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 Federal  Communications  Commission  FCC  04-  179 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 
 In  the  Matter  of 
 Unbundled  Access  to  Network  Elements 
 Review  of  the  Section  251  Unbundling  Obligations  of  Incumbent  Local  Exchange 
 Carriers 


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 WC  Docket  No.  04-  313 
 CC  Docket  No.  01-  338 


 ORDER  AND  NOTICE  OF  PROPOSED  RULEMAKING 
 Adopted:  July  21,  2004  Released:  August  20,  2004 
 Comment  Date:  [21  Days  after  publication  in  the  Federal  Register]  Reply  Comment  Date:  [36  Days  after  publication  in  the  Federal  Register] 


 By  the  Commission:  Chairman  Powell  and  Commissioner  Abernathy  issuing  separate  statements;  Commissioner  Martin  issuing  a  separate  statement  at  a  later  date;  Commissioners  Copps  and  Adelstein 
 dissenting  and  issuing  separate  statements. 
 I.  INTRODUCTION 
 1.  Today,  we  issue  a  Notice  of  Proposed  Rulemaking  (Notice)  in  which  we  solicit  comment  on  alternative  unbundling  rules  that  will  implement  the  obligations  of  section  251(  c)(  3)  of  the 
 Communications  Act  of  1934,  as  amended,  1  in  a  manner  consistent  with  the  U.  S.  Court  of  Appeals  for  the  District  of  Columbia  Circuits  (D.  C.  Circuit)  decision  in  United  States  Telecom  Assn  v.  FCC.  2  We  also 
 issue  an  Order  in  which  we  take  several  steps  designed  to  avoid  disruption  in  the  telecommunications  industry  while  these  new  rules  are  being  written.  The  actions  we  take  today  are  designed  to  advance  the 
 Commissions  most  important  statutory  objectives:  the  promotion  of  competition  and  the  protection  of  consumers.  If  the  Commission  does  not  act,  the  $127  billion  local  telecommunications  market  will 
 unnecessarily  be  placed  at  risk.  To  that  end,  we  set  forth  a  comprehensive  twelve-  month  plan  consisting  of  two  phases  to  stabilize  the  market.  First,  on  an  interim  basis,  we  require  incumbent  local  exchange 
 carriers  (LECs)  to  continue  providing  unbundled  access  to  switching,  3  enterprise  market  loops,  and 
 1  We  refer  to  the  Communications  Act  of  1934,  as  amended,  inter  alia,  by  the  Telecommunications  Act  of  1996,  as 
 the  Communications  Act  or  the  Act.  See  generally  47  U.  S.  C.    151  et  seq. 
 2  359  F.  3d  554  (D.  C.  Cir.  2004)  (USTA  II),  pets.  for  cert.  filed,  Nos.  04-  12,  04-  15,  04-  18  (June  30,  2004).  See  also 
 United  States  Telecom  Assn  v.  FCC,  No.  00-  1012,  Order,  (D.  C.  Cir.  Apr.  13,  2004)  (granting  a  stay  of  the  courts  mandate  through  June  15,  2004)  (USTA  II  Stay  Order).  The  USTA  II  mandate  issued  on  June  16,  2004. 


 3  Throughout  this  Notice  and  Order,  references  to  unbundled  switching  encompass  mass  market  local  circuit 
 switching  and  all  elements  that  must  be  made  available  when  such  switching  is  made  available. 
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 dedicated  transport  4  under  the  same  rates,  terms  and  conditions  that  applied  under  their  interconnection  agreements  5  as  of  June  15,  2004.  6  These  rates,  terms,  and  conditions  shall  remain  in  place  until  the  earlier 
 of  the  effective  date  of  final  unbundling  rules  promulgated  by  the  Commission  or  six  months  after  Federal  Register  publication  of  this  Order,  except  to  the  extent  that  they  are  or  have  been  superseded  by  (1) 
 voluntarily  negotiated  agreements,  (2)  an  intervening  Commission  order  affecting  specific  unbundling  obligations  (e.  g.,  an  order  addressing  a  pending  petition  for  reconsideration),  or  (3)  (with  respect  to  rates 
 only)  a  state  public  utility  commission  order  raising  the  rates  for  network  elements.  Second,  we  set  forth  transitional  measures  for  the  next  six  months  thereafter.  Under  our  plan,  in  the  absence  of  a  Commission 
 holding  that  particular  network  elements  are  subject  to  the  unbundling  regime,  those  elements  would  still  be  made  available  to  serve  existing  customers  for  a  six-  month  period,  at  rates  that  will  be  moderately 
 higher  than  those  in  effect  as  of  June  15,  2004. 
 2.  The  one-  year  transitional  regime  described  above  is  designed  to  provide  a  reasonable  timeframe  for  the  Commission  to  complete  its  work  while  interim  protections  remain  in  place.  Eight 
 years  after  the  initial  implementation  of  the  local  competition  provisions  of  the  Act,  the  Commission  continues  to  search  for  unbundling  rules  that  identify  where  carriers  are  genuinely  impaired  and  where 
 overbroad  unbundling  works  to  frustrate  sustainable,  facilities-  based  competition.  As  the  Commission  has  repeatedly  recognized,  our  primary  goal  in  implementing  section  251  is  to  advance  the  development 
 of  facilities-  based  competition.  7  We  believe  that  unbundling  rules  based  on  a  preference  for  facilities- 


 4  The  D.  C.  Circuit  did  not  make  a  formal  pronouncement  regarding  the  status  of  the  Commissions  findings 
 regarding  enterprise  market  loops.  Some  carriers  have  taken  the  position  that  those  rules  have  been  vacated.  See,  e.  g.,  Letter  from  Jerry  Hendrix,  Assistant  Vice  President  Interconnection  Services,  BellSouth,  to  Stephen  G.  Huels, 


 Region  Vice  President,  AT&  T  (Apr.  30,  2004)  in  Letter  from  David  Lawson,  Counsel  to  AT&  T,  to  Marlene  H.  Dortch,  Secretary,  FCC,  WC  Docket  No.  01-  338  at  attach.  7  (filed  May  7,  2004)  (  The  D.  C.  Circuit  Order  explicitly 
 vacated  the  Federal  Communications  Commissions  (FCC)  national  impairment  finding  for  DS1,  DS3  and  dark  fiber  elements.  As  a  result,  once  vacatur  becomes  effective,  ILECs  will  no  longer  have  an  obligation  under  Section 
 251  of  the  Act  to  offer  these  elements  and,  at  that  time,  BellSouth  will  pursue  the  legal  and  regulatory  options  available  to  it.);  Verizon  Reply,  CC  Docket  Nos.  01-  338,  96-  98,  98-  147  at  5  (filed  Apr.  5,  2004)  (  Once  the 
 mandate  in  USTA  II  issues,  ILECs  will  have  no  obligation  to  make  high-  capacity  facilities  available  on  an  unbundled  basis  at  all.).  We  do  not  take  a  position  on  that  question  here;  but  to  ensure  a  smooth  transition 
 governed  by  clear  requirements,  we  assume  arguendo  that  the  D.  C.  Circuit  vacated  the  Commissions  enterprise  market  loop  unbundling  rules. 


 5  Throughout  this  Notice  and  Order,  references  to  an  incumbent  LECs  obligations  under  its  interconnection 
 agreements  apply  also  to  obligations  set  forth  in  the  incumbent  LECs  applicable  statements  of  generally  available  terms  (SGATs)  and  relevant  state  tariffs. 


 6  These  obligations  apply  irrespective  of  whether  an  incumbent  LEC  has  taken  steps  before  or  after  this  date  to 
 relieve  itself  of  such  obligations. 
 7  See  Implementation  Of  The  Local  Competition  Provisions  Of  The  Telecommunications  Act  Of  1996,  CC  Docket 
 No.  96-  98,  Third  Report  and  Order  and  Fourth  Further  Notice  of  Proposed  Rulemaking,  15  FCC  Rcd  3696,  3701,  para.  7  (1999)  (UNE  Remand  Order);  see  also  Review  of  the  Section  251  Unbundling  Obligations  of  Incumbent 


 Local  Exchange  Carriers,  Implementation  of  the  Local  Competition  Provisions  of  the  Telecommunications  Act  of  1996,  Deployment  of  Wireline  Services  Offering  Advanced  Telecommunications  Capability,  CC  Docket  Nos.  01- 
 338,  96-  98,  98-  147,  Report  and  Order  and  Order  on  Remand  and  Further  Notice  of  Proposed  Rulemaking,  18  FCC  Rcd  16978,  16984,  para.  3  (2003)  (Triennial  Review  Order),  corrected  by  Errata,  18  FCC  Rcd  19020,  19021,  paras. 
 12-  13,  15,  17  (2003)  (Triennial  Review  Order  Errata),  vacated  and  remanded  in  part,  affirmed  in  part,  USTA  II,  (continued.) 
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 based  competition  will  provide  incentives  for  both  incumbent  LECs  and  competitors  to  innovate  and  invest.  Accordingly,  as  we  initiate  this  remand  proceeding,  we  renew  our  commitment  to  promoting  the 
 development  of  facilities-  based  competition  and  seek  to  adopt  unbundling  rules  that  will  achieve  this  end. 
 II.  BACKGROUND 
 3.  The  Act  requires  that  incumbent  LECs  provide  unbundled  network  elements  (UNEs)  to  other  telecommunications  carriers.  In  particular,  section  251(  c)(  3)  requires  incumbent  LECs  to  provide  to 
 requesting  telecommunications  carriers  nondiscriminatory  access  to  network  elements  on  an  unbundled  basis  at  any  technically  feasible  point  on  rates,  terms,  and  conditions  that  are  just,  reasonable,  and 
 nondiscriminatory  in  accordance  with  .  .  .  the  requirements  of  this  section  and  section  252.  8  Section  251(  d)(  2)(  B)  authorizes  the  Commission  to  determine  which  elements  are  subject  to  unbundling,  and 
 directs  the  Commission  to  consider,  at  a  minimum,  whether  access  to  proprietary  network  elements  is  necessary  and  whether  failure  to  provide  a  non-  proprietary  element  on  an  unbundled  basis  would 
 impair  a  requesting  carriers  ability  to  provide  service.  9  Section  252,  in  turn,  requires  that  those  network  elements  that  must  be  offered  pursuant  to  section  251(  c)(  3)  be  made  available  at  cost-  based 
 rates.  10 
 4.  The  Commission  first  addressed  the  unbundling  obligations  of  incumbent  LECs  in  the  Local  Competition  Order,  which,  among  other  things,  adopted  rules  designed  to  implement  the 
 requirements  of  section  251,  establishing  a  list  of  seven  UNEs  which  incumbent  LECs  were  obliged  to  provide.  11  In  1997,  the  U.  S.  Court  of  Appeals  for  the  Eighth  Circuit  affirmed  some  parts  of  the  Local 
 Competition  Order  and  reversed  others.  12  The  Commission,  MCI,  AT&  T,  and  various  incumbent  LECs  appealed  different  portions  of  that  decision.  In  January  1999,  the  Supreme  Court  (1)  affirmed  the 
 Commissions  general  authority  to  adopt  unbundling  rules  to  implement  the  1996  Act,  (2)  vacated  the  specific  unbundling  rules  at  issue,  (3)  instructed  the  Commission  to  revise  the  standards  under  which  the 


 (Continued  from  previous  page) 
 359  F.  3d  554  (discussing  the  difficulties  and  limitations  inherent  in  competition  based  on  the  shared  use  of  infrastructure). 


 8  47  U.  S.  C.    251(  c)(  3). 
 9  47  U.  S.  C.    251(  d)(  2)(  B). 
 10  See  id.    252(  d)(  1). 
 11  The  seven  network  elements  set  forth  in  the  Local  Competition  Order  were:  (1)  local  loops;  (2)  network  interface 
 devices;  (3)  local  and  tandem  switching;  (4)  interoffice  transmission  facilities;  (5)  signaling  networks  and  call-related  databases;  (6)  operations  support  systems;  and  (7)  operator  services  and  directory  assistance.  Implementation 


 of  the  Local  Competition  Provisions  in  the  Telecommunications  Act  of  1996;  Interconnection  between  Local  Exchange  Carriers  and  Commercial  Mobile  Radio  Service  Providers,  CC  Docket  Nos.  96-  98,  95-  185,  First  Report 
 and  Order,  11  FCC  Rcd  15499,  15616-  775  (1996)  (Local  Competition  Order)  (subsequent  history  omitted). 
 12  Iowa  Utils.  Bd.  v.  FCC,  120  F.  3d  753  (8th  Cir.  1997). 
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 unbundling  obligation  is  determined,  and  (4)  required  the  Commission  to  reevaluate  which  network  elements  were  subject  to  unbundling  under  the  revised  standard.  13 
 5.  In  November  1999,  the  Commission  responded  to  the  Supreme  Courts  remand  by  issuing  the  UNE  Remand  Order,  in  which  it  reevaluated  the  unbundling  obligations  of  incumbent  LECs 
 and  promulgated  new  unbundling  rules,  pursuant  to  the  Courts  direction.  14  The  D.  C.  Circuit  granted  petitions  for  review,  and  in  United  States  Telecom  Assn  v.  FCC,  it  vacated  and  remanded  the  portions  of 
 the  UNE  Remand  Order  interpreting  the  statutes  impair  standard  and  establishing  a  list  of  mandatory  UNEs.  The  court  also  vacated  and  remanded  the  Commissions  line  sharing  requirements.  15 


 6.  In  December  2001,  prior  to  the  D.  C.  Circuits  issuance  of  USTA  I,  the  Commission  released  the  Triennial  Review  NPRM,  seeking  comment  regarding  how,  if  at  all,  the  unbundling  regime 
 should  be  modified  to  reflect  market  developments  since  issuance  of  the  UNE  Remand  Order.  16  Following  USTA  I,  the  Commission  asked  commenters  responding  to  the  Triennial  Review  NPRM  to 
 address  the  issues  raised  in  that  decision.  17  In  the  Triennial  Review  Order,  based  on  the  record  compiled  in  response  to  the  Triennial  Review  NPRM,  the  Commission  adopted  new  unbundling  rules  implementing 
 section  251  of  the  1996  Act.  18  The  Triennial  Review  Order  reinterpreted  the  statutes  impair  standard  and  reevaluated  incumbent  LECs  unbundling  obligations  with  regard  to  particular  elements.  Various 
 parties  appealed  the  Triennial  Review  Order,  and,  on  March  2,  2004,  the  D.  C.  Circuit  decided  USTA  II,  vacating  and  remanding  several  of  the  Triennial  Review  Orders  unbundling  rules.  19  The  USTA  II  court 
 directed  that  the  decisions  mandate  would  issue  no  later  than  the  later  of  May  2,  2004  or  the  denial  of  any  rehearing  or  rehearing  en  banc.  20 


 7.  On  March  31,  2004,  the  Commission  unanimously  called  on  industry  participants  to  engage  in  good  faith  negotiations  to  arrive  at  commercially  acceptable  arrangements  for  the  availability 


 13  AT&  T  Corp.  v.  Iowa  Utils.  Bd.,  525  U.  S.  366  (1999).  In  reaching  this  conclusion,  the  Court  held  that  the 
 Commission  had  not  adequately  considered  the  necessary  and  impair  standards  of  section  251(  d)(  2)  in  establishing  the  list  of  seven  network  elements.  Id.  at  387-  92. 


 14  UNE  Remand  Order,  15  FCC  Rcd  3696  (1999). 
 15  United  States  Telecom  Assn  v.  FCC,  290  F.  3d  415  (D.  C.  Cir.  2002)  (USTA  I). 
 16  Review  of  the  Section  251  Unbundling  Obligations  of  Incumbent  Local  Exchange  Carriers,  Implementation  of 
 the  Local  Competition  Provisions  of  the  Telecommunications  Act  of  1996,  Deployment  of  Wireline  Services  Offering  Advanced  Telecommunications  Capability,  CC  Docket  Nos.  01-  338,  96-  98,  98-  147,  Notice  of  Proposed 


 Rulemaking,  16  FCC  Rcd  22781  (2001). 
 17  See  Wireline  Competition  Bureau  Extends  Reply  Comment  Deadline  For  The  Triennial  Review  Proceedings,  CC 
 Docket  No.  01-  338,  Public  Notice,  17  FCC  Rcd  10512  (WCB  2002). 
 18  Triennial  Review  Order,  18  FCC  Rcd  at  17155-  75,  17199-  223,  17263-  79,  paras.  298-  327,  359-  93,  459-  79. 


 19  USTA  II,  359  F.  3d  at  564-  76.  In  addition,  the  court  upheld  the  Commission  with  respect  to  a  number  of 
 elements,  including  broadband  loops,  hybrid  loops,  enterprise  switching,  as  well  as  the  section  271  access  obligation. 


 20  Id.  at  595. 
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 of  unbundled  network  elements.  21  To  help  facilitate  this  period  of  negotiations,  the  Commission  requested,  and  subsequently  received,  an  extension  of  the  USTA  II  mandate  from  the  D.  C.  Circuit  through 
 June  15,  2004.  22  To  date  there  have  been  numerous  commercial  agreements  reached  between  incumbent  LECs  and  competing  carriers.  23  The  court  later  denied  a  Commission  request  to  further  stay  the  mandate, 
 and,  on  June  14,  2004,  Supreme  Court  Chief  Justice  Rehnquist  denied  competitive  LECs  petitions  for  stay  of  the  D.  C.  Circuit  mandate.  24  The  USTA  II  mandate  thus  issued  on  June  16,  2004.  25  In  letters  sent 
 to  the  Commission  in  the  days  leading  up  to  June  16,  each  of  the  four  Bell  Operating  Companies  (BOCs)  indicated  its  willingness  to  take  limited  action  to  protect  the  market  as  the  Commission  fashions  new 
 rules,  though  these  commitments  differ  both  in  their  scope  and  in  their  duration.  26 


 21  Press  Statement  of  Chairman  Michael  K.  Powell  and  Commissioners  Kathleen  Q.  Abernathy,  Michael  J.  Copps, 
 Kevin  J.  Martin  and  Jonathan  S.  Adelstein  on  Triennial  Review  Next  Steps  (rel.  Mar.  31,  2004). 
 22  See  generally  USTA  II  Stay  Order. 


 23  See,  e.  g.,  MCI,  MCI  and  Qwest  Reach  Commercial  Agreement  for  Wholesale  Services,  Press  Release  (May  31, 
 2004),  available  at  http://  global.  mci.  com/  news/  news2.  xml?  newsid=  10710&  mode=  long&  lang=  en&  width=  530&  langlinks=  off;  SBC, 


 SBC,  Sage  Telecom  Reach  Wholesale  Telecom  Services  Agreement,  Press  Release  (Apr.  3,  2004),  available  at  http://  www.  sbc.  com/  gen/  press-  room?  pid=  5097&  cdvn=  news&  newsarticleid=  21080;  BellSouth  in  Deals  with  Four 
 Carriers;  CLEC  Group  Cries  Foul  on  Deadline,  TR  DAILY  (May  5,  2004)  (describing  BellSouths  commercial  agreements  with  ABC  Telecom,  INET,  KingTel,  and  WebShoppe);  BellSouth,  BellSouth  Signs  Contracts  for  Long-Term 
 Commercial  Agreements  with  Three  Wholesale  Carriers,  Press  Release  (Apr.  29,  2004),  available  at  http://  bellsouthcorp.  com/  proactive/  newsroom/  release.  vtml?  id=  45448  (describing  BellSouths  commercial 
 agreements  with  Dialogica  Communications  Inc.,  International  Telnet,  and  CI2);  Verizon,  Verizon  and  Granite  Telecommunications  Sign  Binding  Letter  of  Intent  for  Commercial  Agreement  on  Wholesale  Services,  Press  Release 
 (June  15,  2004),  available  at  http://  newscenter.  verizon.  com/  proactive/  newsroom/  release.  vtml?  id=  85517;  Verizon,  Verizon  Entering  Into  Commercial  Agreement  With  A  Wholesale  Customer,  Press  Release  (June  18,  2004),  available 
 at  http://  newscenter.  verizon.  com/  proactive/  newsroom/  release.  vtml?  id=  85593  (describing  Verizons  commercial  agreement  with  Sterling  Telecommunications);  Verizon  Reaches  Tentative  Pact  with  CLEC  for  Network  Access,  TR 
 DAILY,  (Apr.  23,  2004)  (describing  Verizons  commercial  agreement  with  DSCI);  Wireline,  COMMUNICATIONS  DAILY  (May  19,  2004)  (describing  Verizons  commercial  agreement  with  InfoHighway). 


