Common carrier services: Federal-State Joint Board on Universal Service— Jurisdictional separations and referral,

[Federal Register: May 24, 2006 (Volume 71, Number 100)]

[Proposed Rules]

[Page 29882-29886]

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

[DOCID:fr24my06-29]

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 36

[CC Docket No. 80-286; FCC 06-70]

Jurisdictional Separations and Referral to the Federal-State Joint Board

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

SUMMARY: In this document, the Commission addresses several pending issues related to the jurisdictional separations process by which incumbent local exchange carriers (incumbent LECs) apportion regulated costs between the intrastate and interstate jurisdictions. The Further Notice of Proposed Rulemaking seeks comment on issues relating to reform of the jurisdictional separations process, including several proposals submitted to the Commission since its adoption of the 2001 Separations Freeze Order.

DATES: Comments are due on or before August 22, 2006. Reply comments are due on or before November 20, 2006.

ADDRESSES: You may submit comments, identified by CC Docket No. 80-286, by any of the following methods:

[dec221] Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

[dec221] Federal Communications Commission's Web Site: http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.

[dec221] People with Disabilities: Contact the FCC to request reasonable accommodations (accessible format documents, sign language interpreters, CART, etc.) by e-mail: FCC504@fcc.gov or phone: 202-418- 0530 or TTY: 202-418-0432.

For detailed instructions for submitting comments and additional information on the rulemaking process, see the SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Ted Burmeister, Attorney Advisor, at (202) 418-7389 or Michael Jacobs, at (202) 418-2859, Telecommunications Access Policy Division, Wireline Competition Bureau, TTY (202) 418- 0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Further Notice of Proposed Rulemaking (FNPRM) in CC Docket No. 80-286, FCC 06-70, released on May 16, 2006. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 12th Street, SW., Washington, DC 20554.

1. The FNPRM addresses several pending issues related to the jurisdictional separations process by which incumbent LECs apportion regulated costs between the intrastate and interstate jurisdictions. The FNPRM seeks comment on issues relating to reform of the jurisdictional separations process, including several proposals submitted to the Commission since its adoption of the 2001 Separations Freeze Order, 66 FR 33202, June 21, 2001. The technological and market landscape of

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   the telecommunications industry has continued to evolve since the adoption of the 1997 Separations Notice, 62 FR 59842, which initiated a proceeding seeking comment on the extent to which legislative changes, technological changes, and market changes warrant comprehensive reform of the separations process. Thus, in the FNPRM, the Commission seeks comment on the effects on its separations rules of increased market adoption of IP-enabled services such as voice over IP (VoIP) services, among other technological and market changes.

2. Because of the time that has passed and changes that have occurred since the 1997 Separations Notice, the Commission asks that commenters refresh the record on the 1997 Separations Notice. For instance, the Commission seeks guidance on whether competitive neutrality, administrative simplicity, and principles of cost causation still should be the primary criteria for evaluating proposals for reform of the separations rules, or whether other criteria should be balanced in addition to or in place of these criteria. In addition, the Commission solicits updated analysis of whether the Supreme Court's holding in Smith v. Illinois, 282 U.S. 133 (1930), is still applicable in light of competitive market conditions. Furthermore, the Commission seeks comment on whether there is a continued need to prescribe separations rules for either price cap or rate-of-return incumbent LECs.

3. On December 19, 2001, following adoption of the 2001 Separations Freeze Order, the State Members of the Federal-State Joint Board on Jurisdictional Separations (Joint Board) filed the Glide Path Paper, outlining seven options for comprehensive separations reform, including the advantages and disadvantages of each option. The Glide Path II Paper, prepared by the State Members of the Joint Board in late October 2005, proposes six options for comprehensive separations reform, some of which overlap with the seven proposed in the original Glide Path Paper. Both papers also outline several goals for comprehensive separations reform, including the principles that separations should be simpler, separations should be compatible with new technologies and competitive markets, and cost responsibilities should follow jurisdictional responsibilities. The Commission asks commenters to refresh the record on the Glide Path Paper, and, as requested by the State Members of the Joint Board, the Commission seeks comment on all of the proposals in the Glide Path II Paper.

4. In a May 2004 letter to the Commission, the State Members of the Joint Board suggested a one-time data collection designed to assist the Commission in evaluating whether to modify its rules pertaining to jurisdictional separations, specifically, the part 36 category relationships and jurisdictional cost allocation factors. The Commission believes that the information derived from such a data request will be useful in assisting it as it contemplates comprehensive separations reform. Appendix C of the Order and FNPRM contains the draft data request. The Commission seeks comment generally on the data request's utility in assisting separations reform efforts, and on whether, as currently drafted, the data request will help the Commission to elicit useful information towards that end. The Commission also seeks comment on whether there are alternatives to a data request to help the Commission educe the desired information, and on whether there is any way to streamline the draft data request without sacrificing its utility.

