[Federal Register: June 8, 2007 (Volume 72, Number 110)]
[Proposed Rules]
[Page 31782-31789]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08jn07-23]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[CC Docket No. 96-115, WC Docket No. 04-36; FCC 07-22]
Customer Proprietary Network Information
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Communications Commission (Commission) adopted a
further notice of proposed rulemaking (Further NPRM) seeking comment on
what steps the Commission should take, if any, to implement section 222
of the Communications Act of 1934, as amended, which governs carriers'
use and disclosure of customer proprietary network information. Through
this Further NRPM, the Commission seeks comment on whether the
Commission should act to expand its CPNI rules further, and whether it
should expand the consumer protections to ensure that customer
information and CPNI are protected in the context of mobile
communication devices.
DATES: Comments are due on or before July 9, 2007, and reply comments
are due on or before August 7, 2007.
ADDRESSES: You may submit comments, identified by CC Docket No. 96-115
and WC Docket No. 04-36, by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Agency Web Site: http://www.fcc.gov Follow the instructions for submitting comments on http://www.fcc.gov/cgb/ecfs/.
E-mail: 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.
Mail: Secretary, Federal Communications Commission, 445
12th Street, SW., Washington DC 20554.
Hand Delivery/Courier: 236 Massachusetts Avenue, NE.,
Suite 110, Washington, DC 20002.
Instructions: All submissions received must include the agency name
and docket numbers for this rulemaking, CC Docket No. 96-115 and WC
Docket No. 04-36. All comments received will be posted without change
to http://www.fcc.gov/cgb/ecfs/, including any personal information
provided. For detailed instructions on submitting comments and
additional information on the rulemaking process, see the ``Public
Participation'' heading of the SUPPLEMENTARY INFORMATION section of
this document.
Docket: For access to the docket to read background documents or
comments received, go to http://www.fcc.gov/cgb/ecfs/.
FOR FURTHER INFORMATION CONTACT: Adam Kirschenbaum, (202) 418-7280,
Wireline Competition Bureau.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
Further Notice of Proposed Rulemaking (Further NPRM) in CC Docket No.
96-115 and WC Docket No. 04-36, FCC 07-22, adopted March 13, 2007, and
released April 2, 2007. The complete text of this document is available
for inspection and copying during normal business hours in the FCC
Reference Information Center, Portals II, 445 12th Street, SW., Room
CY-A257, Washington, DC, 20554. This document may also be purchased
from the Commission's duplicating contractor, Best Copy and Printing,
Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554,
telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-2898,
or via e-mail at http://www.bcpiweb.com It is also available on the Commission's Web site at http://www.fcc.gov.
Public Participation
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).
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.
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.
Paper Filers: Parties who choose to file by paper must
file an original and
[[Page 31783]]
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.
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 the Commission continues to experience delays in
receiving U.S. Postal Service mail). All filings must be addressed to
the Commission's Secretary, Office of the Secretary, Federal
Communications Commission.
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.
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. Parties must
also send a courtesy copy of their filing to Janice Myles, Competition
Policy Division, Wireline Competition Bureau, Federal Communications
Commission, 445 12th Street, SW., Room 5-C140, 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., Washington, DC 20554 or via
e-mail to fcc@bcpiweb.com.
Synopsis of the Further Notice of Proposed Rulemaking (Further NPRM)
1. In this Further NPRM, the Commission seeks comment on what steps
the Commission should take, if any, to secure further the privacy of
customer information. The Commission has a duty to ensure that, as
technologies evolve, the consumer protection objectives of the Act are
maintained. Through this Further NRPM, the Commission seeks comment on
whether the Commission should act to expand its CPNI rules further, and
whether it should expand the consumer protections to ensure that
customer information and CPNI are protected in the context of mobile
communication devices.
