**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | > ET Docket No. 04-295          |
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| Communications Assistance for    | ) | > RM-10865                      |
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| Enforcement Act and Broadband    | ) |                                 |
| Access and Services              | ) |                                 |
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**SECOND REPORT AND ORDER AND MEMORANDUM OPINION AND ORDER**

**Adopted: May 3, 2006 Released: May 12, 2006**

By the Commission: Chairman Martin, and Commissioners Copps, Adelstein
and Tate issuing separate statements.

 

**TABLE OF CONTENTS**

**Paragraph**

I. INTRODUCTION [2](#i.-introduction)

II\. BACKGROUND 4

III\. DISCUSSION 6

A. REQUIREMENTS AND SOLUTIONS 7

B. SECTIONS 107(C) AND 109(B) PETITIONS 27

C. ENFORCEMENT OF CALEA 63

D. COST RECOVERY ISSUES 69

E. SYSTEM SECURITY REQUIREMENTS 75

F. FUTURE SERVICES AND TECHNOLOGIES 77

G. CONSOLIDATION OF CALEA RULES 81

H. MISCELLANEOUS 83

IV\. PROCEDURAL ISSUES 84

V. ORDERING CLAUSES 89

APPENDIX A -- LIST OF COMMENTERS

APPENDIX B -- FINAL RULES

APPENDIX C -- REGULATORY FLEXIBILITY ANALYSES

APPENDIX D -- STANDARDS FOR PACKET-MODE TECHNOLOGIES

APPENDIX E -- SECTION 109(B)(1) PETITIONS FOR COST-SHIFTING RELIEF:

FILING INSTRUCTIONS

APPENDIX F -- SECTION 107(C) PETITIONS FOR EXTENSION OF TIME:

FILING INSTRUCTIONS

APPENDIX G -- SAMPLE MONITORING REPORT (FORM XXX)

# I. INTRODUCTION {#i.-introduction .unnumbered}

1.  In the *Second Report and Order* (*Second R&O*), we address several
    issues regarding CALEA implementation raised in the Notice of
    Proposed Rulemaking (*Notice*) in this proceeding. In particular,
    the *Second R&O* addresses the assistance capabilities required,
    pursuant to section 103 of the Communications Assistance for Law
    Enforcement Act (CALEA),[^1] for facilities-based broadband Internet
    access providers and providers of interconnected Voice over Internet
    Protocol (VoIP). Telecommunications industry standard-setting
    bodies, working in concert with law enforcement agencies (LEAs) and
    other interested parties, are developing technical requirements and
    solutions for these providers, and we conclude that, absent the
    filing of a deficiency petition under CALEA section 107(b), it would
    be premature for the FCC to intervene in the standards development
    process. Additionally, we permit all carriers providing
    facilities-based broadband Internet access and interconnected VoIP
    services until May 14, 2007 to come into compliance with CALEA.[^2]
    Further, we require that all carriers providing facilities-based
    broadband Internet access and interconnected VoIP service to submit
    interim reports to the Commission to ensure that they will be
    CALEA-compliant by May 14, 2007. We also require that all
    facilities-based broadband Internet access and interconnected VoIP
    providers to whom CALEA obligations were extended in the *First R&O*
    come into compliance with the system security requirements in our
    rules within 90 days of the effective date of this *Second R&O*.

2.  More generally, we herein specify mechanisms to ensure that
    telecommunications carriers comply with CALEA. Specifically, under
    the express terms of the statute, all carriers subject to CALEA are
    obliged to become CALEA-compliant. We find that sections 107(c) and
    109(b) of CALEA provide only limited and temporary relief from
    compliance requirements, and that they are complementary provisions
    that serve different purposes, which are, respectively: (1)
    extension of the CALEA section 103 compliance deadline for
    equipment, facility, or service deployed before October 25, 1998;
    and (2) recovery of CALEA-imposed costs. We also conclude that, in
    addition to the enforcement remedies through the courts available to
    LEAs under CALEA section 108, we may take separate enforcement
    action against carriers that fail to comply with CALEA. Moreover, we
    conclude that carriers are generally responsible for CALEA
    development and implementation costs for post-January 1, 1995
    equipment and facilities.

3.  In the *Memorandum Opinion and Order* (*MO&O*), we deny in part and
    grant in part a petition for reconsideration and clarification filed
    by the United States Telecom Association (USTelecom). USTelecom
    requested the Commission to re-set the CALEA compliance deadline for
    facilities-based broadband Internet access and interconnected VoIP
    services from the May 14, 2007 date established by the *First R&O*
    to 18 months from the date of this *Second R&O* and to clarify the
    specific broadband access services subject to the 18-month deadline.
    We deny USTelecom's request to re-set the CALEA compliance deadline
    for facilities-based broadband Internet access and interconnected
    VoIP services, but conclude that the public interest will be best
    served by applying the existing May 14, 2007 CALEA compliance date
    to all facilities-based broadband Internet access and interconnected
    VoIP services.

# II. BACKGROUND {#ii.-background .unnumbered}

4.  In March 2004, the Department of Justice (DOJ), the Federal Bureau
    of Investigation (FBI), and the Drug Enforcement Administration
    (DEA) (collectively, Law Enforcement) filed with the Commission a
    petition for expedited rulemaking, requesting that we initiate a
    proceeding to resolve various outstanding issues associated with the
    implementation of CALEA.[^3] We responded in August 2004 by issuing
    a Notice of Proposed Rulemaking and Declaratory Ruling in this
    proceeding.[^4] The *Notice* examined issues relating to the scope
    of CALEA's applicability to packet-mode services, such as broadband
    Internet access, and implementation and enforcement issues.[^5]

5.  In September 2005, the *First R&O* concluded that CALEA applies to
    facilities-based broadband Internet access providers and providers
    of interconnected VoIP service,[^6] and the concurrent Further
    Notice of Proposed Rulemaking (*Further Notice*) sought comment on
    whether CALEA obligations should be extended to providers of other
    types of VoIP services[^7] and on whether something less than full
    CALEA compliance should be required of certain classes or categories
    of facilities-based broadband Internet access providers.[^8] The
    *First R&O* stated: "In the coming months, we will release another
    order that will address separate questions regarding the assistance
    capabilities required of the providers covered by today's Order
    pursuant to section 103 of CALEA.[^9] This subsequent order will
    include other important issues under CALEA, such as compliance
    extensions and exemptions, cost recovery, identification of future
    services and entities subject to CALEA, and enforcement."[^10]
    Today's *Second R&O* addresses these questions and issues and
    specifies what telecommunications providers must do to facilitate
    electronic surveillance of their equipment, facilities, and services
    by LEAs, pursuant to court orders or other lawful authorization.

**III. DISCUSSION**

6.  *Introduction*. In this *Second R&O*, we first examine the
    obligations of facilities-based broadband Internet access and
    interconnected VoIP providers to implement CALEA compliance
    solutions under section 103 of the statute, including solutions
    based on either CALEA "safe harbor" standards or the use of trusted
    third parties. We next examine the scope of relief available to
    telecommunications carriers pursuant to CALEA sections 107(c) and
    109(b), issue new guidelines to govern the filing and evaluation of
    petitions associated with those rule sections, and dispose of
    pending section 107(c) petitions. Third, we address CALEA
    enforcement issues, both generally and with specific regard to
    facilities-based broadband Internet access and interconnected VoIP
    providers, including the filing of reports by these providers to
    ensure their timely compliance with the assistance capability
    requirements of CALEA section 103. Fourth, we examine CALEA cost
    issues and specify cost recovery mechanisms for wireline, wireless,
    and other telecommunications carriers. Fifth, we specify a date for
    facilities-based broadband Internet access and interconnected VoIP
    providers to comply with CALEA system security requirements.
    Finally, we address the CALEA compliance obligations of providers of
    future telecommunications services and technologies.

##  A. REQUIREMENTS AND SOLUTIONS {#a.-requirements-and-solutions .unnumbered}

7.  *Overview*. As we observed in the *Notice*, packet technologies are
    fundamentally different from the circuit switched technologies that
    were the primary focus of the Commission's earlier decisions on
    CALEA.[^11] Nonetheless, carriers, manufacturers and Law Enforcement
    have applied the statutory definition of call-identifying
    information (CII) in developing standards or proprietary solutions
    for packet technologies. In some cases, however, the exact
    application of these terms to packet technologies remains to be
    determined. For example, CII may be found within several
    encapsulated layers of protocols, and as a packet makes its way
    through the network of the broadband Internet access service
    provider, these providers' equipment generally do not examine or
    process information in the layers used to control packet-mode
    services such as VoIP, and in fact operate at layers below the ones
    that carry control information for broadband access services. As a
    result, broadband Internet access service providers may not be able
    to easily isolate CII.[^12]

8.  In this proceeding, we have explored the complexity of the technical
    issues regarding packet technologies to ensure that broadband
    Internet access and VoIP providers can comply with CALEA and not
    compromise the ability of LEAs to receive the information to which
    they are entitled under the statute. Specifically, as discussed in
    detail below, we probed the capabilities of broadband Internet
    access and VoIP providers to extract CII and provide it to LEAs
    under CALEA, and inquired about compliance solutions for these
    providers based upon either CALEA "safe harbor" standards or the use
    of trusted third parties. As we discuss below, the record
    demonstrates that Law Enforcement and industry have made progress
    toward the goal of achieving successful implementation of CALEA with
    regard to the deployment of packet technologies by broadband
    Internet access and VoIP providers, but this is an ongoing process.
    Although section 107(b) of CALEA allows the Commission, upon
    petition, to establish rules, technical requirements or standards
    necessary for implementing section 103 if any entity believes that
    industry-created requirements or standards are deficient, CALEA
    clearly provides that LEAs and industry work together in the first
    instance to formulate CALEA compliance standards. Accordingly, we
    will continue to monitor developments in this area as Law
    Enforcement and industry continue working together, primarily
    through various standards organizations, to develop long-term
    solutions to these complex technical issues. We also determine that
    all carriers providing facilities-based broadband Internet access
    and interconnected VoIP services must be in compliance with section
    103 of CALEA by May 14, 2007.

> **1.** **CALEA Obligations Under Section 103**

9.  *Background.* Section 103(a)(1) of CALEA requires telecommunications
    carriers to establish the capability of providing to LEAs call
    content information, pursuant to a court order or other lawful
    authorization; and section 103(a)(2) of CALEA requires
    telecommunications carriers to establish the capability of providing
    to LEAs reasonably available call-identifying information (CII),
    pursuant to a court order or other lawful authorization.[^13] In
    this section of the *Second R&O*, we discuss a carrier's obligations
    under section 103 and compliance solutions as they relate to
    broadband Internet access and interconnected VoIP services.

10. CALEA defines CII 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," but CALEA does not define "origin," "direction,"
    "destination," or "termination."[^14] The Commission has adopted
    definitions of the component terms (origin, direction, destination,
    and termination) in the statutory definition of CII in addressing
    petitions regarding standards for circuit switched networks in
    J-STD-025.[^15] However, as noted above, packet technologies are
    substantially different from the circuit switched technologies that
    were the primary focus of the Commission's earlier decisions on
    CALEA. Accordingly, in the *Notice,* we sought comment on whether
    the Commission should clarify the statutory term "call-identifying
    information" for broadband Internet access and VoIP services. We
    asked commenters to provide specific suggestions for these
    definitional issues.[^16]

11. We also invited comment as to how the Commission should apply the
    term "reasonably available" to broadband Internet access.[^17] We
    observed that the Commission has previously determined that
    information may not be "reasonably" available in circuit switched
    networks if the information is accessible only by significantly
    modifying a network, and further observed that cost concerns are
    best addressed as part of a section 107(c) analysis.[^18] We
    tentatively concluded that we should apply the same "reasonably"
    available criteria to broadband Internet access and VoIP providers;
    *i.e.*, information may not be reasonably available to those
    providers if it is accessible only by significantly modifying their
    networks. However, we recognized that, when looking at those
    providers' service architectures, it is not always readily apparent
    where CII is available. Accordingly we sought comment on these
    related issues, such as instances in which CII may be reasonably
    available from either a broadband Internet access provider or a VoIP
    provider, but not from both. We stated that, if the information is
    reasonably available from both, we would expect that both would have
    a CALEA obligation with respect to that information and would work
    cooperatively with each other and with the LEA to provide the LEA
    with all required information.[^19]

12. *Discussion*. A number of parties commented generally on the
    Commission's authority to intervene in the development of CALEA
    technical standards. Cingular notes that the U.S. Court of Appeals
    for the District of Columbia Circuit (D.C. Circuit) stated: ". . .
    Congress gave the telecommunications industry the first crack at
    developing standards, authorizing the Commission to alter those
    standards only if it found them 'deficient.'\"[^20] Cingular and
    many other parties conclude that the Commission must defer to the
    efforts of industry standards bodies to formulate standards, absent
    the filing of a petition under section 107(b) with the
    Commission.[^21]

13. With regard to the availability of CII in broadband access and VoIP
    networks, commenters generally agree that different information is
    available to different service providers, and that different parts
    of that information are "reasonably available" to different service
    providers. However, several parties identify situations in which,
    they contend, a broadband Internet access provider would not
    reasonably be able to extract CII used by non-affiliated VoIP
    providers.[^22] With regard to the Commission's tentative conclusion
    that CII may be reasonably available to a broadband access or VoIP
    provider as long as that provider's network does not have to be
    significantly modified, some parties argue that this standard is
    inappropriate for Internet applications.[^23] DOJ expresses
    particular concern about the Commission using cost considerations to
    decide what is "reasonably available" because, DOJ asserts, the
    Commission could mistakenly excuse an entire class of carriers from
    delivering a capability, even though only one or two carriers
    qualify for such relief based on non-technical considerations.[^24]
    However, industry commenters strongly disagree with DOJ regarding
    the exclusion of cost considerations from a "reasonably available"
    inquiry.[^25]

14. We note the D.C. Circuit's opinion referenced by Cingular, as well
    as the comments of both DOJ and the telecommunications industry that
    express concern about Commission intervention in the continuing work
    by Law Enforcement and industry to develop CALEA technical standards
    for broadband Internet access and VoIP services. Addressing
    analogous circumstances, the Court explained that such intervention
    "would weaken the major role Congress obviously expected industry to
    play in formulating CALEA standards."[^26] In the course of
    developing standards for CALEA compliance by broadband Internet
    access and VoIP providers, we expect that industry standard-setting
    bodies, working in concert with Law Enforcement and other interested
    parties, will develop an appropriate definition of "call-identifying
    information" in the context of broadband Internet access and VoIP
    networks as well as an appropriate definition of what constitutes
    either "reasonable availability" of CII in such networks or a
    "significant modification" of such networks. If this process proves
    unsatisfactory, any interested party may submit to the Commission a
    deficiency petition under CALEA section 107(b).[^27] We thus take no
    action on these issues at this time.[^28]

15. The *First R&O* in this proceeding[^29] established a CALEA
    compliance date of May 14, 2007 for newly covered entities and
    providers of newly covered services. USTelecom has asked the
    Commission to identify specifically all broadband Internet access
    services subject to that compliance date.[^30] To eliminate any
    possible confusion about the applicability of that deadline, we
    conclude that the public interest will be best served by applying
    the May 14, 2007 compliance date to all facilities-based broadband
    Internet access and interconnected VoIP services. We agree with
    USTelecom that applying the compliance date uniformly to these
    services is consistent with the policy objectives identified in the
    *First R&*O.[^31] We find that applying the same compliance dates to
    all providers of facilities-based broadband Internet access and
    interconnected VoIP services will avoid any skewing effect on
    competition and will prevent migration of criminal activity onto
    networks with delayed compliance dates.

16. One firm date establishes a clear goal for all carriers, equipment
    manufacturers, and law enforcement that must cooperate in the
    process of identifying, implementing and deploying solutions. One
    firm date also should encourage all interested parties to move
    quickly to develop solutions which, in turn, will benefit smaller
    carriers who face greater challenges in complying with CALEA in the
    absence of standards and the availability of compliant equipment in
    the marketplace.[^32] Thus, we reject suggestions for different
    compliance deadlines for VoIP and broadband Internet access
    services,[^33] or linking compliance deadlines to certain events or
    criteria, such as the development of standards, a Commission
    decision that a service provider is subject to CALEA, or carrier
    size.[^34]

17. We also find that May 14, 2007 is a reasonable time period for
    compliance with the Section 103 requirements.[^35] We note, at the
    outset, that VoIP standards for CALEA are nearing or are at
    completion for various technologies.[^36] Thus, manufacturers and
    carriers are in a good position to implement and deploy solutions
    for VoIP by that date, even though we recognize that VoIP providers
    who plan a nationwide deployment will need to incorporate a CALEA
    solution into numerous routers or servers or negotiate arrangements
    with numerous interconnecting carriers. We similarly conclude that
    providers of broadband Internet access services should be able to
    comply with Section 103 by May 14, 2007. Although standards for
    newer broadband Internet access technologies are yet to be
    developed, especially regarding the delivery of CII, we note that
    full content surveillance has already been addressed by standards
    groups for certain older technologies[^37] and some carriers may be
    able to rely on "passive" techniques (e.g., using probes at certain
    points throughout their network) to implement surveillance. Other
    factors should facilitate carrier compliance by that date. For
    example, some solutions will be software based, and thus carriers
    will not necessarily have the burden of deploying new equipment to
    come into compliance. Further, facilities-based broadband Internet
    access and VoIP services interconnect with the public Internet and
    public switched telephone network (PSTN), respectively. Thus,
    broadband access architectures and protocols are compatible with
    standards used for the Internet and VoIP architectures and protocols
    are compatible with standards used for the PSTN, providing a
    foundation upon which CALEA solutions for broadband access and VoIP
    services can be developed.[^38]

> **2. Compliance Solutions Based on CALEA "Safe Harbor" Standards**

18. *Background.* In the *Notice*, the Commission invited comment on a
    variety of industry standards for packet-mode technologies 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 section 103 of CALEA. We noted
    that, over the past several years, various organizations have been
    developing standards for various types of packet technologies that
    support a variety of applications used in both wireline and wireless
    networks. We stated that these standards could serve, pursuant to
    section 107(a) of CALEA, as safe harbors for section 103 compliance
    by telecommunications carriers. Section 107(a) is titled "Safe
    Harbor" and subsection 107(a)(2) provides: "A telecommunications
    carrier shall be found to be in compliance with the assistance
    capability requirements under section 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 section 103."[^39]
    We noted that the standards process is ongoing in several different
    venues, with some standards already having undergone modification
    and new ones under development, and that compliance with a safe
    harbor standard is not required by CALEA.[^40]

19. In the *Notice*, we also noted Law Enforcement's assessment that
    packet-mode standards that have been published are deficient. We
    stated our belief that underlying this assessment are Law
    Enforcement's assumptions that the definition of CII can be clearly
    applied to packet networks, that information so identified is
    "reasonably available" to the carrier, and that the provision of the
    information to LEAs by the carrier is "reasonably achievable." We
    further noted that the Telecommunication Industry Association
    disagrees with Law Enforcement's assessment.[^41] We asked 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 section 103. We made
    clear, however, that we did not intend to inhibit the ongoing work
    by standards organizations, carriers, and manufacturers to develop
    and deploy CALEA-compliant facilities and services. We recognized
    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 section 103, unless the Commission takes specific
    action in response to a petition.[^42]

20. In the *Notice*, therefore, we invited comment as to whether there
    is any need to define what constitutes publicly available technical
    requirements or standards adopted by an industry association or
    standard-setting organization, and sought comment regarding the
    appropriateness of available standards and specifications to be used
    as safe harbors for packet-mode technologies for purposes of CALEA.
    We observed that it appears that any group or organization could
    publish a set of technical requirements or standards and claim it to
    be a safe harbor, and we requested comment on whether we should
    define what constitutes publicly available technical requirements or
    standards adopted by an industry association or standard setting
    organization.[^43] We also sought comment on the appropriate format
    to be used for the transmission of CII data to LEAs. We noted that,
    when broadband telephony (including VoIP) CII is provided to LEAs,
    they may have concerns with the format of the electronic interface
    used to provide the CII. We requested comment on whether the CII
    should be converted into a format preferred by LEAs.[^44]

21. *Discussion.* No specific deficiencies in any packet-mode standard
    were cited by any commenter. Rather, there was a consensus to allow
    the standards process to proceed and to resolve issues with
    deficiency petitions.[^45] In fact, both industry commenters and DOJ
    note the appropriateness of this process.[^46] Further, industry
    commenters observe that Law Enforcement has not filed a deficiency
    petition with respect to any packet-mode standard.[^47] Similarly,
    with regard to whether the Commission should seek to determine the
    industry bodies that are appropriate to generate safe harbor
    standards, there is broad consensus in the record that we should
    not.[^48] Finally, with regard to the issue of the format of CII to
    be provided to LEAs, there was a difference of opinion among
    commenters as to whether a single format is appropriate,[^49] but no
    one recommended that the Commission determine this issue in advance
    of industry.

22. Consistent with a broad range of comments, we find that it would be
    premature for the Commission to pre-empt the ongoing industry
    process to develop additional standards for packet-mode
    technologies. We believe that industry organizations, whose meetings
    are generally open to all interested parties -- including LEAs --
    can best develop those standards, just as they previously developed
    circuit switched standards. Further, given the diversity of
    technologies supporting communications services and the breadth of
    organizations involved both domestically and internationally in
    developing packet-mode standards, we find it both infeasible and
    inappropriate to specify the organizations qualified to develop
    standards that may be used as "safe harbors." Finally, we find no
    reason to become involved at this time in the technically complex
    issue of determining the appropriate format to be used for the
    transmission of broadband CII data to LEAs. Rather, for all of these
    technical issues, we find that the industry standards process
    remains the preferred forum. We note again, however, to the extent
    that any party perceives a problem with an industry developed
    packet-mode standard, it may file with the Commission a deficiency
    petition under section 107(b) of CALEA.

    **3.** **Compliance Solutions Based on a Trusted Third Party**

23. *Background.* In the *Notice*, we sought comment on the feasibility
    of using a trusted third party (TTP) approach to extract CII and
    content from packets.[^50] Under this approach, a TTP would operate
    a service bureau with a system that has access to a carrier's
    network equipment and remotely manage the intercept process for the
    carrier.[^51] We noted that the TTP could either rely on a mediation
    device to collect *separated* call content and CII from various
    points in the carrier's network and deliver the appropriate
    information to a LEA, or could rely on an external system to collect
    *combined* call content and CII and deliver appropriate information
    to the LEA.[^52] In the *Notice*, we focused on the external system
    approach which, we noted, could analyze the combined information and
    provide the LEA only that information to which it is entitled.[^53]
    We sought comment on whether an external system would be an
    efficient method to extract information from packets. We stated that
    external systems might provide economies of scale for small
    carriers, and asked about the approximate relative costs of internal
    versus external systems for packet extraction.[^54]

24. We recognized that tension could develop between relying on a TTP
    model and relying on safe harbor standards. For example, we inquired
    whether, if a TTP approach makes CII "reasonably" available to a
    telecommunications carrier, a standard that allows a carrier to
    provide only the information it uses to process a packet should be
    considered a safe harbor if a LEA would not have all
    call-identifying information for the communication.[^55] We also
    recognized that reliance on a TTP might shift the burden now shared
    by carriers and manufacturers in complying with CALEA.[^56] We noted
    that the financial responsibility for funding a TTP approach could
    follow several models: the TTP could be owned by the packet service
    provider or a LEA, or it could be an independent surveillance
    service provider who contracts with individual carriers.[^57]
    Finally, we sought comment on how a telecommunications carrier that
    relies on a TTP would meet its obligations under section 103(a) of
    CALEA to protect the privacy and security of communications and CII
    not authorized to be intercepted, as well as to protect information
    regarding the government's interception of communications and access
    to CII.[^58]

25. *Discussion.* Commenters agree that use of a TTP should be an option
    available to broadband access and VoIP providers.[^59] Some contend
    that a TTP approach will result in cost savings,[^60] while others
    express skepticism that this approach will be more cost-effective
    than an in-house approach.[^61] DOJ expresses concern that the use
    of TTPs by service providers may diminish providers' incentives to
    find cost-effective intercept solutions and that providers could
    attempt to use TTPs to shift their CALEA financial responsibilities
    to LEAs.[^62] However, SBC asserts that LEAs are required to
    compensate service providers for certain surveillance costs,
    irrespective of whether those providers choose to use a TTP.[^63]
    Regarding the use of TTP capabilities to determine which features of
    a carrier's packet network are reasonably available for standards
    purposes, DOJ and many industry commenters agree that those
    capabilities should not determine reasonable availability.[^64] Some
    parties express privacy concerns about TTPs;[^65] however, others
    note that there are privacy obligations on carriers due to statutes
    other than CALEA, and that TTPs already deal with customer-private
    data, including information needed to support customer billing and
    to control Internet spam.[^66]

26. The record indicates that TTPs are available to provide a variety of
    services for CALEA compliance to carriers, including processing
    requests for intercepts, conducting electronic surveillance, and
    delivering relevant information to LEAs. Given the effectively
    unanimous view of commenters that the use of TTPs should be
    permitted but not required, we conclude that TTPs may provide a
    reasonable means for carriers to comply with CALEA, especially
    broadband access and VoIP providers and smaller carriers. We
    emphasize, however, that if a carrier chooses to use a TTP, that
    carrier remains responsible for ensuring the timely delivery of CII
    and call content information to a LEA and for protecting subscriber
    privacy, as required by CALEA. Thus, a carrier must be satisfied
    that the TTP\'s processes allow the carrier to meet its obligations
    without compromising the integrity of the intercept.[^67] Carriers
    will not be relieved of their CALEA obligations by asserting that a
    TTP\'s processes prevented them from complying with CALEA. We note
    DOJ's concern about carriers attempting to use TTPs to shift costs
    to LEAs, but we make no decision here that would allow carriers who
    choose to use a TTP to shift the financial responsibility for CALEA
    compliance to the Attorney General under Section 109 (*see*
    discussion on cost recovery, *infra*). We will evaluate whether the
    availability of a TTP makes call-identifying information
    "reasonably" available to a carrier within the context of section
    103 in acting on a section 109 petition that a carrier may file
    (*see* discussion on section 109 petitions, *infra*). As noted by
    several commenters, telecommunications carriers and manufacturers
    have legally-mandated privacy obligations, and we take no action
    herein to modify those obligations based on potential broadband
    access and VoIP provider use of TTPs.[^68] Finally, in accord with
    the consensus of comments, we will defer to standards organizations
    and industry associations and allow them to determine the degree to
    which the ability of a TTP external system to extract and isolate
    CII makes that information reasonably available for purposes of
    defining CALEA standards and safe harbors.

    **B. SECTIONS 107(C) AND 109(B) PETITIONS**

27. In this section of the *Second Report and Order*, we address the
    scope of relief available to telecommunications carriers pursuant to
    CALEA sections 107(c)(2) and 109(b); clarify guidelines to govern
    the filing and evaluation of petitions filed under these two
    sections; and dispose of pending section 107(c)(2) petitions. As
    discussed below, under the express terms of the statute, all
    telecommunications carriers subject to CALEA must comply with its
    mandate. Sections 107(c) and 109(b) provide only limited and
    temporary relief from CALEA compliance requirements; they are
    "complementary provisions that serve different purposes."[^69]

28. Due to the time limitations set forth in the CALEA statute,
    telecommunications carriers may not use section 107(c)(1) to obtain
    extensions of the compliance deadline in connection with most packet
    services.[^70] We find that it would be inconsistent with the
    express time limitations of section 107(c) for the Commission to
    grant 107(c) extension relief to equipment, facilities or services
    deployed after the effective date of CALEA pursuant to other CALEA
    provisions, section 229 of the Communications Act, or section 706 of
    the Telecommunications Act of 1996. We also find that, to obtain
    section 109(b)(1) relief, in connection with a given assistance
    capability requirement under section 103, a telecommunications
    carrier must demonstrate that it undertook active and sustained
    efforts to come into compliance with that requirement, and that
    compliance could not reasonably be achieved without "significant
    difficulty or expense."[^71] As a result, telecommunications
    carriers filing section 109(b) petitions face a high burden to
    obtain relief.

