[Federal Register: September 23, 2004 (Volume 69, Number 184)]
[Proposed Rules]
[Page 56976-56987]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23se04-21]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 22, 24 and 64
[ET Docket No. 04-295; FCC 04-187]
Communications Assistance for Law Enforcement Act
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: This document launches a thorough examination of the
appropriate legal and policy framework of the 1994 Communications
Assistance for Law Enforcement Act (``CALEA''). We initiate this
proceeding at the request of, and in response to, a joint petition
filed by the Department of Justice, Federal Bureau of Investigation,
and the Drug Enforcement Administration (collectively, ``Law
Enforcement'').
DATES: Comments must be filed on or before November 8, 2004, and reply
comments must be filed on or before December 7, 2004.
FOR FURTHER INFORMATION CONTACT: Rodney Small, Office of Engineering
and Technology, (202) 418-2454, e-mail: Rodney.Small@fcc.gov, TTY (202)
418-2989.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rule Making, ET Docket No. 04-295, FCC 04-187, adopted
August 4, 2004, and released August 9, 2004. The full text of this
document is available for inspection and copying during normal business
hours in the FCC Reference Center (Room CY-A257), 445 12th Street, SW.,
Washington, DC 20554. The complete text of this document also may be
purchased from the Commission's copy contractor, Best Copy and
Printing, Inc., 445 12th Street, SW., Room, CY-B402, Washington, DC
20554. The full text may also be downloaded at: http://www.fcc.gov.
Alternate formats are available to persons with disabilities by
contacting Brian Millin at (202) 418-7426 or TTY (202) 418-7365.
Pursuant to Secs. 1.415 and 1.419 of the Commission's rules, 47 CFR
1.415, 1.419, interested parties may file comments on or before
November 8, 2004, and reply comments on or before December 7, 2004.
Comments may be filed using the Commission's Electronic Comment Filing
System (ECFS) or by filing paper copies. See Electronic Filing of
Documents in Rulemaking Proceedings, 63 FR 24121, May 1, 1998. Comments
filed through the ECFS can be sent as an electronic file via the
Internet to http://www.fcc.gov/e-file/ecfs.html. Generally, only one
copy of an electronic submission must be filed. If multiple docket or
rulemaking numbers appear in the caption of this proceeding, however,
commenters must transmit one electronic copy of the comments to each
docket or rulemaking number referenced in the caption. In completing
the transmittal screen, commenters 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
[[Page 56977]]
Internet e-mail. To get filing instructions for e-mail comments,
commenters should send an e-mail to ecfs@fcc.gov, and should include
the following words in the body of the message, ``get form < your e-mail
address>.'' A sample form and directions will be sent in reply. Parties
who choose to file by paper must file an original and four copies of
each filing. If more than one docket or rulemaking number appears in
the caption of this proceeding, commenters must submit two additional
copies for each additional docket or rulemaking number.
All filings must be addressed to the Commission's Secretary, Office
of the Secretary, Federal Communications Commission. 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).
The Commission's contractor, Natek, Inc., 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 mail, Express mail, and Priority Mail
should be addressed to 445 12th Street, SW., Washington, DC 20554.
Summary of the Notice of Proposed Rulemaking
Overview
1. In the Notice of Proposed Rulemaking (``NPRM''), the Commission
examines issues relating to the scope of CALEA's applicability to
packet-mode services, such as broadband Internet access, and
implementation and enforcement issues. The Commission tentatively
conclude that: (1) Congress intended the scope of CALEA's definition of
``telecommunications carrier'' to be more inclusive than that of the
Communications Act; (2) facilities-based providers of any type of
broadband Internet access service, whether provided on a wholesale or
retail basis, are subject to CALEA; (3) ``managed'' Voice over Internet
Protocol (``VoIP'') services are subject to CALEA; (4) the phrase in
Sec. 102 of CALEA ``a replacement for a substantial portion of the
local telephone exchange service'' calls for assessing the replacement
of any portion of an individual subscriber's functionality previously
provided via ``plain old telephone service'' (``POTS''); and (5) call-
identifying information in packet networks is ``reasonably available''
under Sec. 103 of CALEA if the information is accessible without
``significantly modifying a network.'' We seek comment on: (1) the
feasibility of carriers relying on a trusted third party to manage
their CALEA obligations and to provide to law enforcement agencies
(``LEAs'') the electronic surveillance information they require in an
acceptable format; and (2) whether standards for packet technologies
are deficient and should not serve as safe harbors for complying with
Sec. 103 capability requirements.
2. We also propose mechanisms to ensure that telecommunications
carriers comply with CALEA. Specifically, we propose to restrict the
availability of compliance extensions under CALEA Sec. 107(c) and
clarify the role and scope of CALEA Sec. 109, which addresses the
payment of costs of carriers to comply with the Sec. 103 capability
requirements. Additionally, we consider whether, in addition to the
enforcement remedies through the courts available to LEAs under CALEA
Sec. 108, we may take separate enforcement action against carriers that
fail to comply with CALEA. We tentatively conclude that carriers are
responsible for CALEA development and implementation costs for post-
January 1, 1995 equipment and facilities; seek comment on cost recovery
issues for wireline, wireless and other carriers; and refer to the
Federal-State Separations Joint Board cost recovery issues for carriers
subject to Title II of the Communications Act.
Background
3. CALEA, which was enacted in 1994, requires telecommunications
carriers to incorporate into their networks technical capabilities to
enable law enforcement to conduct lawful electronic surveillance. See
Public Law 103-414, 108 Stat. 4279 (1994) (codified as amended in 18
U.S.C. 2522 and 47 U.S.C. 229, 1001-1010). CALEA does not authorize
electronic surveillance; rather, it is intended to ensure that law
enforcement has the ability to conduct electronic surveillance
effectively and efficiently in the face of rapid advances in
telecommunications technology. The various statutory provisions of
CALEA are focused on the following topics: assistance capability to law
enforcement; system capacity for simultaneous wiretaps, implementation
and enforcement.
4. The Commission initiated this rulemaking proceeding in response
to a joint petition for rulemaking filed by the Department of Justice,
Federal Bureau of Investigation and Drug Enforcement Administration on
March 10, 2004. The petition requested the Commission to resolve
outstanding issues regarding CALEA implementation, including
identifying the types of packet-mode services and entities providing
such services that are subject to CALEA, establishing benchmarks and
deadlines for CALEA packet-mode compliance, establishing procedures for
enforcement action by the Commission, and clarifying certain cost
recovery issues.
Introduction
5. In the NPRM, we addressed the types of services and entities
encompassed by the terms ``broadband access service'' and ``broadband
telephony service.'' We rely on Law Enforcement's definitions to a
large extent in this endeavor. We attempt to identify services and
processes that provide broadband access to the public Internet,
focusing primarily on those services and entities using packet-mode
technology. In the NPRM, we refer to ``broadband access service'' and
``broadband Internet access service'' interchangeably. Law Enforcement
does not define the term ``broadband,'' and thus we will rely on
previous uses we have made of this term, i.e., those services having
the capability to support upstream or downstream speeds in excess of
200 kilobits per second (``kbps'') in the last mile. Finally, this NPRM
addresses broadly CALEA compliance for any packet-mode application and
focuses specifically on voice communications. We recognize that
although broadband access for voice telephony communications could be
provided using various packet-mode technologies, most packet voice
communications in commercial use today are provided using the Internet
Protocol and are commonly referred to as ``VoIP.'' Thus, we refer to
VoIP rather than ``broadband telephony service'' in the NPRM.
6. In the NPRM, we also addressed several other issues raised by
Law Enforcement. Law Enforcement urges the Commission to take a more
active role in CALEA implementation by, for example, establishing
benchmarks and deadlines for packet-mode compliance and enforcement of
CALEA requirements. We seek comment on these proposals, as well as
alternatives, all designed with the goal of moving carriers toward full
CALEA compliance
[[Page 56978]]
rapidly. We therefore explore alternative methods of achieving the same
objective. Finally, LEAs are very concerned about the cost of
conducting electronic surveillance and believe that increased rates for
such surveillance might hamper their ability to rely on this important
investigative tool. As the number of electronic surveillances has
increased, so have the rates carriers charge LEAs. In the NPRM, we
clarify and seek comment on various cost and cost recovery issues.