 24  United  States  Telecom  Assn  v.  FCC,  D.  C.  Cir.  No.  00-  1012  (and  consolidated  cases)  (June  4,  2004)  (order 
 denying  stay  of  mandate). 
 25  Several  parties  have  sought  Supreme  Court  review  of  the  USTA  II  decision.  See  National  Association  of 
 Regulatory  Utility  Commissioners  and  the  Arizona  Corporation  Commission,  Petition  for  a  Writ  of  Certiorari,  No.  04-  12  (June  30,  2004);  AT&  T  Corp.,  et  al.,  Petition  for  a  Writ  of  Certiorari,  No.  04-  15  (June  30,  2004);  People  of 


 the  State  of  California,  et  al.,  Petition  for  a  Writ  of  Certiorari,  No.  04-  18  (June  30,  2004). 
 26  SBC  states  that  it  will  continue  providing  to  [its]  wholesale  customers  the  mass  market  UNE-  P,  loops  and  high-capacity 
 transport  between  SBCs  offices  and  will  not  unilaterally  increase  the  applicable  state-  approved  prices  for  these  facilities  at  least  through  the  end  of  this  year.  Letter  from  Edward  E.  Whitacre  Jr.,  Chairman  and  CEO,  SBC, 


 to  Michael  K.  Powell,  Chairman,  FCC  (filed  June  9,  2004)  (SBC  Commitment  Letter).  BellSouth  states  that  it  will  not  unilaterally  increase  the  prices  it  charges  for  the  mass  market  UNE-  Platform  or  high-  capacity  loop  or  transport 
 UNEs  before  January  1,  2005  for  those  carriers  with  current  interconnection  agreements.  Letter  from  F.  Duane  Ackerman,  Chairman  and  CEO,  BellSouth  Corp.,  to  Michael  K.  Powell,  Chairman,  FCC  (filed  June  10,  2004) 
 (BellSouth  Commitment  Letter).  Verizon  asserts  that  until  it  will  continue  to  provide  wholesale  access  to  [its]  narrowband  network  and  will  not  unilaterally  increase  the  wholesale  price  [it]  charge[  s]  for  UNE-  P  arrangements 
 (continued.) 
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 III.  NOTICE  OF  PROPOSED  RULEMAKING 
 8.  The  USTA  II  court,  inter  alia,  vacated  the  Commissions  delegation  of  authority  to  state  commissions  to  engage  in  further  granular  impairment  analyses;  27  vacated  the  Commissions  distinction 
 between  qualifying  and  non-  qualifying  services;  28  vacated  and  remanded  the  nationwide  impairment  findings  for  mass  market  switching  and  dedicated  transport;  29  and,  in  the  context  of  reviewing  the 
 Commissions  findings  on  dedicated  transport,  vacated  and  remanded  the  failure  by  the  Commission  to  consider  alternative  network  access  arrangements,  such  as  tariffed  offerings,  offered  by  incumbent 
 LECs.  30  Importantly,  the  D.  C.  Circuit  also  remanded,  but  did  not  vacate,  other  portions  of  the  Triennial  Review  Order,  including  the  exclusion  of  entrance  facilities  from  an  impairment  analysis.  31  Moreover, 
 the  D.  C.  Circuit  called  into  question  certain  aspects  of  the  Commissions  unbundling  framework,  including  the  open-  endedness  of  the  Commissions  touchstone  of  impairment    uneconomic  entry   
 and  the  Commissions  treatment  of  impairment  in  relation  to  universal  service  cross-  subsidies.  32 
 9.  We  seek  comment  on  how  to  respond  to  the  D.  C.  Circuits  USTA  II  decision  in  establishing  sustainable  new  unbundling  rules  under  sections  251(  c)  and  251(  d)(  2)  of  the  Act.  33  As  an 
 initial  matter,  we  seek  comment  on  the  changes  to  the  Commissions  unbundling  framework  that  are  necessary,  given  the  guidance  of  the  USTA  II  court.  To  that  end,  we  seek  comment  on  how  various 
 incumbent  LEC  service  offerings  and  obligations,  such  as  tariffed  offerings  and  BOC  section  271  access  obligations,  fit  into  the  Commissions  unbundling  framework.  34  Moreover,  we  seek  comment  on  how 
 best  to  define  relevant  markets  (e.  g.,  product  markets,  geographic  markets,  customer  classes)  to  develop  rules  that  account  for  market  variability  and  to  conduct  the  service-  specific  inquiries  to  which  USTA  II 


 (Continued  from  previous  page) 
 that  are  used  to  serve  customers  with  three  lines  or  fewer  before  November  11,  2004.  Letter  from  Ivan  Seidenberg,  Chairman  and  CEO,  Verizon,  to  Michael  K.  Powell,  Chairman,  FCC  (filed  June  11,  2004).  Finally,  Qwest 


 pledge[  s]  not  to  raise  UNE-  P  rates  for  the  remainder  of  the  year.  Letter  from  Richard  C.  Notebaert,  Qwest,  to  Michael  K.  Powell,  Chairman,  FCC  (filed  June  14,  2004).  All  letters  cited  in  this  Order  have  been  filed  in  CC 
 Docket  No.  01-  338. 
 27  USTA  II,  359  F.  3d  at  565-  68,  573-  74,  594. 


 28  USTA  II,  359  F.  3d  at  591-  92,  594. 
 29  USTA  II,  359  F.  3d  at  568-  71,  574-  75,  594.  As  stated  above,  for  purposes  of  this  proceeding,  we  assume 
 arguendo  that  the  D.  C.  Circuit  also  vacated  the  Commissions  findings  regarding  enterprise  market  loops.  See  supra  note  4. 


 30  USTA  II,  359  F.  3d  at  577  (  We  therefore  hold  that  the  Commissions  impairment  analysis  must  consider  the 
 availability  of  tariffed  ILEC  special  access  when  determining  whether  would-  be  entrants  are  impaired.);  see  also  id.  at  575-  77,  592,  594. 


 31  USTA  II,  359  F.  3d  at  585-  86,  594. 
 32  USTA  II,  359  F.  3d  at  571-  73. 
 33  47  U.  S.  C.    251(  c),  (d)(  2). 
 34  See,  e.  g.,  USTA  II,  359  F.  3d  at  575-  77,  588-  90,  592,  594  (discussing  the  relevance  of  incumbent  LEC  service 
 offerings  to  unbundling  determinations,  as  well  as  BOC  section  271  access  obligations). 
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 refers.  35  Also,  we  seek  comment  on  how  to  respond  to  the  D.  C.  Circuits  guidance  on  other  threshold  factors,  including  the  relationship  between  universal  service  support  and  UNEs. 
 10.  Below,  we  set  forth  a  two-  phase  plan  to  govern  the  provision  of  unbundled  switching,  dedicated  transport  and  enterprise  market  loops  over  the  next  twelve  months.  36  In  the  absence  of  such  a 
 plan,  existing  UNE  arrangements  might  be  terminated  prematurely  without  an  orderly  transition  mechanism  in  place.  Such  an  abrupt  result  would  be  inimical  to  competition  and  its  benefits  for 
 consumers,  and  thus  would  be  inconsistent  with  the  public  interest.  Thus,  we  set  forth  below  a  plan  that  (1)  ensures  continued  availability  over  the  next  six  months  of  elements  provided  under  interconnection 
 agreements  as  of  June  15,  2004  and  (2)  mitigates,  during  the  next  six-  month  period  thereafter,  the  disruption  that  might  otherwise  ensue  in  the  absence  of  a  Commission  finding  that  any  or  all  of  those 
 elements  are  subject  to  unbundling.  37  Are  there  circumstances  in  which  particular  final  rules  would  necessitate  additional  transition  mechanisms  apart  from  or  beyond  this  second  six-  month  phase?  For 
 example,  we  seek  comment  on  what  additional  transition  mechanisms,  if  any,  would  help  to  prevent  service  disruptions  during  cut-  overs  from  UNE  facilities  to  a  carriers  own  (or  third-  party)  facilities,  or 
 for  conversions  to  tariffed  or  other  service  arrangements,  and  would  be  consistent  with  the  courts  decision. 


 11.  Moving  beyond  the  threshold  unbundling  issues,  we  seek  comment  on  how  to  apply  the  Commissions  unbundling  framework  to  make  determinations  on  access  to  individual  network  elements. 
 Thus,  we  seek  comment,  including  evidence  at  a  granular  level,  on  which  specific  network  elements  the  Commission  should  require  incumbent  LECs  to  make  available  as  UNEs  in  which  specific  markets, 
 consistent  with  USTA  II,  and  how  the  Commission  should  make  these  determinations.  Further,  we  invite  parties  to  comment  on  any  other  issues  the  Commission  should  address  in  light  of  USTA  II.  38  We  also 
 incorporate  into  this  Notice  the  Commissions  2001  Triennial  Review  NPRM,  rather  than  restating  similar 
 35  See,  e.  g.,  USTA  II,  359  F.  3d  at  575-  577,  591-  92  (requiring  Commission  to  analyze  impairment  for  all 
 telecommunications  services  and  suggesting  that  the  impairment  analysis  must  account  for  specific  characteristics  of  the  market  in  which  a  particular  requesting  carrier  operates). 


 36  See  generally  infra  Section  IV. 
 37  See  infra  paras.  29-  30. 
 38  For  example,  because  the  Commissions  hybrid  loop  unbundling  rules  changed  the  extent  to  which  and  the  ways 
 in  which  requesting  carriers  may  access  subloops  pursuant  to  section  251(  c)(  3),  we  invite  parties  to  refresh  the  record  assembled  in  response  to  the  Second  Further  Notice  in  the  Advanced  Services  proceeding  regarding 


 collocation  at  remote  incumbent  LEC  premises.  See  Deployment  of  Wireline  Services  Offering  Advanced  Telecommunications  Capability,  CC  Docket  No.  98-  147,  Order  on  Reconsideration  and  Second  Further  Notice  of 
 Proposed  Rulemaking  and  Fifth  Further  Notice,  15  FCC  Rcd  17806,  17851-  54,  paras.  103-  12  (2000)  (Second  Further  Notice)  (subsequent  history  omitted).  Similarly,  we  seek  comment  on  whether  and  how  we  should  clarify 
 our  rules  regarding  access  to  customers  served  by  integrated  digital  loop  carrier  equipment  in  a  manner  that  promotes  facilities-  based  deployment.  See,  e.  g.,  Letter  from  Tina  M.  Pidgeon,  Vice  President,  Federal  Regulatory 
 Affairs,  GCI,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  01-  338  (filed  July  1,  2004).  Furthermore,  because  we  have  received  petitions  regarding  the  details  of  the  independent  section  271  unbundling  obligations,  we 
 seek  comment  on  whether  these  obligations  need  to  be  clarified  or  modified  in  light  of  USTA  II.  See  BellSouth  Emergency  Petition  for  Declaratory  Ruling  and  Preemption  of  State  Action,  WC  Docket  No.  04-  245  (filed  July  1, 
 2004)  (petitioning  the  Commission  to  assert  exclusive  jurisdiction  over  the  enforcement  of  section  271  and  preempt  a  state  commission  ruling  asserting  jurisdiction). 
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 proposals  and  questions,  to  the  extent  that  they  remain  relevant.  39  Commenters  should  address  the  questions  posed  in  the  Triennial  Review  NPRM  to  the  extent  the  questions  remain  valid  after  USTA  I  and 
 USTA  II. 
 12.  We  intend  to  draw  on  our  experiences  with  both  the  1996  Act  and  the  rules  adopted  in  the  Triennial  Review  Order  to  inform  our  unbundling  analysis.  Since  the  Commission  released  the  Triennial 
 Review  Order,  parties  have  identified  many  interrelated  issues  through  petitions,  requests  for  waivers,  and  ex  parte  communications.  We  describe  these  proceedings  below  and  we  hereby  incorporate  the 
 pleadings,  comments,  and  ex  parte  communications  of  these  proceedings  into  this  docket.  We  first  incorporate  the  record  generated  by  the  petitions  for  reconsideration  and  clarification  of  the  Triennial 
 Review  Order,  including  discussion  of  issues  such  as  broadband  unbundling  requirements,  section  271  access  obligations,  and  access  to  signaling.  40  Next,  we  incorporate  the  record  developed  in  response  to  a 
 petition  by  BellSouth  for  temporary  waiver  of  the  Commissions  rules  regarding  enhanced  extended  links  (EELs).  41 


 13.  Additionally,  we  incorporate  three  petitions  regarding  incumbent  LEC  obligations  to  file  commercial  agreements,  under  section  252  of  the  Act,  governing  access  to  network  elements  for  which 
 there  is  no  section  251(  c)(  3)  unbundling  obligation.  42  To  that  end,  should  we  properly  treat  commercially  negotiated  agreements  for  access  to  network  elements  that  are  not  required  to  be  unbundled  pursuant  to 
 section  251(  c)(  3)  under  section  252,  section  211,  or  other  provisions  of  law? 
 14.  Finally,  we  incorporate  into  the  record  a  petition  filed  by  Qwest  for  rulemaking  to  adopt  interim  unbundling  rules  following  the  USTA  II  decision.  43  The  issues  raised  in  these  various  proceedings 
 are  suitable  for  consideration  in  this  proceeding  because  the  information  we  receive  or  have  received 
 39  Triennial  Review  NPRM,  16  FCC  Rcd  22781.  For  example,  the  Commission  sought  comment  on  the  relationship 
 between  UNEs  and  tariffed  offerings,  as  well  as  BOC  section  271  access  obligations.  See  id.  at  22801-  02,  22814-  15,  paras.  44,  72,  75.  The  Commission  also  sought  comment  on  various  market  definitions  including  service  and 


 geographic  markets.  See  id.  at  22797-  802,  paras.  34-  46.  On  May  30,  2002,  the  Commission  extended  the  reply  comment  due  date  to  allow  parties  to  respond  to  the  D.  C.  Circuits  analysis  in  USTA  I.  See  Wireline  Competition 
 Bureau  Extends  Reply  Comment  Deadline  for  the  Triennial  Review  Proceedings,  CC  Docket  No.  01-  338,  Public  Notice,  17  FCC  Rcd  10512  (WCB  2002).  We  do  not,  however,  incorporate  the  record  from  the  Triennial  Review 
 proceeding. 
 40  See  Petitions  for  Reconsideration  and  Clarification  of  Action  in  Rulemaking  Proceedings,  Report  No.  2635  (Oct. 
 9,  2003);  68  Fed.  Reg.  60391  (2003). 
 41  BellSouth  Telecommunications,  Inc.,  Petition  for  Waiver,  CC  Docket  Nos.  01-  338,  96-  98,  98-  147  (filed  Feb.  11, 
 2004). 
 42  SBC  Communications,  Inc.,  Emergency  Petition  for  Declaratory  Ruling,  Preemption,  and  Standstill,  WC  Docket 
 No.  04-  172  (filed  May  3,  2004);  BellSouth,  Emergency  Petition  for  Declaratory  Ruling  (filed  May  27,  2004);  BellSouth,  Petition  for  Forbearance  Under  47  U.  S.  C.    160(  c)  from  Enforcement  of  Section  252  with  Respect  to 


 Non-  251  Agreements  (filed  May  27,  2004). 
 43  Petition  of  Qwest  Communications  International  Inc.  for  Rulemaking  (filed  March  29,  2004)  (proposing  a  set  of 
 interim  rules,  including  pricing  limitations,  for  unbundled  switching,  shared  transport,  dedicated  transport,  and  enterprise  loops  for  the  time  period  between  vacatur  of  some  of  the  Commissions  unbundling  rules  and  adoption  of 


 final  rules). 
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 associated  with  these  proceedings  will  help  inform  our  analysis  of  incumbent  LEC  unbundling  obligations. 
 15.  Given  that  our  inquiry  raises  complex  issues,  and  proceedings  that  state  commissions  initiated  to  implement  the  Triennial  Review  Order  developed  voluminous  records  containing  information 
 potentially  relevant  to  our  inquiry,  we  anticipate  that  parties  might  wish  to  submit  much  of  that  same  factual  evidence  to  support  their  positions  here.  To  be  sure,  the  state  commissions  dedication  in 
 executing  the  difficult  tasks  set  out  for  them  in  our  Triennial  Review  Order  was  impressive,  and  we  appreciate  their  efforts.  To  make  the  records  from  state  proceedings  more  usable,  we  encourage  state 
 commissions  and  other  parties  to  file  summaries  of  the  state  proceedings,  especially  highlighting  factual  information  that  would  be  relevant  under  the  guidance  of  USTA  II.  Similarly,  we  encourage  state 
 commissions  and  other  parties  to  summarize  state  commission  efforts  to  develop  batch  hot  cut  processes.  To  avoid  duplicative  filings,  we  encourage  parties  (particularly  the  state  commissions  and  parties 
 participating  in  the  state  proceedings)  to  coordinate  with  one  another  regarding  the  filing  of  that  information.  Otherwise,  parties  generally  shall  not  incorporate  merely  by  reference  entire  documents  or 
 significant  portions  of  documents  that  were  filed  in  other  proceedings  in  this  or  other  dockets,  or  in  state  proceedings  or  elsewhere.  Rather,  the  parties  must  provide  a  complete  recitation  in  their  current  filings  of 
 any  arguments  or  data  that  they  wish  the  Commission  to  consider.  44  Moreover,  parties  making  factual  submissions  shall  provide  the  underlying  data,  analysis  and  methodologies  necessary  to  enable  the 
 Commission  and  commenters  to  evaluate  the  factual  claims  meaningfully,  including  a  discussion  of  the  basis  upon  which  data  were  included  or  excluded.  45  Further,  to  minimize  the  burden  and  time  associated 
 with  determining  parties  positions,  we  require  parties  to  make  all  substantive  legal  and  policy  arguments  in  their  comments,  reply  comments,  or  ex  parte  filings,  rather  than  only  raising  them  in  supporting 
 materials.  46  We  explicitly  warn  parties  that  these  requirements  are  being  put  into  place  to  ensure  that  the  issues  in  this  proceeding  are  fully  and  fairly  presented  within  the  severe  constraints  placed  on  the 
 Commission  by  the  necessity  of  formulating  permanent  rules  quickly. 
 IV.  ORDER 
 16.  Although  we  initiate  a  new  proceeding  to  craft  final  unbundling  rules  that  address  the  requirements  of  USTA  II,  we  find  that  the  pressing  need  for  market  certainty  until  we  issue  final 
 unbundling  rules  warrants  the  implementation  of  a  plan  that  will  preserve  for  six  months  certain  obligations  as  they  existed  on  June  15,  2004,  and  then,  during  a  subsequent  six-  month  period,  permit 
 competitive  LECs  to  access  from  incumbent  LECs  certain  network  elements  at  increased  rates.  Specifically,  we  conclude  that  the  appropriate  interim  approach  here  is  to  require  incumbent  LECs  to 
 continue  providing  unbundled  access  to  switching,  enterprise  market  loops,  and  dedicated  transport  under  the  same  rates,  terms  and  conditions  that  applied  under  their  interconnection  agreements  as  of  June  15, 
 2004.  These  rates,  terms,  and  conditions  shall  remain  in  place  until  the  earlier  of  the  effective  date  of  final  unbundling  rules  promulgated  by  the  Commission  or  six  months  after  Federal  Register  publication 


 44  Cf.  Updated  Filing  Requirements  for  the  Bell  Operating  Company  Applications  Under  Section  271  of  the 
 Communications  Act,  Public  Notice,  17  FCC  Rcd  14670,  14674  (Com.  Car.  Bur.  2001)  (discussing  requirements  for  filings  made  in  section  271  proceedings). 


