FR Doc 06-2423

[Federal Register: March 15, 2006 (Volume 71, Number 50)]
[Proposed Rules]
[Page 13317-13323]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15mr06-35]

=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Ch. I

[FCC 06-10]

Customer Proprietary Network Information

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: In this document the Commission considers whether to take
additional steps to protect the privacy of customer proprietary network
information (CPNI) that is collected and held by telecommunications
carriers. The Commission has long been committed to safeguarding
customer privacy, and its rules requiring carriers to take specific
steps to ensure that CPNI is adequately protected from unauthorized
disclosure.

DATES: Comments are due April 14, 2006. Reply comments are due May 15,
2006. Written comments on the Paperwork Reduction Act proposed
information collection requirements must be submitted by the public,
Office of Management and Budget (OMB), and other interested parties on
or before May 15, 2006.

ADDRESSES: You may submit comments, identified by CC Docket No. 96-115,
by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.

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

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: Tim Stelzig, (202) 418-0942,
Competition Policy Division, Wireline Competition Bureau. For
additional information concerning the Paperwork Reduction Act
information collection requirements contained in this document, contact
Judith B. Herman at 202-418-0214, or via the Internet at PRA@fcc.gov.

SUPPLEMENTARY INFORMATION: Pursuant to Sec. Sec. 1.415 and 1.419 of
the Commission's rules, 47 CFR 1.415 and 1.419, interested parties may
file comments and reply comments regarding the NPRM. All filings
related to this Notice of Proposed Rulemaking should refer to CC Docket
No. 96-115. 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. The public may view a full copy of this document at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-06-10A1.pdf
.

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 Web site for submitting
comments.

[[Page 13318]]

For ECFS filers, 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.
Paper Filers: Parties who choose to file by paper must
file an original and four copies of each filing. 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, 445
12th Street, SW., Washington, DC 20554.
The Commission's contractor will receive hand-delivered or
messenger-delivered paper filings for the 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.
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.
U.S. Postal Service first-class, Express, and Priority
mail should be addressed to 445 12th Street, SW., Washington, DC 20554.
Parties should send a copy of their filings to Janice
Myles, Competition Policy Division, Wireline Competition Bureau,
Federal Communications Commission, Room 5-C140, 445 12th Street, SW.,
Washington, DC 20554, or by e-mail to Janice.myles@fcc.gov. Parties
should also serve one copy with the Commission's copy contractor, Best
Copy and Printing, Inc. (BCPI), Portals II, 445 12th Street, SW., Room
CY-B402, Washington, DC 20554, (202) 488-5300, or via e-mail to
fcc@bcpiweb.com.

Documents in CC Docket No. 96-115 will be available for
public inspection and copying during business hours at the FCC
Reference Information Center, Portals II, 445 12th Street, SW., Room
CY-A257, Washington, DC 20554. The documents may also be purchased from
BCPI, telephone (202) 488-5300, facsimile (202) 488-5563, TTY (202)
488-5562, e-mail fcc@bcpiweb.com.
People with Disabilities: Contact the FCC to request
materials in accessible formats (Braille, large print, electronic
files, audio format, etc.) by e-mail at fcc504@fcc.gov or call the
Consumer and Governmental Affairs Bureau at (202) 418-0531 (voice),
(202) 418-7365 (TTY).

I. Paperwork Reduction Act

This document contains proposed information collection
requirements. The Commission, as part of its continuing effort to
reduce paperwork burden, invites the general public and the Office of
Management and Budget (OMB) to comment on the information collection
requirements contained in this document, as required by the Paperwork
Reduction Act of 1995, Public Law 104-13. Public and agency comments
are due May 15, 2006. Comments should address: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have practical utility; (b) the accuracy of the Commission's
burden estimates; (c) ways to enhance the quality, utility, and clarity
of the information collected; and (d) ways to minimize the burden of
the collection of information on the respondents, including the use of
automated collection techniques or other forms of information
technology. In addition, pursuant to the Small Business Paperwork
Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the
Commission seeks specific comment on how the Commission might ``further
reduce the information collection burden for small business concerns
with fewer than 25 employees.''