Applicability of CALEA to Broadband Internet Access and VoIP Services
7. We tentatively conclude that facilities-based providers of any
type of broadband Internet access service, whether provided on a
wholesale or retail basis, are subject to CALEA because, under the
``Substantial Replacement Provision'' of Sec. 102(8)(B)(ii) of CALEA,
they provide a replacement for a substantial portion of the local
telephone exchange service used for dial-up Internet access service and
treating such providers as telecommunications carriers for purposes of
CALEA is in the public interest. Broadband Internet access providers
include, but are not limited to, wireline, cable modem, satellite,
wireless, and broadband access via powerline companies. We seek comment
on this tentative conclusion. In addition, we tentatively conclude that
providers of VoIP services that Law Enforcement characterizes as
``managed'' or ``mediated'' are subject to CALEA as telecommunications
carriers under Sec. 102(8)(B)(ii) of CALEA. Law Enforcement describes
managed or mediated VoIP services as those services that offer voice
communications calling capability whereby the VoIP provider acts as a
mediator to manage the communication between its end points and to
provide call set up, connection, termination, and party identification
features, often generating or modifying dialing, signaling, switching,
addressing or routing functions for the user. Law Enforcement
distinguishes managed communications from ``non-managed'' or ``peer-to-
peer'' communications, which involve disintermediated communications
that are set up and managed by the end user via its customer premises
equipment or personal computer. In these non-managed, or
disintermediated, communications, the VoIP provider has minimal or no
involvement in the flow of packets during the communication, serving
instead primarily as a directory that provides users' Internet web
addresses to facilitate peer-to-peer communications. We request comment
on the appropriateness of this distinction between managed and non-
managed VoIP communications for purposes of CALEA.
8. Law Enforcement asserts that CALEA applies to broadband Internet
access service and mediated VoIP services and that application is
critical to its efforts to combat crime and terrorism. We base our
tentative conclusion that those services are subject to CALEA on an
analysis of the statute and its legislative history--which demonstrate
that the meaning of ``telecommunications carrier'' in CALEA is broader
than its meaning under the Communications Act--and on Congress's stated
intent ``to preserve the government's ability, pursuant to court order
or other lawful authorization, to intercept communications involving
advanced technologies such as digital or wireless transmission modes.''
See, H.R. Rep. No. 103-827(I)(1994).
9. CALEA requires ``telecommunications carriers'' to ensure that
their equipment, facilities, and services are capable of providing
surveillance capabilities to LEAs, and CALEA contains its own unique
definition of ``telecommunications carrier.'' CALEA defines this term
in section 102(8). See 47 U.S.C. 1001(8). For purposes of CALEA, a
``telecommunications carrier'' is ``a person or entity engaged in the
transmission or switching of wire or electronic communications as a
common carrier for hire,'' but also includes entities that provide ``a
replacement for a substantial portion of the local telephone exchange
service'' if the Commission deems those entities to be
``telecommunications carriers'' as well, 47 U.S.C. 1001(8).
10. We tentatively conclude that Congress intended the scope of
CALEA's definition of ``telecommunications carrier'' to be more
inclusive than that of the Communications Act. We base this tentative
conclusion on the facial differences in the statutory language
discussed below. We acknowledge the Commission's previous statement
that it expected ``in virtually all cases that the definitions of the
two Acts will produce the same results,'' see, Second R&O at 7112,
[para] 13. In making that statement, however, the Commission
foreshadowed the possibility that the definitions under each of the two
statutes may differ when it also concluded that it is ``a matter of law
that the entities and services subject to CALEA must be based on the
CALEA definition * * * independently of their classification for the
separate purposes of the Communications Act.'' We seek comment on our
analysis.
11. In the past, the Commission has never before exercised its
Sec. 102(8)(B)(ii) discretion to identify additional entities that fall
within CALEA's definition of ``telecommunications carrier.'' Moreover,
it has never, until now, solicited comment on the discrete components
of this section or on specific classes of entities to which this
section might apply. We therefore seek comment on what criteria we
should apply to deem an entity a ``telecommunications carrier'' under
the Substantial Replacement Provision and to which services CALEA
should apply.
12. The Commission seeks comment on the three articulated
components of the Substantial Replacement Provision. First, we seek
comment on the phrase ``engaged in providing wire or electronic
communication switching or transmission service,'' see 47 U.S.C.
1001(8)(B)(ii); see also 47 U.S.C. 1001(8)(A). Because of Congress's
stated purpose to require compliance with CALEA ``with respect to
services or facilities that provide a customer or subscriber with the
ability to originate, terminate or direct communication,'' see 47
U.S.C. 1002(a), we read the phrase ``switching or transmission
service'' broadly here. Specifically, we interpret ``switching'' in
this section to include routers, softswitches, and other equipment that
may provide addressing and intelligence functions for packet-based
communications to manage and direct the communications along to their
intended destinations. These functions are similar to the switching
functions in a circuit-switched network and thus we believe CALEA's
explicit inclusion of the word ``switching'' is meant to include these
capabilities. With regard to ``transmission,'' we note that CALEA does
not limit ``transmission'' in Sec. 102 to transmission ``without change
in the form or content of the information as sent or received,'' as
does the Communications Act. Thus, we would interpret the ``switching
or transmission'' component of the Substantial Replacement Provision to
include entities that provide the underlying broadband transmission
capability of Internet access services. The Commission seeks comment on
this analysis and inquire specifically what types of ``switching or
transmission'' satisfy this component of the Substantial Replacement
Provision.
13. Second, we consider the meaning of the phrase ``a replacement
for a substantial portion of the local telephone exchange service.'' We
tentatively conclude that the phrase ``a replacement for a substantial
portion of the local telephone exchange service'' reaches the
replacement of any portion
[[Page 56979]]
of an individual subscriber's functionality previously provided via
POTS, e.g., the telephony portion of dial-up Internet access
functionality when replaced by broadband Internet access service.
Finally, we seek comment on the meaning of ``public interest'' under
Sec. 102(8)(B)(ii) of CALEA.
14. Law Enforcement seeks a Commission declaration that all forms
of broadband Internet access are subject to CALEA. Law Enforcement
asserts that these services are so clearly subject to CALEA that the
Commission should issue a ruling declaring so. While we agree with
commenters that we must develop a more complete record on the
substantial factual and legal issues involved before we can make final
determinations, we tentatively conclude that facilities-based providers
of any type of broadband Internet access, including but not limited to
wireline, cable modem, satellite, wireless, and broadband access via
the powerline, whether provided on a wholesale or retail basis, are
subject to CALEA because they provide replacement for a substantial
portion of the local telephone exchange service used for dial-up
Internet access service and such treatment is in the public interest.
We base this belief on our reading of CALEA and its legislative history
as well as the record thus far.
15. In reaching this tentative conclusion, the Commission
tentatively determine that such broadband Internet access service
providers satisfy each of the three prongs of the Substantial
Replacement Provision: broadband Internet access includes the switching
(routing) and transmission functionality; it replaces a substantial
portion of the local telephone exchange service used for narrowband
Internet access; and the public interest factors we consider at a
minimum, i.e., the effect on competition, the development and provision
of new technologies and services, and public safety and national
security, weigh in favor of subjecting these broadband Internet access
services to CALEA.
16. There may exist discrete groups of entities for which the
public interest may not be served by including them under the
Substantial Replacement Provision. As discussed in the NPRM, we will
base such determination on the three public interest factors, at a
minimum, including: whether it would promote competition, encourage the
development of new technologies, and protect public safety and national
security. For example, entities that deploy broadband capability to
consumers in underserved areas may fall in this category because of the
potential deterrent effect it could have on deployment in particular
circumstances (negatively impacting the first and second factors, i.e.,
protecting competition and encouraging the development of new
technologies).