A. Additional CPNI Protective Measures
2. Password Protection. In light of the rules the Commission adopts
in the Order (FCC 07-22) and the recent enactment of criminal penalties
against pretexters, the Commission seeks comment on whether it should
adopt any further carrier requirements to protect CPNI. Specifically,
while the Commission limited its rules to password protecting call
detail information for customer-initiated telephone contact, it seeks
comment on whether to extend these rules to include optional or
mandatory password protection for non-call detail CPNI. Should this
password protection be for all non-call detail CPNI or should it only
include certain account changes? Further, if the Commission were to
adopt password protection for certain account changes, what should that
include (e.g., changes in the address of record, account plans, or
billing methods)? Would requiring these forms of password protection
place an undue burden on carriers, customers, or others, including any
burdens placed on small carriers? The Commission solicits further
comment on any other modifications to its rules that the Commission
should adopt in light of pretexting activity, and a carrier's duty to
protect CPNI.
3. Audit Trails. While the Commission does not adopt rules
requiring audit trails at this time, in light of its new rules and the
recent enactment of criminal penalties against pretexters, the
Commission seeks comment on whether it should adopt rules pertinent to
audit trails. Are audit trails generally used by carriers to track
customer contact? The Commission asks carriers to assess the benefits
and burdens, including the burdens on small carriers, of recording the
disclosure of CPNI and customer contact. The Commission's current
record indicates that the broad use of audit trails likely would be of
limited value in ending pretexting because such a log would record
enormous amounts of data, the vast majority of it being legitimate
customer inquiry. Commenters also report that implementing and
maintaining audit trails would be costly with little to no
corresponding benefit to the consumer. However, would an audit trail
assist law enforcement with its criminal investigations against
pretexters? Further, in the interim period since the Commission sought
comment on this issue, have carriers' reactions to audit trails changed
or has the technology changed such that audit trails are now an
economically feasible option?
4. Physical Safeguards. The Commission also seeks comment on
whether the Commission, in light of the rules it adopts in its Order
(FCC 07-22) and the recent enactment of criminal penalties against
pretexters, should adopt rules that govern the physical transfer of
CPNI among companies, such as between a carrier and its affiliates, or
the transfer of CPNI to any other third party authorized to access or
maintain CPNI, including a carrier's joint venture partners and
independent contractors. Specifically, the Commission seeks comment on
what physical safeguards carriers currently are using when they
transfer, or allow access to, CPNI to ensure that they maintain the
security and confidentiality of CPNI? The Commission also seeks comment
on whether these safeguards for the physical transfer of, or for access
to, CPNI are sufficient? Further, the Commission seeks comment on what
steps it should require of a carrier to protect CPNI when CPNI is being
transferred or accessed by the carrier, its affiliates, or its third
parties (e.g., encryption, audit trails, logs, etc.). Additionally, the
Commission seeks comment on the benefits and burdens, including the
burdens on small carriers, of requiring carriers to physically
safeguard the security and confidentiality of CPNI.
5. Limiting Data Retention. The Commission also seeks comment on
whether the Commission, in light of the rules it adopts in its Order
(FCC 07-22) and the recent enactment of criminal penalties against
pretexters, should adopt rules that require carriers to limit data
retention. If the Commission did adopt such a rule, what should be the
maximum amount of time that a carrier should be able to retain customer
records? Additionally, should all customer records be eliminated or is
there a subset of customer records that are more susceptible to abuse
and should be destroyed? Also, should the Commission define exceptions
where a carrier is permitted to retain certain records (e.g., for the
length of carrier-carrier or carrier-customer disputes)? The Department
of Justice argues that destruction of CPNI after a specified period
would hamper law enforcement efforts by destroying data sometimes
needed for criminal and other lawful investigations. The Commission
also seeks comment on whether there are any state or Commission data
retention requirements that might conflict with a
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carrier's data limitation. Additionally, does a limitation on data
retention enhance protection of CPNI? Alternatively, should the
Commission require carriers to de-identify customer records after a
certain period? The Commission seeks comment on the benefits and
burdens, including the burdens on small carriers, of requiring carriers
to limit their data retention or to de-identify customer records.
B. Protection of Information Stored in Mobile Communications Devices
6. The Commission seeks comment on what steps it should take, if
any, to secure the privacy of customer information stored in mobile
communications devices. Specifically, the Commission seeks comment on
what methods carriers currently use, if any, for erasing customer
information on mobile equipment prior to refurbishing the equipment,
and the extent to which carriers enable customers to permanently erase
their personal information prior to discarding the device. The
Commission also seeks comment on whether it should require carriers to
permanently erase, or allow customers to permanently erase, customer
information in such circumstances. Should the Commission require
manufacturers to configure wireless devices so consumers can easily and
permanently delete personal information from those devices? Further,
the Commission seeks comment on the burdens, including those placed on
small carriers, associated with a Commission rule requiring carriers
and manufacturers to fully expunge existing customer data from a mobile
device at the customer's request.