5. In the 2001 Separations Freeze Order, the Commission agreed with the Joint Board's recommendation that the Commission commit itself to addressing the separations ramifications of issues associated with the emergence of new technologies and local exchange service competition. These issues include the appropriate separations treatment of: (1) Unbundled network elements; (2) digital subscriber line services; (3) private lines; and (4) Internet traffic. In accord with the Commission's commitment, the Commission seeks comment on the separations ramifications of these four specified issues.

6. In addition, the Commission seeks comment on what effect competitive changes in the local telecommunications marketplace since passage of the Telecommunications Act of 1996 (1996 Act) should have on comprehensive reform of the Commission's separations rules; the general interaction of the Commission's separations rules with its universal service rules; the effects that separations reform would have on evaluation of special access rates; and the effect on comprehensive separations reform, and vice-versa, of a Commission grant or denial of a BellSouth request for forbearance from the separations rules. Furthermore, the Commission seeks comment on how any other issues and proceedings before the Commission, may affect, or be affected by, comprehensive separations reform.

7. Finally, while the Commission froze the separations category relationships and the jurisdictional cost allocation factors in the 2001 Separations Freeze Order, the Commission also required that categories or portions of categories that had been directly assigned prior to the separations freeze would continue to be directly assigned to each jurisdiction. There has been some disagreement, however, between state commissions and carriers regarding the application of this direct assignment requirement. For instance, at its February 2006 Winter Meetings, the National Association of Regulatory Utility Commissioners (NARUC) Board of Directors adopted a resolution stating that the Commission ``should clarify that all carriers must continue to directly assign all private lines and special access circuits based on existing line counts.'' Conversely, USTelecom asserts that the direct assignment provision ``is narrow and does not require investment studies,'' but that some state regulators are attempting to compel carriers to demonstrate that costs are directly assigned in the proper manner. The Commission seeks comment on the clarifications sought by NARUC and by USTelecom.

   1. Procedural Matters

   1. Initial Regulatory Flexibility Analysis

8. As required by the Regulatory Flexibility Act of 1980, as amended (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 and rules proposed in the FNPRM. Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the FNPRM provided above. The Commission will send a copy of the FNPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). See 5 U.S.C. 603(a). In addition, the FNPRM and the IRFA (or summaries thereof) will be published in the Federal Register. 1. Need for, and Objectives of, the Proposed Rules

9. In the 1997 Separations Notice, the Commission noted that the network infrastructure by that time had become vastly different from the network and services used to define the cost categories appearing in the Commission's part 36 jurisdictional separations rules, and that the separations process codified in part 36 was developed during a time when common carrier regulation presumed

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   that interstate and intrastate telecommunications service must be provided through a regulated monopoly. Thus, the Commission initiated a proceeding with the goal of reviewing comprehensively the Commission's part 36 procedures to ensure that they meet the objectives of the 1996 Act. The Commission sought comment on the extent to which legislative changes, technological changes, and market changes might warrant comprehensive reform of the separations process. Because over eight years have elapsed since the closing of the comment cycle on the 1997 Separations Notice, and the industry has experienced myriad changes during that time, we ask that commenters, in their comments on the present FNPRM, refresh the record on the issues set forth in the 1997 Separations Notice, and we seek comment on several new issues related to separations reform.

10. We seek comment on four issues relating to comprehensive separations reform. First, the Commission seeks comment on specific proposals for comprehensive separations reform advanced by the State Members of the Joint Board. Second, the Commission seeks comment on a draft data request prepared by the State Members that is intended to elicit data that may be helpful in formulating a reformed separations process. Third, the Commission seeks comment on the separations ramifications of four specific issues associated with the emergence of new technologies and local exchange service competition, including the appropriate separations treatment of: (1) UNEs; (2) DSL services; (3) private lines; and (4) Internet traffic. Fourth, the Commission seeks comment on how the market adoption and regulatory treatment of IP- enabled services, and other issues and proceedings before the Commission, may affect, or be affected by, comprehensive separations reform.

11. Furthermore, we seek comment on clarifications sought by NARUC and by USTelecom as to direct assignment of investment categories and portions of investment categories during the freeze.

