Common carrier services: Interlocking directorates; CFR part removed; biennial regulatory review,

[Federal Register: August 12, 1999 (Volume 64, Number 155)]

[Rules and Regulations]

[Page 43937-43941]

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

[DOCID:fr12au99-12]

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 62

[CC Docket No. 98-195; FCC 99-163]

1998 Biennial Regulatory Review--Repeal of Part 62 of the Commission's Rules

AGENCY: Federal Communications Commission.

ACTION: Final rule.

SUMMARY: This document seeks as part of its 1998 biennial review of regulations whether its rules governing interlocking directorates should be repealed. After reviewing the comments, the Commission released a Report and Order (Order) repealing part 62 of the rules governing interlocking directorates, because it concluded that part 62 is no longer necessary in the public interest. The Commission concludes that it should forbear from applying those provisions in section 212 of the Act that prohibit any person from holding the position of officer or director of more than one carrier subject to the Act without obtaining prior Commission authorization.

DATES: Effective September 13, 1999.

ADDRESSES: Federal Communications Commission, 445 12th Street, S.W., Room TW-A325, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Jennifer Myers Kashatus, Formal Complaints and Investigations Branch, Enforcement Division, Common Carrier Bureau (202) 418-0960.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report and Order in CC Docket 98-195 [FCC 99-163], adopted on July 7, 1999, and released on July 16, 1999. The full text of the Report and Order is available for inspection and copying during normal business hours in the FCC Reference Center, Room CY-A257, 445 12th Street, S.W., Washington, D.C. 20554. The complete text of this decision also may be purchased from the Commission's duplicating contractor, International

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Transcription Services, 445 12th Street, S.W., Room CY-B400, Washington, D.C. 20554.

1. The Commission initiated this proceeding by a Notice of Proposed Rulemaking (Notice) released on November 17, 1998. In the Notice, the Commission designated this proceeding as part of its 1998 biennial review of regulations pursuant to section 11 of the Act. Section 11 requires the Commission to conduct a biennial review, in every even- numbered year beginning in 1998, of ``all regulations * * * that apply to the operations or activities of any provider of telecommunications service'' and to ``determine whether any such regulation is no longer necessary in the public interest as the result of meaningful economic competition between providers of such service.'' ‹SUP›1‹/SUP› Section 11 further requires the Commission to repeal or to modify any regulation it determines is no longer necessary in the public interest.

   \1\ 47 U.S.C. 161(a).

2. In the Notice, the Commission tentatively concluded that part 62 of its rules governing interlocking directorates is no longer necessary to the public interest and therefore should be repealed. Specifically, the Commission proposed to eliminate the requirements that: (1) application be made to hold interlocking positions with more than one carrier subject to the Act where one carrier sought to be interlocked is either a dominant carrier, or a carrier not yet determined to be non-dominant; (2) applications for findings of common ownership be filedif dominant carriers are involved; (3) interlocking positions of more than one carrier subject to the Act involving non-dominant carriers, connecting carriers, cellular licensees operating in different geographic markets, and parents of carriers, among others, be reported to the Commission within 30 days after such interlock occurs; and (4) any change in status as reported under part 62 of the rules be reported to the Commission within 30 days of such change.

3. Additionally, in the Notice, the Commission tentatively concluded that it should forbear from enforcing those provisions of section 212 of the Act that address interlocking directorates. Section 10 of the Act requires the Commission to forbear from applying any provision of the Act, or any regulations, to a telecommunications carrier or telecommunications service, or class thereof, if the Commission makes certain specified findings with respect to such provisions or regulations. In the Notice, the Commission tentatively concluded that section 212 of the Act: (1) is not necessary to ensure that carriers' charges, practices, or classifications are just and reasonable, and are not unjustly or unreasonably discriminatory; and (2) is not necessary for the protection of consumers. The Commission also tentatively concluded that forbearance from applying interlocking directorate requirements is consistent with the public interest.

4. The Commission received eleven comments and one reply comment in this proceeding. All but one commenter support the Commission's tentative conclusions that the Commission should repeal part 62 of its rules and forbear from enforcing the interlocking directorate provisions of section 212 of the Act.