Paperwork Reduction Act
7. This Further NPRM contains proposed information collection
requirements. The Commission, as part of its continuing effort to
reduce paperwork burdens, invited the general public and the Office of
Management and Budget (OMB) to comment on the information collection
requirements contained in this Further NPRM, as required by the
Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. Public and
agency comments are due August 7, 2007. 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 comment on how it might
``further reduce the information collection burden for small business
concerns with fewer than 25 employees.''
Initial Regulatory Flexibility Analysis
8. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), 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 Further
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 Further NPRM provided above. The
Commission will send a copy of the Further NPRM, including this IRFA,
to the Chief Counsel for Advocacy of the Small Business Administration.
In addition, the Further NPRM and the IRFA (or summaries thereof) will
be published in the Federal Register.
A. Need for, and Objectives of, the Proposed Rules
9. In the Further NPRM, the Commission seeks comment on what steps
the Commission should take, if any, to expand its CPNI rules further,
and whether it should expand the consumer protections to ensure that
customer information and CPNI are protected in the context of mobile
communications devices. In particular, the Commission seeks comment on
whether it should adopt any further carrier requirements to protect
CPNI, including password protection, audit trails, physical security,
and limits on data retention. Further, the Commission seeks comment on
what methods carriers currently use, if any, for erasing customer
information on mobile equipment prior to refurbishing the equipment,
and the extent to which carriers enable customers to permanently erase
their personal information prior to discarding the device. The
Commission also seeks comment on whether it should require carriers or
manufacturers to permanently erase, or allow customers to permanently
erase, customer information in such circumstances. For each of these
issues, the Commission seeks comment on the burdens, including those
placed on small carriers, associated with corresponding Commission
rules related to each issue.
B. Legal Basis
10. The legal basis for any action that may be taken pursuant to
this Further 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
11. 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).
12. Small Businesses. Nationwide, there are a total of
approximately 22.4 million small businesses, according to SBA data.
13. Small Organizations. Nationwide, there are approximately 1.6
million small organizations.
14. 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
15. 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
[[Page 31785]]
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.
16. 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 its action.
17. 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 its action.
18. 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 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
its action.
19. 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
its action.
20. 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 its action.
21. 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 its action.
22. 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 its action.
23. 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 its action.
24. 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 are
unable at
[[Page 31786]]
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
25. 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.
26. 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 its action.
27. 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 its action.
c. Wireless Telecommunications Service Providers
28. 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 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.
29. 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.
30. 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.
31. 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.
32. 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
[[Page 31787]]
of wireless telephony. The Commission has estimated that 245 of these
are small under the SBA small business size standard.
33. 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.
34. 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
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.
35. 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.
36. 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.
37. 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
38. 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 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.
39. 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.
40. 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
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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.
41. 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
42. 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 its action.
43. All Other Information Services. ``This industry comprises
establishments primarily engaged in providing other information
services (except new syndicates and libraries and archives).'' 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 its action.
4. Equipment Manufacturers
44. Wireless Communications Equipment Manufacturers. The SBA has
established a small business size standard for Radio and Television
Broadcasting and Wireless Communications Equipment Manufacturing.
Examples of products in this category include ``transmitting and
receiving antennas, cable television equipment, GPS equipment, pagers,
cellular phones, mobile communications equipment, and radio and
television studio and broadcasting equipment'' and may include other
devices that transmit and receive IP-enabled services, such as personal
digital assistants (PDAs). Under the SBA size standard, firms are
considered small if they have 750 or fewer employees. According to
Census Bureau data for 1997, there were 1,215 establishments in this
category that operated for the entire year. Of those, there were 1,150
that had employment of under 500, and an additional 37 that had
employment of 500 to 999. The percentage of wireless equipment
manufacturers in this category was approximately 61.35%, so the
Commission estimates that the number of wireless equipment
manufacturers with employment of under 500 was actually closer to 706,
with and additional 23 establishments having employment of between 500
and 999. Consequently, the Commission estimates that the majority of
wireless communications equipment manufacturers are small entities that
may be affected by its action.