12. The purpose of proposed separations reform is to ensure that the Commission's separations rules meet the objectives of the 1996 Act, and to consider changes that may need to be made to the separations process in light of changes in the law, technology, and market structure of the telecommunications industry. Though the Commission originally proposed that competitive neutrality, administrative simplicity, and principles of cost causation should be the primary criteria for evaluating proposals for separations reform, in the FNPRM we seek guidance on whether these criteria should be retained as the primary criteria, or whether other criteria should be balanced in addition to or in place of these criteria. 2. Legal Basis

13. The legal basis for the FNPRM is contained in sections 1, 2, 4, 201 through 205, 215, 218, 220, 221(c), 254 and 410 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154, 201- 205, 215, 218, 220, 221(c), 254 and 410; section 706(a) of the Telecommunications Act of 1996, 47 U.S.C. 157nt; and sections 1.421, 36.1 and 36.2 of the Commission's rules, 47 CFR 1.421, 36.1, and 36.2. 3. Description and Estimate of the Number of Small Entities to Which Rules May Apply

14. The RFA directs agencies to provide a description of, and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. See 5 U.S.C. 603(b)(3). The RFA generally defines the term ``small entity'' as having the same meaning as the terms ``small business,'' ``small organization,'' and ``small governmental jurisdiction.'' 5 U.S.C. 601(b). In addition, the term ``small business'' has the same meaning as the term ``small business concern'' under section 3 of the Small Business Act. 5 U.S.C. 601(3). 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) satisfies any additional criteria established by the Small Business Administration (SBA). 15 U.S.C. 632.

15. We have included small incumbent LECs in this RFA analysis. As noted above, a ``small business'' under the RFA is one that, inter alia, meets the pertinent small business size standard established by the SBA, and is not dominant in its field of operation. Section 121.201 of the SBA regulations defines a small wireline telecommunications business as one with 1,500 or fewer employees. In addition, the SBA's Office of Advocacy contends that, for RFA purposes, small incumbent LECs are not dominant in their field of operation because any such dominance is not ``national'' in scope. Because our proposals concerning the part 36 separations process will affect all incumbent LECs providing interstate services, some entities employing 1500 or fewer employees may be affected by the proposals made in this FNPRM. We therefore have included small incumbent LECs in this RFA analysis, although we emphasize that this RFA action has no effect on the Commission's analyses and determinations in other, non-RFA contexts.

16. Neither the Commission nor the SBA has developed a small business size standard specifically for providers of incumbent local exchange services. The closest applicable size standard under the SBA rules is for Wired Telecommunications Carriers. Under the SBA definition, a carrier is small if it has 1,500 or fewer employees. According to the FCC's Telephone Trends Report data, 1,303 incumbent LECs reported that they were engaged in the provision of local exchange services. Of these 1,303 carriers, an estimated 1,020 have 1,500 or fewer employees and 283 have more than 1,500 employees. Consequently, the Commission estimates that most incumbent LECs are small entities that may be affected by the rules and policies adopted herein. 4. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements

17. The FNPRM seeks comment on a draft one-time data collection designed to assist the Commission in evaluating whether to modify its separations rules, specifically, the part 36 category relationships and jurisdictional cost allocation factors. To assist the Separations Joint Board and the Commission in this regard, carriers would be requested to identify and explain the way in which specific categories of costs and revenues are recorded for accounting and jurisdictional purposes. The Commission seeks comment on alternatives to the data collection, including the draft data request's impact on small incumbent LECs. Furthermore, we believe that incumbent LECs, including small incumbent LECs, would be able to readily obtain the required data at minimal additional costs. We believe that the information derived from a data request will be useful in assisting the Commission as it contemplates comprehensive separations reform, including evaluation of the possible impact of various reform efforts specifically on small incumbent LECs. We emphasize that any data request that the Commission adopts looking towards comprehensive separations reform would be a one-time request.

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

18. 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 and reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or part thereof, for small entities. See 5 U.S.C. 603(c)(1)-(4).

19. As described above, because over eight years have elapsed since the closing of the comment cycle on the 1997 Separations Notice, and the industry has experienced myriad changes during that time, we ask that commenters, in their comments on the FNPRM, refresh the record on the issues set forth in the 1997 Separations Notice. We also seek comment on specific proposals for comprehensive separations reform advanced by the State Members of the Joint Board, as well as a draft data request prepared by the State Members that is intended to elicit data that may be helpful in formulating a reformed separations process. For each of these issues and proposals, we seek comment on the effects our proposals would have on small entities, and whether any rules that we adopt should apply differently to small entities.

20. For instance, we ask that commenters specifically address how proposals for comprehensive separations reform advanced by the State Members, the Glide Path Paper and Glide Path II Paper, would affect small carriers, including rural incumbent LECs. Furthermore, we particularly seek comment on the burdens of the draft data request on small carriers. Moreover, we seek comment on whether there are alternatives to a data request to help the Commission educe the desired information, and on whether there is any way to streamline the draft data request without sacrificing its utility. Finally, as a general matter, we direct commenters to ``consider how costly and burdensome any proposed changes to the Commission's separations rules would be for small carriers, and whether such changes would disproportionately affect specific types of carriers or ratepayers.''