5. In the Report and Order, the Commission concludes that it should repeal part 62 of its rules, which implements section 212 of the Act. Specifically, the Commission concludes that it should delete its rules that require: (1) dominant carriers and those carriers not yet found to be non-dominant to seek Commission approval prior to accepting an interlocking directorate position; (2) non-dominant carriers, connecting carriers, parent companies, and other carriers as may be required under our rules, to file post interlocking directorate reports; (3) carriers desiring authorization to hold interlocking directorates based on a finding of common ownership to make specific filings with the Commission; and (4) carriers that undergo a change in status with respect to interlocking directorate status to file a change of status report. The Commission found that interlocking directorates rarely threaten to constrain competition. More precisely, the Commission finds it difficult to envision a proposed interlock that the Commission would conclude to be anticompetitive, ab initio, such that the Commission would deny approval for such interlock. To the extent that potentially anticompetitive interlocks may occur, the Commission further finds that other Title II provisions and antitrust laws adequately protect against the particular concerns its Part 62 rules seek to address. Therefore, the Commission found that its rules are no longer necessary in the public interest and should be repealed.

   The Commission also concludes that, pursuant to section 10 of the Act, the Commission should forbear from enforcing the interlocking directorate provisions of section 212 of the Act. In the Notice, the Commission tentatively concluded that the Commission should forbear from enforcing the provisions of section 212 of the Act requiring any person seeking to hold the position of officer or director with more than one carrier subject to the Act to seek prior Commission approval. The Commission tentatively concluded that these provisions of section 212 of the Act: (1) Are not necessary to ensure that a carrier's charges, practices, or classifications are just and reasonable, and are not unjustly or unreasonably discriminatory; and (2) are not necessary for the protection of consumers. The Commission also tentatively concluded that forbearance from enforcing these requirements is consistent with the public interest. The Commission recognized in the Notice that section 212 of the Act applies to carriers in telecommunications markets that may not yet be fully competitive, and therefore, sought comment on whether the analysis undertaken to consider forbearance from enforcing section 212 of the Act should vary from market to market. No commenter opposes the Commission's tentative conclusion that the Commission should forbear from section 212 of the Act as applied to all carriers in all telecommunications markets. For all the reasons detailed previously in support of eliminating its part 62 rules, the Commission concludes that each of the statutory criteria for forbearance is satisfied, and therefore, that it should forbear from enforcing these provisions of section 212 of the Act in all markets.

   5. Final Regulatory Flexibility Act Analysis

8. As required by the Regulatory Flexibility Act (RFA), the Commission incorporated an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities by the policies and rules proposed in the Notice. The Commission sought written public comment on the proposals in the Notice, including comment on the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

9. Need for, and Objectives of, this Action: The Commission initiated its examination of its part 62 rules as part of its 1998 biennial review of regulations as required by section 11 of the Communications Act of 1934, as amended. The Commission also issued the Notice to review its regulatory regime for interlocking directorates, and to determine whether in light of section 10 of the Act, the Commission should forbear from applying such requirements. The purpose of the Report and Order is to delete part 62 of the Commission's rules, which the Commission finds are no longer

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   necessary in the public interest. The Commission also has determined that it should forbear from addressing those provisions in section 212 of the Act that address interlocking directorates.

10. Summary of Significant Issues Raised by Public Comments in Response to the IRFA: In the IRFA, the Commission sought comment on whether repealing part 62 of its rules and forbearing from section 212 would benefit small entities. The Commission received no comments in response to the IRFA. Several commenters, including one small entity, however, indicated that the proposals in the Notice would benefit small entities by reducing unnecessary regulatory burdens.

11. Description, potential impact, and number of small entities affected: In this order, the Commission has decided to repeal part 62 of its rules, which includes eliminating the post-interlock filing requirement for non-dominant carriers, many of whom may be small entities. The Commission also has decided to forbear from enforcing those provisions of section 212 of the Act addressing interlocking directorates. Forbearance from enforcing these rules will benefit small entities by reducing the regulatory burden to which small businesses would otherwise be subject.

12. To estimate the number of small entities that would benefit from this positive economic impact, we first consider the statutory definition of ``small entity'' under the RFA. The RFA generally defines ``small entity'' as having the same meaning as the term ``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, unless the Commission has developed one or more definitions that are appropriate to its activities. Under the Small Business Act, a ``small business concern'' is one that: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) meets any additional criteria established by the Small Business Administration (SBA). The SBA has defined a small business for Standard Industrial Classification (SIC) categories 4812 (Radiotelephone Communications) and 4813 (Telephone Communications, Except Radiotelephone) to be small entities when they have no more than 1,500 employees. We first discuss the number of small telephone companies falling within these SIC categories, then attempt to refine further those estimates to correspond with the categories of telephone companies that are commonly used under our rules.

