Before the

**FEDERAL COMMUNICATIONS COMMISSION**

**Washington, D.C. 20554**

**In the Matter of )**

**)**

**Section 257 Report to Congress )**

**)**

**Identifying and Eliminating )**

**Market Entry Barriers )**

**For Entrepreneurs and Other )**

**Small Businesses )**

**REPORT**

**Adopted:** July 28, 2000 **Released:** August 10, 2000

**By the Commission:** Commissioner Furchtgott-Roth approving in part,
dissenting in part, and issuing a separate statement.

Page

I. executive summary [2](#executive-summary)

II\. INTRODUCTION [8](#introduction)

A. Section 257 [8](#section-257)

B. A REVIEW OF THE *1997 Report* [8](#a-review-of-the-1997-report)

III\. regulatory initiatives TO REMOVE IMPEDIMENTS IN SPECIFIC SERVICES
[11](#regulatory-initiatives-to-remove-impediments-in-specific-services)

A. COMMON CARRIER SERVICEs [11](#common-carrier-services)

1\. Interconnection and Resale Barriers
[11](#interconnection-and-resale-barriers)

2\. Information Filing and Accounting Burdens
[13](#information-filing-and-accounting-burdens)

3\. Treatment of Small ILECs Under the Regulatory Flexibility Act
[15](#treatment-of-small-ilecs-under-the-regulatory-flexibility-act)

4\. Universal Service [15](#universal-service)

5\. Impartial Administration of Telecommunications Numbers
[16](#impartial-administration-of-telecommunications-numbers)

6\. Preemption of Onerous State Requirements
[18](#preemption-of-onerous-state-requirements)

7\. Forbearance Authority [19](#forbearance-authority)

8\. Pricing Flexibility [19](#__RefHeading___Toc488735928)

9\. Customer Proprietary Network Information Requirements
[20](#customer-proprietary-network-information-requirements)

10\. Provision of Advanced Services
[22](#provision-of-advanced-services)

11\. The E-Rate Program and the Potential for Market Participation
[22](#the-e-rate-program-and-the-potential-for-market-participation)

B. WIRELESS SERVICES [23](#wireless-services)

1\. Spectrum Assignment Policies [23](#spectrum-assignment-policies)

2\. Construction Requirements [28](#construction-requirements)

3\. Application Processing and Filing
[30](#application-processing-and-filing)

4\. Outreach Efforts [32](#outreach-efforts)

5\. Interconnection and Resale [34](#interconnection-and-resale)

6\. Definition of "Covered SMR" [36](#definition-of-covered-smr)

7\. Competitive Bidding Incentives [36](#competitive-bidding-incentives)

C. CABLE SERVICES [39](#cable-services)

1\. Deregulation of Small Cable Companies
[39](#deregulation-of-small-cable-companies)

2\. Leased Access [40](#leased-access)

3\. Multiple Dwelling Units [41](#multiple-dwelling-units)

4\. Filing and Record Keeping [41](#filing-and-record-keeping)

5\. Closed Captioning Exemption [43](#closed-captioning-exemption)

D. MASS MEDIA SERVICES [43](#mass-media-services)

1\. Low Power Radio [45](#low-power-radio)

2\. Local Television Ownership/Radio-Television Cross Ownership
[46](#local-television-ownershipradio-television-cross-ownership)

3\. Class A Television Service [47](#class-a-television-service)

4\. Multichannel Multipoint Distribution Service
[49](#multichannel-multipoint-distribution-service)

5\. Equal Employment Opportunity [50](#equal-employment-opportunity)

E. OTHER SERVICES [52](#other-services)

1\. International Bureau [52](#international-bureau)

2\. Office of Engineering and Technology
[55](#office-of-engineering-and-technology)

3\. Enforcement Bureau [59](#enforcement-bureau)

4\. Consumer Information Bureau [60](#consumer-information-bureau)

IV\. Other Regulatory Initiatives to remove impediments
[62](#other-regulatory-initiatives-to-remove-impediments)

A. Access to the Telecommunications Industry
[62](#access-to-the-telecommunications-industry)

B. Tribal Initiatives [62](#tribal-initiatives)

C. Access to Capital [63](#access-to-capital)

D. Office of Communications Business Opportunities
[64](#office-of-communications-business-opportunities)

E. BIENNIAL REVIEW [64](#biennial-regulatory-review)

F. REGULATORY FLEXIBILITY ACT AND SMALL BUSINESS ACT INITIATIVES
[65](#regulatory-flexibility-act-and-small-business-act-initiatives)

G. ELECTRONIC INITIATIVES [67](#electronic-initiatives)

H. advanced telecommunications CAPABILITIES
[67](#advanced-telecommunications-capabilities)

V. proposed LEGISLATIVE initiatives to remove impediments
[68](#proposed-legislative-initiatives-to-remove-impediments)

VI\. CONCLUSION [71](#conclusion)

# executive summary

1.  This Report is submitted pursuant to Section 257(c) of the
    Communications Act of 1934, as amended ("Communications Act").[^1]
    In the past three years, the Commission's efforts on behalf of
    entrepreneurs and other small businesses reflect conscientious
    compliance with the four major policies and purposes outlined in the
    Telecommunications Act of 1996 ("1996 Act"):[^2] favoring the
    development of a diversity of media voices; enabling vigorous
    economic competition; facilitating the advancement of technology;
    and promoting the public interest, convenience, and necessity.
    Section 257 was enacted as part of the 1996 Act.

2.  Section 257 required that the Commission complete a proceeding to
    identify and eliminate "market entry barriers for entrepreneurs and
    other small businesses" in telecommunications. Pursuant to that
    mandate, the Commission adopted a report on market entry barriers
    ("*1997 Report*")[^3] and has undertaken revisions in Commission
    policy, organizational structure, and administrative requirements in
    the past three years. Since the *1997 Report* on Section 257, the
    Commission has responded to concerns raised in the *1997 Report*
    that the Commission could lower market entry barriers by
    streamlining some of its rules and by providing electronic access to
    Commission information and licensing procedures. The Commission's
    efforts to increase the availability of regulatory information,
    facilitate the acquisition of licenses, improve ease of
    participation in rule-makings, and streamline regulatory procedures
    and requirements were intended to improve access for entrepreneurs
    and other small businesses to telecommunications markets.

3.  Part III describes pertinent regulatory and other initiatives
    undertaken by the Commission's bureaus and offices during the
    three-year period since the *1997 Report*. This section discusses
    initiatives in the common carrier, wireless, cable, mass media,
    international, and engineering and technology areas that affect the
    ability of small businesses to enter and participate in the dynamic
    telecommunications marketplace.

4.  In the area of common carrier services, the Commission undertook the
    following initiatives.

-   unbundling of network elements;

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-   reducing Commission tariff filing burdens on carriers by
    streamlining contributor reporting requirements, adopting a single
    filing location requirement, and coordinating sharing of information
    submitted on reporting worksheets;

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-   streamlining accounting requirements for mid-sized incumbent local
    exchange carriers, while excluding small carriers from requirements
    to submit yearly operating revenue reports and cost allocation
    manuals;

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-   deregulating and streamlining domestic market entry certification
    and domestic exit reporting requirements, including automatic
    approval of applications;

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-   introducing universal service high-cost support portability for
    non-rural carriers to promote competitive entry in high-cost areas;

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-   promoting participation of new carriers in rural health care
    services through relaxation of eligible telecommunications carrier
    requirements;

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-   increasing incentives to target services at unserved Native American
    communities and increasing telephone service support to low-income
    Native Americans;

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-   using Section 253 preemption powers to benefit entrance by small
    businesses into telecommunications markets;

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-   using the 1996 Act's authority to forbear from imposing unnecessary
    and otherwise burdensome regulatory requirements on small or new
    carriers that provide new services; and

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-   assessing and promoting the availability of competitive broadband
    xDSL services to residential and small business customers.

5.  In wireless services, the Commission undertook the following
    initiatives.

-   allocating spectrum, through competitive bidding rules, to small
    businesses and rural telephone companies, including businesses owned
    by members of minority groups or women;

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-   seeking innovative methods to make spectrum available for new
    services, such as promoting Guard Band Managers and the development
    of spectrum secondary markets;

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-   targeting incentives to provide services to "unserved" and
    "underserved" areas, particularly to Native American communities;

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-   easing construction requirements, including certain requirements for
    small businesses, to create greater flexibility to meet requirements
    for the licensed wide-area buildout of providers;

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-   streamlining the application for and processing of wireless
    licenses, the filing of reports and rulemaking comments, and
    providing public viewing of licensing data; and

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-   enhancing the ability of new and small wireless carriers to
    interconnect with established providers of services, to partition
    and disaggregate licenses, and to resell wireless services.

6.  In cable services, the Commission undertook the following
    initiatives.

-   relieving small cable entities from many regulatory burdens;

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-   enhancing business opportunities for programmers by adopting a
    formula to calculate maximum levels of compensation for accessing
    the cable system;

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-   promoting business opportunities for video providers to serve
    multiple dwelling units through cable systems;

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-   reducing filing and record keeping requirements, and facilitating
    compliance with cable television rules for small cable entities; and

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-   exempting small cable carriers from the closed captioning
    requirements.

7.  In mass media services, the Commission undertook the following
    initiatives.

-   streamlining filing requirements and easing filing of reports
    through an electronic reporting system;

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-   providing information on how to start a new broadcast station, apply
    for low power or micro stations, and other important information for
    new broadcast business opportunities;

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-   authorizing licensing of two new classes of noncommercial low power
    FM radio stations, with rules to ease record keeping and filing
    burdens;

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-   revising local television and radio-television cross-ownership rules
    to enable small stations to combine operations and reduce expenses,
    thereby perhaps diversifying programming and promoting competition;

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-   modifying television service rules to allow certain low-power
    television stations to qualify as primary broadcasters (Class A
    service) and therefore become providers of new services; and

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-   amending multichannel multipoint distribution rules to facilitate
    the provision of new, enhanced services, including new digital and
    two-way communications services.

8.  In international services, the Commission undertook the following
    initiatives.

-   granting earth stations a new authorization to communicate with
    foreign satellites, thus lowering the cost for earth station owners
    and establishing procedures that permit routine licensing of earth
    stations seeking to use satellites;

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-   construing liberally financial qualification requirements to remove
    barriers limiting smaller and new entity participation in satellite
    licensed services;

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-   streamlining procedures for licensing applications and reducing
    paperwork obligations and tariff requirements for non-dominant
    international carriers; and

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-   coordinating international policy with the International
    Telecommunications Union to find additional spectrum to use for
    advanced wireless services, new equipment and software development,
    and provision of new services.

9.  The Office of Engineering and Technology undertook the following
    initiatives.

-   streamlining and simplifying authorization of equipment and
    experimental licenses;

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-   promoting new and innovative services by small entities and
    entrepreneurs in the unlicensed spectrum market, including services
    that promote application of wireless internet, wireless local area
    network and ultra-wideband technologies;

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-   supporting the development of dedicated short-range communications
    systems in the Intelligent Transportation System radio service and
    fixed wireless access services; and

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-   developing a policy to guide the Commission's future reallocation of
    spectrum to enable a broad range of new radio services and business
    opportunities, including software-defined radios.

10. Recently, the Commission created two new bureaus that help
    facilitate implementation of the Section 257 mandate. Specifically,
    the new Consumer Information Bureau disseminates to the public,
    including entrepreneurs and other small businesses, information
    about Commission rulemakings, policy statements, adjudicative
    decisions, technical studies, transfers, mergers, and licensing
    matters. The consolidation of agency-wide consumer information
    functions provides consumers a one-stop shop for obtaining the
    information they need to make choices in a robust and competitive
    marketplace. In addition, the new Enforcement Bureau provides the
    Commission with a centralized office from which to conduct most of
    the enforcement and compliance activities of the Commission. The
    bureau also promotes the rapid processing of formal complaints.
    Consolidation of enforcement responsibilities allows the Commission
    to streamline compliance activities and employ innovative means to
    expedite problem solving among industry participants.

11. Part IV of this Report addresses Commission efforts to:

-   improve access to telecommunications licenses;

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-   overcome unique obstacles faced by minority- and women-owned small
    businesses;

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-   institute a regular process to review the agency's regulations and
    decide whether to retain, modify, or eliminate them through the
    auspices of the agency-wide Biennial Review;

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-   review the impact of all Commission's rules on small businesses
    under the Regulatory Flexibility Act and the Small Business Act;[^4]

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-   implement a Commission-wide system for electronic filing of
    applications for licenses, comments on rule-makings, and other
    submissions to the Commission that are important for participation
    in the telecommunications market;

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-   sponsor an historic seminar in September 2000 providing valuable
    information to tribal communities about telecommunications
    technologies, regulatory framework, available resources, and options
    for enhancing services to tribal residents;

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-   promote equal employment opportunities in licensed broadcast and
    cable services;

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-   provide vital information on business opportunities for
    entrepreneurs and small businesses;

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-   support access to advanced services to facilitate educational
    opportunities through the Commission's educational universal
    services program; and

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-   evaluate market entry barriers through sponsored studies.

12. Part V proposes legislative initiatives that either directly lower
    market entry barriers faced by entrepreneurs and other small
    businesses seeking to participate in the telecommunications
    marketplace or enhance the Commission's ability to remove such
    barriers.

# INTRODUCTION

## Section 257

13. Section 257(c) of the Communications Act requires the Commission to
    report triennially to Congress on the steps it has taken to
    eliminate market entry barriers identified in the Commission's
    proceeding entitled *In the Matter of Section 257 Proceeding to
    Identify and Eliminate Market Entry Barriers for Small
    Businesses*.[^5]

14. Section 257 is entitled "Market Entry Barriers Proceeding." Section
    257(a), "Elimination of Barriers," requires that, within 15 months
    after the enactment of the 1996 Act, the Commission complete a
    proceeding to identify and eliminate "market entry barriers for
    entrepreneurs and other small businesses" in telecommunications.
    Section 257(a) focused the proceeding on two areas: (1) "the
    provision and ownership of telecommunications services and
    information services"; and (2) "the provision of parts or services
    to providers of telecommunications services and information
    services." Pursuant to that mandate, the Commission adopted a report
    ("*1997 Report*").

15. Section 257(b), "National Policy," established guidelines for the
    Commission's proceeding that resulted in the *1997 Report*.
    Specifically, Section 257(b) instructs the Commission "to promote
    the policies and purposes of this Act favoring diversity of media
    voices, vigorous economic competition, technological advancement,
    and promotion of the public interest, convenience and necessity."

16. Pursuant to Section 257(c), "Periodic Review," the Commission, on
    the third anniversary of the issuance of the *1997 Report*, is
    required to review and report to Congress on

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(1) any regulations prescribed to eliminate barriers within its
    jurisdiction that are identified \[in the *1997 Report*\] and that
    can be prescribed consistent with the public interest, convenience,
    and necessity; and

(2) the statutory barriers identified \[in the *1997 Report*\] that the
    Commission recommends be eliminated, consistent with the public
    interest, convenience and necessity.[^6]

This Report fulfills this requirement.

## A REVIEW OF THE *1997 Report*

17. Pursuant to the requirements of Section 257(a), the Commission, in
    1996, initiated a proceeding to identify market entry barriers. In
    May 1996 a Notice of Inquiry ("NOI")[^7] was issued in the
    proceeding that culminated in the *1997 Report*. In the NOI, the
    Commission made several inquiries of the public, including how to
    define small businesses; specifics about market entry barriers for
    small businesses; and whether small businesses owned by women and
    minorities faced unique market entry barriers.

18. Over 80 entities filed comments in response to the NOI. The
    commenters represented virtually every industry and interest group
    within the field of telecommunications, including individual
    entrepreneurs, small businesses, large businesses, large
    communications companies, associations, federal and state government
    representatives, telecommunications policy groups, women's
    organizations, and minority interests. Also in conjunction with the
    NOI, the Office of the General Counsel and the Office of
    Communications Business Opportunities held a public forum in
    September 1996.

19. In preparing the *1997 Report*, the Commission followed the
    definition of market entry barriers found in the NOI which included:

> obstacles that deter individuals from forming small businesses,
> barriers that impede entry into the telecommunications market by
> existing small businesses, and obstacles that small telecommunications
> businesses face in providing service or expanding within the
> telecommunications industry . . ..[^8]

Also, the Commission framed its discussion of market entry barriers by
referencing the policy objectives set forth in Section 257(b), and
described a variety of measures taken to fulfill those policies.

20. First, in furtherance of the policy favoring "vigorous economic
    competition," the Commission noted that efforts to eliminate market
    entry barriers must be undertaken in a manner that "facilitates
    entry by small businesses yet avoids unwarranted regulatory
    intervention that could distort a competitive marketplace." Thus, by
    recognizing that economically unjustified intervention might make it
    difficult to promote vigorous competition, the Commission defined
    "market entry barrier" to include only those impediments that would
    "significantly distort competition and harm consumer welfare."[^9]

21. Second, to promote the policy of expediting technological
    advancement, the Commission disseminated information to small
    entities and entrepreneurs about (1) improving access to Commission
    decision makers and (2) Commission processes and communications
    opportunities. The *1997 Report* also noted that the Commission had
    made additional spectrum available to spur technological
    advancement.[^10]

22. Third, to implement the policy of supporting diversity of media
    voices, the Commission continued its review of ownership rules in
    broadcast and other contexts, and continued to evaluate issues
    relating to small businesses owned by women or minorities.[^11]

23. Fourth, the Commission stated its belief that it had promoted the
    public interest, convenience and necessity by combining its Section
    257 efforts, *i.e.* preparation and issuance of the *1997 Report*,
    with its ongoing commitment to enhance opportunities for small
    business.[^12]

24. In addition to the foregoing, the *1997 Report* also listed various
    initiatives that the Commission had undertaken in response to the
    comments received in the NOI. The Commission adopted many of the
    principal proposals set forth in the comments received. It also
    acted on its own initiative to introduce other measures. As
    described in the *1997 Report*, some of the key new measures adopted
    to implement Section 257 were: (1) using service-specific
    definitions of small businesses rather than adopting a general
    definition; (2) planning initiatives that enable small businesses
    more easily to file comments and otherwise participate in Commission
    proceedings; (3) requiring the Commission's bureaus and offices to
    be thorough and timely in preparing, for each rulemaking or policy
    statement issued to the public, fully detailed statements that
    explain the impact of the rules on small businesses; (4) instituting
    rulemaking proceedings intended to ensure effective and prompt
    enforcement of Communications Act provisions and Commission
    rules; (5) reducing information-filing and other burdens that
    created obstacles to entry for small businesses; and (6) ensuring
    that the Commission fully consider the interests of small telephone
    carriers in proceedings to determine funding mechanisms for
    universal service support.[^13]

25. Other measures reported in 1997 included: (1) adopting initiatives
    to facilitate small business participation in spectrum auctions; (2)
    proposing and adopting policies that permit geographic partitioning
    and spectrum disaggregation in various wireless communications
    services; (3) adopting spectrum initiatives to encourage
    technological innovation by equipment manufacturers and others; (4)
    speeding resolution of complaints; (5) sponsoring conferences on
    telecommunications services and related financing options; (6)
    increasing public access to the Commission by creating accessible,
    interactive FCC sites on the World Wide Web and by establishing the
    National Call Center to field inquiries from the public; and (7)
    making continued efforts to ensure that the Telecommunications
    Development Fund ("TDF" or "Fund") becomes an effective vehicle for
    removing financial obstacles to entry.[^14]

# regulatory initiatives TO REMOVE IMPEDIMENTS IN SPECIFIC SERVICES

## COMMON CARRIER SERVICEs

### Interconnection and Resale Barriers

26. The 1996 Act added Section 251 of the Communications Act. Section
    251 of the Communications Act imposes specific obligations on
    telecommunications carriers designed to promote competition in local
    exchange markets across the country. Incumbent carrier compliance
    with the obligations set forth in this Section is absolutely
    necessary for achievement of the pro-competitive goals and policies
    of the 1996 Act. Section 251 establishes the general interconnection
    obligations for all telecommunications carriers; delineates further
    obligations for local exchange carriers ("LECs"); and prescribes
    additional requirements for incumbent LECs ("ILECs"). Section 252
    generally sets forth the procedures that state commissions, ILECs
    and new entrants must follow to implement the requirements of
    Section 251 and to establish specific interconnection arrangements.
    In its 1996 *Local Competition Order*,[^15] the Commission imposed
    new obligations on telecommunications carriers in order to implement
    Section 251. The Commission prescribed certain minimum points of
    interconnection necessary to permit competing carriers to choose the
    most efficient points at which to interconnect with the ILEC's
    network. In addition, the Commission prescribed a minimum list of
    unbundled network elements that ILECs must make available to new
    entrants, upon request. The Commission expects that these
    obligations will promote small businesses' entry into the market for
    competitive local service by removing barriers to interconnection
    with ILECs' facilities.

27. As stated in the *1997 Report*, the Commission continues to ensure
    carrier compliance with the rights and obligations set forth in
    Section 251.[^16] At the time of the *1997 Report*, the Commission's
    regulations implementing the local interconnection and resale
    provisions of the 1996 Act had been partially stayed by the United
    States Court of Appeals for the Eighth Circuit.[^17] In particular,
    the Eighth Circuit questioned the Commission's jurisdiction to
    impose national pricing rules.[^18] In January 1999, however, the
    Supreme Court reversed that decision and remanded the case to the
    Eighth Circuit for further proceedings.[^19] One of the Commission's
    rules that the Supreme Court reinstated requires each state
    commission to deaverage rates for interconnection and unbundled
    network elements across at least three defined geographic areas
    within the state to reflect cost differences. As a result of the
    Eighth Circuit decision, some states had not established deaveraged
    rates for interconnection and unbundled network elements. Following
    the Supreme Court's decision, therefore, the Commission stayed the
    effectiveness of that rule to allow states to bring their rules into
    compliance.[^20] The stay was terminated by its own terms on May
    1, 2000. The introduction of deaveraged rates for interconnection
    and unbundled network elements will make it easier for competitors
    to enter and serve new markets.

28. The Supreme Court also held in its January 1999 decision that the
    Commission has general jurisdiction to implement the 1996 Act's
    local competition provisions, and the Commission's rulemaking
    authority extends to Sections 251 and 252. The Court also determined
    that the Commission's rules governing unbundled access are, with the
    exception of identifying unbundled network elements under Section
    251(d)(2), consistent with the 1996 Act. The Court did find,
    however, that the Commission did not adequately consider the
    "necessary" and "impair" standards of Section 251(d)(2) when it
    determined which network elements ILECs are required to unbundle
    pursuant to Section 251(c)(3). Accordingly, the Court concluded that
    the Commission's rule, which set forth a list of the minimum network
    elements that must be unbundled, should be vacated.

29. On September 15, 1999, in response to the Supreme Court's decision,
    the Commission adopted a *Third Report and Order and Fourth Notice
    of Proposed Rulemaking* in the Local Competition docket.[^21] The
    *Third Report and Order* sets forth a new standard for determining
    whether ILECs must unbundle network elements. The *Third Report and
    Order* also identifies a minimum set of network elements that ILECs
    must provide to new entrants and other competing carriers under
    Section 251(c)(3). They include: loops, subloops, network interface
    devices, circuit switching (except for larger customers in major
    urban markets), dedicated and shared transport, signaling and
    call-related databases, and operation support systems. The *Fourth
    Notice of Proposed Rulemaking* seeks comments on issues surrounding
    the ability of carriers to use certain unbundled network elements as
    a substitute for the ILECs' special access services. Again, the
    Commission hopes that these new rules will promote small businesses'
    entry into the market for competitive local service by removing
    barriers to interconnection with ILECs' facilities.

### Information Filing and Accounting Burdens

30. Pursuant to the Biennial Review of Commission regulations required
    by the 1996 Act, the Commission reviewed its tariff filing rules so
    as to reduce burdens on carriers.[^22] In particular, we eliminated
    the requirement that carriers make their tariffs accessible to the
    public during normal business hours in favor of less onerous options
    such as posting rates on an Internet web site. This will make
    information more readily available to new entities in the
    marketplace. We also simplified and clarified the requirements for
    filing tariffs by nondominant carriers so that more options are
    available without requesting a waiver of the rules.

31. The Commission also, in the *Streamlined Contributor Reporting
    Requirements Order*,[^23] simplified the filing requirements for
    communications service providers by replacing four different \-- but
    largely duplicative \-- forms with one consolidated form, the
    Telecommunications Reporting Worksheet. In addition to a reduction
    in the number of forms filed, the Commission, to further ease the
    burden of filing for these four programs, adopted a single filing
    location and took additional steps to ensure that the various
    administrators have the ability to coordinate the sharing of
    information submitted on the Telecommunications Reporting Worksheet.
    The adoption of this process resulted in a one-third reduction in
    time necessary to comply with the filing requirements of these
    various programs.[^24] The Commission believes that this action not
    only reduces regulatory burdens on small carriers and service
    providers, but will also reduce the costs to administrators and the
    public cost of regulation by conserving Commission resources
    associated with auditing and crosschecking data submissions.

