Before the

Federal Communications Commission

Washington, D.C. 20554

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DECLARATORY RULING AND

NOTICE OF PROPOSED RULEMAKING

**Adopted: July 12, 2001 Released: July 20, 2001**

# Comment Date: 30 days after Federal Register publication of this NPRM {#comment-date-30-days-after-federal-register-publication-of-this-nprm .Appendix-Heading}

**Reply Comment Date: 60 days after Federal Register publication of this
NPRM**

By the Commission: Commissioner Abernathy not participating.

# INTRODUCTIOn

1.  In this proceeding, the Commission clarifies, and proposes further
    streamlining of, its rules governing requests for authorization
    pursuant to section 214 of the Communications Act of 1934, as
    amended ("the Act") to transfer domestic interstate transmission
    lines through an acquisition of corporate control. Under section
    214, applicants must obtain Commission authorization before
    constructing, operating, or acquiring domestic interstate
    transmission lines.[^1] The Commission, in Rule 63.01, granted
    blanket authority to domestic interstate communications common
    carriers to provide domestic interstate services and to construct,
    acquire, and operate domestic transmission lines.[^2] The blanket
    authority in Rule 63.01, however, expressly does not apply to
    acquisitions of corporate control. When an acquisition of corporate
    control is involved, carriers must file a section 214 application
    with the Commission and obtain Commission approval prior to
    consummating a proposed transaction.

2.  The Commission adopts this *Declaratory Ruling*, on its own motion,
    in response to questions that have been raised concerning the scope
    of domestic section 214 filing requirements and Rule 63.01. In this
    *Declaratory Ruling*, we clarify that "connecting carriers," as
    defined in section 3(11) of the Act,[^3] are not subject to section
    214 or Rule 63.01 when engaging in an acquisition of corporate
    control. We further clarify that, except for connecting carriers,
    any party, including a non-dominant carrier, that "would be a
    domestic interstate communications common carrier,"[^4] either
    before or after a proposed transaction, must obtain Commission
    approval prior to consummating a transaction involving an
    acquisition of corporate control.

3.  In keeping with the pro-competitive, deregulatory goals of the Act,
    we also initiate a *Notice of Proposed Rulemaking* to seek comment
    on our proposal to streamline our rules with respect to domestic
    section 214 authorizations involving acquisitions of corporate
    control.[^5] In particular, we propose streamlined treatment of
    applications under section 214 of the Act for transfers of domestic
    interstate transmission lines through acquisitions of corporate
    control that require little scrutiny in order for the Commission to
    determine that they serve the public interest. As explained below,
    we request comment on the types of domestic section 214 applications
    that should be eligible for streamlined treatment and the
    streamlined procedures that should be adopted for these
    applications.

# declaratory ruling

4.  This *Declaratory Ruling* addresses questions raised by interested
    parties, both formally and informally, since adoption of the
    Commission's current rules governing "entry certification"[^6] under
    section 214.

## Background

5.  In 1999, the Commission adopted the current version of Rule 63.01,
    granting all carriers blanket authority under section 214 to provide
    domestic interstate services and to construct, acquire, or operate
    any domestic line.[^7] This blanket authority does not extend,
    however, to the transfer of lines resulting from an acquisition of
    corporate control.[^8] As the Commission explained in the *1999
    Streamlining Order,* acquisitions under section 214 can be either
    acquisitions of assets, such as by purchase or lease of lines, or
    acquisitions of corporate control, such as acquisitions of equity
    ownership (*e.g.*, stock or partnership interests), veto power, or a
    controlling interest in a board of directors.[^9] The Commission
    found that acquisitions of corporate control often raise serious
    public interest concerns regarding the state of competition
    following the proposed acquisition or merger.[^10] The Commission
    also noted that such acquisitions are often contested and draw
    significant public comments that the Commission is bound to
    consider.[^11] The Commission reasoned that the magnitude of
    corporate acquisitions and their potential effect on competition
    distinguished them from acquisitions of assets.[^12] Therefore, the
    Commission decided to include asset acquisitions under blanket
    authority, while concluding that "corporate acquisitions should not
    be covered by blanket authority."[^13]

6.  Since adoption of the current Rule 63.01, a number of parties have
    indicated informally to Commission staff that they are not required,
    or should not be required, to file applications for Commission
    authorization to acquire domestic interstate transmission lines
    through acquisitions of corporate control. Some have indicated that
    as "connecting" carriers, they are exempt from the requirements of
    section 214 under section 2(b)(2) of the Act.[^14] Others have
    indicated that as resellers or non-dominant carriers, they have had
    blanket authority since the 1980s to acquire lines, and thus are
    not, and should not be, bound by Rule 63.01. We adopt this
    *Declaratory Ruling* to respond to these arguments and thereby
    clarify our requirements.

## Discussion

7.  After reviewing the relevant statutory provisions, we clarify that
    connecting carriers are not required to file domestic section 214
    applications for acquisitions of corporate control. We also clarify
    that resellers and other non-dominant carriers are not exempt from
    the requirements of Rule 63.01 and must file applications for
    acquisitions of corporate control.[^15]

8.  *Connecting Carriers.* The Act defines a connecting carrier as a
    carrier described in sections 2(b)(2), (3), or (4) of the Act.[^16]
    Sections 2(b)(2), (3), and (4), in turn, generally provide that
    "nothing in this \[Act\] shall be construed to apply or to give the
    Commission jurisdiction with respect to" a carrier that is engaged
    in interstate or foreign communications solely through connection
    with an unaffiliated carrier.[^17] Although section 2(b) lists
    several sections of the Act that are not covered by the exemption in
    sections 2(b)(2) through (4), section 214 is not one of the sections
    listed. Because of this, and because no other statutory provision of
    the Act overrides the 2(b) exemption, we clarify that connecting
    carriers that qualify for the exemption in section 2(b)(2) of the
    Act are not required to file applications for domestic section 214
    authorizations involving acquisitions of corporate control.[^18]

9.  In reaching our conclusion concerning the applicability of section
    214, we note that only those carriers that fall within the specific
    provisions of sections 2(b)(2), (3), or (4) are statutorily exempt
    from section 214. In particular, a carrier that provides an
    interstate service by establishing a connection with another carrier
    that is "directly or indirectly controlling or controlled by, or
    under direct or indirect common control with" the first carrier may
    not qualify for connecting carrier status.[^19] In addition, because
    the Act applies to, and our jurisdiction reaches, all interstate
    carriers that are not connecting carriers,[^20] if any party to a
    proposed transaction is an interstate carrier other than a
    connecting carrier before the proposed acquisition of corporate
    control, the transaction is subject to section 214 and Rule 63.01
    and the Commission's prior approval is required.

10. *Non-dominant Carriers.* In 1984, as part of the *Competitive
    Carrier* proceeding, the Commission adopted a rule, former Rule
    63.07, granting blanket authority to non-dominant[^21] carriers to
    provide domestic, interstate services to any domestic point and to
    construct, acquire, or operate any transmission line.[^22] Rule
    63.07 did not expressly address acquisitions of corporate control.
    Rather, the rule authorized any party that would be a non-dominant
    domestic interstate communications common carrier to provide
    domestic, interstate services to any domestic point and to
    construct, acquire, or operate any transmission line as long as it
    obtained all necessary authorizations from the Commission for use of
    radio frequencies.

11. In the *1999* *Streamlining Order*, the Commission extended blanket
    authority to dominant carriers by adopting current Rule 63.01 and
    deleting Rule 63.07. Under Rule 63.01, blanket authority is granted
    to "\[a\]ny party that would be a domestic interstate communications
    common carrier," and the qualification that such party be
    "non-dominant" was removed.[^23] In adopting Rule 63.01, the
    Commission also expressly addressed acquisitions of corporate
    control and, based upon the record developed in that proceeding,
    concluded that blanket authority should not extend to those types of
    transactions. Rule 63.01 does not distinguish between dominant and
    non-dominant carriers, and nothing in the *1999 Streamlining Order*
    indicates that the new language concerning acquisitions of corporate
    control was inapplicable to non-dominant carriers. Moreover, in
    granting blanket authority to all domestic carriers, the Commission
    affirmatively contemplated the appropriate regulatory treatment of
    non-dominant carriers.[^24] There is nothing in either the *1999
    Streamlining Order* or the plain language of Rule 63.01 to support
    the contention that acquisitions of corporate control involving
    non-dominant carriers are covered under the blanket authority of
    Rule 63.01. Therefore, we clarify that non-dominant carriers are
    required to file section 214 applications and obtain Commission
    approval before consummating a transaction involving an acquisition
    of corporate control involving a domestic interstate line.

# notice of proposed rulemaking

12. In this *Notice of Proposed Rulemaking*, we propose streamlined
    treatment of applications under section 214 to acquire domestic
    transmission lines through acquisitions of corporate control where,
    based upon predetermined criteria, it would require little scrutiny
    for the Commission to determine that grant of the applications would
    serve the public interest. We tentatively conclude that, at a
    minimum, we should streamline such applications for acquisitions of
    corporate control in a manner similar to the way in which we have
    previously streamlined domestic section 214 applications to
    discontinue service. Specifically, we seek comment on whether we
    should shorten the review period for a predetermined class of
    domestic section 214 applications, so that absent written notice to
    the contrary from the Commission, transfers involving a
    predetermined class of non-dominant carriers would automatically be
    granted after 31 days, and transfers involving a predetermined class
    of one or more dominant carriers would automatically be granted
    after 60 days. Additionally, we seek comment on: (1) what criteria
    to employ to determine eligibility for streamlined review; (2) how
    to treat a streamlined domestic section 214 application that is
    accompanied by a request for waiver of Commission rules; (3) whether
    the Commission should have discretion to remove an application from
    streamlined processing; (4) how the Common Carrier Bureau should
    treat a streamlined application when the applicants file related
    applications in other bureaus; and (5) whether the Commission
    should, as an alternative to streamlining, relieve all non-dominant
    carriers, or certain categories of non-dominant carriers, that have
    blanket domestic section 214 authority from filing transfer of
    control applications.

