option, the Commission proposes to identify a ``key applicant group'' of a proposed cable and seeks comment on the extent of ownership in the three key submarine cable facilities (wetlink, cable landing stations, and exclusive backhaul facilities) that would give a firm control of a cable system for purposes of including the firm in the key applicant group of a proposed cable. The Commission states that, for example, one approach would be to include in the key applicant group any entity that: owns 50 percent or more of the equity in the wet link of the proposed cable; owns 50 percent or more of the equity in a landing station on the proposed cable; is the exclusive backhaul provider at a landing station of the proposed cable; or exercises de facto control over the wet link of the proposed cable or a landing station on the proposed cable. Alternatively, the Commission seeks comment on whether there may be other options to consider in determining what level of ownership of key submarine cable facilities would give a firm control of a cable system for purposes of including the firm in the key applicant group of the proposed cable.

13. The proposed streamlining option would consist of a demonstration that entities in the key applicant group of a proposed cable control less than 50 percent of the existing wet link capacity on the route to be served by the proposed cable. The Commission states that an applicant that is providing service on the route for the first time could satisfy this proposed streamlining option simply by certifying that the key applicant group of the proposed cable does not control any existing wet link capacity on the route to be served by the proposed cable. In a situation in which an applicant is proposing to serve previously unserved routes, the Commission seeks comment on whether it should streamline the processing of such an application.

14. For a proposed cable whose key applicant group controls existing capacity on the route to be served by the proposed cable, the NPRM states that an applicant could make a showing that it controls less than 50 percent of the existing wet link capacity on the route. The Commission proposes to attribute the entire capacity of an existing cable system to any entity that owns 50 percent or more of the equity in the wet link of the existing cable or exercises de facto control over the wet link of the existing cable. In addition, the Commission seeks comment on whether and to what extent it should attribute to a firm capacity on an existing cable based on the firm's percentage of control of landing stations in any country in which that existing cable lands. The Commission invites alternative proposals for attributing capacity and seeks comment on the appropriate treatment of joint ventures and affiliates in this context.

15. The NPRM proposes that applicants choosing this streamlining option provide a list of all firms in the key applicant group and a calculation of this group's share of existing capacity on the route. The Commission states that it believes that this information should be readily available through cable landing license applications, Commission Orders, the International Bureau's annual Circuit Status Report, the various C&MAs and capacity purchase agreements for the cables, and

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    industry press releases. Comments are sought on whether this is the case.

16. Global Crossing submitted a proposal it suggests the Commission use as a basis for addressing competitive issues in the submarine cable market in a Notice of Proposed Rulemaking. Specifically, Global Crossing proposes a structural solution under which, for an applicant to receive a submarine cable landing license, the applicant would need to demonstrate that the landing parties on the U.S. end of the cable do not have a combined share of more than 35 percent of the active half circuits, including half circuits of full circuits, on the U.S. side of the route served by the cable. The NPRM seeks comment on this proposal.

17. The third proposed streamlining option is a demonstration of sufficient pro-competitive arrangements. The Commission states that, as a general matter, the pro-competitive provisions should constrain the ability of major carriers on a cable to set supracompetitive prices by controlling backhaul and the timing of the final capacity upgrade of the cable system, which ultimately would result in higher prices for consumers. The Commission seeks comment on its general conclusions, and whether the Commission's licensing processing processes should reflect these goals.

18. As part of the pro-competitive policy, the Commission proposes that an applicant, in ownership or other documents, include specific provisions regarding landing stations and competitive backhaul. The Commission seeks comment on two alternatives for such provisions. First, the Commission states that, in order to qualify for streamlining, applicants might include in ownership or other documents general provisions allowing for sufficient collocation at a landing station by other owners or their designees and stating that there will be no restrictions on who can provide backhaul. Alternatively, the Commission states that, in order to qualify for streamlining, applicants might be required to make more specific demonstrations. As an example, the Commission notes that it might provide that an applicant include provisions explicitly stating that: sufficient space at all landing stations in the United States, and at each foreign landing station on the route where applicants plan to land the proposed cable, will be made available to any other owner, or the designee of any other owner, for the purpose of collocating equipment to provide backhaul; all owners or designees of owners may use such space for the provision by them of backhaul services to others; and there will be no restrictions on the ability of any owner to subcontract the provision of backhaul. The Commission notes that, to make specific demonstrations regarding backhaul, an applicant could include provisions in ownership or other documents explicitly stating that at least two separate parties will provide backhaul, rather than a single entity, at all landing stations in the United States, and at each foreign landing station on the route where applicants plan to land the proposed cable.