32. In the *Accounting Reductions Order*[^25] and the *ARMIS Reporting
    Reductions Order*,[^26] the Commission streamlined the accounting
    requirements for mid-sized ILECs based on the aggregate revenues of
    the ILEC and any ILEC that it controls, is controlled by, or with
    which it is under common control. In addition, small carriers
    (*i.e.* those with under \$112 million in yearly operating revenues)
    do not file ARMIS reports.

33. Section 64.903 of the Commission's Rules requires ILECs with \$112
    million or more in annual operating revenues to file cost allocation
    manuals ("CAMs") setting forth the cost allocation procedures they
    use to allocate costs between regulated and nonregulated
    services.[^27] Small carriers are exempted from filing CAMs with the
    Commission. The Commission also adopted rules to streamline the cost
    allocation regulations by permitting mid-sized ILECs to submit their
    CAMs based on the Class B system of accounts. Specifically, ILECs
    with annual revenues in excess of \$112 million are eligible for
    streamlined reporting if the ILEC, together with its ILEC
    affiliates, had aggregate annual revenues of less than \$7 billion.
    Allowing mid-sized LECs to submit their CAMs based on the Class B
    system of accounts reduces the reporting burden of the nonregulated
    activity matrix and the cost apportionment section of the CAM.
    Carriers required to file CAMs are also required to perform an
    independent audit of reported cost allocation data. The Commission
    also allowed mid-sized ILECs to obtain an attestation audit every
    two years instead of an annual financial statement audit. Such
    attestation would cover the previous two years. Small carriers are
    not required to perform audits of cost allocation data, nor are they
    required to obtain an attestation audit.

34. The Commission also reduced the filing burden on mid-sized ILECs by
    eliminating the requirement to file 21 tables from the ARMIS 43-02
    USOA Report. Mid-sized ILECs are now required to file only six
    tables in the ARMIS 43-02 Report. In streamlining the accounting and
    cost allocation rules for mid-sized carriers, the Commission hopes
    to reduce any unnecessary burdens and remove regulations that are no
    longer needed to meet regulatory demands.

35. In 1999, the Commission adopted rules under Section 214 that
    deregulate domestic market entry and streamline domestic exit
    requirements. Specifically, the rules (1) confer "blanket"
    certification for new lines of all domestic carriers; (2) exempt
    line extensions and video programming services from Section 214 in
    accord with the 1996 Act; and (3) provide that all applications to
    discontinue domestic service will be automatically granted unless
    the Commission notifies the applicants otherwise.[^28] This action
    will reduce the burden on small carriers by eliminating, in most
    instances, the Section 214 authorization process.

### Treatment of Small ILECs Under the Regulatory Flexibility Act

36. A "small business" under the Regulatory Flexibility Act ("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."[^29] In the *1997 Report*, the Commission stated that it
    did not believe that small ILECs qualified as small businesses under
    the RFA because such businesses appeared to be "dominant in their
    field of operation due to their current control of bottleneck
    facilities."[^30] We also noted that, since 1996, the Commission had
    nonetheless addressed in its regulatory flexibility analyses the
    impact of its rules on such ILECs.[^31] During 1999, following a
    letter on this subject from the Office of Advocacy[^32] and a
    meeting between agency staffs, the Commission decided to revise the
    language of its decisions to make clear that small ILECs are among
    the small businesses included in its analyses under the RFA.[^33] We
    also expect that this change will encourage a more consistent focus
    on small business alternatives when our common carrier proposals are
    drafted.

### Universal Service

37. The Commission, through its universal service programs, has taken
    several steps to eliminate market barriers and promote competition.
    Specifically, in the *18th Order on Reconsideration*,[^34] the
    Commission implemented a new high-cost universal service support
    mechanism for non-rural carriers. The support provided by this
    mechanism is portable, *i.e.*, competing carriers are entitled to
    the same amount of support for serving a customer that the incumbent
    receives. This portability provision is designed to encourage
    competitive entry in high-cost areas by lowering the most
    significant barrier to entry in such areas \-- the high cost of
    providing service. In conjunction with the Federal-State Joint Board
    on Universal Service, the Commission has also established a Rural
    Task Force[^35] to recommend reforms to the high-cost support
    mechanism for rural

    carriers. The Rural Task Force will be guided by the universal
    service principles in the 1996 Act and the Commission's stated
    objective that universal service should be portable and
    competitively neutral.

38. In the *14th Order on Reconsideration*,[^36] the Commission
    determined that a broader group of telecommunications carriers, not
    just eligible telecommunications carriers, as defined by § 214(e),
    may participate in the Commission's rural health care support
    mechanism. This should give rural health care providers greater
    choice among service providers.

39. The Commission has also undertaken initiatives to remove barriers to
    entry for carriers serving unserved, underserved, tribal, and
    insular areas. In a *Twelfth Report and Order, Memorandum Opinion
    and Order, and Second Further Notice of Proposed Rulemaking* adopted
    June 8, 2000, the Commission adopted various ways to increase the
    telephone penetration rate in tribal areas by expanding or modifying
    our universal service programs.[^37] Additionally, in an *Order*
    released in December 1999, the Common Carrier Bureau waived certain
    rules to allow tribal carriers to derive greater benefit from the
    federal Lifeline support program.[^38]

### Impartial Administration of Telecommunications Numbers

40. The Commission has promulgated rules to implement Section 251(e)(1),
    which requires the Commission to create or designate one or more
    impartial entities to administer telecommunications numbering and to
    make such numbers available on an equitable basis. Commission rules
    requiring the impartial administration of numbering resources
    assures that small carriers, to the same extent as large carriers,
    are able to access numbering resources in a timely manner in order
    to offer communications services to their customers. The rules
    provide, in part, that if the Commission delegates to the states or
    to other entities any portion of its authority over
    telecommunications numbering, those states or entities must perform
    their delegated functions in a manner consistent with certain
    guidelines, which require that the numbering administration: (1)
    facilitate entry into the telecommunications marketplace by making
    telecommunications numbering resources available on an efficient,
    timely basis to telecommunications carriers; (2) not unduly favor or
    disfavor any particular industry segment or group of
    telecommunications consumers; and (3) not unduly favor one
    telecommunications technology over another.[^39]

41. To ensure the impartial administration of numbering resources, the
    rules further provide that: (1) the North American Numbering Plan
    Administrator ("NANPA") may not be an affiliate of any
    telecommunications service provider; (2) the NANPA or its affiliate
    may not issue a majority of its debt to, nor derive a majority of
    its revenues from, any telecommunications service provider; and (3)
    notwithstanding (1) and (2), the NANPA may or may not be determined
    to be subject to undue influence by parties with a vested interest
    in the outcome of numbering administration activities.[^40]
    Previously, the ILEC within each geographic area performed central
    office ("CO") code administration.[^41] In response to a request by
    the Commission to the North American Numbering Council ("NANC") to
    recommend a neutral entity to serve as the NANPA, the NANC selected
    Lockheed Martin IMS. In October 1997, the Commission affirmed the
    selection of Lockheed Martin IMS as the new NANPA, noting that it
    would perform the numbering administration functions previously
    performed by Bellcore, as well as area code relief planning and CO
    code administration. In November 1999, the Commission approved the
    transfer of the NANPA functions to NeuStar for the remainder of the
    current NANPA appointment term, finding that NeuStar was in
    compliance with the neutrality criteria.[^42]

42. Recently, the Commission took steps to optimize the use of numbering
    resources through various administrative and regulatory efforts. In
    seeking to establish a uniform national strategy for numbering
    resource optimization, the Commission had the goal of, among other
    things, ensuring that all carriers \-- including new entrants and
    small carriers \-- have the numbering resources they need to compete
    in the rapidly growing telecommunications marketplace. In the
    *Numbering Resources Optimization Report and Order*, [^43] the
    Commission adopted several technical measures and reporting
    requirements designed to make more efficient use of, and make
    carriers more accountable for, telecommunications numbering
    resources. We note, however, that the Commission took steps to
    reduce the reporting requirement for certain small, rural carriers
    by allowing them to report required telephone number utilization
    data at a less granular level than other carriers will. The
    Commission will continue to seek additional ways to optimize number
    utilization to ensure that no carrier is barred from entry into
    telecommunications markets because of the unavailability of
    numbering resources.

### Preemption of Onerous State Requirements

43. The 1996 Act created Section 253 of the Communications Act,[^44]
    which expressly empowers the Commission to preempt state and local
    laws under certain specified conditions. Section 253(a) sets forth a
    general proscription of any state or local legal requirement that
    "prohibit\[s\] or ha\[s\] the effect of prohibiting the ability of
    any entity to provide any interstate or intrastate
    telecommunications service."[^45] Under Section 253(d), if after
    notice and an opportunity for public comment, the Commission finds
    that a state or local statute, regulation, or legal requirement
    falls within the proscription of Section 253(a) and outside the
    shelter of Section 253(b) or (c), the Commission must "preempt
    enforcement of such statute, regulation, or legal requirement to the
    extent necessary to correct such violation or inconsistency."

44. Below we give examples of the Commission's use of its preemption
    power to benefit small businesses entering into telecommunications
    markets. The Commission stands ready to enforce the general
    prohibition set forth in Section 253 of the 1996 Act. Since issuance
    of the *1997 Report*, the Commission has issued orders preempting a
    number of state and local legal requirements, which it found
    violated Section 253. For example, in the *Silver Star Preemption
    Order,* released on September 24, 1997, the Commission granted a
    LEC\'s petition for preemption of the enforcement of (i) a provision
    of the Wyoming Telecommunications Act of 1995 that gives ILECs
    serving fewer than 30,000 access lines veto power over the
    certificate applications of potential competitors, and (ii) a
    decision of the Wyoming Public Service Commission enforcing that
    provision of the Wyoming statute.[^46] In the *Hyperion Preemption
    Order*, released on May 27, 1999, the Commission granted a petition
    for preemption filed by Hyperion of Tennessee, L.P.
    ("Hyperion").[^47] Hyperion had asked the Commission to issue an
    order preempting a decision by the Tennessee Regulatory Authority
    denying Hyperion\'s application for a Certificate of Public
    Convenience and Necessity to provide service in an area of Tennessee
    served by a carrier with less than 100,000 access lines within the
    state and a related provision of the Tennessee Code.

45. Finally, in an order released December 23, 1999 (the "*Arkansas
    Preemption Order*"), the Commission preempted three provisions of
    the Arkansas Telecommunications Regulatory Reform Act of 1997,
    concluding that they unlawfully erect barriers to entry into local
    telephone service markets in Arkansas.[^48] First, the *Arkansas
    Preemption Order* preempted a Section of the Arkansas Act that
    permitted an incumbent company to make bundled retail service
    offerings unavailable to competing carriers at wholesale rates. The
    Commission concluded that this provision conflicted with the rules
    governing resale in the 1996 Act. The Commission also preempted a
    provision that concerned the standards that the Arkansas Public
    Service Commission used to review local telephone companies'
    interconnection arrangements with competitive carriers. Third, the
    Commission preempted a provision that appeared to be designed to
    shield rural telephone companies from entry by competitors.

### Forbearance Authority

46. The Commission has exercised the forbearance authority granted by
    the 1996 Act[^49] to eliminate or reduce burdens imposed by our
    regulations. For example, in response to a petition for forbearance
    filed by an organization of mid-sized ILECs that serve fewer than
    two percent of the nation's access lines, we granted forbearance
    from our Part 69 rules to allow these carriers to introduce new
    services without first requesting a waiver.[^50] This allows these
    carriers to introduce new services used by small businesses and
    consumers more quickly and enhances competition among providers of
    telecommunications services. []{#__RefHeading___Toc488735928
    .anchor}

47. In addition, the Commission remains committed to eliminating or
    streamlining tariff filing and other reporting requirements
    applicable to entities providing common carrier services. Such
    streamlining is particularly helpful to small businesses, as it may
    cut back on the number of person-hours that such entities must
    devote to filing tariffs. As we noted in the *1997 Report*, the
    Commission's order eliminating tariff filing requirements for
    interstate, domestic, interexchange services offered by nondominant
    interexchange carriers was stayed by the United States Court of
    Appeals for the D.C. Circuit.[^51] Recently, that court affirmed the
    Commission\'s decision prohibiting non-dominant long distance
    companies from filing tariffs to offer their interstate services,
    subject to a transition period, and subject to certain
    mass-marketing arrangements, dial-around services, casual calling
    rates, and rates applied to new customers until an account can be
    established.[^52] The court's decision vindicates an effort by the
    Commission to remove tariffing from its regulation of non-dominant
    long distance carriers.

### Pricing Flexibility

48. The Commission adopted an order establishing a framework to grant
    ILECs progressively greater flexibility in the pricing of interstate
    access services as competition develops for these services.[^53] By
    allowing ILECs to introduce new interstate access services on a
    streamlined basis, without prior approval or cost support, for
    example, we made it easier for the LECs, both small and large, to
    respond to the needs of both customers and competitors that purchase
    these services.

### Customer Proprietary Network Information Requirements

49. The 1996 Act created Section 222 of the Communications Act, which
    establishes Consumer Proprietary Network Information ("CPNI")
    requirements that apply to all telecommunications carriers.[^54] The
    Commission had previously defined CPNI to encompass any information
    about customers' basic network services and the customers' use of
    those services. This encompassed information that a telephone
    company possesses because it provides those network services. Under
    Section 222, all telecommunications carriers are subject to CPNI
    requirements. Absent customer approval or a legal requirement,
    telecommunications carriers may use or disclose individually
    identifiable CPNI only in the provision of the telecommunications
    service from which such information is derived, or in the provision
    of services necessary to or used in the provision of such
    telecommunications services, such as directory publishing.
    Telecommunications carriers must disclose CPNI to any person upon
    the customer's affirmative written request.

50. Although challenges to portions of the Commission's CPNI rules have
    been sustained by the Tenth Circuit Court of Appeals,[^55] the
    Commission issued several orders and enacted rules prior to that
    decision which had a positive impact on small businesses. In the
    *CPNI Report and Order* released on February 26, 1998, the
    Commission promulgated rules to implement Section 222.[^56] Those
    rules permitted carriers to use CPNI, without customer approval, to
    market offerings that are related to, but limited by, the customer's
    existing service relationship with the carrier. On September 3,
    1999, the Commission released an *Order on Reconsideration* that
    lessened the regulatory burden of various CPNI safeguards for both
    wireline and wireless companies, while continuing to require that
    carriers protect customer privacy.[^57] Specifically, the Commission
    reduced the restriction on telecommunications companies' use of CPNI
    to market services and equipment to their own customers. The
    Commission allowed wireline telephone carriers to use CPNI without
    customer approval to market related information services. Wireless
    carriers were awarded broader discretion to use CPNI without
    customer approval to market all information services that are
    necessary to, or used in the provision of, their telecommunications
    services. The Commission also allowed telecommunications companies
    to use CPNI in their efforts to win back customers lost to
    competitors, reasoning that win-back campaigns are good for
    competition and consistent with the 1996 Act. The Commission also
    modified its requirement that carriers develop and implement
    software that indicates a customer's CPNI approval status within the
    first few lines of the first screen of a customer's service record.
    Now, carriers must clearly establish the status of a customer's CPNI
    approval prior to the use of CPNI, but the specific details of
    compliance are left to the carriers. In so doing, the Commission
    allowed the carriers the flexibility to adapt their record-keeping
    systems in a manner most conducive to their individual size, capital
    resources, culture, and technological capabilities.

51. The Commission also eliminated the requirements that carriers
    maintain an electronic audit mechanism that tracks access to
    customer accounts. Instead, the Commission required carriers to
    maintain a record of their sales and marketing campaigns that use
    CPNI. The Commission also modified the CPNI "flagging" rule to state
    that carriers must implement a system by which the status of a
    customer's CPNI approval can be clearly established prior to use of
    CPNI \-- a number of small and rural carriers had stated their
    concern that these requirements were particularly burdensome for
    carriers of their size. These modifications will permit all carriers
    to develop and implement a system for auditing and flagging that is
    suitable to, among other things, their unique size, capital
    resources, culture, and technological capabilities.

### Provision of Advanced Services

52. On December 9, 1999, the Commission released the *Advanced Services
    Third Report and Order*.[^58] In that order, the Commission adopted
    measures to promote the availability of competitive broadband
    xDSL-based services, especially to residential and small business
    customers. The Commission amended its unbundling rules to require
    ILECs to provide unbundled access to a new network element, the high
    frequency portion of the local loop. This will enable competitive
    LECs to compete with larger ILECs to provide to consumers xDSL-based
    services through telephone lines that the competitive LECs can share
    with ILECs. The provision of xDSL-based service by a competitive LEC
    and voiceband service by an ILEC on the same loop is frequently
    called "line sharing." The Commission believes that line sharing is
    vital to the development of competition in the advanced services
    market, especially for residential and small business consumers. The
    Commission also believes that unbundled access to the high frequency
    portion of the loop can be implemented rapidly and in an equitable
    manner that balances the needs of both potential competitors and
    ILECs.

### The E-Rate Program and the Potential for Market Participation

53. The Universal Service[^59] Schools and Libraries program, popularly
    known as the "E-rate" program, is regarded as a program that will
    help close the "digital divide" between the technology "haves" and
    "have-nots" in America. Established by the 1996 Act, and funded at
    up to \$2.25 billion per year by contributions from
    telecommunications companies, the E-rate provides discounts of 20
    percent to 90 percent on the cost of telecommunications services,
    Internet access, and internal connections to schools and libraries.
    The discounts are paid directly to the companies that provide
    schools and libraries with these technology services.[^60]

54. The E-rate program helps to bridge the "digital divide" in access to
    information technology between the affluent and non-affluent in
    America by providing greater discounts for poorer and rural
    schools.[^61] The E-rate thus helps to ensure that all children,
    including those without computers or Internet access at home, will
    have the high-tech tools necessary to compete in the new digital
    economy.[^62] This will help to remove the market entry barriers to
    those disadvantaged segments of our society.

## WIRELESS SERVICES

### Spectrum Assignment Policies

55. The Omnibus Budget Reconciliation Act of 1993 (the "Budget
    Act")[^63] added Section 309(j) to the Communications Act. Section
    309(j) originally authorized the Commission to employ competitive
    bidding to choose from among mutually exclusive applications for
    initial licenses in services where the licensee receives
    compensation from subscribers. In the summer of 1997, Congress
    revised the Commission\'s auction authority. Specifically, the
    Balanced Budget Act of 1997 amended Section 309(j)(1) to require the
    Commission to award mutually exclusive applications for initial
    licenses or permits using competitive bidding procedures, except in
    limited circumstances.[^64] Section 309(j) requires the Commission
    to promote the development and rapid deployment of new technologies,
    products and services for the benefit of the public, including those
    residing in rural areas, without administrative or judicial delays.
    It further requires the Commission to promote opportunity and
    competition by avoiding excessive concentration of licenses and by
    disseminating licenses among a wide variety of applicants, including
    small businesses, rural telephone companies, and businesses owned by
    members of minority groups or women.

56. Since the 1993 mandate to ensure that small businesses, rural
    telephone companies, and businesses owned by members of minority
    groups or women are given the opportunity to participate in the
    provision of spectrum-based services, Congressional and Supreme
    Court actions have narrowed our options for fulfilling this mandate.
    In 1994, Congress repealed Section 1071 of the Internal Revenue
    Code, voiding the Commission's tax certificate program.[^65] In
    1995, the Supreme Court held in *Adarand Constructors, Inc. v. Peña*
    that "all racial classifications . . . must be analyzed by a
    reviewing court under strict scrutiny."[^66] The Court ruled that
    any federal program that imposes racial classifications must serve a
    compelling governmental interest and must be narrowly tailored to
    serve that interest. In 1996, the Supreme Court held in *United
    States v. Virginia* that a state program that makes distinctions on
    the basis of gender must be supported by an "exceeding\[ly\]
    persuasive justification" in order to withstand constitutional
    scrutiny.[^67] Because the record developed in promulgating rules to
    promote Section 309(j)\'s objectives did not assume application of a
    "strict scrutiny test," the Commission limited its available
    provisions to those benefiting small business. The Commission
    continues to encourage the participation of a variety of
    entrepreneurs in the provision of wireless services, believing that
    innovation by small businesses will result in a diversity of service
    offerings which, in turn, will increase customer choice and promote
    competition.

57. In the *1997 Report* proceeding, commenters indicated that our
    spectrum assignment decisions, specifically the assignment of
    spectrum for large geographic service areas and in large spectrum
    blocks, create a barrier to entry for small businesses.[^68] They
    stated that wide-area geographic systems are more capital intensive
    to construct and operate than other types of systems and that these
    costs are often too expensive for a small business and thus
    constitute a substantial market entry barrier for small businesses.
    Commenters expressed concern that the Commission\'s allocation of
    spectrum in larger blocks in some services reflected a bias in favor
    of larger commercial carriers, while ignoring the needs of small
    businesses operating site-specific systems.

58. At the outset, we note that not all Commission wireless licensing is
    for large geographic areas in large spectrum blocks. For example,
    the Commission's rules provide for certain shared, non-exclusive use
    of private land mobile radio ("PLMR") spectrum.[^69] By this
    process, many small businesses or entities in a given geographic
    area might be assigned the same spectrum, increasing the amount of
    frequency re-use that is possible compared to the alternative of
    exclusive use with set distance separations.[^70] Small businesses
    or entities in the same geographic area, each licensed for shared
    spectrum in this way, often combine resources to use transmitters
    and equipment offered by a single (often third-party) provider under
    a concept called multiple licensing.[^71] Additionally, a given
    licensee, whether on shared spectrum or not, may share the use of
    its particular PLMR license with other small businesses or entities
    also eligible for that particular spectrum.[^72] Finally, we note
    that we have encouraged partnering between PLMR licensees, such as
    public safety entities and utilities.[^73] Each of these sharing
    paradigms promotes conservation of capital, operational efficiency,
    and cost reduction for the small business entity.

59. The Commission continues to seek innovative policies to make
    spectrum available for services and thereby create additional market
    opportunities for small businesses. Recently, the Commission
    released its *Second Report and Order* in the 700 MHz proceeding,
    establishing service and auction rules for the 6 MHz of Guard Band
    spectrum (746-747/ 776-777 MHz and 762-764/ 792-794 MHz).[^74]
    Licenses in the Guard Bands will be assigned only to Guard Band
    Managers, a new class of commercial licensee that will be engaged
    solely in the business of leasing spectrum to third parties on a
    for-profit basis. The Guard Band Manager may subdivide its spectrum
    in any manner it chooses and make it available to system operators,
    including small businesses, or directly to end users for fixed or
    mobile communications, consistent with the frequency coordination
    and interference rules specified for these bands. Guard Band Manager
    licensing will have many potential benefits, including: (1) Guard
    Band Managers will engage in market-based transactions in wireless
    capacity at a time when access to spectrum is a critical need for a
    wide variety of wireless operations; (2) spectrum users, including
    small businesses, will have more flexibility in obtaining access to
    the amount of spectrum, in terms of quantity, length of time, and
    geographic area, that best suits their needs; (3) development of a
    "free market" in spectrum could result in more efficient use of this
    limited resource; and (4) this licensing approach will streamline
    the day-to-day management of this spectrum. As a result, in this
    band many spectrum-related functions ordinarily carried out by the
    Commission will be handled by Guard Band Managers.

60. We remain mindful of the challenges that small businesses face in
    their efforts to acquire geographic area licenses generally, and
    have taken several steps to alleviate these possible difficulties.
    First, our decisions defining the service areas and spectrum blocks
    by which licenses for wireless services are to be assigned have
    taken into account the needs of small businesses. For example, in
    some services we have adopted band plans that included licenses for
    small geographic areas and spectrum blocks. These plans will promote
    economic opportunity for a wide variety of applicants, including
    small businesses, rural telephone companies and businesses owned by
    minorities or women.[^75] Moreover, in many of our auctionable
    services, we have adopted special provisions, such as bidding
    credits and partitioning and disaggregation, to assist small
    businesses, including minority- and women-owned businesses and rural
    telephone companies, in acquiring spectrum assigned in geographic
    service areas and spectrum blocks.