##  {#section .unnumbered}

## Background

13. Because procedures governing other Commission certification and
    authorization processes may be relevant to our instant inquiry, we
    briefly describe some of those procedures below, including the
    domestic section 214 facilities authorization process for common
    carriers, the rules that apply to applications to provide
    international common carrier service under section 214, and the
    rules applicable to transfers of control of licenses involving
    commercial mobile radio services (CMRS) under section 310.[^25]

### Entry and Exit Certification Rules for Domestic Common Carriers

14. As explained above, on June 30, 1999, the Commission adopted its
    *1999 Streamlining Order*, which simplified "entry certification"
    for facilities under section 214 by conferring "blanket authority"
    on all domestic interstate carriers, whether dominant or
    non-dominant, to construct and operate domestic transmission lines
    and to acquire lines except through acquisitions of corporate
    control.[^26] By granting carriers blanket authority to operate,
    instead of simply rescinding the requirement that carriers obtain
    authorization to operate, the Commission retains the ability to
    enforce our rules.[^27] Thus, the grant of blanket authority permits
    the construction, operation and certain acquisitions of domestic
    interstate lines while retaining an enforcement tool if a carrier
    engages in behavior inconsistent with its obligations under our
    rules.

15. As indicated above, the blanket authority granted under section
    63.01 of the Commission's rules does not apply to authorizations to
    acquire lines through "acquisitions of corporate control," *i.e*.,
    direct or indirect acquisitions of control by either a dominant or
    non-dominant carrier.[^28] Applications involving acquisitions of
    corporate control require affirmative action by the Commission
    before the acquisition can occur. The Commission found that
    acquisitions of corporate control, *e.g.*, equity ownership (such as
    stock or partnership interests), veto power, or a controlling
    interest in a board of directors, could raise serious public
    interest concerns with respect to competition, and were likely to
    elicit significant public comment.[^29] By contrast, with
    acquisitions of assets, the new operator is not required to submit a
    domestic section 214 application for Commission approval.[^30] The
    Commission found that acquisitions of assets rarely elicited public
    comment, were "limited in scope," and were generally granted because
    they raised few public interest concerns.[^31]

16. The *1999* *Streamlining Order* also amended Rule 63.71 to
    streamline significantly so-called "exit certification" requirements
    for carriers discontinuing operations. Exit requirements ensure that
    service to communities will not be discontinued without advance
    notice to the public and Commission authorization. As amended by the
    *1999 Streamlining Order*, Rule 63.71 provides that a non-dominant
    carrier automatically obtains Commission approval to cease providing
    service on the 31^st^ day after filing a discontinuance
    application.[^32] Likewise, a dominant carrier automatically obtains
    Commission approval to cease providing service 60 days after filing
    a discontinuance application.[^33] Under the Commission's rules, the
    Commission retains the discretion to remove a discontinuance
    application from streamlined processing.[^34]

### Streamlining Rules for International Common Carrier Applications

17. Under Rule 63.12, international section 214 applications meeting
    certain criteria may be granted without a formal written order 14
    days after public notice.[^35] As described below, a transfer of
    control or assignment is eligible for this streamlined procedure in
    circumstances where an initial, *i.e.*, new international section
    214 application filed by the transferee or assignee would be
    eligible for streamlined processing.[^36] Even where the Commission
    receives a timely-filed petition to deny, the Commission retains the
    discretion to grant an application on a streamlined basis.[^37]
    Carriers may use the streamlined authorization process to obtain the
    same authorizations that any affiliate (*e.g.*, a sister company)
    with identical ownership has already obtained.[^38] Rule 63.12 also
    provides for streamlined processing of applications filed by
    carriers seeking to provide service on routes where an affiliated
    foreign carrier has either no facilities, limited facilities, or
    only mobile wireless facilities, in the destination market.[^39]
    Additionally, the streamlined international rules eliminate the
    requirement for prior approval of *pro* *forma* assignments and
    transfers of control of international 214 authorizations.[^40]

18. Rule 63.12 sets forth specific exceptions to streamlined treatment
    of international applications. For example, streamlining does not
    apply where the applicant seeks to resell switched or private line
    services of an affiliated dominant U.S. carrier (unless the
    applicant agrees to be classified as a dominant carrier to the
    affiliated destination country).[^41] Nor does streamlining apply
    where the international application seeks to provide switched basic
    services over private lines to a country the Commission has not
    approved to provide switched services over private lines.[^42]
    Streamlining also generally does not apply where the applicant is
    affiliated with a foreign carrier in a destination market, and the
    foreign carrier has market power in the destination market, unless
    the applicants agree to be classified as dominant on those
    routes.[^43] Finally, under Rule 63.12, the Commission maintains its
    authority to identify those particular applications that warrant
    additional scrutiny and public comment, and to exclude those
    applications from streamlined processing initially or to remove
    those applications from streamlining within 14 days, by written
    notice to the applicants.[^44] If streamlining does not apply, the
    rule provides that the Commission will affirmatively act upon the
    application within 90 days or provide notice that an additional
    90-day period is needed for review.[^45] Successive 90-day periods
    are permitted.[^46]

### Streamlining Rules Involving Commercial Mobile Radio Services Applications

19. Section 310(d) of the Act prohibits any assignment or transfer of
    control of a radio license without obtaining prior Commission
    consent.[^47] However, the Commission forbears from enforcing its
    section 310(d) requirements with respect to transfers or assignments
    of radio licenses used by telecommunications carriers to provide
    CMRS when the transaction does not involve a "substantial change" in
    ownership or control, referred to as a *pro forma* transaction.[^48]
    Where no substantial change of control would result from the
    transfer or assignment, no prior Commission application or approval
    is required.[^49] Where the proposed transfer or assignment would
    result in a substantial change of *de jure* or *de facto* control,
    the transaction is not treated as *pro forma* and is outside the
    scope of the Commission's forbearance in the *CMRS Forbearance
    Order*.[^50] Licensees bear the initial responsibility for
    determining whether a transaction merits *pro forma* treatment.[^51]
    The Commission reserves its authority, however, to determine that a
    transaction involving transfers of commercial mobile radio services
    and classified by the licensee as *pro forma* should in fact be
    classified otherwise.[^52]

## Discussion

20. We propose to streamline our requirements for approving transfers of
    domestic section 214 authorizations involving certain types of
    acquisitions of corporate control. We tentatively conclude that a
    substantial number of such transactions do not raise public interest
    concerns and therefore should be granted on an expedited basis.[^53]
    Identifying certain classes of applications that are eligible for
    streamlined review will provide regulatory certainty and
    predictability and serve to enhance the transparency of the
    authorization process. Accordingly, we seek comment on whether, as
    we have tentatively concluded, there are categories of applications
    that should automatically qualify for streamlined treatment, and if
    so, what criteria we should use in identifying those
    applications.[^54] Should combinations involving certain product or
    geographic markets be accorded streamlined review, and if so, what
    role should applicants, commenters and the Commission each play in
    defining the applicable product or geographic markets? Moreover, we
    seek comment whether certain types of transactions should always
    qualify for streamlined treatment. For example, should a proposed
    transfer of control in the face of imminent business failure or
    reorganization under Chapter 11 of the U.S. Bankruptcy Act routinely
    receive streamlined treatment or, as discussed below, should the
    Commission undertake a more detailed analysis where the transaction
    may pose public interest concerns?[^55] To the extent transactions
    involving financially troubled firms do in fact raise public
    interest concerns, we seek comment whether a "failing firm" defense,
    or something akin to this doctrine, should apply to the Commission's
    evaluation of such mergers.[^56]

21. In establishing such categories, the Commission hopes to draft rules
    that are simple and clear. Such provisions should facilitate
    enforcement, aid predictability and reduce controversy over whether
    a proposed transfer of control is eligible for streamlined
    treatment. Thus, in seeking comments on the proposals set forth
    below, the Commission also seeks information regarding which
    eligibility criteria will maximize the predictability of our
    processes while continuing to fulfill our statutory obligations.

22. The Regulatory Flexibility Act requires the Commission to consider
    the possible significant economic impact that streamlining may have
    on small entities.[^57] In this *Notice of Proposed Rulemaking*, we
    expressly seek proposals that would reduce legal and business
    burdens associated with filing domestic section 214 applications.
    For example, we seek comment whether the size of the parties, either
    in terms of access lines, revenues or some other measure, should be
    a factor in determining whether a carrier should be afforded
    expedited treatment with minimal filing requirements? Streamlined
    treatment could apply, for example, if both the acquiring and
    acquired companies have net sales or total assets below a certain
    threshold. Alternatively, the size of the transaction could be a
    qualifying factor for streamlined treatment. Should the number of
    local exchange areas in which a carrier operates or the number or
    percentage of lines (or voice-grade equivalents) that an applicant
    uses to serve consumers within a particular geographic area be a
    qualifying factor when it is below a certain threshold?

23. Furthermore, we observe that a carrier's market share, as a measure
    of size relative to other competitors, may serve as a proxy for
    market power. It therefore may be relevant for purposes of
    streamlining that the applicants lack substantial market shares and
    that there are sufficient other competitors in the market so that
    the transaction would not result in a significant increase in market
    concentration. We seek comment whether applicants should qualify for
    streamlined treatment depending on what their post-merger market
    share would be. For example, if the combined market share were to
    fall beneath a certain level, should the transaction be eligible for
    streamlined review? If so, what should this threshold be? We also
    seek comment on how those market share and market concentration
    levels should be calculated, *e.g.*, by access lines, revenues,
    etc.[^58]

24. Commenters should also address whether certain criteria should
    automatically disqualify applicants from streamlined review. Such
    criteria could include whether one or both of the merging carriers
    are incumbent local exchange carriers, or otherwise are dominant
    carriers, or whether either carrier is affiliated with a third-party
    dominant carrier. Similarly, we seek comment on whether the fact
    that a carrier is a facilities-based provider should trigger removal
    from streamlining treatment. We also seek comment on whether there
    are other factors that may affect the potential for public interest
    harms resulting from the acquisition of corporate control and
    therefore should result in removing the application from
    streamlining.