19. The Commission seeks comment on these two alternatives and any other alternative that commenters deem to be more appropriate. The Commission also seeks comment on whether collocation and backhaul rights provided by applicants should apply only to owners of equity or to IRU holders as well. In addition, the Commission notes that there has been some concern expressed about high rates charged for connection to cables and backhaul from cable landing stations, and seeks comment on ways in which the Commission might ensure the ability of carriers to obtain connection to a cable and backhaul to points of presence at competitive rates.

20. The Commission also proposes that, in order to qualify under this streamlining option, an applicant include certain provisions in ownership or other documents about wet link capacity upgrades and use of capacity. The Commission seeks comment on whether, in order to qualify for this streamlining option, a provision should be included in ownership or other documents that would allow the capacity of a cable to be upgraded either by a 51 percent vote of the owners or by any group of owners voting to fully fund the cost of the upgrade. The Commission notes that, in the latter case, ownership or other documents would indicate that all owners, not just owners voting to fully fund the upgrade, will have the right to buy into the upgrade consistent with their contractual rights. The Commission also seeks comment on whether a firm's interest in a cable should be measured in terms of circuits, dollar value of investment or some other measure. In addition, the Commission seeks comment on whether, in order to qualify for this streamlining option, an applicant should include provisions in ownership or other documents explicitly stating that, after the initial capacity has been funded, there will be no restrictions on resale or transfer of capacity and no restrictions on parties reselling their ownership shares and/or reselling or leasing their rights on the cable. The Commission seeks comment on whether an applicant should explicitly state that there will be no unreasonable charges assessed on owners wishing to resell or transfer capacity or ownership shares, or wishing to resell or lease their rights on the cable.

21. The Commission also seeks comment on whether, as an additional pro-competitive arrangement, an applicant should include a provision in ownership or other documents explicitly allowing smaller firms to combine their capacity requirements for the purpose of obtaining volume discounts.

22. The Commission also proposes methods to streamline the process and seeks comment on the proposals. The Commission notes because of the unique role of the Executive Branch with respect to submarine cable landing licenses, and because the Commission we intends to coordinate closely with the Executive Branch, the Commission does not propose a wholesale adoption of the Section 214 streamlining process for submarine cable landing license applications. With respect to timing for review of submarine cable landing license applications, the Commission proposes that, if an application qualifies presumptively for grant on a streamlined basis under one of the three streamlining options, the Commission will grant the application 60 days from the date the International Bureau issues a public notice accepting the application for filing, or indicate in a public notice why grant of the application within 60 days cannot be provided. The Commission seeks comment on this proposal and states that it expects that the period between the filing of an application and the release of a public notice ordinarily would not be lengthy because the International Bureau would put an application out on public notice promptly after determining that the application is complete.

23. The NPRM also discusses the possibility of a conditional grant of a cable landing license whereby the Commission would condition its grant of authority on ultimate approval by the Secretary of State. The Commission also proposes to issue streamlined licenses by public notice, rather than by issuing an Order and seeks comment on whether issuing a public notice would satisfy the requirement under the Cable Landing License Act that grants be issued by ``written license.''

24. The Commission states its intention to continue its private submarine cable policy in order to further stimulate competition in the market, but states that it does not

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    propose to abandon the distinction between submarine cable systems which operate on a common carrier and a non-common carrier basis. The Commission also seeks comment on whether, in a situation in which an applicant is proposing to serve previously unserved routes, the Commission should impose conditions, such as a nondiscrimination requirement, on the license, regardless of whether the Commission grants the license on a streamlined basis. The Commission also seeks comment on the types of situations in which it might be appropriate for the Commission to require a cable to be operated on a common carrier basis and asks commenters to address whether the Commission should consider indirect means to a destination point in determining the level of competition on a route and whether a route is a thin route. The Commission also seeks comment on what effect, if any, the imposition of common carrier regulations or common carrier-like obligations may have on a company's business decision whether to build a cable.