II. Notice of Proposed Rulemaking

In this Notice of Proposed Rulemaking (NPRM), CC Docket No. 96-115
and RM-11277, FCC 06-10, released February 14, 2006, the Commission
seeks comment on what additional steps, if any, the Commission should
take to further protect the privacy of customer proprietary network
information (CPNI) that is collected and held by telecommunications
carriers. This NPRM directly responds to the petition filed by the
Electronic Privacy Information Center (EPIC) expressing concerns about
the sufficiency of carrier practices related to CPNI. As the EPIC
petition points out, numerous websites advertise the sale of personal
telephone records for a price. Specifically, data brokers advertise the
availability of cell phone records, which include calls to and/or from
a particular cell phone number, the duration of such calls, and may
even include the physical location of the cell phone. In addition to
selling cell phone call records, many data brokers also claim to
provide calling records for landline and voice over Internet protocol,
as well as non-published phone numbers. In many cases, the data brokers
claim to be able to provide this information within fairly quick time
frames, ranging from a few hours to a few days. The Commission finds
this conduct to be very disturbing and, accordingly, the Commission
grants EPIC's request and initiates a rulemaking to determine whether
enhanced security and authentication standards for access to customer
telephone records are warranted.
In the NPRM, the Commission seeks comment, pursuant to the
Commission's authority under section 222 of the Act, on the nature and
scope of the problem identified by EPIC. The Commission seeks comment
generally on how CPNI is maintained and secured by carriers and how
data brokers are able to obtain CPNI from carriers. The Commission also
seeks comment on whether the Commission's existing opt-out regime
sufficiently protects the privacy of CPNI in the context of CPNI
disclosed to telecommunications carriers' joint venture partners and
independent contractors. The Commission also seeks comment on carriers'
current practices regarding the disclosure of CPNI and whether they are
sufficient. In particular, EPIC proposes five forms of security
measures that it maintains would more adequately protect access to
CPNI: consumer-set passwords, audit trails, encryption, limiting data
retention, and notice procedures. The Commission seeks comment about
the feasibility and advisability of these and other measures. The
Commission also seeks comment on whether it should take steps to
enhance its ability to enforce the requirements of section 222 and the
Commission's regulations relating to CPNI.

III. Procedural Matters

Ex Parte Presentations

The rulemaking this NPRM initiates 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 generally is required. Other requirements
pertaining

[[Page 13319]]

to oral and written presentations are set forth in Sec. 1.1206(b) of
the Commission's rules.

Initial Regulatory Flexibility Analysis

1. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), see 5 U.S.C. 603, the Commission has prepared the
present Initial Regulatory Flexibility Analysis (IRFA) of the possible
significant economic impact on small entities that might result from
this NPRM. 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 NPRM. Comments are due April 14, 2006.
Reply comments are due May 15, 2006. 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.
A. Need for, and Objectives of, the Proposed Rules
2. In the NPRM, the Commission grants EPIC's petition for
rulemaking and seeks comment on what security measures
telecommunications carriers currently have in place for verifying the
identity of people requesting CPNI; what inadequacies currently exist
in those measures that allow third parties such as online data brokers
and private investigators to access CPNI without the customer's
knowledge or authorization; and what kind of security measures may be
warranted to better protect telecommunications customers from
unauthorized access to CPNI. In particular, the Commission seeks
comment on EPIC's five proposals to address the unauthorized means of
obtaining CPNI: (1) Consumer-set passwords; (2) audit trails; (3)
encryption; (4) limiting data retention; and (5) procedures for notice
to the customer on release of CPNI data. The Commission also seeks
comment on what steps the Commission should take to enforce its CPNI
rules and whether carriers should be required to report further on the
release of CPNI.
B. Legal Basis
3. The legal basis for any action that may be taken pursuant to the
NPRM is contained in sections 1, 4(i), 4(j), and 222 of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i)-(j), 222.
C. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules May Apply
4. 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. The RFA generally defines the term
``small entity'' as having the same meaning as the terms ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. A small business concern is one which: (1) Is independently owned
and operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the Small Business
Administration (SBA).
5. Small Businesses. Nationwide, there are a total of approximately
22.4 million small businesses, according to SBA data.
6. Small Organizations. Nationwide, there are approximately 1.6
million small organizations.
7. Small Governmental Jurisdictions. The term ``small governmental
jurisdiction'' is defined generally as ``governments of cities, towns,
townships, villages, school districts, or special districts, with a
population of less than fifty thousand.'' Census Bureau data for 2002
indicate that there were 87,525 local governmental jurisdictions in the
United States. The Commission estimates that, of this total, 84,377
entities were ``small governmental jurisdictions.'' Thus, the
Commission estimates that most governmental jurisdictions are small.