29. In the case of packet-mode compliance requirements addressed in this
    *Second Report and Order*, we expect that telecommunications
    carriers will work diligently until the end of the 18-month
    compliance period, established in the *First Report and Order*, to
    implement an appropriate packet-mode CALEA solution. Once the
    compliance period expires, telecommunications carriers seeking
    relief pursuant to section 109(b) will be expected to document the
    efforts they undertook throughout the 18-month compliance period to
    achieve CALEA compliance and to demonstrate how the solution for
    which they wish to receive cost recovery relief constitutes a
    "significant difficulty or expense." Because section 109(b) is not a
    compliance extension device, however, the filing of a section 109(b)
    petition will not, by itself, toll the compliance date.

30. Specifically, in this section, we find that:

-   Section 107(c)(1) may not be used by telecommunications carriers
    seeking extensions for equipment, facilities, and services
    (hereinafter "facilities") *deployed on or after* October 25, 1998
    (the effective date of the CALEA section 103 and 105 requirements).

-   Section 109(b)(1) does not itself authorize the Commission to grant
    a telecommunications carrier an extension of the CALEA compliance
    deadlines.

-   Section 109(b)(1) imposes a high burden of proof for
    telecommunications carriers to demonstrate that they made reasonable
    efforts to develop CALEA solutions and that none of them are
    reasonably achievable. In the absence of CALEA compliance standards
    or industry solutions, a petitioner must demonstrate that it
    exercised a high degree of due diligence in order to develop its own
    solution, but was unable to implement this solution because of a
    "significant difficulty or expense."

-   Office of Management and Budget (OMB) approval of the paperwork
    collection requirements of this *Second Report and Order* is
    required. Once approval is received, we will issue a public notice
    setting forth a deadline that will require all telecommunications
    carriers who have pending section 107(c)(1) petitions currently on
    file with the Commission to inform the Commission whether, pursuant
    to our actions taken here, such petitions concern "equipment,
    facilities, or services" deployed prior to October 25, 1998.

-   Once OMB approval is received, we will issue a public notice setting
    forth a deadline that will require all telecommunications carriers
    providing facilities-based broadband Internet access or
    interconnected VoIP services to file monitoring reports with the
    Commission that briefly describe steps that they are taking to come
    into compliance with CALEA section 103. We also will issue a public
    notice to notify carriers of OMB approval of paperwork collection
    requirements for filing petitions under sections 107(c) and 109(b).

> **1. Section 107(c)(1) Relief**
>
> **a. Section 107(c)(1) Does Not Apply to Any Equipment, Facility, or
> Service Deployed On or After October 25, 1998**

31. We adopt our tentative conclusion that section 107(c)(1)'s
    unambiguous language expressly limits extensions to cases where the
    petitioning telecommunications carrier proposes to install or
    deploy, or has installed or deployed, its "'equipment, facility, or
    service *prior to the effective date of*

*section 103* ...,'[^72] *i.e*., prior to October 25, 1998."[^73] Given
this limitation, a section 107(c) extension is not available to cover
equipment, facilities, or services installed or deployed on or after
October 25, 1998. Commenters failed to present any other reasonable way
to read this section, and we reject arguments by commenters that the
Commission should nonetheless ignore Congress's limited grant of
authority to entertain CALEA extension petitions and look to other
statutes for authority to grant extensions for facilities deployed after
Congress's cut-off date.

32. We reject commenters' argument that the Commission could entertain
    extension petitions pursuant to statutes other than section 107(c),
    including CALEA section 109(b)(1) and section 706 of the
    Telecommunications Act of 1996. [^74] While we agree that section
    107(c)(1) does not appear to prohibit the Commission from exercising
    authority under another statute, we find it unlikely that Congress
    intended the Commission to do so. The language of section 107(c)(1)
    is very specific as to what equipment, facilities, and services are
    covered. Congress determined that, effective October 25, 1998,
    telecommunications carriers should incorporate a CALEA compliance
    plan into the design of any new facilities deployments in so far as
    they are not exempt from CALEA.[^75] To the extent that, in
    hindsight, after exercising due diligence, a specific CALEA
    compliance plan was not reasonably achievable due to a "significant
    expense" or "significant harm,"[^76] telecommunications carriers
    could then seek relief pursuant to section 109(b)(1). Therefore, in
    designing sections 107(c)(1) and 109(b)(1), Congress appears to have
    balanced carefully what it found to be a reasonable compliance
    period against a firm deadline for CALEA compliance. If Congress had
    intended for the Commission to continue granting extension petitions
    after October 25, 1998, we find it unlikely that Congress would have
    placed the time limitations in section 107(c)(1).

33. To interpret other statutes to grant the Commission CALEA extension
    authority would undermine Congress's intent that, after a reasonable
    compliance period, all telecommunications carriers would comply with
    their lawful CALEA obligations. Thus, we reject commenters'
    arguments that CALEA section 109(b)(1), section 706 of the
    Telecommunications Act of 1996, and section 229(a) of the
    Communications Act provide the Commission with authority to grant
    extension petitions for facilities *deployed on or after* October
    25, 1998. First, although we believe that the Commission has broad
    discretion under CALEA section 109(b)(1)(K) to impose conditions on
    relief granted by that section, we disagree with Global Crossing
    that the Commission should use that section to grant extension
    relief given

the express limitation in section 107(c)(1).[^77] Second, we disagree
with OPASTCO[^78] that the Commission should employ section 706 as
overriding statutory authority, because we find that section 706's
directive that the Commission encourage the deployment of "advanced
telecommunications capability"[^79] is consistent with a criterion that
the Commission must examine in a section 109(b)(1) petition.[^80]
Because section 109(b)(1) directs the Commission to balance this one
policy objective against 10 other factors, we decline to rely solely on
one factor to the exclusion of all others. Third, we disagree with
commenters who argue that the Commission has broad authority to
entertain extension petitions under section 229(a) of the Communications
Act,[^81] which is the provision that grants the Commission authority to
implement CALEA. We believe that, where Congress has specifically
limited Commission extension authority in the CALEA statute itself, it
would be inappropriate to employ section 229(a) to nevertheless find
this authority.[^82]

**b. Contents of Section 107(c)(1) Petitions**

34. We note that participation in the FBI's Flexible Deployment Program
    has permitted even small and rural telecommunications carriers to
    work with LEAs to develop circuit-mode CALEA compliance
    solutions.[^83] Packet-mode telecommunications carriers, however,
    are still in a much earlier stage of CALEA deployment. Our finding
    today that section 107(c)(1) is not available for facilities
    deployed on or after October 25, 1998 will compel most of these
    telecommunications carriers to implement CALEA compliant solutions.
    To the extent that telecommunications carriers deployed packet-mode
    facilities prior to this date, we expect those telecommunications
    carriers to follow the guidelines set forth below for section
    107(c)(1) petitions.

35. *Telecommunications carriers that deployed circuit-mode facilities
    prior to October 25, 1998.* For this class of telecommunications
    carriers, we adopt the *Notice's* proposal that petitions
    contain (1) an explanation for why an extension is necessary, (2) a
    compliance plan setting forth specific dates for compliance no later
    than two years after the petition's filing date,[^84] (3) a
    description of petitioner's "due diligence" attempts to become CALEA
    compliant since June 30, 2002,[^85] and (4) information satisfying
    the information requests attached in Appendix F to this *Second
    Report and Order*.[^86] Such information will enable us to better
    evaluate whether a telecommunications carrier merits an extension.
    We decline to adopt our tentative proposal that a circuit-mode
    telecommunications carrier that participates in the FBI's Flexible
    Deployment Program should be deemed *de jure* to meet the section
    107(c)(1) standard. Upon consideration of its comments, we agree
    with DOJ that section 107(c) requires more than enrollment in Flex
    Deployment.[^87] We will consider enrollment plus the other items
    included in our instructions in determining whether section 107(c)
    relief is appropriate.[^88] As in the past, upon the filing of a
    section 107(c)(1) petition, we will continue to grant a provisional
    extension for a period of two years unless or until we issue an
    order that states otherwise.

36. We reject assertions that our section 107(c)(1) approach is overly
    burdensome.[^89] We interpret section 107(c)(1) so that
    telecommunications carriers may minimize the statutory burden
    themselves if they proactively seek CALEA solutions. Commenters
    argue that telecommunications carriers, especially small ones, face
    particular challenges, including, for example, lack of clout to
    negotiate with manufacturers and lack of resources.[^90] We find
    that section 107(c) allows us to take into account the particular
    situation of a telecommunications carrier, including its bargaining
    power and financial resources, when analyzing whether CALEA
    compliance is "not reasonably achievable through application of
    technology available within the compliance period."

37. *Telecommunications carriers that deployed packet-mode facilities
    prior to October 25, 1998.* We adopt the *Notice'*s proposal that,
    to obtain an extension of time, a packet mode telecommunications
    carrier must provide documentation setting forth (1) an explanation
    why an extension of time is necessary, (2) a compliance plan
    including specific dates for compliance no later than two years
    after the petition's filing date, (3) a description of petitioner's
    "due diligence" attempts to become CALEA compliant since November
    19, 2001, *i.e*., the date mandated for packet-mode CALEA compliance
    by the Commission's September 28, 2001 Public *Notice*,[^91] and (4)
    information satisfying the information requests attached in Appendix
    F hereto.[^92] Other than arguments of burden, which we discuss
    above, commenters failed to provide convincing evidence or arguments
    to show why the Commission should depart from its proposal in the
    *Notice*.

> **2. Section 109(b)(1) Relief**

38. In this section, we affirm the *Notice*'s tentative conclusions that
    "Congress anticipated that section 109(b)(1) would be used in
    extraordinary cases by telecommunications carriers facing
    particularly high CALEA-related costs and difficulties."[^93] We
    first describe below the scope of relief granted under section
    109(b)(1) and its relationship to other CALEA provisions. Second, we
    find that a petitioner must meet a high burden of proof to satisfy
    section 109(b)(1) and may not use the absence of available solutions
    as the sole basis for section 109(b)(1) relief. Third, we find that
    a petitioner must exercise due diligence to present a specific
    solution or a pathway designed to reach a specific solution.
    Finally, we explain how we will weigh section 109(b)(1)'s eleven
    factors in evaluating a petition.

> **a. Scope of Section 109(b)(1) Relief and Its Relationship To Other
> CALEA Sections**

39. *Section 109(b)(1) relief shifts the burden of paying for a specific
    CALEA solution to DOJ.* Section 109(b)(1) is a mechanism for a
    telecommunications carrier to recover CALEA compliance costs from
    DOJ if the telecommunications carrier can demonstrate that
    compliance with CALEA capability requirements is not "reasonably
    achievable." Section 109(b)(1) defines "reasonably achievable" to
    mean that compliance would impose a "significant difficulty or
    expense" on the telecommunications carrier.[^94] If the Commission
    grants a section 109(b)(1) petition, the only relief that a
    telecommunications carrier receives is the following: the
    telecommunications carrier may, pursuant to section 109(b)(2)(A),
    request DOJ to pay for the additional reasonable costs for making
    CALEA compliance reasonably achievable. DOJ may then agree to pay
    for these costs. If DOJ declines to pay for these costs, then the
    telecommunications carrier "shall be deemed to be in compliance"
    with the capability requirements for the equipment, facilities,
    and/or services that were the subject of the section 109(b)(1)
    petition.[^95]

40. Section 109(b)(1) neither compels a telecommunications carrier to
    adopt a specific CALEA solution nor requires DOJ to pay for the
    telecommunications carrier's preferred solution. As discussed above,
    under section 103, a telecommunications carrier is entitled to
    implement whatever solution it believes best suits its network
    needs.[^96] However, to recover costs from DOJ, a telecommunications
    carrier must satisfy the obligations set forth in section 109(b)(1).
    This means that the telecommunications carrier must demonstrate that
    compliance would impose a significant difficulty or expense.[^97] If
    there is a reasonable means of compliance available, even if it is
    not the telecommunications carrier's preferred solution, then the
    Commission may find that a less expensive, alternative solution
    would not impose a significant difficulty or expense and deny the
    petition. Section 109(b)(1) makes no reference to the solution
    preferences of a telecommunications carrier -- rather it focuses on
    whether compliance with section 103 would impose a "significant
    difficulty or expense." A telecommunications carrier that fails to
    make this showing may not request payment from DOJ. If, on the other
    hand, the Commission finds that compliance is not reasonably
    achievable within the meaning of section 109(b), DOJ has the option
    to pay the appropriate costs of whatever compliance solutions DOJ
    deems appropriate.

41. *Section 109(b)(1) relief terminates when the equipment, facilities
    or services undergo a substantial replacement, modification or
    upgrade.* As discussed in more detail below, a section 109(b)(1)
    petition must explain with specificity the equipment, facility, or
    service for which the petitioner seeks relief.[^98] The Commission's
    order granting section 109(b)(1) relief will specify what equipment,
    facility, and/or service is covered by the order. Once that
    equipment, facility, or service is replaced, significantly upgraded
    or otherwise undergoes major modification, the carrier is no longer
    relieved of its CALEA obligations and the replacement must comply
    with section 103.[^99] To obtain section 109(b)(1) relief for the
    modified equipment, the telecommunications carrier would have to
    file a new 109(b)(1) petition.[^100]

42. *Section 109(b)(1) relief does not include extensions of time.*
    Section 109(b)(1) is a cost recovery vehicle. Section 107(c)(1) is
    the CALEA provision that addresses extensions of time. As discussed
    in Section III.B.1, *supra*, Congress determined that
    telecommunications carriers cannot seek extension relief for
    facilities deployed on or after October 25, 1998.

**b. The Section 109(b)(1) Burden of Proof**

43. We affirm the *Notice*'s tentative conclusion that a
    telecommunications carrier faces a high burden of proof in order to
    be relieved of its obligations to pay for CALEA compliance.[^101]
    Specifically, section 109(b)(1) requires a petitioner to
    demonstrate, with respect to each section 103 assistance capability
    requirement for which it seeks relief, that it has examined all
    possible solutions and that all of these solutions would impose a
    significant difficulty or expense on the petitioner. This means that
    if the Commission is aware of a CALEA solution that the
    telecommunications carrier has not explored and covered in its
    petition, the Commission will likely dismiss the section 109(b)(1)
    petition as *prima facie* insufficient.[^102] In its petition, the
    telecommunications carrier must explain with specificity the
    possible CALEA solution and the significant difficulty or expense
    that that solution would impose on the telecommunications carrier so
    that the Commission and later DOJ may render their respective
    determinations, under sections 109(b)(1) and 109(b)(2)(A). We adopt
    the tentative conclusion in the *Notice* that telecommunications
    carriers may not rely solely on the absence of industry standards
    and solutions under section 109(b)(1)(K) as a basis for section
    109(b)(1) relief.[^103]

44. We further adopt our tentative conclusion that a section 109(b)(1)
    petition must seek relief for "precisely identified 'equipment
    facilities, or services.'"[^104] In this regard, a petitioner must
    describe with specificity how, in its due diligence, the
    telecommunications carrier made reasonable efforts to identify a
    specific solution or a pathway to a specific solution. Without this
    showing, the Commission will have no factual basis to evaluate
    whether a telecommunications carrier has satisfied the requirements
    of section 109(b).

45. In addition, to the extent that multiple solutions to a particular
    CALEA capability requirement exist, the petitioner must demonstrate
    that it would suffer significant difficulty or expense if it were to
    implement any of them. We believe that the statute requires this
    showing for at least two reasons. First, the inquiry under section
    109(b)(1) is whether CALEA compliance imposes a specific harm, not
    whether a telecommunications carrier is unable to institute its
    solution of choice. If alternative, less expensive solutions exist
    that are reasonably achievable, then the telecommunications carrier
    is not entitled to a section 109(b)(1) determination that CALEA
    compliance would impose a significant difficulty or expense. Second,
    it would be unreasonable to read the statute to require DOJ to pay
    the costs for a more expensive solution if a less expensive solution
    exists. If multiple solutions exist, DOJ should have the option to
    pay for the least expensive one available.[^105]

**c. Petitioner Due Diligence Requirement**

46. In the *Notice*, the Commission tentatively concluded that section
    109(b)(1) petitioners will be expected to demonstrate active and
    sustained efforts at developing and implementing CALEA solutions for
    their operations, *i.e*., regardless of whether CALEA solutions for
    packet-mode are generally available.[^106] We explained this "due
    diligence" showing as requiring petitioners to submit detailed
    information about discussions and negotiations with switch
    manufacturers, other equipment manufacturers, and TTPs, both before
    and after the FBI announced the termination of the Flexible
    Deployment Program in connection with packet-mode technology. We
    tentatively concluded that unless we are persuaded that petitioners
    have engaged in sustained and systematic negotiations with
    manufacturers and third-party providers to design, develop, and
    implement CALEA solutions, we should reject submitted
    petitions.[^107]

47. Many commenters disagreed with our analysis and conclusions, but
    none persuasively demonstrated that section 109(b)(1) excludes
    consideration of due diligence and none persuade us that
    consideration of due diligence is unnecessary for a proper
    interpretation and application of section 109(b)(1). Basically, the
    due diligence requirement is necessary to ensure that
    telecommunications carriers demonstrate the showing required by
    section 109(b)(1). Section 109(b)(1) requires the Commission to
    determine, upon petition, whether compliance with section 103 is
    reasonably achievable for "any equipment, facility, or service
    installed or deployed after January 1, 1995." Unless the evidence
    demonstrates that the petitioner has comprehensively considered how
    to become compliant with CALEA section 103, it would be difficult
    for the Commission to conclude that section 103 compliance is not
    reasonably achievable. Simply put, the evidence must demonstrate
    that alternative solutions were not reasonably achievable.[^108]

48. To meet this requirement, the petitioner may need to compare, for
    example, the cost of making annual payments to a trusted third party
    for a CALEA service for a number of years to the cost of purchasing
    equipment and/or systems up front that enable the petitioner to meet
    CALEA capability requirements themselves. Some solutions may include
    both elements: leasing capabilities and buying equipment. In
    addition, the petitioner may also seek to include recurring
    CALEA-specific operations costs in the cost calculation. Thus, it is
    necessary to capture the impact of delayed vs. immediate
    expenditures in calculating the total cost of any solution, and to
    express the cost of alternative solutions in comparable dollars. A
    calculation of the (net) present value or present worth of
    expenditures of the solution is a recognized way to accomplish this
    dual purpose.[^109]

49. Our analysis and conclusions here do not compel telecommunications
    carriers to adopt any particular "equipment, facility, service, or
    feature" or "any specific design of equipment, facilities, services,
    features, or system configurations."[^110] Service providers are
    free to configure and build their systems any way they choose. But a
    service provider that seeks cost recovery relief pursuant to section
    109(b)(1) must demonstrate that CALEA compliance *per se* is not
    reasonably achievable. A petition must include persuasive evidence
    that the petitioner cannot afford to achieve compliance through
    network upgrades or equipment retrofits. It must include a
    demonstration that the petitioner's preferred CALEA solution is not
    reasonably achievable and that no alternative CALEA solution is
    reasonably achievable, including alternative manufacturer-provided
    service packages, services provided by TTPs, and sharing
    arrangements with other service providers.[^111]

50. A due diligence showing is particularly necessary to enable us to
    consider whether section 109(b)(1) relief is appropriate in cases
    where CALEA standards have not been developed and/or CALEA solutions
    are not generally available. We reject the idea that we may grant
    section 109(b)(1) relief merely because standards have not been
    developed or solutions are not generally available.[^112] We
    therefore adopt our tentative conclusion that the requirements of
    section 109(b)(1) would not be met by a petitioning
    telecommunications carrier that merely asserted that CALEA standards
    had not been developed, or that solutions were not readily available
    from manufacturers.[^113]

51. Nevertheless, we emphasize that section 109(b)(1)'s due diligence
    analysis is fact-specific and will take into account, for example,
    the resources of the petitioner. We recognize that some
    telecommunications carriers, particularly small telecommunications
    carriers, may conclude that they cannot afford the efforts required
    to develop their own solutions. Thus, for example, a small rural
    telecommunications carrier might provide evidence that the lack of
    industry standards and solutions, coupled with its lack of financial
    resources, would justify a finding that the small telecommunications
    carrier had met its due diligence requirements by proffering only
    one solution, so long as it is a *bona fide* solution.[^114]

52. We expect that significant progress in developing CALEA standards
    and solutions for broadband Internet access and interconnected VoIP
    services will be achieved during the 18-month compliance period. We
    expect that few if any petitioners could successfully demonstrate
    the due diligence necessary to support a section 109(b)(1) petition
    until the close of the transition. We in fact expect broadband
    Internet access and interconnected VoIP providers to utilize that
    transition period as an opportunity to promote the development of
    CALEA standards and solutions. Failure to utilize this opportunity,
    or to document steps taken to promote CALEA compliance throughout
    the transition period, will seriously damage a petitioner's chances
    of obtaining section 109(b)(1) relief.[^115]

**d. Section 109(b)(1)'s Eleven Criteria**

53. In determining whether a telecommunications carrier has successfully
    demonstrated that compliance with a CALEA section 103 assistance
    capability requirement is not reasonably achievable pursuant to
    section 109(b)(1), the Commission must examine the 11 statutory
    criteria set out in section 109(b)(1). We affirm the Commission's
    tentative conclusion in the *Notice* that the Commission need not
    weigh equally all 11 criteria, and its tentative conclusion that we
    should assign greater weight to national security and public
    safety-related concerns.[^116] We also conclude that we should
    require petitioners to include in their showing precisely identified
    CALEA section 103 capability requirements and "equipment,
    facilities, or services" for which relief is sought. We affirm our
    finding in the *Notice* that under the requirements of section
    109(b)(1)(B) and 109(b)(1)(D), petitioners must include a thorough
    analysis of precisely identified costs to satisfy CALEA obligations,
    as well as their effects on local service ratepayers, where
    relevant; general allegations that projected costs were "too high"
    or unreasonably burdensome will not suffice. We direct parties'
    attention to the cost discussion in the previous CALEA Second Report
    and Order, and we reaffirm our determination there that costs not
    directly related to CALEA compliance may not be included in section
    109(b) petitions.[^117]

54. To provide further guidance as to how the Commission will apply
    consideration of the eleven section 109(b)(1) evaluative criteria in
    particular cases, we provide the discussion set out below. We
    nevertheless caution interested persons that these guidelines are
    intended to provide general guidance only. The Commission will
    examine each section 109(b) petition based on the facts contained
    therein and in the context of a specific analysis of national
    security factors and other factors that exist at that time. Section
    109(b(1) directs the Commission to examine the following criteria:

\(A\) "[The effect on public safety and national security.]{.underline}"
Because the purpose of the CALEA statute is to ensure public safety and
national security, this criterion is critically important. In a
particular case, the Commission will consider all relevant evidence
submitted by LEAs per this criterion, as well as recommendations about
how this criterion should be applied to submitted evidence and what
weight should be assigned to such evidence in our particular
deliberations. We will also consider all relevant evidence submitted by
a petitioner, including evidence about the number of electronic
surveillance requests it has received from LEAs for the five (5) year
period prior to submission of its section 109(b) petition.[^118] We will
consider this latter evidence in connection with evaluating application
of the instant criterion as well as evaluating other, cost-related
criteria set out in section 109(b)(1)(A) through (K).

\(B\) "[The effect on rates for basic residential telephone
service]{.underline}." Application of this factor affects only
evaluation of section 109(b) petitions submitted by residential
telephone service providers subject to the Commission's Part 36
regulation.[^119] Its relevance will be decisively affected by how the
Commission decides to implement jurisdictional separations policy
pursuant to the directive set out in 47 U.S.C. § 229(e)(3).[^120]

\(C\) "[The need to protect the privacy and security of communications
not authorized to be intercepted.]{.underline}" A petitioner must submit
persuasive evidence why solution(s) described in its petition could not
protect the privacy and security of customer communications. In
instances where the petition presents evidence about TTP services, the
petitioner must present persuasive evidence that the TTP(s) cannot or
will not provide privacy and security protection.

\(D\) "[The need to achieve the capability assistance requirements of
section 103 by cost-effective methods.]{.underline}" A petitioner must
submit persuasive evidence showing that all identified solutions,
including those provided by equipment vendors[^121] and other
manufacturers, TTPs, or solutions that the petitioner proposes to
develop for itself, would impose a significant "difficulty or expense"
within the meaning of the statute.[^122] In the event that there is no
industry standard or available market solution at the time that a
telecommunications carrier files its petition, the telecommunications
carrier would need to demonstrate that implementation of its own
proposed solution would impose a significant expense.

\(E\) "[The effect on the nature and cost of the equipment, facility, or
service at issue.]{.underline}" In addition to the cost showing
described in paragraph (D), the petitioner must submit persuasive
evidence demonstrating some adverse effect on its facilities.

\(F\) "[The effect on the operation of the equipment, facility, or
service at issue.]{.underline}" In addition to the cost showing in
paragraph (D), the petitioner would need to demonstrate a specific
adverse effect on its operations.

\(G\) "[The policy of the United States to encourage the provision of
new technologies and services to the public.]{.underline}" The
petitioner must submit persuasive evidence demonstrating that CALEA
requirements were preventing it from deploying a specifically identified
new technology or service, and/or persuasive evidence that imposing
CALEA requirements would require it to take a technology or service off
the market.

\(H\) "[The financial resources of the telecommunications
carrier.]{.underline}" A showing under this factor would be similar to
the showing under factor (D). The petitioner must present financial
resource documentation, including current balance sheets and a complete
analysis of debt and equity financing resources that are available. If
the particular petitioner is a small and rural telecommunications
carrier, this must include a description and analysis of all funding and
loan guarantee sources available from state and federal assistance
programs. Where relevant, all telecommunications carriers must provide
evidence showing how state and local regulation affects the availability
or use of its financial resources. For example, telecommunications
carriers regulated by state Public Utility Commissions should describe
in detail how Commission-approved depreciation schedules can be modified
to provide for capital equipment acquisition on terms more favorable
than currently negotiated and approved terms, or provide evidence that
such schedules cannot be modified. Per this criterion, the petitioner
must submit persuasive evidence that demonstrates that its current
financial resources and financial resources generally available to it
are not or would not be sufficient to prevent the imposition of
"significant difficulty or expense" as defined by CALEA section
109(b)(1).[^123]

\(I\) "[The effect on competition in the provision of telecommunications
services.]{.underline}" Under this factor, the petitioner would need to
submit persuasive evidence that demonstrate a specific and quantifiable
harm.

\(J\) "[The extent to which the design and development of the equipment,
facility, or service was initiated before January 1, 1995.]{.underline}"
This factor is self-explanatory. In most if not all cases, it will not
apply to facilities-based broadband Internet access and interconnected
VoIP.

\(K\) "[Such other factors as the Commission determines are
appropriate.]{.underline}" This provision enables the Commission to
evaluate factors that may arise on a case by case basis, that were
difficult for Congress to predict when enacting the statute, and are
difficult for the Commission to predict during a rulemaking.

55. Appendix E, attached hereto, sets forth filing instructions
    explaining the specific information telecommunications carriers
    should include in their section 109(b) petitions. Appendix E
    reflects the proposal in the *Notice*, consideration of the record
    in this proceeding, and our further analysis herein of the statute's
    requirements.

56. Some small telecommunications carriers have urged us to allow
    telecommunications carriers filing section 109(b)(1) petitions to
    pool their applications under one general application petition and,
    as a result, more efficiently present common arguments and save the
    costs of submitting individual petitions, each of which would be
    assessed the \$5200 filing fee. We conclude that this is
    inappropriate given the requirements imposed by section
    109(b)(1).[^124] Section 109(b)(1) requires a detailed presentation
    of evidence that section 103 compliance is not reasonably
    achievable. Petitioners are required to submit evidence that
    demonstrates this in connection with precisely identified services,
    equipment, and facilities. These will differ from carrier to
    carrier. Additionally, petitioners are required to identify cost and
    financial resources information that is detailed and highly
    telecommunications carrier-specific. Even if we were to accept
    jointly pooled section 109(b)(1) petitions, we would, by operation
    of the statute, need to separate each separate telecommunications
    carrier petition for individual assessment. This individual
    assessment will impose predictable costs.