25. As stated above, the Commission's *1999 Streamlining Order* did not
    extend blanket authority to acquisitions of corporate control.[^59]
    The Commission found that---unlike transfers of
    assets---acquisitions of equity ownership (such as stock or
    partnership interests), veto power, or a controlling interest in a
    board of directors, for example, raised serious public interest
    concerns with respect to competition, and were likely to elicit
    significant public comment.[^60] However, we believe it is
    appropriate within the context of this *Notice of Proposed
    Rulemaking* to try to harmonize Commission rules governing domestic
    section 214 applications where appropriate. Therefore, we seek
    comment whether acquisitions of corporate control, structured as
    asset acquisitions, could have the potential to adversely impact the
    public interest. Specifically, we ask whether the Commission's
    current regulatory distinction between asset acquisitions and stock
    acquisitions may provide an incentive for some firms to structure
    transactions to avoid rigorous Commission review.[^61] Commenters
    asserting that this existing distinction is not warranted should
    describe how the Commission could best harmonize its requirements
    and, at the same time, ensure that asset acquisitions that are
    unlikely to raise public interest concerns, such as sales of
    exchanges, are not subject to unnecessary scrutiny.

26. The Commission seeks comment on how best to streamline the
    application process to reduce the regulatory burden on applicants
    and simplify application procedures. We ask commenters to address
    whether the Commission should adopt review periods of the same
    length for streamlined domestic transfers of control under section
    214 as apply to discontinuances so that the rules would be the same
    for both types of domestic section 214 transactions. For example,
    the rule for discontinuances of domestic service provides a 31-day
    review period for applications involving non-dominant carriers and a
    60-day review period involving a dominant carrier.[^62] Therefore,
    we seek comment on whether a 31-day review period for non-dominant
    carriers and a 60-day review period for dominant carriers should
    similarly apply with respect to acquisitions of corporate control,
    even though the analytical review process may differ from that of
    discontinuances. Under this arrangement, applications that qualify
    for streamlined treatment could be granted automatically without
    further written notice at the end of the waiting period. The 60-day
    review period for dominant carriers may be warranted so that the
    public would have a longer opportunity to provide detailed comments
    and the Commission would have sufficient time to review these
    transactions. Moreover, a transfer of control involving a dominant
    carrier may be more likely to result in loss of service for
    consumers if, after the merger, consumers would lack a competitive
    alternative for telecommunications services. Commenters may also
    comment on lengthier or shorter review periods, or whether review
    periods of the same length should apply to all transactions
    regardless of whether the applicants are classified as dominant or
    non-dominant carriers.

27. The Commission also seeks comment on whether certain transactions
    merit treatment similar to that currently afforded *pro forma*
    assignments and transfers of control in the wireless and
    international context.[^63] For example, where an assignment or
    transfer of control is *pro forma* within the meaning of Rule 63.24,
    an assignee or carrier that is the subject of a *pro forma* transfer
    of control need not obtain prior Commission approval. However, a
    *pro forma* assignee must notify the Commission no later than 30
    days after the assignment is consummated.[^64] The Commission has
    received notices of *pro forma* assignments or transfers of control
    of section 214 authorizations in the case of involuntary
    dispositions, including where the carrier's status has changed to
    "Debtor-in-Possession" after filing for bankruptcy protection under
    Chapter 11 of the U.S. Bankruptcy Code.[^65] In such cases, the
    Commission has viewed the transfer of control of section 214
    authorizations to the "Debtor-in-Possession" as a *pro* *forma*
    transfer.[^66] We request comment on whether there exists a class of
    domestic section 214 transactions that should be similarly treated,
    eliminating the need for prior Commission approval but requiring the
    carrier to notify the Commission of the transfer within a designated
    number of days.

28. We also seek comment on what, if any, treatment should apply where
    an internal corporate restructuring results in a new or existing
    subsidiary assuming interstate carrier operations under section 214
    from an existing parent or affiliated company.[^67] Such
    transactions may be afforded *pro forma* treatment, which requires
    notification only, with no prior approval. Alternatively, we could
    require a filing and a predetermined waiting period; or some other
    process may apply. We tentatively conclude that a provision should
    accompany any new rule regarding internal corporate restructurings
    stating that the applicant would be subject to all existing
    conditions of service so that, for example, a carrier that begins
    providing service through a differently-named subsidiary still would
    be subject to existing slamming and tariffing rules.[^68]

29. We expect commenters to identify other types of transactions and
    corporate restructurings that would require little scrutiny for the
    Commission to determine that grant of the applications would serve
    the public interest. Similarly, we request comment on other types of
    transactions and corporate restructurings where *pro forma*
    treatment should apply. Commenters may wish to consult Rule 63.24 on
    *pro forma* assignments and transfers of control in the
    international context for an illustrative but non-exhaustive list of
    the kinds of transactions that do not result in a change in the
    carrier's ultimate control.[^69] Moreover, we seek comment on
    whether *de jure* and *de facto* standards used by the Wireless
    Telecommunications Bureau to determine whether a transfer of control
    would result in a "substantial change" in ownership may have some
    applicability in the context of domestic section 214
    authorizations.[^70]

30. We propose that applicants seeking streamlined review will be
    required to provide information necessary to verify eligibility for
    streamlined status. We also believe that it is possible to approve
    applications for domestic section 214 authorization in a more
    expeditious manner to the extent that applicants provide information
    sufficient to show that the transaction raises no public interest
    concerns (*e.g.,* the transaction will not have an adverse effect on
    competition in any relevant market). We seek comment on what
    information applicants should provide to assist the Commission in
    determining whether an application merits streamlined treatment.

31. Applicants filing domestic section 214 applications sometimes
    request waivers of Commission rules. For example, in the *Bell
    Atlantic-GTE Order*,[^71] the Commission considered whether to grant
    Applicants' request for a waiver of the affiliate transaction rules,
    which ensure arm's length transactions between a dominant incumbent
    LEC and its nonregulated affiliate. The Commission denied the
    request and stated its reasoning in the order.[^72] We seek comment
    on how streamlined processing would affect commenters' ability to
    adequately comment on the variety of waiver requests that applicants
    may submit. Is there a strong policy basis to resolve waiver
    requests only in non-streamlined proceedings? In addition, should
    the filing of a waiver request extend the time period for
    automatically granting a streamlined application? We tentatively
    conclude that the Commission should make a determination on a
    case-by-case basis whether to accord streamlined treatment to
    domestic section 214 applications that are accompanied by waiver
    requests.

32. We also tentatively conclude that the Commission should reserve its
    authority to remove applications from streamlined review, as it does
    in the case of international and wireless license transfers.
    Assuming the Commission retains its authority to remove applications
    from streamlined review, we ask parties to address the circumstances
    under which the streamlined review process should be halted and a
    written decision issued. Rule 63.12 gives the Commission discretion
    to provide streamlined grant of international section 214
    applications in 14 days, even in cases where the Commission receives
    public comment.[^73] We seek comment on whether similar discretion
    would be appropriate in the domestic common carrier context, or
    whether specific criteria should be used to remove the application
    from streamlined processing. For example, we seek comment on whether
    the existence of a related application in another bureau should
    cause the Common Carrier Bureau to remove an application from
    streamlined review or otherwise adjust its timeline for reviewing
    the application.[^74] Commenters should also address other
    considerations that should cause the Commission to remove an
    application from streamlined review, and address the impact of our
    proposal to automatically grant streamlined applications on the
    public's ability to file comments.

33. Recognizing that the primary purpose of this item is to streamline
    the Commission's procedures pertaining to transfers of domestic
    section 214 authorizations, we also seek comment on an alternative
    to streamlining. Specifically, we seek comment on whether it would
    serve the public interest to amend our rules to relieve all
    non-dominant carriers, or certain categories of non-dominant
    carriers, that have blanket domestic section 214 authority from
    filing transfer of control applications. The rule in effect from
    1984 to 1999, Rule 63.07, could be read to grant domestic
    non-dominant carriers blanket authority to acquire lines in all
    circumstances, including those involving a change in corporate
    control.[^75] As discussed above in the *Declaratory Ruling*,
    however, the *1999 Streamlining Order* specifically requires all
    domestic interstate carriers, including dominant and non-dominant,
    to file applications for transfers of control. In the *1999
    Streamlining Order*, the Commission did not explicitly state whether
    it intended to clarify existing policies relating to transfers of
    control of non-dominant carriers, or rather, whether the Commission
    intended to impose a new filing requirement on non-dominant
    carriers.

34. We note that a number of the transactions that have raised
    significant public interest concerns in recent years have involved
    the presence of a *dominant* carrier such as an incumbent LEC.[^76]
    With respect to transactions involving non-dominant carriers that
    raised public interest concerns, those transactions also included
    the transfer of Title III licenses and international section 214
    authorizations.[^77] In such cases, the Commission is required to
    make a public interest finding with respect to the proposed
    transaction, regardless whether the carriers require domestic
    section 214 authorization for the transfer because the transfers of
    Title III licenses are involved.[^78] We seek comment on whether the
    public interest standard associated with transfers of Title III
    licenses and section 214 international authorizations is broad
    enough to encompass concerns about acquisitions of non-dominant
    carriers providing domestic interstate services or facilities that
    are subject to the blanket authority. If the public interest review
    is not broad enough in such circumstances, should the Commission
    explicitly retain authority to address public interest concerns
    raised by an acquisition of corporate control of a non-dominant
    domestic interstate carrier despite the fact that a domestic section
    214 transfer of control application would not be filed with the
    Commission? We also seek comment on whether there are circumstances
    under which non-dominant carriers that do not hold Title III or
    international section 214 licenses should be required to file
    section 214 applications, for example when the transaction is likely
    to raise public interest concerns. We seek comment on whether and
    how we would be able to identify this subgroup of transactions or
    carriers. Furthermore, if we were able to successfully identify and
    describe such a subgroup, we seek comment on whether non-dominant
    carriers would have an incentive to modify their corporate
    structures or their transactions to avoid filing a transfer of
    control application and thereby escape Commission scrutiny.