1. Telecommunications Service Entities

a. Wireline Carriers and Service Providers

8. The Commission has included small incumbent local exchange
carriers in this present RFA analysis. As noted above, a ``small
business'' under the RFA is one that, inter alia, meets the pertinent
small business size standard (e.g., a telephone communications business
having 1,500 or fewer employees), and ``is not dominant in its field of
operation.'' The SBA's Office of Advocacy contends that, for RFA
purposes, small incumbent local exchange carriers are not dominant in
their field of operation because any such dominance is not ``national''
in scope. The Commission has therefore included small incumbent local
exchange carriers in this RFA analysis, although the Commission
emphasizes that this RFA action has no effect on Commission analyses
and determinations in other, non-RFA contexts.
9. Incumbent Local Exchange Carriers (LECs). Neither the Commission
nor the SBA has developed a small business size standard specifically
for incumbent local exchange services. The appropriate size standard
under SBA rules is for the category Wired Telecommunications Carriers.
Under that size standard, such a business is small if it has 1,500 or
fewer employees. According to Commission data, 1,303 carriers have
reported that they are engaged in the provision of incumbent 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 providers of incumbent
local exchange service are small businesses that may be affected by the
Commission's action.
10. Competitive Local Exchange Carriers, Competitive Access
Providers (CAPs), ``Shared-Tenant Service Providers,'' and ``Other
Local Service Providers.'' Neither the Commission nor the SBA has
developed a small business size standard specifically for these service
providers. The appropriate size standard under SBA rules is for the
category Wired Telecommunications Carriers. Under that size standard,
such a business is small if it has 1,500 or fewer employees. According
to Commission data, 769 carriers have reported that they are engaged in
the provision of either competitive access provider services or
competitive local exchange carrier services. Of these 769 carriers, an
estimated 676 have 1,500 or fewer employees and 93 have more than 1,500
employees. In addition, 12 carriers have reported that they are
``Shared-Tenant Service Providers,'' and all 12 are estimated to have
1,500 or fewer employees. In addition, 39 carriers have reported that
they are ``Other Local Service Providers.'' Of the 39, an estimated 38
have 1,500 or fewer employees and one has more than 1,500 employees.
Consequently, the Commission estimates that most providers of
competitive local exchange service, competitive access providers,
``Shared-Tenant Service Providers,'' and ``Other Local Service
Providers'' are small entities that may be affected by the Commission's
action.
11. Local Resellers. The SBA has developed a small business size
standard for the category of Telecommunications Resellers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees. According to Commission data, 143 carriers have reported
that they are engaged in the provision of local resale

[[Page 13320]]