17. We do not believe that CALEA's exclusion for information
services should alter our tentative conclusion. Congress expressly
excluded ``persons or entities insofar as they are engaged in providing
information services'' see 47 U.S.C. 1001(6)(B) & (C), from CALEA's
definition of ``telecommunications carrier.'' See 47 U.S.C.
1001(8)(C)(i); see also 47 U.S.C. 1002(b)(2)(A) (stating that CALEA's
capability requirements do not apply to information services). (We
refer to this as the ``Information Services Exclusion.'') We also note
that Sec. 103(b)(2)(A) of CALEA provides that the CALEA capability
requirements do not apply to information services. CALEA's definition
of ``information services'' is very similar to that of the
Communications Act,'' see 47 U.S.C. 153(20). For purposes of the
Communications Act, the Commission has concluded that cable modem
service is an information service and has tentatively concluded that
wireline broadband Internet access service is also an information
service. Assuming those determinations become final, those services
would, nonetheless, have to be evaluated under CALEA's separate
definition of ``telecommunications carrier'' which is broader than the
definition in the Communications Act. Where a service provider is found
to fall within CALEA's Substantial Replacement Provision it would be
deemed a ``telecommunications carrier'' for purposes of CALEA to which
CALEA obligations would apply. If, at the same time, we interpreted
CALEA's Information Services Exclusion to apply, it would present an
irreconcilable tension; that is, particular service providers would
find themselves at the same time subject to CALEA under the Substantial
Replacement Provision and exempted from it by virtue of the Information
Services Exclusion. We believe that the better reading of the statute
is to recognize and give full effect to CALEA's broader definition of
``telecommunications carrier'' and to interpret the statute to mean
that where a service provider is determined to fall within the
Substantial Replacement Provision, by definition it cannot be providing
an information service for purposes of CALEA.
18. VoIP Services. There is a wide array of packet-based services
currently using IP as well as numerous ways that VoIP capabilities
might be provided to consumers. For example, one VoIP service in
particular, which we refer to in this proceeding as ``managed'' VoIP,
may be offered to the general public as a means of communicating with
anyone, including parties reachable only through the public switched
telephone network (``PSTN''). Other VoIP offerings involve the
capability to communicate on a peer-to-peer basis only with other
members of a closed user group or groups. Still other VoIP capabilities
may be additional features of other services or applications that
enable voice communications with a particular user group.
19. We tentatively conclude that providers of managed VoIP
services, which are offered to the general public as a means of
communicating with any telephone subscriber, including parties
reachable only through the PSTN, are subject to CALEA. We believe that
such VoIP service providers satisfy each of the three prongs of the
Substantial Replacement Provision with respect to their VoIP services.
That is, they provide an electronic communication switching or
transmission service that replaces a substantial portion of local
exchange service for their customers in a manner functionally the same
as POTS service; and the public interest factors we consider at a
minimum--i.e., the effect on competition, the development and provision
of new technologies and services, and public safety and national
security--support subjecting these providers to CALEA. We believe there
is an overriding public interest in maintaining Law Enforcement's
ability to conduct wiretaps of on-going voice communications that are
taking place over networks that are rapidly replacing the traditional
circuit-switched network, yet providing consumers essentially the same
calling capability that exists with legacy POTS service. We understand
that basic capabilities essential to Law Enforcement's surveillance
efforts, such as access to call management information (e.g., call
forwarding, conference call features such as party join and drop) and
call set up information (e.g., real time speed dialing information,
post-dial digit extraction information) may not be reasonably available
to the broadband access provider. Consequently, subjecting only the
broadband access provider to CALEA without including managed VoIP
service providers could undermine Law Enforcement's surveillance
efforts. We seek comment on this analysis.
20. The Commission also seeks comment on our tentative conclusion
that providers of non-managed, or disintermediated, communications
[[Page 56980]]
should not be subject to CALEA. Non-managed VoIP services, such as
peer-to-peer communications and voice enabled Instant Messaging, as
currently provided, do not appear to be subject to CALEA for two
reasons. First, because they are confined to a limited universe of
users solely within the Internet or a private IP-network, they may be
more akin to private networks, which Congress expressly excluded from
section 103's capability requirements. Therefore, they do not appear to
replace a substantial portion of local exchange service; as such they
do not appear to fall within the Substantial Replacement Provision.
Second, they may be excluded information services under
Sec. 103(b)(2)(A). We seek comment on this issue.
21. Identification of Future Services and Entities Subject to
CALEA. We tentatively conclude that it is unnecessary for us to adopt
Law Enforcement's proposal regarding the identification of future
services and entities subject to CALEA. We recognize Law Enforcement's
need for more certainty regarding the applicability of CALEA to new
services and technologies. We expect, however, the Commission's Report
and Order in this proceeding to provide substantial clarity on the
application of CALEA to new services and technologies that should
significantly resolve Law Enforcement's and industry's uncertainty
about compliance obligations in the future.
Requirements and Solutions
22. Packet technologies are fundamentally different from the
circuit switched technologies that were the primary focus of the
Commission's earlier decisions on CALEA. These differences have led to
disagreements among Law Enforcement and industry as to how to interpret
and apply telecommunications carriers' obligations under Sec. 103 of
CALEA. Telecommunications carriers are required, under Sec. 103 of
CALEA, to enable LEAs, pursuant to a court order or other lawful
authorization, (1) to intercept, to the exclusion of other
communications, wire and electronic communications carried by the
carrier to or from a subject, and (2) to access call-identifying
information that is reasonably available to the carrier, subject to
certain conditions. Further, the interception of communications or
access to call-identifying information is to be delivered to LEAs in a
format that may be transmitted, over the equipment, facilities or
services procured by LEAs, to a location other than the provider's
premises and in a way that protects the privacy and security of
communications and information not authorized to be intercepted or
accessed.
23. CALEA defines call-identifying information as ``dialing or
signaling information that identifies the origin, direction,
destination, or termination of each communication generated or received
by a subscriber by means of any equipment, facility, or service of a
telecommunications carrier,'' 47 U.S.C. 1001(2). We believe that
carriers, manufacturers and Law Enforcement have applied the statutory
definition of call-identifying information, as well as the Commission's
definitions for the terms origin, destination, direction and
termination, in developing standards or proprietary solutions for
packet-mode technologies. However, the exact application of these terms
is not always clear because call-identifying information may be found
within several encapsulated layers of protocols.
24. We seek comment on whether the Commission needs to clarify the
statutory term ``call-identifying information'' for broadband access
and VoIP services. We ask that commenters provide specific suggestions
for these definitional issues. A more precise understanding of these
terms would support the Commission's efforts to encourage carriers'
compliance with their CALEA obligations whether in acting on petitions
filed under Sec. 107(c) or 109(b) or in pursuing enforcement actions
for violations of the Commission's rules. We also invite comment as to
how the Commission should apply the term ``reasonably available'' to
broadband access.
25. We tentatively conclude that we should apply the same criteria
that we applied to circuit-mode technology--i.e. information may not be
``reasonably'' available if the information is only accessible by
significantly modifying a network--to broadband access and VoIP
providers. We seek comment on this tentative conclusion. We recognize
that, when looking at end-to-end service architectures, it is not
always readily apparent where call-identifying information is
available. We seek comment on where content and various kinds of call-
identifying information are available in the network and further
whether the information is reasonably available to the carrier.
26. Compliance solutions based on use of a ``trusted third party.''
Telecommunications carriers under CALEA may use a variety of means for
making content or call-identifying information available to LEAs. We
seek comment on one approach that, although it would not relieve
carriers of their obligation to comply with CALEA, may simplify or ease
the burden on carriers and manufacturers in providing packet content
and call-identifying information. We refer to this approach as the
``trusted third party'' approach, that is being used today both in the
United States and elsewhere. A trusted third party is a service bureau
with a system that has access to a carrier's network and remotely
manages the intercept process for the carrier. The service bureau may
manage CALEA operations for multiple carriers, and the service bureau's
system may be completely external to all of those carriers' networks.