 45  Cf.  id.  at  14675  (discussing  the  requirements  for  performance  data  submitted  in  support  of  a  section  271 
 application). 
 46  Cf.  id.  at  14673. 
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 of  this  Order,  except  to  the  extent  that  they  are  or  have  been  superseded  by  (1)  voluntarily  negotiated  agreements,  (2)  an  intervening  Commission  order  affecting  specific  unbundling  obligations  (e.  g.,  an  order 
 addressing  a  pending  petition  for  reconsideration),  or  (3)  (with  respect  to  rates  only)  a  state  public  utility  commission  order  raising  the  rates  for  network  elements.  Our  plan  further  contemplates  a  second  six-month 
 period  during  which  competitive  carriers  would  retain  access  to  network  elements  that  the  Commission  has  not  subjected  to  unbundling,  but  only  for  existing  customers  and  at  transitional  rates  that 
 are  modestly  higher  than  those  available  on  June  15,  2004. 
 17.  We  emphasize  at  the  outset  that  the  twelve-  month  transition  described  herein  is  essential  to  the  health  of  the  telecommunications  market  and  the  protection  of  consumers.  While  carriers  can 
 address  short-  term  instability  through  negotiated  modification  of  interconnection  agreements,  it  appears  that  the  change  of  law  provisions  found  in  carriers  interconnection  agreements  vary  widely.  While  some 
 agreements  provide  for  periods  of  renegotiation  in  which  parties  would  work  to  amend  them,  others  immediately  invalidate  the  affected  provisions  while  renegotiations  are  proceeding.  47  There  is  credible 
 evidence  before  us  that  some  incumbents  have  informed  competitive  LECs  of  their  intention  to  initiate  proceedings  to  curtail  their  UNE  offerings,  48  and  that  at  least  one  BOC  has  announced  its  intention  to 
 withdraw  certain  UNE  offerings  immediately.  49  While  such  actions  are  permitted  under  the  courts  holding  in  USTA  II,  they  would  likely  have  the  effect  of  disrupting  competitive  provision  of 
 telecommunications  services  to  millions  of  customers.  50  Moreover,  whether  competitors  and  incumbents  would  seek  resolution  of  disputes  arising  from  the  operation  of  their  change  of  law  clauses  here,  in  federal 
 court,  in  state  court,  or  at  state  public  utility  commissions,  and  what  standards  might  be  used  to  resolve  such  disputes,  is  a  matter  of  speculation.  What  is  certain,  however,  is  that  such  litigation  would  be 


 47  See  Letter  from  John  Windhausen,  Jr.,  President,  ALTS,  to  Michael  Powell,  Chairman,  FCC  at  1-  2  (filed  June 
 23,  2004)  (ALTS  June  23  Letter). 
 48  See  ALTS  June  23  Letter  at  2  (noting  that  BellSouth  has  informed  state  commissions  of  its  intent  to  immediately 
 invoke  change  of  law  provisions  and  to  eliminate  language  concerning  certain  UNEs,  and  that  Qwest  has  provided  competitive  LECs  with  formal  notice  that  it  had  begun  formal  processes  to  discontinue  its  provision  of  mass 


 market  switching,  DS1,  DS3,  and  dark  fiber  loops;  and  DS1,  DS3,  and  dark  fiber  dedicated  transport  as  UNEs);  see  also  Letter  from  David  L.  Lawson,  Counsel  for  AT&  T,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  01- 
 338  at  3-  4  (filed  May  7,  2004)  (asserting  that  BellSouth  is  attempting  to  repudiate  its  obligation  to  provide  dedicated  transport  without  first  complying  with  the  requirements  of  change  of  law  provisions  of  existing  interconnection 
 agreements). 
 49  See  ALTS  June  23  Letter  at  1-  2  (claiming  that  [  o]  n  June  18,  Verizon  began  informing  state  commissions  that, 
 pursuant  to  the  change  of  law  provisions  of  its  interconnection  agreements,  Verizon  can  begin  discontinuing  providing  loops,  switching  and  transport  immediately).  We  note  that  this  action  is  inconsistent  with  written 


 representations  made  by  the  BOCs  before  the  D.  C.  Circuit  and  the  Supreme  Court  when  opposing  a  further  stay  of  the  USTA  II  mandate.  In  that  context,  the  BOCs  argued  that  the  change  of  law  provisions  in  existing  contracts 
 contained  orderly  procedures  .  .  .  to  transition  away  from  the  current  regime  of  maximum  unbundling.  Joint  Opposition  of  ILECs  to  Motions  to  Stay  the  Mandate  Pending  the  Filing  of  Petitions  for  a  Writ  of  Certiorari,  United 
 States  Telecom  Assn  v.  FCC,  D.  C.  Cir.  No.  00-  1012  at  15  (June  1,  2004).  See  also  Opposition  of  ILECs  to  Applications  for  Stay,  NARUC  v.  USTA,  Sup.  Ct.  Nos.  03-  A1008  &  03-  A1010  at  30-  32  (June  14,  2004). 


 50  As  of  December  2003,  competitive  LECs  served  19.4  million  local  customers  using  UNEs.  IATD,  Local 
 Telephone  Competition:  Status  as  of  December  31,  2003,  Table  4  (rel.  June  2004),  available  at  <http://  www.  fcc.  gov/  wcb/  iatd/  stats.  html>.  Total  revenues  from  local  telecommunications  service  for  2002  were 


 $127  billion.  IATD,  Telecommunications  Industry  Revenue  Report,  Table  1  (rel.  Mar.  17,  2004). 
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 wasteful  in  light  of  the  Commissions  plan  to  adopt  new  permanent  rules  as  soon  as  possible.  Therefore,  consistent  with  our  statutory  mandate  to  protect  the  public  interest,  we  adopt  the  following  interim  and 
 transition  requirements. 
 A.  Interim  Requirements 
 18.  Our  plan  to  issue  revised  unbundling  rules  on  an  expedited  basis  does  not  alone  provide  the  requisite  market  stability  in  the  near  term.  The  absence  of  clear  rules,  as  stated  above,  threatens  to 
 disrupt  the  business  plans  of  competitive  carriers  and  their  service  to  millions  of  customers  that  rely  on  competitive  service  offerings.  This  is  a  risk  to  the  public  interest  too  great  to  bear  unheeded.  51  The 
 public  interest  is  best  served  by  clarity  with  regard  to  the  rates,  terms  and  conditions  under  which  network  elements  must  be  made  available  to  requesting  carriers. 


 19.  The  BOC  commitment  letters  mentioned  above  themselves  acknowledge  the  importance  of  ensur[  ing]  stability  and  continuity  during  this  period  and  confirm  the  importance  of  an  orderly 
 transition  for  consumers.  52  Although  the  BOCs  have  voluntarily  agreed  to  many  of  the  legal  obligations  imposed  by  this  Order,  we  find  that  their  commitment  letters  alone  will  not  provide  the  requisite  stability 
 as  the  Commission  works  on  permanent  rules  consistent  with  USTA  II.  First,  the  letters  commit  to  different  types  of  arrangements.  For  example,  while  SBC  and  BellSouth  make  commitments  regarding 
 transport  and  enterprise  market  loops,  Verizon  and  Qwest  do  not,  and  in  fact  have  declared  their  intentions  to  raise  prices  for  these  inputs.  Second,  the  letters  commit  to  differing  time  periods.  While 
 SBC,  BellSouth  and  Qwest  note  that  their  commitments  remain  effective  through  the  close  of  this  year,  Verizons  commitment  expires  on  November  11,  2004.  Third,  the  commitments  are  expressed  in  terms 
 subject  to  differing  interpretations.  For  example,  it  is  not  clear  whether  the  BOCs  commitments  not  to  raise  rates  unilaterally  require  the  negotiated  consent  of  the  competitor,  or  merely  a  state  commissions 
 invalidation  of  previous  rates  or  terms  in  accordance  with  the  relevant  interconnection  agreements  change  of  law  provisions.  Similarly,  it  is  unclear  whether  the  BOCs  commitments  not  to  raise  prices  in 
 the  short  term  also  preclude  retroactive  rate  increases  (i.  e.,  true-  ups)  upon  the  Commissions  issuance  of  final  rules.  53  Finally,  we  note  that  the  letters  bind  only  the  BOCs,  and  not  those  non-  BOC  incumbent 
 LECs  that  must  provide  unbundled  network  elements  pursuant  to  the  Act.  54 


 51  We  note  that  many  industry  participants  and  the  U.  S.  Department  of  Commerce  (Department  of  Commerce)  have 
 recognized  the  need  for  interim  action  to  ensure  market  stability  pending  the  issuance  of  permanent  rules.  Specifically,  the  Department  of  Commerce  has  asked  the  Commission  to  act  promptly  using  all  methods  at  [its] 


 disposal  to  protect  consumers  and  ensure  appropriate  competitive  access  to  local  networks,  including  the  rapid  adoption  of  interim  rules  that  will  accomplish  these  goals,  and  urged  us  to  prevent  wholesale  rate  increases  for 
 those  network  elements  subject  to  the  vacatur  of  the  DC  Circuit  Court  for  the  maximum  legally  sustainable  transition  period.  Letter  from  Michael  D.  Gallagher,  Acting  Assistant  Secretary  for  Communications  and 
 Information,  United  States  Department  of  Commerce,  to  Michael  K.  Powell,  Chairman,  FCC  (filed  June  16,  2004).  At  least  some  competitive  LECs  have  predicted  massive  chaos  if  BOCs  cease  providing  service  to  facilities-based 
 providers  and  their  customers.  ALTS,  ALTS  Not  Satisfied  with  RBOC  Letters  to  FCC  Claiming  to  Maintain  Status  Quo,  Press  Release  (June  14,  2004),  available  at 
 http://  206.161.82.210/  NewsPress/  061404%  20PR%  20on%  20RBOC%  20Letters.  pdf. 
 52  SBC  Commitment  Letter  at  1;  BellSouth  Commitment  Letter  at  1. 


 53  It  is  also  unclear  whether  the  commitment  letters  extend  only  to  the  prices  at  which  elements  will  be  offered  or, 
 alternatively,  whether  the  other  terms  and  conditions  that  are  inherent  to  the  UNE  regime  are  contemplated  under  (continued.) 
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 20.  Thus,  while  we  credit  the  BOCs  voluntary  efforts,  we  must  adopt  a  plan  that  will  prevent  a  gap  in  the  Acts  federal  unbundling  regime  in  the  period  leading  up  to  the  effective  date  of  the 
 permanent  rules  that  the  Commission  will  promulgate  later  this  year,  and,  will  ease  the  transition  to  whatever  new  rules  we  adopt.  As  the  D.  C.  Circuit  has  held,  [  a]  voidance  of  market  disruption  pending 
 broader  reforms  is,  of  course,  a  standard  and  accepted  justification  for  a  temporary  rule.  55  Our  interim  requirements  will,  during  the  first  six  months  of  our  year-  long  plan,  maintain  existing  unbundling 
 obligations  to  minimize  disruptive  effects  and  marketplace  uncertainty  that  otherwise  would  result  from  the  abrupt  elimination  of  particular  unbundling  requirements.  As  the  D.  C.  Circuit  has  held,  [  s]  ubstantial 
 deference  must  be  accorded  an  agency  when  it  acts  to  maintain  the  status  quo  so  that  the  objectives  of  [related  proceedings]  will  not  be  frustrated.  56  Here,  the  disruption  that  would  accompany  a  chaotic 
 transition  period  would  undermine  the  very  competition  that  was  the  objective  of  USTA  II,  and  we  thus  exercise  our  authority  to  take  interim  action  to  protect  the  market  during  this  transition  period  for  a 
 limited  period  lasting  until  no  later  than  six  months  after  Federal  Register  publication  of  this  Order. 
 21.  Specifically,  we  require  that  between  the  effective  date  of  this  Order  and  the  effective  date  of  the  permanent  unbundling  rules  that  the  Commission  plans  to  issue  before  the  close  of  2004, 
 incumbent  LECs  shall  continue  providing  unbundled  access  to  switching,  enterprise  market  loops,  and  dedicated  transport  under  the  rates,  terms  and  conditions  that  applied  under  their  interconnection 
 agreements  as  of  June  15,  2004.  57  These  rates,  terms,  and  conditions  shall  remain  in  place  until  the  earlier  of  the  effective  date  of  final  unbundling  rules  promulgated  by  the  Commission  or  six  months  after  Federal 
 Register  publication  of  this  Order,  except  to  the  extent  that  they  are  or  have  been  superseded  by  (1)  voluntarily  negotiated  agreements,  58  (2)  an  intervening  Commission  order  affecting  specific  unbundling 
 obligations  (e.  g.,  an  order  addressing  a  pending  petition  for  reconsideration),  or  (3)  (with  respect  to  rates  only)  a  state  public  utility  commission  order  raising  the  rates  for  network  elements.  59  These  interim 


 (Continued  from  previous  page) 
 those  letters.  We  note  that  our  UNE  rules  do  not  just  encompass  pricing  terms  but  also  other  important  terms  and  conditions  that  are  important  to  the  stability  of  the  telecommunications  market  in  the  short  term. 


 54  Section  251(  f)  exempts  many,  but  not  all,  non-  BOC  incumbent  LECs  from  the  unbundling  obligations  set  forth  in 
 section  251(  c)(  3).  See  47  U.  S.  C.    251(  f). 
 55  CompTel  v.  FCC,  309  F.  3d  8,  14  (D.  C.  Cir.  2002)  (citing  MCI  v.  FCC,  750  F.  2d  at  141;  ACS  of  Anchorage,  Inc. 
 v.  FCC,  290  F.  3d  403,  410  (D.  C.  Cir.  2002)). 
 56  MCI  v.  FCC,  750  F.  2d  at  141. 


 57  For  purposes  of  evaluating  carriers  obligations  under  this  interim  regime,  we  do  not  draw  distinctions  between 
 obligations  resulting  from  an  interconnection  agreement  that  was  in  effect  on  June  15,  2004  and  obligations  that  were  set  forth  in  an  expired  agreement  but  that  nevertheless  still  applied  on  June  15,  2004  (as  a  result,  for  example, 


 of  a  contractual  provision  rendering  the  agreements  provisions  enforceable  after  expiration  in  the  absence  of  some  other  event,  such  as  the  execution  of  a  new  agreement). 


 58  As  noted  above,  see  supra  note  23,  several  parties  have  successfully  negotiated  agreements  governing 
 interconnection.  We  support  such  negotiations,  and  thus  specifically  craft  these  interim  requirements  to  minimize  the  risk  that  they  might  nullify  existing  agreements  or  foreclose  any  future  agreements. 


 59  During  this  interim  period,  and  only  during  this  six-  month  interim  period,  these  rates,  terms  and  conditions  must 
 also  be  made  available  for  provision  of  service  to  a  competitive  LECs  new  customers. 
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 requirements  will  only  remain  in  place  for  six  months  after  Federal  Register  publication  of  this  Order,  by  which  time  we  intend  to  issue  permanent  rules. 
 22.  In  order  to  allow  a  speedy  transition  in  the  event  we  ultimately  decline  to  unbundle  switching,  enterprise  market  loops,  or  dedicated  transport,  we  expressly  preserve  incumbent  LECs 
 contractual  prerogatives  to  initiate  change  of  law  proceedings  to  the  extent  consistent  with  their  governing  interconnection  agreements.  To  that  end,  we  do  not  restrict  such  change-  of-  law  proceedings  from 
 presuming  an  ultimate  Commission  holding  relieving  incumbent  LECs  of  section  251  unbundling  obligations  with  respect  to  some  or  all  of  these  elements,  but  under  any  such  presumption,  the  results  of 
 such  proceedings  must  reflect  the  transitional  structure  set  forth  below.  60  In  no  instance,  however,  shall  the  rates,  terms  or  conditions  resulting  from  any  such  proceeding  take  effect  before  the  earlier  of  (1) 
 Federal  Register  publication  of  this  Order  or  (2)  the  effective  date  of  our  forthcoming  final  unbundling  rules.  We  also  hold  that  competitive  LECs  may  not  opt  into  the  contract  provisions  frozen  in  place  by 
 this  interim  approach.  The  fundamental  thrust  of  the  interim  relief  provided  here  is  to  maintain  the  status  quo  in  certain  respects  without  expanding  unbundling  beyond  that  which  was  in  place  on  June  15,  2004. 
 This  aim  would  not  be  served  by  a  requirement  permitting  new  carriers  to  enter  during  the  interim  period. 
 23.  Our  approach  here  is,  in  several  meaningful  respects,  different  from  a  mere  reinstatement  of  our  vacated  rules.  Most  significantly,  the  interim  approach  forecloses  the  implementation  and 
 propagation  of  the  vacated  rules.  For  various  reasons,  the  vacated  rules  had  generally  not  yet  been  translated  into  contractual  agreements.  Thus,  by  freezing  in  place  carriers  obligations  as  they  stood  on 
 June  15,  2004,  we  are  in  many  ways  preserving  contract  terms  that  predate  the  vacated  rules.  Moreover,  if  the  vacated  rules  were  still  in  place,  competing  carriers  could  expand  their  contractual  rights  by  seeking 
 arbitration  of  new  contracts,  or  by  opting  into  other  carriers  new  contracts.  The  interim  approach  adopted  here,  in  contrast,  does  not  enable  competing  carriers  to  do  either.  Further,  as  described  above, 
 while  we  require  incumbents  to  continue  providing  the  specified  elements  at  the  June  15,  2004  rates,  terms  and  conditions,  we  do  not  prohibit  incumbents  from  initiating  change  of  law  proceedings  that 
 presume  the  absence  of  unbundling  requirements  for  switching,  enterprise  market  loops,  and  dedicated  transport,  so  long  as  they  reflect  the  transition  regime  set  forth  below,  and  provided  that  incumbents 
 continue  to  comply  with  our  interim  approach  until  the  earlier  of  (1)  Federal  Register  publication  of  this  Order  or  (2)  the  effective  date  of  our  forthcoming  final  unbundling  rules.  Thus,  whatever  alterations  are 
 approved  or  deemed  approved  by  the  relevant  state  commission  may  take  effect  quickly  if  our  final  rules  in  fact  decline  to  require  unbundling  of  the  elements  at  issue,  or  if  new  unbundling  rules  are  not  in  place 
 by  six  months  after  Federal  Register  publication  of  this  Order.  61 
 24.  Incumbent  LECs  and  competitive  LECs  recently  have  both  agreed  that  the  Commission  has  the  authority  to  adopt  some  form  of  interim  rules,  pending  the  expeditious  completion  of 


 60  See  infra  paras.  29-  30. 
 61  See  infra.  para.  29.  We  also  note  that  the  interim  regime  imposes  unbundling  obligations  that  are  no  greater  than 
 the  requirements  incumbent  LECs  currently  operate  under    and,  in  many  cases,  have  voluntarily  agreed  to  continue.  Indeed,  the  BOCs  themselves  have  argued  to  the  D.  C.  Circuit  and  the  Supreme  Court  that  existing  change 


 of  law  provisions  contain  orderly  procedures  .  .  .  to  transition  away  from  the  current  regime  of  maximum  unbundling.  Joint  Opposition  of  ILECs  to  Motions  to  Stay  the  Mandate  Pending  the  Filing  of  Petitions  for  a  Writ 
 of  Certiorari,  United  States  Telecom  Assn  v.  FCC,  D.  C.  Cir.  No.  00-  1012,  June  1,  2004,  at  15;  see  also  Opposition  of  ILECs  to  Applications  for  Stay,  NARUC  v.  USTA,  Sup.  Ct.  Nos.  03-  A1008  &  03-  A1010,  June  14,  2004,  at  30-  32. 
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 a  proceeding  crafting  new  permanent  rules.  62  As  we  describe  below,  parties  have  proposed  a  variety  of  alternative  approaches.  We  have  considered  these  and  other  alternatives,  but  determine  that  none  of  them 
 better  promotes  stability  and  minimizes  harmful  disruption  in  the  telecommunications  markets  during  the  transition  to  new  permanent  rules  that  are  consistent  with  the  USTA  II  decision.  Both  AT&  T  and  ALTS, 
 for  example,  suggest  that  the  Commission  consider  enabling  incumbent  LECs  to  petition  for  waivers  of  any  interim  requirements  requiring  access  to  unbundled  elements  in  certain  circumstances.  Recognizing 
 that  this  subject  matter  is  complicated  and  fact-  intensive    particularly  in  a  waiver  process  that  seeks  to  address  the  range  of  concerns  raised  by  the  court  in  USTA  II    we  find  that  administrative  resources  will 
 be  best  spent  immediately  addressing  permanent  rules,  rather  than  perfecting  a  longer  interim  regime. 
 25.  We  also  decline  to  make  our  interim  rules  subject  to  a  true-  up,  under  which,  for  example,  competing  carriers  would  be  required  to  pay  back  the  difference  between  UNE  and  market-based 
 rates  if  the  Commission  determines  that  a  particular  network  element  need  not  be  unbundled  under  its  permanent  rules.  This  approach  is  tantamount  to  doing  nothing  at  all,  given  the  severity  of  the 
 immediate  financial  impact  it  could  have  on  competitive  LECs.  For  accounting  purposes,  these  carriers  would  likely  have  to  begin  to  reserve    immediately  and  for  every  single  element  subject  to  dispute    the 
 difference  between  the  UNE  prices  temporarily  in  effect  and  the  higher  rates,  such  as  special  access  pricing,  to  which  those  elements  might  ultimately  (and,  in  the  presence  of  a  true-  up,  retroactively)  be 
 subjected.  We  also  considered,  but  decline  to  adopt,  an  interim  approach  that  precludes  the  addition  of  new  customers;  given  the  high  rate  of  customer  turn-  over  for  services  affected  by  these  rules,  we  find  that 
 competitive  LECs  ability  to  compete  or  even  stay  in  business,  using  network  elements  that  may  be  retained  to  some  degree  in  permanent  rules,  would  be  severely  compromised.  Further,  while  we  find  it 
 critical  to  provide  carriers  with  the  certainty  of  a  near-  term  transitional  pricing  mechanism,  we  find  it  unnecessary  to  establish  at  this  time  a  multi-  year  transitional  mechanism,  as  requested  by  AT&  T. 