services. Of these, an estimated 141 have 1,500 or fewer employees and
two have more than 1,500 employees. Consequently, the Commission
estimates that the majority of local resellers are small entities that
may be affected by the Commission's action.
12. Toll Resellers. The SBA has developed a small business size
standard for the category of Telecommunications Resellers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees. According to Commission data, 770 carriers have reported
that they are engaged in the provision of toll resale services. Of
these, an estimated 747 have 1,500 or fewer employees and 23 have more
than 1,500 employees. Consequently, the Commission estimates that the
majority of toll resellers are small entities that may be affected by
the Commission's action.
13. Payphone Service Providers (PSPs). Neither the Commission nor
the SBA has developed a small business size standard specifically for
payphone services providers. The appropriate size standard under SBA
rules is for the category Wired Telecommunications Carriers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees. According to Commission data, 613 carriers have reported
that they are engaged in the provision of payphone services. Of these,
an estimated 609 have 1,500 or fewer employees and four have more than
1,500 employees. Consequently, the Commission estimates that the
majority of payphone service providers are small entities that may be
affected by the Commission's action.
14. Interexchange Carriers (IXCs). Neither the Commission nor the
SBA has developed a small business size standard specifically for
providers of interexchange services. The appropriate size standard
under SBA rules is for the category Wired Telecommunications Carriers.
Under that size standard, such a business is small if it has 1,500 or
fewer employees. According to Commission data, 316 carriers have
reported that they are engaged in the provision of interexchange
service. Of these, an estimated 292 have 1,500 or fewer employees and
24 have more than 1,500 employees. Consequently, the Commission
estimates that the majority of IXCs are small entities that may be
affected by the Commission's action.
15. Operator Service Providers (OSPs). Neither the Commission nor
the SBA has developed a small business size standard specifically for
operator service providers. The appropriate size standard under SBA
rules is for the category Wired Telecommunications Carriers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees. According to Commission data, 23 carriers have reported that
they are engaged in the provision of operator services. Of these, an
estimated 20 have 1,500 or fewer employees and three have more than
1,500 employees. Consequently, the Commission estimates that the
majority of OSPs are small entities that may be affected by the
Commission's action.
16. Prepaid Calling Card Providers. Neither the Commission nor the
SBA has developed a small business size standard specifically for
prepaid calling card providers. The appropriate size standard under SBA
rules is for the category Telecommunications Resellers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.
According to Commission data, 89 carriers have reported that they are
engaged in the provision of prepaid calling cards. Of these, 88 are
estimated to have 1,500 or fewer employees and one has more than 1,500
employees. Consequently, the Commission estimates that all or the
majority of prepaid calling card providers are small entities that may
be affected by the Commission's action.
17. 800 and 800-Like Service Subscribers. Neither the Commission
nor the SBA has developed a small business size standard specifically
for 800 and 800-like service (``toll free'') subscribers. The
appropriate size standard under SBA rules is for the category
Telecommunications Resellers. Under that size standard, such a business
is small if it has 1,500 or fewer employees. The most reliable source
of information regarding the number of these service subscribers
appears to be data the Commission collects on the 800, 888, and 877
numbers in use. According to the Commission's data, at the end of
January 1999, the number of 800 numbers assigned was 7,692,955; the
number of 888 numbers assigned was 7,706,393; and the number of 877
numbers assigned was 1,946,538. The Commission does not have data
specifying the number of these subscribers that are not independently
owned and operated or have more than 1,500 employees, and thus is
unable at this time to estimate with greater precision the number of
toll free subscribers that would qualify as small businesses under the
SBA size standard. Consequently, the Commission estimates that there
are 7,692,955 or fewer small entity 800 subscribers; 7,706,393 or fewer
small entity 888 subscribers; and 1,946,538 or fewer small entity 877
subscribers.

b. International Service Providers

18. The Commission has not developed a small business size standard
specifically for providers of international service. The appropriate
size standards under SBA rules are for the two broad census categories
of ``Satellite Telecommunications'' and ``Other Telecommunications.''
Under both categories, such a business is small if it has $12.5 million
or less in average annual receipts.
19. The first category of Satellite Telecommunications ``comprises
establishments primarily engaged in providing point-to-point
telecommunications services to other establishments in the
telecommunications and broadcasting industries by forwarding and
receiving communications signals via a system of satellites or
reselling satellite telecommunications.'' For this category, Census
Bureau data for 2002 show that there were a total of 371 firms that
operated for the entire year. Of this total, 307 firms had annual
receipts of under $10 million, and 26 firms had receipts of $10 million
to $24,999,999. Consequently, the Commission estimates that the
majority of Satellite Telecommunications firms are small entities that
might be affected by the Commission's action.
20. The second category of Other Telecommunications ``comprises
establishments primarily engaged in (1) Providing specialized
telecommunications applications, such as satellite tracking,
communications telemetry, and radar station operations; or (2)
providing satellite terminal stations and associated facilities
operationally connected with one or more terrestrial communications
systems and capable of transmitting telecommunications to or receiving
telecommunications from satellite systems.'' For this category, Census
Bureau data for 2002 show that there were a total of 332 firms that
operated for the entire year. Of this total, 259 firms had annual
receipts of under $10 million and 15 firms had annual receipts of $10
million to $24,999,999. Consequently, the Commission estimates that the
majority of Other Telecommunications firms are small entities that
might be affected by the Commission's action.