27. The trusted third party approach recognizes that, even if a
carrier does not process certain call-identifying information, that
information may be extracted from that carrier's network and delivered
to a LEA. The trusted third party obtains the call content and call-
identifying information in either of two ways. The trusted third party
could rely on a mediation device to collect separated call content and
call-identifying information from various points in the network and to
deliver the appropriate information to a LEA. Alternatively, the
trusted third party could rely on an external system to collect
combined call content and call-identifying information and to deliver
the appropriate information to a LEA. We believe that the availability
of a trusted third party approach makes call-identifying information
``reasonably'' available to a telecommunications carrier under
Sec. 103(a)(2). We seek comment on this analysis.
28. We seek comment on the feasibility of using a trusted third
party approach to extract the content and call-identifying information
of a communication from packets. In particular, we seek comment on
whether an external system would be an efficient method to extract
information from packets. It seems that external systems might provide
economies of scale for small carriers. What would be the approximate
relative costs of internal versus external systems for packet
extraction?
29. We recognize, however, that there may be some tension between
relying on a trusted third party model and relying on ``safe harbor''
standards for complying with CALEA Sec. 103 capability requirements.
For example, if a trusted third party approach makes call-identifying
information ``reasonably'' available to a telecommunications carrier,
should a standard that requires a carrier to provide only the
information it uses to process a packet be considered a ``safe harbor''
if a LEA would not have all call-identifying information for the
communication?
[[Page 56981]]
30. Finally, we seek comment on how a telecommunications carrier
that relies on a trusted third party would meet its obligations under
Sec. 103(a) of CALEA, e.g., to protect the privacy and security of
communications and call-identifying information not authorized to be
intercepted, as well as to protect information regarding the
government's interception of communications and access to call-
identifying information.
31. Compliance solutions based on CALEA ``Safe Harbor'' standards.
Subsection 107(a)(2) of CALEA states that ``[a] telecommunications
carrier shall be found to be in compliance with the assistance
capability requirements under Sec. 103, and a manufacturer of
telecommunications transmission or switching equipment or a provider of
telecommunications support services shall be found to be in compliance
with section 106, if the carrier, manufacturer, or support service
provider is in compliance with publicly available technical
requirements or standards adopted by an industry association or
standard-setting organization, or by the Commission under subsection
(b), to meet the requirements of Sec. 103.'' See, 47 U.S.C. 1001(2). We
ask parties to comment on industry standards for packet-mode
technologies in an attempt to determine whether any of these standards
are deficient and thus preclude carriers, manufacturers and others from
relying on them as safe harbors in complying with CALEA Sec. 103. By
doing so, however, we do not intend to inhibit the ongoing work by
standards organizations, carriers and manufacturers to develop and
deploy CALEA-compliant facilities and services. We recognize that CALEA
provides that carriers and others may rely on publicly available
technical requirements or standards adopted by an industry association
or standard-setting organization to meet the requirements of CALEA
Sec. 103, unless the Commission takes specific action in response to a
petition.
32. CALEA compliance for satellite networks based on system-by-
system agreements. We note that satellite carriers have used a CALEA
approach based on negotiation with LEAs, resulting in private
agreements to provide information to LEAs. Satellite networks differ in
fundamental ways not only from terrestrial networks but also from each
other. These differences arise from unique aspects of the type of
satellite used in the network (e.g., non-geostationary vs.
geostationary satellites) and the gateway earth stations that may be
located both within and outside the United States. System-by-system
agreements between LEAs and satellite carriers account for the unique
aspects of each system. We tentatively conclude that continued use of
system-by-system arrangements is the appropriate method for satellite
systems and will aid in meeting CALEA's goals. We seek comment on this
tentative conclusion.
CALEA Compliance Extension Petitions
33. We propose to restrict the availability of compliance
extensions under Sec. 107(c), particularly in connection with packet-
mode requirements, and we clarify the role and scope of CALEA
Sec. 109(b), which provides that the Commission may find that
compliance with CALEA Sec. 103 is not reasonable achievable, leaving it
to the Attorney General to determine whether to pay telecommunications
carriers' compliance costs, see 47 U.S.C. 1008(b)(2)(A).
34. We recognize that carriers have continued to rely on CALEA
Sec. 107(c) when submitting extension requests for packet-mode
compliance. We intend to resolve the status of those petitions in this
proceeding, but in a way that is not unduly disruptive. Accordingly, we
intend to afford all carriers a reasonable period of time in which to
comply with, or seek relief from, any determinations that we eventually
adopt. We tentatively conclude that a ``reasonable period of time'' is
90 days and request comment on this tentative conclusion. We may, on
less than 90 days notice, require any or all carriers to provide
additional information to support their extension requests. We seek
comment on all issues identified in the following analysis, as well as
any other issues that relate to disposition of pending and future
extension requests.
35. Section 107(c) expressly limits extensions to cases where the
petitioning carrier proposes to install or deploy, or has installed or
deployed, its ``equipment, facility, or service prior to the effective
date of Sec. 103 * * * '' i.e., prior to October 25, 1998. See 47
U.S.C. 1006(c)(1). Given this limitation, we believe that a Sec. 107(c)
extension is not available to cover equipment, facilities, or services
installed or deployed after October 25, 1998. This interpretation of
the scope of Sec. 107(c) would likely preclude granting Sec. 107(c)
relief in connection with packet-mode applications because, in our
experience, most if not all carrier packet-based ``equipment,
facilit[ies], or service'' have been installed or deployed after the
Sec. 107(c)-mandated cut-off date. We seek comment on this analysis.
36. Moreover, we believe that carriers face a high burden in making
an adequate showing to obtain alternative relief pursuant to
Sec. 109(b). Under the requirements of that section, carriers must
demonstrate that compliance is not reasonably achievable, and we must
evaluate submitted petitions under the criteria set out in
Sec. 109(b)(1), including cost and cost-related criteria and an
assessment of the effect of any granted extension ``on public safety
and national security.'' It would be difficult for a petitioner to make
such a showing unless the request was made in connection with precisely
identified ``equipment, facilities, or services.'' We seek comment on
this analysis.
37. Under this interpretation of the applicability and scope of
Sec. 107(c) and 109(b), we believe that many carriers could find it
difficult to obtain either CALEA compliance extensions or exemptions in
connection with packet requirements. As a result, they may become
immediately subject to enforcement action. This outcome could be
precisely what Congress intended, because it would encourage carriers
to press for the development of CALEA standards by industry-staffed
committees and for solutions from manufacturers. Under this reading of
the statute, neither Sec. 107(c) nor Sec. 109(b) provides a permanent
exemption from CALEA's Sec. 103 compliance mandate. And it reflects a
statutory expectation that whenever a carrier replaces or upgrades its
network architecture after Sec. 107(c)'s mandated compliance date, it
must do so by employing CALEA-compliant equipment, or explain why it
could not do so under the stringent requirements of a Sec. 109(b)
petition. We seek comment on this interpretation of the relationship of
CALEA Sec. 103, 107(c), and 109(b) and the likely effects if we apply
it to pending packet-mode Sec. 107(c) extension petitions.
Enforcement of CALEA
38. We consider whether, in addition to the enforcement remedies
through the courts available to LEAs under Sec. 108 of CALEA, see 47
U.S.C. 1007, the Commission may take separate enforcement action
against telecommunications carriers, manufacturers and providers of
telecommunications support services that fail to comply with CALEA. The
Commission has broad authority to enforce its rules under the
Communications Act. Section 229(a) of the Communications Act provides
broad authority for the Commission to adopt rules to implement CALEA
and, unlike Sec. 229(b), does not limit such rulemaking authority to
common carriers. While the ``penalties'' provision of Sec. 229(d) of
the Communications Act refers to CALEA violations ``by the carrier,''
nothing in
[[Page 56982]]
Sec. 229(d) appears to limit the Commission's general enforcement
authority under the Communications Act. As such, it appears the
Commission has general authority under the Communications Act to
promulgate and enforce CALEA rules against carriers as well as non-
common carriers. We seek comment on this analysis. We also seek comment
on whether CALEA Sec. 108 and/or 201 impose any limitations on the
nature of the remedy that the Commission may impose (e.g. injunctive
relief) and whether CALEA Sec. 106 imposes any limitations on the
Commission's enforcement authority over manufacturers and support
service providers.