 26.  Moreover,  we  find  that  our  interim  approach,  which  preserves  legal  obligations  as  of  June  15,  2004,  is  superior  to  the  imposition  of  entirely  new  interim  requirements.  Temporary  implementation 
 of  unfamiliar  interim  requirements  would  likely  require  changes  to  existing  practices,  possibly  including  costly  and  cumbersome  alterations  to  incumbent  LECs  operations  and  support  systems,  which  might 
 need  to  be  reversed  or  further  revised  only  months  later  when  the  final  rules  become  effective.  Moreover,  any  attempt  to  create  and  implement  new  unbundling  rules  that  would  be  effective  for  only  the  brief 
 interim  period  until  the  Commission  adopts  permanent  rules  would  be  administratively  burdensome  for  both  the  Commission  and  industry  participants.  Finally,  the  temporary  withdrawal  of  access  to  UNEs  that 
 the  Commission  ultimately  might  find  to  be  subject  to  section  251(  c)(  3)  would  threaten  irreparable    and  perhaps  debilitating    harm  to  competitive  LECs,  which  rely  on  such  elements  to  serve  their  customers, 
 and  which  might  well  be  unable  to  recapture  customers  lost  during  a  UNE-  free  interim  period.  Thus,  just  like  the  absence  of  any  rules  at  all,  the  implementation  of  a  new  interim  approach  could  lead  to  further 
 disruption  and  confusion  that  would  disserve  the  goals  of  section  251. 
 27.  Given  the  need  for  immediate  interim  action,  the  requirements  set  forth  here  shall  take  effect  immediately  upon  Federal  Register  publication,  and  without  prior  public  notice  and  comment. 
 Commission  rules  permit  us  to  render  an  order  effective  upon  publication  in  the  Federal  Register  where 
 62  See  ALTS  June  23  Letter  at  2-  3;  Letter  from  Richard  S.  Whitt,  Senior  Director,  Federal  Law  and  Policy,  MCI,  to 
 Michael  K.  Powell,  Chairman,  FCC,  et  al.  at  4  (filed  June  25,  2004);  Letter  from  Michael  Kellogg,  Counsel  for  United  States  Telecom  Association,  to  John  A.  Rogovin,  General  Counsel,  Federal  Communications  Commission  at 


 2-  3  (filed  June  24,  2004). 
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 good  cause  warrants.  63  Similarly,  section  553(  b)  of  the  Administrative  Procedures  Act  (APA)  64  permits  any  agency  to  implement  a  rule  without  public  notice  and  opportunity  for  comment  when  the  agency  for 
 good  cause  finds  .  .  .  that  notice  and  public  procedure  thereon  are  impracticable,  unnecessary,  or  contrary  to  the  public  interest.  65  As  a  general  matter,  we  firmly  believe  that  public  notice  requirements  are  an 
 essential  component  of  our  rulemaking  process.  Above,  we  seek  comment  regarding  permanent  rules  on  an  expedited  basis  to  ensure  prompt  implementation  of  the  USTA  II  mandate.  We  find,  however,  that 
 while  receipt  of  public  comment  clearly  is  necessary  to  the  formulation  of  final  rules  responsive  to  USTA  II,  there  exists  good  cause  to  make  this  Order  effective  upon  Federal  Register  publication  and  adopt  the 
 interim  requirement  described  herein  immediately. 
 28.  We  find  such  good  cause  for  several  reasons.  First,  concurrently  with  the  action  in  this  Order,  the  Commission  is  commencing  a  new  proceeding,  and  is  thus  limiting  the  applicability  of  these 
 interim  requirements  to  only  six  months.  66  Second,  immediate  adoption  of  the  interim  approach,  without  prior  notice  and  comment,  serves  the  public  interest.  The  interim  requirements  merely  maintain 
 unbundling  obligations  that  have  been  governing  the  industry.  Indeed,  the  obligation  to  unbundle  switching,  enterprise  market  loops,  and  transport  has  been  in  place  for  several  years.  67  As  described 
 above,  precipitate  elimination  of  those  requirements  could  destabilize  the  market  and  initiate  negotiations  that  might,  in  some  or  all  cases,  be  rendered  null  and  void  upon  the  Commissions  issuance  of  final  rules. 
 Courts  have  upheld  agencies  exercise  of  section  553(  b)  authority  based  on  considerations  such  as  the  need  to  avoid  regulatory  confusion  and  industry  disruption  where  parties  have  placed  considerable 
 reliance  on  the  vacated  rules.  68  These  considerations  are  applicable  here,  and  counsel  prompt  implementation  of  an  interim  requirement  without  prior  notice  and  comment,  effective  upon  publication 
 of  this  Order  in  the  Federal  Register. 
 B.  Twelve-  Month  Plan 
 29.  Our  commitment  to  providing  certainty  and  steadiness  in  the  market  extends  beyond  the  six-  month  interim  period  addressed  above.  We  recognize  that  while  certainty  in  the  short  term  is  critical, 
 industry  participants  also  require  a  clear  understanding  of  how  the  regulatory  landscape  might  change  after  our  issuance  of  final  rules.  While  we  cannot  and  will  not  prejudge  the  important  questions  posed  in 
 the  attached  Notice,  we  believe  the  public  interest  would  be  served  by  a  transition  in  the  event  that  our  final  rules  decline  to  require  unbundled  access  to  any  element  or  elements  that  were  available  to 


 63  See  47  C.  F.  R.    1.103(  a),  1.427(  b). 
 64  5  U.  S.  C.    500  et  seq. 
 65  5  U.  S.  C.    553(  b)(  3)(  B). 
 66  Mid-  Tex  Elec.  Co-  op.,  Inc.  v.  FERC,  822  F.  2d  1123,  1132  (D.  C.  Cir.  1987). 
 67  See,  e.  g.,  UNE  Remand  Order,  15  FCC  Rcd  at  3704,  para.  15.  In  many  cases,  BOCs  have  already  voluntarily 
 agreed  to  adhere  to  much  of  the  legal  obligation  we  preserve  here. 
 68  Mid-  Tex  v.  FERC,  822  F.  2d  at  1131-  32;  see  also  Amendment  of  Parts  80  and  87  of  The  Commission's  Rules  to 
 Permit  Operation  of  Certain  Domestic  Ship  and  Aircraft  Radio  Stations  Without  Individual  Licenses,  WT  Docket  No.  96-  82,  Notice  of  Proposed  Rulemaking,  11  FCC  Rcd  6353,  6354,  paras.  12-  13  (1996)  (finding  good  cause  to 


 suspend  a  regulatory  requirement  without  public  notice,  in  part  to  avoid  confusion  and  regulatory  uncertainty  in  the  affected  industries). 
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 amounts  of  data  are  encouraged  to  file  copies  of  that  data  on  CD-  ROM  in  a  searchable,  read-  only  format,  formatted  in  Microsoft  Word,  Microsoft  Excel,  PDF,  or  such  other  format  as  may  be  approved  by  the 
 Wireline  Competition  Bureau.  We  note  that  the  Wireline  Competition  Bureau  has  today  adopted  a  protective  order  under  which  commenters  may  file  confidential  materials  in  this  proceeding  if  they  so 
 chose.  75 
 33.  Comments  filed  through  ECFS  can  be  sent  in  electronic  form  via  the  Internet  to  <http://  www.  fcc.  gov/  e-  file/  ecfs.  html>.  Only  one  copy  of  an  electronic  submission  must  be  filed.  In 
 completing  the  transmittal  screen,  commenters  should  include  a  full  name,  postal  service  mailing  address,  and  the  applicable  docket  numbers,  which  in  this  instance  are  CC  Docket  No.  01-  338  and  WC  Docket  No. 
 04-  313.  Parties  may  also  submit  an  electronic  comment  by  Internet  e-  mail.  To  obtain  filing  instructions  for  e-  mail  comments,  commenters  should  send  an  e-  mail  to  ecfshelp@  fcc.  gov,  and  should  include  the 
 following  words  in  the  regarding  line  of  the  message:  get  form<  your  e-  mail  address>.  A  sample  form  and  directions  will  be  sent  in  reply. 


 34.  Parties  who  choose  to  file  by  paper  must  file  an  original  and  four  copies  of  each  filing.  Parties  filing  by  paper  must  also  send  five  (5)  courtesy  copies  to  the  attention  of  Janice  M.  Myles, 
 Wireline  Competition  Bureau,  Competition  Policy  Division,  445  12th  Street,  S.  W.,  Suite  5-  C327,  Washington,  D.  C.  20554,  or  via  e-  mail  janice.  myles@  fcc.  gov.  Paper  filings  and  courtesy  copies  must  be 
 delivered  in  the  following  manner.  Filings  can  be  sent  by  hand  or  messenger  delivery,  by  commercial  overnight  courier,  or  by  first-  class  or  overnight  U.  S.  Postal  Service  mail  (although  we  continue  to 
 experience  delays  in  receiving  U.  S.  Postal  Service  mail). 
 35.  The  Commissions  contractor,  Natek,  Inc.,  will  receive  hand-  delivered  or  messenger-delivered  paper  filings  for  the  Commissions  Secretary  at  236  Massachusetts  Avenue,  N.  E.,  Suite  110, 
 Washington,  D.  C.  20002.  The  filing  hours  at  this  location  last  from  8:  00  a.  m.  to  7:  00  p.  m.  All  hand  deliveries  must  be  held  together  with  rubber  bands  or  fasteners.  Any  envelopes  must  be  disposed  of 
 before  entering  the  building.  This  facility  is  the  only  location  where  hand-  delivered  or  messenger-delivered  paper  filings  or  courtesy  copies  for  the  Commissions  Secretary  and  Commission  staff  will  be 
 accepted. 
 36.  Commercial  overnight  mail  (other  than  U.  S.  Postal  Service  Express  Mail  and  Priority  Mail)  must  be  sent  to  9300  East  Hampton  Drive,  Capitol  Heights,  MD  20743. 


 37.  U.  S.  Postal  Service  first-  class  mail,  Express  Mail,  and  Priority  Mail  should  be  addressed  to  445  12th  Street,  SW,  Washington,  D.  C.  20554. 
 38.  All  filings  must  be  addressed  to  the  Commissions  Secretary,  Office  of  the  Secretary,  Federal  Communications  Commission. 
 39.  One  copy  of  each  filing  must  be  sent  to  Best  Copy  and  Printing,  Inc.,  Portals  II,  445  12th  Street,  SW,  Room  CY-  B402,  Washington,  DC  20554,  telephone  1-  800-  378-  3160,  or  online  at 
 www.  bcpiweb.  com. 
 75  This  protective  order  matches  that  which  the  Bureau  adopted  for  use  in  the  Triennial  Review  proceeding.  See 
 Review  of  the  Section  251  Unbundling  Obligations  of  Incumbent  Local  Exchange  Carriers,  CC  Docket  Nos.  01-  338,  96-  98,  98-  147,  Order,  17  FCC  Rcd  5852  (WCB  2002). 
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 40.  Each  comment  and  reply  comment  must  include  a  short  and  concise  summary  of  the  substantive  arguments  raised  in  the  pleading.  Comments  and  reply  comments  must  also  comply  with 
 section  1.48  and  all  other  applicable  sections  of  the  Commissions  rules.  76  We  direct  all  interested  parties  to  include  the  name  of  the  filing  party  and  the  date  of  the  filing  on  each  page  of  their  comments  and  reply 
 comments.  All  parties  are  encouraged  to  utilize  a  table  of  contents,  regardless  of  the  length  of  their  submission. 


 41.  Filings  and  comments  may  be  downloaded  from  the  Commissions  ECFS  web  site,  and  filings  and  comments  are  available  for  public  inspection  and  copying  during  regular  business  hours  at  the 
 FCC  Reference  Information  Center,  Portals  II,  445  12th  Street,  SW,  Room  CY-  A257,  Washington,  D.  C.  20554.  They  may  also  be  purchased  from  the  Commissions  duplicating  contractor,  Best  Copy  and 
 Printing,  Inc.,  Portals  II,  445  12th  Street,  SW,  Room  CY-  B402,  Washington,  DC  20554,  telephone  1-  800-  378-  3160,  or  online  at  www.  bcpiweb.  com. 


 C.  Commission  Resources  For  Commenting  Parties 
 42.  In  order  to  keep  interested  parties  apprised  of  new  developments  in  this  proceeding  and  to  facilitate  meaningful  comment  from  all  interested  parties,  the  Wireline  Competition  Bureau  will  maintain 
 a  website  devoted  to  this  proceeding,  including  links  to  relevant  resources,  available  at:  http://  www.  fcc.  gov/  wcb/  cpd/  triennial_  review/.  This  website  is  not  intended  to  serve    and  should  not  be 
 relied  upon    as  a  complete  list  of  relevant  resources,  but  rather  to  promote  meaningful  analysis  during  the  accelerated  comment  period  contemplated  in  this  Notice. 


 43.  Additionally,  for  parties  not  familiar  with  the  Commissions  Internet  resources,  we  highlight  two  databases  that  may  aid  interested  parties  in  their  participation  in  this  proceeding.  First,  the 
 Commissions  Electronic  Comment  Filing  System  (ECFS)  serves  as  the  repository  for  official  records  in  the  Commissions  docketed  proceedings  and  rulemakings,  such  as  this,  from  the  year  1992  onward.  77 
 Any  interested  party  can  research,  retrieve,  view,  and  print  any  document  in  the  system,  including  comments  and  other  pleadings  filed  by  parties  to  prior  and  ongoing  proceedings.  78  Second,  all 
 Commission  decisions  and  other  publications  issued  since  March  1996  can  be  found  via  the  Commissions  EDOCS  database.  79 


 76  See  47  C.  F.  R.    1.48. 
 77  The  Commissions  ECFS  system  can  be  accessed  at:  http://  gullfoss2.  fcc.  gov/  prod/  ecfs/  comsrch_  v2.  cgi  (main 
 site);  or  at:  http://  svartifoss2.  fcc.  gov/  prod/  ecfs/  comsrch_  v2.  cgi  (alternative  site). 
 78  Please  refer  to  the  Commissions  ECFS  webpage  at:  http://  www.  fcc.  gov/  cgb/  ecfs/  for  more  details.  For 
 instructions  on  filing  comments  or  other  pleadings,  please  refer  to  the  discussion  above. 
 79  The  Commissions  EDOCS  database  is  available  at: 
 http://  hraunfoss.  fcc.  gov/  edocs_  public/  SilverStream/  Pages/  edocs.  html.  EDOCS  has  two  search  modules:  quick  79  and  advanced.  The  quick  search  allows  users  to  search  by  a  documents  DA  or  FCC  number,  its  release  date,  and/  or 


 its  title  or  description.  The  advanced  search  allows  users  to  search  by  a  much  larger  number  of  criteria  including  citations,  titles,  descriptions,  docket  numbers,  and  dates.  The  EDOCS  advanced  query  works  with  any  data  element 
 or  combination  of  data  elements. 
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 D.  Accessible  Formats 
 44.  To  request  materials  in  accessible  formats  for  people  with  disabilities  (braille,  large  print,  electronic  files,  audio  format),  send  an  e-  mail  to  fcc504@  fcc.  gov  or  call  the  Consumer  &  Governmental 
 Affairs  Bureau  at  202-  418-  0531  (voice),  202-  418-  7365  (tty). 
 E.  Initial  Regulatory  Flexibility  Analysis 
 45.  As  required  by  the  Regulatory  Flexibility  Act,  see  5  U.  S.  C.    603,  the  Commission  has  prepared  an  Initial  Regulatory  Flexibility  Analysis  (IRFA)  of  the  possible  significant  economic  impact  on 
 small  entities  of  the  policies  and  rules  addressed  in  this  document.  The  IRFA  is  set  forth  in  the  Appendix.  Written  public  comments  are  requested  on  the  IRFA.  These  comments  must  be  filed  in  accordance  with 
 the  same  filing  deadlines  as  comments  filed  in  response  to  this  Notice  of  Proposed  Rule  Making  as  set  forth  above,  and  have  a  separate  and  distinct  heading  designating  them  as  responses  to  the  IRFA. 


 F.  Paperwork  Reduction  Act  Analysis 
 46.  This  document  does  not  contain  proposed  information  collection(  s)  subject  to  the  Paperwork  Reduction  Act  of  1995  (PRA),  Public  Law  104-  13.  In  addition,  therefore,  it  does  not  contain 
 any  new  or  modified  information  collection  burden  for  small  business  concerns  with  fewer  than  25  employees,  pursuant  to  the  Small  Business  Paperwork  Relief  Act  of  2002,  Public  Law  107-  198,  see  44 
 U.  S.  C.    3506(  c)(  4). 
 VI.  ORDERING  CLAUSES 
 47.  Accordingly,  IT  IS  ORDERED  that  pursuant  to  Sections  1,  3,  4,  201-  205,  251,  256,  303(  r)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  153,  154,  201-  205,  251,  252, 
 256,  271,  303(  r),  and  706  of  the  Telecommunications  Act  of  1996,  47  U.  S.  C.    157  nt,  the  Order  and  Notice  of  Proposed  Rulemaking  in  CC  Docket  No.  01-  338  and  WC  Docket  No.  04-  313  IS  ADOPTED, 
 and  the  interim  requirements  set  forth  herein  SHALL  BECOME  EFFECTIVE  immediately  upon  publication  in  the  Federal  Register  pursuant  to  5  U.  S.  C.    553(  b)(  3)(  B). 


 48.  IT  IS  FURTHER  ORDERED  that  pursuant  to  Sections  1,  3,  4,  201-  205,  251,  256,  303(  r)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  153,  154,  201-  205,  251,  252,  256, 
 271,  303(  r),  and  706  of  the  Telecommunications  Act  of  1996,  47  U.  S.  C.    157  nt,  the  emergency  motion  for  stabilization  order  filed  in  CC  Docket  Nos.  01-  338,  96-  98,  98-  147  by  CompTel/  ASCENT  on  June  24, 
 2004  IS  GRANTED  to  the  extent  indicated  herein  and  otherwise  IS  DENIED. 
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 49.  IT  IS  FURTHER  ORDERED,  that  the  Commissions  Consumer  and  Governmental  Affairs  Bureau,  Reference  Information  Center,  SHALL  SEND  a  copy  of  this  Order  and  Notice  of 
 Proposed  Rulemaking,  including  the  Initial  Regulatory  Flexibility  Analysis,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business  Administration. 


 FEDERAL  COMMUNICATIONS  COMMISSION 


 Marlene  H.  Dortch  Secretary 
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 APPENDIX 
 INITIAL  REGULATORY  FLEXIBILITY  ANALYSIS 
 1.  As  required  by  the  RFA,  1  the  Commission  has  prepared  this  IRFA  of  the  possible  significant  economic  impact  on  a  substantial  number  of  small  entities  by  the  policies  and  rules  proposed  in  this 
 NPRM.  Written  public  comments  are  sought  on  this  IRFA.  Comments  must  be  identified  as  responses  to  the  IRFA  and  must  be  filed  by  the  deadlines  for  comments  on  the  NPRM,  provided  above  in  Part  V.  The 
 Commission  will  send  a  copy  of  the  NPRM,  including  this  IRFA,  to  the  Chief  Counsel  for  SBA  Advocacy.  2  In  addition,  the  NPRM  and  IRFA  (or  summaries  thereof)  will  be  published  in  the  Federal 
 Register.  3 
 A.  Need  for,  and  Objectives  of,  the  Proposed  Rule 
 2.  We  initiate  this  proceeding  to  begin  a  comprehensive  examination  of  the  circumstances  under  which  incumbent  LECs  must  make  UNEs  available  to  requesting  carriers  pursuant  to  sections  251(  c)(  3) 
 and  251(  d)(  2)  of  the  Act.  The  Commission  last  reviewed  its  unbundling  rules  comprehensively  in  2003  in  the  Triennial  Review  Order.  Portions  of  the  Triennial  Review  Order  were  vacated  and/  or  remanded  by 
 the  D.  C.  Circuit  in  its  USTA  II  decision.  4  The  NPRM  seeks  comment  on  how  the  Commission  should  respond  to  the  D.  C.  Circuits  opinion,  both  in  terms  of  creating  a  legally  sustainable  impairment  standard 
 and  applying  that  standard  to  individual  network  elements.  5 
 B.  Legal  Basis 
 3.  The  legal  basis  for  any  action  that  may  be  taken  pursuant  to  the  NPRM  is  contained  in  Sections  1,  3,  4,  201-  205,  251,  256,  271,  303(  r)  of  the  Communications  Act  of  1934,  as  amended,  47 
 U.  S.  C.    151,  153,  154,  201-  205,  251,  252,  256,  271,  303(  r). 
 C.  Description  and  Estimate  of  the  Number  of  Small  Entities  To  Which  the  Proposed  Rules  Would  Apply 


 4.  The  RFA  directs  agencies  to  provide  a  description  of,  and,  where  feasible,  an  estimate  of,  the  number  of  small  entities  that  may  be  affected  by  the  rules  adopted  herein.  6  The  RFA  generally  defines 
 the  term  small  entity  as  having  the  same  meaning  as  the  terms  small  business,  small  organization, 


 1  See  5  U.  S.  C.    603.  The  RFA,  see  5  U.  S.  C.    601-  612,  has  been  amended  by  the  SBREFA,  Pub.  L.  No.  104- 
 121,  Title  II,  110  Stat.  857  (1996). 
 2  See  5  U.  S.  C.    603(  a). 