61. We believe that rules and policies that permit geographic
    partitioning[^76] and spectrum disaggregation[^77] also address the
    concerns raised regarding geographic area licensing. In a series of
    rulemakings, we have adopted rules that permit geographic
    partitioning and spectrum disaggregation in certain services
    including: Broadband and Narrowband PCS,[^78] Cellular,[^79]
    Multipoint Distribution Service ("MDS"),[^80] 800 MHz and 900 MHz
    Specialized Mobile Radio ("SMR"),[^81] 39 GHz fixed point-to-point
    microwave,[^82] Wireless Communications Services ("WCS"),[^83] Local
    Multipoint Distribution Service ("LMDS"),[^84] Maritime
    Services,[^85] Paging,[^86] the commercial service in the 700 MHz
    band (formerly allocated to broadcast channels 60-69),[^87] and the
    218-219 MHz service.[^88] We believe that such provisions will help
    to: (1) remove potential impediments to entry thereby increasing
    competition in the wireless telecommunications marketplace; (2)
    encourage parties to use spectrum more efficiently; and (3) speed
    service to unserved and underserved areas. Parties that are
    unsuccessful bidders or that do not participate in auctions will be
    able to benefit from partitioning and disaggregation as methods to
    acquire spectrum rights after the auctions. Smaller or newly formed
    entities, for example, might choose to enter the market for the
    first time through partitioning or disaggregation.

62. The Commission has also recently adopted a *Report and Order and
    Further Notice of Proposed Rulemaking*, in which it adopts
    terrestrial wireless and satellite policy initiatives to address
    telecommunications needs on tribal lands.[^89] As we have stated
    previously, the 1996 Act instructed the Commission to help ensure
    that all Americans have access to affordable telecommunications
    services.[^90] Because many tribal lands, particularly those in the
    western United States, are geographically isolated,[^91] obtaining
    the lowest cost for providing basic telephone service to the
    reservation population may often require use of a terrestrial
    wireless technology, a satellite technology, or a combination of
    both. Terrestrial wireless technology includes both mobile services,
    such as cellular and PCS, and fixed "wireless local loop" services.
    In this order, the Commission provides bidding credits to successful
    bidders who agree to provide service to unserved areas on tribal
    lands.[^92]

### Construction Requirements

63. In recent years, with the auctioning of geographic-area licenses,
    the Commission has adopted longer, more flexible construction
    requirements for various wireless licensees, including small
    businesses, than it had previously imposed on site-by-site
    licensees. In the 220 MHz and Paging services, the Commission has
    adopted either population-based coverage requirements or substantial
    service requirements for geographic licenses that are purchased at
    auction.[^93] In the 800 MHz SMR service, the Commission in 1991
    began granting certain 800 MHz licensees extended implementation
    ("EI") authority to construct their systems, whereby the licensee
    had up to five years to construct all of the facilities within the
    licensed wide-area "footprint." At the end of the EI period, any
    frequency licensed at a specific site within the footprint that was
    not fully constructed and in operation would cancel
    automatically.[^94]

64. In December 1995, the Commission adopted a new wide-area licensing
    scheme by creating geographic-area licenses (Economic Area, or "EA,"
    licenses) for the upper 200 channels of the 800 MHz SMR band.[^95]
    The Commission also required licensees who had previously obtained
    EI authorizations to rejustify their authorizations by demonstrating
    that continuing to maintain their extended time to construct their
    facilities was warranted and in the public interest. In May and
    November 1997, the Wireless Telecommunications Bureau acted on the
    rejustification submissions filed by thirty-seven wide-area
    licensees, including many small businesses.[^96] In July 1997, the
    Commission generally affirmed the EA licensing system and decided
    that rejustified EI licensees would receive a maximum of two years
    to complete construction of their facilities. Any site-specific
    license within a licensee's wide-area "footprint" that was not
    constructed by the two-year deadline would be automatically
    cancelled.[^97]

65. In February 1999, in *Fresno Mobile Radio, Inc. v. FCC*,[^98] the
    United States Court of Appeals for the District of Columbia remanded
    the Commission's decision regarding the construction requirements
    for EI licensees. The court directed the Commission to explain why
    these SMR licensees were not allowed to apply more liberal coverage
    requirements similar to those adopted for 800 MHz EA licensees,
    cellular licensees, and PCS licensees, given that they are
    substantially similar CMRS providers. On December 23, 1999, the
    Commission released a *Remand Order*[^99] responding to the *Fresno*
    decision. In the *Remand Order*, the Commission adopted more liberal
    construction periods for incumbent wide-area 800 MHz SMR licensees
    who were within their construction periods at the time of the
    *Fresno* decision. These incumbents must satisfy population-based
    construction requirements similar to those given to Economic Area
    licensees in the 800 MHz band (*i.e.,* 1/3 population at 3 years,
    2/3 population at 5 years) on the upper 200 channels or show
    substantial service for the lower 230 channels of the 800 MHz band.
    The Commission has requested further comment on whether the relief
    afforded by the *Remand Order* should also be extended to SMR
    licensees who operate wide-area systems on non-SMR channels through
    inter-category sharing.[^100] This proceeding is currently pending.

### Application Processing and Filing

66. The Commission has taken several steps since the *1997 Report* to
    ensure that its application processing and filing rules and policies
    do not present barriers for small businesses. In this regard, the
    Commission has revised its rules and policies to bring competition
    to the frequency coordination process, unify its administrative
    rules for filing applications, and implement electronic filing and
    online information resources over the Internet. As described below,
    each of these actions constitutes an affirmative step toward
    reducing burdens on small businesses that hold radio (wireless)
    licenses.

67. **Coordination.** In the Part 90 (47 C.F.R. Part 90) private land
    mobile radio ("PLMR") services, frequency coordinators analyze
    applications before they are submitted to the Commission to select a
    frequency that will meet the applicant's needs, while minimizing
    interference to licensees already using the frequency band. The
    frequency coordinator makes a recommendation to the Commission
    regarding the best available frequency for the applicant's proposed
    operations.[^101] Frequency coordinators are most frequently
    utilized for shared PLMR spectrum. In the bands below 512 MHz, which
    are mostly shared (non-exclusive) PLMR spectrum, the Commission, in
    the *Refarming* proceeding, consolidated twenty radio services into
    two broad frequency pools: Public Safety and
    Industrial/Business.[^102]

68. In the Commission's *Refarming* docket[^103] we adopted rules to
    inject competition into the frequency coordination process.[^104]
    Previously, frequency coordinators had sole control over the
    frequencies within their respective radio services.[^105] Now, we
    generally allow coordination of any Industrial/Business pool
    frequency by any of the coordinators of the services that were
    consolidated into the pool, who notify the other in-pool frequency
    coordinators within one business day. This competitive coordination
    is intended to lessen market entry barriers by reducing prices,
    improving coordination services, and providing more flexibility to
    the small businesses that constitute the bulk of private land mobile
    radio licensees.

69. **Unified Filing Rules and Policies.** Since the *1997 Report*, the
    Commission has taken significant steps to simplify its application
    filing rules and policies. Specifically, the Commission found that
    its administrative rules for the filing and treatment of commercial,
    private, and personal radio services were contained under various
    sections in Parts 22, 24, 26, 27, 80, 87, 90, 95, 97, and 101 of the
    Commission's Rules,[^106] and that these rules differed slightly for
    the various radio services. This approach complicated the regulatory
    process for small businesses that held licenses in multiple radio
    services. For example, a small business holding a cellular license
    may also hold licenses in the microwave and private land mobile
    services in order to facilitate backhaul communications and
    communications among its employees, respectively. In this example,
    the licensee would need to be familiar with application filing
    procedures under Parts 22, 90, and 101 in order to remain in
    compliance with our rules. To remedy this situation, the Commission
    adopted a unified set of procedural rules governing the filing of
    all wireless applications in its *Universal Licensing System Report
    and Order*. [^107] Today, small businesses can find a single set of
    procedures in Part 1 of the Commission's Rules,[^108] simplifying
    the process of filing wireless license applications with the
    Wireless Telecommunications Bureau ("WTB").

70. **Electronic Filing.** We noted in the *1997 Report* that one
    commenter, the Small Business in Telecommunications Association, had
    suggested that the Commission design its electronic filing programs
    so that they can be used on less sophisticated computers, and, in
    particular, can be used to prepare applications on computers which
    are not interconnected. Since that time, the Commission\'s goal has
    been to ensure that all wireless licensees have access to licensing
    information online and the ability to file license applications
    electronically without the need for high-end computer systems or
    specialized, hard-to-obtain software. The Commission has achieved
    this goal for the wireless radio services by implementing its
    Universal Licensing System ("ULS").

71. The ULS is an online, interactive application filing system and
    research facility allowing wireless applicants to file applications
    electronically, as well as view license information and applications
    online. ULS eliminates the need for wireless carriers to file
    duplicative applications, increases the accuracy and reliability of
    licensing information, and increases the speed and efficiency of the
    application process. Significantly, ULS benefits licensees who are
    small businesses in three ways.

72. First, electronic filing is now easily accessible. Licensees may
    file applications electronically via ULS using inexpensive computer
    equipment, a standard telephone line, and web browser software that
    is available free via the Internet. As a result, licensees need only
    learn to use a single software program in order to file applications
    with the WTB. Today, license and application searches are available
    via the Internet, while application filing is available through a
    toll-free dial-up connection. The WTB has made application filing
    available via the Internet in May 2000.

73. Second, electronic filing is simple. When filing through ULS,
    applicants do not need to determine which forms and schedules to
    file, which questions must be answered, or which fees are due.
    Instead, ULS determines what questions need to be answered based on
    the applicant\'s radio service and application purpose, checks the
    applicant\'s answers and provides feedback before the application is
    submitted, and calculates the fee for the applicant.

74. Third, application, license, and Public Notice information is
    available online. Licensees can view license information (*e.g*.,
    administrative and technical data) and applications via ULS using a
    web browser. In this connection, the WTB has combined ten separate
    licensing databases into the single ULS database, eliminating the
    need for small businesses to conduct research on multiple databases
    and be familiar with multiple database formats. The WTB web site
    (www.fcc.gov/wtb) provides the public with on line access to all
    released documents, public notices, and the current auction schedule
    (including maps and channel band plans). Further, licensees may
    review the Commission\'s weekly public notices online. This provides
    instant access to applications that have been accepted for filing,
    as well as actions taken by the staff. Small businesses benefit from
    this approach by having the capability to quickly review Commission
    actions and proposed actions in a consistent format without having
    to obtain paper copies.

75. Today, the Commission has nearly completed its ULS implementation
    for the wireless services. In June 1998, the WTB implemented ULS for
    commercial wireless services such as Paging, Cellular, PCS, and all
    other auctioned radio services. This was followed in August 1999
    with the implementation of the microwave radio services and will
    conclude in 2000 with a phased implementation of the Part 90 Land
    Mobile Radio Services.

### Outreach Efforts

76. The WTB operates a booth at many industry trade shows, including
    those regularly attended by representatives of small businesses. The
    booth provides hands-on training regarding use of the Commission's
    ULS and auction bidding software over the Internet. The Commission's
    outreach program also includes a Web Page and the Telemarketing Hot
    Line.[^109] Members of the Commission and its staff have spoken at
    numerous industry, trade association, public interest organization,
    and telecommunications user group conferences on opportunities in
    wireless services licensed by the Commission, and will continue to
    do so. In addition, prior to the start of each service-specific
    Commission auction, the WTB routinely holds seminars for bidders to
    provide additional information about auction procedures. These
    seminars are offered free of charge and provide anyone interested in
    specific auctions the opportunity to see presentations on radio
    service and auction rules and observe a demonstration of the
    competitive bidding system. After each auction, the WTB conducts a
    customer survey of auction participants regarding their experiences
    in the auction and the auction process generally.

77. In implementing the electronic ULS, the Commission established a
    task force to receive public input on the design of the system and
    to coordinate efforts. The WTB conducted numerous interactive
    demonstrations for licensees and their representatives on the proper
    use of the system for filing license applications and conducting
    database research. Demonstrations were announced by public notice
    and, in 1999, approximately sixty sessions were held on certain
    topics of interest, including: (1) finding information in ULS for
    license and application searches; (2) filing and researching license
    transfers and assignments; and (3) general application filing
    procedures. As stated above, implementation of ULS has resulted in
    substantial benefits to all applicants, including small businesses.
    The WTB periodically updates its "ULS Newsletter" on the WTB web
    site to provide the public with current information on ULS and
    related topics of interest. The WTB has held public forums and has
    issued numerous public notices to educate the public on ULS
    procedures and benefits and to obtain public input on ULS
    issues.[^110] The WTB maintains an electronic mail list of
    interested parties, which are provided with updated ULS information
    free of charge. The WTB also maintains a toll-free phone line[^111]
    to assist with licensing questions during the ULS transition and has
    established a technical support hotline (and e-mail address)[^112]
    to assist the public with computer-related issues, including set-up
    and configuration.

78. The Commission's Antenna Structure Registration ("ASR") program was
    also revised in conjunction with the implementation of ULS,
    resulting in a streamlined approach to application filings and
    greater public access to ASR information. For example, antenna
    structure owners may now use the Internet to determine interactively
    whether their structures meet certain registration criteria.
    Previously, such research involved dialing into a Commission network
    and paying a per-minute fee to use Commission software. Similarly,
    the Commission has expanded the public's ability to research
    existing records on the Internet, and began providing expanded
    database, daily transaction and Federal Aviation Administration
    ("FAA") files for downloading. The new ASR procedures allow
    electronic filers to determine, at the time of filing, whether their
    application will be granted, which reduces delay and transactional
    costs associated with the registration of antenna structures.

79. The WTB has also developed a wireless facility-siting page that,
    among other things, provides current information about Commission
    rules and procedures. The web page provides access to fact sheets,
    rules and regulations regarding local government and environmental
    issues related to wireless facility siting. The web site also
    provides links to the Commission's environmental rules and federal
    agencies responsible for environmental laws that are of concern to
    small businesses proposing to locate on communications facilities
    such as towers.

80. Further, in autumn of 2000, the Commission will offer a seminar
    aimed at providing information to Native American tribal leaders and
    other interested parties to help increase telecommunications
    services to tribal residents. The Commission will bring together its
    own experts, along with representatives from other federal
    government agencies, telecommunications companies and emerging
    technology firms, to inform tribal governments about various facets
    of telecommunications services and how different technologies,
    regulatory rules, and government programs can benefit tribal
    communities.[^113]

### Interconnection and Resale

81. The *1997 Report* addressed concerns about obstacles that small
    businesses may face in their abilities to resell, interconnect, or
    benefit from economies of scale.[^114] It noted that the Commission
    had taken steps to overcome market entry and expansion barriers to
    small businesses by facilitating resale and interconnection
    agreements with established providers of Commercial Mobile Radio
    Services ("CMRS"). First, the *1997 Report* noted that in the *CMRS
    Resale Order*, the Commission prohibited certain CMRS providers from
    restricting the resale of their services during a five-year,
    transitional period in order to promote competition and accelerate
    the entry of new service providers.[^115] The Commission also stated
    that it intended to enforce actively the requirements of Sections
    201 and 202 of the 1996 Act,[^116] as well as other provisions of
    the 1996 Act and the Commission's Rules, to resolve complaints that
    were pending regarding resale and interconnection obligations.[^117]
    Finally, the *1997 Report* noted that, by establishing geographic
    partitioning and spectrum disaggregation of channels in CMRS service
    rules, the Commission was providing existing licensees and new
    entrants, including resellers, with a fair opportunity to compete
    and develop their businesses.

82. Since the release of the *1997 Report*, the Commission has continued
    to address resale and interconnection issues in order to ensure that
    such issues are not market barriers for small wireless businesses.
    On reconsideration, the Commission generally affirmed the resale
    rule adopted in the *CMRS Resale Order* as an important means to
    facilitate CMRS market entry by small businesses consistent with the
    goals of Congress and Section 257.[^118] The five-year effective
    period of the rule was retained in recognition that new entry and
    increasing competition will obviate the need for the rule within the
    next few years, but that under current conditions the rule continues
    to confer benefits upon the public.[^119] To ensure compliance with
    the rule, the Commission adopted a stepped-up mediation program to
    resolve formal and informal complaints filed by a reseller and avoid
    delays or other practices by CMRS carriers covered by the rule that
    may prevent resale arrangements.[^120]

83. The Commission took additional action in the *CMRS Resale
    Reconsideration Order*[^121] to promote competition by small
    wireless businesses. The scope of the resale rule was modified to
    exclude certain smaller or limited CMRS providers, inasmuch as
    imposing the obligations of the resale rule on such providers was
    neither necessary nor useful in securing the benefits intended from
    providers with excess capacity or extensive market share.[^122] The
    exclusion from the rule was applied to certain C, D, E, and F block
    PCS licensees and, in addition, the Commission exempted all CMRS
    providers that do not utilize in-network-switching facilities.
    Finally, as discussed above, the Commission continues to adopt CMRS
    service rules that enable smaller or newly formed wireless entities
    to enter the service market for the first time through partitioning
    and disaggregation.

### Definition of "Covered SMR"

84. Our definition of covered SMR services has changed since the *1997
    Report*. In the *CMRS* proceeding, the Commission determined that an
    SMR licensee offering interconnected service falls within the
    statutory definition of a CMRS provider.[^123] In several other
    proceedings, however, the Commission determined that certain CMRS
    rules should apply only to a subset of SMR licensees that can
    realistically compete with traditional cellular and broadband PCS
    services. The *1997 Report* noted that requests were pending to
    modify the definition of SMR licensees covered by these rules as
    overly inclusive and a market entry barrier for certain small
    businesses that do not compete in the mobile telephony mass
    market.[^124] In response, the Commission has agreed that its former
    definition of covered SMR services subject to certain CMRS-related
    regulations was too broad and has changed the rule to exclude
    certain providers that have limited capacity and services.
    Specifically, the Commission decided to exclude SMR providers that
    do not utilize in-network switching facilities from the obligations
    imposed on CMRS providers by (1) the resale rule,[^125] (2) the
    Enhanced 911 transmissions ("E911") rule,[^126] and (3) the number
    portability rule.[^127] The modified definitions also were extended
    to exclude cellular and broadband PCS providers that similarly do
    not utilize an in-network switching facility. The Commission found
    that, unless CMRS providers have in-network switching facilities,
    they are likely to be offering only geographically or functionally
    limited services (such as dispatch) that those particular rules were
    not intended to cover, and that application of these rules to those
    services would not benefit the public.

### Competitive Bidding Incentives

85. As noted above, Section 309(j) of the Communications Act, like
    Section 257, fulfills Congress' intent to facilitate opportunities
    for small businesses in telecommunications. In enacting Section
    309(j), Congress found that "unless the Commission is sensitive to
    the need to maintain opportunities for small businesses, competitive
    bidding could result in a significant increase in concentration in
    the telecommunications industries"[^128] and that small businesses
    should "continue to have opportunities to become Commission
    licensees."[^129] To this end, Section 309(j) requires the
    Commission to establish competitive bidding rules and other
    provisions to ensure that small businesses, businesses owned by
    minorities and women, and rural telephone companies have an
    opportunity to participate in the wireless telecommunications
    industry. Section 309(j) requires that in designing systems of
    competitive bidding, the Commission "promot\[e\] economic
    opportunity and competition . . . by disseminating licenses among a
    wide variety of applicants, including small businesses . . . and
    businesses owned by members of minority groups and women."[^130]
    Section 309(j)(4)(D) requires that in prescribing regulations, the
    Commission "ensure that small business . . . and businesses owned by
    members of minority groups and women are given the opportunity to
    participate in the provision of spectrum-based services, and for
    such purposes, consider the use of tax certificates, bidding
    preferences, and other procedures."[^131]

86. The Commission has designed a number of incentives to encourage the
    participation of small businesses, rural telephone companies, and
    businesses owned by members of minority groups or women in the
    wireless spectrum-based services. For example, in the broadband PCS
    auctions, the Commission established entrepreneurs' blocks in which
    participation was limited to applicants with \$125 million or less
    in annual gross revenues for the previous two years and total assets
    of \$500 million or less.[^132] In the past, incentives have
    included reduced upfront payments,[^133] bidding credits,[^134]
    installment payment plans with favorable interest rates,[^135] and
    reduced down payments on winning bids. As noted above, we have
    recently adopted rules to provide bidding credits to applicants that
    intend to provide service to tribal lands or other unserved
    areas.[^136]

87. As we noted in the *Third Report and Order* in our proceeding
    concerning general auction rules (the *"Part 1 Proceeding"*), the
    Commission has found that obligating licensees to pay for their
    licenses as a condition of receipt requires greater financial
    accountability from applicants.[^137] Therefore, we determined to
    eliminate installment payments. We noted that Congress had not
    required the use of installment payments in all auctions, but rather
    recognized them as one means of promoting the objectives of Section
    309(j)(3).[^138] In light of the decision to eliminate the
    installment payment program, we adopted a schedule of tiered bidding
    credits that, coupled with providing bidders with sufficient time to
    raise financing, will provide adequate opportunities for small
    businesses, including minority- and women-owned businesses, to
    compete successfully in spectrum auctions.

88. In addition, our policies regarding geographic partitioning and
    spectrum disaggregation should aid small businesses and other
    entrepreneurs through the creation of smaller, less capital
    intensive license authorizations that are more easily within the
    reach of smaller entities. Moreover, such policies may increase
    access to capital that can be used to construct and maintain
    wireless systems.[^139] We note that small businesses have both
    participated in and been successful bidders in the majority of
    spectrum auctions we have conducted to date. Specifically, in our
    simultaneous multiple-round spectrum auctions, 82 percent[^140] of
    the high bidders were small businesses (as defined for each
    respective service).

## CABLE SERVICES

89. Since the *1997 Report*, we have relieved small cable entities of
    additional regulatory burdens. In the *1997 Report*, it was noted
    that the Commission had already taken significant steps to minimize
    the impact of the Commission's cable television regulations on small
    business, and that effort has continued. We have increased the
    number of small entities that qualify for relief from rate
    regulation. In addition, we have amended our "leased access"
    regulations to make access by an independent programmer to a cable
    system more affordable. We have adopted new "inside wiring" rules
    that enhance the ability of a new competitor, whether large or
    small, to enter a multi-dwelling unit and provide service. And we
    have reduced the record keeping requirements of small entities, thus
    lowering their costs.

### Deregulation of Small Cable Companies

90. Prior to the *1997 Report*, we had adopted regulations that
    substantially relieved small cable systems and small cable companies
    from the burdens of rate regulation. The 1995 *Small System Order*
    extended relief from cable rate regulation to approximately 7,000
    small cable systems.[^141] While the small system relief did not
    constitute complete deregulation, the practical effect was to reduce
    significantly the impact of rate regulation on small cable systems.
    At the time, we regarded the regulatory initiative adopted in the
    *Small System Order* as the most important action the Commission had
    taken on behalf of small cable systems since Congress had directed
    the imposition of rate regulation pursuant to the 1992 Cable
    Act.[^142] Then, with the implementation of additional regulatory
    relief provided by Congress in the 1996 Act, "small cable
    operators," as that term was defined in the 1996 Act, were wholly
    exempted from a significant portion of rate regulation.[^143] The
    combination of the Commission's small system initiative and the
    relief afforded "small cable operators" under the 1996 Act,
    effectively removed most small cable companies from the burdens of
    rate regulation.

91. More specifically, pursuant to the 1992 Cable Act, the Commission
    recognized "small cable companies" and "small systems" as deserving
    of special regulatory treatment. A "small cable company" was defined
    as one serving fewer than 400,000 subscribers nationwide.[^144] At
    the time of adoption, we estimated that there were approximately
    1,440 cable companies that qualified as small cable companies.[^145]
    We defined a "small \[cable\] system" as a cable system with 15,000
    or fewer subscribers.[^146] As a result of this Commission
    initiative, both "small cable companies" and "small systems" were
    subject to significantly less rate regulation than larger cable
    companies. Then, with enactment of the 1996 Act, we adopted
    regulations recognizing an additional class of cable provider to be
    afforded regulatory relief under that legislation. Congress had
    created another category of cable company which it defined as a
    "small cable operator" and which was measured by the number of
    subscribers served (no more than one percent of all cable
    subscribers) and gross revenues earned (no more than \$250 million
    annual gross revenues), and freed such "small cable operators" from
    rate regulation of their "upper tiers" of service or, if they had
    only one tier, from rate regulation entirely.[^147] At the time,
    based on available data, we concluded that approximately 1,450 cable
    operators were relieved from the regulatory burdens of upper tier
    rate regulation with the enactment of the 1996 Act.