39. We seek comment on how the Commission would enforce the
assistance capability requirements under Sec. 103 of CALEA. To
facilitate enforcement, we tentatively conclude that, at a minimum, we
should adopt the requirements of Sec. 103 as Commission rules. We ask
whether, given this tentative conclusion, the lack of Commission-
established technical requirements or standards under Sec. 107(b) for a
particular technology would affect the Commission's authority to
enforce Sec. 103. How would the lack of publicly available technical
requirements or standards from a standard-setting organization impact
the Commission's authority/ability to enforce Sec. 103? In addition, we
ask whether there are other provisions of CALEA, such as Sec. 107(a)'s
safe harbor provisions, that the Commission should adopt as rules in
order to effectively enforce CALEA. How would the upgrade of a standard
by a standard-setting organization impact the application of
Sec. 107(a)'s safe harbor provision?
40. We believe it is in the public interest for covered carriers to
become CALEA compliant as expeditiously as possible and recognize the
importance of effective enforcement of Commission rules affecting such
compliance. We seek comment on whether the Commission's general
enforcement procedures are sufficient for purposes of CALEA
enforcement. The Commission has broad authority to enforce its rules
under the Communications Act. It can, for example, issue monetary
forfeitures and cease and desist orders against common carriers and
non-common carriers alike for violation of Commission rules. Is this
general enforcement authority sufficient or should we implement some
special procedures for purposes of CALEA enforcement? Would an
established enforcement scheme expedite the CALEA implementation
process? We seek comment on any other measures we should take into
consideration in deciding how best to enforce CALEA requirements.
Cost and Cost Recovery Issues
41. We seek comment on various cost determination and recovery
issues that different telecommunications carriers face in complying
with CALEA. We seek comment on whether individual carriers should bear
responsibility for the costs of CALEA compliance. We further seek
comment on specific jurisdictional issues, depending on whether
carriers provide wireline or wireless service that may affect our
determinations concerning what responsibilities they should have in
bearing those costs.
42. CALEA Sec. 109 places financial responsibility on the Federal
Government for CALEA implementation costs related to equipment deployed
on or before January 1, 1995. See 47 U.S.C. 1008(a), (d). Where the
Federal Government refuses to pay for such modifications, a carrier's
pre-1995 deployed equipment and facilities will be considered CALEA
compliant until such equipment or facility ``is replaced or
significantly upgraded or otherwise undergoes major modification'' for
purposes of normal business operations. See, 47 U.S.C. 1008(d). See
also, CALEA Sec. 108(c)(3), 47 U.S.C. 1007(c)(3). However, for CALEA
implementation costs associated with equipment deployed after January
1, 1995, Sec. 109 places financial responsibility on the
telecommunications carriers unless the Commission determines compliance
is not ``reasonably achievable.'' See, 47 U.S.C. 1008(b)(1). Based on
CALEA's delineation of responsibility for compliance costs, we
tentatively conclude that carriers bear responsibility for CALEA
development and implementation costs for post-January 1, 1995 equipment
and facilities. We seek comment on this analysis.
43. We also seek comment on other cost recovery options that could
reduce CALEA-related burdens otherwise imposed on carriers and their
customers. Given the public benefits of CALEA-supported surveillance of
criminals and terrorists, does it make sense to consider cost recovery
devices that more equitably spread costs among the general public? For
example, should CALEA costs be recovered directly from
telecommunications and other consumers by means of a Commission-
mandated, flat monthly charge similar to the current subscriber line
charge (``SLC'')? Does the Commission have authority to impose such a
charge? How would such a charge be developed? Our experience to date
evaluating circuit-based CALEA-related costs indicates that developing
an appropriate cost analysis for packet capabilities could be complex
and difficult. We seek comment on how to assess the scope of CALEA-
related costs in this proceeding. We ask commenters to submit cost
calculations and analysis, and to identify any conditions or factors
that may affect our ability to determine the true scope of CALEA-
related costs.
44. We seek specific comment about how cost and cost-recovery
issues connected with CALEA affect small and rural carriers. Should we
adopt specific rules and policies to help ensure that such carriers can
become CALEA compliant? Is it sufficient that such carriers have
recourse to the CALEA Sec. 109(b) petition process to seek funding from
the Attorney General? Would exclusive reliance on CALEA Sec. 109(b)
tend to encourage hundreds of rural carriers to file such petitions? If
the Attorney General finds, in such a case, that it cannot pay for
CALEA compliance upgrades, successful petitioners would be deemed CALEA
compliant. Is this result desirable from the perspective of providing
for the reasonable needs of LEAs to engage in intercept activities in
rural areas?
45. We also seek comment on whether we should distinguish carrier
recovery of CALEA-incurred capital costs generally from recovery of
specific intercept-related costs. We seek comment on whether CALEA
limits the available cost recovery for intercept provisioning, and on
whether carriers should be allowed to adjust their charges for such
intercept provisioning to cover costs for CALEA-related services, which
would include CALEA-related intercept provisioning charges. We seek
comment as to whether recovery for capital costs associated with
intercept provisioning should be different in the circuit-mode and
packet-mode contexts, and if so, why.
46. In 1997, the Commission referred CALEA cost recovery issues to
the Federal-State Joint Board on Jurisdictional Separations (``Federal-
State Separations Joint Board''). At that time, parties were focused on
cost recovery issues related to deployment of CALEA capabilities in
circuit-switched networks of telecommunications carriers; standards for
CALEA implementation had not yet been developed. Since then, a number
of significant technological, marketplace, and regulatory developments
have taken place, including the development of standards for circuit-
mode and packet-mode CALEA implementation and widespread deployment of
packet-
[[Page 56983]]
switching capabilities. Meanwhile, the Federal-State Separations Joint
Board recommended, and the Commission adopted, an interim freeze on
further modifications to the Commission's jurisdictional separations
rules. The separations freeze went into effect on July 1, 2001 and is
scheduled to end on June 30, 2006, absent further action by the
Commission.
47. As a result of the separations freeze, the Federal-State
Separations Joint Board has not had the opportunity to consider fully
CALEA cost recovery issues and their implications for the Commission's
jurisdictional separations rules. We therefore refer to the Federal-
State Separations Joint Board the following CALEA-related cost recovery
issues: (i) Whether costs for circuit-based capabilities should be
separated, and if so, how the associated costs and revenues should be
allocated for jurisdictional separations purposes; (ii) whether costs
for packet-mode capabilities should be separated, and if so, how the
associated costs and revenues should be allocated for jurisdictional
separations purposes. We emphasize that our separations rules apply
only to incumbent local exchange carriers under the Communications Act,
and do not apply to entities that may be deemed telecommunications
carriers under CALEA. As such, the Federal-State Separations Joint
Board shall focus on the foregoing questions only insofar as they
pertain to entities subject to jurisdictional separations.
48. In addition, we ask parties to refresh the record on the CALEA
issues identified in the Separations NPRM, i.e., whether costs should
be allocated in a new CALEA-specific category or in previously-existing
categories, whether revenues received from the Attorney General should
be allocated in a particular manner (and if so, how), and whether
CALEA-related revenues could be allocated to the jurisdictions based on
relative-use factors derived from the relative electronic surveillance
requirements of Federal, State, and local LEAs. Finally, because of the
national importance of CALEA issues, we request that the Federal-State
Separations Joint Board issue its recommended decision no later than
one year from the release of this NPRM.