# PROCEDURAL MATTERS

## Ex Parte Presentations

35. These matters shall be treated as a "permit-but-disclose" proceeding
    in accordance with the Commission's *ex parte* rules.[^79] 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.[^80] Other
    rules pertaining to oral and written presentations are set forth in
    section 1.1206(b) as well.

## Initial Regulatory Flexibility Act Analysis

36. Section V sets forth the Commission's IRFA regarding policies and
    rules proposed in the *Declaratory Ruling and Notice of Proposed
    Rule Making*. Written public comments are requested on this IRFA.
    Comments must be identified as responses to the IRFA and must be
    filed by the deadlines for comments on the *Declaratory Ruling and
    Notice of Proposed Rule Making*. The Commission will send a copy of
    the *Declaratory Ruling and Notice of Proposed Rule Making*,
    including this IRFA, to the Chief Counsel for Advocacy of the Small
    Business Administration.[^81] In addition, the *Declaratory Ruling
    and Notice of Proposed Rule Making* will be published in the Federal
    Register.[^82]

## Comment Filing Procedures

37. Pursuant to applicable procedures set forth in sections 1.415 and
    1.419 of the Commission\'s rules,[^83] interested parties may file
    comments on or before **30 days after Federal Register publication
    of this *Declaratory Ruling and Notice of Proposed Rule Making*,**
    and reply comments on or before **60 days after Federal Register
    publication of this *Declaratory Ruling and Notice of Proposed Rule
    Making*.** All filings should refer to CC Docket No. 01-150.
    Comments may be filed using the Commission\'s Electronic Comment
    Filing System (ECFS) or by filing paper copies.[^84] Comments filed
    through ECFS can be sent as an electronic file via the Internet to
    \<http://www.fcc.gov/e-file/ecfs.html\>. Generally, only one copy of
    an electronic submission must be filed. In completing the
    transmittal screen, commenters should include their full name,
    Postal Service mailing address, and the applicable docket number,
    which in this instance is CC Docket No. 01-150. Parties may also
    submit an electronic comment by Internet e-mail. To get filing
    instructions for e-mail comments, commenters should send an e-mail
    to ecfs@fcc.gov, and should include the following words in the body
    of the message, \"get form \<your e-mail address.\" A sample form
    and directions will be sent in reply.

38. Parties who choose to file by paper must file an original and four
    copies of each filing. All filings must be sent to the Commission\'s
    Secretary, Magalie Roman Salas, Office of the Secretary, Federal
    Communications Commission, Room TW-B204, 445 12th St. S.W.,
    Washington, D.C. 20554.

39. Parties who choose to file by paper should also submit their
    comments on diskette. These diskettes should be submitted to Janice
    Myles, Policy & Program Planning Division, Common Carrier Bureau,
    445 12th Street, S.W., Washington, D.C. 20554. Such a submission
    should be on a 3.5 inch diskette formatted in an IBM compatible
    format using Microsoft Word or compatible software. The diskette
    should be accompanied by a cover letter and should be submitted in
    \"read only\" mode. The diskette should be clearly labeled with the
    commenter\'s name, proceeding (including the docket number, in this
    case, CC Docket No. 01-150), type of pleading (comment or reply
    comment), date of submission, and the name of the electronic file on
    the diskette. The label should also include the following phrase
    \"Disk Copy - Not an Original.\" Each diskette should contain only
    one party\'s pleading, preferably in a single electronic file. In
    addition, commenters must send diskette copies to the Commission\'s
    copy contractor, International Transcription Service, Inc., 1231
    20th Street, N.W., Washington, D.C. 20036.

40. Regardless of whether parties choose to file electronically or by
    paper, parties should also file one copy of any documents filed in
    this docket with the Commission\'s copy contractor, International
    Transcription Services, Inc., 1231 20th Street, N.W., Washington,
    D.C. 20036. Comments and reply comments will be available for public
    inspection during regular business hours in the FCC Reference
    Center, Room CY-A257, 445 12th Street, S.W., Washington, D.C. 20554.

41. Comments and reply comments must include a short and concise summary
    of the substantive arguments raised in the pleading. Comments and
    reply comments must also comply with section 1.49 and all other
    applicable sections of the Commission\'s rules.[^85] We direct all
    interested parties to include the name of the filing party and the
    date of the filing on each page of their comments and reply
    comments. All parties are encouraged to utilize a table of contents,
    regardless of the length of their submission. We also strongly
    encourage that parties track the organization set forth in the
    *Declaratory Ruling and Notice of Proposed Rulemaking* in order to
    facilitate our internal review process.

# INITIAL REGULATORY FLEXIBILITY ACT ANALYSIS

42. As required by the Regulatory Flexibility Act (RFA),[^86] the
    Commission has prepared this Initial Regulatory Flexibility Analysis
    (IRFA) of the possible significant economic impact on small entities
    by the policies and rules proposed in this *Declaratory Ruling and
    Notice of Proposed Rule Making*. Written public comments are
    requested on this IRFA. Comments must be identified as responses to
    the IRFA and must be filed by the deadlines for comments on the
    *Declaratory Ruling and Notice of Proposed Rule Making* provided
    above in section IV(D). The Commission will send a copy of the
    *Declaratory Ruling and Notice of Proposed Rule Making*,

43. including this IRFA, to the Chief Counsel for Advocacy of the Small
    Business Administration.[^87] In addition, the *Declaratory Ruling
    and Notice of Proposed Rule Making* and IRFA (or summaries thereof)
    will be published in the Federal Register.[^88]

## Need for, and Objectives of, the Proposed Rules

44. The Commission has initiated this proceeding to seek comment on how
    it might improve and streamline applications under section 214 to
    acquire domestic transmission lines through acquisitions of
    corporate control that require little scrutiny in order for the
    Commission to determine that they serve the public interest. We also
    propose to shorten the review periods for transfers of control. In
    the *Declaratory Ruling*, we clarify that connecting carriers are
    not required to file section 214 applications for acquisitions of
    corporate control, and that resellers and other non-dominant
    carriers must file applications for acquisitions of corporate
    control.

## Legal Basis

45. The legal basis for any action that may be taken pursuant to the
    NPRM is contained in sections 4, 201-202, 303 and 403 of the
    Communications Act of 1934, as amended, 47 U.S.C. §§ 154, 201-202,
    303 and 403, and sections 1.1, 1.411 and 1.412 of the Commission's
    rules, 47 C.F.R. §§ 1.1, 1.411 and 1.412.

## Description and Estimate of the Number of Small Entities To Which the Proposed Rules Will Apply

46. 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 rulemaking, if adopted.[^89] The Regulatory
    Flexibility Act defines the term "small entity" as having the same
    meaning as the terms "small business," "small organization," and
    "small governmental jurisdiction."[^90] In addition, the term "small
    business" has the same meaning as the term "small business concern"
    under section 3 of the Small Business Act.[^91] A small business
    concern is one which: (1) is independently owned and operated; (2)
    is not dominant in its field of operation; and (3) satisfies any
    additional criteria established by the SBA.[^92]

47. The most reliable source of information regarding the total numbers
    of certain common carrier and related providers nationwide, as well
    as the number of commercial wireless entities, appears to be data
    the Commission publishes in its *Trends in Telephone Service*
    report.[^93] However, in a recent news release, the Commission
    indicated that there are 4,144 interstate carriers.[^94] These
    carriers include, *inter alia*, local exchange carriers, wireline
    carriers and service providers, interexchange carriers, competitive
    access providers, operator service providers, pay telephone
    operators, providers of telephone service, providers of telephone
    exchange service, and resellers.

48. The SBA has defined establishments engaged in providing
    \"Radiotelephone Communications\" and \"Telephone Communications,
    Except Radiotelephone\" to be small businesses when they have no
    more than 1,500 employees.[^95] Below, we discuss the total
    estimated number of telephone companies falling within the two
    categories and the number of small businesses in each, and we then
    attempt to refine further those estimates to correspond with the
    categories of telephone companies that are commonly used under our
    rules.

49. We have included small incumbent LECs in this present RFA analysis.
    As noted above, a \"small business\" under the RFA is one that,
    *inter alia*, meets the pertinent small business size standard
    (*e.g.*, a telephone communications business having 1,500 or fewer
    employees), and \"is not dominant in its field of operation.\"[^96]
    The SBA\'s Office of Advocacy contends that, for RFA purposes, small
    incumbent LECs are not dominant in their field of operation because
    any such dominance is not \"national\" in scope.[^97] We have
    therefore included small incumbent LECs in this RFA analysis,
    although we emphasize that this RFA action has no effect on FCC
    analyses and determinations in other, non-RFA contexts.

50. **Total Number of Telephone Companies Affected.** The U.S. Bureau of
    the Census (\"Census Bureau\") reports that, at the end of 1992,
    there were 3,497 firms engaged in providing telephone services, as
    defined therein, for at least one year.[^98] This number contains a
    variety of different categories of carriers, including local
    exchange carriers, interexchange carriers, competitive access
    providers, cellular carriers, mobile service carriers, operator
    service providers, pay telephone operators, covered specialized
    mobile radio providers, and resellers. It seems certain that some of
    these 3,497 telephone service firms may not qualify as small
    entities or small incumbent LECs because they are not
    \"independently owned and operated.\"[^99] For example, a PCS
    provider that is affiliated with an interexchange carrier having
    more than 1,500 employees would not meet the definition of a small
    business. It is reasonable to conclude that fewer than 3,497
    telephone service firms are small entity telephone service firms or
    small incumbent LECs that may be affected by the proposed rules,
    herein adopted.