92. In the *1997 Report*, we also discussed our efforts towards
    implementing the small operator rate deregulation provided in the
    1996 Act; in particular, how we proposed to define the term
    "affiliate" in measuring whether a small operator is eligible for
    the rate deregulation provided in the 1996 Act. The 1996 Act
    provided certain rate deregulation for operators with less than
    \$250 million gross revenues. Subsequent to release of the *1997
    Report*, we adopted a definition of "affiliate" in the *Cable Act
    Reform Order*[^148] under which an ownership of 20 percent or
    greater of one cable operator by another entity would require the
    combination of the gross revenues of both companies in calculating
    whether the cable operator was eligible for rate deregulation under
    the 1996 Act. We set our ownership threshold of 20 percent at a
    point where a large entity would be able to make a significant
    enough stake in a small operator to permit it to extend financial
    resources to the small operator to meet the operator's needs \-- and
    not subject the small operator to more comprehensive rate
    regulation.[^149] In addition, we concluded that if two or more
    unaffiliated entities each holds less than a 20 percent interest in
    the cable operator, neither is deemed "affiliated" for purposes of
    the gross revenue test.

### Leased Access

93. The *1997 Report* also discussed the concept of "leased access"
    through which independent programmers are provided access to local
    cable operators. The 1992 Cable Act requires that a certain
    percentage of channels be "accessible" to programmers as a way of
    enhancing diversity and promoting small business. Soon after
    enactment, we adopted a formula to be used for calculating the
    maximum level of compensation that the cable operator could demand
    from a programmer, typically a small business, seeking access to the
    cable system. In 1997 we revised that formula to lower the maximum
    rates, thereby enhancing the likelihood that a small business could
    afford leased access. In addition, we established special provisions
    for small cable operators, excusing small systems from having to
    respond to leased access requests unless the programmer provides
    specific information and also allowing the small operator twice as
    much time to respond to the programmer.[^150] Together, the changes
    are intended to assist both the independent programmer and the small
    operator in meeting the leased access requirements.

### Multiple Dwelling Units

94. Another issue raised in the *1997 Report* involved the pending
    rulemaking addressing access of competitive video providers to
    multiple dwelling units ("MDUs"). That issue was subsequently
    addressed affirmatively in our *Cable Home Wiring Order.*[^151] In
    that order we adopted "home run wiring " rules for MDUs setting
    forth guidelines for use by a video provider of cable wiring already
    installed in an MDU and owned by a provider whose contract with the
    MDU owner has terminated and who is no longer entitled to remain in
    the MDU. The intent of the home run wiring rules was to promote
    competition, especially by new market entrants. In addition, in a
    pending proceeding, we are considering whether to limit the use of
    exclusive and perpetual contracts between MDU owners and cable
    operators.[^152] Perpetual contracts enable an incumbent cable
    provider to remain in an MDU indefinitely. Such contracts, it is
    alleged, frustrate competition or entry by competitive video
    providers, whether large or small. Exclusive contracts give
    Multichannel Video Programming Distributors ("MVPDs") the exclusive
    right to serve MDUs. Some commenters allege that exclusive contracts
    frustrate competition by allowing only one provider to serve a
    building; others state that alternative MVPDs need exclusive
    contracts to enable them to serve MDUs and thereby compete with the
    incumbent cable operators.

### Filing and Record Keeping

95. Since release of the *1997 Report*, we have adopted a number of
    small entity-friendly rules for the cable industry beyond those
    discussed above. One involves the relief afforded small cable
    systems with regard to the filing of the Annual Report of Cable
    Television Systems Form (Form 325). Form 325 serves as the
    Commission's annual reporting requirement for the cable television
    industry. In 1998, in the *Form 325 Order*,[^153] the Commission
    considered whether to retain the requirement that cable systems file
    Form 325. The Commission concluded it would not eliminate the Form
    325 information collection process, but that it would reduce the
    administrative burden of completing the information request and
    filing the form by drastically reducing the number of cable systems
    required to file it. Instead of requiring all cable systems to file,
    the *Form 325 Order* requires that only systems with 20,000 or more
    subscribers file and devised a sampling methodology to gather
    information from cable systems with fewer than 20,000
    subscribers.[^154] Thus, the filing requirement was completely
    eliminated for almost 90 percent of cable systems. The *Form 325
    Order* also replaced the old four-part Form 325 with a streamlined
    two-part form. The *Form 325 Order* further reduced the burden on
    those cable systems still required to file the form by modifying it
    so information now will be collected on a system-wide basis rather
    than on a community-by-community basis.

96. In another effort to reduce the regulatory burden on all entities
    and particularly small businesses, we have revised and streamlined
    the public file and notice requirements set forth in the
    Commission's Part 76 cable television rules.[^155] The public file
    requirements provide consumers with information about the services
    they receive and the rates they pay for those services. For example,
    cable operators must notify subscribers before increasing rates and
    must maintain records demonstrating compliance with certain safety
    standards.[^156] The 1999 *Streamlining Order*[^157] reduced the
    regulatory burden faced by cable operators of all sizes with regard
    to public file requirements by: (1) reorganizing the public file
    requirements; (2) providing cable operators with an alternative to
    maintaining a paper public file; (3) eliminating outdated public
    file requirements; and (4) expanding the definition of small cable
    systems for purposes of the public inspection rules. With respect to
    the record-keeping requirement of small cable systems, our previous
    rules exempted cable systems serving fewer than 1000 subscribers
    from certain public file requirements. In the *Streamlining Order*,
    we granted cable systems serving 1000 to 5000 subscribers relief
    from certain public file requirements as well. Pursuant to that
    order, we adopted an amendment to Section 76.305(a) providing that,
    except for the political file requirements contained in Section
    76.207, the information that was to be maintained under Section
    76.305(a) would no longer have to be maintained in a file and could
    be provided only upon request.[^158] The maintenance of the
    political file requirements by cable systems with 1000 to 5000
    subscribers was continued. The relief granted constituted an
    exemption from the public inspection rules for approximately 79
    percent of all cable systems serving approximately 12 percent of
    subscribers.[^159] The amendment provides regulatory relief while
    ensuring that the public continues to have access to important
    information.

### Closed Captioning Exemption

97. Still another area of small business activity given special
    consideration by the Commission in the cable industry involved our
    adoption of rules generally requiring closed captioning of video
    programming as required by the 1996 Act.[^160] In the *Closed
    Captioning Order*, we adopted several exemptions for small operators
    where we concluded a captioning requirement would impose an economic
    burden. The 1996 Act permitted exemptions of "programs, classes of
    programs, or services" for which the Commission determined that "the
    provision of closed captioning would be economically
    burdensome."[^161] With statutory authority to adopt exemptions, we
    did so, some of which provided relief to small businesses. For
    example, we adopted a four-year exemption from the captioning
    requirements for all new networks on grounds that we did not intend
    the captioning requirements to inhibit new sources of programming,
    which we recognized as being provided by, among others, small
    entities.[^162] We also adopted two revenue-based exemptions from
    the captioning requirements. Under the first exemption, a video
    programming provider is not required to spend any money to caption
    any channel of video programming that produced less than \$3 million
    in annual gross revenues in the previous year.[^163] That exemption
    is intended to address the problems of small providers that are not
    in a position to devote significant resources towards captioning.
    Also, no programming provider will be required to spend more than 2
    percent of its annual gross revenues from any channel on any such
    captioning.[^164]

## MASS MEDIA SERVICES

98. The Mass Media Bureau ("MMB") has endeavored to keep constant the
    goal of eliminating market entry barriers in the broadcast and
    wireless cable sectors. In a number of rulemaking proceedings and
    policy initiatives, the MMB has developed regulations that should
    help sustain small, minority- and women-owned businesses, as well as
    encourage their entry into the telecommunications marketplace.
    Developments in this regard have occurred particularly in the areas
    of low power radio, Class A television, wireless cable, and our
    local television and radio/television cross ownership rules. For
    example, in creating a new low power FM radio service, the
    Commission is advancing its goal of encouraging diverse voices on
    the nation's airwaves and creating opportunities for new entrants in
    broadcasting. Our new TV ownership rule ensures that small stations
    may combine operations, reduce expenses, and perhaps diversify
    programming. The modified radio/TV cross-ownership rule will allow
    stations, including small stations, to realize economies of scale.
    Further, pursuant to new rules, certain low-power television
    stations will be accorded Class A status, which is a "primary"
    status similar to full power television broadcasters. We believe
    these new regulations will facilitate the acquisition of capital
    needed by these stations \-- which comprise a large variety of
    licensees, including minorities and women \-- to provide locally
    originated programming to their communities. Additionally, the MMB
    amended several of its MDS[^165] rules to facilitate the provision
    of new, enhanced services, including new digital and two-way
    communications services. Our modified rules will simplify our
    licensing system and provide greater flexibility in the use of the
    allotted spectrum to licensees. It is expected that such changes
    will further eliminate market entry barriers for small entities.

99. Since the *1997 Report*, the Commission has launched a number of
    initiatives that have helped small broadcasters to file
    applications, find information at the Commission, and participate in
    the rulemaking process. The MMB's web page provides many
    self-service functions that greatly assist small entities, including
    those owned by minorities and women, who often have fewer financial
    and business resources. By accessing the MMB web page
    ([http://www.fcc.gov.mmb)](), licensees may utilize an on-line
    retrieval system of broadcast radio and television station and
    application information; as well as an online call sign reservation
    and authorization service. Other MMB web page services include links
    to obtain information on subjects such as, "How to Start a New
    Broadcast Station," "Details on Low Power or 'Micro' Stations," and
    "Digital Television Tower Siting Fact Sheet and Frequently Asked
    Questions." Additionally, the web pages for the Policy and Rules
    Division and the Audio Services Division of the MMB include
    information on how to participate in the rulemaking process.
    Moreover, the MMB has implemented an electronic filing capability.
    Users can access the Radio and Television Broadcast Station
    Consolidated Database System ("CDBS") via the Internet from the MMB
    web site. This new Internet-based electronic forms filing system
    enables radio and television broadcast station applicants to file
    electronically with the Commission several license, transfer of
    control, and assignment forms. These initiatives have benefited
    small entities by helping them to obtain Commission authorizations
    and approvals more easily, access information more readily, and make
    their concerns known to the Commission. Below are additional
    initiatives to reduce market entry barriers.

### Low Power Radio

100. In January of 2000, in the *LPFM Report and Order,* the Commission
     authorized the licensing of two new classes of noncommercial low
     power FM ("LPFM") radio stations.[^166] One class of stations will
     operate at a maximum power of 100 watts with power from 50-100
     watts and a service radius of approximately 3.5 miles ("LP100"),
     and the other class of stations will operate at a maximum power of
     10 watts with power from 1-10 watts and a service radius of about 1
     to 2 miles ("LP10"). In so doing, the Commission continues to
     advance its goal of encouraging diverse voices on the nation's
     airwaves and creating opportunities for new entrants in
     broadcasting. Many of the LPFM rules adopted are designed to create
     significant opportunities for small entity new entrants. In
     addition, the Commission has taken steps to minimize the impact on
     existing small business. For example, LP100 and LP10 stations will
     be noncommercial, educational stations, and so will not compete
     with small business commercial broadcasters for advertising
     revenue.

101. The *LPFM Report and Order* adopted ownership rules to assist small
     entities to construct LPFM stations. Parties with attributable
     interests in any full power broadcast facilities are not eligible
     to have any ownership interest in any low power radio stations.
     This will prevent owners of full-power stations, including large
     group owners, from obtaining licenses for LPFM facilities that
     might otherwise be available to new entrants. The local and
     national ownership restrictions of one station per community and,
     initially, one station, and ultimately, 10 stations, nationwide are
     intended to ensure that authorizations for LPFM stations are
     dispersed among many new entrants. One of the most important
     purposes of establishing this service is to afford community-based
     organizations an opportunity to communicate over the airwaves and
     thus expand diversity of ownership \-- a purpose inconsistent with
     common ownership of LPFM stations and existing broadcast facilities
     or other media interests.

102. Further, the Commission minimized the regulatory burdens imposed on
     LPFM stations. LPFM stations are not required to maintain a public
     file, although they must maintain a political file. They also need
     not create quarterly issues and programming lists or maintain a
     main studio. In addition, while full power and LPFM stations both
     must participate in the Emergency Alert System ("EAS") and have
     decoding equipment, LPFM stations need not purchase encoding
     equipment. These decisions will reduce administrative burdens and
     costs for small business licensees.

103. The *LPFM Report and Order* also adopts filing requirements that
     should help small businesses. The Commission declined to mandate
     electronic filing for LPFM stations because it recognized that
     there might be a disparity among applicants for LP100 licenses in
     terms of computer resources and skills. This result should help
     small businesses without more advanced technological resources to
     participate in the LP100 application process. The *LPFM Report and
     Order* adopts a filing window process, as opposed to a first-come,
     first-served process, so as not to disadvantage applicants based
     solely on the quality of their Internet connection.

### Local Television Ownership/Radio-Television Cross Ownership

104. The 1996 Act directed the Commission to make a number of
     significant revisions to its broadcast ownership rules.
     Specifically, Section 202 required the Commission to: (1) complete
     a rulemaking proceeding concerning the retention, modification, or
     elimination of the local television ownership rule[^167] and (2)
     extend the radio-television cross-ownership waiver policy formerly
     applicable only in the top 25 markets to the top 50 markets,
     "consistent with the public interest, convenience, and
     necessity."[^168] Under our modified local television ownership
     rule,[^169] adopted in the 1999 *Ownership Report and Order*, we
     relaxed the television duopoly rule by narrowing its geographic
     scope from the current Grade B contour approach to a Designated
     Market Areas ("DMAs") test. The new test allows common ownership of
     two television stations without regard to contour overlap if the
     stations are in separate Nielsen DMAs. In addition, we will allow
     common ownership of two TV stations in the same DMA if (1) their
     Grade B contours do not overlap (a continuation of the current
     rule) or (2) if eight independently owned, full-power and
     operational television stations (commercial and noncommercial) will
     remain, provided that one of the commonly-owned stations is not
     among the top four-ranked stations in the market.[^170]

105. The new TV ownership rule ensures that small stations may combine
     operations, reduce expenses, and perhaps diversify programming. At
     the same time, both the market rank and the voice count components
     of the rule further our goal of fostering diversity of voices. The
     market rank test ensures that the two largest TV stations cannot
     combine to dominate and exercise market power in advertising and
     programming markets in which TV stations compete; the voice count
     test ensures that more than eight competitors must exist in the
     market before any two of them may combine.

106. Additionally, we have revised our radio/TV cross-ownership rule to
     permit common ownership of either (1) one or two TV stations and up
     to six radio stations, provided 20 independent voices will remain
     in the market; (2) one TV station and seven radio stations,
     provided 20 independent voices will remain; (3) one or two TV
     stations and up to four radio stations, provided at least ten
     voices will remain in the market; or (4) one or two TV stations and
     one radio station regardless of the number of voices that will
     remain in the market. As with our amended TV duopoly rule, the
     modified radio/TV cross-ownership rule will allow stations,
     including small stations, to realize economies of scale, while
     ensuring that no market will become concentrated to such an extent
     that any one or more combinations will dominate the markets in
     which broadcasters compete, or monopolize the media and sources of
     information for their audiences.

107. The Commission also determined three specific criteria by which we
     would evaluate a request for waiver of our local television
     ownership rule. We will presume a waiver of the rule is in the
     public interest to permit common ownership of two television
     stations in the same market where one station is a "failed
     station," where one of the merging stations is a "failing station,"
     or where the applicants can show that the combination will result
     in the construction and operation of an authorized but as yet
     "unbuilt" station. We will continue to grant waivers of our
     radio-television cross-ownership rule, on a presumptive basis, in
     situations involving a failed station. In order to qualify as
     "failed," a station must be dark for at least four months or
     involved in court-supervised involuntary bankruptcy or involuntary
     insolvency proceedings.

108. Our waiver policies accommodate small stations, while protecting
     our competition and diversity goals. Each of these waiver policies
     was designed to ensure that only truly financially distressed
     (which are typically smaller) stations could benefit from them. The
     waiver policies also ensure that more financially successful
     in-market stations (which are typically larger and would likely
     value same-market broadcast assets more highly than out-of-market
     stations) cannot foreclose out-of-market buyers. The in-market
     buyer must demonstrate that it is the only purchaser ready,
     willing, and able to operate the station, and that sale to an
     out-of-market buyer would result in an artificially depressed
     price.[^171] We will monitor the effects of the modifications of
     our ownership rules on new entry.

### Class A Television Service

109. In its *Class A TV Report and Order*,[^172] the Commission
     established a Class A television service and provided that certain
     qualifying low-power television ("LPTV") stations will be accorded
     Class A status.[^173] This action implemented the Community
     Broadcasters Protection Act of 1999 ("CBPA"),[^174] which sets out
     certain certification and application procedures for low-power
     television licensees seeking to obtain Class A status, prescribes
     the criteria low-power stations must meet to be eligible for a
     Class A license, and outlines the interference protection Class A
     applicants must provide to analog (or NTSC), digital ("DTV"), LPTV,
     and TV translator stations. Class A licensees will have "primary"
     status as television broadcasters, thereby gaining a measure of
     protection from full-service television stations, even as those
     stations convert to digital format. We believe this change in
     regulatory status will positively affect the ability of LPTV
     stations to raise necessary capital.

110. The LPTV stations eligible for Class A status provide
     locally-originated programming, often to rural and certain urban
     communities that have either no or little access to such
     programming. LPTV stations are owned by a wide variety of
     licensees, including minorities and women, and often provide
     "niche" programming to residents of specific ethnic, racial, and
     interest communities. These new provisions will facilitate the
     acquisition of capital needed by these stations to continue to
     provide free, over-the-air programming, including locally
     originated programming to their communities. By improving the
     commercial viability of LPTV stations that provide valuable
     programming, the Commission's action is consistent with its
     fundamental goals of ensuring diversity and localism in television
     broadcasting.

111. The LPTV service has significantly increased the diversity of
     broadcast station ownership. Stations are operated by such diverse
     entities as community groups, schools and colleges, religious
     organizations, radio and TV broadcasters, and a wide variety of
     small businesses. The service has also provided first-time
     ownership opportunities for minorities and women.

112. The CBPA, and our implementing regulations, protect the future of
     low-power television licensees. LPTV stations have secondary
     spectrum status, and, as such, they can be displaced by full-power
     TV stations that seek to expand their own service area, or by new
     full-power stations seeking to enter the same market. This
     regulatory status has impaired the ability of LPTV stations to
     raise capital. In addition, Congress recognized that the conversion
     to digital television further complicates the uncertain future of
     LPTV stations. Many of these issues have now been addressed by
     Congress' actions. Class A licensees are now subject to the same
     license terms and renewal standards as full-power television
     licensees. Class A licensees are accorded primary status as
     television broadcasters as long as they continue to meet the
     eligibility requirements.[^175]

### Multichannel Multipoint Distribution Service

113. In 1998, the Commission adopted its *Multichannel Multipoint
     Distribution Service ("MDS") Report and Order*, which amended
     several of its MDS[^176] rules to facilitate the provision of new,
     enhanced services, including new digital and two-way communications
     services. [^177] Specifically, the *MDS Two-way Report and
     Order*: (1) permitted both MDS and Instructional Television Fixed
     Service ("ITFS") licensees to provide two-way services on a regular
     basis; (2) permitted increased flexibility on permissible
     modulation types; (3) permitted increased flexibility in spectrum
     use and channelization, including combining multiple channels to
     accommodate wider bandwidths, dividing 6 MHz channels into smaller
     bandwidths, and channel swapping; (4) adopted a number of technical
     parameters to mitigate the potential for interference among service
     providers and to ensure interference protection to existing MDS and
     ITFS services; (5) simplified and streamlined the licensing
     process; and (6) modified the ITFS programming requirements. The
     modifications in our rules were in keeping with the mandate of
     Section 257, which requires the Commission to identify and
     eliminate market entry barriers for entrepreneurs and other small
     businesses to promote diversity of media voices, vigorous economic
     competition, technological advancement, and the public interest.

114. The rule changes adopted in the *MDS Two-way Report and Order* to
     allow two-way operations for MDS and ITFS will simplify our
     licensing system and provide greater flexibility to licensees in
     the use of the allotted spectrum. It is expected that such changes
     will help eliminate market entry barriers for small entities.
     Further, by allowing for subchannelization,[^178] the rules will
     enable small entity licensees to respond to the demands of the
     market and create an unlimited number of channels to carry their
     current and future communications needs. Allowing
     superchannelization[^179] will permit small entity licensees to
     combine their spectrum with other small entity licensees and create
     larger systems to meet their particular operations and to operate
     at greater speeds.

115. To permit small entity ITFS licensees with limited resources
     adequate time to evaluate a two-way applicant's proposed service
     plan, we adopted a certification procedure whereby applicants are
     required to certify that they have met all requirements regarding
     interference protection to existing and prior proposed facilities.
     The applicant will also be required to certify that it has served
     all potentially affected parties with copies of its application and
     with its engineering analysis supporting its interference
     compliance claim.

116. In an effort to minimize the impact of our new rules on educational
     ITFS, many of whom are small entities, we determined not to
     restrict ITFS eligible use to the downstream video/audio paradigm
     because that would preclude flexibility in service offerings for an
     ITFS licensee which leases excess channel capacity. We provided
     educational entities with additional flexibility to define what
     ITFS usage they regard as educational in an effort to permit such
     entities to further their educational mission. We did not expand
     our minimum educational usage requirement for digital ITFS
     transmissions, and we added a requirement that 5 percent of an ITFS
     station's capacity be set aside for instructional purposes only.

### Equal Employment Opportunity

117. Commenters in the *1997 Report* expressed concerns about
     enforcement of equal employment opportunity ("EEO") rules in the
     broadcast marketplace. However, certain aspects of the EEO rules in
     effect at that time were struck down in 1999 on constitutional
     grounds by the U.S. Court of Appeals for the D.C. Circuit Court in
     the *Lutheran Church* decision.[^180] Since then, the Commission
     has adopted its new *EEO Report and Order*.[^181] In the *EEO
     Report and Order*, the Commission adopted new EEO program
     requirements that are free of the constitutional infirmities
     identified in the *Lutheran Church* decision. The Commission also
     addressed the concerns raised in the *Lutheran Church* opinion
     regarding the Commission's authority to promulgate an employment
     nondiscrimination rule.

118. We believe that the new EEO rules serve an important, constructive
     function in deterring discrimination in employment and fostering
     greater diversity of viewpoints and programming that is responsive
     to the interests of a diverse community. In addition, the new rules
     and policies provide a way for all individuals, including
     minorities and women and those with little or no communications
     experience, to be informed of job opportunities and enter the
     broadcast and cable industries. This, in turn, could lead in some
     cases to higher-level positions of greater responsibility that
     could affect programming and/or provide the experience desired by
     financial institutions to finance ownership in the broadcast and
     cable industries.

119. The new EEO rules require wide dissemination of information about
     all job vacancies by broadcasters, cable operators, and other
     multichannel video programming distributors.[^182] Additionally,
     these entities may select either to implement supplemental
     recruitment measures or an alternative recruitment program.
     Pursuant to the supplemental recruitment option, entities must
     select and implement a number of non-vacancy-specific recruitment
     measures from a menu of options. They must also, upon request, send
     vacancy notices to community groups who provide employment
     information to those seeking jobs. Broadcast and cable entities who
     select the alternative recruitment program may use recruitment
     sources of their own selection, and must maintain records
     concerning the composition of their applicant pool, to ensure that
     vacancy notices are reaching all segments of the community. All
     broadcasters and cable entities are required to assess periodically
     the effectiveness of their outreach efforts and make any needed
     modifications in order to reach qualified applicants in their
     community, including minorities and women.

120. Entities must also maintain records reflecting their outreach
     efforts and, annually, place a summary of their overall EEO efforts
     in their public files. The new rules and policies afford
     broadcasters and cable operators flexibility in designing their EEO
     programs. The Commission also sought to address the unique
     circumstances of stations with fewer employees. Recognizing that
     often fewer staff resources are available to these stations, the
     Commission provided relief from EEO requirements and recordkeeping.
     Thus, stations with five to ten full-time employees are required to
     undertake fewer of the non-vacancy specific recruitment measures
     than larger stations employing more than ten full-time
     employees.[^183] The Commission has also maintained its previous
     policy whereby broadcast station employment units with fewer than
     five full-time employees and cable employment units with fewer than
     six full-time employees will not be required to demonstrate
     compliance with the EEO program requirements.