Effective Dates of New Rules
49. If the Commission ultimately decides, as discussed in the NPRM,
that broadband access providers or additional entities are subject to
CALEA, entities that heretofore have not been subject to CALEA will
have to comply with its requirements. Thus, entities previously
identified as information service providers under the Commission's
previous decisions would be subject to CALEA and would have to comply
with various requirements, including the assistance capability
requirements in CALEA Sec. 103, the capacity requirements in CALEA
Sec. 104, and the system security requirements in CALEA Sec. 105 and in
Sec. 229(b) of the Communications Act.
50. If the Commission ultimately decides that entities that
heretofore have not been subject to CALEA will have to comply with its
requirements, we seek comment on what would be a reasonable amount of
time for those entities to come into compliance with Secs. 103 and 105
of CALEA. Should newly-identified entities either come into compliance
with or seek relief from Sec. 103 requirements within 90 days, as we
propose for carriers that have filed Sec. 107(c) petitions? Or should
newly-identified entities have 15 months to come into compliance with
Sec. 103, as Law Enforcement suggests, or is some other amount of time
reasonable? Regarding compliance with CALEA Sec. 105 and Sec. 229(b) of
the Communications Act, should newly-identified carriers comply with
the system security requirements previously adopted by the Commission
within 90 days, which was the amount of time the Commission provided
when it adopted those rules, or is some other amount of time
reasonable? Commenters should address factors that would support their
suggestions for Secs. 103, 105 and 229(b) compliance deadlines.
Ordering Clauses
51. Pursuant to sections 1, 4(i), 7(a), 229, 301, 303, 332, and 410
of the Communications Act of 1934, as amended, and sections 103, 106,
107, and 109 of the Communications Assistance for Law Enforcement Act,
47 U.S.C. 151, 154(i), 157(a), 229, 301, 303, 332, 410, 1002, 1005,
1006, and 1008, the Notice of Proposed Rulemaking is hereby Adopted.
52. Pursuant to section 410(c) of the Communications Act of 1934,
47 U.S.C. 410(c), the Federal-State Joint Board on Jurisdictional
Separations is requested to review the CALEA cost recovery issues of
the NOTICE OF PROPOSED RULEMAKING and to provide recommendations to the
Commission.
53. The Joint Petition for Expedited Rulemaking, filed by the
Department of Justice, Federal Bureau of Investigation, and Drug
Enforcement Administration on March 10, 2004, Is Granted to the Extent
Indicated in the NPRM.
54. The Commission's Consumer Information and Governmental Affairs
Bureau, Reference Information Center, SHALL SEND a copy of this Notice
of Proposed Rulemaking, including the Initial Regulatory Flexibility
Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
Initial Regulatory Flexibility Analysis
55. As required by the Regulatory Flexibility Act of 1980, as
amended (``RFA''),\1\ the Commission has prepared this Initial
Regulatory Flexibility Analysis (``IRFA'') of the possible significant
economic impact on a substantial number of small entities by the
policies and rules proposed in this Notice of Proposed Rule Making
(``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 provided above. The
Commission will send a copy of the Notice of Proposed Rule Making,
including this IRFA, to the Chief Counsel for Advocacy of the Small
Business Administration (``SBA'').\2\ In addition, the Notice of
Proposed Rule Making (or summaries thereof), including the IRFA, will
be published in the Federal Register.\3\
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\1\ See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601-612, has been
amended by the Contract With America Advancement Act of 1996, Public
Law 104-112, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is
the Small Business Regulatory Enforcement Fairness Act of 1966
(SBREFA).
\2\ 5 U.S.C. 603(a).
\3\ Id.
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A. Need for, and Objectives of, the Proposed Rules
56. The NPRM proposes to permit law enforcement agencies (``LEAs'')
to better perform electronic surveillance of telecommunications
carriers under several existing statutes by tentatively concluding that
new broadband Internet services and ``managed'' Voice over Internet
Protocol (``VoIP'') services--i.e., services that offer voice
communications calling capability whereby the VoIP provider acts as a
mediator to manage the communication between its end points and to
provide, e.g., call set up, connection, termination, and party
identification features--are subject to the assistance capability
requirements of the 1994 Communications Assistance for Law Enforcement
Act (``CALEA''). The NPRM also proposes steps to ensure that
telecommunications carriers comply with CALEA. However, the NPRM
tentatively concludes that non-managed VoIP services are not subject to
CALEA, and does not propose to establish a pre-approval process for new
technologies and services that would determine whether they are subject
to CALEA, as
[[Page 56984]]
requested by the Law Enforcement Petition. The Commission believes that
these proposals strike an appropriate balance between better permitting
LEAs to combat crime and terrorism and the limited scope of CALEA.
B. Legal Basis
57. This proposed action is authorized pursuant to sections 1,
4(i), 7(a), 229, 301, 303, 332, and 410 of the Communications Act of
1934, as amended, and sections 103, 106, 107, and 109 of the
Communications Assistance for Law Enforcement Act, 47 U.S.C. 151,
154(i), 157(a), 229, 301, 303, 332, 410, 1002, 1005, 1006, and 1008.
C. Description and Estimate of the Number of Small Entities to Which
the Proposed Rule Will Apply
58. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that will be
affected by the proposed rules.\4\ The RFA generally defines the term
``small entity'' as having the same meaning as the terms ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' \5\ In addition, the term ``small business'' has the
same meaning as the term ``small business concern'' under the Small
Business Act.\6\ A small business concern is one which: (1) Is
independently owned and operated; (2) is not dominant in its field of
operation; and (3) satisfies any additional criteria established by the
SBA.\7\
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\4\ 5 U.S.C. 603(b)(3), 604(a)(3).
\5\ Id. 601(6).
\6\ Id. 601(3) (incorporating by reference the definition of
``small business concern'' in the Small Business Act, 15 U.S.C.
632). Pursuant to 5 U.S.C. 601(3), the statutory definition of a
small business applies ``unless an agency, after consultation with
the Office of Advocacy of the Small Business Administration and
after opportunity for public comment, establishes one or more
definitions of such terms which are appropriate to the activities of
the agency and publishes such definitions(s) in the Federal
Register.''
\7\ 15 U.S.C. 632.
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Telecommunications Service Entities
Wireline Carriers and Service Providers
59. We have 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.''
\8\ 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.\9\
We have therefore included small incumbent local exchange carriers in
this RFA analysis, although we emphasize that this RFA action has no
effect on Commission analyses and determinations in other, non-RFA
contexts.
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\8\ Id. 632.
\9\ Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA,
to William E. Kennard, Chairman, FCC (May 27, 1999). The Small
Business Act contains a definition of ``small-business concern,''
which the RFA incorporates into its own definition of ``small
business.'' See 15 U.S.C. 632(a) (Small Business Act); 5 U.S.C.
601(3) (RFA). SBA regulations interpret ``small business concern''
to include the concept of dominance on a national basis. See 13 CFR
121.102(b).
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Incumbent Local Exchange Carriers. 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.\10\ According to Commission data,\11\ 1,337 carriers have
reported that they are engaged in the provision of incumbent local
exchange services. Of these 1,337 carriers, an estimated 1,032 have
1,500 or fewer employees and 305 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 our
action.
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\10\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in
Oct. 2002).
\11\ FCC, Wireline Competition Bureau, Industry Analysis and
Technology Division, ``Trends in Telephone Service'' at Table 5.3,
Page 5-5 (Aug. 2003) (hereinafter ``Trends in Telephone Service'').
This source uses data that are current as of December 31, 2001.
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Competitive Local Exchange Carriers, Competitive Access Providers,
``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.\12\ According to
Commission data,\13\ 609 carriers have reported that they are engaged
in the provision of either competitive access provider services or
competitive local exchange carrier services. Of these 609 carriers, an
estimated 458 have 1,500 or fewer employees and 151 have more than
1,500 employees. In addition, 16 carriers have reported that they are
``Shared-Tenant Service Providers,'' and all 16 are estimated to have
1.500 or fewer employees. In addition, 35 carriers have reported that
they are ``Other Local Service Providers.'' Of the 35, an estimated 34
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 our action.
---------------------------------------------------------------------------
\12\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in
Oct. 2002).
\13\ ``Trends in Telephone Service'' at Table 5.3.