> **3. Confidential Treatment of Section 107(c)(1) and Section 109(b)(1)
> Petitions**

57. In addition to highly sensitive cost and financial resources
    information, section 107(c)(1) and section 109(b)(1) petitions are
    likely to contain specific information regarding the inability of
    telecommunications equipment, facilities, and services to comply
    with CALEA standards. The facts underlying discrete section 107(c)
    and section 109(b) adjudicatory proceedings could also involve
    highly sensitive information about LEA activities. We therefore
    believe that section 107(c) and section 109(b) filings would be
    entitled to confidential treatment under the Freedom of Information
    Act (FOIA) and the Commission's rules.[^125] Accordingly, we direct
    petitioners to file their petitions under a general claim of
    confidential or proprietary protection, subject only to scrutiny by
    the Commission and the Attorney General who is consulted in section
    107(c) adjudications and is a party to all section 109(b)
    adjudications.[^126] Petitioning telecommunications carriers are not
    required to request separately confidential treatment for the
    information submitted in their petitions.[^127] However, petitioners
    must mark the top of each page of their petitions: "Confidential --
    Not for Public Inspection." We further conclude that, pursuant to
    section 0.457(g) of the Commission's rules, the information provided
    by telecommunications carriers in these CALEA proceedings will not
    be made routinely available for public inspection.[^128] No
    commenter disagrees with this approach.

> **4. Monitoring Reports**

58. In its Petition, Law Enforcement requested that the Commission
    impose a new compliance regime consisting of standardized CALEA
    compliance benchmarks for packet technologies. Under this proposal,
    limited compliance extensions generally would be granted only if
    providers of services that use packet technologies agreed to meet
    the proposed benchmarks.[^129] Most LEAs supported this proposal;
    nearly everyone else opposed it as exceeding or contravening the
    explicit terms of the statute. We decline at this time to adopt the
    Law Enforcement benchmark proposal. As we stated in the *Notice*, we
    conclude that the interpretation of CALEA that we adopt in this
    *Second Report and Order*, particularly of CALEA sections 107(c) and
    109(b), will better promote law enforcement's stated objective that
    all telecommunications carriers should become compliant with CALEA
    requirements as soon as possible.[^130]

59. Nevertheless, we share Law Enforcement's general concern that
    telecommunications carriers timely comply with CALEA for packet
    technologies. In the past, telecommunications carriers' progress in
    complying with CALEA for packet technologies was effectively
    monitored in two ways: by the FBI when it administered a Flexible
    Deployment program for packet technology, and by the Commission in
    administering section 107(c) extension petitions. The FBI's Flexible
    Deployment program no longer applies to packet technology and, as a
    consequence of our decision here, few telecommunications carriers
    will be able to seek extensions under section 107(c). With
    information from these programs no longer available, the Commission
    will have difficulty identifying, with sufficient forewarning,
    impediments to timely compliance and will have little opportunity to
    assist the industry, as appropriate, in achieving timely compliance.
    We thus conclude that all telecommunications carriers providing
    facilities-based broadband Internet access or interconnected VoIP
    services shall file a monitoring report with the Commission which
    will help the Commission ensure that providers of services that use
    packet technologies become CALEA compliant expeditiously.
    Specifically, with respect to facilities-based broadband Internet
    access providers and interconnected VoIP providers, we believe that
    a monitoring report will better ensure that they are able to meet
    the May 14, 2007 CALEA compliance deadline. A sample monitoring
    report (Form XXX) is provided in attached Appendix G to this *Second
    Report and Order*. These monitoring reports are separate and
    distinct from any section 107(c) or section 109 filings that a
    telecommunications carrier may choose to make, and will not be
    considered substitutes for seeking relief under those provisions.

60. Accordingly, we specify the following procedure for these monitoring
    reports. Once OMB approves the new paperwork collection requirements
    of this *Second Report and Order*, we will issue a public notice
    setting forth a deadline that will require that providers of all
    such services to submit to the Commission a completed Form XXX,
    briefly describing the status of its compliance for each service
    based on packet technology, *e.g.*, whether the service already
    complies, whether the telecommunications carrier will comply with an
    identified industry standard or develop an ad hoc solution, the
    steps the telecommunications carrier is undertaking to achieve CALEA
    compliance, any problems with manufacturer support or network
    installation, and the date compliance is anticipated. Completed
    Forms XXX will not be made available to the public. We will,
    however, share completed Forms XXX with DOJ/FBI so that they may
    evaluate the progress each provider of a service that uses packet
    technology is making to achieve CALEA compliance. Where necessary,
    we may request additional information from a provider regarding its
    efforts to become CALEA compliant by May 14, 2007 deadline.

61. We find that the above procedure will promote expeditious CALEA
    compliance by providers of services that use packet technologies,
    but whose services are not yet CALEA compliant. We recognize that
    this procedure will impose an increased administrative burden on
    such providers, but anticipate that this burden will be minimal. To
    minimize the burden, we have developed a relatively short reporting
    form.

> **5. Disposition of Pending Section 107(c)(1) Petitions**

62. As discussed above, we conclude that section 107(c) extension relief
    is not available for applications that include equipment, facilities
    and services installed or deployed on or after October 25, 1998.
    Accordingly, once OMB approves the new paperwork collection
    requirements of this *Second Report and Order*, we will issue a
    Public Notice setting forth a deadline by which any
    telecommunications carrier that has a section 107(c) petition on
    file with us shall file a letter that attests that its pending
    petition exclusively concerns equipment, facilities and services
    installed or deployed before October 25, 1998.[^131] The Commission
    will thereafter dismiss all non-conforming petitions and petitions
    for which clarifying letters have not been received.

##  C. ENFORCEMENT OF CALEA  {#c.-enforcement-of-calea .unnumbered}

63. In the *Notice,* we considered whether, in addition to the
    enforcement remedies through the courts available to LEAs under
    section 108 of CALEA, we may take separate enforcement action
    against telecommunications carriers, manufacturers and providers of
    telecommunications support services that fail to comply with CALEA.
    We stated that we appear to have broad authority under section
    229(a) of the Communications Act to promulgate and enforce CALEA
    rules against both common carriers and non-common carriers, and
    sought comment on this analysis. We also sought comment on whether
    sections 108 and/or 201 of CALEA impose any limitations on the
    nature of the remedy that we may impose (*e.g.* injunctive relief)
    and whether section 106 of CALEA imposes any limitations on our
    enforcement authority over manufacturers and support service
    providers.[^132]

64. Additionally, we sought comment in the *Notice* on how we would
    enforce the assistance capability requirements under section 103 of
    CALEA. To facilitate enforcement, we tentatively concluded that, at
    a minimum, we should adopt the requirements of section 103 as
    Commission rules. We asked whether, given this tentative conclusion,
    the lack of Commission-established technical requirements or
    standards under CALEA section 107(b) for a particular technology
    would affect our authority to enforce section 103. Further, we asked
    whether there are other provisions of CALEA, such as section
    107(a)'s safe harbor provisions, that the Commission should adopt as
    rules in order to effectively enforce the statute.[^133] Moreover,
    we stated in the *Notice* that we believed it to be in the public
    interest for covered carriers to become CALEA compliant as
    expeditiously as possible and recognized the importance of effective
    enforcement of our rules affecting such compliance. We sought
    comment on whether our general enforcement procedures are sufficient
    for purposes of CALEA enforcement or whether we should implement
    some special procedures for purposes of CALEA enforcement. We also
    sought comment on any other measures we should take into
    consideration in deciding how best to enforce CALEA requirements.

65. *Discussion*. DOJ strongly supports the Commission enforcing the
    CALEA rules under section 229(a) of the Communications Act. DOJ
    contends that the telecommunications industry has in many instances
    failed to cooperate with LEAs and has delayed establishing CALEA
    standards and implementing new wiretapping technologies.[^134]
    However, industry commenters contend that CALEA enforcement
    authority lies exclusively with the courts under CALEA section
    108.[^135]

66. We find that we have the authority under section 229(a) to enforce
    CALEA, as that section gives us authority to "prescribe such rules
    as are necessary to implement the requirements of the Communications
    Assistance for Law Enforcement Act." [^136] As we observed in the
    *Notice*, section 229(a) provides broad authority for the Commission
    to adopt rules to implement CALEA and, unlike section 229(b) does
    not limit our rulemaking authority to common carriers.[^137] While
    the "penalties" provision of section 229(d) refers to CALEA
    violations "by the carrier," section 229(d) does not limit the
    Commission's general enforcement authority under the Communications
    Act.[^138] We thus conclude that the Commission has general
    authority under the Communications Act to promulgate and enforce
    CALEA rules against carriers as well as non-common carriers. We also
    conclude that section 106 of CALEA does not limit our authority to
    promulgate and enforce CALEA rules against manufacturers and support
    service providers. Accordingly, we find that, contrary to commenters
    who argued that authority to enforce CALEA lies exclusively with the
    courts under CALEA section 108,[^139] we have the authority to
    prescribe CALEA rules and investigate the compliance of those
    carriers and providers subject to such rules. Additionally, under
    the Communications Act, the Commission has broad authority to
    enforce its rules. It can, for example, issue monetary forfeitures
    and cease and desist orders against common carriers and non-common
    carriers alike for violations of Commission rules.[^140]

67. We also conclude that sections 108 and 201 of CALEA do not limit the
    nature of the remedy that the Commission may impose.[^141] Whereas
    court actions under sections 108 and 201 would typically follow a
    failed attempt by a carrier to comply with an electronic
    surveillance order, the Commission may pursue enforcement actions
    against any carrier for failure to ensure that its equipment,
    facilities or services are capable of providing the assistance
    capability requirements prior to receiving an electronic
    surveillance request. Thus, the Commission's enforcement authority
    is complementary to, not duplicative of, the authority granted LEAs
    under sections 108 and 201.

68. We observe that the Commission's rules already include various CALEA
    requirements that we may enforce, including system security and
    records management requirements for all carriers subject to CALEA
    and assistance capability requirements for wireline, cellular and
    PCS carriers.[^142] Our existing rules for wireline, cellular and
    PCS carriers already state that these carriers are to comply with
    the assistance capability requirements in section 103; however, we
    have not previously codified this requirement for other carriers
    subject to CALEA. We thus adopt our tentative conclusion to codify
    this statutory requirement and thereby clarify that all carriers
    subject to CALEA are to comply, at a minimum, with the assistance
    capability requirements of section 103.[^143] This action will
    facilitate the Commission's enforcement of CALEA. We recognize that,
    in the absence of Commission action to specify more precise
    requirements in response to a section 107 (b) deficiency petition,
    as we did previously regarding J-STD-025, our rule sets forth a
    minimum requirement that carriers, manufacturers and support service
    providers may satisfy in various ways (*e.g.*, implementing an
    industry standard, ad hoc or interim solution).[^144] Nonetheless,
    this does not diminish our resolve to consider carefully a *bona
    fide* complaint that a carrier, manufacturers or support service
    provider has not provided the necessary assistance capabilities and
    to take appropriate enforcement action.

## D. COST RECOVERY ISSUES {#d.-cost-recovery-issues .unnumbered}

69. In the *Notice*, the Commission sought comment on a number of issues
    related to the recovery of CALEA compliance costs, including the
    nature of such costs and from which parties the costs could be
    recovered.[^145] The Commission also inquired into CALEA cost
    recovery pursuant to intercept statutes.[^146] The Commission
    further sought comment on whether specific cost recovery rules
    should be adopted to help ensure that small and rural carriers can
    become CALEA-compliant.[^147] Acting pursuant to section 229(e)(3)
    of the Communications Act, the Commission also referred to the
    Federal-State Joint Board on Jurisdictional Separations (Joint
    Board) the following question: whether CALEA compliance costs should
    be separated between intrastate and interstate jurisdictions, and,
    if so, how the associated costs and revenues should be
    allocated.[^148] Because of the importance of the issues, the
    Commission asked the Joint Board to issue recommendations within a
    year of the release of the *Notice*, by August 9, 2005.[^149] The
    Joint Board, however, has not yet issued its recommendation.

70. In the *Notice*, the Commission tentatively concluded that carriers
    bear responsibility for CALEA development and implementation costs
    for post-January 1, 1995 equipment and facilities.[^150] We affirm
    this tentative conclusion. Cost recovery from the federal government
    under CALEA section 109 turns on whether equipment and facilities
    were deployed before or after January 1, 1995.[^151] CALEA section
    109 placed financial responsibility on the federal government for
    CALEA implementation costs related to equipment deployed *on or
    before* January 1, 1995.[^152] If the federal government refused to
    pay for such modifications, a carrier's pre-1995 deployed equipment
    and facilities are considered CALEA compliant until such equipment
    or facility "is replaced or significantly upgraded or otherwise
    undergoes major modification" for purposes of normal business
    operations.[^153] On the other hand, for CALEA implementation costs
    associated with equipment deployed *after* January 1, 1995, CALEA
    section 109 places financial responsibility on the
    telecommunications carriers unless the Commission determines
    compliance is not "reasonably achievable."[^154] Only in that event
    may the Attorney General agree to pay carriers the "additional
    reasonable costs of making compliance . . . reasonably
    achievable."[^155] Based on CALEA's clear delineation of
    responsibility for compliance costs, we conclude that carriers bear
    responsibility for CALEA development and implementation costs for
    post-January 1, 1995 equipment and facilities, absent a finding that
    compliance is not reasonably achievable pursuant to CALEA section
    109(b).[^156]

71. In the *Notice*, the Commission acknowledged its prior statement
    regarding the ability of carriers to recover a portion of their
    CALEA capital costs through electronic surveillance order charges
    imposed on LEAs, and that this statement was made without the
    benefit of a complete and full record on the issue.[^157] The
    Commission made this observation as one of several aspects that
    mitigated the cost burden on carriers of implementing four CALEA
    punch list items.[^158] However, because we now conclude that CALEA
    section 109 provides the *exclusive* mechanism by which carriers may
    recover from law enforcement capital costs associated with meeting
    the capability requirements of CALEA section 103,[^159] the
    Commission's prior statement was incorrect to the extent it
    suggested that carriers may recover CALEA capital costs through
    intercept charges. As discussed above, CALEA specifically addresses
    the allocation of responsibility for compliance costs. CALEA section
    109 makes the federal government responsible for compliance costs
    for the period on or before January 1, 1995, and places the
    responsibility for compliance costs after January 1, 1995 on
    carriers, absent a finding that compliance is not reasonably
    achievable pursuant to CALEA section 109(b).[^160] Allowing carriers
    to recover CALEA compliance costs from the government through other
    means, such as through intercept charges, would be inconsistent with
    the cost recovery methodology set forth in CALEA section 109 because
    it would disrupt the cost burden balance between law enforcement and
    carriers carefully crafted by Congress in enacting CALEA. In short,
    as DOJ notes, it "would essentially allow carriers to do an
    'end-run' around the provisions of section 109(b) and Congressional
    intent."[^161] We therefore conclude that, while carriers possess
    the authority to recover through intercept charges the costs
    associated with carrying out an intercept that is accomplished using
    a CALEA-based intercept solution,[^162] they are prohibited by CALEA
    from recovering through intercept charges the costs of making
    modifications to equipment, facilities, or services pursuant to the
    assistance capability requirements of CALEA section 103 and the
    costs of developing, installing, and deploying CALEA-based intercept
    solutions that comply with the assistance capability requirements of
    CALEA section 103.[^163]

72. To the extent carriers do not meet the necessary criteria for
    obtaining cost recovery pursuant to section 109(b) of CALEA,[^164]
    carriers may absorb the costs of CALEA compliance as a necessary
    cost of doing business, or, where appropriate, recover some portion
    of their CALEA section 103 implementation costs from their
    subscribers.[^165] The specific provision allowing carriers to
    recover some portion of their CALEA capital costs from their
    subscribers also reinforces our conclusion that carriers may not
    recover such costs from law enforcement through intercept charges.
    To the extent that carriers are not able to recover their CALEA
    capital costs from the federal government through section 109,
    Congress provided only one other avenue for carriers to recover such
    costs, and that is from subscribers, not law enforcement. Such
    recovery from consumers, of course, will vary among
    telecommunications carriers subject to CALEA depending on certain
    factors. Rate-regulated carriers (e.g., incumbent local exchange
    carriers) cannot raise rates without first obtaining authorization
    to do so. Other carriers (e.g., Commercial Mobile Radio Services
    (CMRS) providers) can recover their costs from subscribers on a
    competitive market basis.[^166] Given this backdrop, in the
    *Notice*, we invited comment on whether a national surcharge scheme
    is feasible for carriers in their efforts to meet CALEA
    requirements.[^167] We also sought comment on whether the Commission
    would need to undertake a specific forbearance analysis under
    section 10 of the Communications Act, and whether states may
    expressly provide for or preclude the recovery of CALEA compliance
    costs.[^168]

73. We decline to adopt a national surcharge to recover CALEA costs. We
    find that it would not serve the public interest to use a national
    surcharge scheme or to implement some form of cost pooling system,
    as some commenters suggest,[^169] because such a scheme would
    increase the administrative burden placed upon the carriers and
    provide little incentive for carriers to minimize their costs. We
    therefore decline to mandate a surcharge or other specific method of
    CALEA cost recovery. We find that carriers that are not subject to
    rate regulation may choose to recover their CALEA-related costs from
    their subscribers through any lawful manner consistent with their
    obligations under the Communications Act.[^170] Section 229(e) of
    the Communications Act allows rate-regulated common carriers to seek
    to recover their federally-allocated CALEA section 103 costs from
    subscribers.[^171] As noted above, the Joint Board has not yet
    provided its recommendation as to the allocation of CALEA costs
    between the federal and state jurisdictions. After the Joint Board
    issues its recommendation, and to the extent that CALEA costs
    ultimately are allocated to the federal jurisdiction, rate-regulated
    carriers subject to the Commission's price cap rules have the
    ability to seek exogenous treatment of the federally-allocated CALEA
    costs.[^172] Carriers subject to the Commission's rate-of-return
    rules have the ability to propose rate changes that would seek
    recovery of any federally-allocated CALEA costs not already
    recovered in rates.[^173]

74. Commenters to the *Notice* also argue that carriers with smaller
    subscriber bases are less able to bear the costs of CALEA
    implementation.[^174] To the extent CALEA costs prohibit these
    carriers from reasonably achieving CALEA compliance, CALEA section
    109(b) provides a remedy.[^175] The carriers can seek a
    determination from the Commission that CALEA compliance is not
    reasonably achievable, and, upon such a determination, the Attorney
    General may agree to pay the costs of compliance for these carriers,
    or the carriers will be deemed to be in compliance.[^176]

##  E. SYSTEM SECURITY REQUIREMENTS {#e.-system-security-requirements .unnumbered}

75. In the *First R&O*, we concluded that providers of facilities-based
    broadband Internet access service and interconnected VoIP service
    newly identified as subject to CALEA under the SRP are to comply
    with the assistance capability requirements in section 103 of CALEA
    within 18 months of the

    effective date of the *First R&O*.[^177] In this *Second R&O*, we
    determine that these newly identified carriers must comply with the
    system security requirements in section 105 of CALEA and section
    229(b) of the Communications Act, as codified in the Commission's
    rules,[^178] within 90 days of the effective date of this *Second
    R&O*.[^179]

76. We find that, based on the record, 90 days is a reasonable time
    period to expect providers of facilities-based broadband Internet
    access service and interconnected VoIP service to comply with the
    Section 105 and 229(b) system security requirements, as codified in
    the Commission's rules.[^180] Thus, we require these carriers to
    file with the Commission within 90 days of the effective date of
    this *Second R&O* the policies and procedures they use to comply
    with the system security requirements as codified in our rules.
    Ninety days is the same amount of time provided by the Commission
    when it initially adopted these requirements.[^181] Timely
    compliance with these requirements will assist LEAs and the
    Commission in identifying those entities now subject to CALEA,
    provide important contact information for Commission follow-up on
    CALEA compliance, and, more importantly for LEAs, ensure that
    providers of facilities-based broadband Internet access service and
    interconnected VoIP service are adequately prepared for assisting
    LEAs in conducting lawful electronic surveillance.

    **F. FUTURE SERVICES AND TECHNOLOGIES**

77. In the *Notice*, the Commission tentatively concluded that it is
    unnecessary to adopt Law Enforcement's proposal regarding the
    Commission identifying future services and entities subject to
    CALEA.[^182] We recognized Law Enforcement's need for more certainty
    regarding the applicability of CALEA to new services and
    technologies, but expressed concerned that Law Enforcement's
    proposed approach could be inconsistent with CALEA's statutory
    intent and could create an obstacle to innovation.[^183] We noted
    that the requirements of the statute and its legislative history
    seem to support opponents' arguments that Congress did not intend
    that manufacturers or service providers would be required to obtain
    advance clearance from the government before deploying a technology
    or service that is not subject to CALEA. We also expressed concern
    that, as a practical matter, providers will be reluctant to develop
    and deploy innovative services and technologies if they must build
    in CALEA capabilities to equipment that ultimately may not be
    subject to CALEA or wait for a ruling on the statute's application
    to the new service or technology.[^184]

78. *Discussion*. In its comments to the *Notice*, DOJ argues that the
    Commission should adopt procedures to determine whether future
    services and entities are subject to CALEA. DOJ contends that it
    would be helpful for industry and LEAs to be able to seek rulings
    from the Commission regarding CALEA's applicability to a new service
    in advance of that service's introduction into the marketplace. DOJ
    concludes that the Commission should require or strongly encourage
    all providers of interstate wire or electronic communications
    services that have any question about whether they are subject to
    CALEA to seek Commission guidance at the earliest possible date,
    well before deployment of the service in question.[^185]

79. Other commenters support the tentative conclusion set forth in the
    *Notice*, contending that the public interest in innovation is not
    served by government design mandates imposed upon manufacturers and
    telecommunications carriers.[^186] Verizon states that, while it
    supports the availability of an optional expedited declaratory
    ruling procedure for carriers that are unsure of their CALEA
    obligations, DOJ's proposed procedures and related requirements
    would effectively force carriers to obtain pre-authorization of new
    services and would contradict Congress's intent expressed in CALEA's
    legislative history, which makes clear that CALEA should be
    implemented in a way that does not impede the introduction of new
    technologies, features, and services.[^187]

80. We agree with Verizon and other commenters that it would be
    inconsistent with the legislative history of CALEA and inappropriate
    as a matter of policy for the Commission to identify future services
    and entities that may be subject to CALEA.[^188] While we are
    sympathetic to DOJ's goal of establishing greater certainty
    regarding the applicability of CALEA to new services and
    technologies, we find that implementing DOJ's proposal would have a
    chilling effect on innovation. We believe that we can best determine
    the future services and entities that are subject to CALEA on a
    case-by-case basis. However, we concur with Verizon that an optional
    expedited declaratory ruling procedure for entities that are unsure
    of their CALEA obligations with regard to new services would be
    useful. Accordingly, telecommunications carriers and manufacturers,
    as well as LEAs, may petition the Commission for a declaratory
    ruling as to CALEA obligations with regard to new equipment,
    facilities and services.

**G. CONSOLIDATION OF CALEA RULES**

81. We are taking this opportunity to consolidate our CALEA rules into
    Part 1. Currently, those rules are contained in three different
    Parts of the Commission's rules: Part 22, titled "Public Mobile
    Services;" Part 24, titled "Personal Communications Services;" and
    Part 64, titled "Miscellaneous Rules Related to Common Carriers."
    CALEA rules for Parts 22 and 24 are each contained in a Subpart J,
    titled "Required New Capabilities Pursuant to the Communications
    Assistance for Law Enforcement Act (CALEA)." Each respective Subpart
    sets forth the CALEA capabilities that must be provided by cellular
    and Personal Communications Services (PCS) telecommunications
    carriers. CALEA rules for Part 64 are contained both in Subpart V,
    titled "Telecommunication Carrier System Security and Integrity
    Pursuant to the Communications Assistance for Law Enforcement Act
    (CALEA);" and in Subpart W, titled "Required New Capabilities
    Pursuant to the Communications Assistance for Law Enforcement Act
    (CALEA)." Subpart V of Part 64 sets forth the CALEA systems security
    and integrity rules for all telecommunications carriers, while
    Subpart W of Part 64 sets forth the CALEA capabilities that must be
    provided by wireline telecommunications carriers.

82. Our current CALEA rules structure is somewhat confusing because
    capability requirements are contained in three different Parts,
    while systems security and integrity requirements are contained in
    only one Part. Further, the capability requirements for cellular,
    PCS, and wireline telecommunications carriers specified in different
    Parts are identical, with the only differences in language being the
    specific references to the three different types of carriers.
    Moreover, as discussed in paragraph 68, *supra*, we are herein
    codifying the statutory requirement that all carriers subject to
    CALEA must comply with the assistance capability requirements of
    section 103. While we could codify this requirement in Part 64, that
    Part pertains to "telecommunications carriers" under the
    Communications Act, rather than the broader application of that term
    under CALEA.[^189] We therefore find it more logical to codify this
    requirement and consolidate our existing CALEA rules in Part 1,
    which is titled "Practice and Procedure," and contains rules that
    apply more broadly to various services within the Commission's
    jurisdiction. Accordingly, we are establishing new Subpart Z of Part
    1, titling it "Communications Assistance for Law Enforcement Act,"
    and are deleting Part 22, Subpart J; Part 24, Subpart J; Part 64,
    Subpart V; and Part 64, Subpart W. Part 1, Subpart Z specifies that
    all carriers subject to CALEA must comply with both the assistance
    capability requirements of CALEA section 103 and the systems
    security and integrity requirements of CALEA section 105, and also
    lists the specific capability requirements pertaining to cellular,
    PCS, and wireline carriers that are currently set forth in Parts 22,
    24, and 64. These rule changes are specified in Appendix B, *infra*.

**H. MISCELLANEOUS**

83. We recognize that certain questions raised by the outstanding
    *Further Notice of Proposed Rulemaking* in this docket remain
    unresolved.[^190] We intend to address these matters expeditiously
    in a future order. In addition, we recognize that parties may also
    seek clarification of our rules and regulations. Our rules and
    precedent provide us with authority to issue such clarifications,
    amendments, suspensions, or waivers both in response to petitions or
    on our own motion.[^191]

    **IV. PROCEDURAL ISSUES**

> **1. *Ex Parte* Rules**

84. This rulemaking shall be treated as a "permit-but-disclose"
    proceeding in accordance with the Commission's *ex parte*
    rules.[^192] Persons making oral *ex parte* presentations are
    reminded that memoranda summarizing the presentations must contain
    summaries of the substance of the presentations and not merely a
    listing of the subjects discussed. More than a one or two sentence
    description of the views and arguments presented is generally
    required.[^193] Other requirements pertaining to oral and written
    presentations are set forth in section 1.1206(b) of the Commission's
    rules.

85. Documents in ET Docket No. 04-295 are available for public
    inspection and copying during business hours at the FCC Reference
    Information Center, Portals II, 445 12th St. SW, Room CY-A257,
    Washington, DC 20554. The documents may also be purchased from BCPI,
    telephone (202) 488-5300, facsimile (202) 488-5563, TTY (202)
    488-5562, e-mail <fcc@bcpiweb.com>.

    **2. Accessible Formats**

86. To request materials in accessible formats for people with
    disabilities (Braille, large print, electronic files, audio format),
    send an e-mail to <fcc504@fcc.gov> or call the Consumer &
    Governmental Affairs Bureau at (202) 418-0531 (voice), (202)
    418-7365 (TTY).