## OTHER SERVICES

### International Bureau

121. The International Bureau has taken actions in a number of areas to
     remove barriers to entry for small businesses. In addition to
     addressing concerns discussed in the *1997 Report*, the
     International Bureau has several programs that provide particular
     benefits for small businesses. First, streamlining of the
     international Section 214 process has substantially lowered costs
     and eliminated delays in the authorization of entry, increased the
     availability of capital by eliminating unnecessary limits on
     foreign investment, and reduced reporting burdens. Second, through
     participation in International Telecommunication Union ("ITU")
     activities, the Commission addresses one of the most vexing issues
     for small businesses interested in innovative telecommunications
     enterprises \-- spectrum availability. Third, the International
     Bureau's consolidated licensing and application processing system
     has been designed to lower costs for applicants, and thereby lower
     barriers to entry for small business. This system also provides
     easier availability of data for small business.

122. **Satellite Licensing**. In the *1997 Report*, the Commission
     discussed two concerns raised by industry regarding the impact of
     Commission regulations on small businesses in the international
     arena. First, the Commission addressed a concern regarding the
     Commission's policy of not granting earth station authorizations to
     communicate with satellites that have not yet been authorized,
     specifically, a request filed by TelQuest for an earth station that
     would communicate with a Canadian satellite. Second, the Commission
     addressed concerns raised about its financial qualification policy
     for satellite licensing.[^184]

123. With respect to TelQuest, we stated in the *1997 Report* that
     nothing in the International Bureau policy reflected in that case
     imposes burdens uniquely or predominantly on small
     businesses.[^185] We note, however, that we have taken actions with
     respect to earth station licensing that may facilitate use of
     foreign licensed satellites, and lower the cost for individual
     earth station owners of using those facilities. Specifically, we
     have adopted a new procedure that permits operators of
     foreign-licensed satellites to obtain a ruling that would permit
     the subsequent routine licensing of earth stations seeking to use
     that satellite.[^186]

124. With respect to financial qualification requirements, since the
     *1997 Report*, the Commission has continued to construe liberally
     the requirements. Since that time, no applicant has been denied a
     license because it was considered financially unqualified. On a
     number of occasions, applicants have been granted licenses,
     pursuant to a waiver.[^187] The waivers were granted after it was
     found that the available radio frequency spectrum could accommodate
     all otherwise qualified applicants then before the Commission, as
     well as, potential future applicants.[^188]

125. **Streamlining Procedures.** The Commission has implemented
     numerous streamlining procedures to reduce administrative
     regulatory barriers to entry into the US international
     telecommunications service market, many of which benefit small
     businesses. As early as 1985, the Commission began a process of
     streamlining its Section 214 international telecommunications
     licensing procedures.[^189] In 1996, the Commission streamlined the
     application process for certain categories of international Section
     214 authorizations by creating an expedited process for global,
     facilities-based Section 214 applications.[^190] Specifically, the
     Commission created global Section 214 authorizations, reduced
     paperwork obligations, and streamlined tariff requirements for
     non-dominant international carriers. The new regulations
     facilitated entrance by businesses of all sizes into the
     international telecommunications market.

126. In 1999, the Commission continued its efforts to reduce possible
     barriers to entry by further streamlining its Section 214 licensing
     process and increasing the number of applications to provide
     international service eligible for streamlined processing.[^191]
     Approximately 99 percent of applications to provide U.S.
     international telecommunications services are now processed on a
     streamlined basis, being granted within 14 days after each
     application is accepted for filing and placed on public notice. The
     Commission has also sought to increase foreign investment in U.S.
     international telecommunications by streamlining the application
     process for companies affiliated with foreign carriers following a
     finding that such investment furthers the public interest,[^192]
     and by reducing regulatory and reporting requirements on companies
     doing business with foreign carriers. These deregulatory efforts
     significantly reduce barriers to entry of small businesses seeking
     to attract foreign capital or to provide U.S. international
     telecommunications.

127. **Spectrum.** Wireless mobile telecommunications in the United
     States, aided by the ongoing joint efforts of industry and
     government, are developing into global systems. Higher capacity
     systems, with enhanced and more flexible service capabilities,
     continue to develop. Demand for these devices continues to
     escalate, and when coupled with the growing attractiveness of new
     high performance features, spectrum becomes an even more precious
     commodity. The Commission has been inundated with correspondence
     from manufacturers and service providers pointing out the impending
     crisis of the spectrum shortage. Internationally, within the
     schedule of ITU activities, the Commission has focused on trying to
     find additional spectrum that can be used for advanced wireless
     services.

128. New entities seeking to enter the terrestrial or satellite mobile
     marketplace immediately encounter the obstacle of spectrum that is
     already saturated by incumbent licensees. Additional opportunities
     can be made available either through efficiencies brought about by
     further advances in technology, *i.e.*, by compressing existing
     user requirements into less bandwidth, or by the designation of
     additional spectrum via domestic or global reallocation processes.
     The International Bureau is heavily involved in activities using
     both approaches.

129. The Commission works closely with wireless industry representatives
     within the context of ITU study groups in both the radio
     communication and telecommunication sectors. Here, experience has
     proven that advances in technology and standardization will
     ultimately lead to significant growth in business opportunities
     whether it is in equipment design and manufacture, new software
     development, creative applications of existing intellectual
     property, or the provision of new services.

130. The other, more direct, approach to alleviating the shortage of
     spectrum for the purpose of providing new opportunities is to
     address the matter before the World Radio Conference. The
     International Bureau is fully committed to making every effort to
     optimize spectrum utility to facilitate the entry of new users and
     to promote new and innovative uses.

131. **Electronic Initiatives.** In an effort to reduce paper filings
     and make use of new Internet technologies to improve processing
     efficiency, the International Bureau has developed a consolidated
     licensing and application processing system known as the
     International Bureau Filing System ("IBFS"). Implementation of the
     pilot IBFS web modules began in February 1999. IBFS allows for
     electronic filing of applications for International Bureau service
     areas, facilitating the following applications and filings: space
     station authorization and special temporary authority, earth
     station authorization and special temporary authority, space and
     earth station application for modification of current
     authorization, Section 214 international authorization and special
     temporary authority, cable landing license, accounting rate change,
     recognized operating agency, international signaling point code,
     request for data network identification code, and foreign carrier
     affiliation notification filings.

132. IBFS provides many benefits to applicants. Under the traditional
     method of paper filing, procedures for many types of applications
     before the Commission require that an original copy and multiple
     photocopies of an application be filed with the Commission. Also,
     unlike many automated systems that require entities to follow up
     their electronic data submissions with paper submissions, IBFS
     electronic filing requires no further action on the part of the
     applicant. IBFS eliminates all paper filing requirements for
     applications except for the requirement to file the Commission's
     Remittance Advice Form. This reduces applicants' time and
     administrative costs of filing. Software features in IBFS also
     enable applicants to easily copy information from existing
     applications to subsequent applications. These features benefit
     those applicants who need to file multiple versions of similar
     applications.

133. Moreover, IBFS has "demystified" the process, making it easier for
     applicants to initiate filings, especially the new entrants to the
     market, without the need to retain outside counsel. The Commission
     will soon make IBFS filing even easier. Within the next year, the
     Commission will begin to accept credit card payment of application
     fees associated with IBFS filings.

134. IBFS also provides access to valuable processing and technical data
     for new entrants and the general public alike. For example,
     applicants can check the status of their application by accessing
     IBFS from their personal computer. In addition, users are easily
     able to identify the competitors in a service area using IBFS's
     powerful search engine, from any web-ready location.

135. The International Bureau strongly encourages electronic filing via
     IBFS, but applicants can still opt for paper filing. At this time,
     IBFS is a voluntary filing alternative. The Commission, however, is
     working towards a five-year goal that calls for 100 percent
     electronic filing of applications to the extent that applicants
     have access to electronic media.[^193]

### Office of Engineering and Technology

136. The Commission has adopted several measures to streamline and
     simplify the processes for authorization of equipment and
     experimental licenses. In April 1998, the Commission simplified the
     equipment authorization process by creating a single authorization
     procedure and made many types of equipment subject to
     manufacturers' self-approval, thereby reducing by half the number
     of applications required to be filed with the Commission.[^194] In
     December 1998, the Commission further streamlined the equipment
     authorization process by allowing designated private parties in the
     US to issue equipment authorizations.[^195] The Commission has also
     worked diligently to implement Mutual Recognition Agreements
     ("MRAs") which permit designated parties in other countries to
     issue equipment authorizations.[^196] Most recently, in May 2000,
     the Commission proposed to streamline the process of developing
     technical criteria for customer premises equipment and to privatize
     the customer premises equipment approval process.[^197] These
     measures promote competition in the provision of telecommunications
     products and electronic equipment, speed delivery of products to
     the public and ensure market access in other countries. These
     measures also enhance market opportunities for small business, such
     as those that engage in compliance testing of equipment, and
     manufacturers who supply parts and services to telecommunications
     service providers.

137. In October 1998, the Commission also streamlined the regulations
     governing the Experimental Radio Service, many of the applicants
     and licensees of which are small entities.[^198] The Commission
     eliminated unnecessary and burdensome regulations, and reorganized
     the service to promote greater technical innovation and new
     services. The Commission also encouraged experiments and increased
     opportunities for manufacturers, inventors, entrepreneurs and
     students to experiment with new radio technologies, equipment
     designs, characteristics of radio wave propagation and new radio
     service concepts using the radio spectrum.

138. Within the past three years, the Commission has both adopted and
     instituted procedures for the electronic filing, processing and
     tracking of equipment authorizations[^199] and for experimental
     licenses and special temporary authorizations in the licensed
     services.[^200] These measures reduce processing time, eliminate
     delays, and facilitate opportunities for small businesses and
     entrepreneurs.

139. Through various spectrum management efforts, the Commission has
     endeavored to facilitate new and innovative services and to
     encourage the involvement of small entities and entrepreneurs in
     telecommunications. Specifically, the Commission has facilitated
     the proliferation of unlicensed services through the allocation of
     spectrum for the Unlicensed National Information Infrastructure
     ("UNII") and authorization of UNII devices. These devices provide
     short-range, high-speed wireless digital communications that
     support wireless local area networks and facilitate wireless access
     to the national information infrastructure.[^201] The Commission
     has also allocated millimeter wave spectrum for unlicensed devices
     that provide short-range communications. These unlicensed devices
     can be used for such diverse services as vehicle radar systems for
     collision avoidance, computer-to-computer wireless connections, and
     improved access to libraries and information databases.[^202] The
     Commission has proposed to revise its rules for spread spectrum
     devices to facilitate the development of new and innovative
     technology that is often used for high data rate wireless
     applications.[^203] In 1998, the Commission began investigating the
     possibility of permitting operation of one of the newest innovative
     wireless technologies, ultra-wideband technology.[^204] This new
     technology can be used for a variety of applications such as radar
     imaging of objects under the ground or behind walls, and for
     wireless communications such as short-range high-speed data
     transmissions suitable for broadband access to the Internet.

140. In addition to unlicensed spectrum, the Commission allocated
     spectrum for Dedicated Short Range communications systems operating
     in the Intelligent Transportation System radio service.[^205] These
     services and systems can provide short range wireless information
     links between vehicles and roadside systems, and can improve
     traveler safety, decrease traffic congestion, facilitate the
     reduction of air pollution and help conserve fossil fuels. The
     Commission also proposed allocating spectrum for fixed wireless
     access service that could be used to provide wireless local
     exchange and exchange access service.[^206] The Commission also
     recently issued a *Policy Statement*[^207] articulating the
     principles that will guide the Commission's reallocation of
     approximately 200 MHz of spectrum over the next three to five
     years. This spectrum will enable a broad range of new radio
     communications services, such as expanded wireless services,
     advanced mobile services, new spectrum-efficient private land
     mobile systems, and medical telemetry.

141. With these new spectrum allocations, rules and principles, the
     Commission anticipates the development of a broad range of new
     devices and communications options that will stimulate economic
     development and the growth of new industries and promote the
     ability of manufacturers, including small businesses and
     entrepreneurs to compete globally.

142. The Commission very recently began an inquiry to obtain more
     information about software defined radios.[^208] In a
     software-defined radio, functions formerly performed solely in
     hardware, are performed by software. This innovation, which makes a
     radio programmable, could facilitate interoperability between radio
     services, improve efficient use of spectrum, expand opportunities
     for broadband communication access for all persons, increase
     competition among telecommunications service providers, decrease
     equipment costs for consumers, and increase worldwide market
     opportunities for US manufacturer of all sizes.

143. The Commission has also continued its efforts to provide accessible
     information to the public, small businesses, local governments,
     manufacturers and telecommunications service providers on radio
     frequency emission requirements and safety guidelines. Through the
     Office of Engineering and Technology, the Commission updated OET
     Bulletin No. 56, which provides answers to commonly asked questions
     regarding radio frequency energy.[^209] OET Bulletin No. 65 was
     also revised and updated and Supplement A was created to provide
     guidelines for radio frequency safety requirements and to assist
     broadcasts in determining compliance with the 1997 guidelines for
     evaluating the environmental effects of radio frequency emissions
     from FCC regulated transmitters.[^210] The Commission established a
     three year transition period for existing radio transmitting
     facilities and devices to become compliant with the 1997
     guidelines,[^211] in part, to address compliance concerns expressed
     by small businesses. Through a recently issued public notice,
     licensees and manufacturers were reminded of the upcoming September
     1, 2000 compliance deadline.[^212]

### Enforcement Bureau

144. Commenters in the *1997 Report* expressed a concern that the
     Commission takes too long to resolve formal complaints. As we noted
     in the *1997 Report*, "effective enforcement of the Communications
     Act and existing Commission rules and policies is imperative if
     small businesses are to participate fully in the telecommunications
     marketplace."[^213] The creation of the Commission's new
     Enforcement Bureau in November 1999 represents the agency's
     commitment to making enforcement a priority.[^214] The Commission
     anticipates that this renewed focus will result in faster
     enforcement action than in the past, thereby reducing some of the
     obstacles for small businesses that were identified in the *1997
     Report*.

145. With the creation of the Enforcement Bureau, the traditional
     enforcement functions and personnel from the former enforcement
     divisions of the Wireless Telecommunications Bureau, Mass Media
     Bureau, and Common Carrier Bureau, as well as, the enforcement and
     field staff of the former Compliance and Information Bureau have
     been consolidated. By dedicating significant resources solely to
     the enforcement of the Communications Act and the Commission's
     Rules, the Commission can respond more quickly and more clearly to
     industry problems, a result that will benefit all carriers,
     including small ones.

146. Consolidation provides the Commission with more flexible and
     efficient use of its enforcement expertise and resources when
     responding to industry problems and priorities. Enforcement
     consolidation also promotes greater consistency and predictability
     of enforcement efforts. Furthermore, separating enforcement
     functions from rulemaking responsibilities improves the
     Commission's ability to set enforcement priorities and coordinate
     enforcement activities, unencumbered by the often lengthy and
     resource-intensive rulemaking process.

147. In an effort to expedite problem solving among common carrier
     industry participants, the Market Disputes Resolution Division of
     the Enforcement Bureau engages in informal mediation of most formal
     complaints. This type of alternative dispute resolution facilitates
     a private resolution, obviating the need for a labor- and
     time-intensive Commission investigation and costly litigation. A
     subset of this mediation effort involves the Accelerated Docket,
     which the Commission created to address selected carrier-to-carrier
     disputes. One of the requirements of the order establishing the
     Accelerated Docket is to provide for the disposition of complaints
     within 60 days of the filing of the complaint. Significantly,
     before any complaint is accepted onto the docket, the parties must
     participate in staff-supervised settlement discussions. This type
     of mediation often results in the dispute being resolved before a
     complaint is filed, which substantially reduces litigation costs
     for the parties involved and allows the Commission to dedicate its
     often scarce resources to the resolution of disputes that do not
     settle. The Commission anticipates that, through informal mediation
     and the Enforcement Bureau's ongoing efforts to reduce the backlog
     of formal complaints, the average amount of time that it takes the
     Commission to decide formal complaints will be greatly reduced over
     the course of time.

148. In addition, the Enforcement Bureau's Investigations and Hearings
     Division investigates informal complaints and allegations of
     anticompetitive or discriminatory conduct by telecommunications
     carriers, which could result in barriers to market entry by small
     competitors. The function of such investigations is to identify,
     correct, and deter violations of the Communications Act and the
     Commission's Rules, through the issuance of monetary forfeitures
     and other enforcement tools. Such investigations also enable the
     Enforcement Bureau to spot significant industry problems and
     identify bad actors, without the filing of formal complaints. This
     new function complements the dispute resolution functions that
     existed prior to the Enforcement Bureau\'s inception. Using
     investigative and other enforcement tools, the Enforcement Bureau
     is moving beyond the formal litigation process and solving problems
     with creative, flexible solutions.

### Consumer Information Bureau

149. In the *1997 Report*, the Commission noted that several parties
     claimed difficulties in obtaining access to information about new
     communications services and related regulated matters. The creation
     of the Consumer Information Bureau ("CIB") (which was created in
     November 1999 along with the new Enforcement Bureau)[^215]
     addressed those difficulties, emerging as a significant step to
     ensure the availability of information about new services and
     regulatory proceedings. Competitive markets work only when
     consumers have the information required to make informed choices.
     The CIB, being a consolidation of the agency-wide consumer
     information functions, enhances efficiencies in providing consumers
     a one-stop shop for obtaining the information they need to make
     wise choices in a robust and competitive marketplace. CIB's offices
     develop, recommend, coordinate and administer the Commission's
     consumer information program to enhance the public's understanding
     of the Commission's policies, goals, objectives, and regulatory
     requirements, in order to facilitate public participation in the
     Commission's decision-making processes.

150. The CIB's Reference Information Center ("RIC") serves as the
     official Commission custodian for designated records, and handles
     the intake processing, organization and maintenance, reference
     services, retirement, and retrieval of these records. The RIC is
     responsible for managing and maintaining the Electronic Comment
     Filing System. Thus, the RIC provides a convenient one-stop shop
     for consumers and industry alike to research and obtain relevant
     and available information to make informed choices.

151. The CIB has two consumer information centers, namely, the
     Gettysburg Consumer Information Center and the Portals Consumer
     Information Center. Both of these centers respond to inquiries on
     telecommunications issues to provide comprehensive information, and
     handle complaints received telephonically, over the web site, via
     e-mail, facsimile, and by postal mail. Moreover, CIB is in the
     process of streamlining its informal complaint procedures, so that
     informal complaints are resolved more efficiently to benefit
     consumers and the market. CIB's Strategic Information Office
     ("SIO") is charged with collecting and analyzing information
     received in the bureau from incoming consumer complaints and
     inquiries, consumer forums, and other industry sources. Thus, the
     SIO serves as an early warning system to the Commission.

152. In furtherance of CIB's mission to educate the public about
     important Commission regulatory programs, CIB's Consumer Education
     Office ("CEO") and its Disabilities Rights Office ("DRO") have been
     uniquely active in conducting consumer and industry forums and
     workshops. Additionally, DRO ensures that individuals with
     disabilities have access to Commission processes by providing
     Commission material in accessible formats. In February of 2000, the
     DRO held a Telecommunications Relay Services ("TRS") Exposition
     where carriers exhibited to demonstrate available new technologies
     that assist persons with disabilities. In addition, in March of
     2000, DRO conducted a TRS Forum, in which state relay providers
     from all over the country provided input on relay operations. These
     forums provided an awareness of available technologies that may
     increase consumer demand. It is expected that demand will open the
     doors of opportunity to new suppliers. More recently, the CEO held
     a workshop to facilitate discussions between industry groups, state
     agencies, and consumer groups to make billing practices more
     consumer friendly. Both DRO and CEO are developing, in conjunction
     with other Commission bureaus and offices, consumer alerts and
     public service announcements to give consumers general information
     about their rights and information so that they can protect
     themselves from unscrupulous individuals and business
     entities.[^216]

153. Finally, CIB has coordinated with other Commission bureaus and
     offices to further the Commission's mission to ensure that
     telecommunications services are available to "all the People" of
     the United States. Specifically, CIB staff has assisted on the
     Commission's tribal initiatives to address the problem of limited
     availability of basic and advanced services to many tribal regions,
     and to ensure that basic and advanced telecommunications services
     are made available in those geographical areas.

# Other Regulatory Initiatives to remove impediments

154. The Commission has undertaken numerous efforts to address the
     unique market entry barriers to the telecommunications industry for
     minority- and women-owned businesses.

## Access to the Telecommunications Industry

155. Commenters in the *1997 Report* expressed concerns about access to
     telecommunications licenses.[^217] The Commission responded by
     providing small business bidding credits, streamlined applications
     procedures, enhanced bidding mechanisms, and public online license
     databases to facilitate partitioning and disaggregation
     opportunities for small businesses, including minority- and
     women-owned businesses, in telecommunications services.[^218]

156. In addition, the Commission is planning a two-day Communications
     and Technology Opportunity Summit. This summit is scheduled
     tentatively for autumn of 2000 in Washington, D.C. and is designed
     to be an interactive forum for minorities, women, entrepreneurs,
     and small-business owners interested in the communications
     industry. The Commission, beginning in October 2000, will be
     publishing all public information documents in Spanish.

## Tribal Initiatives

157. In 1999, the Commission began an historic regulatory effort to open
     the telecommunications market for Native American reservations and
     identify barriers to providing telecommunications services to
     tribal reservations. Based on the record gathered from two field
     hearings,[^219] the Commission adopted two orders in 2000 to create
     regulatory incentives to address telecommunications underservice to
     tribal reservations,[^220] as well as a policy statement promoting
     the government-to-government relationship between the Commission
     and the tribes.[^221]

158. In addition, this fall the Commission will sponsor a 4-day tribal
     leadership telecommunications training seminar called Indian
     Telecom Training Initiative '2000[^222] ("ITTI '2000"). This
     training seminar will provide important information to tribal
     leaders on telecommunications technologies, provide information on
     private and public resources available to assist tribal nations,
     and provide forums on how to assist tribal nations to develop
     strategies to improve telecommunications services on reservations.
     ITTI '2000 has already attracted a broad coalition of interested
     cosponsors.

## Access to Capital

159. Commenters in the *1997 Report* were also concerned about access to
     capital as a general barrier to small, minority- and women-owned
     businesses.[^223] Additional funding mechanisms for small
     telecommunications businesses have become available since the *1997
     Report*.[^224]

160. The Telecommunications Development Fund ("TDF"),[^225] which was
     described in the *1997 Report*, was created by the 1996 Act as a
     private fund to promote access to capital for small businesses,
     including minority- and women-owned businesses. TDF's mandate is to
     make investments to: "(1) enhance competition in the
     telecommunications industry, (2) stimulate new technology
     development and promote employment and training, and (3) support
     universal service and promote delivery of telecommunications
     services to underserved rural and urban areas."[^226] The TDF
     currently has approximately \$25 million[^227] and has invested in
     minority-owned small business projects that increase wireless and
     software capacity to serve competitive local exchange carriers and
     to provide wireless service to local communities. The TDF
     anticipates an increased pace of investments in promising small
     telecommunications companies for this upcoming year.

## Office of Communications Business Opportunities

161. The Office of Communications Business Opportunities ("OCBO") was
     created in 1994 to promote business opportunities for entrepreneurs
     and small businesses, including minority- and women-owned small
     businesses. OCBO maintains a database of roughly 2700 small and
     minority-owned businesses and mails information on Commission
     notices and new service opportunities to the businesses on that
     list. OCBO recently introduced a web site that maintains vital
     information about Commission rulemakings and service opportunities
     for small businesses and entrepreneurs. OCBO also hosts annual
     auction seminars to inform the public about new licensing
     opportunities, seminars to provide information on new technology
     business opportunities in the unlicensed spectrum, and has led two
     field hearings on obstacles to service on tribal
     reservations.[^228] In addition, OCBO oversees the administration
     of the Commission's obligations under the Regulatory Flexibility
     Act and the Small Business Act,[^229] including agency regulatory
     review provisions. OCBO staff participates in conferences and
     seminars throughout the country to inform the public about small
     business and entrepreneurial business opportunities in the
     telecommunications industry.

## BIENNIAL Regulatory REVIEW

162. The 1996 Act added Section 11 to the Communications Act.[^230] It
     requires the Commission to review all of its regulations that
     affect the operations and activities of telecommunications service
     providers and determine whether any of them can be repealed or
     modified if they are no longer in the public interest because of
     the development of competition. In addition, Section 202(h) of the
     1996 Act requires the Commission to review its broadcast ownership
     rules biennially as part of the review conducted pursuant to
     Section 11. There was little legislative history associated with
     these provisions, but it is clear that Congress intended that the
     Commission regularly evaluate its rules to determine whether they
     could be modified or eliminated in light of the rapidly changing,
     and increasingly competitive, market conditions that the 1996 Act
     sought to produce.