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Payphone Service Providers. 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.\14\ According to Commission data,\15\ 761 carriers have
reported that they are engaged in the provision of payphone services.
Of these, an estimated 757 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 our action.
---------------------------------------------------------------------------
\14\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in
Oct. 2002).
\15\ ``Trends in Telephone Service'' at Table 5.3.
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Interexchange Carriers. 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.\16\ According to Commission data,\17\ 261 carriers have
reported that they are engaged in the provision of interexchange
service. Of these, an estimated 223 have 1,500 or fewer employees and
38 have more than 1,500 employees. Consequently, the Commission
estimates that the majority of IXCs are small entities that may be
affected by our action.
---------------------------------------------------------------------------
\16\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in
Oct. 2002).
\17\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------
Operator Service Providers. 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
[[Page 56985]]
category Wired Telecommunications Carriers. Under that size standard,
such a business is small if it has 1,500 or fewer employees.\18\
According to Commission data,\19\ 23 carriers have reported that they
are engaged in the provision of operator services. Of these, an
estimated 22 have 1,500 or fewer employees and one has more than 1,500
employees. Consequently, the Commission estimates that the majority of
OSPs are small entities that may be affected by our action.
---------------------------------------------------------------------------
\18\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in
Oct. 2002).
\19\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------
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.\20\ According to Commission data,\21\ 37 carriers have
reported that they are engaged in the provision of prepaid calling
cards. Of these, an estimated 36 have 1,500 or fewer employees and one
has more than 1,500 employees. Consequently, the Commission estimates
that the majority of prepaid calling card providers are small entities
that may be affected by our action.
---------------------------------------------------------------------------
\20\ 13 CFR 121.201, NAICS code 517310 (changed from 513330 in
Oct. 2002).
\21\ ``Trends in Telephone Service'' at Table 5.3.
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Wireless Telecommunications Service Providers
60. Wireless Service Providers. The SBA has developed a small
business size standard for wireless firms within the two broad economic
census categories of ``Paging'' \22\ and ``Cellular and Other Wireless
Telecommunications.'' \23\ 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 1997 show that there were
1,320 firms in this category, total, that operated for the entire
year.\24\ Of this total, 1,303 firms had employment of 999 or fewer
employees, and an additional 17 firms had employment of 1,000 employees
or more.\25\ Thus, under this category and associated small business
size standard, the majority of firms can be considered small. For the
census category Cellular and Other Wireless Telecommunications, Census
Bureau data for 1997 show that there were 977 firms in this category,
total, that operated for the entire year.\26\ Of this total, 965 firms
had employment of 999 or fewer employees, and an additional 12 firms
had employment of 1,000 employees or more.\27\ Thus, under this second
category and size standard, the majority of firms can, again, be
considered small.
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\22\ 13 CFR 121.201, NAICS code 513321 (changed to 517211 in
October 2002).
\23\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\24\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 5, Employment Size of Firms Subject to
Federal Income Tax: 1997, NAICS code 513321 (issued October 2000).
\25\ Id. The census data do not provide a more precise estimate
of the number of firms that have employment of 1,500 or fewer
employees; the largest category provided is ``Firms with 1000
employees or more.''
\26\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 5, Employment Size of Firms Subject to
Federal Income Tax: 1997, NAICS code 513322 (issued October 2000).
\27\ Id. The census data do not provide a more precise estimate
of the number of firms that have employment of 1,500 or fewer
employees; the largest category provided is ``Firms with 1000
employees or more.''
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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.'' \28\ Under this SBA
category, a wireless business is small if it has 1,500 or fewer
employees. For the census category Cellular and Other Wireless
Telecommunications firms, Census Bureau data for 1997 show that there
were 977 firms in this category, total, that operated for the entire
year.\29\ Of this total, 965 firms had employment of 999 or fewer
employees, and an additional 12 firms had employment of 1,000 employees
or more.\30\ Thus, under this category and size standard, the great
majority of firms can be considered small. According to the most recent
Trends in Telephone Service data, 719 carriers reported that they were
engaged in the provision of cellular service, Personal Communications
Service (``PCS''), or Specialized Mobile Radio Telephony services,
which are placed together in the data.\31\ We have estimated that 294
of these are small, under the SBA small business size standard.\32\
Common Carrier Paging. The SBA has developed a small business size
standard for wireless firms within the broad economic census categories
of ``Cellular and Other Wireless Telecommunications.'' \33\ 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
1997 show that there were 1,320 firms in this category, total, that
operated for the entire year.\34\ Of this total, 1,303 firms had
employment of 999 or fewer employees, and an additional 17 firms had
employment of 1,000 employees or more.\35\ Thus, under this category
and associated small business size standard, the great majority of
firms can be considered small. In the Paging Third Report and Order, we
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.\36\ 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.\37\ The SBA has
approved these small business size standards.\38\ An auction of
[[Page 56986]]
Metropolitan Economic Area licenses commenced on February 24, 2000, and
closed on March 2, 2000.\39\ Of the 985 licenses auctioned, 440 were
sold. Fifty-seven companies claiming small business status won.
According to the most recent Trends in Telephone Service, 433 carriers
reported that they were engaged in the provision of paging and
messaging services.\40\ Of those, we estimate that 423 are small, under
the SBA approved small business size standard.\41\
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\28\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\29\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 5, Employment Size of Firms Subject to
Federal Income Tax: 1997, NAICS code 513322 (issued October 2000).
\30\ Id. The census data do not provide a more precise estimate
of the number of firms that have employment of 1,500 or fewer
employees; the largest category provided is ``Firms with 1000
employees or more.''
\31\ FCC, Wireline Competition Bureau, Industry Analysis and
Technology Division, ``Trends in Telephone Service'' at Table 5.3,
page 5-5 (August 2003). This source uses data that are current as of
December 31, 2001.
\32\ FCC, Wireline Competition Bureau, Industry Analysis and
Technology Division, ``Trends in Telephone Service'' at Table 5.3,
page 5-5 (August 2003). This source uses data that are current as of
December 31, 2001.
\33\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\34\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
``Information,'' Table 5, Employment Size of Firms Subject to
Federal Income Tax: 1997, NAICS code 513321 (issued October 2000).
\35\ Id. The census data do not provide a more precise estimate
of the number of firms that have employment of 1,500 or fewer
employees; the largest category provided is ``Firms with 1000
employees or more.''
\36\ Amendment of Part 90 of the Commission's Rules To Provide
for the Use of the 220-222 MHz Band by the Private Land Mobile Radio
Service, PR Docket No. 89-552, Third Report and Order and Fifth
Notice of Proposed Rulemaking, 12 FCC Rcd 10943, 11068-70, 62 FR
16004 (April 3, 1997), paras. 291-295.
\37\ See Letter to Amy Zoslov, Chief, Auctions and Industry
Analysis Division, Wireless Telecommunications Bureau, Federal
Communications Commission, from A. Alvarez, Administrator, SBA (Dec.
2, 1998).
\38\ ``Revision of Part 22 and Part 90 of the Commission's Rules
To Facilitate Future Development of Paging Systems,'' Memorandum
Opinion and Order on Reconsideration and Third Report and Order, 14
FCC Rcd 10030, at paragraphs 98-107 (1999).
\39\ Revision of Part 22 and Part 90 of the Commission's Rules
To Facilitate Future Development of Paging Systems, Memorandum
Opinion and Order on Reconsideration and Third Report and Order, 14
FCC Rcd 10030, 10085 para. 98 (1999).
\40\ FCC, Wireline Competition Bureau, Industry Analysis and
Technology Division, ``Trends in Telephone Service'' at Table 5.3,
page 5-5 (August 2003). This source uses data that are current as of
December 31, 2001.
\41\ FCC, Wireline Competition Bureau, Industry Analysis and
Technology Division, ``Trends in Telephone Service'' at Table 5.3,
page 5-5 (August 2003). This source uses data that are current as of
December 31, 2001.