    **3. Regulatory Flexibility Analysis**

87. As required by the Regulatory Flexibility Act, see 5 U.S.C. § 603,
    the Commission has prepared a Final Regulatory Flexibility Analysis
    (FRFA) of the possible significant economic impact on small entities
    of the policies and rules addressed in the *Second R&O*. The FRFA is
    set forth in Appendix C.

    **4. Paperwork Reduction Analysis**

88. *Final Paperwork Reduction Analysis.* The *Second R&O* contains new
    information collection requirements subject to the Paperwork
    Reduction Act of 1995 (PRA), Public Law 104-13.  It will be
    submitted to the Office of Management and Budget (OMB) for review
    under Section 3507(d) of the PRA.  OMB, the general public, and
    other Federal agencies are invited to comment on the new or modified
    information collection requirements contained in this proceeding. 

    **V. ORDERING CLAUSES**

89. Accordingly, IT IS ORDERED that that pursuant to sections 1, 4(i),
    7(a), 229, 301, 303, 332, and 410 of the Communications Act of 1934,
    as amended, and section 102 of the Communications Assistance for Law
    Enforcement Act, 18 U.S.C. § 1001, the *Second Report and Order and
    Memorandum Opinion and Order* in ET Docket No. 04-295 IS ADOPTED.

90. IT IS FURTHER ORDERED that Parts 1, 22, 24, and 64 of the
    Commission's Rules, 47 C.F.R. Parts 1, 22, 24, and 64, are amended
    as set forth in Appendix B. The requirements of the *Second Report
    and Order* shall become effective 30 days after publication in the
    Federal Register. This *Second Report and Order* contains
    information collection requirements subject to the Paperwork
    Reduction Act of 1995 (PRA), Public Law 104-13, that are not
    effective until approved by the Office of Management and Budget. The
    Federal Communications Commission will publish a document in the
    Federal Register by the OMB announcing the effective date of those
    rules.

91. IT IS FURTHER ORDERED that the "Petition for Reconsideration and for
    Clarification of the *CALEA Applicability Order*" filed by the
    United States Telecom Association is granted to the extent indicated
    herein and is denied in all other respects.

92. IT IS FURTHER ORDERED that the Commission's Consumer and
    Governmental Affairs Bureau, Reference Information Center, SHALL
    SEND a copy of this *Second Report and Order and Memorandum Opinion
    and Order*, including the Final Regulatory Flexibility Analysis, to
    the Chief Counsel for Advocacy of the Small Business Administration.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Marlene H. Dortch
>
> Secretary

APPENDIX A

LIST OF COMMENTERS

**Comments to *Notice* in ET Docket No. 04-295:**

  ------------------------------------ ----------------------------------
  **[Comments]{.underline}**           **[Abbreviation]{.underline}**

  AMA TechTel Communications, LLC      AMA TechTel

  American Civil Liberties Union       ACLU

  BellSouth Corporation                BellSouth

  Cellular Telecommunications &        CTIA
  Internet Association                 

  Cingular Wireless LLC                Cingular

  Coalition for Reasonable Rural       CRRBCC
  Broadband CALEA Compliance           

  Corr Wireless Communications, L.L.C  Corr

  EarthLink, Inc.                      EarthLink

  EDUCAUSE Coalition                   EDUCAUSE

  Electronic Frontier Foundation       EFF

  European Telecommunications          ETSI
  Standards Institute                  

  Fiducianet, Inc.                     Fiducianet

  Global Crossing North America, Inc.  Global Crossing

  GVNW Consulting, Inc.                GVNW

  Industry and Public Interest Joint   I&P
  Commenters                           

  Level 3 Communications, LLC          Level 3

  MaineStreet Communications, Inc.     MaineStreet

  Motorola, Inc.                       Motorola

  National Cable & Telecommunications  NCTA
  Association                          

  National Telecommunications          NTCA
  Cooperative Association              

  New York Attorney General Eliot      NYAG
  Spitzer                              

  Nextel Communications, Inc.          Nextel

  Nuvio Corporation                    Nuvio

  Organization for the Promotion and   OPASTCO
  Advancement of Small                 
  Telecommunications Companies         

  Rural Cellular Association           RCA

  Rural Telecommunications Group, Inc. RTG

  Rural Telecommunications Providers   RTP

  Satellite Industry Association       SIA

  SBC Communications Inc.              SBC

  Smithville Telephone Company         STC

  Subsentio, Inc.                      Subsentio

  Telcom Consulting Associates, Inc.   TCA

  Telecommunications Industry          TIA
  Association                          

  T-Mobile USA, Inc.                   T-Mobile

  Texas Department of Public Safety    Texas DPS

  United States Department of Justice  DOJ

  United States Internet Service       US ISPA
  Provider Association                 

  United States Telecom Association    USTelecom

  VeriSign, Inc.                       VeriSign

  Verizon                              Verizon

  Vonage Holdings Corp.                Vonage

  Yahoo! Inc.                          Yahoo!
  ------------------------------------ ----------------------------------

**Reply Comments to *Notice* in ET Docket No. 04-295:**

  ------------------------------------ ----------------------------------
  **[Replies]{.underline}**            **[Abbreviation]{.underline}**

  BellSouth Corporation                BellSouth

  Cellular Telecommunications &        CTIA
  Internet Association                 

  EarthLink, Inc.                      EarthLink

  Electronic Frontier Foundation       EFF

  Fiducianet, Inc.                     Fiducianet

  Global Crossing North America, Inc.  Global Crossing

  Industry and Public Interest Joint   I&P
  Commenters                           

  Level 3 Communications, LLC          Level 3

  MetroPCS Communications, Inc.        MetroPCS

  National Cable & Telecommunications  NCTA
  Association                          

  National Telecommunications          NTCA
  Cooperative Association              

  Nextel Communications, Inc.          Nextel

  Rural Iowa Independent Telephone     RIITA
  Association                          

  Satellite Industry Association       SIA

  SBC Communications Inc.              SBC

  Southern LINC                        Southern LINC

  Sprint Corporation                   Sprint

  Telecommunications Industry          TIA
  Association                          

  T-Mobile USA, Inc.                   T-Mobile

  United Power Line Council            UPLC

  United States Cellular Corporation   USCC

  United States Department of Justice  DOJ

  United States Internet Service       US ISPA
  Provider Association                 

  Office of Advocacy, United States    Advocacy
  Small Business Administration        

  United States Telecom Association    USTA

  United Utilities, Inc., *et al.*     United Utilities

  Verint Systems, Inc.                 Verint

  VeriSign, Inc.                       VeriSign

  Verizon                              Verizon

  Vonage Holdings Corp.                Vonage
  ------------------------------------ ----------------------------------

**Comments/Oppositions to United States Telecom Association's Petition
for Reconsideration and Clarification in ET Docket No. 04-295**

  -------------------------------------------- --------------------------------
  **[Oppositions and Comments]{.underline}**   **[Abbreviation]{.underline}**

  8x8, Inc., Acorn Active Media, American      8x8
  Library Association, Association for         
  Community Networking, Association of College 
  and Research Libraries, Association of       
  Research Libraries, Center for Democracy &   
  Technology, Champaign Urbana Community       
  Wireless Network, Electronic Frontier        
  Foundation, Information Technology           
  Association of America, Texas Internet       
  Service Providers Association, Voice on the  
  Net (VON) Coalition                          

  American Civil Liberties Union               ACLU

  CTIA -- The Wireless Association             CTIA

  Global Crossing North America, Inc.          Global Crossing

  National Telecommunications Cooperative      NTCA/OPASTCO
  Association and the Organization for the     
  Promotion and Advancement of Small           
  Telecommunications Companies                 

  Satellite Industry Association               SIA

  Telecommunications Industry Association      TIA

  United States Department of Justice          DOJ

  VeriSign, Inc.                               VeriSign
  -------------------------------------------- --------------------------------

**Replies to Comments/Oppositions to United States Telecom Association's
Petition for Reconsideration and Clarification in ET Docket No. 04-295**

  -------------------------------------------- --------------------------------
  **[Replies]{.underline}**                    **[Abbreviation]{.underline}**

  American Library Association, Association of ALA
  Research Libraries, Association of College   
  and Research Libraries                       

  United States Telecom Association            USTelecom

  Computer & Communications Industry           CCIA
  Association, Information Technology          
  Association of America, Acorn Active Media,  
  Association for Community Networking, Center 
  for Democracy & Technology, Center for       
  Financial Privacy and Human Rights,          
  Champaign Urbana Community Wireless Network, 
  Electronic Frontier Foundation, Texas        
  Internet Service Providers Association       

  Information Technology Industry Council      ITI

  United Power Line Council                    UPLC

  US LEC Acquisition Co.                       US LEC

  VeriSign, Inc.                               VeriSign
  -------------------------------------------- --------------------------------

APPENDIX B

FINAL RULES

For the reasons discussed in the preamble, the Federal Communications
Commission amends 47 CFR Parts 1, 22, 24, and 64 as follows:

A. Part 1 of the Code of Federal Regulations is amended as follows:

**PART 1- PRACTICE AND PROCEDURE**

1\. The authority for Part 1 continues to read as follows:

Authority: 15 U.S.C. 79 *et seq*.; 47 U.S.C. 151, 154(i), 154(j), 155,
157, 225, and 303(r).

### 2. Subpart Z is added to read as follows: {#subpart-z-is-added-to-read-as-follows .unnumbered}

**Subpart Z -- Communications Assistance for Law Enforcement Act**

1.20000 Purpose.

1.20001 Scope.

1.20002 Definitions.

1.20003 Policies and procedures for employee supervision and control.

1.20004 Maintaining secure and accurate records.

1.20005 Submission of policies and procedures and Commission review.

1.20006 Assistance capability requirements.

1.20007 Additional assistance capability requirements for wireline,
cellular, and PCS telecommunications carriers.

**§ 1.20000 Purpose.**

Pursuant to the Communications Assistance for Law Enforcement Act
(CALEA), Public Law 103-414, 108 Stat. 4279 (1994) (codified as amended
in sections of 18 U.S.C. and 47 U.S.C.), this subpart contains rules
that require a telecommunications carrier to:

\(a\) ensure that any interception of communications or access to
call-identifying information effected within its switching premises can
be activated only in accordance with appropriate legal authorization,
appropriate carrier authorization, and with the affirmative intervention
of an individual officer or employee of the carrier acting in accordance
with regulations prescribed by the Commission; and

\(b\) implement the assistance capability requirements of CALEA section
103, 47 U.S.C. § 1002, to ensure law enforcement access to authorized
wire and electronic communications or call-identifying information.

**§ 1.20001 Scope.**

The definitions included in this subchapter shall be used solely for the
purpose of implementing CALEA requirements.

**§ 1.20002 Definitions.**

\(a\) *Appropriate legal authorization*. The term *appropriate legal
authorization* means:

\(1\) A court order signed by a judge or magistrate authorizing or
approving interception of wire or electronic communications; or

\(2\) Other authorization, pursuant to 18 U.S.C. 2518(7), or any other
relevant federal or state statute.

\(b\) *Appropriate carrier authorization*. The term *appropriate carrier
authorization* means the policies and procedures adopted by
telecommunications carriers to supervise and control officers and
employees authorized to assist law enforcement in conducting any
interception of communications or access to call-identifying
information.

\(c\) *Appropriate authorization*. The term *appropriate authorization*
means both appropriate legal authorization and appropriate carrier
authorization.

\(d\) *LEA*. The term *LEA* means law enforcement agency; e.g., the
Federal Bureau of Investigation or a local police department.

\(e\) *Telecommunications carrier*. The term *telecommunications
carrier* includes:

\(1\) A person or entity engaged in the transmission or switching of
wire or electronic communications as a common carrier for hire;

\(2\) A person or entity engaged in providing commercial mobile service
(as defined in section 332(d) of the Communications Act of 1934 (47
U.S.C. 332(d))); or

\(3\) A person or entity that the Commission has found is engaged in
providing wire or electronic communication switching or transmission
service such that the service is a replacement for a substantial portion
of the local telephone exchange service and that it is in the public
interest to deem such a person or entity to be a telecommunications
carrier for purposes of CALEA.

**§ 1.20003 Policies and procedures for employee supervision and
control.**

A telecommunications carrier shall:

\(a\) Appoint a senior officer or employee responsible for ensuring that
any interception of communications or access to call-identifying
information effected within its switching premises can be activated only
in accordance with a court order or other lawful authorization and with
the affirmative intervention of an individual officer or employee of the
carrier.

\(b\) Establish policies and procedures to implement paragraph (a) of
this section, to include:

\(1\) A statement that carrier personnel must receive appropriate legal
authorization and appropriate carrier authorization before enabling law
enforcement officials and carrier personnel to implement the
interception of communications or access to call-identifying
information;

\(2\) An interpretation of the phrase \"appropriate authorization\" that
encompasses the definitions of appropriate legal authorization and
appropriate carrier authorization, as used in paragraph (b)(1) of this
section;

\(3\) A detailed description of how long it will maintain its records of
each interception of communications or access to call-identifying
information pursuant to § 1.20004;

\(4\) In a separate appendix to the policies and procedures document:

\(i\) The name and a description of the job function of the senior
officer or employee appointed pursuant to paragraph (a) of this section;
and

\(ii\) Information necessary for law enforcement agencies to contact the
senior officer or employee appointed pursuant to paragraph (a) of this
section or other CALEA points of contact on a seven days a week, 24
hours a day basis.

\(c\) Report to the affected law enforcement agencies, within a
reasonable time upon discovery:

\(1\) Any act of compromise of a lawful interception of communications
or access to call-identifying information to unauthorized persons or
entities; and

\(2\) Any act of unlawful electronic surveillance that occurred on its
premises.

**§ 1.20004 Maintaining secure and accurate records.**

\(a\) A telecommunications carrier shall maintain a secure and accurate
record of each interception of communications or access to
call-identifying information, made with or without appropriate
authorization, in the form of single certification.

\(1\) This certification must include, at a minimum, the following
information:

\(i\) The telephone number(s) and/or circuit identification numbers
involved;

\(ii\) The start date and time that the carrier enables the interception
of communications or access to call identifying information;

\(iii\) The identity of the law enforcement officer presenting the
authorization;

\(iv\) The name of the person signing the appropriate legal
authorization;

\(v\) The type of interception of communications or access to
call-identifying information (e.g., pen register, trap and trace, Title
III, FISA); and

\(vi\) The name of the telecommunications carriers\' personnel who is
responsible for overseeing the interception of communication or access
to call-identifying information and who is acting in accordance with the
carriers\' policies established under § 1.20003.

\(2\) This certification must be signed by the individual who is
responsible for overseeing the interception of communications or access
to call-identifying information and who is acting in accordance with the
telecommunications carrier\'s policies established under § 1.20003. This
individual will, by his/her signature, certify that the record is
complete and accurate.

\(3\) This certification must be compiled either contemporaneously with,
or within a reasonable period of time after the initiation of the
interception of the communications or access to call-identifying
information.

\(4\) A telecommunications carrier may satisfy the obligations of
paragraph (a) of this section by requiring the individual who is
responsible for overseeing the interception of communication or access
to call-identifying information and who is acting in accordance with the
carriers\' policies established under § 1.20003 to sign the
certification and append the appropriate legal authorization and any
extensions that have been granted. This form of certification must at a
minimum include all of the information listed in paragraph (a) of this
section.

\(b\) A telecommunications carrier shall maintain the secure and
accurate records set forth in paragraph (a) for a reasonable period of
time as determined by the carrier.

\(c\) It is the telecommunications carrier\'s responsibility to ensure
its records are complete and accurate.

\(d\) Violation of this rule is subject to the penalties of § 1.20008.

**§ 1.20005 Submission of policies and procedures and Commission
review.**

\(a\) Each telecommunications carrier shall file with the Commission the
policies and procedures it uses to comply with the requirements of this
subchapter. These policies and procedures shall be filed with the
Federal Communications Commission within 90 days of the effective date
of these rules, and thereafter, within 90 days of a carrier\'s merger or
divestiture or a carrier\'s amendment of its existing policies and
procedures.

\(b\) The Commission shall review each telecommunications carrier\'s
policies and procedures to determine whether they comply with the
requirements of § 1.20003 and § 1.20004.

\(1\) If, upon review, the Commission determines that a
telecommunications carrier\'s policies and procedures do not comply with
the requirements established under § 1.20003 and § 1.20004, the
telecommunications carrier shall modify its policies and procedures in
accordance with an order released by the Commission.

\(2\) The Commission shall review and order modification of a
telecommunications carrier\'s policies and procedures as may be
necessary to insure compliance by telecommunications carriers with the
requirements of the regulations prescribed under § 1.20003 and §
1.20004.

**§ 1.20006 Assistance capability requirements.**

\(a\) Telecommunications carriers shall provide to a Law Enforcement
Agency the assistance capability requirements of CALEA regarding wire
and electronic communications and call identifying information, see 47
U.S.C. 1002. A carrier may satisfy these requirements by complying with
publicly available technical requirements or standards adopted by an
industry association or standard-setting organization, such as J-STD-025
(current version), or by the Commission.

\(b\) Telecommunications carriers shall consult, as necessary, in a
timely fashion with manufacturers of its telecommunications transmission
and switching equipment and its providers of telecommunications support
services for the purpose of ensuring that current and planned equipment,
facilities, and services comply with the assistance capability
requirements of 47 U.S.C. 1002.

\(c\) A manufacturer of telecommunications transmission or switching
equipment and a provider of telecommunications support service shall, on
a reasonably timely basis and at a reasonable charge, make available to
the telecommunications carriers using its equipment, facilities, or
services such features or modifications as are necessary to permit such
carriers to comply with the assistance capability requirements of 47
U.S.C. 1002.

**§1.20007 Additional assistance capability requirements for wireline,
cellular, and PCS telecommunications carriers.**

\(a\) *Definitions*.

\(1\) *Call identifying information*. Call identifying information means
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. Call identifying information is \"reasonably
available\" to a carrier if it is present at an intercept access point
and can be made available without the carrier being unduly burdened with
network modifications.

\(2\) *Collection function*. The location where lawfully authorized
intercepted communications and call-identifying information is collected
by a law enforcement agency (LEA).

\(3\) *Content of subject-initiated conference calls*. Capability that
permits a LEA to monitor the content of conversations by all parties
connected via a conference call when the facilities under surveillance
maintain a circuit connection to the call.

\(4\) *Destination*. A party or place to which a call is being made
(e.g., the called party).

\(5\) *Dialed digit extraction.* Capability that permits a LEA to
receive on the call data channel a digits dialed by a subject after a
call is connected to another carrier\'s service for processing and
routing.

\(6\) *Direction*. A party or place to which a call is re-directed or
the party or place from which it came, either incoming or outgoing
(e.g., a redirected-to party or redirected-from party).

\(7\) *IAP*. Intercept access point is a point within a carrier\'s
system where some of the communications or call-identifying information
of an intercept subject\'s equipment, facilities, and services are
accessed.

\(8\) *In-band and out-of-band signaling*. Capability that permits a LEA
to be informed when a network message that provides call identifying
information (e.g., ringing, busy, call waiting signal, message light) is
generated or sent by the IAP switch to a subject using the facilities
under surveillance. Excludes signals generated by customer premises
equipment when no network signal is generated.

\(9\) *J-STD-025*. The standard, including the latest version, developed
by the Telecommunications Industry Association (TIA) and the Alliance
for Telecommunications Industry Solutions (ATIS) for wireline, cellular,
and broadband PCS carriers. This standard defines services and features
to support lawfully authorized electronic surveillance, and specifies
interfaces necessary to deliver intercepted communications and
call-identifying information to a LEA. Subsequently, TIA and ATIS
published J-STD-025-A and J-STD-025-B.

\(10\) *Origin*. A party initiating a call (e.g., a calling party), or a
place from which a call is initiated.

\(11\) *Party hold, join, drop on conference calls*. Capability that
permits a LEA to identify the parties to a conference call conversation
at all times.

\(12\) *Subject-initiated dialing and signaling information*. Capability
that permits a LEA to be informed when a subject using the facilities
under surveillance uses services that provide call identifying
information, such as call forwarding, call waiting, call hold, and
three-way calling. Excludes signals generated by customer premises
equipment when no network signal is generated.

\(13\) *Termination*. A party or place at the end of a communication
path (e.g. the called or call-receiving party, or the switch of a party
that has placed another party on hold).

\(14\) *Timing information*. Capability that permits a LEA to associate
call-identifying information with the content of a call. A
call-identifying message must be sent from the carrier\'s IAP to the
LEA\'s Collection Function within eight seconds of receipt of that
message by the IAP at least 95% of the time, and with the call event
time-stamped to an accuracy of at least 200 milliseconds.

(b) In addition to the requirements in section 1.20006, wireline,
cellular, and PCS telecommunications carriers shall provide to a LEA the
assistance capability requirements regarding wire and electronic
communications and call identifying information covered by J-STD-025
(current version), and, subject to the definitions in this section, may
satisfy these requirements by complying with J-STD-025 (current
version), or by another means of their own choosing. These carriers also
shall provide to a LEA the following capabilities:

\(1\) Content of subject-initiated conference calls;

\(2\) Party hold, join, drop on conference calls;

\(3\) Subject-initiated dialing and signaling information;

\(4\) In-band and out-of-band signaling;

\(5\) Timing information;

\(6\) Dialed digit extraction, with a toggle feature that can
activate/deactivate this capability.

**§ 1.20008 Penalties.**

In the event of a telecommunications carrier\'s violation of this
subchapter, the Commission shall enforce the penalties articulated in 47
U.S.C. 503(b) of the Communications Act of 1934 and 47 CFR 1.8.

**PART 22- PUBLIC MOBILE SERVICES**

1\. The authority for Part 22 continues to read as follows:

Authority: 47 U.S.C. 154, 222, 303, 309, and 332.

### Part 22, Subpart J, is amended by removing Sections 22.1100-22.1103.

**PART 24- PERSONAL COMMUNICATIONS SERVICES**

1\. The authority for Part 24 continues to read as follows:

Authority: 47 U.S.C. 154, 301, 302, 303, 309, and 332.

### Part 24, Subpart J, is amended by removing Sections 24.900- 24.903.

**PART 64 -- MISCELLANEOUS RULES RELATING TO COMMON CARRIERS**

1\. The authority for Part 64 continues to read as follows:

Authority: 47 U.S.C. 154, 254(K); secs. 403(b)(2)(B), (c), Pub. L.
104-104, 110 Stat. 56. Interpret or apply 47 U.S.C. 201, 218, 222, 225,
226, 228, and 254(k) unless otherwise noted.

### 2. Part 64, Subparts V and W, are amended by removing Sections 64.2100-64.2106 and 64.2200-2203. {#part-64-subparts-v-and-w-are-amended-by-removing-sections-64.2100-64.2106-and-64.2200-2203. .unnumbered}

APPENDIX C

REGULATORY FLEXIBILITY ANALYSIS

**I. FINAL REGULATORY FLEXIBILITY ANALYSIS**

1.  As required by the Regulatory Flexibility Act of 1980, as amended
    (RFA),[^194] an Initial Regulatory Flexibility Analysis (IRFA) was
    incorporated in the *Notice of Proposed Rulemaking* (*Notice*) in
    this proceeding.[^195] The Commission sought written public comment
    on the proposals in the *Notice*, including comment on the
    IRFA.[^196] The comments received are discussed below, except to the
    extent that they were previously addressed in the Final Regulatory
    Flexibility Analysis (FRFA) attached to the *First Report and Order*
    (*First R&O*) in this proceeding.[^197] The current FRFA, which
    conforms to the RFA,[^198] pertains only to the *Second Report and
    Order* (*Second R&*O) in this proceeding. The companion *Memorandum
    Opinion and Order* (*MO&O*) does not adopt rules, but rather, *inter
    alia*, denies a petition to change a Commission rule.

## A. Need for, and Objectives of, the Rules  {#a.-need-for-and-objectives-of-the-rules .unnumbered}

2.  Advances in technology, most notably the introduction of digital
    transmission and processing techniques, and the proliferation of
    Internet services such as broadband access and Voice over Internet
    Protocol (VoIP), have challenged the ability of law enforcement
    agencies (LEAs) to conduct lawful electronic surveillance. In light
    of these difficulties and other outstanding issues associated with
    the implementation of the 1994 Communications Assistance for Law
    Enforcement Act (CALEA), the Department of Justice, the Federal
    Bureau of Investigation, and the Drug Enforcement Administration
    filed a joint petition for expedited rulemaking in March 2004,
    asking the Commission to address and resolve these issues. The
    *First R&O* concluded that CALEA applies to facilities-based
    broadband Internet access providers and providers of interconnected
    VoIP service, and established a compliance deadline of May 14, 2007
    for these providers.[^199]

3.  In the *Second R&O*, we require that facilities-based broadband
    Internet access providers and providers of interconnected VoIP
    submit monitoring reports to ensure their CALEA compliance by the
    May 14, 2007 deadline established by the *First R&O*. More
    generally, we require that telecommunications carriers comply with
    CALEA by finding that sections 107(c) and 109(b) of CALEA provide
    only limited and temporary relief from compliance requirements, and
    by finding that extension of the compliance deadline for
    capabilities required by CALEA section 103 is available only for
    facilities and services deployed prior to October 25, 1998 under the
    express terms of the statute. We also conclude that, in addition to
    the enforcement remedies through the courts available to LEAs under
    CALEA section 108, we may take separate enforcement action under
    section 229(a) of the Communications Act against carriers that fail
    to comply with CALEA. Moreover, we conclude that carriers must
    generally pay for CALEA development and implementation costs
    incurred after January 1, 1995 (unless their costs are reimbursed in
    response to a CALEA section 109(b) petition), but we acknowledge
    that they may recover costs from other sources, such as from their
    subscribers.

## B. Summary of Significant Issues Raised by Public Comments in Response to the IRFA {#b.-summary-of-significant-issues-raised-by-public-comments-in-response-to-the-irfa .unnumbered}

4.  In this section, we respond to commenters who filed directly in
    response to the IRFA. To the extent we received comments raising
    general small business concerns during this proceeding, those
    comments are discussed throughout the *Second R&O*.[^200]

5.  The National Telecommunications Cooperative Association (NTCA) and
    the Office of Advocacy, U.S. Small Business Administration
    (Advocacy) filed comments directly in response to the IRFA. NTCA and
    Advocacy both generally contend that the RFA requires that the
    Commission consider less burdensome alternatives appropriate to the
    size of the covered entities.[^201] These comments were partially
    addressed in our previous *First R&O* in this proceeding;[^202]
    therefore, in this FRFA, we respond only to those arguments that are
    relevant to the *Second R&O*. In particular, we respond to NTCA's
    argument[^203] that we failed to include the availability of CALEA
    section 107(c) extension petitions as part of the IRFA and to
    Advocacy's arguments[^204] that the IRFA did not discuss all the
    alternatives available to small entities, including petitions for
    extensions under CALEA sections 107(c) and 109(b) and use of trusted
    third parties (TTPs).

6.  We reject NTCA's and Advocacy's arguments that the Commission failed
    to adequately consider these issues. While we recognize that we did
    not specifically list them in the IRFA, the IRFA combined with the
    *Notice* appropriately identified the ways in which the Commission
    could lessen the regulatory burdens on small businesses in
    compliance with our RFA obligations. First, we generally discussed
    in the *Notice* the possibility of an exemption from CALEA
    compliance for small businesses that provide wireless broadband
    Internet access to rural areas.[^205] Second, with regard to CALEA
    sections 107(c) and 109(b) compliance extension petitions, we
    devoted an entire section of the *Notice*, spanning 24 paragraphs,
    to these issues.[^206] Although we proposed to restrict the
    availability of compliance extensions under section 107(c)[^207] and
    noted that there is a significant burden on section 109(b)
    petitioners,[^208] we thoroughly considered the potential impact of
    those proposals on small businesses, but concluded that it would be
    inconsistent with the CALEA statute to make exceptions for small
    businesses with respect to section 107(c) and section 109(b)
    petitions. Third, with respect to TTPs, we devoted a subsection of
    the *Notice*, spanning eight paragraphs, to that issue. We noted
    therein that there may be some tension between relying on a TTP
    model and "safe harbor" standards, but that TTPs had the potential
    to simplify or ease the burden on carriers and manufacturers in
    providing packet content and call-identifying information to
    LEAs.[^209] Further, we noted that external TTP systems "might
    provide economies of scale for small carriers."[^210] Therefore, we
    believe that a revised IRFA is not necessary on any of these issues.