163. In 1998, the Commission undertook a broad, comprehensive internal
     review of all Commission regulations, and did not limit itself to
     those rules covered by Section 11.

164. As part of this process, the Commission sought and received
     substantial public input. Each of the five operating bureaus,
     together with the Office of General Counsel, hosted a series of
     public forums to receive ideas from the public, including
     organizations representing small carriers, regarding Commission
     regulations that were thought to be potential candidates for repeal
     or modification during the 1998 Biennial Regulatory Review.

165. The 1998 Biennial Regulatory Review proceedings that were initiated
     involved a wide range of deregulatory and streamlining proposals.
     For example, in the common carrier area, the Commission initiated
     32 proceedings and modified or eliminated hundreds of rules,
     particularly ones that affected the operations and activities of
     telecommunications service providers. The Commission has already
     begun its 2000 Biennial Regulatory Review.

## REGULATORY FLEXIBILITY ACT AND SMALL BUSINESS ACT INITIATIVES

166. **RFA Analyses and Certifications.** Since enactment of the Small
     Business Regulatory Enforcement Fairness Act of 1996 ("SBREFA")
     amendments[^231] to the Regulatory Flexibility Act ("RFA"),[^232]
     the Commission has worked diligently to make its RFA analyses more
     extensive, precise, and helpful, including a focus on plain
     language. For instance, because the agency typically writes
     rulemakings tailored to the various and numerous communications
     "services" it regulates (*e.g.*, FM Radio, Paging, Satellite
     Services, etc.), the agency has undertaken numerous RFA analyses
     describing each service and the extent of the small entity
     participation within each. This has required constant revision of
     the service sector analyses, as new services are created and
     additional licenses for traditional services are issued. In this
     way, the agency attempts to ensure full and accurate analyses and
     certifications in the agency\'s 150 or more rulemaking items per
     year.

167. Special initiatives have included internal training sessions for
     Commission staff on the RFA process and, most recently, a series of
     presentations by the Small Business Administration\'s ("SBA's")
     Office of Advocacy to train Commission staff. The first
     presentation was held on October 12, 1999, and featured the SBA's
     Chief Counsel for Advocacy. Also, as noted previously,[^233]
     another 1999 initiative was the resolution of the Commission's
     treatment of small ILECs under the RFA. In the *1997 Report*, the
     Commission stated that it did not believe that small ILECs
     qualified as small businesses under the RFA because such businesses
     appeared to be "dominant in their field or operation due to their
     current control of bottleneck facilities."[^234] Following a letter
     on the subject from the Office of Advocacy and a meeting between
     agency staffs, the Commission decided to revise the language of its
     decisions to make clear that small ILECs are among the small
     businesses included in its analyses under the RFA.[^235]

168. **Annual "Ten-Year Review of Rules," 5 U.S.C. § 610**. During 1999,
     the Commission completed and published an updated, comprehensive
     listing of Commission rule sections subject to review under the
     RFA's annual "ten-year review of rules" provision, 5 U.S.C. § 610.
     Section 610 requires that agencies publish in the *Federal
     Register* a plan for the periodic review of rules that have a
     significant economic impact on a substantial number of small
     entities. The recent Commission plan lists hundreds of rules to
     assist the public in identifying rules that might be amended or
     rescinded in the public interest. In addition, the Commission has
     explored the creation of a computer software program that,
     utilizing historical Code of Federal Regulations data, would track
     rules over a ten-year period and significantly reduce the
     administrative work currently required to undertake a Section 610
     review. If the Commission were to accomplish this goal, it could
     share the computer program with other federal agencies subject to
     Section 610 obligations, thereby assisting those programs as well.

169. **Special Small Business Size Standards, 15 U.S.C. § 632**. Federal
     agencies or departments promulgating regulations relating to small
     businesses usually use SBA size criteria. To ensure that the
     Commission\'s initiatives accurately target small entity
     participation in the telecommunications industry, the Commission
     works closely with the SBA's Office of Size Standards to create new
     telecommunications small business size standards. In particular, in
     recent years, the agency has coordinated extensively with both the
     SBA Office of Size Standards and the Office of Advocacy to create
     informal guidelines to keep the SBA apprised of size standard
     initiatives. The Commission's policy is to send SBA descriptions
     and analyses of proposed size standards prior to adoption of the
     Notice of Proposed Rulemaking in such proceedings, and thereafter
     to send to the SBA additional comments and documentation at each
     step of the way. At the end of the process, the Commission sends a
     formal request for approval to the SBA Administrator, prior to
     final Commission consideration of the new size standard. This close
     coordination has particularly helped the Commission to initiate
     radio spectrum auctions, where the goals are to make efficient use
     of the spectrum, give all Americans access to telecommunications
     services, and promote economic growth.

170. **Semi-Annual "Unified Agenda," 5 U.S.C. § 602**. The Commission
     participates in the semi-annual publication of the "Unified Agenda
     of Federal Regulatory and Deregulatory Actions," which provides
     information, in a uniform format, about regulations that the
     government is considering or reviewing.[^236] The Unified Agenda
     has appeared in the Federal Register twice each year since 1983. It
     helps agencies comply with certain obligations under the RFA, other
     statutes, and Executive Orders. As a part of the October 1999
     Unified Agenda compilation, the Commission listed and described 128
     ongoing rulemaking proceedings. These descriptions assist the
     public in becoming involved in the regulatory process, and assist
     the regulated community to comply with existing regulation.

## ELECTRONIC INITIATIVES

171. In an effort to create a model agency for the digital age, the
     Commission has undertaken concrete proposals to increase small
     business access to the market and to the Commission by implementing
     several electronic filing initiatives. The Commission developed the
     Electronic Comment Filing System ("ECFS") which is available to the
     public for the filing, searching, and viewing of comments and
     documents pertaining to notice-and-comment rulemaking proceedings.
     The system also covers the docketed proceedings that are
     adjudicatory in nature. The ECFS gives access to Commission
     rulemakings and docketed proceedings via the World Wide Web. The
     system includes data and images going back to 1992.

172. The Commission also implemented electronic filing capabilities in
     the Common Carrier, International, Mass Media, and Wireless
     Telecommunications Bureaus, and in the Office of Engineering and
     Technology. All routine common carriers' Local Access Transport
     modifications are now immediately placed on public notice and are
     accessible electronically through the Commission's Digital Index.

173. The Commission implemented an electronic tariff filing system that
     permits ILECs to submit federal tariffs and associated documents
     via the Internet. The International Bureau designed and implemented
     the International Bureau Electronic Filing System,[^237] which is
     accessible through any computer with Internet access.

174. The Commission is nearing completion of its implementation of a
     Universal Licensing System[^238] that provides streamlined
     electronic filing capabilities for most wireless services, provides
     application and tracking status information, and reduces the number
     of wireless applications from 40 to four.

## advanced telecommunications CAPABILITIES

175. In Section 706 of the 1996 Act, [^239] Congress charged the
     Commission with monitoring and encouraging the deployment, on a
     reasonable and timely basis, of advanced telecommunications
     capabilities to all Americans. In February 1999, the Commission
     issued its Report on Advanced Telecommunications Capability in
     response to the statutory mandate.[^240] In the report, the
     Commission concluded that the consumer broadband market was in the
     early stages of development and that it was too early to reach
     definitive conclusions. However, aggregate data suggested that
     broadband was being deployed in a reasonable and timely fashion.
     The Commission also compared broadband to other
     communications-related technologies and found that, in terms of
     actual users, deployment of broadband is exceeding that of these
     other technologies at a similar point in their development. The
     Commission stated that it would not hesitate to reduce barriers to
     competition and infrastructure investment to ensure that market
     conditions are conducive to investment, innovation, and meeting the
     needs of all consumers. The Commission noted, however, that it
     lacked sufficient information to determine whether high-speed
     services were reaching rural and inner-city users and persons with
     disabilities.

176. As a result, the Commission began a targeted information- and data-
     gathering program to ascertain the extent of actual
     facilities-based broadband deployment and local telecommunications
     competition.[^241] A Federal-State Joint Conference on Advanced
     Telecommunications Services was convened on October 8, 1999, to
     identify and disseminate information on successful community
     efforts to promote deployment of advanced telecommunications
     capabilities and to monitor ongoing deployment of advanced
     services, and a series of six hearings were scheduled for March
     through June, 2000.[^242] The Commission also initiated a Notice of
     Inquiry into the status of deployment of advanced
     telecommunications capabilities,[^243] including a data collection
     on the broadband deployment to business and residential customers,
     to various geographic areas, and to various socio-economic groups.
     The Commission sought comment on additional actions that might be
     taken to accelerate deployment, if such were necessary to achieve
     deployment to all Americans in a reasonable and timely fashion.

# proposed LEGISLATIVE initiatives to remove impediments

177. As noted in the Introduction to this Report, Section 257(c)(2)
     requires the Commission to identify statutory market entry barriers
     which it recommends be eliminated, consistent with the public
     interest, convenience and necessity. Below, we have itemized a list
     of statutory proposals, which, if adopted, would reduce certain
     market entry barriers.

178. **Expedite Processing of Routine Satellite Applications.** This
     proposal would amend Sections 309(c)(2)(G) and (H), and would add
     Section 309(c)(2)(I) of the Communications Act. Specifically these
     changes would authorize the Commission to exempt non-controversial,
     routine satellite earth station applications from the usual 30-day
     public notice period. This would, in turn, speed up the processing
     of routine satellite applications which in 1998 totaled 600, and
     thus remove a barrier to entry for small businesses that are
     hampered by the current procedure.

179. **Remove Entry Barriers for Information Delivery Technologies.**
     This proposed legislation would add a new Section 716 to the
     Communications Act and amend Section 207 of the 1996 Act. The
     proposal would reduce entry barriers and expand consumer access to
     competing providers of multichannel video programming and non-video
     telecommunications and information services. The changes would
     require the Commission to ensure increased access by consumers in
     multiple dwelling units ("MDUs") and commercial buildings to
     providers transmitting data, video, audio, or other digital
     services over one-way and two-way communications systems, including
     broadband systems. Any legislative proposal would provide a
     mechanism to compensate property owners for the use of their
     property and to reimburse owners for any damage that results from
     the installation or removal of facilities.

180. **Increase the Statute of Limitations for Forfeiture Proceedings
     Against Non-Broadcasters.** An amendment of Section 503(b)(6)(B) of
     the Communications Act would change the statute of limitations on
     forfeitures against common carriers and other non-broadcasters from
     one to three years. This would strengthen the effectiveness of the
     Commission's enforcement program by increasing the time period
     within which the Commission may issue a notice of apparent
     liability for a forfeiture to a telecommunications carrier or other
     non-broadcast entity. This change would facilitate the ability of
     market competitors to enforce violations of the Commission's Rules
     by incumbents.

181. **Reform General Forfeiture Authority.** This proposal would amend
     Sections 504(a) and (b) of the Communications Act. It would
     authorize the Commission to prosecute to recover forfeitures in
     federal district court if the U.S. Attorney General has not
     initiated such action within six months of written notice of an
     unpaid forfeiture penalty, or, alternatively, initiate a Commission
     adjudicatory hearing under Section 503(b). The measure would
     streamline and increase the effectiveness of the Commission's
     enforcement program by aiding in the recovery of forfeitures
     payable to the Treasury of the United States.

182. **Expand General Forbearance Authority.** This proposal would amend
     Section 10(a) of the Communications Act to expand the Commission's
     authority to forebear from regulation regarding any and all
     Commission-regulated services rather than regulation of only
     telecommunications services. This would benefit small businesses by
     providing the Commission the needed flexibility to implement
     deregulatory proposals that reduce or eliminate unnecessary
     regulation for all its services, not just common carrier services.
     This would further allow the Commission to apply the same
     pro-competition, deregulatory benefits from common carrier
     forbearance to other sectors of the communications market, and
     would conserve government resources to a greater extent than is
     permissible today.

183. **Exempt Instructional Television Fixed Service Applications from
     Competitive Bidding.** This proposal adds a new Section
     309(j)(2)(D) to the Communications Act. It would exempt
     applications for licenses or construction permits for Instructional
     Television Fixed Service ("ITFS") stations from the Commission\'s
     competitive bidding authority. This would enhance the ability of
     educational institutions and governmental entities, especially
     those with limited funds, to utilize ITFS channels for the benefit
     of their students and the public. An exemption for such
     institutions and entities from a requirement to bid at auction for
     spectrum reserved for instructional use would also further broaden
     access to important communications services and technology.

184. **Create New Tax Incentive Program.** The measure would benefit
     small businesses by permitting deferral of taxes on any gain from
     the sales of telecommunications businesses to small
     telecommunications firms, including disadvantaged firms and firms
     owned by minorities or women, as long as that gain is reinvested in
     one or more qualifying replacement telecommunications businesses.
     In addition, it would provide a tax credit for sellers who offer
     financing on sales to small telecommunications firms, thereby
     facilitating sales to small businesses. It would also include
     strict limits on the size of eligible purchasing firms, the length
     of time the firm must hold the business purchased, and the dollar
     value of eligible transactions. This would encourage
     diversification of ownership in the telecommunications industry,
     and provide entry opportunities for small businesses, including
     disadvantaged businesses and businesses owned by minorities and
     women.

185. **Protect Commission Licenses from Bankruptcy Litigation.** One
     measure would add a new Section 309(j)(8)(D) to the Communications
     Act. It would clarify that certain provisions of the Bankruptcy
     Code are not applicable to any Commission license on which payment
     is owed. The proposal does not relieve any licensee from payment
     obligations, and does not affect the Commission's authority to
     revoke, cancel, transfer or assign such licenses. The measure would
     benefit small businesses, and their customers, by preventing
     auctioned Commission licenses from being tied up in bankruptcy
     court, thus allowing the Commission to assign licenses to entities
     that are best able to deploy the spectrum in a timely manner. This
     would also strengthen the integrity of the Commission's auction
     process.

186. **Authorize *Pro Forma* Transfer of Licenses.** An amendment of
     Section 310 of the Communications Act would authorize the
     Commission to adopt a notification procedure for *pro forma*
     assignments and transfers of licenses and construction permits. The
     amendment would streamline the Commission's administrative
     processing of assignment and transfer applications, thereby
     reducing an administrative burden for small businesses.

187. **Streamline Construction Permit Requirements.** By amending
     Section 319 of the Communications Act, the current two-step
     construction permit/license process could be replaced at the FCC's
     discretion with a single-step, license-only process. This measure
     would benefit small businesses seeking to enter the broadcasting
     industry, by simplifying the application process and reducing both
     legal fees and the pre-license waiting period. This result would
     promote competition.

# CONCLUSION

188. This Report demonstrates our continuing commitment to implement the
     spirit and mandate of Section 257 to promote policies "favoring
     diversity of media voices, vigorous economic competition,
     technological advancement, and promotion of the public interest,
     convenience, and necessity."[^244] The Commission takes seriously
     the mandate to remove market entry barriers for entrepreneurs and
     other small businesses in the provision and ownership of
     telecommunications and information services, or in the provision of
     parts or services to providers of telecommunications and
     information services.[^245]

189. The Commission recognizes that rules that enhance ownership
     opportunities are critical to providing small businesses and
     entrepreneurs the opportunity to participate. Finally, through
     internal monitoring and institutionalized policies such as the
     Biennial Review process, the Regulatory Flexibility Act review
     process, and open policy and mission forums, we hope to generate
     regular feedback and gain quality control over the services
     provided by the Commission to the small business and
     entrepreneurial communities.

190. The Federal Communications Commission hereby submits its triennial
     Report to Congress.

     FEDERAL COMMUNICATIONS COMMISSION

     Magalie Roman Salas

     Secretary

**Separate Statement of Commissioner Harold W. Furchtgott-Roth**

**In the Matter of Section 257 Report to Congress Identifying and
Eliminating Market Entry Barriers for Entrepreneurs and Small
Businesses**

I did not, of course, vote in favor of many of the regulatory actions
described in this Report. But I vote to adopt this Report in so far as
it is an accurate description of certain Commission actions over the
last three years, which I believe that it is.

As for the legislative recommendations in Part V regarding market entry
barriers identified in the 1997 document, section 257(c) expressly
requires a report on this topic. I do not subscribe to the substance of
many of these recommendations, however, and thus cannot vote to adopt
this part of the Report. I think our recommendations would have been
better focused on strengthening our implementation of those statutory
provisions that provide tools for deregulation, such as sections 10, 11,
and 202(h) of the 1996 Telecommunications Act, rather than ranging into
areas such as bankruptcy and tax law.

\###

[^1]: 47 U.S.C. § 257.

[^2]: Telecommunications Act of 1996, Public Law No. 104-104, 110 Stat.
    56 (1996) ("1996 Act").

[^3]: *See* In the Matter of Section 257 Proceeding To Identify and
    Eliminate Market Entry Barriers For Small Businesses, *Report*, GN
    Docket No. 96-113, 12 FCC Rcd 16802 (1997) ("*1997 Report*"). The
    *1997 Report* was released on May 8, 1997.

[^4]: Regulatory Flexibility Act of 1980, *as amended*, 5 U.S.C. § 601
    *et seq.*; Small Business Act, 15 U.S.C. § 632.

[^5]: *1997 Report*, *supra*, at note 3.

[^6]: 47 U.S.C. § 257(c).

[^7]: *See* In the Matter of Section 257 Proceeding To Identify and
    Eliminate Market Entry Barriers For Small Businesses, *Report*, GN
    Docket No. 96-113, 12 FCC Rcd 16802 (1997).

[^8]: *See* In the Matter of Section 257 Proceeding To Identify and
    Eliminate Market Entry Barriers For Small Businesses, *Notice of
    Inquiry*, GN Docket No. 96-113, 11 FCC Rcd 6280, 6183 (1996).

[^9]: *1997 Report* at para. 3.

[^10]: *Id*. at para. 4.

[^11]: *Id.*

[^12]: *Id.*

[^13]: *1997 Report* at para. 8.

[^14]: *Id.*

[^15]: Implementation of the Local Competition Provisions in the
    Telecommunications Act of 1996, CC Docket No. 96-98, Interconnection
    between Local Exchange Carriers and Commercial Mobile Radio Service
    Providers, CC Docket No. 95-185, *First Report and Order*, FCC
    96-325, 11 FCC Rcd 15499 (1996) ("*Local Competition Order")*.

[^16]: *1997 Report* at para. 85.

[^17]: *Iowa Utils. Bd. v. FCC,* 120 F. 3d 753 (8^th^ Cir. 1997).

[^18]: *Id*. at 793-800.

[^19]: *AT&T Corp. v. Iowa Utils. Bd.*, 119 S. Ct. 721 (1999).

[^20]: Implementation of the Local Competition Provisions in the
    Telecommunications Act of 1996, Deaveraged Rate Zones for Unbundled
    Network Elements, CC Docket No. 96-98, *Stay Order*, 14 FCC Rcd 8300
    (1999).

[^21]: Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996, *Third Report and Order and Fourth
    Further Notice of Proposed Rulemaking*, CC Docket No. 99-238, FCC
    99-238 (rel. Nov. 5, 1999) ("*Third Report and Order*").

[^22]: 1998 Biennial Regulatory Review \-- Part 61 of the Commission\'s
    Rules and Related Tariffing Requirements*,* CC Docket No. 98-131,
    and Implementation of Section 402(b)(1)(A) of the Telecommunications
    Act of 1996*,* CC Docket No. 96-187, *Report and Order and First
    Order on Reconsideration*, 14 FCC Rcd 12293 (1999).

[^23]: *See* In the Matter of 1998 Biennial Review \-- Streamlined
    Contributor Reporting Requirements Associated with Administration of
    Telecommunications Relay Services, North American Numbering Plan,
    Local Number Portability, and Universal Service Support Mechanisms,
    *Report and Order*, CC Docket No. 98-171, FCC 99-175 (rel. July 14,
    1999) ("*Streamlined Contributor Reporting Requirements Order*").

[^24]: Based on the annual burden estimates of the four forms, the
    estimated annual burden was 12.5 hours. With the single
    Telecommunications Reporting Worksheet, the estimated annual burden
    is only 8 hours.

[^25]: 1998 Biennial Regulatory Review \-- Review of Accounting and Cost
    Allocation Requirements, CC Docket No. 98-81, *Report and Order in
    CC Docket No. 98-81*, 14 FCC Rcd 11396 (1999) ("*Accounting
    Reductions Order*").

[^26]: 1998 Biennial Regulatory Review \-- Review of ARMIS Reporting
    Requirements, CC Docket No. 98-117, *Report and Order in CC Docket
    No. 98-117*, 14 FCC Rcd 11443 (1999) ("*ARMIS Reporting Reductions
    Order*").

[^27]: 47 C.F.R. § 64.903.

[^28]: Implementation of Section 402(b)(2)(A) of the Telecommunications
    Act of 1996, *Report and Order and Second Memorandum Opinion and
    Order*, CC Docket No. 97-11, 14 FCC Rcd 11364 (1999).

[^29]: 5 U.S.C. § 601(3); 15 U.S.C. § 632(a); OMB, Standard Industrial
    Classification Manual (1987), SIC code 4813; 13 C.F.R. § 121.902,
    SIC code 4813.

[^30]: *1997 Report* at para. 94.

[^31]: *Id.*; *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).

[^32]: Letter *from* Jere W. Glover, Chief Counsel for Advocacy, SBA,
    *to* William E. Kennard, Chairman, FCC (May 27, 1999).

[^33]: This change did not effect Commission analyses and determinations
    in other, non-RFA contexts.

[^34]: Federal-State Joint Board on Universal Service, *Ninth Report &
    Order and Eighteenth Order on Reconsideration*, FCC 99-306, 14 FCC
    Rcd 20432 (1999) ("*Eighteenth Order on Reconsideration*").

[^35]: *See* Federal-State Joint Board on Universal Service Announce the
    Creation of a Rural Task Force; Solicits Nominations for Membership
    on Rural Task Force, *Public Notice*, FCC 97J-1, 12 FCC Rcd 15752
    (1997).

[^36]: Federal-State Joint Board on Universal Service, *Fourteenth Order
    on Reconsideration*, FCC 99-256, 14 FCC Rcd 20106 (1999).

[^37]: In the Matter of Federal-State Joint Board on Universal Service:
    Promoting Deployment and Subscribership in Unserved and Underserved
    Areas, Including Tribal and Insular Areas, *Twelfth Report and
    Order, Memorandum Opinion and Order, and Second Further Notice of
    Proposed Rulemaking*, CC Docket No. 96-45, FCC 00-208 (adopted June
    8, 2000).

[^38]: Federal-State Joint Board on Universal Service, *Order*, CC
    Docket 96-45, DA 99-2970 (rel. December 23, 1999).

[^39]: 47 C.F.R. § 52.9.

[^40]: 47 C.F.R. § 52.12(a)(1).

[^41]: *See* *1997 Report* at paras. 101, 103.

[^42]: Administration of the North American Numbering Plan, *Third
    Report and Order*; Toll Free Service Access Codes, *Third Report and
    Order*, CC Docket No. 95-155, 12 FCC Rcd 23040, 23048 (1997);
    Request of Lockheed Martin Corporation and Warburg, Pincus & Co. For
    Review of the Transfer of the Lockheed Martin Communications
    Industry Services Business, *Order*, CC Docket No. 92-237, 14 FCC
    Rcd 19792 (1999).

[^43]: Numbering Resources Optimization, CC Docket No. 99-200, *Report
    and Order and Further Notice of Rule Making*, FCC 00-104 (rel. Mar.
    31, 2000) ("*Numbering Resources Optimization Report and Order*").

[^44]: 47 U.S.C. § 253.

[^45]: 47 U.S.C. § 253(a).

[^46]: Silver Star Telephone Company, Inc. Petition for Preemption and
    Declaratory Ruling, *Memorandum Opinion and Order*, FCC 97-336, 12
    FCC Rcd 15639 (1997) ("*Silver Star Preemption Order*").

[^47]: AVR, L.P. d/b/a Hyperion of Tennessee, L.P., Petition for
    Preemption of Tennessee Code Annotated § 65-4-201(d) and Tennessee
    Regulatory Authority Decision Denying Hyperion\'s Application
    Requesting Authority to Provide Service in Tennessee Rural LEC
    Service Areas, *Memorandum Opinion and Order*, FCC 99-100, 14 FCC
    Rcd 11064 (1999) ("*Hyperion Preemption Order*").

[^48]: American Communications Services, Inc., MCI Telecommunications
    Corp. Petitions for Expedited Declaratory Ruling Preempting Arkansas
    Telecommunications Regulatory Reform Act of 1997 Pursuant to
    Sections 251, 252, and 253 of the Communications Act of 1934, as
    Amended, *Memorandum Opinion and Order*, FCC 99-386, 14 FCC Rcd
    21579 (1999) ("*Arkansas Preemption Order"*).