51. **Wireline Carriers and Service Providers.** The SBA has developed a
    definition of small entities for telephone communications companies
    except radiotelephone (wireless) companies. The Census Bureau
    reports that there were 2,321 such telephone companies in operation
    for at least one year at the end of 1992.[^100] According to the
    SBA\'s definition, a small business telephone company other than a
    radiotelephone company is one employing no more than 1,500
    persons.[^101] All but 26 of the 2,321 non-radiotelephone companies
    listed by the Census Bureau were reported to have fewer than 1,000
    employees. Thus, even if all 26 of those companies had more than
    1,500 employees, there would still be 2,295 non‑radiotelephone
    companies that might qualify as small entities or small incumbent
    LECs. We do not have data specifying the number of these carriers
    that are not independently owned and operated, and thus are unable
    at this time to estimate with greater precision the number of
    wireline carriers and service providers that would qualify as small
    business concerns under the SBA\'s definition. Consequently, we
    estimate that fewer than 2,295 small telephone communications
    companies other than radiotelephone companies are small entities or
    small incumbent LECs that may be affected by the proposed
    rulemaking. We further note that some of these small entities may be
    "connecting carriers," as defined in section 3(11) of the Act,[^102]
    and would not be subject to section 214 or Rule 63.01 when engaging
    in an acquisition of corporate control [^103] and thus would not
    require prior Commission approval to consummate a transaction
    involving an acquisition of corporate control.

52. **Local Exchange Carriers.** Neither the Commission nor the SBA has
    developed a definition for small providers of local exchange
    services. The closest applicable definition under the SBA rules is
    for telephone communications companies other than radiotelephone
    (wireless) companies.[^104] According to the most recent *Trends in
    Telephone Service* data, 1,348 incumbent carriers reported that they
    were engaged in the provision of local exchange services.[^105] We
    do not have data specifying the number of these carriers that are
    either dominant in their field of operations, are not independently
    owned and operated, or have more than 1,500 employees, and thus are
    unable at this time to estimate with greater precision the number of
    LECs that would qualify as small business concerns under the SBA\'s
    definition. Consequently, we estimate that fewer than 1,348
    providers of local exchange service are small entities or small
    incumbent LECs that may be affected by the proposed rulemaking.

53. **Interexchange Carriers**. Neither the Commission nor the SBA has
    developed a definition of small entities specifically applicable to
    providers of interexchange services (IXCs). The closest applicable
    definition under the SBA rules is for telephone communications
    companies other than radiotelephone (wireless) companies.[^106]
    According to the most recent *Trends in Telephone Service* data, 171
    carriers reported that they were engaged in the provision of
    interexchange services.[^107] We do not have data specifying the
    number of these carriers that are not independently owned and
    operated or have more than 1,500 employees, and thus are unable at
    this time to estimate with greater precision the number of IXCs that
    would qualify as small business concerns under the SBA\'s
    definition. Consequently, we estimate that there are fewer than 171
    small entity IXCs that may be affected by the proposed rulemaking.

54. **Competitive Access Providers.** Neither the Commission nor the SBA
    has developed a definition of small entities specifically applicable
    to competitive access services providers (CAPs). The closest
    applicable definition under the SBA rules is for telephone
    communications companies other than radiotelephone (wireless)
    companies.[^108] According to the most recent *Trends in Telephone
    Service* data, 212 CAP/CLECs carriers and 10 other LECs reported
    that they were engaged in the provision of competitive local
    exchange services.[^109] We do not have data specifying the number
    of these carriers that are not independently owned and operated, or
    have more than 1,500 employees, and thus are unable at this time to
    estimate with greater precision the number of CAPs that would
    qualify as small business concerns under the SBA\'s definition.
    Consequently, we estimate that there are fewer than 212 small entity
    CAPs and 10 other LECs that may be affected by the proposed
    rulemaking.

55. **Operator Service Providers.** Neither the Commission nor the SBA
    has developed a definition of small entities specifically applicable
    to providers of operator services. The closest applicable definition
    under the SBA rules is for telephone communications companies other
    than radiotelephone (wireless) companies.[^110] According to the
    most recent *Trends in Telephone Service* data, 24 carriers reported
    that they were engaged in the provision of operator services.[^111]
    We do not have data specifying the number of these carriers that are
    not independently owned and operated or have more than 1,500
    employees, and thus are unable at this time to estimate with greater
    precision the number of operator service providers that would
    qualify as small business concerns under the SBA\'s definition.
    Consequently, we estimate that there are fewer than 24 small entity
    operator service providers that may be affected by the proposed
    rulemaking.

56. **Pay Telephone Operators.** Neither the Commission nor the SBA has
    developed a definition of small entities specifically applicable to
    pay telephone operators. The closest applicable definition under SBA
    rules is for telephone communications companies other than
    radiotelephone (wireless) companies.[^112] According to the most
    recent *Trends in Telephone Service* data, 615 carriers reported
    that they were engaged in the provision of pay telephone
    services.[^113] We do not have data specifying the number of these
    carriers that are not independently owned and operated or have more
    than 1,500 employees, and thus are unable at this time to estimate
    with greater precision the number of pay telephone operators that
    would qualify as small business concerns under the SBA\'s
    definition. Consequently, we estimate that there are fewer than 615
    small entity pay telephone operators that may be affected by the
    proposed rulemaking.

57. **Resellers (including debit card providers).** Neither the
    Commission nor the SBA has developed a definition of small entities
    specifically applicable to resellers. The closest applicable SBA
    definition for a reseller is a telephone communications company
    other than radiotelephone (wireless) companies.[^114] According to
    the most recent *Trends in Telephone Service* data, 388 toll and 54
    local entities reported that they were engaged in the resale of
    telephone service.[^115] We do not have data specifying the number
    of these carriers that are not independently owned and operated or
    have more than 1,500 employees, and thus are unable at this time to
    estimate with greater precision the number of resellers that would
    qualify as small business concerns under the SBA\'s definition.
    Consequently, we estimate that there are fewer than 388 small toll
    entity resellers and 54 small local entity resellers that may be
    affected by the proposed rulemaking.

58. **Toll-Free 800 and 800-Like Service Subscribers.**[^116] Neither
    the Commission nor the SBA has developed a definition of small
    entities specifically applicable to 800 and 800-like service (\"toll
    free\") subscribers. The most reliable source of information
    regarding the number of these service subscribers appears to be data
    the Commission collects on the 800, 888, and 877 numbers in
    use.[^117] According to our most recent data, at the end of January
    1999, the number of 800 numbers assigned was 7,692,955; the number
    of 888 numbers that had been assigned was 7,706,393; and the number
    of 877 numbers assigned was 1,946,538. We do not have data
    specifying the number of these subscribers that are not
    independently owned and operated or have more than 1,500 employees,
    and thus are unable at this time to estimate with greater precision
    the number of toll free subscribers that would qualify as small
    business concerns under the SBA\'s definition. Consequently, we
    estimate that there are fewer than 7,692,955 small entity 800
    subscribers, fewer than 7,706,393 small entity 888 subscribers, and
    fewer than 1,946,538 small entity 877 subscribers may be affected by
    the proposed rulemaking.

## Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements

59. In this *Notice of Proposed Rulemaking*, we propose a number of
    steps to reduce the regulatory burden on carriers filing section 214
    authorization under the Communications Act. We do not believe that
    small entities would be disproportionately affected by the
    implementation of the measures under consideration. In this *Notice
    of Proposed Rulemaking*, we propose to clarify existing rules and
    shorten the review period for a predetermined class of domestic
    section 214 applications. We expect these changes would save
    carriers time and labor in the pre-filing stage, by reducing the
    amount of research required and documentation to be submitted when
    it is apparent that the transaction would require little scrutiny in
    order for the Commission to determine that it serves the public
    interest. We also expect these changes would save carriers time and
    labor during the review period by reducing costs associated with
    uncertainty surrounding the current process. Accordingly, any costs
    associated with the proposed measures in this *Notice of Proposed
    Rulemaking* would not be greater for small carriers.

## Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered

60. The RFA requires an agency to describe any significant alternatives
    that it has considered in reaching its proposed approach, which may
    include the following four alternatives (among others): (1) the
    establishment of differing compliance or reporting requirements or
    timetables that take into account the resources available to small
    entities; (2) the clarification, consolidation, or simplification of
    compliance and 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.[^118]

61. In this *Declaratory Ruling*, the Commission clarifies that
    connecting carriers are not required to file section 214
    applications for acquisitions of corporate control.[^119] The
    Commission offers this clarification of an existing rule in order to
    reduce the regulatory burden for connecting carriers, including
    small entities. We believe that by expressly articulating that
    connecting carriers are free from a specific section 214 filing
    requirement, the Commission has provided small entities the least
    burdensome of filing requirements, *i.e.*, carriers who were once
    uncertain of their obligations will now find it unnecessary to
    assume the costs of filing section 214 applications for acquisitions
    of corporate control. We note that any other interpretation of
    section 2(b) of the Act would increase and not decrease compliance
    and reporting requirements for connecting carriers, including small
    entities.

62. Moreover, in this *Declaratory Ruling*, we also clarify that
    resellers and non-dominant carriers are not exempt from Rule 63.01
    and must file applications for acquisitions of corporate
    control.[^120] As we explain in Section II(B), there is nothing in
    either the *1999 Streamlining Order* or the plain language of Rule
    63.01 to support the contention that acquisitions of corporate
    control involving non-dominant carriers are covered under the
    blanket authority of Rule 63.01. Therefore, we clarify that
    non-dominant carriers are required to file applications and obtain
    Commission approval before consummating a transaction involving an
    acquisition of corporate control. Any alternative approach would
    violate an existing rule and frustrate the Commission's ability to
    perform its statutory obligation of considering the public interest
    in connection with proposed acquisitions of domestic interstate
    common carriers, including non-dominant carriers.