## C. Description and Estimate of the Number of Small Entities to Which Rules Will Apply {#c.-description-and-estimate-of-the-number-of-small-entities-to-which-rules-will-apply .unnumbered}

7.  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.[^211] The RFA generally defines the
    term "small entity" as having the same meaning as the terms "small
    business," "small organization," and "small governmental
    jurisdiction."[^212] In addition, the term "small business" has the
    same meaning as the term "small business concern" under the Small
    Business Act.[^213] 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).[^214]

**1. Telecommunications Service Entities**

**a. Wireline Carriers and Service Providers**

8.  *Small Incumbent Local Exchange Carriers (LECs)*. We have included
    small incumbent LECs 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."[^215] Advocacy contends
    that, for RFA purposes, small incumbent LECs are not dominant in
    their field of operation because any such dominance is not
    "national" in scope.[^216] We have therefore included small
    incumbent LECs in this RFA analysis, although we emphasize that this
    RFA action has no effect on Commission analyses and determinations
    in other, non-RFA contexts.

9.  *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.[^217] According to Commission
    data,[^218] 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 our action. In
    addition, limited preliminary census data for 2002 indicate that the
    total number of wired communications carriers increased
    approximately 34 percent from 1997 to 2002.[^219]

10. *Competitive Local Exchange Carriers, Competitive Access Providers
    (CAPs), "Shared-Tenant Service Providers," and "Other Local Service
    Providers."* Neither the Commission nor the SBA has developed a
    small business size standard specifically for these service
    providers. The appropriate size standard under SBA rules is for the
    category Wired Telecommunications Carriers. Under that size
    standard, such a business is small if it has 1,500 or fewer
    employees.[^220] According to Commission data,[^221] 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 our action. In
    addition, limited preliminary census data for 2002 indicate that the
    total number of wired communications carriers increased
    approximately 34 percent from 1997 to 2002.[^222]

11. *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.[^223] According to Commission data,[^224] 654
    carriers have reported that they are engaged in the provision of
    payphone services. Of these, an estimated 652 have 1,500 or fewer
    employees and two 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. In addition,
    limited preliminary census data for 2002 indicate that the total
    number of wired communications carriers increased approximately 34
    percent from 1997 to 2002.[^225]

12. *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.[^226] According to Commission
    data,[^227] 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 our action. In addition,
    limited preliminary census data for 2002 indicate that the total
    number of wired communications carriers increased approximately 34
    percent from 1997 to 2002.[^228]

13. *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.[^229] According to Commission data,[^230] 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 our action. In addition, limited
    preliminary census data for 2002 indicate that the total number of
    wired communications carriers increased approximately 34 percent
    from 1997 to 2002.[^231]

14. *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.[^232] According to Commission data,[^233] 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 our
    action.

> **b. Wireless Telecommunications Service Providers**

15. Below, for those services subject to auctions, 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.

16. *Wireless Service Providers.* The SBA has developed a small business
    size standard for wireless firms within the two broad economic
    census categories of "Paging"[^234] and "Cellular and Other Wireless
    Telecommunications."[^235] 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.[^236] 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.[^237] 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.[^238] 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.[^239] Thus, under this second category and size
    standard, the majority of firms can, again, be considered small. In
    addition, limited preliminary census data for 2002 indicate that the
    total number of paging providers decreased approximately 51 percent
    from 1997 to 2002.[^240] In addition, limited preliminary census
    data for 2002 indicate that the total number of cellular and other
    wireless telecommunications carriers increased approximately 321
    percent from 1997 to 2002.[^241]

17. *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."[^242]
    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.[^243] 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.[^244] 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.[^245] We
    have estimated that 260 of these are small, under the SBA small
    business size standard.[^246]

18. *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."[^247]
    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.[^248] 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.[^249]
    Thus, under this category and associated small business size
    standard, the majority of firms can be considered small.

19. 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.[^250] 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.[^251] The SBA has approved these small business size
    standards.[^252] An auction of Metropolitan Economic Area licenses
    closed on March 2, 2000.[^253] 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.[^254] Of those, we estimate that 370 are small, under the
    SBA-approved small business size standard.

20. *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 (WCS)
    auction.[^255] 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.[^256] The Commission
    auctioned geographic area licenses in the WCS service. In the
    auction, there were seven winning bidders that qualified as "very
    small business" entities, and one that qualified as a "small
    business" entity.

21. *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.[^257] Under that SBA small business
    size standard, a business is small if it has 1,500 or fewer
    employees.[^258] According to Commission data, 437 carriers reported
    that they were engaged in the provision of wireless telephony.[^259]
    We have estimated that 260 of these are small under the SBA small
    business size standard.

22. *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.[^260] 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."[^261] These standards defining "small entity" in
    the context of broadband PCS auctions have been approved by the
    SBA.[^262] 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.[^263] 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.

> **c. Satellite Telecommunications Service Providers**

23. Satellite telecommunications service providers include satellite
    operators and earth station operators. The Commission has not
    developed a definition of small entities applicable to such
    operators. Therefore, the applicable definition of small entity is
    generally the definition under the SBA rules applicable to Satellite
    Telecommunications. This definition provides that a small entity is
    expressed as one with \$13.5 million or less in annual
    receipts.[^264] 1997 Census Bureau data indicate that, for 1997, 273
    satellite communication firms had annual receipts of under \$10
    million. In addition, 24 firms had receipts for that year of \$10
    million to \$24,999,990.

**2. Cable and OVS Operators**

24. *Cable and Other Program Distribution*. The Census Bureau defines
    this category as follows: "This industry comprises establishments
    primarily engaged as third-party distribution systems for broadcast
    programming. The establishments of this industry deliver visual,
    aural, or textual programming received from cable networks, local
    television stations, or radio networks to consumers via cable or
    direct-to-home satellite systems on a subscription or fee basis.
    These establishments do not generally originate programming
    material."[^265] The SBA has developed a small business size
    standard for Cable and Other Program Distribution, which is: all
    such firms having \$13.5 million or less in annual receipts.[^266]
    According to Census Bureau data for 2002, there were a total of
    1,191 firms in this category that operated for the entire
    year.[^267] 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.[^268] Thus, under this size standard, the
    majority of firms can be considered small.

25. *Cable Companies and Systems.* The Commission has also developed its
    own small business size standards, for the purpose of cable rate
    regulation. Under the Commission's rules, a "small cable company" is
    one serving 400,000 or fewer subscribers, nationwide.[^269] Industry
    data indicate that, of 1,076 cable operators nationwide, all but
    eleven are small under this size standard.[^270] In addition, under
    the Commission's rules, a "small system" is a cable system serving
    15,000 or fewer subscribers.[^271] Industry data indicate that, of
    7,208 systems nationwide, 6,139 systems have under 10,000
    subscribers, and an additional 379 systems have 10,000-19,999
    subscribers.[^272] Thus, under this second size standard, most cable
    systems are small.

26. *Cable System Operators*. 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."[^273] The Commission has determined that 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.[^274] Industry data indicate that, of 1,076 cable
    operators nationwide, all but ten are small under this size
    standard.[^275] We note that the Commission neither requests nor
    collects information on whether cable system operators are
    affiliated with entities whose gross annual revenues exceed \$250
    million,[^276] and therefore we are unable to estimate more
    accurately the number of cable system operators that would qualify
    as small und

27. *Open Video Services.* Open Video Service (OVS) systems provide
    subscription services.[^277] The SBA has created a small business
    size standard for Cable and Other Program Distribution.[^278] This
    standard provides that a small entity is one with \$12.5 million or
    less in annual receipts. The Commission has certified a large number
    of OVS operators, and some of these are currently providing
    service.[^279] Affiliates of Residential Communications Network,
    Inc. (RCN) received approval to operate OVS systems in New York
    City, Boston, Washington, D.C., and other areas. RCN has sufficient
    revenues to assure that it does not qualify as a small business
    entity. Little financial information is available for the other
    entities that are authorized to provide OVS. Given this fact, the
    Commission concludes that those entities might qualify as small
    businesses, and therefore may be affected by the rules and policies
    adopted herein.

> **3. Internet and other Information Service Providers**

28. *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."[^280] Under
    the SBA size standard, such a business is small if it has average
    annual receipts of \$23 million or less.[^281] According to Census
    Bureau data for 2002, there were 2,529 firms in this category that
    operated for the entire year. [^282] 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.[^283] Consequently,
    we estimate that the majority of these firms are small entities that
    may be affected by our action.

29. *All Other Information Services*. "This industry comprises
    establishments primarily engaged in providing other information
    services (except new syndicates and libraries and archives)."[^284]
    Our action pertains to VoIP services, which could be provided by
    entities that provide other services such as email, online gaming,
    web browsing, video conferencing, instant messaging, and other,
    similar IP-enabled services. The SBA has developed a small business
    size standard for this category; that size standard is \$6.5 million
    or less in average annual receipts.[^285] According to Census Bureau
    data for 1997, there were 195 firms in this category that operated
    for the entire year.[^286] 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, we estimate that
    the majority of these firms are small entities that may be affected
    by our action.

## D. Description of Projected Reporting, Recordkeeping and Other Compliance Requirements {#d.-description-of-projected-reporting-recordkeeping-and-other-compliance-requirements .unnumbered}

30. This *Second R&O* requires that facilities-based broadband Internet
    access providers and providers of interconnected VoIP submit
    monitoring reports to the Commission to ensure their CALEA
    compliance by the May 14, 2007 deadline established by the *First
    R&O*. The *Second R&O* also requires that, within 90 days of its
    effective date, facilities-based broadband Internet access providers
    and providers of interconnected VoIP who were newly-identified in
    the *First R&O* as subject to CALEA submit system security
    statements to the Commission. Additionally, the *Second R&O*
    requires that each carrier that has a CALEA section 107(c) petition
    on file with the Commission submit to us a letter documenting that
    the carrier's equipment, facility, or service qualifies for section
    107(c) relief under the October 25, 1998 cutoff for such relief. The
    *Second R&O* contains new information collection requirements
    subject to the Paperwork Reduction Act of 1995 (PRA), Public Law
    104-13.  They will be submitted to the Office of Management and
    Budget (OMB) for review under Section 3507(d) of the PRA.  OMB, the
    general public, and other Federal agencies are invited to comment on
    the new or modified information collection requirements contained in
    this proceeding. 

## E. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered {#e.-steps-taken-to-minimize-significant-economic-impact-on-small-entities-and-significant-alternatives-considered .unnumbered}

31. 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.[^287]

32. The need for the regulations adopted herein is mandated by Federal
    legislation. In the *Second R&O*, we find that, under the express
    terms of the CALEA statute, all carriers subject to CALEA are
    obliged to become CALEA-compliant without exception. However, in the
    previously-issued *Further Notice of Proposed Rulemaking* in this
    proceeding (a companion document to the *First R&O*), we are
    considering two alternatives: (1) exempting from CALEA certain
    classes or categories of facilities-based broadband Internet access
    providers -- notably small and rural providers and providers of
    broadband networks for educational and research institutions,
    and (2) requiring something less than full CALEA compliance for
    certain classes or categories of providers, including smaller
    providers.[^288]

33. In the *Second R&O*, we find that, within 90 days of the effective
    date of the *Second R&O*, facilities-based broadband Internet access
    providers and providers of interconnected VoIP who were
    newly-identified in the *First R&O* as subject to CALEA must submit
    system security statements to the Commission. Ensuring that any
    interception of a carrier's communications or access to
    call-identifying information can be activated only in accordance
    with a court order or other lawful authorization and with the
    affirmative intervention of an employee of the carrier acting in
    accordance with regulations prescribed by the Commission is required
    by section 105 of CALEA and section 229(b) of the Communications
    Act.[^289] Further, system security compliance within 90 days is
    specified for telecommunications carriers in section 64.2105 of the
    Commission's rules.[^290] While we considered the alternative of
    modifying this 90-day compliance period for facilities-based
    broadband Internet access providers and providers of interconnected
    VoIP who were newly-identified in the *First R&O* as subject to
    CALEA, we concluded that would result in disparate treatment of
    these newly-identified providers.

34. In the *Second R&O*, we also find that sections 107(c) and 109(b) of
    CALEA provide only limited and temporary relief from compliance
    requirements, and that they are complementary provisions that serve
    different purposes, which are, respectively: (1) extension of the
    CALEA section 103 compliance deadline; and, (2) recovery of
    CALEA-imposed costs. We considered the alternative of a less
    stringent interpretation of these two sections, but concluded that,
    in designing them, Congress carefully balanced a reasonable
    compliance period against a firm deadline. Accordingly, we conclude
    that the statutory language does not permit us to adopt a less
    stringent interpretation. However, we note that section 109(b) lists
    11 criteria for determining whether CALEA compliance is "reasonably
    achievable" by a particular telecommunications carrier, and one of
    these criteria is "\[t\]he financial resources of the
    telecommunications carrier." [^291] Accordingly, small carriers may
    petition for relief under this CALEA section, thus possibly
    mitigating , in some cases, the economic burden of compliance with
    rules adopted herein.

35. In the *Second R&O*, we also find that, in addition to the
    enforcement remedies through the courts available to LEAs under
    CALEA section 108, we may take separate enforcement action under
    section 229(a) of the Communications Act against carriers that fail
    to comply with the CALEA statute. We considered an alternative,
    recommended by some commenters, that authority to enforce CALEA lies
    exclusively with the courts, but we conclude that we have the
    authority to prescribe CALEA rules and investigate the compliance of
    those carriers and providers subject to such rules. We also conclude
    that there should be no disparate treatment of small entities with
    regard to CALEA enforcement because this would be inconsistent with
    the statute.

36. Finally, in the *Second R&O*, we find that carriers must generally
    pay for CALEA development and implementation costs incurred after
    January 1, 1995, but we acknowledge that they may recover costs from
    other sources, such as from their subscribers. Some commenters argue
    that carriers with small subscriber bases are less able to bear the
    costs of CALEA implementation; however, to the extent CALEA costs
    prohibit these carriers from reasonably achieving CALEA compliance,
    we again note that CALEA section 109(b) provides a remedy.[^292] The
    carriers can seek a determination from the Commission that CALEA
    compliance is not reasonably achievable, and, upon such a
    determination, the Attorney General may agree to pay the costs of
    compliance for these carriers, or the carriers will be deemed to be
    in compliance.[^293] We believe our approach represents a reasonable
    accommodation for small carriers.

## F. Report to Congress  {#f.-report-to-congress .unnumbered}

37. The Commission will send a copy of the *Second R&O and MO&O*,
    including this FRFA, in a report to be sent to Congress and the
    Government Accountability Office pursuant to the Congressional
    Review Act.[^294] In addition, the Commission will send a copy of
    the *Second R&O and MO&O* and FRFA to the Chief Counsel for Advocacy
    of the SBA. A copy of the *Second R&O* *and MO&O* and FRFA (or
    summaries thereof) will also be published in the Federal
    Register.[^295]

    APPENDIX D

    STANDARDS FOR PACKET-MODE TECHNOLOGIES

> This Appendix updates corresponding Appendix D of the *Notice*. [^296]
> The discussion below is informational only, and does not represent
> Commission views regarding any of the packet-mode standards.

**A. Standards for packet content**

> Subcommittee TR45.2 of the TIA developed standard J-STD-025, *Lawfully
> Authorized Electronic Surveillance,* to serve as a \"safe harbor\" for
> wireline, cellular, and broadband PCS carriers and manufacturers under
> section 107(a) of CALEA. J-STD-025 was jointly published in December
> 1997 by TIA and Committee T1 (the latter sponsored by the Alliance for
> Telecommunications Industry Solutions). J-STD-025 defines services and
> features required by wireline, cellular, and broadband PCS carriers to
> support lawfully authorized electronic surveillance, and specifies the
> interfaces for delivering the intercepted communications (*i.e.*,
> content) and call-identifying information to a LEA. J-STD-025 also
> includes standards for some packet-mode communications capability
> (content only)[^297] and a location information requirement.[^298] The
> publishers of the J-Standard subsequently revised it into J-STD-025-A
> (Revision A of the J-Standard) to incorporate the changes adopted by
> the Commission in its initial CALEA proceeding to include the six
> DOJ/FBI "punch list" capabilities.[^299] J-STD-025-A was issued in May
> 2000 and became an American National Standard on April 16, 2003.
>
> J-STD-025, J-STD-025-A, and J-STD-025-B (described below) require that
> a Packet Data intercept access point[^300] shall access data packets
> sent or received by the equipment, facilities, or services of an
> intercept subject when a packet-mode data service is provided and that
> packets shall be sent to a LEA when they are intercepted. TIA states
> that for low-volume communications (*e.g.*, short messaging service,
> or "SMS"), the content may be included in a packet envelope message
> that may be provided to the LEA in a CII channel, but for high-volume
> communications (*e.g.*, most packet data applications) the entire
> packet stream must be provided to the LEA in a content channel. A
> Packet Data intercept access point provides access to one or more of
> the following packet-mode data services: 

-   ISDN user-to-user signaling;

-   ISDN D-channel X.25 packet services; 

-   SMS for cellular and PCS (*e.g.*, Narrowband Advanced Mobile Phone
    System, *TIA/EIA-41*, PCS1900, or Global Systems for Mobile
    Communications ("GSM")-based technologies); 

-   Wireless packet-mode data services (*e.g.*, Cellular Digital
    Packet Data, CDMA, Time Division Multiple Access, PCS1900, or
    GSM-based packet-mode data services);   

-   X.25 services; 

-   IP services; 

-   Paging (one-way or two-way); and 

-   Packet-mode data services using traffic channels. 

 

**B. Standards for packet call-identifying information**

> This section reviews various existing standards and technical
> requirements for providing packet call-identifying information to
> LEAs. Each standard is written to apply to a specific set of packet
> services or technology, or specific combinations of services and
> technologies, since what is reasonably available call-identifying
> information may vary by service and technology.

**(1) TIA, ATIS, and J-STD-025-B\
**

> Subsequent to its issuance of J-STD-025-A, TIA produced J-STD-025-B,
> another revision of the J-Standard. The purpose of the J-STD-025-B
> revision was to add requirements for support of packet mode
> call-identifying information. J-STD-025-B was approved as a TIA
> standard and an ATIS trial use standard in January 2004.[^301]
>
> J-STD-025-B provides standards in three areas, two for wireless
> carriers and one for wireline carriers. First, it includes its own
> text for surveillance of Internet access services using
> cdma2000®[^302] technology, which is used by many commercial wireless
> service providers. Second, it references in the current trial use
> standard to 3^rd^ Generation Partnership Project ("3GPP")
> specifications for surveillance of both Internet access and voice over
> packet using UMTS wireless technology.[^303] The 3GPP specifications
> are aligned with ATIS standard T1.724, and it is expected that the
> final version of J-STD-025-B will refer directly to T1.724 instead of
> the 3GPP specifications.[^304] In January 2004, ANSI approved ATIS
> standard T1.724-2004, *UMTS Handover Interface for Lawful
> Interception.* T1.724 supports surveillance of both Internet access
> services and Session Initiation Protocol ("SIP")-based multimedia
> (including voice) over packet services using UMTS or General Packet
> Radio Service technology.
>
> Finally, J-STD-025-B references to ATIS standard T1.678 for
> surveillance of voice over packet services provided over wireline. In
> January 2004 ANSI approved ATIS standard T1.678-2004, *Lawfully
> Authorized Electronic Surveillance ("LAES") for Voice over Packet
> Technologies in Wireline Telecommunications Networks.* T1.678 supports
> surveillance of VoIP arrangements using two call set-up protocols: SIP
> and H.323-based VoIP services.
>
> As mentioned above, J-STD-025-B refers to ATIS standard T1.678 for
> providing LEAs with access to call-identifying information on voice
> over packet services provided over wireline. In addition, J-STD-025-B
> refers to international standards aligned with ATIS standard T1.724
> for providing LEAs with access to call-identifying information on both
> Internet access and voice over packet using UMTS wireless technology.

**(2) Cable Television Laboratories (CableLabs®) specification**[^305]

> As discussed in the *Notice*, CableLabs®, starting in 1999, has issued
> specifications for lawfully authorized electronic surveillance for
> cable operators using systems compliant with CableLabs®
> PacketCable^TM13^ specifications for multi-media services such as IP
> telephony.[^306] Version I01 of the PacketCable^TM^ 1.5 Electronic
> Surveillance Specification (PKT-SP-ESP1.5-I01-050128) was released on
> January 28, 2005 and is the latest specification, superseding all
> previous documents.[^307]

APPENDIX E

SECTION 109(B)(1) PETITIONS FOR COST-SHIFTING RELIEF:

**FILING INSTRUCTIONS**

**I. PURPOSE**

CALEA section 109(b) permits a telecommunications carrier covered by
CALEA to file a petition with the FCC and an application with the
Department of Justice (DOJ) to request that DOJ pay the costs of the
carrier's CALEA compliance (cost-shifting relief) with respect to any
equipment, facility or service installed or deployed after January 1,
1995. First, the carrier must file a section 109(b)(1) petition with the
FCC and prove that, based on one or more of the criteria set forth in
section 109(b)(1)(A)-(K), implementation of at least one particular
solution that would comply with a particular section 103 capability
requirement is not "reasonably achievable." The filing instructions for
this section 109(b)(1) petition are set forth in this appendix. Second,
if the Commission grants a section 109(b)(1) petition, the carrier must
then apply to DOJ, pursuant to section 109(b)(2), to pay the reasonable
costs of compliance for one of the solutions proposed in the section
109(b)(1) petition. DOJ may then either pay the reasonable costs of
compliance or deny the application. If DOJ denies the section 109(b)(2)
application, then the carrier is deemed to be CALEA compliant for the
facilities, networks, and services (services) described in the section
109(b)(1) petition until those services are replaced, significantly
upgraded or otherwise undergo a major modification.

**II. EFFECT OF FILING**

The Commission shall rule on the petition within one year after the date
such petition was filed. The filing of a petition does not toll the
effective date that a carrier must become CALEA-compliant or shield a
carrier from CALEA enforcement by law enforcement.

**III. FILING INSTRUCTIONS AND PROCEDURES**

**A. Where to File and Number of Copies**

> All petitioners must file an original and two copies addressed to:
>
> Secretary
>
> Federal Communications Commission
>
> ATTN: CALEA 109(b)(1)
>
> 445 12th Street, S.W.
>
> Washington, D.C. 20554

**B. Filing Copies with the FBI**

A carrier shall also send one copy of the petition to:

> CALEA Implementation Unit
>
> 14800 Conference Center Drive, Suite 300
>
> Chantilly, Virginia 20151-0450.

C.  **Confidentiality Process**

All filings, orders and any other information provided in a section
109(b)(1) proceeding shall be treated as presumptively confidential
pursuant to section 0.457(g) of the Commission's rules,[^308] and must
be filed under seal by the petitioner. Petitioners must mark the top of
each page of their petitions: "Confidential -- Not for Public
Inspection." Persons seeking access to any information from a section
109(b)(1) proceeding must request such access pursuant to section 0.461
of the Commission's rules.[^309]

**IV. Required Petitioner Identification Information**

**A.** Name of carrier, address, and name of carrier contact person.

**B.** Form 499A file number for petitioner (if applicable).

**C.** Petitioner FCC Registration Number and/or Tax Payer
Identification Number.

**D.** The information required in paragraphs A-C shall be provided on
page one of the petition.

**V. FORMAT OF SECTION 109(b)(1) PETITIONS**

A.  Include an executive summary at the beginning of each petition that,
    in one to two paragraphs only, summarizes the petitioner's
    arguments.

B.  Include a Table of Contents that clearly indicates to the reader
    where to find the (1) facilities, networks, and services (services)
    at issue, (2) the CALEA section 103 capability requirement(s) at
    issue, (3) the petitioner's proposed solution(s), including a cost
    analysis of the solution(s), to satisfy the section 103 capability
    requirement(s) at issue, (4) the section 109(b)(1) criterion under
    which the petitioner will argue that compliance is not reasonably
    achievable, and (5) petitioner's due diligence showing.

**VI.** **CONTENT OF SECTION 109(b)(1) PETITIONS**

> **A. Identification Of Specific Facilities, Networks And Services
> (Services) And CALEA Section 103 Capability Requirements**

1\. Identify the facilities, networks, and services (services) that are
the subject of the petition.

2\. Identify which CALEA section 103 capability requirement(s) is the
subject of the petition.

> **B. Identification Of A Solution Or Solutions That, If Implemented,
> Would Make The Service At Issue Compliant With The Applicable CALEA
> Section 103 Capability Requirement(s)**

1\. The petition must present at least one solution for which the
petitioner argues the costs should be shifted to DOJ. The petition must
include evidence that the petitioner engaged in due diligence to
identify a reasonably achievable solution, but that, despite this due
diligence, the solution or solutions presented in the petition are not
reasonably achievable by the petitioner. This due diligence standard is
set forth in more detail in Section III.B.2.c. of this *Second R&O*. At
a minimum, a petitioner must present evidence of a specific CALEA
solution, of the petitioner's due diligence efforts to make this
solution reasonably achievable, and how the petitioner ultimately
determined that it could not implement the specified CALEA solution
without incurring "significant difficulty or expense." To the extent
more than one CALEA solution is available, the petitioner must identify
each of these solutions and demonstrate that petitioner exercised due
diligence in examining each of those solutions and why it determined
that none of them was reasonably achievable.

2\. Due diligence will be measured by a carrier's resources, and the
number of solutions a carrier should present in its petition shall be
proportionate to the amount of a carrier's resources. Due to their
greater resources, larger carriers shall be expected to examine and
propose more solutions in their petitions in order to demonstrate that
the costs of a CALEA solution are not reasonably achievable for those
carriers and therefore should be shifted to DOJ. Smaller carriers need
not examine as many solutions in their petitions, but must examine as
many solutions as their resources permit.

3\. To the extent that other solutions exist in the marketplace, such as
a solution offered by a third-party provider, that are less expensive
than the solutions proffered in a petition, the petitioner must explain
why the less expensive solutions are not reasonably achievable pursuant
to a cost analysis, as described in more detail below.

> **C. Special Instructions for Packet Services Claims of Not Reasonably
> Achievable**

1\. Identify each packet service to be covered by this petition and the
date that service was initially offered to the public.

2\. For each packet service, identify and list all intercept access
points to which this petition applies. (These should be the intercept
access points associated with the least cost solution, as discussed in
paragraphs 4-5 below.) Provide the name of the manufacturer, the model,
and the type of network equipment (*e.g.*, router, DSLAM, ATM switch,
soft switch, SIP server, or IP-PSTN gateway, CMTS (cable modem
termination system), CMS (call management system), media gateway, or
media gateway controller) currently in use at each access point. Also
provide the date of initial installation of the equipment in the service
provider\'s network, the generic software release currently loaded on
the equipment and the date of its installation in the service provider's
network.

*Description of Alternative CALEA Solutions and Cost Analysis*

3\. For each packet service, identify the applicable industry
surveillance standards or specifications (*e.g.*, TIA J-STD-025-A, TIA
J-STD-025-B, ANSI T1.678, ANSI T1.724, and PACKETCABLE
PKT-SP-ESP1.5-I01-050128) to which the service provider intends to
conform. If no applicable standard exists, and the service provider
intends to implement a custom solution, indicate "custom solution" and
go to 4, below.

4\. For each packet service, identify and describe each CALEA solution
the service provider has considered. As part of the discussion of each
solution, describe the type and function(s) of network equipment used at
the intercept access points, and provide a count of such equipment by
manufacturer name and model. Also, include a discussion and count of
equipment or software upgrades and additional components such as
mediation devices and/or probes that are required to implement each
solution. Indicate if solutions involve the use of a trusted third party
CALEA service provider, association or cooperative, and identify the
functions the third party provider is expected to perform. Identify the
least expensive solution or solutions.