 3  Id. 
 4  USTA  II,  359  F.  3d  554. 
 5  See  Order  and  Notice  of  Proposed  Rulemaking,  supra  paras.  8-  13. 
 6  5  U.  S.  C.    604(  a)(  3). 
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 and  small  governmental  jurisdiction.  7  In  addition,  the  term  small  business  has  the  same  meaning  as  the  term  small  business  concern  under  the  Small  Business  Act.  8  A  small  business  concern  is  one 
 which:  (1)  is  independently  owned  and  operated;  (2)  is  not  dominant  in  its  field  of  operation;  and  (3)  satisfies  any  additional  criteria  established  by  the  Small  Business  Administration  (SBA).  9 


 5.  In  this  section,  we  further  describe  and  estimate  the  number  of  small  entity  licensees  and  regulatees  that  may  be  affected  by  our  action.  The  most  reliable  source  of  information  regarding  the  total 
 numbers  of  certain  common  carrier  and  related  providers  nationwide,  as  well  as  the  number  of  commercial  wireless  entities,  appears  to  be  the  data  that  the  Commission  publishes  in  its  Trends  in 
 Telephone  Service  report.  10  The  SBA  has  developed  small  business  size  standards  for  wireline  and  wireless  small  businesses  within  the  three  commercial  census  categories  of  Wired  Telecommunications 
 Carriers,  11  Paging,  12  and  Cellular  and  Other  Wireless  Telecommunications.  13  Under  these  categories,  a  business  is  small  if  it  has  1,500  or  fewer  employees.  Below,  using  the  above  size  standards  and  others, 
 we  discuss  the  total  estimated  numbers  of  small  businesses  that  might  be  affected  by  our  actions. 
 6.  We  have  included  small  incumbent  local  exchange  carriers  in  this  present  RFA  analysis.  As  noted  above,  a  small  business  under  the  RFA  is  one  that,  inter  alia,  meets  the  pertinent  small  business 
 size  standard  (e.  g.,  a  telephone  communications  business  having  1,500  or  fewer  employees),  and  is  not  dominant  in  its  field  of  operation.  14  The  SBAs  Office  of  Advocacy  contends  that,  for  RFA  purposes, 
 small  incumbent  local  exchange  carriers  are  not  dominant  in  their  field  of  operation  because  any  such  dominance  is  not  national  in  scope.  15  We  have  therefore  included  small  incumbent  local  exchange 


 7  5  U.  S.  C.    601(  6). 
 8  5  U.  S.  C.    601(  3)  (incorporating  by  reference  the  definition  of  small-  business  concern  in  the  Small  Business 
 Act,  15  U.  S.  C.    632).  Pursuant  to  5  U.  S.  C.    601(  3),  the  statutory  definition  of  a  small  business  applies  unless  an  agency,  after  consultation  with  the  Office  of  Advocacy  of  the  Small  Business  Administration  and  after  opportunity 


 for  public  comment,  establishes  one  or  more  definitions  of  such  term  which  are  appropriate  to  the  activities  of  the  agency  and  publishes  such  definition(  s)  in  the  Federal  Register. 


 9  15  U.  S.  C.    632. 
 10  FCC,  Wireline  Competition  Bureau,  Industry  Analysis  and  Technology  Division,  Trends  in  Telephone  Service 
 at  Table  5.3,  Page  5-  5  (May  2004)  (Trends  in  Telephone  Service).  This  source  uses  data  that  are  current  as  of  October  22,  2003. 


 11  13  C.  F.  R.    121.201,  North  American  Industry  Classification  System  (NAICS)  code  513310  (changed  to 
 517110  in  Oct.  2002). 
 12  13  C.  F.  R.    121.201,  NAICS  code  513321  (changed  to  517211  in  Oct.  2002). 


 13  13  C.  F.  R.    121.201,  NAICS  code  513322  (changed  to  517212  in  Oct.  2002). 
 14  15  U.  S.  C.    632. 
 15  Letter  from  Jere  W.  Glover,  Chief  Counsel  for  Advocacy,  SBA,  to  William  E.  Kennard,  Chairman,  FCC  (May 
 27,  1999).  The  Small  Business  Act  contains  a  definition  of  small-  business  concern,  which  the  RFA  incorporates  into  its  own  definition  of  small  business.  See  15  U.  S.  C.    632(  a)  (Small  Business  Act);  5  U.  S.  C.    601(  3)  (RFA). 


 SBA  regulations  interpret  small  business  concern  to  include  the  concept  of  dominance  on  a  national  basis.  13  C.  F.  R.    121.102(  b). 
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 carriers  in  this  RFA  analysis,  although  we  emphasize  that  this  RFA  action  has  no  effect  on  Commission  analyses  and  determinations  in  other,  non-  RFA  contexts. 
 7.  Wired  Telecommunications  Carriers.  The  SBA  has  developed  a  small  business  size  standard  for  Wired  Telecommunications  Carriers,  which  consists  of  all  such  companies  having  1,500  or  fewer 
 employees.  16  According  to  Census  Bureau  data  for  1997,  there  were  2,225  firms  in  this  category,  total,  that  operated  for  the  entire  year.  17  Of  this  total,  2,201  firms  had  employment  of  999  or  fewer  employees, 
 and  an  additional  24  firms  had  employment  of  1,000  employees  or  more.  18  Thus,  under  this  size  standard,  the  great  majority  of  firms  can  be  considered  small. 


 8.  Incumbent  Local  Exchange  Carriers  (LECs).  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  for  incumbent  local  exchange  services.  The 
 appropriate  size  standard  under  SBA  rules  is  for  the  category  Wired  Telecommunications  Carriers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  19  According  to 
 Commission  data,  20  1,310  carriers  have  reported  that  they  are  engaged  in  the  provision  of  incumbent  local  exchange  services.  Of  these  1,310  carriers,  an  estimated  1,025  have  1,500  or  fewer  employees  and  285 
 have  more  than  1,500  employees.  Consequently,  the  Commission  estimates  that  most  providers  of  incumbent  local  exchange  service  are  small  businesses  that  may  be  affected  by  our  proposed  action. 


 9.  Competitive  Local  Exchange  Carriers  (CLECs),  Competitive  Access  Providers  (CAPs),  Shared-  Tenant  Service  Providers,  and  Other  Local  Service  Providers.  Neither  the  Commission  nor 
 the  SBA  has  developed  a  small  business  size  standard  specifically  for  these  service  providers.  The  appropriate  size  standard  under  SBA  rules  is  for  the  category  Wired  Telecommunications  Carriers.  Under 
 that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  21  According  to  Commission  data,  22  563  carriers  have  reported  that  they  are  engaged  in  the  provision  of  either  competitive 
 access  provider  services  or  competitive  local  exchange  carrier  services.  Of  these  563  carriers,  an  estimated  472  have  1,500  or  fewer  employees  and  91  have  more  than  1,500  employees.  In  addition,  14 
 carriers  have  reported  that  they  are  Shared-  Tenant  Service  Providers,  and  all  14  are  estimated  to  have  1.500  or  fewer  employees.  In  addition,  37  carriers  have  reported  that  they  are  Other  Local  Service 
 Providers.  Of  the  37,  an  estimated  36  have  1,500  or  fewer  employees  and  one  has  more  than  1,500  employees.  Consequently,  the  Commission  estimates  that  most  providers  of  competitive  local  exchange 
 service,  competitive  access  providers,  Shared-  Tenant  Service  Providers,  and  Other  Local  Service 


 16  13  C.  F.  R.    121.201,  NAICS  code  513310  (changed  to  517110  in  Oct.  2002). 
 17  1997  Economic  Census,  Establishment  and  Firm  Size,  Table  5,  NAICS  code  513310  (issued  Oct.  2000). 
 18  Id.  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of 
 1,500  or  fewer  employees;  the  largest  category  provided  is  Firms  with  1,000  employees  or  more. 
 19  13  C.  F.  R.    121.201,  North  American  Industry  Classification  System  (NAICS)  code  517110  (changed  from 
 513310  in  October  2002). 
 20  Trends  in  Telephone  Service  at  Table  5.3. 


 21  13  C.  F.  R.    121.201,  NAICS  code  517110  (changed  from  513310  in  October  2002). 
 22  Trends  in  Telephone  Service  at  Table  5.3. 
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 Providers  are  small  entities  that  may  be  affected  by  our  proposed  action. 
 10.  Interexchange  Carriers  (IXCs).  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  for  providers  of  interexchange  services.  The  appropriate  size  standard 
 under  SBA  rules  is  for  the  category  Wired  Telecommunications  Carriers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  23  According  to  Commission  data,  24  281  carriers  have 
 reported  that  they  are  engaged  in  the  provision  of  interexchange  service.  Of  these,  an  estimated  254  have  1,500  or  fewer  employees  and  27  have  more  than  1,500  employees.  Consequently,  the  Commission 
 estimates  that  the  majority  of  IXCs  are  small  entities  that  may  be  affected  by  our  proposed  action. 
 11.  Operator  Service  Providers  (OSPs).  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  for  operator  service  providers.  The  appropriate  size  standard 
 under  SBA  rules  is  for  the  category  Wired  Telecommunications  Carriers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  25  According  to  Commission  data,  26  23  carriers  have 
 reported  that  they  are  engaged  in  the  provision  of  operator  services.  Of  these,  an  estimated  22  have  1,500  or  fewer  employees  and  one  has  more  than  1,500  employees.  Consequently,  the  Commission  estimates 
 that  the  majority  of  OSPs  are  small  entities  that  may  be  affected  by  our  proposed  action. 
 12.  Prepaid  Calling  Card  Providers.  The  SBA  has  developed  a  size  standard  for  a  small  business  within  the  category  of  Telecommunications  Resellers.  Under  that  SBA  size  standard,  such  a 
 business  is  small  if  it  has  1,500  or  fewer  employees.  27  According  to  Commission  data,  32  companies  reported  that  they  were  engaged  in  the  provision  of  prepaid  calling  cards.  28  Of  these  32  companies,  an 
 estimated  31  have  1,500  or  fewer  employees  and  one  has  more  than  1,500  employees.  29  Consequently,  the  Commission  estimates  that  the  great  majority  of  prepaid  calling  card  providers  are  small  entities  that 
 may  be  affected  by  the  rules  and  policies  adopted  herein. 
 13.  Other  Toll  Carriers.  Neither  the  Commission  nor  the  SBA  has  developed  a  size  standard  for  small  businesses  specifically  applicable  to  Other  Toll  Carriers.  This  category  includes  toll  carriers  that 
 do  not  fall  within  the  categories  of  interexchange  carriers,  OSPs,  prepaid  calling  card  providers,  satellite  service  carriers,  or  toll  resellers.  The  closest  applicable  size  standard  under  SBA  rules  is  for  Wired 
 Telecommunications  Carriers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  30  According  to  Commissions  data,  65  companies  reported  that  their  primary 


 23  13  C.  F.  R.    121.201,  NAICS  code  517110  (changed  from  513310  in  October  2002). 
 24  Trends  in  Telephone  Service  at  Table  5.3. 
 25  13  C.  F.  R.    121.201,  NAICS  code  517110  (changed  from  513310  in  October  2002). 
 26  Trends  in  Telephone  Service  at  Table  5.3. 
 27  13  C.  F.  R.    121.201,  NAICS  code  513330  (changed  to  517310  in  Oct.  2002). 
 28  Trends  in  Telephone  Service  at  Table  5.3. 
 29  Id. 
 30  13  C.  F.  R.    121.201,  NAICS  code  513310  (changed  to  517110  in  Oct.  2002). 
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 telecommunications  service  activity  was  the  provision  of  other  toll  services.  31  Of  these  65  companies,  an  estimated  62  have  1,500  or  fewer  employees  and  three  have  more  than  1,500  employees.  32  Consequently, 
 the  Commission  estimates  that  most  Other  Toll  Carriers  are  small  entities  that  may  be  affected  by  the  rules  and  policies  adopted  herein. 


 14.  Wireless  Service  Providers.  The  SBA  has  developed  a  small  business  size  standard  for  wireless  firms  within  the  two  broad  economic  census  categories  of  Paging  33  and  Cellular  and  Other 
 Wireless  Telecommunications.  34  Under  both  SBA  categories,  a  wireless  business  is  small  if  it  has  1,500  or  fewer  employees.  For  the  census  category  of  Paging,  Census  Bureau  data  for  1997  show  that  there 
 were  1,320  firms  in  this  category,  total,  that  operated  for  the  entire  year.  35  Of  this  total,  1,303  firms  had  employment  of  999  or  fewer  employees,  and  an  additional  17  firms  had  employment  of  1,000  employees 
 or  more.  36  Thus,  under  this  category  and  associated  small  business  size  standard,  the  great  majority  of  firms  can  be  considered  small.  For  the  census  category  Cellular  and  Other  Wireless  Telecommunications, 
 Census  Bureau  data  for  1997  show  that  there  were  977  firms  in  this  category,  total,  that  operated  for  the  entire  year.  37  Of  this  total,  965  firms  had  employment  of  999  or  fewer  employees,  and  an  additional  12 
 firms  had  employment  of  1,000  employees  or  more.  38  Thus,  under  this  second  category  and  size  standard,  the  great  majority  of  firms  can,  again,  be  considered  small. 


 15.  Broadband  PCS.  The  broadband  PCS  spectrum  is  divided  into  six  frequency  blocks  designated  A  through  F,  and  the  Commission  has  held  auctions  for  each  block.  The  Commission  defined 
 small  entity  for  Blocks  C  and  F  as  an  entity  that  has  average  gross  revenues  of  $40  million  or  less  in  the  three  previous  calendar  years.  39  For  Block  F,  an  additional  classification  for  very  small  business  was 


 31  Trends  in  Telephone  Service  at  Table  5.3. 
 32  Id. 
 33  13  C.  F.  R.    121.201,  NAICS  code  513321  (changed  to  517211  in  October  2002). 
 34  13  C.  F.  R.    121.201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
 35  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of 
 Firms  Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513321  (issued  October  2000). 
 36  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of 
 Firms  Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513321  (issued  October  2000).  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of  1,500  or  fewer  employees;  the 


 largest  category  provided  is  Firms  with  1000  employees  or  more. 
 37  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of 
 Firms  Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513322  (issued  October  2000). 
 38  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of 
 Firms  Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513322  (issued  October  2000).  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of  1,500  or  fewer  employees;  the 


 largest  category  provided  is  Firms  with  1000  employees  or  more. 
 39  See  Amendment  of  Parts  20  and  24  of  the  Commissions  Rules    Broadband  PCS  Competitive  Bidding  and  the 
 Commercial  Mobile  Radio  Service  Spectrum  Cap,  WT  Docket  No.  96-  59,  Report  and  Order,  11  FCC  Rcd  7824  (1996);  see  also  47  C.  F.  R.    24.720(  b). 
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 added  and  is  defined  as  an  entity  that,  together  with  its  affiliates,  has  average  gross  revenues  of  not  more  than  $15  million  for  the  preceding  three  calendar  years.  40  These  standards  defining  small  entity  in  the 
 context  of  broadband  PCS  auctions  have  been  approved  by  the  SBA.  41  No  small  businesses,  within  the  SBA-  approved  small  business  size  standards  bid  successfully  for  licenses  in  Blocks  A  and  B.  There  were 
 90  winning  bidders  that  qualified  as  small  entities  in  the  Block  C  auctions.  A  total  of  93  small  and  very  small  business  bidders  won  approximately  40  percent  of  the  1,479  licenses  for  Blocks  D,  E,  and  F.  42  On 
 March  23,  1999,  the  Commission  re-  auctioned  347  C,  D,  E,  and  F  Block  licenses.  There  were  48  small  business  winning  bidders.  On  January  26,  2001,  the  Commission  completed  the  auction  of  422  C  and  F 
 Broadband  PCS  licenses  in  Auction  No.  35.  Of  the  35  winning  bidders  in  this  auction,  29  qualified  as  small  or  very  small  businesses.  Subsequent  events,  concerning  Auction  305,  including  judicial  and 
 agency  determinations,  resulted  in  a  total  of  163  C  and  F  Block  licenses  being  available  for  grant.  In  addition,  we  note  that,  as  a  general  matter,  the  number  of  winning  bidders  that  qualify  as  small  businesses 
 at  the  close  of  an  auction  does  not  necessarily  represent  the  number  of  small  businesses  currently  in  service.  Also,  the  Commission  does  not  generally  track  subsequent  business  size  unless,  in  the  context  of 
 assignments  or  transfers,  unjust  enrichment  issues  are  implicated. 
 16.  Narrowband  Personal  Communications  Services.  The  Commission  held  an  auction  for  Narrowband  PCS  licenses  that  commenced  on  July  25,  1994,  and  closed  on  July  29,  1994.  A  second 
 auction  commenced  on  October  26,  1994  and  closed  on  November  8,  1994.  For  purposes  of  the  first  two  Narrowband  PCS  auctions,  small  businesses  were  entities  with  average  gross  revenues  for  the  prior 
 three  calendar  years  of  $40  million  or  less.  43  Through  these  auctions,  the  Commission  awarded  a  total  of  41  licenses,  11  of  which  were  obtained  by  four  small  businesses.  44  To  ensure  meaningful  participation  by 
 small  business  entities  in  future  auctions,  the  Commission  adopted  a  two-  tiered  small  business  size  standard  in  the  Narrowband  PCS  Second  Report  and  Order.  45  A  small  business  is  an  entity  that, 
 together  with  affiliates  and  controlling  interests,  has  average  gross  revenues  for  the  three  preceding  years 
 40  See  Amendment  of  Parts  20  and  24  of  the  Commissions  Rules    Broadband  PCS  Competitive  Bidding  and  the 
 Commercial  Mobile  Radio  Service  Spectrum  Cap,  WT  Docket  No.  96-  59,  Report  and  Order,  11  FCC  Rcd  7824  (1996). 


 41  See,  e.  g.,  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding,  PP  Docket  No. 
 93-  253,  Fifth  Report  and  Order,  9  FCC  Rcd  5332  (1994). 
 42  Broadband  PCS,  D,  E  and  F  Block  Auction  Closes,  (rel.  Jan.  14,  1997);  see  also  Amendment  of  the 
 Commissions  Rules  Regarding  Installment  Payment  Financing  for  Personal  Communications  Services  (PCS)  Licenses,  WT  Docket  No.  97-  82,  Second  Report  and  Order,  12  FCC  Rcd  16436  (1997). 


 43  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding  Narrowband  PCS,  Third 
 Memorandum  Opinion  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  10  FCC  Rcd  175,  196,  para.  46  (1994). 


 44  See  Announcing  the  High  Bidders  in  the  Auction  of  ten  Nationwide  Narrowband  PCS  Licenses,  Winning  Bids 
 Total  $617,006,674,  Public  Notice,  PNWL  94-  004  (released  Aug.  2,  1994);  Announcing  the  High  Bidders  in  the  Auction  of  30  Regional  Narrowband  PCS  Licenses;  Winning  Bids  Total  $490,901,787,  Public  Notice,  PNWL  94- 


 27  (released  Nov.  9,  1994). 
 45  Amendment  of  the  Commissions  Rules  to  Establish  New  Personal  Communications  Services,  Narrowband 
 PCS,  Second  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  15  FCC  Rcd  10456,  10476,  para.  40  (2000). 
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 of  not  more  than  $40  million.  46  A  very  small  business  is  an  entity  that,  together  with  affiliates  and  controlling  interests,  has  average  gross  revenues  for  the  three  preceding  years  of  not  more  than  $15 
 million.  47  The  SBA  has  approved  these  small  business  size  standards.  48  A  third  auction  commenced  on  October  3,  2001  and  closed  on  October  16,  2001.  Here,  five  bidders  won  317  (Metropolitan  Trading 
 Areas  and  nationwide)  licenses.  49  Three  of  these  claimed  status  as  a  small  or  very  small  entity  and  won  311  licenses. 