63. Also in this *Notice of Proposed Rulemaking* in section III(B), we
    seek comment on whether the established Commission review periods
    for transfers of control should be 31 days for non-dominant
    carriers.[^121] In considering alternatives to a 31-day review, we
    weighed the need for Commission time to review the application and
    public record (including adequate time for competitors and other
    interested parties to file a petition to deny a proposed
    application), versus the costs faced by the applicants associated
    with filing, as well as the business and legal uncertainty that
    accompanies an extended waiting period. Accordingly, it is possible
    that a 31-day review period would minimize application-related costs
    and uncertainties while preserving the Commission's ability to
    review the proposed transaction. The item also seeks comment whether
    longer or shorter review periods should apply. The review period
    would apply to all non-dominant carriers including small entities.
    The Commission staff has come to no conclusion as to what length
    review period should apply. However, one argument in favor of a
    31-day review period is that a shorter review period would have the
    unintended result of impacting small entities negatively rather than
    beneficially. Small entities commenting on the appropriate review
    period may wish to address whether small entities would be
    negatively impacted by a shorter review period because they would
    not be able to effectively comment on the public interest benefits
    or harms of competitors' proposed consolidations.

64. Finally, in section III(B), the *Notice of Proposed Rulemaking*
    seeks comment on whether to accord streamlined treatment to
    applications that are accompanied by requests for waivers of other
    Commission rules.[^122] The Commission has come to no conclusion
    whether such a rule should apply. However, one consideration in
    favor of considering waiver requests on a case by case basis is that
    small entities seeking to comment on issues raised by the waiver may
    lack the resources to adequately or timely respond otherwise.
    Therefore, we believe the Commission should maintain the flexibility
    to consider whether commenters representing the interests of small
    entities have had adequate opportunity to comment.

## Federal Rules that May Duplicate, Overlap, or Conflict With the Proposed Rules

65. None.

# Ordering clauses

66. Accordingly, IT IS ORDERED, pursuant to the authority contained in
    sections 2, 4(i)-(j), 201, 214, and 303(r) of the Communications Act
    of 1934, as amended, 47 U.S.C. §§ 152, 154(i)-(j), 201, 214, and
    303(r), that the *Declaratory Ruling and Notice of Proposed
    Rulemaking* in CC Docket No. 01-150 ARE ADOPTED*.*

67. IT IS FURTHER ORDERED that the Commission\'s Consumer Information
    Bureau, Reference Information Center, SHALL SEND a copy of this
    *Declaratory Ruling and Notice of Proposed Rulemaking*, including
    the Initial Regulatory Flexibility Analysis, to the Chief Counsel
    for Advocacy of the Small Business Administration.

68. IT IS FURTHER ORDERED, pursuant to sections 2, 4(i)-(j), 201, 214,
    and 303(r) of the Communications Acct of 1934, as amended, 47 U.S.C.
    §§ 152, 154(i)-(j), 201, 214, and 303(r), that the *Declaratory
    Ruling and Notice of Proposed Rulemaking* in CC Docket No. 01-150
    SHALL BECOME EFFECTIVE upon publication of the text or summary
    thereof in the Federal Register.

    FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

[^1]: Section 214 imposes regulatory obligations on common carriers
    seeking to construct, acquire, or operate transmission lines:

    > No carrier shall undertake the construction of a new line. . . or
    > shall acquire or operate any line . . . or shall engage in
    > transmission over or by means of such additional or extended line,
    > unless and until there shall first have been obtained from the
    > Commission a certificate that the present or future public
    > convenience and necessity require or will require the
    > construction, or operation, or construction and operation, of such
    > additional . . . line.

    47 U.S.C. § 214(a).

[^2]: 47 C.F.R. § 63.01.

[^3]: 47 U.S.C. § 153(11). The Commission defines a connecting carrier
    as \"a carrier engaged in interstate or foreign communication solely
    through physical connection with the facilities of another carrier
    not directly or indirectly controlling or controlled by, or under
    direct or indirect common control with, such carrier.\" 47 C.F.R. §
    61.3(n).

[^4]: 47 C.F.R. § 63.01.

[^5]: We note that simultaneous with the release of this Notice of
    Proposed Rulemaking, the Common Carrier Bureau released a Public
    Notice clarifying the filing requirements for all domestic section
    214 applications involving acquisitions of corporate control.
    *Common Carrier Bureau Announces Procedures for Applicants Requiring
    Section 214 Authorization for Acquisitions of Corporate Control*,
    Public Notice, DA-01-1654 (rel. July 20, 2001).

[^6]: Entry certification refers to authorizations to construct,
    acquire, operate, or engage in transmission over lines of
    communication. *See Implementation of Section 402(b)(2)(A) of the
    Telecommunications Act of 1996, Petition for Forbearance of the
    Independent Telephone & Telecommunications Alliance*, Report and
    Order in CC Docket No. 97-11, Second Memorandum Opinion and Order in
    AAD File No. 98-43, 14 FCC Rcd 11364, 11365, ¶1 & n.1 (1999) (*"1999
    Streamlining Order"*)*.* Exit certification refers to authorizations
    to discontinue, reduce, or impair service to a community. *See id.*

[^7]: *See id.* at 11372, ¶12; 47 C.F.R. § 63.01(a).

[^8]: Rule 63.01(a) states:

    > Any party that would be a domestic interstate communications
    > common carrier is authorized to provide domestic, interstate
    > services to any domestic point and to construct, acquire, or
    > operate any domestic transmission line as long as it obtains all
    > necessary authorizations from the Commission for use of radio
    > frequencies. This authority does not apply to acquisitions of
    > corporate control . . . .

    47 C.F.R. § 63.01.

[^9]: *1999 Streamlining Order,* 14 FCC Rcd at 11374, ¶17 (citing
    *GTE-Telenet Merger,* 72 FCC 2d 91 (1979), in which the Commission
    asserted jurisdiction under section 214 to review acquisition of a
    resale carrier operating pursuant to section 214 authority); *see
    also Applications of Alascom, Inc., AT&T Corporation, and Pacific
    Telecom, Inc. for Transfer of Control of Alascom, Inc. from Pacific
    Telecom, Inc. to AT&T Corporation*, Order and Authorization, 11 FCC
    Rcd 732, 739, ¶ 13 (1995) (*"Alascom, Inc."*) (pointing out that
    "applications filed pursuant to \[s\]ection 214 of the
    Communications Act are required for transfers of control even if no
    new facilities are constructed").

[^10]: *1999 Streamlining Order,* 14 FCC Rcd at 11374-75, ¶18. *See
    also* *id.* at 11366, 11374, ¶¶ 2, 17 & nn. 6-7 (stating that
    acquisitions of corporate control "entail market and economic
    considerations," and citing as examples *Applications of NYNEX
    Corporation, Transferor, and Bell Atlantic Corporation, Transferee,
    for Consent to Transfer Control of NYNEX Corporation and Its
    Subsidiaries,* Memorandum Opinion and Order, 12 FCC Rcd 19985
    (1997), *Alascom, Inc.*, 11 FCC Rcd at 739).

[^11]: *Id*. at 11374-75, ¶18.

[^12]: *Id*.

[^13]: *Id*.

[^14]: 47 U.S.C. § 152(b)(2).

[^15]: As an aside, we note that, although commercial mobile radio
    service providers are common carriers, our rules provide that these
    carriers are not required to file section 214 applications for
    domestic services. *See* 47 C.F.R. § 20.15(b)(3).

[^16]: 47 U.S.C. § 153(11).

[^17]: 47 U.S.C. § 152(b). In their entirety, sections 152(b)(2), (3),
    and (4) provide:

    > Except as provided in sections 223 through 227 of this title,
    > inclusive, and section 332 of this title, and subject to the
    > provisions of section 301 of this title and Title VI, nothing in
    > this chapter shall be construed to apply or to give the Commission
    > jurisdiction with respect to . . . (2) any carrier engaged in
    > interstate or foreign communication solely through physical
    > connection with the facilities of another carrier not directly or
    > indirectly controlling or controlled by, or under direct or
    > indirect common control with such carrier, or (3) any carrier
    > engaged in interstate or foreign communication solely through
    > connection by radio, or by wire and radio, with facilities,
    > located in an adjoining State or in Canada or Mexico (where they
    > adjoin the State in which the carrier is doing business), of
    > another carrier not directly or indirectly controlling or
    > controlled by, or under direct or indirect common control with
    > such carrier, or (4) any carrier to which clause (2) or clause (3)
    > of this subsection would be applicable except for furnishing
    > interstate mobile radio communication service or radio
    > communication service to mobile stations on land vehicles in
    > Canada or Mexico; except that sections 201 to 205 of this Act,
    > both inclusive, shall, except as otherwise provided therein, apply
    > to carriers described in clauses (2), (3), and (4) of this
    > subsection.

[^18]: *See Application of Contel of Indiana, Inc. for Authority
    Pursuant to Section 214 of the Communications Act of 1934 and
    Section 63.01 of the Commission's Rules and Regulations to Lease
    Transmission Facilities*, Memorandum Opinion and Order, 3 FCC Rcd
    4298 (1988) (stating that the determination of connecting carrier
    status involves a range of factual determinations with respect to
    the operations and relationships of a particular carrier); *see also
    Declaratory Ruling on the Application of Section 2(b)(2) of the
    Communications Act of 1934 to Bell Operating Companies*, Memorandum
    Opinion and Order, 2 FCC Rcd 1750 (1987).

[^19]: *Id.*

[^20]: *See*, *e.g.*, 47 U.S.C. § 152(a); *see also* *id.* § 214(a)
    (covering both construction of new lines and acquisition of existing
    lines).