c. Wireless Telecommunications Service Providers

21. Below, for those services subject to auctions, the Commission
notes that, as a general matter, the number of winning bidders that
qualify as small businesses at the close of an auction

[[Page 13321]]

does not necessarily represent the number of small businesses currently
in service. Also, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated.
22. Wireless Service Providers. The SBA has developed a small
business size standard for wireless firms within the two broad economic
census categories of ``Paging'' and ``Cellular and Other Wireless
Telecommunications.'' Under both SBA categories, a wireless business is
small if it has 1,500 or fewer employees. For the census category of
Paging, Census Bureau data for 2002 show that there were 807 firms in
this category that operated for the entire year. Of this total, 804
firms had employment of 999 or fewer employees, and three firms had
employment of 1,000 employees or more. Thus, under this category and
associated small business size standard, the majority of firms can be
considered small. For the census category of Cellular and Other
Wireless Telecommunications, Census Bureau data for 2002 show that
there were 1,397 firms in this category that operated for the entire
year. Of this total, 1,378 firms had employment of 999 or fewer
employees, and 19 firms had employment of 1,000 employees or more.
Thus, under this second category and size standard, the majority of
firms can, again, be considered small.
23. Cellular Licensees. The SBA has developed a small business size
standard for wireless firms within the broad economic census category
``Cellular and Other Wireless Telecommunications.'' Under this SBA
category, a wireless business is small if it has 1,500 or fewer
employees. For the census category of Cellular and Other Wireless
Telecommunications, Census Bureau data for 2002 show that there were
1,397 firms in this category that operated for the entire year. Of this
total, 1,378 firms had employment of 999 or fewer employees, and 19
firms had employment of 1,000 employees or more. Thus, under this
category and size standard, the great majority of firms can be
considered small. Also, according to Commission data, 437 carriers
reported that they were engaged in the provision of cellular service,
Personal Communications Service (PCS), or Specialized Mobile Radio
(SMR) Telephony services, which are placed together in the data. The
Commission has estimated that 260 of these are small, under the SBA
small business size standard.
24. Common Carrier Paging. The SBA has developed a small business
size standard for wireless firms within the broad economic census
category, ``Cellular and Other Wireless Telecommunications.'' Under
this SBA category, a wireless business is small if it has 1,500 or
fewer employees. For the census category of Paging, Census Bureau data
for 2002 show that there were 807 firms in this category that operated
for the entire year. Of this total, 804 firms had employment of 999 or
fewer employees, and three firms had employment of 1,000 employees or
more. Thus, under this category and associated small business size
standard, the majority of firms can be considered small. In the Paging
Third Report and Order, the Commission developed a small business size
standard for ``small businesses'' and ``very small businesses'' for
purposes of determining their eligibility for special provisions such
as bidding credits and installment payments. A ``small business'' is an
entity that, together with its affiliates and controlling principals,
has average gross revenues not exceeding $15 million for the preceding
three years. Additionally, a ``very small business'' is an entity that,
together with its affiliates and controlling principals, has average
gross revenues that are not more than $3 million for the preceding
three years. The SBA has approved these small business size standards.
An auction of Metropolitan Economic Area licenses commenced on February
24, 2000, and closed on March 2, 2000. Of the 985 licenses auctioned,
440 were sold. Fifty-seven companies claiming small business status
won. Also, according to Commission data, 375 carriers reported that
they were engaged in the provision of paging and messaging services. Of
those, the Commission estimates that 370 are small, under the SBA-
approved small business size standard.
25. Wireless Telephony. Wireless telephony includes cellular,
personal communications services (PCS), and specialized mobile radio
(SMR) telephony carriers. As noted earlier, the SBA has developed a
small business size standard for ``Cellular and Other Wireless
Telecommunications'' services. Under that SBA small business size
standard, a business is small if it has 1,500 or fewer employees.
According to Commission data, 445 carriers reported that they were
engaged in the provision of wireless telephony. The Commission has
estimated that 245 of these are small under the SBA small business size
standard.
26. Broadband Personal Communications Service. The broadband
Personal Communications Service (PCS) spectrum is divided into six
frequency blocks designated A through F, and the Commission has held
auctions for each block. The Commission defined ``small entity'' for
Blocks C and F as an entity that has average gross revenues of $40
million or less in the three previous calendar years. For Block F, an
additional classification for ``very small business'' was added and is
defined as an entity that, together with its affiliates, has average
gross revenues of not more than $15 million for the preceding three
calendar years.'' These standards defining ``small entity'' in the
context of broadband PCS auctions have been approved by the SBA. No
small businesses, within the SBA-approved small business size standards
bid successfully for licenses in Blocks A and B. There were 90 winning
bidders that qualified as small entities in the Block C auctions. A
total of 93 small and very small business bidders won approximately 40
percent of the 1,479 licenses for Blocks D, E, and F. On March 23,
1999, the Commission re-auctioned 347 C, D, E, and F Block licenses.
There were 48 small business winning bidders. On January 26, 2001, the
Commission completed the auction of 422 C and F Broadband PCS licenses
in Auction No. 35. Of the 35 winning bidders in this auction, 29
qualified as ``small'' or ``very small'' businesses. Subsequent events,
concerning Auction 35, including judicial and agency determinations,
resulted in a total of 163 C and F Block licenses being available for
grant.
27. Narrowband Personal Communications Services. To date, two
auctions of narrowband personal communications services (PCS) licenses
have been conducted. For purposes of the two auctions that have already
been held, ``small businesses'' were entities with average gross
revenues for the prior three calendar years of $40 million or less.
Through these auctions, the Commission has awarded a total of 41
licenses, out of which 11 were obtained by small businesses. To ensure
meaningful participation of small business entities in future auctions,
the Commission has adopted a two-tiered small business size standard in
the Narrowband PCS Second Report and Order. A ``small business'' is an
entity that, together with affiliates and controlling interests, has
average gross revenues for the three preceding years of not more than
$40 million. A ``very small business'' is an entity that, together with
affiliates and controlling interests, has average gross revenues for
the three preceding years of not more than $15 million. The SBA has
approved these small business size standards. In the future, the