25. In addition, the Commission seeks comment on whether any of the routine conditions currently imposed on cable landing licenses should be eliminated or modified. The Commission also notes that Level 3 suggested that the Commission develop special conditions for the licenses of submarine cables whose participants include carriers that are ``major suppliers,'' regardless of whether those carriers are U.S.- licensed carriers, and states that Level 3 defines a ``major supplier'' as that term is defined in the Reference Paper to the WTO Basic Telecom Agreement. Level 3 argued that to prevent such carriers from acting anticompetitively in the submarine cable market, the Commission should impose conditions relating to: cable station access, requiring a major supplier to provide competing carriers with, for example, physical collocation at the cable station, circuit provisioning and interconnection intervals; backhaul, requiring a major supplier to allow competing carriers to negotiate a backhaul contract with the major supplier on a timely and reasonable basis with nondiscriminatory pricing; and procedures, requiring a major supplier to expedite orders for service with reasonable times and reasonable charges, to ensure freely available information, and, for consortium cables, to separate submarine cable and related operations from terrestrial operations. The Commission seeks comment on Level 3's suggestions and states that commenters advocating that the Commission adopt Level 3's suggestions should indicate whether we should define ``major supplier'' as Level 3 defines the term, or whether we should adopt an alternative definition, and explain how the proposed definition would work in practice.

26. To provide more certainty to potential cable landing license applicants, the Commission proposes a method for determining who should be included as an applicant for a cable landing license. Specifically, the Commission proposes that an entity should be included as an applicant for a cable landing license for a proposed cable system, regardless of whether the entity also is a Section 214 licensee, if the entity is a landing station owner or: the entity has a five percent or greater ownership interest in the proposed cable which includes voting rights, except if the ownership is exclusively at foreign points on the cable system, and the entity will use the U.S. points of the cable system in any capacity, unless the capacity merely is ``hard-patched'' through and is not dropping traffic in the U.S. or using the U.S. points of the cable system to re-originate traffic. Under the Commission's proposal, if an entity, at the time it files the application and the license is granted does not plan to use the U.S.- points of the cable system, but later decides to do so, that entity would need to file an application to be added to the license. The Commission seeks comment on whether a five percent or greater ownership interest would ensure that we include entities with a significant ability to affect the operation of a cable system, but that we not burden smaller carriers or investors and notes that, under a five percent or greater ownership threshold, fewer entities will be required to obtain licenses than under the current practice. The Commission seeks comment on whether a different percentage would be appropriate to accomplish these goals. The Commission notes, that, under this proposal, an entity that is a licensee for an existing submarine cable but does not own a landing station and has less than a five percent ownership interest in the cable, may file with the Commission a request that its license be relinquished.

27. The Commission also seeks comment on whether it would facilitate processing if it encourages or mandates electronic filing for the applications. As the Commission did with respect to streamlined assignments and transfers of control of international Section 214 authorizations, the Commission proposes to delegate to the International Bureau the authority to identify those particular applications that do warrant public comment and additional Commission scrutiny under current stated Commission policies. Comments are solicited on this proposal as well as others described in the NPRM.

28. The Commission declines to propose modifying or waiving licensing or regulatory fees. The Commission does, however, seek comment generally on whether, if the Commission ultimately adopts the streamlining measures proposed in the NPRM, it would be in the pubic interest to propose a modification of the regulatory fees.

    Procedural Matters

29. Ex Parte Presentations. This NPRM is a permit but disclose notice and comment rulemaking proceeding. Ex Parte presentations are permitted, except during the Sunshine Agenda period, provided they are disclosed as provided in the Commission's rules.