[^21]: A "dominant" carrier is a carrier found by the Commission to have
    market power (*i.e*., power to control prices). 47 C.F.R. § 61.3(q).
    A "non-dominant" carrier is a carrier not found to be dominant. 47
    C.F.R. § 61.3(y).

[^22]: *See 1999 Streamlining Order,* 14 FCC Rcd at 11367, ¶ 4; *Policy
    and Rules Concerning Rates for Competitive Common Carrier Services
    and Facilities Authorizations Therefor,* CC Docket No. 79-252, Fifth
    Report and Order, 98 FCC 2d 1191 (1984) (*Competitive Carrier Fifth
    Report and Order*); 47 C.F.R. § 63.07(a)(1996) ("Any party that
    would be a non-dominant domestic interstate communications common
    carrier is authorized to provide domestic, interstate services to
    any domestic point and to construct, acquire, or operate any
    transmission line as long as it obtains all necessary authorizations
    from the Commission for use of radio frequencies.").

[^23]: 47 C.F.R. § 63.01.

[^24]: *See* *1999 Streamlining Order*, 14 FCC Rcd at 11370, ¶ 8
    (considering whether to forbear from applying section 214 to
    non-dominant carriers); *id.* at 11373, ¶¶ 15-16 (noting that the
    public interest required blanket authority be adopted rather than
    forbearance so that the Commission would retain an enforcement
    mechanism against abusive practices by carriers, including
    non-dominant carriers).

[^25]: *See* *id.* at 11364; s*ee also* *In the Matter of 1998 Biennial
    Regulatory Review---Review of International Common Carrier
    Regulations*, Report and Order, 14 FCC Rcd 4909 (1999)
    *("International Streamlining Order"*); *In the Matter of Federal
    Communications Bar Association's Petition for Forbearance from
    Section 310(d) of the Communications Act Regarding Non-Substantial
    Assignments of Wireless Licenses and Transfers of Control Involving
    Telecommunications Carriers, et al.,* Memorandum Opinion and Order,
    13 FCC Rcd 6293 (1998) (*"CMRS Forbearance Order"*). CMRS is defined
    as "any mobile service . . . that is provided for profit and makes
    interconnected service available (A) to the public or (B) to such
    classes of eligible users as to be effectively available to a
    substantial portion of the public." *In the Matter of Implementation
    of Sections 3(n) and 332 of the Communications Act, Regulatory
    Treatment of Mobile Services*, Second Report and Order, 9 FCC Rcd
    1411, 1417, ¶ 11 (1994) (citing 47 U.S.C. § 332(d)(11)).

[^26]: *1999 Streamlining Order,* 14 FCC Rcd at 11364. In this context,
    "blanket authority" refers to a deregulatory measure in which the
    Commission broadly granted section 214 authority to all carriers to
    construct, operate, or engage in transmission over lines of
    communication without prior approval from the Commission.

[^27]: *Id.* at 11372, ¶ 12.

[^28]: 47 C.F.R. § 63.01(a); *see also 1999 Streamlining Order,* 14 FCC
    Rcd at 11365-66, ¶ 2.

[^29]: *1999 Streamlining Order,* 14 FCC Rcd at 11374-75, ¶ 18.

[^30]: The discontinuing operator, however, must file an application to
    discontinue service under Rule 63.71. Because of this requirement,
    the Commission determined that it was unlikely that a transaction
    would be structured as an asset acquisition rather than an
    acquisition of corporate control for the purpose of avoiding
    Commission review of the transaction. *Id.* at 11374, ¶ 17, n.55.

[^31]: *Id.* at 11374-75, ¶ 18.

[^32]: *Id.* at 11380, ¶ 29; 47 C.F.R. § 63.71(c).

[^33]: *Id*.

[^34]: 47 C.F.R. § 63.71.

[^35]: *Id.* at § 63.12.

[^36]: S*ee* *Rules and Policies on Foreign Participation in the U.S.
    Telecommunications Market, Report and Order and Order on
    Reconsideration*, IB Docket Nos. 97-142 and 95-22, 12 FCC Rcd 23891,
    24032-33, ¶ 322 (1997), *on recon*., 15 FCC Rcd 18158 (2000).

[^37]: *International Streamlining Order,* 14 FCC Rcd at 4914-15,
    4919-20, ¶¶ 12-13, 23-24.

[^38]: *Id.* at 4911, ¶ 6.

[^39]: 47 C.F.R. § 63.12(c)(1)(iii); *International Streamlining Order,*
    14 FCC Rcd at 4922, ¶ 29.

[^40]: *International Streamlining Order,* 14 FCC Rcd at 4927-29, ¶¶
    41-45. A *pro* *forma* assignment or transfer of control is
    generally one that does not result in a change in ultimate control
    of the carrier. *See* 47 C.F.R. § 63.24(a)(1)-(6). On November 13,
    2000, the Commission adopted a *Notice of Proposed Rulemaking* that
    proposes, among other things, to amend its rules on *pro* *forma*
    assignments and transfers of control of international section 214
    authorizations to provide carriers with greater flexibility and
    clarity, and to align the international procedures with those that
    apply to commercial mobile radio service providers. *In the Matter
    of 2000 Biennial Regulatory Review Amendment of Parts 43 and 63 of
    the Commission's Rules*, IB Docket No. 00-231, 15 FCC Rcd 24264,
    24272-73, 24274, ¶¶ 18-20, 25 (2000) (*"2000 Biennial Regulatory
    Review"*). The Commission also proposed to end requirements that
    dominant international carriers seek prior agency approval before
    discontinuing service on a route, except where a carrier possesses
    market power for international service in the United States. *Id*.
    at ¶ 29.

[^41]: 47 C.F.R. § 63.12(c)(2).

[^42]: *Id.* at § 63.12(c)(3).

[^43]: *See id.* at § 63.12(c)(1)(i)-(v).

[^44]: *International Streamlining Order,* 14 FCC Rcd at 4920-21, ¶
    25-26 ("For example, additional scrutiny may be required where an
    application may present a significant potential adverse impact on
    competition, or where an assignment or transfer of control could
    eliminate a significant current or future competitor."); 47 C.F.R. §
    63.12(c)(4).

[^45]: 47 C.F.R. § 63.12(d).

[^46]: *Id*.

[^47]: 47 U.S.C. § 310(d); *see also* 47 U.S.C. § 309(d)(1), which
    requires the Commission to allow 30 days after public notice of
    acceptance for filing of broadcast, common carrier and certain other
    applications to permit petitions to deny to be filed.

[^48]: *CMRS Forbearance Order,* 13 FCC Rcd at 6299, ¶ 9. There are
    certain exceptions to this forebearance rule, which are not
    applicable to our present discussion.

[^49]: *Id.* at 6295, ¶ 2.

[^50]: *De jure* control exists where one equity holder, or two or more
    equity holders voting together own or control fifty percent or more
    of voting equity. *De facto* control is defined as actual control of
    the licensee, and primarily applies where the party or entity in
    question has the power to control or dominate management of the
    licensee. *De facto* control is determined on a case-by-case basis.
    *Id.* at 6295, 6297, ¶¶ 2, 7.

[^51]: *Id.* at 6299, ¶ 9.

[^52]: *Id.* Among the criteria the Commission considers are: (a) the
    size of an entity's ownership interest; (b) the existence of power
    to constitute or appoint more than fifty percent of the board of
    directors or partnership management committee; (c) the ability to
    make employment decisions, control day-to-day operations, and play a
    role in major management decisions; (d) the existence of authority
    to pay financial obligations, including expenses arising out of
    operations; (e) the ability to receive monies and profits from the
    facility's operations; and (f) the existence of unfettered use of
    all facilities and equipment. *Id.* at 6297-98, ¶ 7.

[^53]: *See, e.g*., *Common Carrier Bureau Grants Consent for Transfer
    of Control to Smart City Telecommunications of Authorizations Held
    by Vista-United Telecommunications,* Public Notice, 15 FCC Rcd 24910
    (2000) (granting section 214 authorization by public notice after
    receiving no public comments).

[^54]: For example, if it is widely believed that a transfer involving
    two long distance resellers is not likely to draw significant public
    comment, such an application could be one type of transaction
    permitted streamlined review.

[^55]: 11 U.S.C. §§ 1101-1174 (1998).

[^56]: We note that in antitrust law, there is no exception from
    pre-merger review for the sale of bankrupt firms. However, the
    "failing firm" doctrine acknowledges that a competitor's acquisition
    of a bankrupt firm in some cases may not lessen competition in
    violation of Section 7 of the Clayton Act. Merging firms relying on
    this defense in the antitrust context have had a difficult burden to
    prove that the acquired firm is truly failing and that acquisition
    by the potential acquiror would have the least anticompetitive
    result, or that the proposed acquiror is the only purchaser
    available. *See*, *e.g*., *Citizen Publishing Co*. *v. United
    States*, 394 U.S. 131, 137-38 (1969) (parties permitted to
    consummate acquisition where purchaser was "last straw at which the
    \[failing firm\] grasped"); *Pillsbury Company*, 93 F.T.C. 966, 1032
    (1979) ("there must have been a good faith effort to determine
    whether there were other purchasers available whose acquisition of
    the company would have resulted in less anticompetitive effects").
    *See also* U.S. Department of Justice and Federal Trade Commission,
    Horizontal Merger Guidelines § 5.1 (1992, as amended 1997),
    *reprinted in* 4 Trade Reg. Rep. (CCH) P 13104 ("Merger
    Guidelines").

[^57]: *See* 5 U.S.C. § 603. The Regulatory Flexibility Act, 5 U.S.C. §
    601 *et. seq*, has been amended by the Contract With America
    Advancement Act of 1996, Pub. L. No. 104-121, 110 Stat. 847 (1996)
    (CWAAA). Title II of the CWAAA is the Small Business Regulatory
    Enforcement Fairness Act of 1996 (SBREFA).