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Wireless Communications Services. This service can be used for
fixed, mobile, radiolocation, and digital audio broadcasting satellite
uses. The Commission established small business size standards for the
wireless communications services auction. A ``small business'' is an
entity with average gross revenues of $40 million for each of the three
preceding years, and a ``very small business'' is an entity with
average gross revenues of $15 million for each of the three preceding
years. The SBA has approved these small business size standards.\42\
The Commission auctioned geographic area licenses in the wireless
communications services. In the auction, there were seven winning
bidders that qualified as ``very small business'' entities, and one
that qualified as a ``small business'' entity.
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\42\ See Letter to Amy Zoslov, Chief, Auctions and Industry
Analysis Division, Wireless Telecommunications Bureau, Federal
Communications Commission, from A. Alvarez, Administrator, Small
Business Administration (December 2, 1998).
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Wireless Telephony. Wireless telephony includes cellular, personal
communications services, and specialized mobile radio telephony
carriers. As noted earlier, the SBA has developed a small business size
standard for ``Cellular and Other Wireless Telecommunications''
services.\43\ Under that SBA small business size standard, a business
is small if it has 1,500 or fewer employees.\44\ According to the most
recent Trends in Telephone Service data, 719 carriers reported that
they were engaged in the provision of wireless telephony.\45\ We have
estimated that 294 of these are small under the SBA small business size
standard.
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\43\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\44\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in
October 2002).
\45\ FCC, Wireline Competition Bureau, Industry Analysis and
Technology Division, ``Trends in Telephone Service'' at Table 5.3,
page 5-5 (August 2003). This source uses data that are current as of
December 31, 2001.
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Broadband Personal Communications Service. The broadband 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.\46\ 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.'' \47\ These
standards defining ``small entity'' in the context of broadband PCS
auctions have been approved by the SBA.\48\ 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.\49\ 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. In
addition, we note 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.
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\46\ See Amendment of Parts 20 and 24 of the Commission's Rules-
-Broadband PCS Competitive Bidding and the Commercial Mobile Radio
Service Spectrum Cap, WT Docket No. 96-59, Report and Order, 11 FCC
Rcd 7824, 61 FR 33859 (July 1, 1996); see also 47 CFR 24.720(b).
\47\ See Amendment of Parts 20 and 24 of the Commission's Rules-
-Broadband PCS Competitive Bidding and the Commercial Mobile Radio
Service Spectrum Cap, WT Docket No. 96-59, Report and Order, 11 FCC
Rcd 7824, 61 FR 33859 (July 1, 1996).
\48\ See. e.g., Implementation of Section 309(j) of the
Communications Act--Competitive Bidding, PP Docket No. 93-253, Fifth
Report and Order, 9 FCC Rcd 5332, 59 FR 37566 (July 22, 1994).
\49\ FCC News, Broadband PCS, D, E and F Block Auction Closes,
No. 71744 (released January 14, 1997). See also Amendment of the
Commission's Rules Regarding Installment Payment Financing for
Personal Communications Services (PCS) Licenses, WT Docket No. 97-
82, Second Report and Order, 12 FCC Rcd 16436, 62 FR 55348 (October
24,1997).
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Cable Operators
61. Cable and Other Program Distribution. This category includes
cable systems operators and other program distribution 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.\50\ According to Census Bureau data for 1997,
there were a total of 1,311 firms in this category, total, that had
operated for the entire year.\51\ Of this total, 1,180 firms had annual
receipts of under $10 million and an additional 52 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.
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\50\ 13 CFR 121.201, North American Industry Classification
System (NAICS) code 513220 (changed to 517510 in October 2002).
\51\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
Information, ``Establishment and Firm Size (Including Legal Form of
Organization),'' Table 4, NAICS code 513220 (issued October 2000).
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Cable System Operators (Rate Regulation Standard). The Commission
has developed its own small business size standard 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.\52\ The most recent estimates indicate that
there were 1,439 cable operators who qualified as small cable system
operators at the end of 1995.\53\ Since then, some of those companies
may
[[Page 56987]]
have grown to serve over 400,000 subscribers, and others may have been
involved in transactions that caused them to be combined with other
cable operators. Consequently, the Commission estimates that there are
now fewer than 1,439 small entity cable system operators that may be
affected by the rules and policies adopted in the NPRM.
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\52\ 47 CFR 76.901(e). The Commission developed this definition
based on its determination that a small cable system operator is one
with annual revenues of $100 million or less. Implementation of
Sections of the 1992 Cable Act: Rate Regulation, Sixth Report and
Order and Eleventh Order on Reconsideration, 10 FCC Rcd 7393 (1995),
60 FR 10534 (Feb. 27, 1995).
\53\ Paul Kagan Associates, Inc., Cable TV Investor, February
29, 1996 (based on figures for December 30, 1995).
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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.'' \54\ The Commission has determined that there are
67,700,000 subscribers in the United States.\55\ 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.\56\ Based on available data, the Commission estimates that
the number of cable operators serving 677,000 subscribers or fewer,
totals 1,450.\57\ The Commission neither requests nor collects
information on whether cable system operators are affiliated with
entities whose gross annual revenues exceed $250 million,\58\ and
therefore are 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.
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\54\ 47 U.S.C. 543(m)(2).
\55\ See FCC Announces New Subscriber Count for the Definition
of Small Cable Operator, Public Notice DA 01-158 (Jan. 24, 2001).
\56\ 47 CFR 76.901(f).
\57\ See FCC Announces New Subscriber Count for the Definition
of Small Cable Operators, Public Notice, DA-01-0158 (rel. January
24, 2001).
\58\ The Commission does receive such information on a case-by-
case basis if a cable operator appeals a local franchise authority's
finding that the operator does not qualify as a small cable operator
pursuant to 76.901(f) of the Commission's rules. See 47 CFR
76.909(b).
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Internet Service Providers
62. 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.'' \59\ Under the
SBA size standard, such a business is small if it has average annual
receipts of $21 million or less.\60\ According to Census Bureau data
for 1997, there were 2,751 firms in this category that operated for the
entire year.\61\ Of these, 2,659 firms had annual receipts of under $10
million, and an additional 67 firms had receipts of between $10 million
and $24, 999,999. Consequently, we estimate that the majority of these
firms are small entities that may be affected by our action.
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\59\ U.S. Census Bureau, ``2002 NAICS Definitions: 518111
Internet Service Providers'' (Feb. 2004) http://www.census.gov.
\60\ 13 CFR 121.201, NAICS code 518111 (changed from previous
code 514191, ``On-Line Information Services,'' in Oct. 2002).
\61\ U.S. Census Bureau, 1997 Economic Census, Subject Series:
Information, ``Establishment and Firm Size (Including Legal Form of
Organization),'' Table 4, NAICS code 514191 (issued Oct. 2000).
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D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
63. The proposed rules require that telecommunications carriers
providing Internet broadband access and managed VoIP services be CALEA-
compliant.\62\ The proposed rules also limit extensions of compliance
deadlines under CALEA Sec. 107(c), which authorizes extensions if
technology is not available to carriers to meet the assistance
capability requirements of CALEA Sec. 103.\63\ We also note that
telecommunications carriers, including small entities, may petition the
Commission under CALEA Sec. 109(b) and argue that CALEA compliance is
not reasonably achievable for a variety of reasons, including a
carrier's financial resources.
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\62\ See [para][para] 1, 13, 20, and 0, supra.
\63\ See [para][para] 2 and 39, supra.
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E. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
64. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include the following four alternatives (among others): (1)
the establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
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.\64\
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\64\ 5 U.S.C. 603(c).
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We also note that telecommunications carriers, including small
entities, may petition the Commission under CALEA Sec. 109(b) and argue
that CALEA compliance is not reasonably achievable for a variety of
reasons, including a carrier's financial resources. We believe that
this provision safeguards small entities from any significant adverse
economic impacts of CALEA compliance. We are unaware of any
alternatives that would better safeguard small entities, but we solicit
comment on any such alternatives.
F. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
65. None.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 04-20705 Filed 9-22-04; 8:45 am]
BILLING CODE 6712-01-P