30. Initial Regulatory Flexibility Act Analysis. Pursuant to the Regulatory Flexibility Act, an Initial Regulatory Flexibility Analysis was prepared and is incorporated as Attachment A of this summary. Written comments on the Initial Regulatory Flexibility Act Analysis are requested.

31. Paperwork Reduction Act. The 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 take this opportunity to comment on the proposed information collections contained in the NPRM, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. Written comments by the public on the proposed information collections are due the same day as comments on the NPRM, August 21, 2000. Written comments must be submitted by OMB on the proposed information collections September 5, 2000. Comments should address the following: (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 estimate; (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 Control Number: 3060-XXXX.

    Title: Applications under the Cable Landing License Act.

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    Form Number: N/A.

    Type of Review: New collection.

    Respondents: Business and other for-profit entities.

    Number of Respondents: 55.

    Number of Responses: 55.

    Estimated Time Per Response: Under Section 1.767(a)-(e), we estimate approximately 10 hours will be imposed on 15 respondents. Under Section 1.767(f), we estimate 1 burden hour per respondent.

    Frequency of Response: On Occasion. Third party disclosure.

    Total Annual Burden: 95 hours (50% of burden estimated to be contracted to outside assistance).

    Total Annual Costs: $208,875.

    Needs and Uses: The information will be used by the Commission to determine the qualifications of applicants to construct and operate submarine cables, including applicants that are affiliated with foreign carriers, and to determine whether and under what conditions the authorizations are in the public interest, convenience, and necessity. The proposed information collections are necessary for the Commission to maintain effective oversight of U.S. carriers that are affiliated with, or involved in certain co-marketing or similar arrangements with, foreign carriers that have sufficient market power to affect competition adversely in the U.S. market. In addition, the Commission must maintain records that accurately reflect a party or parties that control a carrier's operations, particularly for purposes of enforcing the Commission's rules and policies.

    Initial Regulatory Flexibility Analysis

    As required by the Regulatory Flexibility Act (RFA), 5 U.S.C. 603, the Commission has prepared this present Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities by the policies proposed in this Notice of Proposed Rulemaking (NPRM). Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filedby the deadlines for comments on the NPRM provided in Section IV, Subpart C of the NPRM. The Commission will send a copy of the NPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration. In addition, the NPRM and IRFA (or summaries thereof) will be published in the Federal Register.

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

       In recent years, there has been explosive growth in the number and capacity of submarine cables triggered in large part by increased Internet and data traffic. Because of this increased demand for capacity, the rapid pace of technological development, and the emergence of non-traditional ownership and financing structures in the submarine cable marketplace, the International Bureau has undertaken a review of its policies for licensing submarine cables. The result of this review is the initiation of this proceeding to establish streamlined rules for processing applications for submarine cable landing licenses.

       The streamlining proposal in the NPRM is designed to provide guidance for industry in submitting applications and for the Commission in reviewing such applications. The current precedent analyzing competitive issues in the submarine cable market is not extensive. In the absence of extensive precedent, the guidance contained in the proposed streamlining options should help ensure expeditious action on applications. In addition, the streamlining options in this NPRM seek to provide incentives for the development of facilities-based competition and capacity expansion to meet increasing demands.

       This approach reflects broad input from participants in the submarine cable industry. In November 1999 the International Bureau held a Public Forum and has held numerous informal meetings with individual industry participants to solicit views about ways the Commission might improve its regulation of the submarine cable landing licensing process to further promote consumer benefits from increased cable capacity and facilities-based competition. Industry participants expressed three objectives: expedited processing of applications, careful review of certain applications to guard against anticompetitive behavior, and encouragement of pro-competitive licensing procedures in other countries. To accomplish and balance these three objectives, the NPRM proposes streamlining that reflects pro-competitive policies. This approach is designed to provide more certainty and flexibility for participants in the application process, to promote increased investment and infrastructure development by multiple providers, and to decrease application processing time.