13. The most reliable source of information regarding the total numbers of certain common carrier and related providers nationwide, as well as the numbers of commercial wireless entities, appears to be data the Commission publishes annually in its Telecommunications Industry Revenue report, regarding the Telecommunications Relay Service (TRS). According to data in the most recent report, there are 3,459 interstate carriers. These carriers include, inter alia, local exchange carriers, wireline carriers and service providers, interexchange carriers, competitive access providers, operator service providers, pay telephone operators, providers of telephone toll service, providers of telephone exchange service, and resellers.

14. Although some affected incumbent local exchange carriers (ILECs) may have 1,500 or fewer employees, we do not believe that such entities should be considered small entities within the meaning of the RFA because they are either dominant in their field of operations or are not independently owned and operated, and therefore by definition not ``small entities'' or ``small business concerns'' under the RFA. Accordingly, our use of the terms ``small entities'' and ``small businesses'' does not encompass small ILECs. Out of an abundance of caution, however, for regulatory flexibility analysis purposes, we will separately consider small ILECs within this analysis and use the term ``small ILECs'' to refer to any ILECs that arguably might be defined by the SBA as ``small business concerns.''

15. Total Number of Telephone Companies Affected. The United States Bureau of the Census (``the Census Bureau'') reports that, at the end of 1992, there were 3,497 firms engaged in providing telephone services, as defined therein, for at least one year. This number contains a variety of different categories of carriers, including local exchange carriers, interexchange carriers, competitive access providers, cellular carriers, mobile service carriers, operator service providers, pay telephone operators, and resellers. It seems certain that some of those 3,497 telephone service firms may not qualify as small entities or small incumbent LECs because they are not ``independently owned and operated.'' Additionally, we note that the number of small entities affected by this rule change as set forth in this Order is less than the total number of telephone companies as stated herein, because as discussed, the Commission already has decided to forbear from applying section 212 of the Act with regard to CMRS providers. It seems reasonable to conclude, therefore, that fewer than 3,497 telephone service firms are small entity telephone service firms or small incumbent LECs that may be affected by this Order.

16. Wireline Carriers and Service Providers. SBA has developed a definition of small entities for telephone communications companies other than radiotelephone companies. The Census Bureau reports that, there were 2,321 such telephone companies in operation for at least one year at the end of 1992. According to SBA's definition, a small business telephone company other than a radiotelephone company is one employing no more than 1,500 persons. All but 26 of the 2,321 non- radiotelephone 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 non-radiotelephone 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 SBA's definition. Consequently, we estimate that there are fewer than 2,295 small entity telephone communications companies other than radiotelephone companies that may be affected by the decisions in this Order.

17. Local Exchange Carriers. Neither the Commission nor SBA has developed a definition of small providers of local exchange services (LECs). The closest applicable definition under SBA rules is for telephone communications companies other than radiotelephone (wireless) companies. The most reliable source of information regarding the number of LECs nationwide of which we are aware appears to be the data that we collect annually in connection with the Telecommunications Relay Service (TRS). According to our most recent data, 1,371 companies reported that they were engaged in the provision of local exchange services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1,500 employees, we are unable at this time to estimate with greater precision the number of LECs that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 1,371 small

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    entity LECs or small incumbent LECs that may be affected by the decisions in this Order.

18. Interexchange Carriers. Neither the Commission nor SBA has developed a definition of small entities specifically applicable to providers of interexchange services (IXCs). The closest applicable definition under SBA rules is for telephone communications companies other than radiotelephone companies. The most reliable source of information regarding the number of IXCs nationwide of which we are aware appears to be the data that we collect annually in connection with TRS. According to our most recent data, 143 companies reported that they were engaged in the provision of interexchange services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1,500 employees, we are unable at this time to estimate with greater precision the number of IXCs that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 143 small entity IXCs that may be affected by the decisions in this Order.

19. Competitive Access Providers. Neither the Commission nor SBA has developed a definition of small entities specifically applicable to providers of competitive access services (CAPs). The closest applicable definition under SBA rules is for telephone communications companies other than radiotelephone companies. The most reliable source of information regarding the number of CAPs nationwide of which we are aware appears to be the data that we collect annually in connection with the TRS. According to our most recent data, 109 companies reported that they were engaged in the provision of competitive access services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1,500 employees, we are unable at this time to estimate with greater precision the number of CAPs that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 109 small entity CAPs that may be affected by the decisions in this Order.