45. Telephone Apparatus Manufacturing. This category ``comprises
establishments primarily engaged primarily in manufacturing wire
telephone and data communications equipment.'' Examples of pertinent
products are ``central office switching equipment, cordless telephones
(except cellular), PBX equipment, telephones, telephone answering
machines, and data communications equipment, such as bridges, routers,
and gateways.'' The SBA has developed a small business size standard
for this category of manufacturing; that size standard is 1,000 or
fewer employees. According to Census Bureau data for 1997, there were
598 establishments in this category that operated for the entire year.
Of these, 574 had employment of under 1,000, and an additional 17
establishments had employment of 1,000 to 2,499. Consequently, the
Commission estimates that the majority of these establishments are
small entities that may be affected by its action.
46. Semiconductor and Related Device Manufacturing. These
establishments manufacture ``computer storage devices that allow the
storage and retrieval of data from a phase change, magnetic, optical,
or magnetic/optical media.'' The SBA has developed a small business
size standard for this category of manufacturing; that size standard is
500 or fewer employees. According to Census Bureau data for 1997, there
were 1,082 establishments in this category that operated for the entire
year. Of these, 987 had employment of under 500, and 52 establishments
had employment of 500 to 999.
47. Computer Storage Device Manufacturing. These establishments
manufacture ``computer storage devices that allow the storage and
retrieval of data from a phase change, magnetic, optical, or magnetic/
optical media.'' The SBA has developed a small business size standard
for this category of manufacturing; that size standard is 1,000 or
fewer employees. According to Census Bureau data for 1997, there were
209 establishments in this category that operated for the entire year.
Of these, 197 had employment of under 500, and eight establishments had
employment of 500 to 999.
D. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements
48. Should the Commission decide to adopt any further regulations
to ensure that all providers of telecommunication services meet
consumer protection needs in regard to CPNI, including the security of
the privacy of customer information stored in mobile communications
devices, the associated rules potentially could modify the reporting
and recordkeeping requirements of certain telecommunications providers.
The Commission could, for instance, require
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that telecommunications providers require further customer password-
related security procedures to access CPNI data. The Commission could
also require telecommunications providers to track customer contact
through the use of audit trails or to limit their retention of data
related to CPNI. Additionally, the Commission could require additional
physical safeguards be implemented to protect the transfer of CPNI.
Further, the Commission could require telecommunications providers and/
or manufacturers to configure wireless devices so consumers can easily
and permanently delete personal information from mobile communications
devices. These proposals may impose additional reporting and
recordkeeping requirements on entities. Also, the Commission seeks
comment on whether any of these proposals places burdens on small
entities. Entities, especially small businesses, are encouraged to
quantify the costs and benefits or 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
49. 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.
50. The Commission's primary objective is to secure the privacy of
customer information collected by telecommunications carriers and
stored in mobile communications devices. The Commission seeks comment
on the burdens, including those placed on small carriers, associated
with related Commission rules and whether the Commission should adopt
different requirements for small businesses.
F. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
51. None.
Ordering Clauses
52. Accordingly, IT IS ORDERED that pursuant to sections 1, 4(i),
4(j), 222, and 303(r) of the Communications Act of 1934, as amended, 47
U.S.C. 151, 154(i)-(j), 222, 303(r), this Report and Order and Further
Notice of Proposed Rulemaking in CC Docket No. 96-115 and WC Docket No.
04-36 IS ADOPTED, and that Part 64 of the Commission's rules, 47 CFR
part 64, is amended as set forth in Appendix B. The Order shall become
effective upon publication in the Federal Register subject to OMB
approval for new information collection requirements or six months
after the Order's effective date, whichever is later.
53. It Is Further Ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, Shall Send a
copy of this Report and Order and Further Notice of Proposed
Rulemaking, including the Final Regulatory Flexibility Analysis and 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. E7-10734 Filed 6-7-07; 8:45 am]
BILLING CODE 6712-01-P