5\. Provide estimates of the capital cost (*i.e.,* the engineered,
furnished, and installed ("EF&I") costs of hardware and software) of
implementing each considered solution in the service provider\'s
network. Where applicable, include the estimated costs of using a third
party CALEA service provider. Support cost estimates with
manufacturer/third party provider documentation. Also provide estimates
of operations costs. Demonstrate how each estimate was derived in a
manner that permits the results to be verified and duplicated. Provide a
detailed cost estimate for the least expensive solution, and enough
information regarding the other solutions to verify that they are not
the least expensive solutions.[^310] Express the estimated total cost of
each alternative solution in terms of one-time costs plus recurring
costs for a specified number of years.  Calculate the present value of
each alternative in today's (date of petition) dollars.  State the
discount rate used and the rationale for its selection, and the length
of the study period.

> **D. Special Instructions for Circuit Services Claims of Not
> Reasonably Achievable**

1.  The petition should identify, where applicable:

    a.  The date the switch was initially installed in the service
        provider\'s network and the installation date of the most recent
        software generic; and

    b.  The identity of the carrier's switching equipment (by
        manufacturer; type and model; software version or generic
        currently operating; and Common Language Location Identification
        (CLLI) Code and geographic areas served).

*Description of Alternative CALEA Solutions and Cost Analysis*

2\. Describe each CALEA solution the service provider has considered and
identify the least expensive solution(s). For each solution considered,
include a discussion and count of required equipment or software
upgrades and additional components such as adjunct processors that are
required to implement section 103 assistance capabilities.[^311]
Indicate if the solutions involve the use of a trusted third party CALEA
service provider, association or cooperative, and the functions the
third party provider is expected to perform.

3\. Provide estimates of the capital cost (*i.e.,* the engineered,
furnished, and installed ("EF&I") costs of hardware and/or software) of
implementing each solution described above in the service provider\'s
network. Where applicable, include the estimated costs of using a
trusted third party CALEA service provider. Support all estimates with
manufacturer/third party service provider documentation. Also provide
estimates of operations costs for each solution. Demonstrate how each
estimate was derived in a manner that permits the results to be verified
and duplicated. Provide a detailed cost estimate for the least expensive
solution, and enough information regarding the other solutions to
demonstrate that they are not the least expensive solution.[^312]
Express the estimated total cost of each alternative solution in terms
of one-time costs plus recurring costs for a specified number of years. 
Calculate the present value of each alternative in today's (date of
petition) dollars.  State the discount rate used and the rationale for
its selection, and the length of the study period.

> **E. Arguments That CALEA Compliance Is Not Reasonably Achievable On
> Grounds Of Cost**

1\. Explain and produce evidence how the identified solution or, in the
case of multiple solutions, how all solutions would impose a
"significant difficulty or expense" on the petitioner as that phrase is
defined in the eleven statutory criteria set forth in CALEA section
109(b)(1)(A)-(K). *See* paragraph 54 of this *Second R&O* for further
guidance on these eleven statutory criteria. All arguments must clearly
identify and relate to one of these eleven statutory criteria.

2\. If petitioner argues that the least expensive solution or solutions
imposes a significant expense, indicate the impact of implementing the
least expensive solution by providing the number of packet customers and
the number of circuit customers served by the service provider in each
of the past five years, and by comparing the estimated total cost of the
least cost CALEA solution to the service provider\'s capital budget for
the next five years. Costs must be stringently documented. *See* Section
III.D. of this *Second R&O* for further guidance on cost issues and
requirements for documentation.

> 3\. Identify the resources available to the carrier to attain CALEA
> compliance for each service listed in the petition. Examples of
> resources include estimates for capital expenditures approved,
> rejected or modified by the state regulatory authorities, the
> petitioner's capital budget, and long-term capital requirements
> projected by the petitioner. Explain how the petitioner introduced
> CALEA compliance costs into its network planning product development
> cycle.
>
> 4\. Identify efforts by the petitioner to obtain additional resources
> to become CALEA compliant. Examples of evidence of these efforts
> include petitions filed by a carrier with the state public utility
> commission to add CALEA compliance costs to the revenue requirement if
> the carrier is subject to rate of return regulation, or petitions to
> add CALEA compliance costs to the exogenous cost category if the
> carrier is subject to price cap regulation. Further examples could
> include efforts to obtain funding from the federal Rural Utility
> Service (RUS) from private sources.

5\. Provide the number of non-CALEA law enforcement requests received by
the carrier in each of the last five years for the following: (a)
packet-mode content wiretaps; (b) circuit-mode content wiretaps; (c)
packet-mode pen register and trap-and-trace wiretaps; and (d)
circuit-mode pen register and trap and trace wiretaps. In addition,
provide the number of CALEA law enforcement requests received by the
carrier in each of the last three years for the following: (a)
packet-mode content wiretaps; (b) circuit-mode content wiretaps; (c)
packet-mode pen register and trap-and-trace wiretaps; and (d)
circuit-mode pen register and trap-and-trace wiretaps.

**F. Arguments that CALEA Compliance Is Not Reasonably Achievable On
Grounds Other Than Cost**

1\. If petitioner seeks relief on grounds other than cost, petitioner
must produce verified evidence to support an argument that it is
entitled to relief under any of the non-cost criteria of paragraphs (A)
to (K) of section 109(b)(1), as further explained in paragraph 54 of
this *Second R&O*.

APPENDIX F

SECTION 107(C) PETITIONS FOR EXTENSIONS OF TIME:

**FILING INSTRUCTIONS**

**I. Purpose and Scope**

CALEA section 107(c)(1) permits a petitioner to apply for an extension
of time, up to two years from the date that the petition is filed, to
come into compliance with a particular CALEA section 103 capability
requirement.

Under section 107(c)(1), a petitioner may seek an extension of time only
for equipment, facilities, or services ("services") installed or
deployed prior to October 25, 1998.

**II. Effect of Filing**

A section 107(c)(1) extension petition shall be deemed provisionally
granted for two years unless the Commission rules otherwise. The filing
of a section 107(c)(1) petition tolls the deadline for CALEA compliance.

**III. Filing Instructions and Procedures**

**A. Where to File and Number of Copies**

> The petitioner shall file one original petition and two copies with
> the:
>
> Secretary
>
> Federal Communications Commission
>
> ATTN: CALEA 107(c)(1)
>
> 445 12th Street, S.W.
>
> Washington, D.C. 20554

**B. File One Copy With The FBI**

The petitioner, whether or not it chooses to participate in the FBI
CALEA Implementation Unit's Flexible Deployment Program, shall at the
same time send one copy of its FCC petition and one copy of any other
documents that it files in that FCC petition's docket to:

> CALEA Implementation Unit
>
> 14800 Conference Center Drive, Suite 300
>
> Chantilly, Virginia 20151-0450

**C. Letters To And From The FBI's CALEA Implementation Unit Must Be
Filed With The FCC**

If the petitioner applies to participate in the FBI's Flexible
Deployment Program, the petitioner shall attach a copy of the Flexible
Deployment Template required by the FBI to its FCC petition. In
addition, the petitioner shall file copies of the Receipt Notification
Letter and either the Letter of Support or Letter of Non-support that it
receives from the FBI with the FCC pursuant to the instructions in
paragraph A above. For instructions on how to participate in the FBI's
Flexible Deployment Program, see
<http://askcalea.net/docs/flexguide4.pdf> (last visited in May 2006).

**D. Confidentiality Process**

All filings, orders and any other information provided in a section
107(c)(1) proceeding shall be treated as presumptively confidential
pursuant to section 0.457(g) of the Commission's rules,[^313] and must
be filed under seal by the petitioner. Petitioners must mark the top of
each page of their petitions: "Confidential -- Not for Public
Inspection." Persons seeking access to any information from a section
107(c)(1) proceeding must request such access pursuant to section 0.461
of the Commission's rules.[^314]

**IV. Required Petitioner Identification Information**

**A**. Name of carrier, address, and name of carrier contact person.

**B.** Form 499A file number for petitioner (if applicable).

**C.** Petitioner FCC Registration Number ("FRN").

**D.** The information required in paragraphs A-C shall be provided on
page one of the petition.

**V. FORMAT OF SECTION 107 PETITIONS**

**A**. Include an executive summary at the beginning of each petition
that, in one to two paragraphs only, summarizes the petitioner's
arguments.

**B.** Include a Table of Contents that clearly indicates to the reader
where to find the (1) specific facilities, services and equipment at
issue, (2) capability requirements at issue, (3) arguments why the
petitioner needs an extension of time, (4) proposed solution, including
a cost analysis, and (5) petitioner's due diligence showing.

**VI. CONTENT OF SECTION 107 PETITIONS**

**A. Identification of Equipment, Facilities, and Services; CALEA
Section 103 Capability Requirement; and Compliance Date**

1\. Identify the "equipment, facility or service" ("service") that is
the subject of the petition.

2\. Certify that the service was deployed prior to October 25, 1998.

3\. Identify which CALEA section 103 capability requirement (or
requirements) is the subject of the petition.

4\. Identify the date, not to exceed two years from the date that the
petition is filed, that the service at issue in the petition will be
compliant with the applicable CALEA section 103 capability
requirements.[^315]

**B. Evidence**

1\. A petitioner must support all assertions with evidence, either in
the form of documents or in signed declarations.

**C. Circuit Services**

> 1\. The petition should identify, where applicable:

a\. The date the switch was initially installed in the service
provider\'s network and the installation date of the most recent
software generic; and

b\. The identity of the carrier's switching equipment (by manufacturer;
type and model; software version or generic currently operating; and
Common Language Location Identification (CLLI) Code and geographic areas
served).

2.  Description of CALEA Solution(s) and Cost Analysis

    a.  Describe the CALEA solution(s) the service provider intends to
        implement by switch type (manufacturer and model). Include a
        discussion of required equipment and/or software upgrades and
        additional components such as adjunct processors that are
        required to implement section 103 assistance capabilities.[^316]
        Indicate if the solution(s) involve the use of a third party
        CALEA service provider, association or cooperative, and the
        functions the third party provider is expected to perform.

    b.  If cost is not a reason for requiring an extension, skip this
        paragraph. Otherwise, provide estimates of the capital cost
        (*i.e.,* the engineered, furnished, and installed ("EF&I") costs
        of hardware and/or software) of implementing the solutions in
        the service provider\'s network, by switch type. Where
        applicable, include the estimated costs of using a third party
        CALEA service provider. Support all estimates with
        manufacturer/service provider documentation. Also provide
        estimates of operations costs. Demonstrate how each estimate was
        derived in a manner that permits the results to be verified and
        duplicated. Express the estimated total cost of each alternative
        solution in terms of one-time costs plus recurring costs for a
        specified number of years.  Calculate the present value of each
        alternative in today's (date of petition) dollars.  State the
        discount rate used and the rationale for its selection, and the
        length of the study period.

**D. Packet Services**

1\. For each packet service covered by this extension request, identify
and list all intercept access points to which this petition applies.
Provide the name of the manufacturer, the model, and the type of network
equipment (*e.g.*, router, DSLAM, ATM switch, soft switch, SIP server,
or IP-PSTN gateway, CMTS (cable modem termination system), CMS (call
management system), media gateway, or media gateway controller)
currently in use at each access point. Also provide the date of initial
installation of the equipment in the service provider\'s network, the
generic software release currently loaded on the equipment and the date
of its installation in the service provider's network.

2.  Description of CALEA Solution(s) and Cost Analysis

    a.  For each packet service covered by the extension petition,
        identify the applicable industry surveillance standards or
        specifications (*e.g.*, TIA J-STD-025-A, TIA J-STD-025-B, ANSI
        T1.678, ANSI T1.724, and PACKETCABLE PKT-SP-ESP1.5-I01-050128)
        to which the service provider intends to conform. If no
        applicable standard exists, and the service provider intends to
        implement a custom solution, indicate "custom solution" and
        proceed to the next paragraph.

    b.  For each packet service identified in this petition, identify
        and describe the CALEA solution service provider plans to
        implement. As part of the discussion of each solution, describe
        the function(s) of the network equipment used at the intercept
        access points, and provide a count of such equipment by
        manufacturer name and model. Also, include a discussion and
        count of equipment or software upgrades and additional
        components such as mediation devices and/or probes that are
        required to implement each solution. Indicate if a solution
        involves the use of a trusted third party CALEA service
        provider, association or cooperative, and identify the functions
        the third party provider is expected to perform.

    c.  If cost is not a reason for requiring an extension, skip this
        paragraph. Otherwise, provide estimates of the capital cost
        (*i.e.,* the engineered, furnished, and installed ("EF&I") costs
        of hardware and/or software) of implementing each solution in
        the service provider\'s network. Where applicable, include the
        estimated costs of using a trusted third party CALEA service
        provider. Support cost estimates with manufacturer/third party
        provider documentation. Also provide estimates of operations
        costs. Demonstrate how each estimate was derived in a manner
        that permits the results to be verified and duplicated. Express
        the estimated total cost of each alternative solution in terms
        of one-time costs plus recurring costs for a specified number of
        years.  Calculate the present value of each alternative in
        today's (date of petition) dollars.  State the discount rate
        used and the rationale for its selection, and the length of the
        study period.

3\. For each packet service identified in the petition, the petition
must include evidence that third party solutions were solicited from all
available vendors and then compared with the other solutions provided
above.

**E. Arguments For Why Petition Should be Granted**

1\. The petitioner must present evidence for why it merits an extension
of time to bring the service at issue into compliance with the
applicable section 103 CALEA capability requirement(s).

2\. If petitioner argues that it is entitled to relief based on cost,
provide detailed and specific evidence of the impact of the cost by
comparing the estimated total cost of the CALEA solution to the service
provider\'s capital budget for the next five years.

3\. Provide the number of packet customers and the number of circuit
customers served by the service provider in each of the past five years.

4\. Identify the resources available to the carrier to attain CALEA
compliance for each service listed in the petition. Examples of
resources include estimates for capital expenditures approved, rejected
or modified by the state regulatory authorities, the petitioner's
capital budget, and long-term capital requirements projected by the
petitioner. Explain how the petitioner introduced CALEA compliance costs
into its network planning product development cycle.

5\. Identify efforts by the petitioner to obtain additional resources to
become CALEA compliant. Examples of evidence of these efforts include
petitions filed by a carrier with the state public utility commission to
add CALEA compliance costs to the revenue requirement if the carrier is
subject to rate of return regulation, or petitions to add CALEA
compliance costs to the exogenous cost category if the carrier is
subject to price cap regulation. Further examples could include efforts
to obtain funding from the federal Rural Utility Service (RUS) from
private sources.

6\. Provide the number of non-CALEA law enforcement requests received by
the carrier in each of the last five years for the following: (a)
packet-mode content wiretaps; (b) circuit-mode content wiretaps; (c)
packet-mode pen register and trap-and-trace wiretaps; and (d)
circuit-mode pen register and trap and trace wiretaps. In addition,
provide the number of CALEA law enforcement requests received by the
carrier in each of the last three years for the following: (a)
packet-mode content wiretaps; (b) circuit-mode content wiretaps; (c)
packet-mode pen register and trap-and-trace wiretaps; and (d)
circuit-mode pen register and trap-and-trace wiretaps.

**F. Due Diligence Showing**

1\. For circuit services, petitioner must demonstrate that it exercised
due diligence since June 30, 2002, to achieve a CALEA-compliant
solution.[^317]

2\. For packet services, petitioner must demonstrate that it exercised
due diligence since November 19, 2001, to achieve a CALEA-compliant
solution.[^318]

APPENDIX G

SAMPLE MONITORING REPORT (FORM XXX)

![](media/image1.png){width="6.499305555555556in"
height="8.597222222222221in"}

**STATEMENT OF**

**CHAIRMAN KEVIN J. MARTIN**

*Re: Communications Assistance for Law Enforcement Act and Broadband
Access and Services (ET Docket No. 04-295)*

Enabling law enforcement to ensure our safety and security is of
paramount importance. Last August, the Commission took an important step
forward by concluding that VoIP and facilities-based broadband Internet
access providers have CALEA obligations, giving law enforcement the
necessary tools to keep pace with rapid technological change. Today's
Order provides further clarity to carriers and other new technology
service providers regarding the implementation of their law enforcement
obligations.

The Order we adopt today is, as we forecast last year, a second step
toward implementing CALEA obligations. We address important issues under
CALEA such as cost recovery, compliance processes, and enforcement,
providing further clarity for entities subject to CALEA to continue to
work toward full CALEA compliance. I remain committed to ensuring that
these providers take all necessary actions to incorporate surveillance
capabilities into their networks in a timely fashion. Further we will
continue to work to address and overcome any challenges that stand in
the way of effective lawful electronic surveillance.

**STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS**

Re: *Communications Assistance for Law Enforcement Act and Broadband
Access and*

*Services*, Second Report and Order and Memorandum Opinion and Order (ET

Docket No. 04-295, RM-10865)

As I have often said, the first obligation of a public servant is the
safety of the people. In our case here at the FCC, our controlling
statute makes that as explicit as it could possibly be---we are charged
to "make available . . . a rapid, efficient, Nation-wide and world-wide
wire and radio communication service . . . for the purpose of the
national defense" and "for the purpose of promoting safety of life and
property." The implementation and oversight of CALEA is an important
part of that duty. By ensuring that law enforcement authorities have
access to the resources CALEA authorizes, this Commission supports
efforts to protect the public safety and homeland security of the United
States and its people. Because we have a responsibility to assist those
whose job it is to protect us from harm, I support today's decision.

Today's decision addresses a number of outstanding issues regarding
CALEA implementation. The item cleans up some of the ambiguities left
open from our earlier efforts. Notably, we clarify the role that the
experts in industry standard-setting bodies will play by working in
concert with law enforcement and other interested parties to craft
technical standards for critical terms like "call-identifying
information." This is truly urgent work, and I thank those who are
participating in the process and urge them to keep this the top priority
item it must be both to get the job done and to avoid the Commission
having to intrude itself in the process. We also clarify that trusted
third parties are a legitimate way for carriers to manage their CALEA
obligations. The record shows TTP availability and capability to perform
a number of services to advance CALEA compliance. Trusted third party
participation should also mean more cost-effective options for
compliance, particularly for smaller carriers.

As all who have followed our CALEA proceedings know, this is ongoing and
difficult work. As I have remarked before, the challenge is complicated
by the Commission's theory of substantial replacement that collapsed the
statutory dichotomy between information services and telecommunications
services in a stretch that invited time-consuming and unneeded legal
complications. Finally, as this order notes, there is still clarity to
be provided. For example, numerous institutions of higher learning have
expressed concern that language in our earlier order could be read as
extending CALEA obligations to the private networks of universities,
libraries and some others in ways possibly at odds with the statutory
text. All those agencies and offices of government involved in CALEA
implementation should work together to provide clarity here and to avoid
confusion---and potentially significant expenses---for these
institutions.

I commend the Chairman for his dedication to law enforcement and his
continuing work on public safety and homeland security, and I thank the
Bureau for all its hard work in getting this item to us for action
today.

**STATEMENT OF**

**COMMISSIONER JONATHAN S. ADELSTEIN**

*Re: Communications Assistance for Law Enforcement Act and Broadband
Access and Services,* RM-10865, ET Docket 04-295, Second Report and
Order and Memorandum Opinion and Order (May 3, 2006)*.*

There is no higher calling for us at the Commission than preserving
public safety and homeland security, so I support our efforts to provide
guidance on the legal framework for the Communications Assistance for
Law Enforcement Act (CALEA) and the obligations of facilities-based
broadband providers and interconnected VoIP providers under that
statute.

CALEA provides an important tool for law enforcement by requiring
telecommunications carriers to build into their networks technical
capabilities to assist law enforcement with authorized intercepts of
communications and call-identifying information. In August of last year,
the Commission determined that facilities-based broadband providers and
interconnected VoIP providers are subject to CALEA. With this Order, we
take additional steps to meet the unique needs of our nation's first
responders and law enforcement officials. I am particularly encouraged
by the Order's finding that broadband and VoIP providers may use
so-called "trusted third parties" to extract the information necessary
to comply with CALEA, particularly given the potential that this
approach holds for smaller providers.

We move the ball forward today, but there remains important work ahead
for industry, law enforcement, and the Commission, alike. Particularly
given CALEA's reliance on industry organizations to take a lead role on
these issue and the tight deadlines for compliance, it will be critical
for all parties to work expeditiously, creatively and cooperatively if
we are to meet the multi-faceted goals of CALEA. This Order directs
carriers to file detailed reports on the status of their compliance
efforts. I look forward to seeing the results of these reports so that
we can track industry progress and take any additional actions or
address remaining issues necessary.

I would like to thank the staff from our Office of Engineering and
Technology and the Wireline Competition Bureau for their hard work on
this item. I look forward to working with my colleagues and the broader
community as we continue our efforts to faithfully implement CALEA.

**STATEMENT OF**

**COMMISSIONER DEBORAH TAYLOR TATE**

Re: *Communications Assistance for Law Enforcement Act and Broadband
Access and Services (ET Docket No. 04-295).*

As is often the case, we are called on by many parties to weigh their
individual interests \-- in this case the interest of the safety and
security of our citizens \-- against the potential costs and possible
difficulties of ensuring that safety. Our number one priority at this
point in our nation's history must be our national security -- the
safety of every American.

First, let me say that having worked with both Vanderbilt University and
Belmont University, and as a parent of three college aged children, I am
loathe to take any action that unfairly shifts a heavy financial burden
onto students or parents of students in today's colleges and
universities. However concerned I may be, though, I am not persuaded
merely by largely speculative allegations that the financial burden on
the higher education community could total billions of dollars.[^319]
Moreover, it is not sound analysis to rely on vague assertions regarding
the costs per student of CALEA compliance for IP services, when those
assertions were made prior to, or without regard to, our acknowledgement
that the use of a Trusted Third Party (TTP) could be an economically
feasible alternative to meet CALEA's requirements. Indeed, one potential
TTP asserted that the cost per IP service subscriber, based on
large-scale shared implementation costs could be as low as "1 cent per
subscriber per month or less."[^320]

It is also important for these institutions to remember what we have
said about educational networks' compliance. The last sentence
of footnote 100 of our First Report and Order says: "To the extent . . .
that these private \[educational\] networks are interconnected with a
public network, either the PSTN or the Internet, providers of the
facilities that support the connection of the private network to a
public network are subject to CALEA under the SRP." This language means
that although educational networks generally fall under CALEA\'s
exemption for private networks, the facilities connecting these private
networks to the public Internet must be CALEA compliant. 

A number of colleges and universities, however, have expressed concern
that this language could be read to require them to modify their entire
networks, at significant expense. We have explained that this concern is
misplaced.  Our brief to the D.C. Circuit in the CALEA appeal, filed on
February 27, 2006, states (at pp. 39-40):

> Petitioners\' professed fear that a private network would become
> subject to CALEA \"throughout \[the\] entire private network\" if the
> establishment creating the network provided its own connection between
> that network and the Internet is unfounded.  The \[First Report and
> Order\] states that only the connection point between the private and
> public networks is subject to CALEA.  This is true whether that
> connection point is provided by a commercial Internet access provider
> or by the private network operator itself.  

Most importantly, even if compliance costs were to fall on an
educational institution, rather than the commercial provider of the
connection point to the public switched network, CALEA itself allows for
consideration of the identified costs of CALEA compliance and financial
resources of a covered carrier in the criteria for review of a Section
109 request. Thus Congress, in crafting CALEA, provided an avenue for
relief from potential harm by making available section 109 relief.

I understand and appreciate the concerns of America's colleges and
universities, but I am also mindful of the balancing of interests at
stake here, and the need to place great weight on the factors of public
safety and national security.

With regard to clarifying that section 109 is the only statutory
provision under which carriers can seek to recover CALEA compliance
costs, some might argue that traditional switched services carriers have
sought to recover not only wiretap provisioning costs, but also CALEA
capital costs through individual wiretap charges. The Department of
Justice, however, has consistently held the position here that only
costs specific to provisioning the requested wiretap are recoverable in
these charges. To the extent that elimination of CALEA capital costs
from wiretap charges enables law enforcement more effectively to utilize
CALEA wiretaps, our clarification serves to further public safety and
national security interests.

Finally, I support the affirmation of the original May 14, 2007 deadline
for VoIP and Broadband Internet providers to become CALEA compliant, as
well as our finding that it is premature for this agency to pre-empt the
ongoing industry process of developing additional standards for IP-based
services. There is no indication in the record that any party has filed
a deficiency petition under section 107(b) of CALEA with regard to the
developing standards. Moreover, I do not find a basis in the statute for
the issuance of an extension.

As to the assertion of commenters that section 109(b) authorizes us to
grant an extension of the obligation of carriers to become CALEA
compliant, I do not think it is the FCC's job to "rewrite" the statute
by using section 109(b) of CALEA to provide an extension for equipment,
facilities, or services deployed on or after October 25, 1998,[^321]
when such equipment, facilities, or services are not eligible for an
extension under section 107(c). Nor am I convinced that our broad
authority under 229(a), the provision that grants us the authority to
implement CALEA, provides us broader authority to grant extensions than
the specifically limited authority Congress has stated in section 107(c)
of the statute.

Congress has provided clear guidance in the plain language of CALEA, and
we must read CALEA's requirements in a technology neutral manner. Our
action today is not expanding the reach of the statute, but simply
clarifying our interpretation of the statute in order to meet its goals
and to further the interests of public safety and national security.

[^1]: Pub. L. No. 103-414, 108 Stat. 4279 (1994) (codified as amended in
    sections of 18 U.S.C. and 47 U.S.C.).

[^2]: This is the same CALEA compliance date established by the *First
    Report and Order* (*First R&O*) in this proceeding for newly covered
    entities and providers of newly covered services. *See*
    *Communications Assistance for Law Enforcement Act and Broadband
    Access and Services*, *First Report and Order and Further Notice of
    Proposed Rulemaking,* ET Docket No. 04-295, RM-10865, 20 FCC Rcd
    14989 (2005).

[^3]: Joint Petition for Expedited Rulemaking, RM-10865 (filed Mar. 10,
    2004).

[^4]: *See* *Communications Assistance for Law Enforcement Act and
    Broadband Access and Services*, *Notice of Proposed Rulemaking and
    Declaratory Ruling,* ET Docket No. 04-295, RM-10865, 19 FCC Rcd
    15676 (2004).

[^5]: *Notice*, 19 FCC Rcd at 15677, para. 1.

[^6]: *First R&O*, 20 FCC Rcd at 14989, para. 1.

[^7]: *Further Notice*, 20 FCC Rcd at 15013, para. 48.

[^8]: *Id*. at 15013, para. 49.

[^9]: 47 U.S.C. § 1002.

[^10]: *First R&O*, 20 FCC Rcd at 14990, para. 3.

[^11]: *Notice*, 19 FCC Rcd at 15712, para. 63.

[^12]: *Id*. at 15712-13, para. 65.

[^13]: 47 U.S.C. § 1002(a)(1), (a)(2).

[^14]: 47 U.S.C. § 1001(2).

[^15]: *See* *Communications Assistance for Law Enforcement Act*, *Order
    on Remand,* CC Docket No. 97-213, 17 FCC Rcd 6896 (2002) at 6911,
    para. 47. *See also* 47 C.F.R. §§ 22.1102, 24.902, 64.2202.
    J-STD-025 was an interim standard published by the Alliance for
    Telecommunications Industry Solutions (ATIS) and the
    Telecommunications Industry Association (TIA) in December 1997 and
    was replaced by J-STD-025-A in May 2000. J-STD-025-A incorporated
    additions made to J-STD-025 by the Commission in CC Docket No.
    97-213; *see Third Report and Order**, ***14 FCC Rcd 16794 (1999).
    In December 2003, ATIS and TIA published J-STD-025-B; *see*
    [[http://www.atis.org/PRESS/pressreleases2004/031904.htm]{.underline}](http://www.atis.org/PRESS/pressreleases2004/031904.htm)
    (last visited in May 2006). J-STD-025-B focuses on refining CALEA
    packet-mode communications requirements for the interface to the
    collection equipment of LEAs.