21. We also emphasize that several of our proposals in the FNPRM, if adopted, could have the effect of eliminating the separations rules in whole or in part. For example, we seek comment on whether there is a continued need to prescribe separations rules for either price cap or rate-of-return incumbent LECs. In addition, several of the proposals in the Glide Path Paper and Glide Path II Paper call for simplifying separations procedures or eliminating separations altogether. Implementation of these proposals would have the same ultimate effect as freezing the separations rules, namely, easing the administrative burden of regulatory compliance for LECs, including small incumbent LECs. As we recognize in the final RFA certification, the freeze has eliminated the need for all incumbent LECs, including incumbent LECs with 1500 employees or fewer, to complete certain annual studies formerly required by the Commission's rules. If this extended action can be said to have any affect under the RFA, it is to reduce a regulatory compliance burden for small incumbent LECs, by eliminating the aforementioned separations studies and providing these carriers with greater regulatory certainty. Thus, the Commission is considering several proposals that ultimately could lead directly to reducing the regulatory compliance burden for small incumbent LECs. 6. Federal Rules That May Duplicate, Overlap, or Conflict With the Proposed Rules

22. None.

    2. Paperwork Reduction Act Analysis

23. The FNPRM does not contain any new, modified, or proposed information collections subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any new, modified, or proposed ``information collection burden for small business concerns with fewer than 25 employees,'' pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

    3. Ex Parte Presentations

24. These matters shall be treated as a ``permit-but-disclose proceeding in accordance with the Commission's ex parte rules. Persons making oral ex parte presentations are reminded that memoranda summarizing the presentations must contain summaries of the substance of the presentations and not merely a listing of the subjects discussed. More than a one or two sentence description of the views and arguments presented is generally required. Other requirements pertaining to oral and written presentations are set forth in section 1.1206(b) of the Commission's rules.

    4. Comment Filing Procedures

25. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments on or before August 22, 2006. Reply comments are due on or before November 20, 2006. Comments may be filed using: (1) The Commission's Electronic Comment Filing System (ECFS), (2) the Federal Government's eRulemaking Portal, or (3) by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121, May 1, 1998.

26. Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ or the Federal eRulemaking Portal: http://www.regulations.gov. Filers should

    follow the instructions provided on the website for submitting comments.

27. For ECFS filers, if multiple docket or rulemaking numbers appear in the caption of this proceeding, filers must transmit one electronic copy of the comments for each docket or rulemaking number referenced in the caption. In completing the transmittal screen, filers should include their full name, U.S. Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet e-mail. To get filing instructions, filers should send an e-mail to ecfs@fcc.gov, and include the following words in the body of the message, ``get form.'' A sample form and directions will be sent in response.

28. Paper Filers: Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

29. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail (although we continue to experience delays in receiving U.S. Postal Service mail). All filings must be addressed to the Commission's Secretary, Marlene H. Dortch, Office of the Secretary, Federal Communications Commission.

30. The Commission's contractor will receive hand-delivered or messenger-delivered paper filings for the

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    Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building.

31. Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

32. U.S. Postal Service first-class, Express, and Priority mail should be addressed to 445 12th Street, SW., Washington, DC 20554.

33. People with Disabilities: To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

34. In addition, one copy of each pleading must be sent to the Commission's duplicating contractor, Best Copy and Printing, Inc, 445 12th Street, SW., Room CY-B402, Washington, DC 20554; Web site: http://www.bcpiweb.com ; phone: 1-800-378-3160. Furthermore, three copies of

    each pleading must be sent to Antoinette Stevens, Telecommunications Access Policy Division, Wireline Competition Bureau, Federal Communications Commission, 445 12th Street, SW., Room 5-B521, Washington, DC 20554; e-mail: antoinette.stevens@fcc.gov.

35. Filings and comments are also available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC, 20554. Copies may also be purchased from the Commission's duplicating contractor, BCPI, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. Customers may contact BCPI through its Web site: http://www.bcpiweb.com, by e-mail at fcc@bcpiweb.com, by

    telephone at (202) 488-5300 or (800) 378-3160, or by facsimile at (202) 488-5563.

    2. Ordering Clauses

36. Pursuant to the authority contained in sections 1, 2, 4, 201- 205, 215, 218, 220, 229, 254, and 410 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154, 201-205, 215, 218, 220, 229, 254 and 410, this Further Notice of Proposed Rulemaking is adopted.

37. The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Further Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

    List of Subjects in 47 CFR Part 36

    Communications common carriers.

    Federal Communications Commission. Marlene H. Dortch, Secretary.

    [FR Doc. E6-7849 Filed 5-23-06; 8:45 am]

    BILLING CODE 6712-01-P