[^49]: *See* 47 U.S.C. § 10.

[^50]: Petition for Forbearance of the Independent Telephone &
    Telecommunications Alliance, AAD File No. 98-43*, Sixth Memorandum
    Opinion and Order*, 14 FCC Rcd 10840 (1999).

[^51]: *See* Policy and Rules Concerning the Interstate, Interexchange
    Marketplace, CC Docket No. 96-61, *Second Report and Order*, 11 FCC
    Rcd 20730 (1996), *stay granted sub nom. MCI Telecommunications
    Corp. v. FCC*, No. 96-1459 (D.C. Cir. Feb. 13, 1997).

[^52]: *MCI Telecommunications Corp. v. FCC*, No. 96-1459, Slip. Op.
    (D.C. Cir. April 28, 2000).

[^53]: Access Charge Reform*,* CC Docket No. 96-262, Price Cap
    Performance Review for Local Exchange Carriers*,* CC Docket No.
    94-1, Interexchange Carrier Purchases of Switched Access Services
    Offered by Competitive Local Exchange Carriers*,* CCB/CPD File No.
    98-63, Petition of U S West Communications, Inc. for Forbearance
    from Regulation as a Dominant Carrier in the Phoenix, Arizona MSA*,*
    CC Docket No. 98-157, *Fifth Report and Order and Further Notice of
    Proposed Rulemaking*, 14 FCC Rcd 14221 (1999).

[^54]: 47 U.S.C. § 222.

[^55]: The U.S. Court of Appeals for the Tenth Circuit issued its
    opinion vacating the Commission's CPNI rules based upon its
    conclusion that the CPNI rules violate the First Amendment. *US West
    v. FCC*, 182 F.3d 1224 (10^th^ Circuit 1999). On October 1, 1999,
    the Commission filed a petition for rehearing of that decision. The
    Tenth Circuit denied the petition on November 30, 1999, and
    officially vacated the Commission's CPNI rules on December 8, 1999.
    The Competition Policy Institute has filed a petition for
    certiorari, seeking review of the Tenth Circuit decision by the
    United States Supreme Court.

[^56]: Implementation of the Telecommunications Act of 1996,
    Telecommunications Carriers\' Use of Customer Proprietary Network
    Information and Other Customer Information, Implementation of the
    Non-Accounting Safeguards of Sections 271 and 272 of the
    Communications Act of 1934, as Amended, *Second Report and Order and
    Further Notice of Proposed Rulemaking*, FCC 98-27, 13 FCC Rcd 8061
    (1998) ("*CPNI Report and Order*").

[^57]: Implementation of the Telecommunications Act of 1996,
    Telecommunications Carriers' Use of Customer Proprietary Network
    Information, Implementation of the Non-Accounting Safeguards of
    Section 271 and 272 of the Communications Act of 1934, as Amended,
    *Order on Reconsideration and Petitions for Forbearance*, FCC
    99-223, 14 FCC Rcd 14409 (1998) ("*Order on Reconsideration*").

[^58]: Deployment of Wireline Services Offering Advanced
    Telecommunications Capability, and Implementation of The Local
    Competition Provisions of The Telecommunications Act Of 1996, Third
    Report and Order in CC Docket No. 98-147 Fourth Report and Order in
    CC Docket No. 96-98, FCC 99-355, 14 FCC Rcd 20912 (1999) ("*Advanced
    Services Third Report and Order*").

[^59]: 1996 Act, § 254, *supra*.

[^60]: The E-rate is administered by the Universal Service
    Administrative Corporation ("USAC").

[^61]: For example, in the past year, 54 percent of E-rate dollars were
    provided to economically disadvantaged students and library patrons
    (*i.e.*, schools, or libraries near them, where a substantial
    percentage of the students are eligible for the Federal school lunch
    program).

[^62]: Schools, both public and private, and public libraries may now
    apply for the 1999-2000 funding round via the E-rate web site:
    www.universalservice.org.

[^63]: Pub. L. No. 103-66, Title VI, § 6002(a), 107 Stat. 312, 387
    (1993).

[^64]: *See* 47 U.S.C. § 309(j)(1) (as amended by the Balanced Budget
    Act of 1997, § 3002).

[^65]: H.R. 831, 104th Cong., 1st Sess. § 2.

[^66]: 115 S. Ct. 2097, 2113 (1995).

[^67]: 116 S. Ct. 2264, 2274-76 (1996).

[^68]: *1997 Report* at paras. 110-112. The Commission has adopted or is
    considering wide-area geographic licensing, *inter alia*, in the
    following proceedings: The 4.9 GHz Band Transferred From Federal
    Government Use, WT Docket No. 00-32, *Notice of Proposed
    Rulemaking*, 15 FCC Rcd 4778, 4797-4799, para. 41-47 (2000) ("*4.9
    GHz NPRM"*); Service Rules for the 746-764 and 776-794 MHz Bands and
    Revisions to Part 27 of the Commission's Rules, WT Docket No.
    99-168, *First Report and Order*, 15 FCC Rcd 476, 500-502, para.
    56-61 (2000) ("*746-764 and* *776-794 First Report* *and Order"*);
    Amendment of the Commission's Rules Regarding Multiple Address
    Systems, WT Docket No. 97-81, *Report and Order*, FCC 99-415 (rel.
    Jan. 19, 2000); Rule Making to Amend Parts 1, 2, 21, and 25 of the
    Commission\'s Rules to Redesignate the 27.5-29.5 GHz Frequency Band,
    To Reallocate the 29.5-30.0 GHz Frequency Band, To Establish Rules
    and Policies for Local Multipoint Distribution Service and for Fixed
    Satellite Services, *Fourth Report and Order*, CC Docket No. 92-297,
    13 FCC Rcd. 11, 655 (1998) ("*LMDS Fourth Report and Order"*);
    Amendment of the Commission's Rules to Establish Part 27, the
    Wireless Communications Service ("WCS"), *Report and Order*, 12 FCC
    Rcd 10785 (1997) ("*WCS Report and Order"*); Amendment of Part 90 of
    the Commission\'s Rules to Provide For the Use of the 220-222 MHz
    Band by the Private Land Mobile Services, PR Docket No. 89-552,
    *Third Report and Order and Fifth Notice of Proposed Rulemaking*,
    FCC 97-57 (1997) ("*220 MHz Third Report and Order"*); Amendment of
    the Commission\'s Rules Regarding Multiple Address Systems*,*
    *Notice of Proposed Rulemaking*, WT Docket No. 97-81, FCC 97-58
    (rel. Feb. 27, 1997) ("*MAS NPRM"*); Implementation of Section
    309(j) of the Communications Act \-- Competitive Bidding; Revision
    of Part 22 and Part 90 of the Commission's Rules to Facilitate
    Future Development of Paging Systems, *Second Report and Order and
    Further Notice of Proposed Rulemaking,* 12 FCC Rcd 2732 (1997)
    *("Paging Second Report and Order")*; Amendment of Part 90 of the
    Commission\'s Rules to Facilitate Future Development of SMR Systems
    in the 800 MHz Frequency Band, PR Docket No. 93-144, Implementation
    of Sections 3(n) and 322 of the Communications Act \-- Regulatory
    Treatment of Mobile Services, GN Docket No. 93-252, Implementation
    of Sections 309(j) of the Communications Act \-- Competitive
    Bidding, PP Docket No. 93-253, *Second Report and Order*, 12 FCC Rcd
    19079, 19127-19153, para. 138-227 (1997) ("*800 MHz SMR Second
    Report and Order"*); Amendment of Part 90 of the Commission\'s Rules
    to Facilitate Future Development of SMR Systems in the 800 MHz
    Frequency Band, First Report and Order, *Eighth Report and Order and
    Second Notice of Proposed Rulemaking*, 11 FCC Rcd 1463 (1996) ("*800
    MHz SMR Order and NPRM"*); Amendment of Parts 2 and 90 of the
    Commission\'s Rules to Provide for the Use of 200 Channels Outside
    the Designated Filing Areas in the 896-901 MHz and 935-940 MHz Bands
    Allotted to the Specialized Mobile Radio Pool*, Second Order on
    Reconsideration and Seventh Report and Order*, 11 FCC Rcd 2639
    (1996) ("*900 MHz SMR Order"*); Amendment of Parts 21 and 74 of the
    Commission\'s Rules with Regard to Filing Procedures in the
    Multipoint Distribution Service and in the Instructional Television
    Fixed Service, *Report and Order*, 10 FCC Rcd 9589 (1995) ("*MDS
    Report and Order"*).

[^69]: *See generally* 47 C.F.R. Part 90.

[^70]: *See* Implementation of Sections 309(j) and 332 of the
    Communications Act of 1934 as Amended, *Notice of Proposed Rule
    Making*, WT Docket No. 99-87, 14 FCC Rcd 5206, 5217, para. 14 (1999)
    ("*Balanced Budget Act Proceeding"*).

[^71]: *See* 47 C.F.R. § 90.185. We are currently exploring, however,
    whether multiple licensing constitutes commercially available
    communications services. *See* *Balanced Budget Act Proceeding* at
    paras. 45-51.

[^72]: *See* 47 C.F.R. § 90.179.

[^73]: *See*, *e.g.*, American Electric Power Service Corp., *Order*, DA
    00-107 (WTB PSPWD rel. Jan. 20, 2000); Commonwealth of Pennsylvania,
    *Order*, 14 FCC Rcd 14029 (WTB PSPWD 1999); Central and South West
    Services, Inc., *Order* , 13 FCC Rcd 16162 (WTB PSPWD 1998); State
    of South Carolina, *Order*, 13 FCC Rcd 8787 (WTB 1997); Public
    Utility District No. 1 of Snohomish County, *Order*, 13 FCC Rcd 7964
    (WTB PSPWD PRB 1997); Texas Utilities Services, Inc., *Order*, 13
    FCC Rcd 4258 (WTB 1997).

[^74]: *See* Service Rules for the 746-764 and 776-794 MHz Bands, and
    Revisions to Part 27 of the Commission\'s Rules, WT Docket No.
    99-168, *Second Report and Order*, FCC 00-90 (rel. Mar. 9, 2000).

[^75]: For example, in the 800 MHz Specialized Mobile Radio ("Upper 10
    MHz"), 220 MHz, General Wireless Communications Service and Location
    and Monitoring Service auctions, we used EAs to license the
    services. In the Local Multipoint Distribution Service ("LMDS")
    auction, we used BTAs to license the service.

[^76]: Geographic partitioning is the assignment of geographic portions
    of a license along geopolitical or other boundaries (*e.g*., county
    lines).

[^77]: Spectrum disaggregation is the assignment of discrete portions or
    "blocks" of a spectrum license from the existing licensee to a
    geographic licensee or qualifying entity.

[^78]: Geographic Partitioning and Spectrum Disaggregation by Commercial
    Mobile Radio Service Licensees, WT Docket No. 96-148, Implementation
    of Section 257 of the Communications Act \-- Elimination of Market
    Entry Barriers, GN Docket No. 96-113, *Report and Order and Further
    Notice of Proposed Rulemaking*, 11 FCC Rcd 21831 (1996) (allowing
    partitioning of broadband PCS licenses).

[^79]: Geographic Partitioning and Spectrum Disaggregation by Commercial
    Mobile Radio Services Licensees, WT Docket No. 96-148,
    Implementation of Section 257 of the Communications Act \--
    Elimination of Market Entry Barriers, GN Docket No. 96-113, *Second
    Report and Order*, FCC 00-141 (rel. May 19, 2000).

[^80]: Amendment of Parts 21 and 74 of the Commission\'s Rules With
    Regard to Filing Procedures in the Multipoint Distribution Service
    and in the Instructional Television Fixed Service, MM Docket No.
    94-131, and Implementation of Section 309(j) of the Communications
    Act \-- Competitive Bidding, PP Docket No. 93-253, *Report and
    Order*, 10 FCC Rcd 9589, 9614-15, para. 46-47 (1995) (allowing
    partitioning of MDS licenses).

[^81]: Amendment of Part 90 of the Commission\'s Rules to Facili­tate
    Future Development of SMR Systems in the 800 MHz Frequency Band, PR
    Docket No. 93-144, Implementation of Sections 3(n) and 322 of the
    Communications Act \-- Regulatory Treatment of Mobile Services, GN
    Docket No. 93-252, Implementation of Sections 309(j) of the
    Communications Act \-- Competitive Bidding, PP Docket No. 93-253,
    *Second Report and Order*, 12 FCC Rcd 19079, 19127-19153, para.
    138-227 (1997) ("*800 MHz SMR Second Report and Order"*) (adopting
    flexible partitioning and disaggregation rules for all 800 MHz and
    900 MHz SMR licensees).

[^82]: Amendment of the Commission\'s Rules Regarding the 37.0 - 38.6
    GHz and 38.6 - 40.0 GHz Bands, ET Docket No. 95-183, Implementation
    of Section 309(j) of the Communications Act \-- Competitive Bidding,
    37.0 - 38.6 GHz and 38.6 - 40.0 GHz, PP Docket No. 93-253, *Report
    and Order and Second Notice of Proposed Rule Making*, 12 FCC Rcd
    18600, 18634-18636, para. 70-74 (1997) (adopting partitioning and
    disag­gregation rules for licenses in the 39 GHz band).

[^83]: *See* Amendment of the Commission's Rules to Establish Part 27,
    the Wireless Communications Service (WCS), *Report and Order*, 12
    FCC Rcd 10785, 10834-10839, para. 92-103 (1997) (adopting
    partitioning and disaggregation rules for WCS licensees).

[^84]: *See* *LMDS Fourth Report and Order,* 13 FCC Rcd 11655 (1998)
    (adopting partitioning and disaggregation rules for LMDS licensees).

[^85]: Amendment of the Commission\'s Rules Concerning Maritime
    Communications, PR Docket No. 92-257, *Third Report and Order and
    Memorandum Opinion and Order*, FCC 98-151, 13 FCC Rcd 19853, paras.
    37-43 (1998).

[^86]: *Paging Second Report and Order,* 12 FCC Rcd 2732, 2817, para.
    192 (1997).

[^87]: 746-764 and 776-794 MHz Bands, *First Report and Order*, 15 FCC
    Rcd at 506-508, para. 74-78.

[^88]: In the Matter of Amendment of Part 95 Of The Commission\'s Rules
    to Provide Regulatory Flexibility In the 218-219 MHz Service, WT
    Docket No. 98-169, RM-8951, *Report and Order and Memorandum Opinion
    and Order*, FCC 99-239, 1999 WL 705096 (FCC), 17 Communications Reg.
    (P&F) 222.

[^89]: In the Matter of Extending Wireless Telecommunications Services
    to Tribal Lands, *Report and Order and Further Notice of Proposed
    Rulemaking*, WT Docket No. 99-66, FCC 00-209 (adopted June 8, 2000).

[^90]: *See, e.g.*, Truth-in-Billing and Billing Format, CC Docket No.
    98-170, *First Report and Order and Further Notice of Proposed
    Rulemaking*, FCC 99-72, para. 51 (rel. May 11, 1999). *See also*
    Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56, §
    706 (1996).

[^91]: U.S. Congress, Office of Technology Assessment,
    Telecommunications Technology and Native Americans: Opportunities
    and Challenges 74, 80 (1995) ("OTA Study"). Data now suggests that
    Indian tribes live on some of the most isolated areas, locations
    that telecommunications carriers find especially expensive to serve.

[^92]: *See*, *Report and Order and Further Notice of Proposed
    Rulemaking, supra,* note 89.

[^93]: *See* In the matter of Amendment of Part 90 of the Commission's
    Rules to Provide for the Use of the 220-222 MHz Band by the Private
    land Mobile Radio, *Third* *Report and Order*, 12 FCC Rcd 10943
    (1997) (220 MHz EA licensees must meet population-based standards or
    show substantial service); *See also*, *e.g.*, *Paging Systems
    Reconsideration Order*, 14 FCC Rcd 10030 (1999) (paging geographic
    licensees must meet population-based standards or show substantial
    service); In the matter of Construction Requirements For
    Metropolitan Trading Area-Based ("MTA") Licensees in the
    896-901/935-940 MHz Band, *Order*, 14 FCC Rcd. 13223 (WTB 1998) (the
    Bureau waived the requirement that all 900 MHz MTA licensees must
    provide a plan at the three-year coverage deadline showing how they
    would meet substantial service at the five-year construction
    deadline).

[^94]: *See* 47 C.F.R. § 90.629(e).

[^95]: *800 MHz Report and Order*, 11 FCC Rcd. at 1479-80. The "upper
    200 channels" consist of 200 paired channels (Channel Nos. 401-600)
    at 816-821/861-866 MHz. The "lower 230 channels" are a combination
    of the 150 General Category channels and "lower 80" channels. The
    General Category channels consist of 150 paired channels (Channel
    Nos. 1-150) at 806-809.750/851-854.750 MHz. The "lower 80" channels
    consist of 80 paired channels at 811-815.700/856-860.700 MHz
    (Channels Nos. 201-208, 221-228, 241-248, 261-268, 281-288, 301-308,
    321-328, 341-348, 361-368, and 381-388).

[^96]: *See* Amendment of Part 90 of the Commission's Rules to
    Facilitate Future Development of SMR Systems in the 800 MHz
    Frequency Band, PR Docket No. 93-144, Implementation of Sections
    3(n) and 322 of the Communications Act \-- Regulatory Treatment of
    Mobile Services, GN Docket No 93-252, Implementation of Section
    309(j) of the Communications Act \-- Competitive Bidding, PP Docket
    No. 93-253*, Order*, 13 FCC Rcd. 1533, *recon* 12 FCC Rcd 18349
    (*"WTB 1997"*).

[^97]: *See* *800 MHz Reconsideration Order* at 9997, para. 81.

[^98]: 165 F.3d 965 (D.C. Cir. 1999).

[^99]: *See* Amendment of Part 90 of the Commission's Rules to
    Facilitate Future Development of SMR Systems in the 800 MHz
    Frequency Band, PR Docket No. 93-144, *Memorandum Opinion and Order
    on Remand*, FCC 99-399 at para. 19 (rel. December 23, 1999), 65 Fed.
    Reg. 7749 (pub. Feb. 17, 2000) ("*Remand Order"*).

[^100]: *See* Commission Requests Comment, Pursuant to Fresno Mobile
    Radio v. FCC, on the Construction Requirements for Commercial,
    Wide-Area 800 MHz Licensees Operating on Non-SMR Channels Through
    Inter-Category Sharing, *Public Notice*, FCC 00-95, 15 FCC Rcd 5436
    (2000).

[^101]: *See* *Balanced Budget Act Proceeding*, at 5217 para. 14 (1999).

[^102]: *See* Replacement of Part 90 by Part 88 to Revise the Private
    Land Mobile Radio Services and Modify the Policies Governing Them,
    *Second Report and Order*, PR Docket No. 92-235, 14 FCC Rcd 14307,
    14317 (1997).

[^103]: Replacement of Part 90 by Part 88 to Revise the Private Land
    Mobile Radio Services and Modify the Policies Governing Them,
    *Second Report and Order*, PR Docket No. 92-235, FCC 97-61 (rel.
    Mar. 12, 1997) ("*Refarming Second Report and Order"*).

[^104]: *Id.* at para. 40.

[^105]: *Id.*

[^106]: *See generally* 47 C.F.R. Parts 22, 24, 26, 27, 80, 87, 90, 95,
    97, and 101.

[^107]: *See generally* Amendment of Parts 0, 1, 13, 22, 24, 26, 27, 80,
    87, 90, 95, 97, and 101 of the Commission's Rules to Facilitate the
    Development and Use of the Universal Licensing System in the
    Wireless Telecommunications Service, WT Docket Nos. 98-20, Report
    and Order, 13 FCC Rcd. 21027 (1998) (*"ULS Report and Order"*).

[^108]: *See*, *e.g.* 47 C.F.R. § 1.913 (Application Forms; electronic
    and manual filing).

[^109]: The Auctions Hotline telephone number is 1-888-225-5322.

[^110]: A list of FCC Public Notices concerning ULS is available on the
    WTB ULS Homepage at www.fcc.gov/wtb/uls.

[^111]: The toll-free number regarding ULS questions is 1-888-CALL-FCC.

[^112]: The Technical Support telephone no. is 202-414-1250 and the
    e-mail address for ULS technical questions is ulscomm@fcc.gov.

[^113]: *See* Federal Communications Commission Announces Wireless
    Telecommunications Bureau Indian Telecom Training Initiative
    ("ITTI") 2000 Fall Seminar, Public Notice (rel. Feb. 29, 2000). *See
    also* www.fcc.gov/Indians.

[^114]: *1997 Report*, 12 FCC Rcd at 16873-16876, paras. 133-136.

[^115]: Interconnection and Resale Obligations Pertaining to Commercial
    Mobile Radio Services, CC Docket No. 94-54, *First Report and
    Order*, 11 FCC Rcd 18455 (1996) ("*CMRS Resale Order"*), *aff'd sub
    nom.* *Cellnet Communications v. FCC*, 149 F.3d 429 (6^th^ Cir.
    1998).

[^116]: 47 U.S.C. §§ 201, 202.

[^117]: *1997 Report*, 12 FCC Rcd at 16875, para. 136.

[^118]: Interconnection and Resale Obligations Pertaining to Commercial
    Mobile Radio Services: CC Docket No. 94-54, Personal Communications
    Industry Association's Broadband Personal Communications Services
    Alliance's Petition for Forbearance for Broadband Personal
    Communications Services and Forbearance from Applying Provisions of
    the Communications Act to Wireless Telecommunications Carriers: WT
    Docket No. 98-100, and Further Forbearance from Title II Regulation
    for Certain Types of Commercial Mobile Radio Services: GN Docket No.
    94-33, *Memorandum Opinion and Order on Reconsideration*, 14 FCC Rcd
    16340 (1999) ("*CMRS Resale Reconsideration Order"*).

[^119]: *Id.* at 16345-16352 para. 12-25.

[^120]: *Id.* at 16351-16352 para. 25.

[^121]: *See* note 118, *supra*.

[^122]: *CMRS Resale Reconsideration Order,* 14 FCC Rcd at 16355-16364
    paras. 31-52.

[^123]: Implementation of Sections 3(n) and 332 of the Communications
    Act: Regulatory Treatment of Mobile Services, *Second Report and
    Order*, 9 FCC Rcd 1411 (1994) (*"CMRS Second Report and Order"*).

[^124]: *1997 Report*, 12 FCC Rcd at 16876 para. 137.

[^125]: *CMRS Resale Reconsideration Order*, 14 FCC Rcd at 16361 para.
    45-46.

[^126]: Revision of the Commission's Rules to Ensure Compatibility with
    Enhanced 911 Emergency Calling Systems, CC Docket No. 94-102,
    RM-8143, *Memorandum Opinion and Order*, 12 FCC Rcd 22665,
    22703-22704 para. 78 (1998).

[^127]: Telephone Number Portability, CC Docket No. 95-116, *Second
    Memorandum Opinion and Order on Reconsideration*, 13 FCC Rcd 21204,
    21228-30 (paras. 52-57) (1999). Petitions for reconsideration
    seeking a similar modification of the Commission's roaming rule
    remain pending. *See* Interconnection and Resale Obligations
    Pertaining to Commercial Mobile Radio Services, CC Docket No. 94-54,
    *Second Report and Order and Third Notice of Proposed Rulemaking,*
    11 FCC Rcd 9462 (1996).

[^128]: ^?^ H.R. Rep. No. 111, 103rd Cong., 1st Sess. 254 (1993).

[^129]: ^?^ *Id.* at 255.

[^130]: ^?^ 47 U.S.C. § 309(j)(3)(B).

[^131]: 47 U.S.C. § 309(j)(4)(D). Subsequent to Section 309(j)\'s
    enactment, Congress eliminated the Commission\'s minority tax
    certificate program. Self-Employed Health Insurance Act of 1995, Pub
    L. No. 104-7, § 2, 109 Stat. 93 (1995).

[^132]: ^?^ *Competitive Bidding Fifth Report and Order*, 9 FCC Rcd at
    5537. *See also Competitive Bidding Sixth Report and Order*, 11 FCC
    Rcd 136.

[^133]: *See Competitive Bidding Fifth Report and Order,* 9 FCC Rcd at
    5599-5600 (25% reduction for all broadband PCS C block small
    business applicants).