       To achieve these goals, the NPRM proposes a mechanism under which an applicant for a submarine cable landing license will have three options to qualify presumptively for grant on a streamlined basis. The NPRM proposes the following three streamlining options: (1) A demonstration that the route on which the proposed cable would operate is or will become competitive; (2) a demonstration of sufficient independence of control of the proposed cable from control of existing capacity on the route; or (3) the existence of certain pro-competitive arrangements. We believe that, on balance, the streamlining policies proposed in the NPRM are pro-competitive, and that, if an application falls within one of these three categories, we can presume that it is unlikely that we will have competitive concerns about the cable. We note that, if an application does not qualify for streamlining, it will be reviewed on a non-streamlined basis without prejudice.

       Our proposal to streamline the submarine cable landing licensing process is part of a continuing streamlining effort. The proposal's structure of identifying categories of applications eligible for streamlined processing is consistent with our process for streamlining Section 214 applications. The Commission continually seeks ways to grant licenses more quickly to allow parties to enter the market rapidly, especially as new technological developments make speed to market crucial for firms competing in the ever changing Internet-driven communications market.

    2. Legal Basis

       The NPRM is adopted pursuant to Sections 1, 4(i) and (j), 201-255, 303(r) of the Communications Act as amended, 47 U.S.C. 151, 154(i), 154(j), 201-255, and the Cable Landing License Act, 47 U.S.C. 34 through 39 and Executive Order No. 10530, Sec. 5(a), reprinted as amended in 3 U.S.C. 301.

    3. Description and Estimate of the Number of Small Entities to Which the Proposals Will Apply

       The RFA directs agencies to provide a description of, and, where feasible, estimate of the number of small entities that may be affected by the proposals, if adopted. The Regulatory Flexibility Act defines the term ``small entity'' as having the same meaning as the terms ``small business,'' ``small organization,'' and ``small business concern'' under Section 3 of 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.

       The SBA has developed a definition of small entities for telephone communications companies other than radiotelephone (wireless) companies.

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       The Census Bureau reports that there were 2,321 such companies that had been operating for at least one year at the end of 1992. According to the SBA's definition, a wireline telephone company is a small business if it employs no more than 1,500 persons. All but 26 of the 2,321 wireline companies listed by the Census Bureau were reported to have fewer than 1,000 employees. Thus, even if all 26 of those companies had more than 1,500 employees, there would still be 2,295 wireline companies that might qualify as small entities or small incumbent LECs. Although it seems certain that some of these carriers are not independently owned and operated, we are unable at this time to estimate with greater precision the number of wireline carriers and service providers that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that fewer than 2,295 of these wireline companies are small entities that might be affected by these proposals.

       Specifically, the streamlining options contained in the NPRM apply to entities applying for a license to land or operate submarine cables under the Cable Landing License Act, (or entities applying to transfer control of existing submarine cable landing licenses). The proposals, however, may affect other entities as well, including users of submarine cable service such as Internet service providers (ISPs) that lease capacity or purchase indefeasible rights of use (IRUs) on cable systems. The Commission, therefore, encourages these entities to comment on the proposals in the NPRM. The proposals are intended to reduce the burden on all applicants regardless of size, by permitting applicants to seek to have their applications qualify presumptively for grant on a streamlined basis. At this time, we are not certain as to the number of small entities that will be affected by the proposals. Agency data indicates there have been approximately 50 cable landing applications filedwith the Commission since 1992, but the total number of licensees is difficult to determine, because many licenses are jointly held by several licensees. Based on this information, we would estimate that there could be 50 or fewer applicants that might be a small entity.

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

       The reporting requirements proposed in the NPRM are voluntary and should not impose specific burdens on small entities. If an applicant for a submarine cable landing license wishes its application to qualify presumptively for a grant on a streamlined basis, the applicant could demonstrate that its application conforms to any one of the three streamlining options described in the NPRM. The NPRM seeks comment on the kinds of demonstrations an applicant could make to qualify for streamlining under the proposals.

       The documentation proposed by the NPRM is not standardized. The information is unique to the applicant. Although the information could be submitted in a standardized format, creating such a format would impose a burden on an applicant because the applicant has several options from which to choose for streamlined processing. For example, the NPRM suggests types of documentation including cable landing license applications, Commission Orders, the International Bureau's annual Circuit Status Report, the various C&MAs or capacity purchase agreements for the cables, and industry press releases. The NPRM also seeks comment on other types of documentation that would be useful for applicants seeking to qualify for the streamlining options proposed in the NPRM.