[[Page 13322]]

Commission will auction 459 licenses to serve Metropolitan Trading
Areas (MTAs) and 408 response channel licenses. There is also one
megahertz of narrowband PCS spectrum that has been held in reserve and
that the Commission has not yet decided to release for licensing. The
Commission cannot predict accurately the number of licenses that will
be awarded to small entities in future auctions. However, four of the
16 winning bidders in the two previous narrowband PCS auctions were
small businesses, as that term was defined. The Commission assumes, for
purposes of this analysis that a large portion of the remaining
narrowband PCS licenses will be awarded to small entities. The
Commission also assumes that at least some small businesses will
acquire narrowband PCS licenses by means of the Commission's
partitioning and disaggregation rules.
28. Rural Radiotelephone Service. The Commission has not adopted a
size standard for small businesses specific to the Rural Radiotelephone
Service. A significant subset of the Rural Radiotelephone Service is
the Basic Exchange Telephone Radio System (BETRS). The Commission uses
the SBA's small business size standard applicable to ``Cellular and
Other Wireless Telecommunications,'' i.e., an entity employing no more
than 1,500 persons. There are approximately 1,000 licensees in the
Rural Radiotelephone Service, and the Commission estimates that there
are 1,000 or fewer small entity licensees in the Rural Radiotelephone
Service that may be affected by the rules and policies adopted herein.
29. Air-Ground Radiotelephone Service. The Commission has not
adopted a small business size standard specific to the Air-Ground
Radiotelephone Service. The Commission will use SBA's small business
size standard applicable to ``Cellular and Other Wireless
Telecommunications,'' i.e., an entity employing no more than 1,500
persons. There are approximately 100 licensees in the Air-Ground
Radiotelephone Service, and the Commission estimates that almost all of
them qualify as small under the SBA small business size standard.
30. Offshore Radiotelephone Service. This service operates on
several UHF television broadcast channels that are not used for
television broadcasting in the coastal areas of states bordering the
Gulf of Mexico. There are presently approximately 55 licensees in this
service. The Commission is unable to estimate at this time the number
of licensees that would qualify as small under the SBA's small business
size standard for ``Cellular and Other Wireless Telecommunications''
services. Under that SBA small business size standard, a business is
small if it has 1,500 or fewer employees.