[^58]: Although we note that the antitrust agencies use the
    Herfindahl-Hirschman Index of market concentration to estimate
    roughly the competitive impact of mergers, we are not specifically
    advocating that the Commission duplicate those procedures. *See*
    Merger Guidelines, § 1.5.

[^59]: *1999 Streamlining Order*, 14 FCC Rcd at 11374-75, ¶ 18.

[^60]: *Id.*

[^61]: We note that in the antitrust context, both the acquisition of
    stocks and the acquisition of assets of another company are subject
    to antitrust pre-merger review. *See* Hart-Scott-Rodino Antitrust
    Improvements Act of 1976, 15 U.S.C. § 18(a) (1994); *see also*
    *Brown Shoe Co. v. United States*, 370 U.S. 294, 315-23 (1962)
    (describing Congress's efforts in 1950 to "plug the loophole" in the
    Clayton Act, which exempted asset acquisitions from antitrust
    review).

[^62]: 47 C.F.R. § 63.71.

[^63]: *See* *id.* at § 63.24. Additionally, in a *Notice of Proposed
    Rulemaking* adopted November 13, 2000, the Commission proposed,
    among other things, to amend its rules governing *pro forma*
    assignments and transfers of international section 214
    authorizations to provide carriers with greater flexibility and
    clarity, and to align the international procedures with those that
    apply to commercial mobile radio service providers. *See 2000
    Biennial Regulatory Review*, 15 FCC Rcd at 24267, ¶ 7.

[^64]: Such notification may be in the form of a letter certifying that
    the assignment does not result in a change of the carrier's ultimate
    control. *See* 47 C.F.R. 63.24(b).

[^65]: *E.g.*, Letter from Margaret L. Tobey, Joan E. Neal, Counsel for
    Viatel, Inc., to Magalie Roman Salas, Secretary, FCC, May 7, 2001.

[^66]: *Id.*

[^67]: *E.g.*, Letter from Martin L. Stern and David Thomas, Counsel for
    AFN Communications, LLC, to Magalie Roman Salas, May 9, 2001.

[^68]: *See* 47 C.F.R. § 63.12(c)(vi).

[^69]: 47 C.F.R. § 63.24(a)(1)-(6).

[^70]: *See CMRS Forbearance Order*, 13 FCC Rcd at ¶¶ 2, 7. We note that
    the Commission is currently considering whether to amend its rules
    governing *pro forma* assignments and transfers of international
    section 214 authorizations to more closely match those used for the
    assignment and transfer of control of CMRS licenses. *See 2000
    Biennial Regulatory Review*, 15 FCC Rcd at 24267-73, ¶¶ 7-20.

[^71]: *In Re Application of GTE Corporation, Transferor, and Bell
    Atlantic Corporation, Transferee*, *for Consent to Transfer Control
    of Domestic and International Sections 214 and 310 Authorizations
    and Application to Transfer Control of a Submarine Cable Landing
    License*, 15 FCC Rcd 14032 (rel. Jun. 16, 2000) ("*Bell Atlantic-GTE
    Order*").

[^72]: *Bell Atlantic-GTE Order,* 15 FCC Rcd at 14084-86, ¶¶ 94-95.

[^73]: 47 C.F.R. § 63.12(a).

[^74]: As a model, commenters may look to the International Bureau,
    which often conditions streamlined grants of international 214
    assignments and transfers to preclude consummation of a transaction
    for which other applications are pending before other bureaus, and
    qualifies those grants to indicate that they do not prejudge other
    pending applications. *See*, *e.g.*, International Authorizations
    Granted, DA 01-849, Rep. No. TEL-00377 (rel. Apr. 5, 2001)
    (qualifying authorization for transfer of Chorus Networks, Inc. by
    noting that "\[s\]treamlined grant of these applications is
    conditioned upon Applicants\' agreement not to transfer these
    authorizations unless and until the Commission grants the related
    domestic section 214 and wireless transfer applications" and that
    "\[s\]treamlined grant would in no way prejudge the outcome of the
    pending domestic section 214 and wireless transfer applications.")

[^75]: 47 C.F.R. § 63.07(a) (1996) ("Any party that would be a
    non-dominant domestic interstate communications common carrier is
    authorized to provide domestic, interstate services to any domestic
    point and to construct, acquire, or operate any transmission line as
    long as it obtains all necessary authorizations from the Commission
    for use of radio frequencies.").

[^76]: *See, e.g., Applications of Ameritech Corp., Transferor, and SBC
    Communications, Inc., Transferee, for Consent to Transfer Control of
    Corporations Holding Commission Licenses and Lines Pursuant to
    Sections 214 and 310(d) of the Communications Act and Parts 5, 22,
    24, 25, 63, 90, 95 and 101 of the Commission's Rules,* Memorandum
    Opinion and Order, 14 FCC Rcd 14712 (1999).

[^77]: *See, e.g., Common Carrier Bureau Announces Public Forum on MCI
    WorldCom, Inc. and Sprint Corp. Applications for Transfer of
    Control*, CC Docket No. 99-333, Public Notice*,* DA 00-672 (CCB rel.
    Mar. 27, 2000) (announcing public forum to provide an opportunity
    for further discussion of issues raised by WorldCom and Sprint
    applications to transfer control of corporations holding Commission
    licenses and authorizations pursuant to sections 214 and 310(d) of
    the Act).

[^78]: Rule 63.01 grants blanket authority to a domestic interstate
    carrier "as long as it obtains all necessary authorizations from the
    Commission for use of radio frequencies." 47 C.F.R. § 63.01.

[^79]: 47 C.F.R. §§ 1.1200 *et seq.*

[^80]: *See* 47 C.F.R. § 1.1206(b)(2).

[^81]: *See* 5 U.S.C. § 603(a).

[^82]: *Id*.

[^83]: 47 C.F.R. §§ 1.415, 1.419.

[^84]: *See Electronic Filing of Documents in Rulemaking Proceedings*,
    63 Fed. Reg. 24121 (1998).

[^85]: *See* 47 C.F.R. § 1.49.

[^86]: *See* 5 U.S.C. § 603. The RFA, 5 U.S.C. § 601 *et. seq.*, has
    been amended by the Contract With America Advancement Act of 1996,
    Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the
    CWAAA is the Small Business Regulatory Enforcement Fairness Act of
    1996 (SBREFA).

[^87]: 5 U.S.C. § 603(a).

[^88]: 5 U.S.C. § 603(a).

[^89]: 5 U.S.C. § 603(b)(3).

[^90]: 5 U.S.C. § 601(6).

[^91]: 5 U.S.C. § 601(3).

[^92]: 15 U.S.C. § 632.

[^93]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^94]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^95]: 13 C.F.R. § 121.201, Standard Industrial Classification (SIC)
    codes 4812 and 4813. *See also* Executive Office of the President,
    Office of Management and Budget, *Standard Industrial Classification
    Manual* (1987).

[^96]: 15 U.S.C. § 632(a)(1).

[^97]: Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to
    William E. Kennard, Chairman, FCC (May 27, 1999). The Small Business
    Act contains a definition of \"small business concern,\" which the
    RFA incorporates into its own definition of \"small business.\"
    *See* 15 U.S.C. § 632(a) (Small Business Act); 5 U.S.C. § 601(3).
    SBA regulations interpret \"small business concern\" to include the
    concept of dominance on a national basis. 13 C.F.R. § 121.102(b).
    Since 1996, out of an abundance of caution, the Commission has
    included small incumbent LECs in its regulatory flexibility
    analyses. *See*, *e.g*., *Implementation of the Local Competition
    Provisions of the Telecommunications Act of 1996*, First Report and
    Order, 11 FCC Rcd 15499, 16144‑45 (1996), 61 FR 45476 (Aug. 29,
    1996).

[^98]: U.S. Department of Commerce, Bureau of the Census, *1992 Census
    of Transportation, Communications, and Utilities: Establishment and
    Firm Size*, at Firm Size 1‑123 (1995) ("1992 Census").

[^99]: *See* 15 U.S.C. § 632(a)(1).

[^100]: 1992 Census, *supra*, at Firm Size 1‑123.

[^101]: 13 C.F.R. § 121.201, SIC Code 4813; 1997 NAICS 51331.

[^102]: 47 U.S.C. § 153(11). The Commission defines a connecting carrier
    as \"a carrier engaged in interstate or foreign communication solely
    through physical connection with the facilities of another carrier
    not directly or indirectly controlling or controlled by, or under
    direct or indirect common control with, such carrier.\" 47 C.F.R. §
    61.3(n).

[^103]: 47 C.F.R. § 63.01.

[^104]: *Id*.

[^105]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^106]: 13 C.F.R. § 121.201, SIC code 4813; 1997 NAICS 51331.

[^107]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^108]: 13 C.F.R. § 121.201, SIC code 4813; 1997 NAICS 51331.

[^109]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^110]: 13 C.F.R. § 121.201, SIC code 4813; 1997 NAICS 51331.

[^111]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^112]: 13 C.F.R. § 121.201, SIC code 4813; 1997 NAICS 51331.

[^113]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^114]: 13 C.F.R. § 121.201, SIC code 4813; 1997 NAICS 51331.

[^115]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^116]: We include all toll-free number subscribers in this category,
    including 888 numbers.

[^117]: FCC, CCB Industry Analysis Division, *FCC Releases Study on
    Telephone Trends*, Tbls. 21.2, 21.3 and 21.4 (February 19, 1999).

[^118]: 5 U.S.C. § 603(c). As an initial matter, we note that the
    options included in this *Notice of Proposed Rulemaking* are merely
    proposals. The steps that may be taken to minimize any significant
    economic impact on small entities are not limited only to the
    options we have provided here.

[^119]: *See* section II(B), ¶ 8.

[^120]: *See* section II(B), ¶ 11.

[^121]: *See* section III(B), ¶ 26.

[^122]: *See* section III(B), ¶ 31.