       In addition, it is not possible or practical to estimate the costs and burdens associated with the documentation applicants would need to submit to demonstrate satisfaction of the streamlining options. We believe that the applicant's documentation would be information that is maintained by the applicant in the normal course of business, and as such would not impose a significant burden on the applicant. We are seeking comments on possible costs and burdens associated with the documentation applicants would need to submit to qualify for streamlining under the options outlined in the NPRM.

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

       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 compliancor reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage or the rule, or any part thereof, for small entities.

       The proposals in this NPRM are designed to provide more certainty and flexibility for applicants, encourage investment and infrastructure development by multiple providers, expand available submarine cable capacity, and decrease application processing time. This may benefit small entities especially because the proposals would facilitate entry into the submarine cable market and expand international services. The Commission has proposed the following three options from which an entity may choose to qualify presumptively for streamlined processing: (1) A demonstration that the route on which the proposed cable would operate is or will become competitive; (2) a demonstration of sufficient independence of control of the proposed cable from control of existing capacity on the route; or (3) the existence of certain pro- competitive arrangements. We request comment on these three streamlining options.

       We request comment on whether small entities would be adversely affected by the proposals herein and whether the proposals will enable small entities to respond to the demands of the market with minimum regulatory oversight, delays, and expenses. We believe that our proposals will promote the rapid expansion of capacity and facilities- based competition, which will result in innovation and lower prices for U.S. consumers of international telecommunications services. We believe that our proposals would have either no impact, or would reduce, any economic burdens on small entities.

       The NPRM seeks comment on policies of particular benefit to small entities. First, with respect to the proposal regarding which entities need to apply for cable landing licenses, the NPRM notes that the greater a firm's investment in a cable system, the greater ability the firm has to influence the way in which a cable is operated. The NPRM further notes that firms with a greater ability to affect the operation of a cable system would expect to be subject to all conditions and responsibilities that that come with the right to land or operate the cable system. The NPRM notes that entities with minimal investment in a cable system, on the other hand, do not have the same ability to affect the operation of the cable system. There is not the same need, therefore, to subject these entities to the conditions and responsibilities that come with a cable landing license. Under the proposal in the NPRM, therefore, other than landing station owners, entities with less than a five percent ownership interest in a cable system would not need to be

       [[Page 41620]]

       included as an applicant for the cable landing license for a proposed cable. The NPRM notes that, under a five percent or greater ownership threshold, fewer entities will be required to obtain licenses than under the current practice. This means that fewer entities will be subject to the conditions and responsibilities that come with the right to land or operate a cable. The NPRM seeks comment on whether a different percentage would be appropriate to accomplish these goals. In addition, the NPRM provides that an entity that is a licensee for an existing submarine cable but does not own a landing station and has less than a five percent ownership interest in the cable, may file with the Commission a request that its license be relinquished.

    6. Federal Rules that May Duplicate, Overlap, or Conflict With the Proposed Rules

       None.

       Ordering Clauses

       Accordingly, pursuant to Sections 1, 4(i) and (j), 201-255 303(r) of the Communications Act as amended, 47 U.S.C. 151, 154(i), 154(j), 201-255, 303(r), and the Cable Landing License Act, 47 U.S.C. 34 through 39 and Executive Order No. 10530, Sec. 5(a), reprinted as amended in 3 U.S.C. 301, this notice of proposed rulemaking is hereby adopted and comments are requested.

       The Commission's Consumer Information Bureau, Reference Information Center, shall send a copy of this notice of proposed rulemaking, including the Initial Regulatory Flexibility Act Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

       List of Subjects in 47 CFR Part 1

       Communications common carriers, Reporting and recordkeeping requirements, Telecommunications Miscellaneous rules relating to common carriers.

       Federal Communications Commission. Magalie Roman Salas, Secretary.

       [FR Doc. 00-17027Filed7-5-00; 8:45 am]

       BILLING CODE 6712-10-P