 17.  220  MHz  Radio  Service    Phase  I  Licensees.  The  220  MHz  service  has  both  Phase  I  and  Phase  II  licenses.  Phase  I  licensing  was  conducted  by  lotteries  in  1992  and  1993.  There  are 
 approximately  1,515  such  non-  nationwide  licensees  and  four  nationwide  licensees  currently  authorized  to  operate  in  the  220  MHz  band.  The  Commission  has  not  developed  a  definition  of  small  entities 
 specifically  applicable  to  such  incumbent  220  MHz  Phase  I  licensees.  To  estimate  the  number  of  such  licensees  that  are  small  businesses,  we  apply  the  small  business  size  standard  under  the  SBA  rules 
 applicable  to  Cellular  and  Other  Wireless  Telecommunications  companies.  This  category  provides  that  a  small  business  is  a  wireless  company  employing  no  more  than  1,500  persons.  50  According  to  the 
 Census  Bureau  data  for  1997,  only  twelve  firms  out  of  a  total  of  1,238  such  firms  that  operated  for  the  entire  year  in  1997,  had  1,000  or  more  employees.  51  If  this  general  ratio  continues  in  the  context  of 
 Phase  I  220  MHz  licensees,  the  Commission  estimates  that  nearly  all  such  licensees  are  small  businesses  under  the  SBAs  small  business  standard. 


 18.  220  MHz  Radio  Service    Phase  II  Licensees.  The  220  MHz  service  has  both  Phase  I  and  Phase  II  licenses.  The  Phase  II  220  MHz  service  is  a  new  service,  and  is  subject  to  spectrum  auctions.  In 
 the  220  MHz  Third  Report  and  Order,  we  adopted  a  small  business  size  standard  for  defining  small  and  very  small  businesses  for  purposes  of  determining  their  eligibility  for  special  provisions  such  as  bidding 
 credits  and  installment  payments.  52  This  small  business  standard  indicates  that  a  small  business  is  an  entity  that,  together  with  its  affiliates  and  controlling  principals,  has  average  gross  revenues  not  exceeding 


 46  Amendment  of  the  Commissions  Rules  to  Establish  New  Personal  Communications  Services,  Narrowband 
 PCS,  Second  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  15  FCC  Rcd  10456,  10476,  para.  40  (2000). 


 47  Amendment  of  the  Commissions  Rules  to  Establish  New  Personal  Communications  Services,  Narrowband 
 PCS,  Second  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  15  FCC  Rcd  10456,  10476,  para.  40  (2000). 


 48  See  Letter  to  Amy  Zoslov,  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless  Telecommunications 
 Bureau,  Federal  Communications  Commission,  from  Aida  Alvarez,  Administrator,  Small  Business  Administration,  dated  December  2,  1998. 


 49  See  Narrowband  PCS  Auction  Closes,  Public  Notice,  16  FCC  Rcd  18663  (WTB  2001). 
 50  13  C.  F.  R.    121.201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
 51  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Establishment  and  Firm  Size 
 (Including  Legal  Form  of  Organization),  Table  5,  NAICS  code  513322  (October  2000). 
 52  Amendment  of  Part  90  of  the  Commissions  Rules  to  Provide  For  the  Use  of  the  220-  222  MHz  Band  by  the 
 Private  Land  Mobile  Radio  Service,  Third  Report  and  Order,  12  FCC  Rcd  10943,  11068-  70,  paras.  291-  295  (1997). 
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 $15  million  for  the  preceding  three  years.  53  A  very  small  business  is  defined  as  an  entity  that,  together  with  its  affiliates  and  controlling  principals,  has  average  gross  revenues  that  do  not  exceed  $3  million  for 
 the  preceding  three  years.  54  The  SBA  has  approved  these  small  size  standards.  55  Auctions  of  Phase  II  licenses  commenced  on  September  15,  1998,  and  closed  on  October  22,  1998.  56  In  the  first  auction,  908 
 licenses  were  auctioned  in  three  different-  sized  geographic  areas:  three  nationwide  licenses,  30  Regional  Economic  Area  Group  (EAG)  Licenses,  and  875  Economic  Area  (EA)  Licenses.  Of  the  908  licenses 
 auctioned,  693  were  sold.  57  Thirty-  nine  small  businesses  won  373  licenses  in  the  first  220  MHz  auction.  A  second  auction  included  225  licenses:  216  EA  licenses  and  9  EAG  licenses.  Fourteen  companies 
 claiming  small  business  status  won  158  licenses.  58  A  third  auction  included  four  licenses:  2  BEA  licenses  and  2  EAG  licenses  in  the  220  MHz  Service.  No  small  or  very  small  business  won  any  of  these 
 licenses.  59 
 19.  Specialized  Mobile  Radio.  The  Commission  awards  small  entity  bidding  credits  in  auctions  for  Specialized  Mobile  Radio  (SMR)  geographic  area  licenses  in  the  800  MHz  and  900  MHz  bands  to 
 firms  that  had  revenues  of  no  more  than  $15  million  in  each  of  the  three  previous  calendar  years.  60  The  Commission  awards  very  small  entity  bidding  credits  to  firms  that  had  revenues  of  no  more  than  $3 
 million  in  each  of  the  three  previous  calendar  years.  61  The  SBA  has  approved  these  small  business  size  standards  for  the  900  MHz  Service.  62  The  Commission  has  held  auctions  for  geographic  area  licenses  in 
 the  800  MHz  and  900  MHz  bands.  The  900  MHz  SMR  auction  began  on  December  5,  1995,  and  closed  on  April  15,  1996.  Sixty  bidders  claiming  that  they  qualified  as  small  businesses  under  the  $15  million 
 size  standard  won  263  geographic  area  licenses  in  the  900  MHz  SMR  band.  The  800  MHz  SMR  auction  for  the  upper  200  channels  began  on  October  28,  1997,  and  was  completed  on  December  8,  1997.  Ten 
 bidders  claiming  that  they  qualified  as  small  businesses  under  the  $15  million  size  standard  won  38 


 53  Id.  at  11068,  para.  291. 
 54  Id. 
 55  See  Letter  to  Daniel  Phythyon,  Chief,  Wireless  Telecommunications  Bureau,  Federal  Communications 
 Commission,  from  Aida  Alvarez,  Administrator,  Small  Business  Administration,  dated  January  6,  1998. 
 56  See  generally  220  MHz  Service  Auction  Closes,  Public  Notice,  14  FCC  Rcd  605  (WTB  1998). 


 57  See  FCC  Announces  It  is  Prepared  to  Grant  654  Phase  II  220  MHz  Licenses  After  Final  Payment  is  Made, 
 Public  Notice,  14  FCC  Rcd  1085  (WTB  1999). 
 58  See  Phase  II  220  MHz  Service  Spectrum  Auction  Closes,  Public  Notice,  14  FCC  Rcd  11218  (WTB  1999). 


 59  See  Multi-  Radio  Service  Auction  Closes,  Public  Notice,  17  FCC  Rcd  1446  (WTB  2002). 
 60  47  C.  F.  R.    90.814(  b)(  1). 
 61  47  C.  F.  R.    90.814(  b)(  1). 
 62  See  Letter  to  Thomas  Sugrue,  Chief,  Wireless  Telecommunications  Bureau,  Federal  Communications 
 Commission,  from  Aida  Alvarez,  Administrator,  Small  Business  Administration,  dated  August  10,  1999.  We  note  that,  although  a  request  was  also  sent  to  the  SBA  requesting  approval  for  the  small  business  size  standard  for  800 


 MHz,  approval  is  still  pending. 
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 geographic  area  licenses  for  the  upper  200  channels  in  the  800  MHz  SMR  band.  63  A  second  auction  for  the  800  MHz  band  was  held  on  January  10,  2002  and  closed  on  January  17,  2002  and  included  23  BEA 
 licenses.  One  bidder  claiming  small  business  status  won  five  licenses.  64 
 20.  Common  Carrier  Paging.  The  SBA  has  developed  a  small  business  size  standard  for  wireless  firms  within  the  broad  economic  census  categories  of  Cellular  and  Other  Wireless 
 Telecommunications.  65  Under  this  SBA  category,  a  wireless  business  is  small  if  it  has  1,500  or  fewer  employees.  For  the  census  category  of  Paging,  Census  Bureau  data  for  1997  show  that  there  were  1,320 
 firms  in  this  category,  total,  that  operated  for  the  entire  year.  66  Of  this  total,  1,303  firms  had  employment  of  999  or  fewer  employees,  and  an  additional  17  firms  had  employment  of  1,000  employees  or  more.  67 
 Thus,  under  this  category  and  associated  small  business  size  standard,  the  great  majority  of  firms  can  be  considered  small. 


 21.  In  the  Paging  Second  Report  and  Order,  the  Commission  adopted  a  size  standard  for  small  businesses  for  purposes  of  determining  their  eligibility  for  special  provisions  such  as  bidding  credits  and 
 installment  payments.  68  A  small  business  is  an  entity  that,  together  with  its  affiliates  and  controlling  principals,  has  average  gross  revenues  not  exceeding  $15  million  for  the  preceding  three  years.  69  The 
 SBA  has  approved  this  definition.  70  An  auction  of  Metropolitan  Economic  Area  (MEA)  licenses  commenced  on  February  24,  2000,  and  closed  on  March  2,  2000.  Of  the  2,499  licenses  auctioned,  985 
 were  sold.  71  Fifty-  seven  companies  claiming  small  business  status  won  440  licenses.  72  An  auction  of 
 63  See  Correction  to  Public  Notice  DA  96-  586  FCC  Announces  Winning  Bidders  in  the  Auction  of  1020 
 Licenses  to  Provide  900  MHz  SMR  in  Major  Trading  Areas,    Public  Notice,  18  FCC  Rcd  18367  (WTB  1996). 
 64  See  Multi-  Radio  Service  Auction  Closes,  Public  Notice,  17  FCC  Rcd  1446  (WTB  2002). 


 65  13  C.  F.  R.    121.201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
 66  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of 
 Firms  Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513321  (issued  October  2000). 
 67  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of 
 Firms  Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513321  (issued  October  2000).  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of  1,500  or  fewer  employees;  the 


 largest  category  provided  is  Firms  with  1000  employees  or  more. 
 68  Revision  of  Part  22  and  Part  90  of  the  Commissions  Rules  to  Facilitate  Future  Development  of  Paging 
 Systems,  Second  Report  and  Order,  12  FCC  Rcd  2732,  2811-  2812,  paras.  178-  181  (Paging  Second  Report  and  Order);  see  also  Revision  of  Part  22  and  Part  90  of  the  Commissions  Rules  to  Facilitate  Future  Development  of 


 Paging  Systems,  Memorandum  Opinion  and  Order  on  Reconsideration,  14  FCC  Rcd  10030,  10085-  10088,  paras.  98-  107  (1999). 


 69  Paging  Second  Report  and  Order,  12  FCC  Rcd  at  2811,  para.  179. 
 70  See  Letter  to  Amy  Zoslov,  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless  Telecommunications 
 Bureau,  from  Aida  Alvarez,  Administrator,  Small  Business  Administration,  dated  December  2,  1998. 
 71  See  929  and  931  MHz  Paging  Auction  Closes,  Public  Notice,  15  FCC  Rcd  4858  (WTB  2000). 


 72  See  929  and  931  MHz  Paging  Auction  Closes,  Public  Notice,  15  FCC  Rcd  4858  (WTB  2000). 
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 MEA  and  Economic  Area  (EA)  licenses  commenced  on  October  30,  2001,  and  closed  on  December  5,  2001.  Of  the  15,514  licenses  auctioned,  5,323  were  sold.  73  One  hundred  thirty-  two  companies  claiming 
 small  business  status  purchased  3,724  licenses.  A  third  auction,  consisting  of  8,874  licenses  in  each  of  175  EAs  and  1,328  licenses  in  all  but  three  of  the  51  MEAs  commenced  on  May  13,  2003,  and  closed  on 
 May  28,  2003.  Seventy-  seven  bidders  claiming  small  or  very  small  business  status  won  2,093  licenses.  74  Currently,  there  are  approximately  74,000  Common  Carrier  Paging  licenses.  According  to  the  most 
 recent  Trends  in  Telephone  Service,  379  private  and  common  carriers  reported  that  they  were  engaged  in  the  provision  of  either  paging  or  other  mobile  services.  75  Of  these,  we  estimate  that  373  are  small, 
 under  the  SBA-  approved  small  business  size  standard.  76  We  estimate  that  the  majority  of  common  carrier  paging  providers  would  qualify  as  small  entities  under  the  SBA  definition. 


 22.  700  MHz  Guard  Band  Licenses.  In  the  700  MHz  Guard  Band  Order,  we  adopted  size  standards  for  small  businesses  and  very  small  businesses  for  purposes  of  determining  their  eligibility 
 for  special  provisions  such  as  bidding  credits  and  installment  payments.  77  A  small  business  in  this  service  is  an  entity  that,  together  with  its  affiliates  and  controlling  principals,  has  average  gross  revenues  not 
 exceeding  $40  million  for  the  preceding  three  years.  78  Additionally,  a  very  small  business  is  an  entity  that,  together  with  its  affiliates  and  controlling  principals,  has  average  gross  revenues  that  are  not  more 
 than  $15  million  for  the  preceding  three  years.  79  SBA  approval  of  these  definitions  is  not  required.  80  An  auction  of  52  Major  Economic  Area  (MEA)  licenses  commenced  on  September  6,  2000,  and  closed  on 
 September  21,  2000.  81  Of  the  104  licenses  auctioned,  96  licenses  were  sold  to  nine  bidders.  Five  of  these  bidders  were  small  businesses  that  won  a  total  of  26  licenses.  A  second  auction  of  700  MHz  Guard  Band 
 licenses  commenced  on  February  13,  2001,  and  closed  on  February  21,  2001.  All  eight  of  the  licenses  auctioned  were  sold  to  three  bidders.  One  of  these  bidders  was  a  small  business  that  won  a  total  of  two 


 73  See  Lower  and  Upper  Paging  Band  Auction  Closes,  Public  Notice,  16  FCC  Rcd  21821  (WTB  2002). 
 74  See  Lower  and  Upper  Paging  Bands  Auction  Closes,  Public  Notice,  18  FCC  Rcd  11154  (WTB  2003). 
 75  Trends  in  Telephone  Service  at  Table  5.3. 
 76  13  C.  F.  R.    121.201,  NAICS  code  517211. 
 77  See  Service  Rules  for  the  746-  764  MHz  Bands,  and  Revisions  to  Part  27  of  the  Commissions  Rules,  Second 
 Report  and  Order,  15  FCC  Rcd  5299  (2000). 
 78  See  Service  Rules  for  the  746-  764  MHz  Bands,  and  Revisions  to  Part  27  of  the  Commissions  Rules,  Second 
 Report  and  Order,  15  FCC  Rcd  5299,  5343,  para.  108  (2000). 
 79  See  Service  Rules  for  the  746-  764  MHz  Bands,  and  Revisions  to  Part  27  of  the  Commissions  Rules,  Second 
 Report  and  Order,  15  FCC  Rcd  5299,  5343,  para.  108  (2000). 
 80  See  Service  Rules  for  the  746-  764  MHz  Bands,  and  Revisions  to  Part  27  of  the  Commissions  Rules,  Second 
 Report  and  Order,  15  FCC  Rcd  5299,  5343,  para.  108  n.  246  (for  the  746-  764  MHz  and  776-  794  MHz  bands,  the  Commission  is  exempt  from  15  U.  S.  C.    632,  which  requires  Federal  agencies  to  obtain  SBA  approval  before 


 adopting  small  business  size  standards). 
 81  See  700  MHz  Guard  Bands  Auction  Closes:  Winning  Bidders  Announced,  Public  Notice,  15  FCC  Rcd 
 18026  (2000). 
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 licenses.  82  Rural  Radiotelephone  Service.  The  Commission  has  not  adopted  a  size  standard  for  small  businesses  specific  to  the  Rural  Radiotelephone  Service.  83  A  significant  subset  of  the  Rural 
 Radiotelephone  Service  is  the  BETRS.  84  The  Commission  uses  the  SBAs  small  business  size  standard  applicable  to  Cellular  and  Other  Wireless  Telecommunications,  i.  e.,  an  entity  employing  no  more  than 
 1,500  persons.  85  There  are  approximately  1,000  licensees  in  the  Rural  Radiotelephone  Service,  and  the  Commission  estimates  that  there  are  1,000  or  fewer  small  entity  licensees  in  the  Rural  Radiotelephone 
 Service  that  may  be  affected  by  the  rules  and  policies  adopted  herein. 
 23.  Air-  Ground  Radiotelephone  Service.  The  Commission  has  not  adopted  a  small  business  size  standard  specific  to  the  Air-  Ground  Radiotelephone  Service.  86  We  will  use  SBAs  small  business  size 
 standard  applicable  to  Cellular  and  Other  Wireless  Telecommunications,  i.  e.,  an  entity  employing  no  more  than  1,500  persons.  87  There  are  approximately  100  licensees  in  the  Air-  Ground  Radiotelephone 
 Service,  and  we  estimate  that  almost  all  of  them  qualify  as  small  under  the  SBA  small  business  size  standard. 


 24.  Aviation  and  Marine  Radio  Services.  Small  businesses  in  the  aviation  and  marine  radio  services  use  a  very  high  frequency  (VHF)  marine  or  aircraft  radio  and,  as  appropriate,  an  emergency 
 position-  indicating  radio  beacon  (and/  or  radar)  or  an  emergency  locator  transmitter.  The  Commission  has  not  developed  a  small  business  size  standard  specifically  applicable  to  these  small  businesses.  For 
 purposes  of  this  analysis,  the  Commission  uses  the  SBA  small  business  size  standard  for  the  category  Cellular  and  Other  Telecommunications,  which  is  1,500  or  fewer  employees.  88  Most  applicants  for 
 recreational  licenses  are  individuals.  Approximately  581,000  ship  station  licensees  and  131,000  aircraft  station  licensees  operate  domestically  and  are  not  subject  to  the  radio  carriage  requirements  of  any  statute 
 or  treaty.  For  purposes  of  our  evaluations  in  this  analysis,  we  estimate  that  there  are  up  to  approximately  712,000  licensees  that  are  small  businesses  (or  individuals)  under  the  SBA  standard.  In  addition,  between 
 December  3,  1998  and  December  14,  1998,  the  Commission  held  an  auction  of  42  VHF  Public  Coast  licenses  in  the  157.1875-  157.4500  MHz  (ship  transmit)  and  161.775-  162.0125  MHz  (coast  transmit) 
 bands.  For  purposes  of  the  auction,  the  Commission  defined  a  "small"  business  as  an  entity  that,  together  with  controlling  interests  and  affiliates,  has  average  gross  revenues  for  the  preceding  three  years  not  to 
 exceed  $15  million  dollars.  In  addition,  a  "very  small"  business  is  one  that,  together  with  controlling  interests  and  affiliates,  has  average  gross  revenues  for  the  preceding  three  years  not  to  exceed  $3  million 


 82  See  700  MHz  Guard  Bands  Auction  Closes:  Winning  Bidders  Announced,  Public  Notice,  16  FCC  Rcd  4590 
 (WTB  2001). 
 83  The  service  is  defined  in  section  22.99  of  the  Commissions  Rules,  47  C.  F.  R.    22.99. 


 84  BETRS  is  defined  in  sections  22.757  and  22.759  of  the  Commissions  Rules,  47  C.  F.  R.    22.757  and  22.759. 
 85  13  C.  F.  R.    121.201,  NAICS  code  513322  (changed  to  517212  in  Oct.  2002). 
 86  The  service  is  defined  in    22.99  of  the  Commissions  Rules,  47  C.  F.  R.    22.99. 
 87  13  CFR    121.201,  NAICS  codes  513322  (changed  to  517212  in  October  2002). 
 88  13  CFR    121.201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
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 dollars.  89  There  are  approximately  10,672  licensees  in  the  Marine  Coast  Service,  and  the  Commission  estimates  that  almost  all  of  them  qualify  as  "small"  businesses  under  the  above  special  small  business  size 
 standards. 
 25.  Fixed  Microwave  Services.  Fixed  microwave  services  include  common  carrier,  90  private  operational-  fixed,  91  and  broadcast  auxiliary  radio  services.  92  At  present,  there  are  approximately  22,015 
 common  carrier  fixed  licensees  and  61,670  private  operational-  fixed  licensees  and  broadcast  auxiliary  radio  licensees  in  the  microwave  services.  The  Commission  has  not  created  a  size  standard  for  a  small 
 business  specifically  with  respect  to  fixed  microwave  services.  For  purposes  of  this  analysis,  the  Commission  uses  the  SBA  small  business  size  standard  for  the  category  Cellular  and  Other 
 Telecommunications,  which  is  1,500  or  fewer  employees.  93  The  Commission  does  not  have  data  specifying  the  number  of  these  licensees  that  have  more  than  1,500  employees,  and  thus  are  unable  at  this 
 time  to  estimate  with  greater  precision  the  number  of  fixed  microwave  service  licensees  that  would  qualify  as  small  business  concerns  under  the  SBAs  small  business  size  standard.  Consequently,  the 
 Commission  estimates  that  there  are  up  to  22,015  common  carrier  fixed  licensees  and  up  to  61,670  private  operational-  fixed  licensees  and  broadcast  auxiliary  radio  licensees  in  the  microwave  services  that  may  be 
 small  and  may  be  affected  by  the  rules  and  policies  proposed  herein.  We  noted,  however,  that  the  common  carrier  microwave  fixed  licensee  category  includes  some  large  entities. 