[^16]: *Notice*, 19 FCC Rcd at 15713, para. 67.

[^17]: *Id*.

[^18]: *Id.* at 15713-14, para. 67.

[^19]: *Id.* at 15714, para. 68.

[^20]: Cingular Comments at 17, *citing USTA v. FCC,* 227 F.3d 450,460
    (D.C. Cir. 2000).

[^21]: Cingular Comments at 17. Similarly, USTelecom observes that the
    CALEA statute calls for the telecommunications industry to develop a
    standard in consultation with LEAs, that the Commission becomes
    involved in this process only if a deficiency petition is filed, and
    that the Commission may not simply overturn a standard, but rather
    must correct any deficiency. USTelecom Comments at 8-9 citing 47
    U.S.C. §1006. BellSouth, DOJ, and SIA generally concur. BellSouth
    Comments at 16; DOJ Comments at 41; SIA Comments at 20; SIA Reply
    Comments at 13. DOJ, USTelecom, and Verizon also argue that
    standards bodies and industry groups have the resources, which the
    Commission may lack, to determine call-identifying information for
    multiple technologies. DOJ Comments at 41; DOJ Reply Comments at
    23-24; USTelecom Comments at 9; Verizon Comments at 21; Verizon
    Reply Comments at 19-20.

[^22]: Global Crossing Reply Comments at 9; I&P Comments at 49; NCTA
    Comments at 11; SIA Comments at 10-11; TIA Comments at 14; US ISPA
    Comments at 23, 45.

[^23]: US ISPA Comments at 20; I&P Comments at 45.

[^24]: DOJ Comments at 44-48.

[^25]: TIA Comments at 15; BellSouth Comments at 22; US ISPA Comments at
    20-21.

[^26]: *USTA*, 227 F.3d at 461.

[^27]: 47 U.S.C. § 1006(b).

[^28]: Declining to interpret the statutory definition of
    "call-identifying information" in this area until industry
    standard-setting bodies do so in the first instance is consistent
    with the D.C. Circuit's decision in *USTA*. That decision
    "turn\[ed\] on what the Act means by 'call-identifying
    information.'" 227 F.3d at 457. Responding to deficiency petitions
    challenging an industry standard, the Commission had added several
    capabilities beyond those required by that standard (called the
    "J-Standard"). *Id.* at 456. The Commission concluded that these
    additional capabilities were required by the statutory definition of
    "call-identifying information," but the D.C. Circuit held that the
    Commission had not provided an adequate explanation for why this was
    so. *Id.* at 460. The Court noted that this failure was
    "particularly serious in view of CALEA's unique structure." *Id.*
    The J-Standard had provided an interpretation of the statutory
    definition of "call-identifying information," but the Commission
    failed to identify any "deficiencies" in that definition. *Id.* at
    461-62. The Court concluded that this was in error: "Were we to
    allow the Commission to modify the J-Standard without first
    identifying its deficiencies, we would weaken the major role
    Congress obviously expected industry to play in formulating CALEA
    standards." *Id.* at 461. To attempt a definition of the elements of
    "call-identifying information" here -- without any standard-setting
    bodies' definitions even before us -- would be at least as
    disruptive to the statutory scheme as the approach rejected by the
    D.C. Circuit in *USTA*.

[^29]: *See* n.Error: Reference source not found, *supra*.

[^30]: *See Petition for Reconsideration and for Clarification of the
    CALEA Applicability Order*, filed by USTelecom in ET Docket No.
    04-295, at 3-5 (Nov. 14, 2005) (*USTelecom Petition)*. A list of
    parties that filed oppositions/comments and replies in response to
    the petition is shown in Appendix A.

[^31]: *See id.* at 4. We note that no commenter on the USTelecom
    Petition specifically opposed this portion of the petition.

[^32]: *See, e.g.,* Global Crossing Reply Comments at 7; GVNW Consulting
    Comments at 5-6 (equipment vendors will not negotiate with small
    carriers to develop a custom solution if they have not developed a
    solution for a larger market); Advocacy Reply Comments at 7-8,
    Southern LINC Reply Comments at 6-7 (small carriers lack market
    power and must wait until larger carriers or manufacturers develop
    solutions). Some suggest that we allow small carriers more time to
    come into compliance. *See, e.g.,* Advocacy Reply Comments at 7;
    Southern LINC Reply Comments at 6-7 (suggests staggered schedules
    based on carrier size). Others suggest that we not establish a
    compliance deadline for small carriers, allowing them to work out
    compliance plans with Law Enforcement. *See, e.g.,* UPLC Reply
    Comments at 13; United Utilities Reply Comments at 6; Vonage Reply
    Comments at 6.

[^33]: *See, e.g.,* TIA Comments at 8-9; US ISPA Comments at 36-37;
    Verint Reply Comments at 16. Note: Verint filed a document entitled
    *Comments of Verint Systems, Inc.*; however, it was filed during the
    reply comment period, and so we are treating it as a reply comment.

[^34]: *See, e.g.,* TIA Comments at 8-9 (supports an 18 month compliance
    period for content surveillance which would begin to run from when
    the FCC adopts final rules on "substantial compliance" or from when
    the FCC decides a service is subject to CALEA under the "substantial
    replacement" provision); SIA Comments at 16-18 (suggests that, for
    entities newly subject to CALEA, we require compliance one year from
    the latest date on which: (1) safe harbor standards are established
    that satisfy Section 103 requirements or the date on which the
    Commission resolves a deficiency petition filed under Section
    107(b), (2) the Attorney General issues a final notice of capacity
    for the newly subject service/entity, and (3) the Commission
    establishes system security and integrity rules for the newly
    subject entities).

[^35]: *See First Report and Order*, 20 FCC Rcd at 15012, para. 46 &
    n.138.

[^36]: For example, ATIS standard T1.678 supports surveillance of VoIP
    in wireline networks using two different call set-up protocols, and
    CableLabs' *Packet Cable Electronic Surveillance Specification*
    supports surveillance of VoIP in cable networks. *See* Appendix D,
    *infra*; *see also* DOJ Opposition at 7-8.

[^37]: For example, the TIA/ATIS standard J-STD-025 for several
    different technologies such as X.25 packet service, ISDN, short
    message service for cellular and PCS, and various wireless
    packet-mode data services (e.g., CDMA, TDMA, and GSM). *See again*
    Appendix D, *infra*.

[^38]: For all of these reasons, we reject USTelecom's suggestion that
    the 18-month compliance period should run from the date of this
    *Second Report and Order*. *See* *USTelecom Petition* at 1-3; *see
    also, e.g.*, 8x8 Comments at 2; ACLU Comments at 5; CTIA Comments at
    1-3; Global Crossing Comments at 2-3; TIA Comments at 4 (all
    supporting USTelecom's Petition in this respect). We find that the
    May 14, 2007 deadline gives providers of covered services sufficient
    time to develop compliance solutions. Moreover, as discussed *infra*
    in Section III.B.2., any telecommunications carrier that believes
    compliance with section 103 is not reasonably achievable may seek
    relief under section 109(b).

[^39]: 47 U.S.C § 1006(a)(2).

[^40]: *Notice*, 19 FCC Rcd at 15716, para. 77.

[^41]: *Id*. at 15716, para. 78.

[^42]: *Id*. at 15717, para. 79.

[^43]: *Id*. at 15717, para. 80.

[^44]: *Id*. at 15718-19, para. 84.

[^45]: DOJ Comments at 43; SBC Comments at 20-21; US ISPA Reply Comments
    at 3; Level 3 Reply Comments at 5-6; TIA Comments at 13; and
    Cingular Comments at 17.

[^46]: BellSouth Comments at 16 (stating that "the Commission should
    leave technical issues ... to the standards process"); USTelecom
    Comments at 8 (stating that "As CALEA envisioned, it is only through
    collaboration that an industry standard can be adopted;" Verizon
    Reply Comments at 3 ("arguing that the standards process is the best
    forum to resolve complex technical issues"); DOJ Reply Comments at
    24 (stating that "the proper way to resolve section 103 technical
    capability issues under CALEA is through the standard-setting
    process and deficiency petitions."

[^47]: Cingular Comments at 17; SBC Comments at 21.

[^48]: DOJ Comments at 43 (stating the Commission should permit any
    generally recognized industry association or standard setting boding
    to produce a CALEA standard); Sprint Reply Comments at 3 ("if any
    LEA believes that any organization is not qualified under CALEA to
    develop "safe harbor" standards, that LEA can raise the issue in a
    Section 107(b) industry petition."); SIA Comments at 15 (stating
    that the statute places no limitations on the definition of
    "industry association" or "standard-setting organization" and that
    the FCC may not exceed the authority delegated by Congress.).

[^49]: Cingular Comments at 21 ("There is no obligation under CALEA,
    however, that carriers convert all information into J-STD-025
    format"); Motorola Comments at 19 ("The carrier cannot be required
    to deliver the information or content in a code format that is
    different than the code format selected by the carrier for its
    system, so long as the format is capable of being transmitted to law
    enforcement.") However, two parties stated that some format
    standards were appropriate: I&P Comments at 49; Verint Reply
    Comments at 11.

[^50]: *Notice*, 19 FCC Rcd at 15715, para. 72.

[^51]: *Id*. at 15714, para. 69.

[^52]: *Id*. at 15714, para. 70.

[^53]: *Id*. at 15715, para. 71.

[^54]: *Id*. at 15715, para. 72.

[^55]: *Id*. at 15715, para. 73.

[^56]: *Id*. at 15715, para. 74.

[^57]: *Id*. at 15716, para. 75.

[^58]: *Id*. at 15716, para. 76.

[^59]: BellSouth Comments at 43; DOJ Comments at vi, 49; I&P Comments at
    51; Level 3 Comments at 6-7; Nextel Comments at 8; RCA Comments at
    4-5; SBC Comments at 18; US ISPA Comments at 27; Verizon Comments at
    23; DOJ Reply Comments at 27-28; Fiducianet Reply Comments at 3;
    NCTA Reply Comments at 7; Southern LINC Reply Comments at 13; UPLC
    Reply Comments at 14-15; US ISPA Reply Comments at 7-8; Verizon
    Reply Comments at 20-21; Verint Reply Comments at 8.

[^60]: VeriSign Comments at 17.

[^61]: I&P Comments at 51; STC Comments at 2-3; UPLC Reply Comments at
    14-15; Level 3 Comments at 6-7; Verint Reply Comments at 8; RTP
    Comments at 12.

[^62]: DOJ Comments at 51; DOJ Reply Comments at 32-34.

[^63]: SBC Comments at 18-19. SBC also refers to the Omnibus Crime
    Control and Safe Streets Act (OCCSSA), 18 U.S.C. §§ 2510-2522,
    especially 18 U.S.C. § 2518(4), which says, "Any provider of wire or
    electronic communication service, landlord, custodian or other
    person furnishing such facilities or technical assistance shall be
    compensated therefor by the applicant for reasonable expenses
    incurred in providing such facilities or assistance."

[^64]: DOJ Comments at 50; Motorola Comments at 19; Nextel Comments at
    8; NTCA Comments at 6; TIA Comments at 19; US ISPA Comments at
    28-29; Verizon Comments at 25; US ISPA Reply Comments at 8.

[^65]: ACLU Comments at 9; EFF Comments at 26; TCA Comments at 3; US
    ISPA Comments at 28.

[^66]: Cingular Comments at 20; Fiducianet Reply Comments at 8; VeriSign
    Reply Comments at 16.

[^67]: We note, however, that a carrier's independent determination in
    the first instance that compliance through a TTP would not
    compromise the integrity of an intercept is neither controlling on
    the Commission on the issue of compliance with the carrier's CALEA
    obligations nor dispositive of compliance with any specific
    requirements imposed by a court authorizing an interception or
    electronic surveillance pursuant to Titles 18 or 50 of the United
    States Code.

[^68]: We note that the evolution and structure of the TTP industry is
    still ongoing. As a result, we recognize that there may be
    heretofore unknown circumstances in which additional or special
    privacy or security measures may be warranted (*e.g.* in the case of
    a foreign owned or controlled TTP) and which may necessitate further
    Commission action in this area.

[^69]: *See Notice*, 19 FCC Rcd at 15724, para. 96.

[^70]: Most packet-mode technologies were deployed after section
    107(c)(1)'s expiration date, October 25, 1998. Section 107(c)(1)
    provides, "A telecommunications carrier proposing to install or
    deploy, or having installed or deployed, any equipment, facility, or
    service *prior to the effective date of section 1002 \[October 25,
    1998\]* of this title may petition the Commission for 1 or more
    extensions of the deadline for complying with the capability
    requirements under section 1002 of this title." 47 U.S.C. §
    1006(c)(1); CALEA § 108 (emphasis added). Section 1002 sets forth
    the CALEA compliance requirements. 47 U.S.C. § 1002; CALEA § 103.

[^71]: *See* 47 U.S.C. § 1008(b)(1); CALEA § 109(b)(1). A
    telecommunications carrier may demonstrate that compliance is not
    "reasonably achievable" if the Commission determines that compliance
    would impose a "significant difficulty or expense" on the "carrier
    or on the users of the carrier's systems." *Id.* In making this
    determination, the Commission considers the following factors: (1)
    the effect on public safety and national security; (2) the effect on
    rates for basic residential telephone service; (3) the need to
    protect the privacy and security of communications not authorized to
    be intercepted; (4) the need to achieve the capability assistance
    requirements of section 103 by cost-effective methods; (5) the
    effect on the nature and cost of the equipment, facility, or service
    at issue; (6) the effect on the operation of the equipment,
    facility, or service at issue; (7) the policy of the United States
    to encourage the provision of new technologies and services to the
    public; (8) the financial resources of the telecommunications
    carrier; (9) the effect on competition in the provision of
    telecommunications services; (10) the extent to which the design and
    development of the equipment, facility, or service was initiated
    before January 1, 1995; and (11) such other factors as the
    Commission determines are appropriate. *Id.*

    If the Commission finds that compliance is not reasonably achievable
    and grants a section 109(b)(1) petition, then the telecommunications
    carrier need not pay the costs of coming into CALEA compliance.
    However, upon receiving section 109(b)(1) favorable ruling, the
    telecommunications carrier must apply to the Attorney General, who
    may agree, subject to the availability of appropriations, to pay
    that telecommunications carrier for the additional reasonable costs
    of making compliance with the capability requirements reasonably
    achievable. 47 U.S.C. § 1008(b)(2)(A); CALEA § 109(b)(2)(A). If the
    Attorney General does not agree to pay such costs, that
    telecommunications carrier shall be deemed to be in compliance with
    the capability requirements. 47 U.S.C. § 1008(b)(2)(B); CALEA §
    109(b)(2)(B).

[^72]: See 47 U.S.C. § 1006(c)(1); CALEA § 107(c)(1) (emphasis added).

[^73]: *Notice*, 19 FCC Rcd at 15725, para. 97.

[^74]: Cingular Comments at 23; Nextel Comments at 10-11; SBC Reply
    Comments at 6-7. These commenters argue that the language of section
    107(c)(1) does not expressly preclude the Commission from exercising
    extension authority pursuant to other statutes.

[^75]: *See, e.g., First Report and Order* at para. 38 (noting that a
    facilities-based broadband Internet service provider continues to
    have no CALEA obligation with respect to, for example, the storage
    functions of its email service, its web-hosting and DNS lookup
    functions or any other ISP functionality of its Internet access
    service). Telecommunications carriers may petition the Commission
    for a ruling on whether certain facilities or services are subject
    to CALEA (*see* discussion on future services and technologies,
    paras. 77-80, *infra)*.

[^76]: 47 U.S.C. § 1008(b)(1); CALEA § 109(b)(1). A telecommunications
    carrier may demonstrate that compliance is not "reasonable
    achievable" if the Commission determines that compliance would
    impose a "significant difficulty or expense" on the "carrier or on
    the users of the carrier's systems." *Id.*

[^77]: *See* Global Crossing Comments at 14 (arguing that this approach
    will uphold Congress' intent that telecommunications carriers deploy
    advanced facilities until CALEA solutions are developed and until
    the Commission has had an opportunity to review these new
    facilities).

[^78]: OPASTCO Comments at 4 (arguing that, if extensions of time are
    not granted, new technology will not be deployed).

[^79]: Section 706 ("The Commission... shall encourage the deployment...
    of advance telecommunications capability... by utilizing...
    regulating methods that remove barriers to infrastructure
    investment.").

[^80]: In deciding whether to grant a section 109(b)(1) petition, the
    Commission must weigh "\[t\]he policy of the United States to
    encourage the provision of new technologies and services to the
    public." Section 109(b)(1)(G).

[^81]: 47 U.S.C. § 229(a) ("The Commission shall prescribe such rules as
    are necessary to implement the requirements of the Communications
    Assistance for Law Enforcement Act.").

[^82]: *See* Nextel Comments at 10-11; CTIA Comments at 6; OPATSCO
    Comments at 4 (arguing for relief for rural carriers).

[^83]: As noted in the *Notice*, the Commission has on file
    approximately 300 section 107(c)(1) petitions. This is almost 600
    fewer than the number of petitions that we had on file in 2003.

[^84]: Section 107(c)(2) permits the Commission to grant extensions of
    only two years.

[^85]: The *Notice* proposed that "description should include a
    documented recital of negotiations with equipment manufacturers and
    third-party CALEA service providers, or other persuasive evidence
    that the petitioner actively and diligently searched for available
    CALEA-compliant solutions. Regarding petitioner showings about costs
    associated with circuit-mode CALEA compliance, we expect that
    parties will submit detailed and specific information, and we direct
    parties' attention to the discussion in the *Second R&O*, including
    our determination that costs not directly related to CALEA
    compliance may not be included." *Notice*, 19 FCC Rcd at 15723,
    para. 93.

[^86]: In the *Notice*, we proposed that petitioners provide information
    that conformed to Exhibit E to that document. In order to better
    reflect the record and the analysis produced in this proceeding, we
    have refined that exhibit and created filing instructions to better
    guide section 107(c)(2) petitioners in Appendix F, *infra*.

[^87]: *See* DOJ Comments at 61.

[^88]: *See again* Appendix F, *infra*.

[^89]: *See, e.g.,* NTCA Comments at 6-7; RTG Comments at 2-3; Advocacy
    Reply Comments at 7-8; CTIA Reply Comments at 4.

[^90]: *See, e.g.,* NTCA Comments at 8; RTG Comments at 6; Advocacy
    Reply Comments at 6; USTelecom Comments at 14.

[^91]: The *Notice* tentatively concluded that this description must
    include "a documented recital of negotiations with equipment
    manufacturers and third-party CALEA service providers, or other
    persuasive evidence that the petitioner actively and diligently
    searched for available CALEA-compliant solutions since November 19,
    2001." *Notice*, 19 FCC Rcd at 15727-28, para. 103.

[^92]: In the *Notice*, we proposed that petitioners provide information
    that conformed to Exhibit F to that document. In order to better
    reflect the record and the analysis produced in this proceeding, we
    have refined that exhibit and created filing instructions to better
    guide section 107(c)(2) petitioners in Appendix F to this *Second
    R&O and MO&O*.

[^93]: *Notice*, 19 FCC Rcd at 15728, para. 104.

[^94]: *Id*. at 15685, para. 19 ("Section 109 of CALEA addresses the
    payment of costs by the Attorney General to telecommunications
    carriers who comply with the capability requirements of section
    103.").

[^95]: 47 U.S.C. § 1008(b)(2)(B).

[^96]: 47 U.S.C. § 1002(b)(1).

[^97]: This is explained in further detail in section III.B.2.b,
    *infra*.

[^98]: 47 U.S.C. § 1008(b)(1) (determination of "reasonably achievable"
    is made with regard to the telecommunications carrier's particular
    "equipment, facility, or service").

[^99]: *Compare* CALEA section 109(d), 47 U.S.C. § 1008(d) (applying
    this standard to equipment, facilities, and services deployed on or
    before January 1, 1995); *see also Notice*, 19 FCC Rcd 15680-81,
    para. 10 (describing standard). We note that the FBI began a
    rulemaking in 1998 seeking to define "significant upgrade or major
    modification" and other CALEA terms. *Notice*, 19 FCC Rcd at
    15685-86, para. 19 (citing 63 Fed. Reg. 23, 231 (1998); 66 Fed. Reg.
    50931 (2001)).

[^100]: Section 109(b)(1) relief may also be terminated with regard to
    equipment, facilities or services in advance of a substantial
    replacement, modification or upgrade. We note that section 109(b)(1)
    does not foreclose the Commission's consideration and grant of an
    interested party's subsequent petition based on a change in the
    circumstances underlying a section 109(b)(1) determination that
    compliance is not reasonably achievable. Moreover, as the Commission
    stated in the *Notice*, we do not interpret section 109(b)(1) to
    provide a permanent exemption from the CALEA section 103 compliance
    mandate. *See Notice*, 19 FCC Rcd at 15726, para. 99. Thus, the
    Commission may time-limit or otherwise condition a carrier's section
    109(b)(1) relief based on facts known to the Commission at the time
    such relief is granted.

[^101]: In the *Notice*, the Commission invited comment on the
    telecommunications carrier's burden of proof, including what type of
    showing a petitioner must make in the absence of available
    technologies. *See Notice*, 19 FCC Rcd at 15728-29, paras. 104, 105.

[^102]: This does not mean that the petitioner must adopt the solution.
    Rather, it means that the petitioner will not receive section
    109(b)(1) relief until it demonstrates that the solution would
    impose a significant difficulty or harm on the petitioner.

[^103]: Notice, 19 FCC Rcd at 15728, para. 105. In making a section
    109(b)(1) determination, in addition to examining 10 specified
    factors, the Commission may examine "\[s\]uch other factors as the
    Commission determines are appropriate." 47 U.S.C. § 1008(b)(1)(K).

[^104]: *Notice*, 19 FCC Rcd at 15725, para. 98.

[^105]: Our interpretation of how the statute would operate in practice
    is consistent with the different language Congress used in sections
    107(c)(1) and 109(b)(1). Unlike section 107(c), section 109(b)
    contains no requirement that we evaluate what is "reasonably
    achievable" with reference to available technology. In other words,
    while a petitioner may seek relief under section 107(c) on the
    grounds that the industry has not developed a standard or a
    solution, section 109(b) does not provide relief on those grounds.
    We therefore adopt our tentative conclusion that the requirements of
    section 109(b) would not be met by a petitioning telecommunications
    carrier that merely asserted that CALEA standards had not been
    developed, or that solutions were not readily available from
    manufacturers. *See* DOJ Comments at 70-71.

    This interpretation is further supported by section 107(a)(3) that
    provides that the absence of industry standards does not relieve an
    entity from its section 103 capability requirements. Section
    107(a)(3) provides:

    \(3\) ABSENCE OF STANDARDS. \-- The absence of technical
    requirements or standards for implementing the assistance capability
    requirements of section 103 shall not \--

     

              (A) preclude a telecommunications carrier, manufacturer,
    or telecommunications support services provider from deploying a
    technology or service; or

    \(B\) relieve a carrier, manufacturer, or telecommunications support
    services provider of the obligations imposed by section 103 or 106,
    as applicable.

    CALEA section 107(a)(3); 47 U.S.C. 1006(a)(3).

[^106]: *Notice*, 19 FCC Rcd at 15728, para. 105; *see* DOJ Comments at
    70-71.

[^107]: *See* DOJ Comments at 71.

[^108]: *Id*. at 69.

[^109]: *See, e.g.*, Stephen A. Ross, Randolph A. Westerfield & Jeffrey
    Jaffe, *Corporate Finance* at 178-210 (7^th^ ed. 2005). *See*
    Appendix E, *infra*, at Sections VI.C.5 and VI.D.3. We decline to
    specify any particular methodology for calculating present
    value/worth, or to set input parameters, which include for example,
    the interest/discount rate and the length of study period.
    Nevertheless, whichever methodology and input parameters that the
    petitioner uses must be consistent with the petitioner's and the
    industry's best practices, and they must be used consistently in
    determining the present value of all solutions presented in the
    petition.

[^110]: *See* CALEA section 103(b)(1)(A), (B); 47 U.S.C. 1002(b)(1)(A),
    (B).

[^111]: *See* DOJ Comments at 69-71; DOJ Reply Comments at 33-34.

[^112]: *See* para. 27, *supra*.

[^113]: *Notice,* 19 FCC Rcd at 15725-26, para. 98, and 15728-29, para.
    105; *see* DOJ Comments at 70.

[^114]: By "bona fide solution" we mean a solution that could be
    implemented as described by petitioner if we grant its section
    109(b) petition and the Attorney General subsequently agrees to pay
    for costs pursuant to section 109(b)(2)(A).

[^115]: In connection with our decision that persuasive evidence must be
    submitted to prove cost and other economic impact-related
    assertions, we adopt our tentative conclusion that petitioners must
    include copies of all offers, bids, and price lists negotiated with
    manufacturers and third party CALEA service providers.

[^116]: Section 109(b)(1)(A), 47 U.S.C. 1008(b)(1)(A).

[^117]: Second Report and Order*,* CC Docket No. 97-213, 15 FCC Rcd at
    7132-33, para. 46.

[^118]: *See* DOJ Comments at 67, 69.

[^119]: 47 C.F.R. Part 36.

[^120]: *See also* *Notice*, 19 FCC Rcd at 15740-42, paras. 136-139, and
    discussion, *infra*, at paras. 69-74.

[^121]: We note that GVNW and DOJ contend that equipment vendors often
    bundle a CALEA feature with other switch features/upgrades, thereby
    requiring a carrier to purchase an upgrade that includes features
    other than the CALEA feature itself. *See* GVNW Comments at 7-8, DOJ
    Reply Comments at 61-62. A petitioner should document the extent to
    which this is the case with respect to the particular CALEA
    feature(s) it must purchase. We remind equipment vendors that they
    have a separate duty under section 106(b) of CALEA to make available
    to telecommunications carriers on a reasonably timely basis and at a
    reasonable charge features or modifications as are necessary to
    permit such carriers to comply with the capability requirements of
    section 103. *See* 47 U.S.C. § 1005(b). In light of this separate
    duty, the Commission may consider whether the price a carrier must
    pay for a CALEA feature is attributable solely to CALEA compliance
    or is partly attributable to bundling with unrelated software
    upgrades and capabilities, and may investigate equipment vendor
    bundling practices to determine the effects such practices have on
    the CALEA costs paid by carriers or whether vendor practices are
    consistent with vendors' duties under section 106(b).

[^122]: *See* DOJ Comments at 71; DOJ Reply Comments at 43-45.

[^123]: *See* DOJ Comments at 67.

[^124]: *See* DOJ Reply Comments at 43 n.164.

[^125]: Specifically, we believe that this information could be withheld
    from public disclosure under FOIA Exemption 4, 5 U.S.C. § 552(b)(4),
    which protects "trade secrets and commercial or financial
    information obtained from a person and privileged or confidential."
    FOIA Exemption 4 also has been construed to protect information
    obtained by the government that could impair the effectiveness of a
    government program such as CALEA. *See, e.g.*, *Critical Mass Energy
    Project v. NRC*, 975 F.2d 871, 879 (D.C. Cir. 1992) (noting that
    Exemption 4 "protects a governmental interest in administrative
    efficiency and effectiveness"); *Nat'l Parks and Conservation Ass'n
    v. Morton*, 498 F.2d 765, 770 n.17 (D.C. Cir. 1974) (noting that
    other governmental interests may be embodied in this exemption). The
    Commission applied this rationale in the outage reports proceeding,
    specifically finding that it was obliged under Exemption 4 to
    consider any adverse impact that disclosure might have on government
    programs. *See New Part 4 of the Commission's Rules Concerning
    Disruptions to Communications*, 19 FCC Rcd 16830, 16855 (2004). We
    also believe that this information could be withheld from disclosure
    under FOIA Exemption 7(F), 5 U.S.C. § 552(b)(7)(F), which protects
    records compiled for law enforcement purposes that "could reasonably
    be expected to endanger the life or physical safety of any
    individual." *See* 47 C.F.R. § 0.457; s*ee also* *Living Rivers,
    Inc. v. United States Bureau of Reclamation*, 272 F.Supp.2d 1313,
    1321 (D. Utah 2003)(allowing information about inundation dams to be
    withheld under FOIA Exemption 7(F) as sensitive, homeland security
    information "that could prove deadly if obtained by those seeking to
    do harm to the public on a large scale").