20. Pay Telephone Operators. Neither the Commission nor SBA has developed a definition of small entities specifically applicable to pay telephone operators. The closest applicable definition under SBA rules is for telephone communications companies except radiotelephone (wireless) companies. The most reliable source of information regarding the number of pay telephone operators nationwide is the data that we collect annually in connection with the TRS Worksheet. According to our most recent data, 441 companies reported that they were engaged in the provision of pay telephone services. We do not have information on the number of carriers that are not independently owned and operated, nor have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of pay telephone operators that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 271 small pay telephone operators.

21. Operator Service Providers. Neither the Commission nor SBA has developed a definition of small entities specifically applicable to providers of operator services. The closest applicable definition under SBA rules is for telephone communications companies other than radiotelephone companies. The most reliable source of information regarding the number of operator service providers nationwide of which we are aware appears to be the data that we collect annually in connection with the TRS. According to our most recent data, 27 companies reported that they were engaged in the provision of operator services. Although it seems certain that some of these companies are not independently owned and operated, or have more than 1,500 employees, we are unable at this time to estimate with greater precision the number of operator service providers that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 27 small entity operator service providers that may be affected by the decisions in this Order.

22. Resellers. Neither the Commission nor SBA has developed a definition of small entities specifically applicable to resellers. The closest applicable definition under SBA rules is for all telephone communications companies. The most reliable source of information regarding the number of resellers nationwide of which we are aware appears to be the data that we collect annually in connection with the TRS. According to our most recent data, 339 companies reported that they were engaged in the resale of telephone services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1,500 employees, we are unable at this time to estimate with greater precision the number of resellers that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 339 small entity resellers that may be affected by the decisions adopted in this Order.

23. Private Paging. At present, there are approximately 24,000 Private Paging licenses. We do not have data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of paging carriers that would qualify as small business concerns under the SBA's definition. We estimate that the majority of private paging providers would qualify as small entities under the SBA definition. We note that private paging does not include common carrier paging, for which the Commission has adopted auction rules and has proposed to SBA a special small business size standard definition.

24. Wireless (Radiotelephone) Carriers. SBA has developed a definition of small entities for radiotelephone (wireless) companies. The Census Bureau reports that there were 1,176 such companies in operation for at least one year at the end of 1992. According to SBA's definition, a small business radiotelephone company is one employing no more than 1,500 persons. The Census Bureau also reported that 1,164 of those radiotelephone companies had fewer than 1,000 employees. Thus, even if all of the remaining 12 companies had more than 1,500 employees, there would still be 1,164 radiotelephone companies that might qualify as small entities if they are independently owned are operated. 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 radiotelephone carriers and service providers that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 1,164 small entity radiotelephone companies that may be affected by the decisions adopted in this Order.

25. Recording, record keeping, and other compliance requirements: No additional paperwork will be required by the decisions adopted in this proceeding. This proceeding eliminates filing requirements set forth in part 62 of the Commission's rules.

26. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered: The impact of this proceeding should be beneficial to small businesses, because eliminating the Commission's part 62 rules will reduce the reporting or recordkeeping

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    requirements on all communications common carriers.

27. Report to Congress: The Commission will send a copy of this Order, including this FRFA, in a report to be sent to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of this Order, including FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the Order and FRFA (or summaries thereof) will also be published in the Federal Register.

    6. Conclusion and Ordering Clauses

28. Accordingly, It is ordered that pursuant to sections 1, 4, 10, 11, and 212, of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154, 160, 161, and 212, the policies, rules, and requirements set forth herein ARE ADOPTED.

29. It is further ordered That pursuant to section 11 of the Communications Act of 1934, as amended, 47 U.S.C. 161, that part 62 of the Commission's rules, 47 CFR part 62, is no longer in the public interest, and therefore is REMOVED, effective 30 days after publication of the text thereof in the Federal Register.

30. It is further ordered That pursuant to section 10 of the Communications Act of 1934, as amended, 47 U.S.C. 160, the Commission WILL FORBEAR from those provisions of section 212 addressing interlocking directorates, 47 U.S.C. 212, effective 30 days after publication of the text thereof in the Federal Register.

31. It is further ordered That the Commission's Office of Public Affairs, Reference Operations Division, shall send a copy of this Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

    List of Subjects in 47 CFR part 62

    Antitrust, Communications common carriers, Radio, Reporting and recordkeeping requirements, Telegraph and telephone.

    Federal Communications Commission. William F. Caton, Deputy Secretary.

    Rule Changes

    PART 62--[REMOVED]

    Accordingly, under the authority 47 U.S.C. 154, amend 47 CFR chapter I by removing part 62.

    [FR Doc. 99-20886Filed8-11-99; 8:45 am]

    BILLING CODE 6712-01-U