 26.  Offshore  Radiotelephone  Service.  This  service  operates  on  several  ultra  high  frequencies  (UHF)  television  broadcast  channels  that  are  not  used  for  television  broadcasting  in  the  coastal  areas  of 
 states  bordering  the  Gulf  of  Mexico.  94  There  are  presently  approximately  55  licensees  in  this  service.  We  are  unable  to  estimate  at  this  time  the  number  of  licensees  that  would  qualify  as  small  under  the  SBAs 
 small  business  size  standard  for  Cellular  and  Other  Wireless  Telecommunications  services.  95  Under 


 89  Amendment  of  the  Commission's  Rules  Concerning  Maritime  Communications,  PR  Docket  No.  92-  257,  Third 
 Report  and  Order  and  Memorandum  Opinion  and  Order,  13  FCC  Rcd  19853  (1998). 
 90  See  47  C.  F.  R.    101  et  seq.  (formerly,  Part  21  of  the  Commissions  Rules)  for  common  carrier  fixed 
 microwave  services  (except  Multipoint  Distribution  Service). 
 91  Persons  eligible  under  parts  80  and  90  of  the  Commissions  Rules  can  use  Private  Operational-  Fixed 
 Microwave  services.  See  47  C.  F.  R.  Parts  80  and  90.  Stations  in  this  service  are  called  operational-  fixed  to  distinguish  them  from  common  carrier  and  public  fixed  stations.  Only  the  licensee  may  use  the  operational-  fixed 


 station,  and  only  for  communications  related  to  the  licensees  commercial,  industrial,  or  safety  operations. 
 92  Auxiliary  Microwave  Service  is  governed  by  Part  74  of  Title  47  of  the  Commissions  Rules.  See  47  C.  F.  R.  Part 
 74.  This  service  is  available  to  licensees  of  broadcast  stations  and  to  broadcast  and  cable  network  entities.  Broadcast  auxiliary  microwave  stations  are  used  for  relaying  broadcast  television  signals  from  the  studio  to  the 


 transmitter,  or  between  two  points  such  as  a  main  studio  and  an  auxiliary  studio.  The  service  also  includes  mobile  television  pickups,  which  relay  signals  from  a  remote  location  back  to  the  studio. 


 93  13  CFR    121.201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
 94  This  service  is  governed  by  Subpart  I  of  Part  22  of  the  Commissions  Rules.  See  47  C.  F.  R.    22.1001- 
 22.1037. 
 95  13  C.  F.  R.    121.201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
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 that  SBA  small  business  size  standard,  a  business  is  small  if  it  has  1,500  or  fewer  employees.  96 
 27.  Wireless  Communications  Services.  This  service  can  be  used  for  fixed,  mobile,  radiolocation,  and  digital  audio  broadcasting  satellite  uses.  The  Commission  defined  small  business  for  the  wireless 
 communications  services  (WCS)  auction  as  an  entity  with  average  gross  revenues  of  $40  million  for  each  of  the  three  preceding  years,  and  a  very  small  business  as  an  entity  with  average  gross  revenues  of  $15 
 million  for  each  of  the  three  preceding  years.  97  The  SBA  has  approved  these  definitions.  98  The  Commission  auctioned  geographic  area  licenses  in  the  WCS  service.  In  the  auction,  which  commenced 
 on  April  15,  1997  and  closed  on  April  25,  1997,  there  were  seven  bidders  that  won  31  licenses  that  qualified  as  very  small  business  entities,  and  one  bidder  that  won  one  license  that  qualified  as  a  small 
 business  entity.  An  auction  for  one  license  in  the  1670-  1674  MHz  band  commenced  on  April  30,  2003  and  closed  the  same  day.  One  license  was  awarded.  The  winning  bidder  was  not  a  small  entity. 


 28.  39  GHz  Service.  The  Commission  created  a  special  small  business  size  standard  for  39  GHz  licenses    an  entity  that  has  average  gross  revenues  of  $40  million  or  less  in  the  three  previous  calendar 
 years.  99  An  additional  size  standard  for  very  small  business  is:  an  entity  that,  together  with  affiliates,  has  average  gross  revenues  of  not  more  than  $15  million  for  the  preceding  three  calendar  years.  100  The 
 SBA  has  approved  these  small  business  size  standards.  101  The  auction  of  the  2,173  39  GHz  licenses  began  on  April  12,  2000  and  closed  on  May  8,  2000.  The  18  bidders  who  claimed  small  business  status 
 won  849  licenses.  Consequently,  the  Commission  estimates  that  18  or  fewer  39  GHz  licensees  are  small  entities  that  may  be  affected  by  the  rules  and  polices  proposed  herein. 


 29.  Multipoint  Distribution  Service,  Multichannel  Multipoint  Distribution  Service,  and  Instructional  Television  Fixed  Service.  Multichannel  Multipoint  Distribution  Service  (MMDS)  systems, 
 often  referred  to  as  wireless  cable,  transmit  video  programming  to  subscribers  using  the  microwave  frequencies  of  the  Multipoint  Distribution  Service  (MDS)  and  Instructional  Television  Fixed  Service 


 96  Id. 
 97  Amendment  of  the  Commissions  Rules  to  Establish  Part  27,  the  Wireless  Communications  Service  (WCS), 
 Report  and  Order,  12  FCC  Rcd  10785,  10879,  para.  194  (1997). 
 98  See  Letter  to  Amy  Zoslov,  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless  Telecommunications 
 Bureau,  Federal  Communications  Commission,  from  Aida  Alvarez,  Administrator,  Small  Business  Administration,  dated  December  2,  1998. 


 99  See  Amendment  of  the  Commissions  Rules  Regarding  the  37.0-  38.6  GHz  and  38.6-  40.0  GHz  Bands,  ET 
 Docket  No.  95-  183,  Report  and  Order,  12  FCC  Rcd  18600  (1997),  63  Fed.  Reg.  6079  (Feb.  6,  1998). 
 100  Id. 


 101  See  Letter  to  Kathleen  OBrien  Ham,  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless 
 Telecommunications  Bureau,  FCC,  from  Aida  Alvarez,  Administrator,  SBA  (Feb.  4,  1998)  (VoIP);  Letter  to  Margaret  Wiener,  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless  Telecommunications  Bureau,  Federal 


 Communications  Commission,  from  Hector  Barreto,  Administrator,  Small  Business  Administration,  dated  January  18,  2002  (WTB). 
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 (ITFS).  102  In  connection  with  the  1996  MDS  auction,  the  Commission  defined  small  business  as  an  entity  that,  together  with  its  affiliates,  has  average  gross  annual  revenues  that  are  not  more  than  $40 
 million  for  the  preceding  three  calendar  years.  103  The  SBA  has  approved  of  this  standard.  104  The  MDS  auction  resulted  in  67  successful  bidders  obtaining  licensing  opportunities  for  493  Basic  Trading  Areas 
 (BTAs).  105  Of  the  67  auction  winners,  61  claimed  status  as  a  small  business.  At  this  time,  we  estimate  that  of  the  61  small  business  MDS  auction  winners,  48  remain  small  business  licensees.  In  addition  to  the 
 48  small  businesses  that  hold  BTA  authorizations,  there  are  approximately  392  incumbent  MDS  licensees  that  have  gross  revenues  that  are  not  more  than  $40  million  and  are  thus  considered  small  entities.  106 


 30.  In  addition,  the  SBA  has  developed  a  small  business  size  standard  for  Cable  and  Other  Program  Distribution,  107  which  includes  all  such  companies  generating  $12.5  million  or  less  in  annual 
 receipts.  108  According  to  Census  Bureau  data  for  1997,  there  were  a  total  of  1,311  firms  in  this  category,  total,  that  had  operated  for  the  entire  year.  109  Of  this  total,  1,180  firms  had  annual  receipts  of  under  $10 
 million,  and  an  additional  52  firms  had  receipts  of  $10  million  or  more  but  less  than  $25  million.  110  Consequently,  we  estimate  that  the  majority  of  providers  in  this  service  category  are  small  businesses  that 
 may  be  affected  by  the  proposed  rules  and  policies. 
 31.  Finally,  while  SBA  approval  for  a  Commission-  defined  small  business  size  standard 


 102  Amendment  of  Parts  21  and  74  of  the  Commissions  Rules  with  Regard  to  Filing  Procedures  in  the  Multipoint 
 Distribution  Service  and  in  the  Instructional  Television  Fixed  Service  and  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding,  Report  and  Order,  10  FCC  Rcd  9589,  9593,  para.  7  (1995)  (MDS 


 Auction  R&  O). 
 103  47  C.  F.  R.    21.961(  b)(  1). 


 104  See  Letter  to  Margaret  Wiener,  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless  Telecommunications 
 Bureau,  Federal  Communications  Bureau,  from  Gary  Jackson,  Assistant  Administrator  for  Size  Standards,  Small  Business  Administration,  dated  March  20,  2003  (noting  approval  of  $40  million  size  standard  for  MDS  auction). 


 105  Basic  Trading  Areas  (BTAs)  were  designed  by  Rand  McNally  and  are  the  geographic  areas  by  which  MDS  was 
 auctioned  and  authorized.  See  MDS  Auction  R&  O,  10  FCC  Rcd  at  9608,  para.  34. 
 106  47  U.  S.  C.    309(  j).  Hundreds  of  stations  were  licensed  to  incumbent  MDS  licensees  prior  to  implementation  of 
 Section  309(  j)  of  the  Communications  Act  of  1934,  47  U.  S.  C.    309(  j).  For  these  pre-  auction  licenses,  the  applicable  standard  is  SBAs  small  business  size  standard  for  other  telecommunications  (annual  receipts  of  $12.5 


 million  or  less).  See  13  C.  F.  R.    121.201,  NAICS  code  517910. 
 107  13  C.  F.  R.    121.201,  NAICS  code  517510. 


 108  Id. 
 109  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Establishment  and  Firm  Size 
 (Including  Legal  Form  of  Organization),  Table  4  (issued  October  2000). 
 110  Id. 
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 applicable  to  ITFS  is  pending,  educational  institutions  are  included  in  this  analysis  as  small  entities.  111  There  are  currently  2,032  ITFS  licensees,  and  all  but  100  of  these  licenses  are  held  by  educational 
 institutions.  Thus,  we  tentatively  conclude  that  at  least  1,932  ITFS  licensees  are  small  businesses. 
 32.  Local  Multipoint  Distribution  Service.  Local  Multipoint  Distribution  Service  (LMDS)  is  a  fixed  broadband  point-  to-  multipoint  microwave  service  that  provides  for  two-  way  video 
 telecommunications.  112  The  auction  of  the  986  Local  Multipoint  Distribution  Service  (LMDS)  licenses  began  on  February  18,  1998  and  closed  on  March  25,  1998.  The  Commission  established  a  small 
 business  size  standard  for  LMDS  licenses  as  an  entity  that  has  average  gross  revenues  of  less  than  $40  million  in  the  three  previous  calendar  years.  113  An  additional  small  business  size  standard  for  very  small 
 business  was  added  as  an  entity  that,  together  with  its  affiliates,  has  average  gross  revenues  of  not  more  than  $15  million  for  the  preceding  three  calendar  years.  114  The  SBA  has  approved  these  small  business 
 size  standards  in  the  context  of  LMDS  auctions.  115  There  were  93  winning  bidders  that  qualified  as  small  entities  in  the  LMDS  auctions.  A  total  of  93  small  and  very  small  business  bidders  won  approximately 
 277  A  Block  licenses  and  387  B  Block  licenses.  On  March  27,  1999,  the  Commission  re-  auctioned  161  licenses;  there  were  32  small  and  very  small  business  winning  that  won  119  licenses. 


 33.  218-  219  MHz  Service.  The  first  auction  of  218-  219  MHz  (previously  referred  to  as  the  Interactive  and  Video  Data  Service  or  IVDS)  spectrum  resulted  in  178  entities  winning  licenses  for  594 
 Metropolitan  Statistical  Areas  (MSAs).  116  Of  the  594  licenses,  567  were  won  by  167  entities  qualifying  as  a  small  business.  For  that  auction,  we  defined  a  small  business  as  an  entity  that,  together  with  its 
 affiliates,  has  no  more  than  a  $6  million  net  worth  and,  after  federal  income  taxes  (excluding  any  carry 


 111  In  addition,  the  term  small  entity  under  SBREFA  applies  to  small  organizations  (nonprofits)  and  to  small 
 governmental  jurisdictions  (cities,  counties,  towns,  townships,  villages,  school  districts,  and  special  districts  with  populations  of  less  than  50,000).  5  U.  S.  C.    601(  4)-(  6).  We  do  not  collect  annual  revenue  data  on  ITFS  licensees. 


 112  See  Rulemaking  to  Amend  Parts  1,  2,  21,  25,  of  the  Commissions  Rules  to  Redesignate  the  27.5-  29.5  GHz 
 Frequency  Band,  Reallocate  the  29.5-  30.5  Frequency  Band,  to  Establish  Rules  and  Policies  for  Local  Multipoint  Distribution  Service  and  for  Fixed  Satellite  Services,  Second  Report  and  Order,  Order  on  Reconsideration,  and  Fifth 


 Notice  of  Proposed  Rule  Making,  12  FCC  Rcd  12545,  12689-  90,  para.  348  (1997). 
 113  See  Rulemaking  to  Amend  Parts  1,  2,  21,  25,  of  the  Commissions  Rules  to  Redesignate  the  27.5-  29.5  GHz 
 Frequency  Band,  Reallocate  the  29.5-  30.5  Frequency  Band,  to  Establish  Rules  and  Policies  for  Local  Multipoint  Distribution  Service  and  for  Fixed  Satellite  Services,  Second  Report  and  Order,  Order  on  Reconsideration,  and 


 Fifth  Notice  of  Proposed  Rule  Making,  12  FCC  Rcd  12545,  12689-  90,  para.  348  (1997). 
 114  See  Rulemaking  to  Amend  Parts  1,  2,  21,  25,  of  the  Commissions  Rules  to  Redesignate  the  27.5-  29.5  GHz 
 Frequency  Band,  Reallocate  the  29.5-  30.5  Frequency  Band,  to  Establish  Rules  and  Policies  for  Local  Multipoint  Distribution  Service  and  for  Fixed  Satellite  Services,  Second  Report  and  Order,  Order  on  Reconsideration,  and  Fifth 


 Notice  of  Proposed  Rule  Making,  12  FCC  Rcd  12545,  12689-  90,  para.  348  (1997). 
 115  See  Letter  to  Dan  Phythyon,  Chief,  Wireless  Telecommunications  Bureau,  FCC,  from  Aida  Alvarez, 
 Administrator,  SBA  (Jan.  6,  1998). 
 116  See  Interactive  Video  and  Data  Service  (IVDS)  Applications  Accepted  for  Filing,  Public  Notice,  9  FCC  Rcd 
 6227  (1994). 
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 over  losses),  has  no  more  than  $2  million  in  annual  profits  each  year  for  the  previous  two  years.  117  In  the  218-  219  MHz  Report  and  Order  and  Memorandum  Opinion  and  Order,  we  defined  a  small  business  as  an 
 entity  that,  together  with  its  affiliates  and  persons  or  entities  that  hold  interests  in  such  an  entity  and  their  affiliates,  has  average  annual  gross  revenues  not  exceeding  $15  million  for  the  preceding  three  years.  118 
 A  very  small  business  is  defined  as  an  entity  that,  together  with  its  affiliates  and  persons  or  entities  that  hold  interests  in  such  an  entity  and  its  affiliates,  has  average  annual  gross  revenues  not  exceeding  $3 
 million  for  the  preceding  three  years.  119  The  SBA  has  approved  of  these  definitions.  120  At  this  time,  we  cannot  estimate  the  number  of  licenses  that  will  be  won  by  entities  qualifying  as  small  or  very  small 
 businesses  under  our  rules  in  future  auctions  of  218-  219  MHz  spectrum.  Given  the  success  of  small  businesses  in  the  previous  auction,  and  the  prevalence  of  small  businesses  in  the  subscription  television 
 services  and  message  communications  industries,  we  assume  for  purposes  of  this  analysis  that  in  future  auctions,  many,  and  perhaps  all,  of  the  licenses  may  be  awarded  to  small  businesses. 


 34.  Incumbent  24  GHz  Licensees.  This  analysis  may  affect  incumbent  licensees  who  were  relocated  to  the  24  GHz  band  from  the  18  GHz  band,  and  applicants  who  wish  to  provide  services  in  the 
 24  GHz  band.  The  applicable  SBA  small  business  size  standard  is  that  of  Cellular  and  Other  Wireless  Telecommunications  companies.  This  category  provides  that  such  a  company  is  small  if  it  employs  no 
 more  than  1,500  persons.  121  According  to  Census  Bureau  data  for  1997,  there  were  977  firms  in  this  category,  total,  that  operated  for  the  entire  year.  122  Of  this  total,  965  firms  had  employment  of  999  or 
 fewer  employees,  and  an  additional  12  firms  had  employment  of  1,000  employees  or  more.  123  Thus,  under  this  size  standard,  the  great  majority  of  firms  can  be  considered  small.  These  broader  census  data 
 notwithstanding,  we  believe  that  there  are  only  two  licensees  in  the  24  GHz  band  that  were  relocated  from  the  18  GHz  band,  Teligent  124  and  TRW,  Inc.  It  is  our  understanding  that  Teligent  and  its  related 
 companies  have  less  than  1,500  employees,  though  this  may  change  in  the  future.  TRW  is  not  a  small  entity.  Thus,  only  one  incumbent  licensee  in  the  24  GHz  band  is  a  small  business  entity. 


 35.  Future  24  GHz  Licensees.  With  respect  to  new  applicants  in  the  24  GHz  band,  we  have 
 117  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding,  Fourth  Report  and  Order, 
 9  FCC  Rcd  2330  (1994). 
 118  Amendment  of  Part  95  of  the  Commissions  Rules  to  Provide  Regulatory  Flexibility  in  the  218-  219  MHz 
 Service,  Report  and  Order  and  Memorandum  Opinion  and  Order,  15  FCC  Rcd  1497  (1999). 
 119  Id. 


 120  See  Letter  to  Daniel  Phythyon,  Chief,  Wireless  Telecommunications  Bureau,  Federal  Communications 
 Commission,  from  Aida  Alvarez,  Administrator,  Small  Business  Administration,  dated  January  6,  1998. 
 121  13  C.  F.  R.    121.201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 


 122  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Employment  Size  of  Firms  Subject 
 to  Federal  Income  Tax:  1997,  Table  5,  NAICS  code  513322  (issued  October  2000). 
 123  Id.  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of 
 1,500  or  fewer  employees;  the  largest  category  provided  is  Firms  with  1,000  employees  or  more. 
 124  Teligent  acquired  the  DEMS  licenses  of  FirstMark,  the  only  licensee  other  than  TRW  in  the  24  GHz  band 
 whose  license  has  been  modified  to  require  relocation  to  the  24  GHz  band. 
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 38 
 defined  small  business  as  an  entity  that,  together  with  controlling  interests  and  affiliates,  has  average  annual  gross  revenues  for  the  three  preceding  years  not  exceeding  $15  million.  125  Very  small  business 
 in  the  24  GHz  band  is  defined  as  an  entity  that,  together  with  controlling  interests  and  affiliates,  has  average  gross  revenues  not  exceeding  $3  million  for  the  preceding  three  years.  126  The  SBA  has  approved 
 these  definitions.  127  The  Commission  will  not  know  how  many  licensees  will  be  small  or  very  small  businesses  until  the  auction,  if  required,  is  held. 