[^134]: *See, e.g., D, E & F Block Competitive Bidding Report and
    Order*, 11 FCC Rcd at 7875-7876 (25% bidding credit for small
    businesses and 15 percent bidding credit for very small businesses);
    *Competitive Bidding Sixth Report and Order*, 11 FCC Rcd at 161 (25
    percent bidding credit for small businesses in broadband PCS C block
    auctions); *900 MHz SMR*, 11 FCC Rcd at 1705-06 (15 percent bidding
    credit for very small businesses and 10 percent bidding credit for
    small businesses).

[^135]: *See, e.g., 800 MHz SMR Order and NPRM*, 11 FCC Rcd at 1574;
    Allocation of Spectrum Below 5 GHz Transferred from Federal
    Government Use, *Second Report and Order*, 11 FCC Rcd 624, 662-663
    (1996) ("*GWCS Second Report and Order"*).

[^136]: *See* notes 89 and 92 and accompanying text, *supra*.

[^137]: *See* In the Matter of Amendment of Part 1 of the Commission's
    Rules \-- Competitive Bidding Procedures, *Third Report and Order
    and Second Further Notice of Proposed Rule Making*, FCC 97-413, 13
    FCC Rcd 374, 398 (1998), para. 40 ("*Part I Proceeding Third Report
    and Order*").

[^138]: Specifically, Section 309(j)(4) of the Communications Act states
    that the Commission shall, in prescribing regulations pursuant to
    these objectives and others, \"*consider* alternative payment
    schedules and methods of calculation, including lump sums or
    guaranteed installment payments, with or without royalty payments,
    or other schedules or methods that promote the objectives described
    in paragraph (3)(B) . . . .\" *See* 47 U.S.C. § 309(j)(4)(A)
    (emphasis added). Section 3007 of the Balanced Budget Act requires
    that the Commission conduct certain future auctions in a manner that
    ensures that all proceeds from such bidding are deposited in the
    U.S. Treasury not later than September 30, 2002. *See* Section 3001
    of the Omnibus Consolidated Appropriations Act for 1997, P.L.
    104-208, 110 Stat. 3009 (1997) ("Omnibus Consolidated Appropriations
    Act").

[^139]: *See* Geographic Partitioning and Spectrum Disaggregation by
    Commercial Mobile Radio Services Licensees, *Notice of Proposed
    Rulemaking*, 11 FCC Rcd at 10195-10196 (1996).

[^140]: Since the inception of auctions for wireless licenses, 793 of
    971 license winners were small businesses. In total licenses issued,
    small businesses won 56 percent of all wireless licenses auctioned,
    4,743 out of 8,439 licenses. Our auctions have demonstrated that
    small businesses, as well as minority- and women-owned businesses,
    have benefited from our competitive bidding procedures. Of the over
    971 bidders who have won licenses thus far, 82 percent were small
    businesses, 18 percent were minority-owned businesses, 14 percent
    were women-owned businesses, and 12 percent were rural telephone
    companies.

[^141]: Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992, Rate Regulation, *Sixth
    Report and Order and Eleventh Order on Reconsideration*, 10 FCC Rcd
    7393 (1995) ("*Small System Order*").

[^142]: Cable Television Consumer Protection and Competition Act of
    1992, P.L. 102-385, 106 Stat. 1482 (1992).

[^143]: 1996 Act, P.L. 104-104, 110 Stat. 56 (1996).

[^144]: 47 C.F.R. § 76.901(e). The Commission developed this definition
    based on its determination in the *Small System Order* that a small
    cable company is one with annual revenues of \$100 million or less.

[^145]: Paul Kagan Associates, Inc., *Cable TV Investor*, Feb. 29, 1996
    (based on figures for Dec. 30, 1995).

[^146]: 47 C.F.R. § 76.901(c). We do not collect information concerning
    systems serving fewer than 15,000 subscribers and so are unable to
    estimate the number of small systems affected by our decision.

[^147]: *See* 47 C.F.R. § 76.1403.

[^148]: Implementation of Cable Act Reform Provisions of the
    Telecommunications Act of 1996*,* *Report and Order,* 14 FCC Rcd
    5296 (1999) ("*Cable Act Reform Order").*

[^149]: *Id.* at 5326-7.

[^150]: Implementation of the Cable Television Consumer Protection and
    Competition Act of 1992: Leased Commercial Access*, Second Report
    and Order and Second Order on Reconsideration*, CS Docket No. 96-60,
    FCC 97-27, 12 FCC Rcd 5267 (1997).

[^151]: In the Matter of Implementation of the Cable Television Consumer
    Protection and Competition Act of 1992: Cable Home Wiring*,* *Report
    and Order and Second Further Notice of Proposed Rulemaking*, 13 FCC
    Rcd 3659 (1997) ("*Cable Home Wiring Order*").

[^152]: *Id.*

[^153]: 1998 Biennial Regulatory Review \-- Annual Report of Cable
    Television Systems, Form 325, filed Pursuant to Section 76.403 of
    the Commission's Rules*,* *Report and Order*, 14 FCC Rcd 4720 (1999)
    ("*Form 325 Order"*).

[^154]: Until 1998, all of the approximately 11,000 cable systems in the
    country were required to file Form 325. The *Form 325 Order* reduces
    the number of filing systems to the 700 systems, approximately, that
    have 20,000 or more subscribers. Those 700 systems serve 70 percent
    of all cable subscribers.

[^155]: 47 C.F.R. §§ 76.1-76.1514 .

[^156]: *See* 47 C.F.R § 76.601(c) and §§ 76.922(b), (c), (e).

[^157]: 1998 Biennial Regulatory Review \-- Streamlining of Cable
    Television Services Part 76 Public File and Notice Requirements, CS
    Docket No. 98-132, FCC 99-12, 14 FCC Rcd 4653 (1999) ("*Streamlining
    Order*").

[^158]: 47 C.F.R. § 76.305(a) and 47 C.F.R. § 76.207.

[^159]: *See* Warren Publishing, Inc., *Television & Cable Factbook,*
    Cable Services Volume No. 53, 1985, p. 1385: Services Volume No. 65,
    1997, p. 1-81.

[^160]: Closed Captioning and Video Description of Video Programming,
    Implementation of Section 305 of the Telecommunications Act of 1996,
    Video Programming Accessibility*,* *Report and Order*, 13 FCC Rcd
    3272 (1997) ("*Closed Captioning Order"*); *Order on
    Reconsideration*, 13 FCC Rcd 19973 (1998).

[^161]: 47 U.S.C. § 613(d)(1).

[^162]: *Closed Captioning Order* at 3346.

[^163]: *Id.* at 3350.

[^164]: *Id.*

[^165]: *See* note 176, *infra* and accompanying text for definition.

[^166]: In the Matter of Creation of Low Power Radio Service, *Report
    and Order,* MM Docket No. 99-25, RM-9208, RM-9242, 15 FCC Rcd 2205
    (2000) (*"LPFM Report and Order"*).

[^167]: Section 202(c)(2) of the 1996 Act.

[^168]: Section 202(d) of the 1996 Act.

[^169]: In the Matter of Review of the Commission's Regulations
    Governing Television Broadcasting, Television Satellite Stations
    Review of Policy and Rules, *Report and Order*, MM Docket No.
    91-221, MM Docket No. 87-8, 14 FCC Rcd 12903 (1999) (*"Ownership
    Report and Order*").

[^170]: This is based on audience share, as measured by Nielsen or any
    comparable professional and accepted rating service, at the time the
    application is filed.

[^171]: We also believe that our grandfathering policies for conditional
    radio/TV cross-ownership waivers and TV Local Marketing Agreements
    ("LMAs"), may help small stations. A television local marketing
    agreement or time brokerage agreement is a type of contract that
    generally involves the sale by a licensee of discrete blocks of time
    to a broker that then supplies the programming to fill that time and
    sells the commercial spot announcements to support the programming.
    In this regard, the record suggested that TV LMAs may have helped
    smaller, struggling stations to remain on or return to the air, and
    to diversify and expand their programming. The *Ownership Report and
    Order* grandfathers all LMAs entered into prior to November 5, 1996,
    and therefore permits them to remain in full force and effect,
    subject to further review in the Commission's Biennial Review in
    2004.

[^172]: In the Matter of Establishment of a Class A Television Service,
    *Report and Order*, MM Docket No. 00-10, FCC 00-115 (rel. Apr. 4,
    2000) ("*Class A TV Report and Order*").

[^173]: *Id.*

[^174]: Community Broadcasters Protection Act of 1999, Pub. L. No
    106-113, 113 Stat. Appendix I at pp. 1501A-594 \-- 1501A-598 (1999),
    *codified* at 47 U.S.C. § 336(f) ("CBPA").

[^175]: LPTV stations that convert to Class A status are exempt from
    certain rules applicable to full power TV stations which cannot
    apply, either due to technical differences in the operation of
    low-power and full-power stations, or for other reasons.

[^176]: "Wireless cable," is a service permitting delivery of video
    programming to subscribers utilizing spectrum allocated to the
    Multipoint Distribution Service and the Multichannel Multipoint
    Distribution Service (collectively referred to as "MDS"), as well as
    leased channels from the Instructional Television Fixed Service
    ("ITFS"). Wireless cable resembles cable television, but instead of
    coaxial or fiber optic cable, wireless cable uses over-the-air
    microwave radio channels to deliver programming to subscribers.

[^177]: In the Matter of Amendment of Parts 21 and 74 to Enable
    Multipoint Distribution Service and Instructional Television Fixed
    Service Licensees to Engage in Fixed Two-Way Transmissions, *Report
    and Order,* MM Docket No. 97-217, File No. RM-9060, 13 FCC Rcd 19112
    (1998) ("*MDS Two-way Report and Order*"). This proceeding was
    commenced in response to a petition for rulemaking filed by a group
    of over one hundred participants in the wireless cable industry who
    requested that the Commission amend its rules to facilitate the
    provision of two-way communication services by MDS and ITFS
    licensees. *See also* Pleading Cycle Established for Comments on
    Petition for Rulemaking to Amend Parts 21 and 74 of the Commission's
    Rules to Enhance the Ability of Multipoint Distribution Service and
    Instructional Television Fixed Service Licensees to Engage in Fixed
    Two-Way Transmissions, *Public Notice,* RM 9060, DA 97-637 (rel.
    Mar. 31, 1997).

[^178]: By subchannelization, we mean the division of a standard channel
    of fixed bandwidth into multiple (but not necessarily equal)
    channels of lesser bandwidth. For example, a 6 MHz channel could be
    divided into four subchannels of 1.5 MHz bandwidth, each of which
    might carry a video and associated audio signal.

[^179]: By superchannelization, we mean the aggregation of multiple
    contiguous channels of standard bandwidth into channels of larger
    bandwidth. For example, three 6 MHz channels could be combined to
    form a single channel with an 18 MHz bandwidth.

[^180]: *Lutheran Church \-- Missouri Synod v. FCC*, 141 F.3d 344 (D.C.
    Cir. 1998), *pet. for reh'g denied* 154 F.3d 487, *pet. for reh'g en
    banc denied* 154 F.3d 494 (D.C. Cir. 1998) ("*Lutheran Church*").

[^181]: *See* In the Matter of Review of the Commission's Broadcast and
    Cable Equal Employment Opportunity Rules and Policies and
    Termination of the EEO Streamlining Proceeding, *Report and Order*,
    MM Docket No. 98-204, MM Docket No. 96-16, 15 FCC Rcd 2329 (2000)
    ("*EEO Report and Order*").

[^182]: Religious broadcasters may establish religious belief as a job
    qualification for all radio station employees. With respect to
    television station employees, we will continue to allow religious
    broadcasters to establish religious belief or affiliation as a
    qualification, as a policy, rather than a rule, due to limitations
    imposed by Section 334 of the Communications Act. 47 U.S.C. §
    334(a)(1).

[^183]: Cable employment units with six to ten full-time employees will
    also be relived of some outreach and recordkeeping requirements.

[^184]: *1997 Report* at para. 200, *supra*.

[^185]: *Id*.; *see also* TelQuest Ventures L.L.C. and Western
    Telecommunications, Inc. for a License for a Fixed-Satellite
    Transmit/Receive Earth Station to Communicate with Transponders on
    Canadian DBS Satellite, etc., *Report and Order*, 11 FCC Rcd 8151
    (1996), *recon*. 11 FCC Rcd 13943 (1996), *applications for recon.
    pending*.

[^186]: Amendment of the Commission's Regulatory Policies to Allow
    Non-U.S. Licensed Space Stations to Provide Domestic and
    International Satellite Service in the United States, *Order*, IB
    Docket No. 96-111, FCC 99-325 (rel. Oct. 29, 1999) (*"DISCO II First
    Reconsideration Order"*).

[^187]: *Id.* at para. 24.

[^188]: *Id.*

[^189]: 47 U.S.C. § 214. *See* International Competitive Carrier
    Policies, CC Docket No. 85-107, *Report and Order*, 102 FCC2d 812
    (1985), *recon.* *denied* 60 RR2d 1435 (1986); *modified*,
    Regulation of International Common Carrier Services, CC Docket No.
    91-360, *Report and Order*, 7 FCC Rcd 7331 (1992).

[^190]: *See* Streamlining the International Section 214 Authorization
    Process and Tariff Requirements, IB Docket No. 95-118, *Report and
    Order*, 11 FCC Rcd 12884 (1996).

[^191]: *Id*.; s*ee* 1998 Biennial Regulatory Review-Review of
    International Common Carrier Regulations, IB Docket No. 98-118,
    *Report and Order*, 14 FCC Rcd 4909 (1999).

[^192]: *See*, In the Matter of Market Entry and Regulation of
    Foreign-affiliated Entities, *Report and Order*, 11 FCC Rcd 3873,
    3881 (1995).

[^193]: FCC Chairman William E. Kennard, *A New FCC for the 21^st^
    Century: Draft Strategic Plan* (Aug. 1999).

[^194]: Amendment of Parts 2, 15, 18, and Other Parts of the
    Commission's Rules to Simplify and Streamline the Equipment
    Authorization Process for Radio Frequency Equipment, ET Docket No.
    97-94, *Report and Order*, FCC 98-58, 13 FCC Rcd 11415 (1998).

[^195]: Amendment of Parts 2, 25 and 68 of the Commission's Rules to
    Further Streamline the Equipment Authorization Process for Radio
    Frequency Equipment, Modify the Equipment Authorization Process for
    Telephone Terminal Equipment, Implement Mutual Recognition
    Agreements and Begin Implementation of Global Mobile Personal
    Communications by Satellite Arrangements, GN Docket No 98-68,
    *Report and Order*, FCC 98-338, 13 FCC Rcd 24687 (1998).

[^196]: *See* FCC Provides Further Information On The Accreditation
    Requirements For Telecommunication Certification Bodies, *Public
    Notice*, DA 99-1640 (Aug. 17, 1999), 1999 W.L. 618038 (FCC).

[^197]: 2000 Biennial Review Regulatory Review of Part 68 of the
    Commission's Rules and Regulations, CC Docket No. 99-216, *Notice of
    Proposed Rulemaking*, FCC 00-171 (adopted May 15, 2000).

[^198]: Amendment of Part 5 of the Commission's Rules to Revise the
    Experimental Radio Service Regulations, ET Docket No. 96-256,
    *Report and Order*, FCC 98-283, 13 FCC Rcd 21391 (1998).

[^199]: Amendment of Parts 2, 15, 18, and Other Parts of the
    Commission's Rules to Simplify and Streamline the Equipment
    Authorization Process for Radio Frequency Equipment, ET Docket No.
    97-94, *Report and Order*, FCC 98-58, 13 FCC Rcd 11415 (1998).

[^200]: Amendment of Part 5 of the Commission's Rules to Revise the
    Experimental Radio Service Regulations, ET Docket No. 96-256,
    *Report and Order*, FCC 98-283, 13 FCC Rcd 21391 (1998).

[^201]: Amendment of Part 15 of the Commission's Rules to Provide for
    Unlicensed National Information Infrastructure Devices at 5 GHz, ET
    Docket 96-102, *Report and Order*, FCC 97-5, 12 FCC Rcd 1576 (1997);
    *Memorandum Opinion and Order*, FCC 98-121, 13 FCC Rcd 14355 (1998).

[^202]: Amendment of Parts 2 and 15 of the Commission's Rules to Permit
    Use of Radio Frequencies Above 40 GHz for New Radio Applications, ET
    Docket 94-124, *Third Report and Order*, 13 FCC Rcd 15074 (1998);
    *recon*., FCC 00-161 (rel. May 11, 2000).

[^203]: Amendment of Part 15 of the Commission's Rules Regarding Spread
    Spectrum Devices, ET Docket 99-231, *Notice of Proposed Rulemaking*,
    FCC 99-149, 14 FCC Rcd 13046 (1999).

[^204]: Revision of Part 15 of the Commission's Rules Regarding
    Ultra-Wideband Transmission Systems, ET Docket No. 98-153, *Notice
    of Inquiry*, FCC 98-208, 13 FCC Rcd 16376 (1998); *Notice of
    Proposed Rulemaking*, FCC 00-163 (adopted May 15, 2000).

[^205]: Amendment of Parts 2 and 90 of the Commission's Rules to
    Allocate the 5.850-5.925 GHz Band to the Mobile Service for
    Dedicated Short Range Communications of Intelligent Transportation
    Services, ET Docket 98-95, *Report and Order*, FCC 99-305, 14 FCC
    Rcd 18221 (1999).

[^206]: Amendment of the Commission's Rules with Regards to the
    3650-3700 MHz Government Transfer Band, ET Docket 98-237, *Notice of
    Proposed Rulemaking*, FCC 98-337, 14 FCC Rcd 1295 (1998).

[^207]: Principles for Reallocation of Spectrum to Encourage the
    Development of Telecommunications Technologies for the New
    Millennium, *Policy Statement*, FCC 99-354, 14 FCC Rcd 19868 (1999).

[^208]: Inquiry Regarding Software Defined Radios, ET Docket No. 00-47,
    *Notice of Inquiry,* FCC 00-103 (Mar. 21, 2000).

[^209]: FCC's Office of Engineering and Technology Issues Revised
    Bulletin on Biological Effects of Radiofrequency Electromagnetic
    Fields: Questions and Answers About Biological Effects and Potential
    Hazards of Radiofrequency Electromagnetic Fields, OET Bulletin No.
    56 (Fourth Edition, August 1999), *Public Notice*, September 2,
    1999. *See also* www.fcc.gov/oet/rfsafety.

[^210]: FCC Releases Revised Bulletin on Compliance with New Guidelines
    for Exposure to Radiofrequency Electromagnetic Fields, *Public
    Notice* (Aug. 25, 1997), 1997 WL 521693 (FCC).

[^211]: Guidelines for Evaluating the Environmental Effects of
    Radiofrequency Radiation, ET Docket No. 93-62, *Second Memorandum
    Opinion and Order*, FCC 97-303, 12 FCC Rcd 13494 (1997).

[^212]: Year 2000 Deadline for Compliance with Commission's Regulations
    Regarding Human Exposure to Radiofrequency Emissions, DA 00-912,
    *Public Notice*, (April 27, 2000), 2000 WL 217572 (FCC).

[^213]: *1997 Report* at para. 88.

[^214]: In the Matter of Establishment of the Enforcement Bureau and the
    Consumer Information Bureau, *Order*, FCC 99-172 (rel. Oct. 27,
    1999).

[^215]: *Id.*

[^216]: For example, CEO has, in conjunction with the MMB, designed and
    edited a brochure for distribution that would provide applicants
    information for LPFM stations. The LPFM service is expected to
    provide opportunity to the smaller, community-oriented broadcaster,
    so as to give a significant number of new voices access to the
    nation\'s airwaves. Similarly, to assist in the Commission\'s
    efforts to further deregulate telecommunications markets and
    determine the state of broadband deployment, CEO has assisted other
    bureaus and offices in posting a web page and in organizing the
    links to provide up-to-date information to the community at large,
    and is coordinating with the appropriate bureaus and offices to hold
    two public workshops on the broadband issue.

[^217]: *See* *1997 Report* at paras. 215-217, *supra*.

[^218]: The information regarding minority and women's participation in
    the Commission's auctions is generated from the short-form
    applications (FCC Form 175) on which the Commission requests, on a
    voluntary basis, that the applicant check its minority and/or women
    status. *See* Section III.B. (Wireless Industry) and Section III.D.
    (Mass Media Industry), *supra*.

[^219]: The Commission held field hearings, *Overcoming Obstacles to
    Telephone Service to Indians on Reservations*, at Albuquerque, New
    Mexico, January 29, 1999 and at Gila River Tribal Reservation, March
    23, 1999.

[^220]: In the Matter of Extending Wireless Telecommunications Services
    to Tribal Lands, *Report and Order and Further Notice of Proposed
    Rulemaking*, WT Docket No. 99-66, FCC 00-209 (adopted June 8, 2000);
    In the Matter of Federal-State Joint Board on Universal Service:
    Promoting Deployment and Subscribership in Unserved and Underserved
    Areas, Including Tribal and Insular Areas, *Twelfth Report and
    Order, Memorandum Opinion and Order, and Second Further Notice of
    Proposed Rulemaking*, CC Docket No. 96-45, FCC 00-208 (adopted June
    8, 2000).

[^221]: In the Matter of Statement of Policy on Establishing a
    Government-to-Government Relationship with Indian Tribes, *Policy
    Statement*, FCC 00-207 (adopted June 8, 2000).

[^222]: ITTI '2000 is scheduled for September 2000 in St. Paul, MN.

[^223]: *See 1997 Report, at* paras. 215, 216.

[^224]: For example, the broadcast industry, which has seen an increase
    in consolidation in the mass media arena, has taken the voluntary
    initiative to create an investment fund to assist minority and
    female mass media ownership by providing financing. Known originally
    as the "Prism Fund," and since renamed "Quetzal/Chase Communications
    Partners, L.P," the fund was started with approximately \$175
    million in contributions from industry.

[^225]: 1996 Act, Section 714, *supra*.

[^226]: *Id.*

[^227]: Funding for the TDF is generated by interest earned on funds
    deposited as up-front payments for participation in
    Commission-sponsored auctions for service licenses.

[^228]: *See* para. 157, *supra*.

[^229]: Regulatory Flexibility Act of 1980, *as amended*, 5 U.S.C. § 601
    et seq.; Small Business Act, 15 U.S.C. § 632.

[^230]: 47 U.S.C. § 161. *See,* note 2, *supra*.

[^231]: The "Small Business Regulatory Enforcement Fairness Act of 1996"
    ("SBREFA") was signed into law as Title II of the Contract With
    America Advancement Act of 1996, Pub. L. No. 104-121, 110 Stat. 847
    (1996) ("CWAAA").

[^232]: *See* 5 U.S.C. §§ 601-612.

[^233]: *See* para. 36, *supra*.

[^234]: *1997 Report* at para. 94.

[^235]: Since 1996, the Commission had consistently included small ILECs
    in its analyses, but had stated that it was doing so out of an
    abundance of caution concerning the status of ILECs.

[^236]: *See, e.g.*, 64 Fed. Reg. 63881, 65368 (Nov. 22, 1999). The
    Unified Agenda is typically published in April and October of each
    year. The Unified Agenda project is overseen by the Government
    Services Administration's Regulatory Information Service Center.

[^237]: *See* paras. 131-135, *supra*.

[^238]: *See* paras. 70-75, *supra*.

[^239]: 1996 Act, Section 706 ("Advanced Telecommunications
    Incentives"), usually reproduced in the notes to 47 U.S.C. § 157.

[^240]: Inquiry Concerning the Deployment of Advanced Telecommunications
    Capabilities to All Americans in a Reasonable and Timely Fashion,
    and Possible Steps to Accelerate Such Deployment Pursuant to Section
    706 of the Telecommunications Act of 1996, *Report*, CC Docket No.
    98-146, FCC 99-5, 14 FCC Rcd 2398 (1999).

[^241]: Local Competition and Broadband Reporting, *Report and Order*,
    CC Docket No. 99-301, FCC 00-114 (rel. Mar. 30, 2000).

[^242]: Federal-State Joint Conference On Advanced Services: Field
    Hearing Schedule, *Public Notice*, DA 00-240 (Feb. 11, 2000); *see*
    Federal-State Joint Conference On Advanced Services, *Order*, CC
    Docket No. 99-294, FCC 99-293 (Oct. 8, 1999).

[^243]: Inquiry Concerning the Deployment of Advanced Telecommunications
    Capabilities to All Americans in a Reasonable and Timely Fashion,
    and Possible Steps to Accelerate Such Deployment Pursuant to Section
    706 of the Telecommunications Act of 1996, *Notice of Inquiry*, FCC
    00-57, CC Docket No. 98-146 (rel. Feb. 18, 2000)

[^244]: 1996 Act, Section 257(b).

[^245]: 1996 Act, Section 257(a).