2. Cable and OVS Operators

31. Cable and Other Program Distribution. This category includes
cable systems operators, closed circuit television services, direct
broadcast satellite services, multipoint distribution systems,
satellite master antenna systems, and subscription television services.
The SBA has developed a small business size standard for this census
category, which includes all such companies generating $12.5 million or
less in revenue annually. According to Census Bureau data for 2002,
there were a total of 1,191 firms in this category that operated for
the entire year. Of this total, 1,087 firms had annual receipts of
under $10 million, and 43 firms had receipts of $10 million or more but
less than $25 million. Consequently, the Commission estimates that the
majority of providers in this service category are small businesses
that may be affected by the rules and policies adopted herein.
32. Cable System Operators. The Commission has developed its own
small business size standards for cable system operators, for purposes
of rate regulation. Under the Commission's rules, a ``small cable
company'' is one serving fewer than 400,000 subscribers nationwide. In
addition, a ``small system'' is a system serving 15,000 or fewer
subscribers.
33. Cable System Operators (Telecom Act Standard). The
Communications Act of 1934, as amended, also contains a size standard
for small cable system operators, which is ``a cable operator that,
directly or through an affiliate, serves in the aggregate fewer than 1
percent of all subscribers in the United States and is not affiliated
with any entity or entities whose gross annual revenues in the
aggregate exceed $250,000,000.'' The Commission has determined that
there are approximately 67,700,000 subscribers in the United States.
Therefore, an operator serving fewer than 677,000 subscribers shall be
deemed a small operator, if its annual revenues, when combined with the
total annual revenues of all its affiliates, do not exceed $250 million
in the aggregate. Based on available data, the Commission estimates
that the number of cable operators serving 677,000 subscribers or
fewer, totals 1,450. The Commission neither requests nor collects
information on whether cable system operators are affiliated with
entities whose gross annual revenues exceed $250 million, and therefore
is unable, at this time, to estimate more accurately the number of
cable system operators that would qualify as small cable operators
under the size standard contained in the Communications Act of 1934.
34. Open Video Services. Open Video Service (OVS) systems provide
subscription services. The SBA has created a small business size
standard for Cable and Other Program Distribution. This standard
provides that a small entity is one with $12.5 million or less in
annual receipts. The Commission has certified approximately 25 OVS
operators to serve 75 areas, and some of these are currently providing
service. Affiliates of Residential Communications Network, Inc. (RCN)
received approval to operate OVS systems in New York City, Boston,
Washington, DC, and other areas. RCN has sufficient revenues to assure
that they do not qualify as a small business entity. Little financial
information is available for the other entities that are authorized to
provide OVS and are not yet operational. Given that some entities
authorized to provide OVS service have not yet begun to generate
revenues, the Commission concludes that up to 24 OVS operators (those
remaining) might qualify as small businesses that may be affected by
the rules and policies adopted herein.

3. Internet Service Providers

35. Internet Service Providers. The SBA has developed a small
business size standard for Internet Service Providers (ISPs). ISPs
``provide clients access to the Internet and generally provide related
services such as Web hosting, Web page designing, and hardware or
software consulting related to Internet connectivity.'' Under the SBA
size standard, such a business is small if it has average annual
receipts of $21 million or less. According to Census Bureau data for
2002, there were 2,529 firms in this category that operated for the
entire year. Of these, 2,437 firms had annual receipts of under $10
million, and 47 firms had receipts of $10 million or more but less then
$25 million. Consequently, the Commission estimates that the majority
of these firms are small entities that may be affected by the
Commission's action.
36. All Other Information Services. ``This industry comprises
establishments primarily engaged in providing other information
services (except new syndicates and libraries and archives).'' The
Commission's action pertains to VoIP services, which could be provided
by entities that provide other services such as e-mail,