[^126]: CALEA sections 107(c), 109(b)(1); 47 U.S.C. §§ 1006(c),
    1008(b)(1).

[^127]: 47 C.F.R. § 0.459(a).

[^128]: 47 C.F.R. § 0.457(g). Note, however, that the Commission will
    entertain requests under section 0.461 of its rules for permission
    to inspect these records, but would grant such request only in the
    event the requester is able to meet the requirements of section
    0.461. 47 C.F.R. § 0.461. *See generally*, Treatment of Confidential
    Information Submitted to the Commission, *Report and Order*, 13 FCC
    Rcd 24816 (1998).

[^129]: *Petition* at 34-53.

[^130]: *Notice*, 19 FCC Rcd at 15721-22, para. 91.

[^131]: Telecommunications carriers and others may also file amended
    section 107(c) petitions *so long as such petitions exclusively seek
    extensions for equipment, facilities and services installed or
    deployed before October 25, 1998*. A petitioner filing an amended
    section 107(c) petitions should clearly declare on the face of the
    petition that the petition has been filed in response to the
    Commission's action in the *Second Report and Order and Memorandum
    Opinion and Order* in ET Docket No. 04-295 and that it solely
    concerns equipment, facilities and services installed or deployed
    before October 25, 1998, along with that information set out and
    described in Appendix F, *infra*.

[^132]: *Notice*, 19 FCC Rcd at 15732-33, para. 114. Section 106
    requires a manufacturer of telecommunications transmission or
    switching equipment and a provider of telecommunications support
    services to make available, on a reasonably timely basis and at a
    reasonable charge, to a carrier that uses its equipment, facilities
    or services the features or modifications as necessary to allow the
    carrier to comply with the assistance capability requirements of
    Section 103 and the capacity requirements of Section 104. 47 U.S.C.
    § 1005(b).

[^133]: *Notice*, 19 FCC Rcd at 15733, para. 115.

[^134]: DOJ Comments at 80-81; DOJ Reply Comments at 48-50.

[^135]: BellSouth Comments at 38; CTIA Comments at 10; Motorola Comments
    at 20; Nextel Comments at 11; SBC Comments at 24-25; T-Mobile
    Comments at 26; TIA Comments at 4; US ISPA Comments at 41.

[^136]: 47 U.S.C. § 229(a).

[^137]: 47 U.S.C. § 229(b).

[^138]: Section 229(d) provides:

    > For purposes of this Act, a violation by an officer or employee of
    > any policy or procedure adopted by a common carrier pursuant to
    > subsection (b), or of a rule prescribed by the Commission pursuant
    > to subsection (a), shall be considered to be a violation by the
    > carrier of a rule prescribed by the Commission pursuant to this
    > Act.
    >
    > 47 U.S.C. § 229(d).

[^139]: 47 U.S.C. § 1007.

[^140]: *See, e.g.,* 47 U.S.C. §§ 312(b), 503(b). We conclude that, at
    this time, we will not adopt any special procedures to enforce CALEA
    and instead will rely on the complaint and investigation procedures
    already in our rules.

[^141]: 18 U.S.C. § 2522(a) (where a court issuing a surveillance order
    finds that a telecommunications carrier, manufacturer, or support
    services provider has failed to comply with CALEA, the court may
    direct such entity to comply); 18 U.S.C. § 2522(b) (the Attorney
    General may, in a civil action in the United States district court,
    obtain an order in accordance with section 108 of CALEA, directing
    that a telecommunications carrier, manufacturer, or support services
    provider comply with CALEA); 18 U.S.C. § 2522(c) (authorizing a
    court to impose a civil penalty of up to \$10,000 per day against a
    telecommunications carrier, manufacturer, or support services
    provider for each day in violation after the issuance of a court
    order requiring compliance).

[^142]: *See, e.g.,* 47 C.F.R. §§ 22.1100-22.1103; 24.900-24.903;
    64.2200-64.2203.

[^143]: We are codifying our rules for all carriers subject to CALEA in
    new Subpart Z of Part 1 of our rules. In doing so, we consolidate
    existing CALEA rules into this Subpart. *See* paras 81-82, *infra*.

[^144]: The absence of technical requirements or standards for
    implementing the assistance capability requirements of section 103
    does not relieve a carrier, manufacturer, or support services
    provider of its CALEA obligations. 47 U.S.C. § 107(a)(3).

[^145]: *Notice*, 19 FCC Rcd at 15734-42, paras. 117-39.

[^146]: *Id*. at 15739-40, paras. 132-33.

[^147]: *Id*. at 15739, para. 131.

[^148]: *Id*. at 15741, para. 138.

[^149]: *Id*.

[^150]: *Id*. at 15737, para. 125.

[^151]: *Compare* 47 U.S.C. § 1008(a), (d) *with* § 1008(b).

[^152]: Section 109(a), (d) of CALEA, 47 U.S.C. § 1008(a), (d).

[^153]: Section 109(d) of CALEA, 47 U.S.C. § 1008(d). *See also* CALEA
    section 108(c)(3), 47 U.S.C. § 1007(c)(3) (no court may issue a
    CALEA enforcement order requiring a carrier to make modifications to
    pre-1995 equipment or facilities unless the federal government has
    agreed to pay for any such modifications).

[^154]: Section 109(b)(1) of CALEA, 47 U.S.C. § 1008(b)(1).

[^155]: Section 109(b)(2)(A) of CALEA, 47 U.S.C. § 1008(b)(2)(A).

[^156]: 47 U.S.C. § 1008(b). Commenters opposing this conclusion, *see,
    e.g.,* CTIA Comments at 13-14; Nextel Comments at 4; RTG Comments at
    8; SBC Comments at 27-28, provide no convincing arguments to
    overcome the clear bifurcation of cost responsibilities set forth in
    CALEA section 109.

[^157]: *Notice*, 19 FCC Rcd at 15739, para. 132 (citing *Order on
    Remand*, 17 FCC Rcd at 6917, para. 60).

[^158]: *Id*.

[^159]: "Except as provided in subsections . . . 109(b) . . . , a
    telecommunications carrier shall ensure that its equipment,
    facilities, or services that provide a customer or subscriber with
    the ability to originate, terminate, or direct communications are
    capable of \[providing the capabilities required by CALEA\]." CALEA
    section 103(a), 47 U.S.C. § 1002(a).

[^160]: 47 U.S.C. § 1008.

[^161]: DOJ Reply Comments at 66.

[^162]: *See, e.g.,* 18 U.S.C. § 2518(4).

[^163]: While some commenters point to 18 U.S.C. § 2518(4) as support
    for the proposition that carriers may recover CALEA capital costs
    from law enforcement through intercept charges, *see, e.g.,* CTIA
    Comments at 28; Corr Comments at 10; Global Crossing Comments at 16;
    SBC Comments at 26; we disagree. Indeed, we believe that it is
    significant that when CALEA was passed, Congress provided specified
    cost recovery mechanisms for CALEA capital costs in CALEA section
    109 and section 229 of the Communications Act but chose not to amend
    the portion of 18 U.S.C. § 2518(4) addressing intercept charges
    (even though Congress amended other provisions of Title III in
    CALEA). This strongly suggests that Congress did not intend for the
    additional compliance costs associated with CALEA to be recovered
    through intercept charges authorized by 18 U.S.C.§ 2518(4) but
    rather by those mechanisms set forth in CALEA itself.

[^164]: *See supra* Section III.B.2 for a discussion of the criteria to
    be met by carriers seeking cost recovery pursuant to section
    109(b)(1) of CALEA, 47 U.S.C. § 1008(b)(1).

[^165]: *See* 47 U.S.C. § 229(e) (authorizing common carriers to
    petition the Commission to adjust charges, practices,
    classifications, and regulations to recover costs expended for
    making modifications to equipment, facilities, or services pursuant
    to the requirements of section 103 of CALEA).

[^166]: *See* 47 U.S.C. § 332(c)(3) (preempting the states from any rate
    regulation of CMRS providers). *See Notice*, 19 FCC Rcd at 15738,
    para. 128. While some commenters expressed concern about the ability
    of small carriers in particular to recover a significant portion of
    their CALEA from subscribers, commenters uniformly agreed that
    carriers not subject to rate regulation are free to recover all or
    part of their CALEA costs by passing them on to their subscribers on
    a competitive market basis. *See, e.g.*, DOJ Comments at 85-87,
    Global Crossing Comments at 16, SBC Comments at 29.

[^167]: *Notice*, 19 FCC Rcd at 15738, para. 129.

[^168]: *Id.* at 15738, para. 130; 47 U.S.C. §§ 160, 332. Because we are
    not adopting cost recovery rules governing the recovery of CALEA
    costs from subscribers, we do not need to address whether analyses
    under sections 160 or 332 are warranted here.

[^169]: *See* RCA Comments at 2; United Utilities Reply Comments at 7.

[^170]: We note that this approach is consistent with the recovery of
    other costs, including those for universal service and local number
    portability, incurred by carriers that are not subject to rate
    regulation. *See* *Truth-in-Billing and Billing Format*, CC Docket
    No. 98-170 and CG Docket No. 04-208, Second Report and Order,
    Declaratory Ruling, and Second Further Notice of Proposed
    Rulemaking, 20 FCC Rcd 6448, 6462, para. 28 (2005); *Telephone
    Number Portability*, CC Docket No. 95-116, Third Report and Order,
    13 FCC Rcd 11701, 11774, para. 136 (1998).

[^171]: 47 U.S.C. § 229(e).

[^172]: 47 C.F.R. § 61.45(d).

[^173]: 47 C.F.R. §§ 61.38 and 61.39.

[^174]: RTG Comments at 7; United Utilities Reply Comments at 4.

[^175]: 47 U.S.C. § 1008(b).

[^176]: 47 U.S.C. § 1008(b)(2).

[^177]: *First R&O*, 20 FCC Rcd at 14990, para. 3.

[^178]: The Commission adopted system security requirements for
    telecommunications carriers in 1999. *See also* 47 C.F.R. §§
    64.2100-64.2106. The Commission's rules provide guidance to carriers
    on policies and procedures for employee supervision and control, as
    well as maintaining secure and accurate records, when responding to
    an appropriate legal authorization for electronic surveillance. Each
    carrier is required to file with the Commission the current policies
    and procedures it uses to comply with these requirements, which are
    subject to Commission review and enforcement.

[^179]: Other carriers were subject to CALEA prior to the *First Report
    and Order* in this proceeding.

[^180]: Most commenters did not address compliance dates for system
    security requirements, although a few noted that complying with some
    of these obligations may be difficult for some small entities to
    meet and for those who have never assisted with an order for
    electronic surveillance; *e.g.*, *see* SIA Comments at 17-18. We
    note that trusted third parties and service bureaus can assist
    carriers in processing surveillance orders in accordance with the
    system security requirements, thereby ameliorating the burden for
    some carriers.

[^181]: 47 C.F.R § 64.2105.

[^182]: *Notice*, 19 FCC Rcd at 15710, para. 60.

[^183]: *Id*. 19 FCC Rcd at 15710-11, paras. 60-61.

[^184]: *Id*. 19 FCC Rcd at 15711, para. 61.

[^185]: DOJ Comments at 36-38.

[^186]: EFF Reply Comments at 3; US ISPA Comments at 14-15.

[^187]: Verizon Reply Comments at 14.

[^188]: *But see* discussion at para. 32, *supra* (carriers should
    incorporate a CALEA compliance plan into new facilities
    deployments).

[^189]: *First R&O*, 20 FCC Rcd at 14993, para. 10.

[^190]: *See, e.g.*, *Further Notice of Proposed Rulemaking*, 20 FCC Rcd
    at 15013, para. 49 & n. 142 (seeking comment "on the appropriateness
    of requiring something less than full CALEA compliance for certain
    classes or categories of providers," such as "small broadband access
    providers in rural areas," and "private broadband networks used by
    schools, libraries, and research institutions."

[^191]: *See* 47 C.F.R. §§ 1.2-3.

[^192]: 47 C.F.R. §§ 1.200 *et seq*.

[^193]: 47 C.F.R. § 1.1206(b)(2).

[^194]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. §§ 601-12, has
    been amended by the Small Business Regulatory Enforcement Fairness
    Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857
    (1996).

[^195]: *Communications Assistance for Law Enforcement Act and Broadband
    Access and Services*, ET Docket No. 04-295, RM-10865, Notice of
    Proposed Rulemaking and Declaratory Ruling*,* 19 FCC Rcd 15676,
    15751-60, App. B (2004) (*Notice*).

[^196]: *Id*.

[^197]: *Communications Assistance for Law Enforcement Act and Broadband
    Access and Services*, First Report and Order and Further Notice of
    Proposed Rulemaking*,* ET Docket No. 04-295, RM-10865, 20 FCC Rcd
    14989, 15021-15036, App. C (2005) (*First R&O*).

[^198]: *See* 5 U.S.C. § 604. Comments on small business issues that
    were raised in response to the *Notice*, rather than to the IRFA
    itself, are also referenced herein.

[^199]: *First R&O*, 20 FCC Rcd at 14989-14990, paras. 1-3.

[^200]: *See Second R&O*, paras. 16, 26, 36, 56, and 78.

[^201]: NTCA Reply Comments at 3; Advocacy Reply Comments at 1-4.

[^202]: *First R&O* at 20 FCC Rcd 15022-23, App. C.

[^203]: NTCA Comments at 7.

[^204]: Advocacy Reply Comments at 7-8.

[^205]: *See* *Notice*, 19 FCC Rcd at 15704-05, para 49.

[^206]: *Id*. 19 FCC Rcd at 15720-30, paras. 87-110.

[^207]: *Id*. 19 FCC Rcd at 15720, para. 87.

[^208]: *Id*. 19 FCC Rcd at 15728-29, paras. 104-06.

[^209]: *Id*. 19 FCC Rcd at 15714-16, paras. 69-76.

[^210]: *Id*. 19 FCC Rcd at 15715, para. 72.

[^211]: 5 U.S.C. §§ 603(b)(3), 604(a)(3).

[^212]: 5 U.S.C. § 601(6).

[^213]: 5 U.S.C. § 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."

[^214]: 15 U.S.C. § 632.

[^215]: 15 U.S.C. § 632.

[^216]: Letter from Jere W. Glover, Chief Counsel for Advocacy, 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 C.F.R. §
    121.102(b).

[^217]: 13 C.F.R. § 121.201, NAICS code 517110.

[^218]: FCC, Wireline Competition Bureau, Industry Analysis and
    Technology Division, "Trends in Telephone Service" at Table 5.3,
    page 5-5 (June 2004) ("Trends in Telephone Service").

[^219]: *See* U.S. Census Bureau, 2002 Economic Census, Industry Series:
    "Information," Table 2, Comparative Statistics for the United States
    (1997 NAICS Basis): 2002 and 1997, NAICS code 513310 (issued Nov.
    2004). The preliminary data indicate that the total number of
    "establishments" increased from 20,815 to 27,891. In this context,
    the number of establishments is a less helpful indicator of small
    business prevalence than is the number of "firms," because the
    latter number takes into account the concept of common ownership or
    control.

[^220]: 13 C.F.R. § 121.201, NAICS code 517110.

[^221]: "Trends in Telephone Service" at Table 5.3.

[^222]: *See* *supra* n.Error: Reference source not found.

[^223]: 13 C.F.R. § 121.201, NAICS code 517110.

[^224]: "Trends in Telephone Service" at Table 5.3.

[^225]: *See* *supra* n.Error: Reference source not found.

[^226]: 13 C.F.R. § 121.201, NAICS code 517110.

[^227]: "Trends in Telephone Service" at Table 5.3.

[^228]: *See* *supra* n.Error: Reference source not found.

[^229]: 13 C.F.R. § 121.201, NAICS code 517110.

[^230]: "Trends in Telephone Service" at Table 5.3.

[^231]: *See* *supra* n.Error: Reference source not found.

[^232]: 13 C.F.R. § 121.201, NAICS code 517310.

[^233]: "Trends in Telephone Service" at Table 5.3.

[^234]: 13 C.F.R. § 121.201, NAICS code 517211.

[^235]: 13 C.F.R. § 121.201, NAICS code 517212.

[^236]: 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).

[^237]: *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."

[^238]: 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).

[^239]: *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."

[^240]: *See* U.S. Census Bureau, 2002 Economic Census, Industry Series:
    "Information," Table 2, Comparative Statistics for the United States
    (1997 NAICS Basis): 2002 and 1997, NAICS code 513321 (issued Nov.
    2004). The preliminary data indicate that the total number of
    "establishments" decreased from 3,427 to 1,664. In this context, the
    number of establishments is a less helpful indicator of small
    business prevalence than is the number of "firms," because the
    latter number takes into account the concept of common ownership or
    control.

[^241]: *See* U.S. Census Bureau, 2002 Economic Census, Industry Series:
    "Information," Table 2, Comparative Statistics for the United States
    (1997 NAICS Basis): 2002 and 1997, NAICS code 513322 (issued Nov.
    2004). The preliminary data indicate that the total number of
    "establishments" increased from 2,959 to 9,511. In this context, the
    number of establishments is a less helpful indicator of small
    business prevalence than is the number of "firms," because the
    latter number takes into account the concept of common ownership or
    control.

[^242]: 13 C.F.R. § 121.201, NAICS code 517212.

[^243]: 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).

[^244]: *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."

[^245]: "Trends in Telephone Service" at Table 5.3.

[^246]: *Id.*

[^247]: 13 C.F.R. § 121.201, NAICS code 517212.

[^248]: 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).

[^249]: *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."

[^250]: *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, paras.
    291-295, 62 FR 16004 (Apr. 3, 1997).

[^251]: *See* Letter to Amy Zoslov, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, FCC, from A.
    Alvarez, Administrator, SBA (Dec. 2, 1998) (SBA Dec. 2, 1998
    letter).

[^252]: *Id*.

[^253]: Public Notice, "929 and 931 MHz Paging Auction Closes," DA
    00-508, March 6, 2000.

[^254]: "Trends in Telephone Service" at Table 5.3.

[^255]: Public Notice, "Auction of Wireless Communications Services,
    Auction Notes and Filing Requirements for 128 WCS Licenses Scheduled
    for April 15, 1997," DA 97-386, Feb. 21, 1997.

[^256]: SBA Dec. 2, 1998 letter, *supra* n.Error: Reference source not
    found.

[^257]: 13 C.F.R. § 121.201, NAICS code 517212.

[^258]: *Id.*

[^259]: "Trends in Telephone Service" at Table 5.3.

[^260]: *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) (*PCS Order*); *see also*
    47 C.F.R. § 24.720(b).

[^261]: *See PCS Order*, 11 FCC Rcd 7824.

[^262]: *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).

[^263]: FCC News, Broadband PCS, D, E and F Block Auction Closes, No.
    71744 (rel. Jan. 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 (Oct. 24,
    1997).

[^264]: 13 C.F.R. § 121.201, North American Industry Classification
    System (NAICS) code 517410.

[^265]: U.S. Census Bureau, 2002 NAICS Definitions, "517510 Cable and
    Other Program Distribution";
    <http://www.census.gov/epcd/naics02/def/NDEF517.HTM>.

[^266]: 13 C.F.R. § 121.201, NAICS code 517510.

[^267]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Table 4, Receipts Size of Firms for the United States:
    2002, NAICS code 517510 (issued November 2005).

[^268]: *Id*. An additional 61 firms had annual receipts of \$25 million
    or more.

[^269]: 47 C.F.R. § 76.901(e). The Commission determined that this size
    standard equates approximately to a size standard of \$100 million
    or less in annual revenues. *Implementation of Sections of the 1992
    Cable Act: Rate Regulation,* Sixth Report and Order and Eleventh
    Order on Reconsideration, 10 FCC Rcd 7393, 7408 (1995).

[^270]: These data are derived from: R.R. Bowker, *Broadcasting & Cable
    Yearbook 2006*, "Top 25 Cable/Satellite Operators," pages A-8 & C-2
    (data current as of June 30, 2005); Warren Communications News,
    *Television & Cable Factbook 2006*, "Ownership of Cable Systems in
    the United States," pages D-1805 to D-1857.

[^271]: 47 C.F.R. § 76.901(c).

[^272]: Warren Communications News, *Television & Cable Factbook 2006*,
    "U.S. Cable Systems by Subscriber Size," page F-2 (data current as
    of Oct. 2005). The data do not include 718 systems for which
    classifying data were not available.

[^273]: 47 U.S.C. § 543(m)(2); *see* 47 C.F.R. § 76.901(f) & nn. 1-3.

[^274]: 47 C.F.R. § 76.901(f); *see* Public Notice*, FCC Announces New
    Subscriber Count for the Definition of Small Cable Operator*, DA
    01‑158 (Cable Services Bureau, Jan. 24, 2001).

[^275]: These data are derived from: R.R. Bowker, *Broadcasting & Cable
    Yearbook 2006*, "Top 25 Cable/Satellite Operators," pages A-8 & C-2
    (data current as of June 30, 2005); Warren Communications News,
    *Television & Cable Factbook 2006*, "Ownership of Cable Systems in
    the United States," pages D-1805 to D-1857.

[^276]: 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 C.F.R. §
    76.909(b).

[^277]: *See* 47 U.S.C. § 573.

[^278]: 13 C.F.R. § 121.201, NAICS code 518111.

[^279]: *See* <http://www.fcc.gov/mb/ovs/csovsarc.html> and
    <http://www.fcc.gov/mb/ovs/csovscer.html> (each visited in April
    2006).

[^280]: U.S. Census Bureau, "2002 NAICS Definitions: 518111 Internet
    Service Providers" (Feb. 2004) \<www.census.gov\>.

[^281]: 13 C.F.R. § 121.201, NAICS code 514191, "On-Line Information
    Services."

[^282]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, Table 4, Receipts Size of Firms for the United States:
    2002, NAICS code 518111 (issued November 2005).

[^283]: *Id*. An additional 45 firms had annual receipts of \$25 million
    or more.

[^284]: U.S. Census Bureau, "2002 NAICS Definitions: 519190 All Other
    Information Services" (Feb. 2004) \<www.census.gov\>.

[^285]: 13 C.F.R. § 121.201, NAICS code 519190.

[^286]: U.S. Census Bureau, 1997 Economic Census, Subject Series:
    Information, "Establishment and Firm Size (Including Legal Form of
    Organization)," Table 4, NAICS code 514199 (issued Oct. 2000). This
    category was created for the 2002 Economic Census by taking a
    portion of the superseded 1997 category, "All Other Information
    Services," NAICS code 514199. The data cited in the text above are
    derived from the superseded category.

[^287]: 5 U.S.C. § 603(c).

[^288]: *First R&O* at 20 FCC Rcd 15013-14, paras. 48-52.

[^289]: 47 U.S.C. §§ 1004 and 229(b), respectively.

[^290]: 47 C.F.R. § 64.2105. We note that this section of the rules is
    herein being transferred to section 1.20005, 47 C.F.R. § 1.20005.

[^291]: 47 U.S.C. § 1008(b)(1)(H).

[^292]: 47 U.S.C. § 1008(b).

[^293]: 47 U.S.C. § 1008(b)(2).

[^294]: *See* 5 U.S.C. § 801(a)(1)(A).

[^295]: *See* 5 U.S.C. § 604(b).

[^296]: *Notice* at 15764.

[^297]: Section 3 of J-STD-025 describes packet-mode as a "communication
    where individual packets or virtual circuits of a communication
    within a physical circuit are switched or routed by the accessing
    telecommunication system. Each packet may take a different route
    through the intervening network(s)."

[^298]: J-STD-025 includes a parameter that would identify the location
    of a subject\'s "mobile terminal" whenever this information is
    reasonably available at the Intercept Access Point and its delivery
    to law enforcement is legally authorized. Location information would
    be available to the law enforcement agency irrespective of whether a
    call content channel or a call data channel is employed. *See*
    J-STD-025 at § 6.4.6 and §§ 5.4.1-5.4.8, Tables 1, 5, 6, and 8.

[^299]: *See Communications Assistance for Law Enforcement Act*, CC
    Docket No. 97-213, 14 FCC Rcd 16794 (1999).

[^300]: The intercept access point is the point within a
    telecommunication system where communications or call-identifying
    information of an intercept subject's equipment, facilities and
    services are accessed.

[^301]: We observed in the *Notice* that TIA had indicated its intent to
    develop another revision to the J-Standard, titled J-STD-025-C; *see
    Notice* at 15765, n.419. However, TIA has not recently indicated
    that this release is still planned.

[^302]: cdma2000 is a registered trademark of TIA.

[^303]: 3G TS 33.108, 3rd Generation Partnership Project: *Technical
    Specification Group Services and System Aspects: 3G Security;
    Handover interface for Lawful Interception*.

[^304]: Presentation by Nortel Networks to the FCC, March 25, 2004.

[^305]: CableLabs® is a trademark of Cable Television Laboratories, Inc.

[^306]: *Notice* at 15766-67.

[^307]: CableLabs® has continued to work with LEAs to improve its
    specifications for lawfully authorized electronic surveillance. As
    discussed in the *Notice* (at 15766-67), Version I01 of the
    PacketCable^TM^ Electronic Surveillance Specification
    (PKT-SP-ESP-I01-991229) was released on December 29^th^, 1999.
    Version I02 was issued on August 1, 2003. Based on FBI input,
    Version I03 was released on January 13^th^, 2004. Version 104 was
    released on July 23^rd^, 2004. The FBI has continued to work with
    the CableLabs® team, resulting in the current ESP1.5-I01 release.

[^308]: 47 C.F.R. § 0.457(g).

[^309]: 47 C.F.R. § 0.461.

[^310]: For example, two solutions may have intercept access points at
    the same physical location. However, the first solution may require
    the installation of a \$10,000 probe at each access point, while the
    second solution may require the installation of software at each
    access point at the cost of \$3000 per access point. Assuming all
    other costs are the same for the two solutions, the software
    solution is clearly the lower cost.

[^311]: 47 U.S.C. § 1002*. See also Lawfully Authorized Electronic
    Surveillance Joint Standard*, J-STD-025-B (TIA December, 2003).

[^312]: For example, two solutions may have intercept access points at
    the same physical location. However, the first solution may require
    the installation of a \$10,000 probe at each access point, while the
    second solution may require the installation of software at each
    access point at the cost of \$3000 per access point. Assuming all
    other costs are the same for the two solutions, the software
    solution is clearly the lower cost.

[^313]: 47 C.F.R. § 0.457(g).

[^314]: 47 C.F.R. § 0.461.

[^315]: Although section 107(c)(1) permits extensions of time for only
    two years, under certain narrow circumstances, a petitioner may
    indicate in its petition why it intends to file a second petition
    for an extension of time at the conclusion of the first petition's
    two-year extension period.

[^316]: 47 U.S.C. § 1002*. See also Lawfully Authorized Electronic
    Surveillance Joint Standard*, J-STD-025-B (TIA December, 2003).

[^317]: *See infra* Section III.B., para. 35 (discussing how this due
    diligence showing must be met).

[^318]: *See infra* Section III.B., para. 37 (discussing how this due
    diligence showing must be met).

[^319]: *See* Comments of the Higher Education Coalition, November 14,
    2005, at 9.

[^320]: Comments of Subsentio, Inc., November 11, 2005; *see also*
    Comments of VeriSign, December 21, 2005, at 4.

[^321]: As noted in our Order, most packet-mode technologies were
    deployed after section 107(c)(1)'s expiration date, October 25,
    1998.