[[Page 13323]]

online gaming, Web browsing, video conferencing, instant messaging, and
other, similar IP-enabled services. The SBA has developed a small
business size standard for this category; that size standard is $6
million or less in average annual receipts. According to Census Bureau
data for 1997, there were 195 firms in this category that operated for
the entire year. Of these, 172 had annual receipts of under $5 million,
and an additional nine firms had receipts of between $5 million and
$9,999,999. Consequently, the Commission estimates that the majority of
these firms are small entities that may be affected by the Commission's
action.
D. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements
37. Should the Commission decide to adopt any regulations to ensure
that all providers of telecommunications services meet consumer
protection needs in regard to CPNI, the associated rules potentially
could modify the reporting and recordkeeping requirements of certain
telecommunications providers. The Commission could, for instance,
require that telecommunications providers require customer password-
related security procedures to access CPNI data and/or encrypt CPNI
data. The Commission could also require that telecommunications
providers maintain more extensive records regarding CPNI data and
report additional CPNI information to their customers and the
Commission. The Commission tentatively concludes that the Commission
should amend its rules to require carriers to certify as to established
operating procedures no later than January 1st (or other date specified
by the Commission) of each year, covering the preceding calendar year,
and to file the compliance certificate with the Commission within 30
days. The Commission further tentatively concludes that carriers should
attach to this annual Sec. 64.2009(e) certification an explanation of
any actions taken against data brokers and a summary of all consumer
complaints received in the past year concerning the unauthorized
release of CPNI. These proposals may impose additional reporting or
recordkeeping requirements on entities. The Commission seeks comment on
the possible burden these requirements would place on small entities.
Also, the Commission seeks comment on whether a special approach toward
any possible compliance burdens on small entities might be appropriate.
Entities, especially small businesses, are encouraged to quantify the
costs and benefits of any reporting requirement that may be established
in this proceeding.
E. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
38. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include (among others) the following four alternatives: (1)
The establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance 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 any part thereof, for small
entities.
39. The Commission's primary objective is to develop a framework
for protecting a customer's CPNI, regardless of the customer's
underlying technology. The Commission seeks comment here on the effect
the various proposals described in the NPRM will have on small
entities, and on what effect alternative rules would have on those
entities. The Commission invites comment on ways in which the
Commission can achieve its goal of protecting consumers while at the
same time impose minimal burdens on small telecommunications service
providers. With respect to any of the Commission's consumer protection
regulations already in place, has the Commission adopted any provisions
for small entities that the Commission should similarly consider here?
Specifically, the Commission invites comment on whether the problems
identified by EPIC are better or worse at smaller carriers. The
Commission invites comment on whether small carriers should be exempt
from password-related security procedures to protect CPNI. The
Commission invites comment on the benefits and burdens of recording
audit trails for the disclosure of CPNI on small carriers. The
Commission invites comment on whether requiring a small carrier to
encrypt its stored data would be unduly burdensome. The Commission
solicits comment on the cost to a small carrier of notifying a customer
upon release of CPNI. The Commission seeks comment on whether the
Commission should amend its rules to require carriers to file annual
certifications concerning CPNI and whether this requirement should
extend to only telecommunications carriers that are not small telephone
companies as defined by the Small Business Administration, and whether
small carriers should be subject to different CPNI-related obligations.
F. Federal Rules that May Duplicate, Overlap, or Conflict with the
Proposed Rules
40. None.

Ordering Clauses

Accordingly, it is ordered, pursuant to sections 1, 4(i), 4(j), and
222 of the Communications Act of 1934, as amended, 47 U.S.C. 151,
154(i)-(j), 222, that this NPRM in CC Docket No. 96-115 and RM-11277 is
adopted.
It is further ordered that the Petition for Rulemaking of the
Electronic Privacy Information Center is granted to the extent
described herein.
It is further ordered that the proceeding in RM-11277 is hereby
terminated.
It is further ordered that the Commission's Consumer & Governmental
Affairs Bureau, Reference Information Center, shall send a copy of this
NPRM, including the Initial Regulatory Flexibility Analysis, to the
Chief Counsel for Advocacy of the Small Business Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 06-2423 Filed 3-14-06; 8:45 am]

BILLING CODE 6712-01-P