 36.  Internet  Service  Providers.  The  SBA  has  developed  a  small  business  size  standard  for  Internet  Service  Providers.  This  category  comprises  establishments  primarily  engaged  in  providing 
 direct  access  through  telecommunications  networks  to  computer-  held  information  compiled  or  published  by  others.  128  Under  the  SBA  size  standard,  such  a  business  is  small  if  it  has  average  annual  receipts  of 
 $21  million  or  less.  129  According  to  Census  Bureau  data  for  1997,  there  were  2,751  firms  in  this  category  that  operated  for  the  entire  year.  130  Of  these,  2,659  firms  had  annual  receipts  of  under  $10  million,  and  an 
 additional  67  firms  had  receipts  of  between  $10  million  and  $24,999,999.  131  Thus,  under  this  size  standard,  the  great  majority  of  firms  can  be  considered  small  entities. 


 D.  Description  of  Projected  Reporting,  Recordkeeping,  and  Other  Compliance  Requirements  for  Small  Entities 
 37.  In  this  NPRM,  we  seek  comment  on  proposed  rules  that  would  establish  unbundling  requirements  for  incumbent  LECs,  pursuant  to  sections  251(  c)  and  251(  d)(  2)  of  the  Act.  The 
 Commission  last  reviewed  its  unbundling  rules  comprehensively  in  2003  in  the  Triennial  Review  Order.  132  Portions  of  the  Triennial  Review  Order  were  vacated  and/  or  remanded  by  the  D.  C.  Circuit  in  its 
 USTA  II  decision.  133  The  NPRM  seeks  comment  on  how  the  Commission  should  respond  to  the  D.  C.  Circuits  opinion,  in  terms  of  both  how  to  create  a  legally  sustainable  impairment  standard,  as  well  as 


 125  Amendments  to  Parts  1,  2,  87  and  101  of  the  Commissions  Rules  To  License  Fixed  Services  at  24  GHz,  Report 
 and  Order,  15  FCC  Rcd  16934,  16967,  para.  77  (2000)  (24  GHz  Report  and  Order);  see  also  47  C.  F.  R.    101.538(  a)(  2). 


 126  24  GHz  Report  and  Order,  15  FCC  Rcd  at  16967,  para.  77;  see  also  47  C.  F.  R.    101.538(  a)(  1). 
 127  See  Letter  to  Margaret  W.  Wiener,  Deputy  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless 
 Telecommunications  Bureau,  Federal  Communications  Commission,  from  Gary  M.  Jackson,  Assistant  Administrator,  Small  Business  Administration,  dated  July  28,  2000. 


 128  Office  of  Management  and  Budget,  North  American  Industry  Classification  System,  page  515  (1997).  NAICS 
 code  514191,  On-  Line  Information  Services  (changed  to  current  name  and  to  code  518111  in  October  2002). 
 129  13  C.  F.  R.    121.201,  NAICS  code  518111. 


 130  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  4,  Receipts  Size  of  Firms 
 Subject  to  Federal  Income  Tax:  1997,  NAICS  code  514191  (issued  October  2000). 
 131  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  4,  Receipts  Size  of  Firms 
 Subject  to  Federal  Income  Tax:  1997,  NAICS  code  514191  (issued  October  2000). 
 132  Triennial  Review  Order,  18  FCC  Rcd  16978. 


 133  USTA  II,  359  F.  3d  554. 
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 applying  that  standard  to  individual  network  elements. 
 E.  Steps  Taken  to  Minimize  Significant  Economic  Impact  on  Small  Entities,  and  Significant  Alternatives  Considered 


 38.  The  RFA  requires  an  agency  to  describe  any  significant  alternatives  that  it  has  considered  in  developing  its  approach,  which  may  include  the  following  four  alternatives  (among  others):  (  1)  the 
 establishment  of  differing  compliance  or  reporting  requirements  or  timetables  that  take  into  account  the  resources  available  to  small  entities;  (2)  the  clarification,  consolidation,  or  simplification  of  compliance 
 and  reporting  requirements  under  the  rule  for  such  small  entities;  (3)  the  use  of  performance  rather  than  design  standards;  and  (4)  an  exemption  from  coverage  of  the  rule,  or  any  part  thereof,  for  such  small 
 entities.  134 
 39.  In  this  Notice,  we  seek  comment  on  how  to  develop  legally  sustainable  rules  for  access  to  unbundled  network  elements.  We  seek  comment,  for  instance,  on  how  best  to  define  markets,  including 
 product  markets  and  customer  classes.  We  also  wish  to  solicit  comment  on  the  economic  effect  that  various  UNE  approaches  might  have  on  small  entity  telecommunications  providers. 


 F.  Federal  Rules  that  May  Duplicate,  Overlap,  or  Conflict  With  the  Proposed  Rule 
 40.  None. 


 134  5  U.  S.  C.    603(  c)(  1)    (c)(  4). 
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 STATEMENT  OF  CHAIRMAN  MICHAEL  K.  POWELL 


 Re:  Unbundled  Access  to  Network  Elements,  WC  Docket  No.  04-  313;  Review  of  Section  251  Unbundling  Obligations  of  Incumbent  Local  Exchange  Carriers,  CC  Docket  No.  01-  338. 
 Todays  decision  does  two  critical  things:  It  starts  a  rulemaking  to  quickly  replace  rules  within  6  months,  swept  away  by  a  court  incensed  by  the  Commissions  persistent  refusal  to 
 apply  the  law  faithfully.  Second,  it  puts  in  place  an  interim  freeze  for  6  months,  ensuring  consumers  and  competitors  are  protected  while  we  complete  our  work.  Contrary  to  the 
 inaccurate  assertions  being  thrown  around,  there  are  no  automatic  price  increase  after  6  months  for  facilities  providers.  Todays  Order  only  seeks  comment  on  a  transition  that  will  not  be 
 necessary  if  the  Commission  gets  its  work  done. 
 Over  a  year  and  a  half  ago,  I  dissented  from  the  Majoritys  ill-  considered  decision  to  preserve  at  all  costs  a  repudiated  mode  of  competition  UNE-  P.  I  took  that  position  on  policy 
 grounds,  but  my  greatest  concern  was  the  prolonged  uncertainty  it  would  unleash.  I  believed,  given  that  this  modality  had  twice  before  been  struck  down  by  the  courts,  it  was  a  reckless 
 decision  that  was  sure  to  meet  a  similar  fate,  which,  in  turn,  would  plunge  a  fragile  market  into  even  further  chaos.  I  wrote:  I  fear  as  much  or  more  for  competitors  as  I  do  for  incumbents,  for 
 the  prolonged  uncertainty  .  .  .  may  prove  stifling.  1  Despite  the  warning,  we  forged  ahead  and  now  we  embark  for  the  fourth  time  on  an  effort  to  write  rules  that  promote  local  competition. 
 Getting  it  right  this  time,  without  clever  shortcuts,  is  vital. 
 I  want  to  make  one  essential  point  at  the  outset,  given  the  melodrama  of  my  dissenting  colleagues:  There  are  not  automatic  price  increases  after  6  months  for  facilities  providers.  Such 
 assertions  are  flat  wrong.  I  elaborate  on  this  more  fully  below. 
 I  am  not  a  fan  of  UNE-  P  as  the  vehicle  for  parking  our  aspirations  for  vigorous  voice  competition.  It  is  a  synthetic  form  of  competition  that  would  never  have  proved  sustainable,  or 
 have  provided  long-  lasting  consumer  benefits.  I  believe  government  policy  should  encourage  intermodal  and  intramodal  facilities-  based  competition.  Bringing  some  of  your  own 
 infrastructure  to  the  table  allows  a  competitor  to  offer  a  differentiated  service  to  consumers.  It  allows  a  competitor  to  control  more  of  its  costs,  and  thus  offer  consumers  potentially  lower 
 prices.  A  facilities  competitor  is  less  dependent  on  its  major  competitor  for  its  service  an  unenviable  position  for  any  competitor.  And,  a  facilities  competitor  helps  create  vital  redundant 
 networks  that  can  serve  our  nation  if  other  facilities  are  damaged  by  those  hostile  to  our  way  of  life.  Facilities  competition  is  real  competition  and  it  is  emerging  everywhere. 


 1  See  Review  of  the  Section  251  Unbundling  Obligations  of  Incumbent  Local  Exchange  Carriers,  Implementation 
 of  the  Local  Competition  Provisions  of  the  Telecommunications  Act  of  1996,  Deployment  of  Wireline  Services  Offering  Advanced  Telecommunications  Capability,  CC  Docket  Nos.  01-  338,  96-  98,  98-  147,  Report  and  Order  and 


 Order  on  Remand  and  Further  Notice  of  Proposed  Rulemaking,  18  FCC  Rcd  16978,  17519  (2003)  (Triennial  Review  Order),  corrected  by  Errata,  18  FCC  Rcd  19020  (2003). 
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 Federal  Communications  Commission  FCC  04-  179 
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 There  is  no  need  to  fear  that  consumers  will  be  left  with  nothing  to  choose  from  as  UNE-P  begins  to  whither.  Consumers  are  using  wireless  telephones  more  than  they  are  using  wired 
 telephones  today  many  now  use  their  mobile  as  their  primary  phone.  Cable  companies  are  offering  competitive  telephone  service  to  residential  consumers.  VoIP  is  surging  into  the 
 marketplace  as  broadband  grows,  offering  an  exciting  and  new  competitive  alternative  that  offers  cut-  rate  prices  and  futuristic  features.  Indeed,  the  venerable  AT&  T  is  pushing  its  own  VoIP 
 consumer  service  and  re-  entering  the  consumer  wireless  market.  Aggressive  AT&  T  advertisements  for  VoIP,  touting  the  re-  invention  of  the  telephone,  are  blanketing  the  airwaves 
 during  the  Summer  Olympic  Games.  And,  recent  reports  show  Ma  Bell  has  teamed  up  with  cable  providers  to  offer  this  service  in  direct  competition  to  the  Bells.  2  I  applaud  these 
 developments. 
 I  also  have  consistently  supported  intramodal  competitors  that  are  facilities-  based.  Carries  like  Covad,  NuVox,  McLeod  and  XO  have  been  important  contributors  to  competition. 
 In  the  Triennial  Review  Order,  I  supported  fully  requiring  incumbents  to  unbundle  DS1  loops  and  transport,  as  did  every  one  of  my  colleagues.  I  remain  steadfastly  committed  to  providing 
 the  key  network  elements  to  these  facilities  competitors  in  this  proceeding,  without  which  they  would  be  impaired.  Indeed,  I  am  quite  confident  that  we  will  be  able  to  provide  these  elements, 
 once  we  have  a  full  and  complete  record,  consistent  with  the  guidance  of  the  court.  We  will  move  to  do  so  as  quickly  as  possible. 


 It  is  exceedingly  important  for  the  Commission  to  rewrite  the  new  rules  of  competition  as  fast  as  it  can.  As  I  predicted  in  the  Triennial  Review  Order,  the  course  the  Commission  took  a 
 year  and  a  half  ago  has  led  to  more  uncertainty  that  risks  stifling  investment.  Clarity  is  needed  to  repair  the  damage.  The  court  has  vacated  the  competition  rules  and  we  need  to  work  to  fill  the 
 void.  As  an  interim  step,  today  we  freeze  any  changes  in  the  current  competition  rules  for  six  months,  to  protect  consumers  from  any  sudden  disruption  in  service.  This  will  give  us  the  time 
 we  need  to  repair  the  rules.  I  have  committed  to  push  the  Commission  to  complete  this  proceeding  in  six  months,  before  the  freeze  expires.  As  a  sign  of  that  commitment,  I  have 
 already  scheduled  the  decision  for  a  vote  at  our  December  2004  open  meeting.  I  insist  the  parties  and  urge  my  colleagues  to  move  heaven  and  earth  to  ensure  we  meet  this  objective. 
 Consumers  demand  it  and  competitors  and  incumbents  alike  need  it. 
 In  addition  to  an  interim  freeze,  we  also  seek  comment  on  a  transition  proposal  that  will  only  take  effect  if  the  Commission  does  not  act  on  final  rules,  or  fails  to  justify  an  unbundled 
 element.  It  is  important  to  emphasize  that  no  transition  will  be  required,  or  go  into  effect  if  we  meet  our  objective  to  finish  the  rules  and  re-  justify  necessary  inputs.  In  other  words,  no  price 
 increases  if  we  get  the  job  done,  which  I  am  fully  confident  we  will.  For  example,  I  have  expressed  a  commitment  and  some  confidence  that  DS1  loops  and  transport  will  remain 


 2  AT&  T  dials  up  VoIP  service  with  cable  deals,  USA  Today,  Aug.  19,  2004;  AT&  T,  Cable  Providers  Join 
 Forces,  Wall  Street  Journal,  Aug.  19,  2004. 
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 unbundled  elements  for  facilities-  based  providers.  Should  the  Commission  adopt  final  rules  along  these  lines,  facilities  competitors  will  not  be  subject  to  price  increases,  or  special  access 
 pricing.  Indeed,  I  expect  that  will  be  the  case. 
 Some  parties  wanted  even  more  to  be  done  to  make  elements  available  right  this  minute.  I  fully  empathize  with  the  desire  to  re-  unbundle  key  elements  immediately.  A  business  loathes 
 even  a  brief  period  of  uncertainty.  However,  I  believe  there  is  no  lawful  way  to  order  an  incumbent  to  provide  an  element  indefinitely  that  the  court  vacated  with  gusto.  To  do  so  now, 
 without  notice  or  comment  from  the  public  is  a  hazardous  and  unlawful  course  to  take.  To  do  so  is  to  flaunt  the  courts  decision  and  would  lead,  I  am  sure,  to  the  court  vacating  our  interim  rule 
 and  perhaps  making  it  even  more  difficult  to  sustain  good  competition  rules.  This  is  an  unacceptable  risk,  for  short-  term  gain.  This  is  the  game  we  played  before  that  cost  so  dearly  and 
 I  doubt  seriously  the  court  would  be  amused  to  play  it  again.  It  might  be  worth  repeating  the  courts  own  words  when  it  wiped  these  rules  from  the  books:  This  deadline  is  appropriate  in 
 light  of  the  Commissions  failure,  after  eight  years,  to  develop  lawful  unbundling  rules,  and  its  apparent  unwillingness  to  adhere  to  prior  judicial  rulings.  So  ordered.  3  Will  we  ever  learn? 


 Before  concluding,  I  must  reject  utterly  the  inaccurate  and  revisionist  statements  of  my  dissenting  colleagues.  The  unbundling  rules  have  been  tossed  out  because  of  their  ill-  considered 
 UNE-  P  decision.  We  are  working  now  to  pick  up  the  pieces.  We  are  not  free  to  simply  plop  the  rules  back  into  place  as  they  seem  to  think.  Second,  they  bemoan  the  harm  to  facilities 
 competitors  by  our  action  today,  while  simultaneously  refusing  overtures  by  us  to  modify  todays  decision  to  provide  greater  confidence  to  this  community  going  forward.  They  seem 
 prepared  to  inflict  harm  on  companies,  in  order  to  maintain  the  political  purity  to  criticize  todays  well-  considered  step  to  reconstruct  a  regime  blown  down  by  the  courts  rejection  of  their 
 approach. 
 Nonetheless,  I  believe  a  majority  of  the  Commission  is  committed  to  providing  a  sound  decision  that  will  allow  competition  to  flourish.  I  am  confident  that  we  can  put  in  place  the 
 fundamentals  of  sustainable  competition  and  get  this  right  for  American  consumers. 


 3  United  States  Telecom  Assn  v.  FCC  ,  359  F.  3d  554,  595  (D.  C.  Cir.  2004),  pets.  for  cert.  filed,  Nos.  04-  12,  04- 
 15,  04-  18  (June  30,  2004). 
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 DISSENTING  STATEMENT  OF  COMMISSIONER  MICHAEL  J.  COPPS 
 Re:  Unbundled  Access  to  Network  Elements,  WC  Docket  No.  04-  313;  Review  of  Section  251  Unbundling  Obligations  of  Incumbent  Local  Exchange  Carriers,  CC  Docket  No.  01-  338. 
 I  respectfully  but  strongly  dissent  to  these  interim  rules.  There  is  no  need  to  mince  words.  The  current  Commission  is  on  track  to  butcher  the  pro-  competitive  vision  of  the  1996 
 Act.  And  it  is  sticking  consumers  with  higher  telephone  rates  and  fewer  choices.  The  people  who  pay  Americas  phone  bills  deserve  better. 


 The  majority  characterizes  this  effort  as  a  comprehensive  plan  to  stabilize  the  market.  The  truth  is  just  the  opposite.  In  exchange  for  a  standstill  today,  they  commit  to  price  increases 
 tomorrow.  After  six  months  of  stay,  existing  enterprise  market  loop  and  dedicated  transport  customers  can  expect  rate  increases  of  15  percent.  The  news  is  even  worse  for  new  customers. 
 For  enterprise  loops  and  transport,  rates  will  race  up  to  special  access.  This  could  mean  price  increases  of  more  than  300  percent  a  potentially  lethal  blow  to  any  carrier  that  built  its  business 
 plan  on  the  core  tenets  of  the  1996  Act.  For  carriers  operating  on  slim  margins  in  price  sensitive  markets,  absorbing  these  increases  may  just  not  be  possible. 


 Stability  in  the  short  term  is  good.  But  it  is  meaningless  if  it  is  accompanied  by  rate  increases  that  make  it  impossible  for  facilities-  based  carriers  to  continue  to  operate.  In  a  capital 
 intensive  industry,  this  kind  of  regulatory  whiplash  prevents  companies  from  planning.  It  ruptures  good  business  models.  It  scares  investors.  And  it  denies  the  market  the  clarity  it  needs 
 and  deserves  from  the  FCC. 
 This  situation  is  particularly  harmful  to  carriers  serving  small  business  customers.  Small  businesses  power  this  countrys  economy.  They  generate  between  two-  thirds  and  three-  quarters 
 of  all  new  jobs.  They  produce  over  half  of  our  private  sector  output.  The  Small  Business  Administration  tells  us  that  in  metropolitan  areas,  29  percent  of  small  business  customers  are 
 served  by  competitive  carriers,  many  of  them  using  enterprise  loops  and  transport  facilities.  Right  now,  thousands  of  small  business  consumers  enjoy  affordable  access  to  innovative 
 broadband  services  that  were  previously  available  only  to  the  largest  business  customers.  Clearly,  Americas  small  businesses  are  deriving  huge  benefits  from  these  services,  and  their 
 productivity  has  been  increasing  as  a  result.  Why  would  we  eliminate  this  opportunity?  For  whose  benefit? 


 In  effect,  the  majority  justifies  these  price  increases  as  pressure  on  the  Commission  to  put  final  rules  in  place.  But  in  putting  pressure  on  the  Commission,  the  majority  points  a  loaded  gun 
 at  industrys  head.  I  agree  wholeheartedly  that  we  need  final,  judicially-  sustainable  rules  in  place  as  soon  as  possible.  And  I  believe  my  colleagues  will  work  hard  to  ensure  this  happens. 
 But  there  is  no  reason  to  hold  one  segment  of  an  industry  hostage  to  a  motivational  framework  for  regulators. 


 The  problems  with  the  majoritys  framework  run  deep.  The  price  increases  they  commit 
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 to  are  based  on  shaky  legal  ground.  There  is  no  analysis  relating  them  back  to  the  Commissions  statutory  duties.  There  is  no  discussion  of  impairment.  This  may  come  as  a  surprise  to  both 
 Congress  and  the  courts,  because  impairment  is  the  touchstone  of  our  unbundling  policy  under  Section  251.  It  triggers  a  very  specific  pricing  obligation.  All  elements  unbundled  pursuant  to 
 Section  251  must  be  made  available  to  competitors  at  cost  plus  a  reasonable  profit.  The  statute  provides  no  authority  for  grafting  onto  the  current  rules  arbitrary  price  increases  of  15  to  300 
 percent.  Todays  decision  casts  aside  these  legal  realities,  saving  them,  perhaps,  for  another  day.  The  bad  news  for  competitors  is  that  they  must  deal  with  the  resulting  wreckage  now.  After  so 
 many  trips  to  the  court  and  back,  ignoring  the  statute  like  this  only  invites  more  problems. 
 It  didnt  have  to  be  this  way.  Sadly,  there  is  no  justification  for  the  majoritys  insistence  on  price  increases  during  the  interim  period.  The  Commission  was  unanimous  in  upholding 
 unbundled  access  to  DS-  1  transmission  facilities  in  the  original  Triennial  Review  Order,  and  nowhere  does  the  court  state  that  our  rules  requiring  the  unbundling  of  high  capacity  loop 
 facilities  are  vacated.  To  suggest  that  special  access  rates  apply  in  six  months  and  a  day  is  not  just  devastating  it  is,  as  a  legal  matter,  wholly  unnecessary. 


 Similarly,  we  must  address  the  future  of  line-  sharing  and  how  it  can  contribute  to  renewed  competition  in  the  drastically-  changed  and  more  anti-  competitive  environment  that  we 
 now  confront.  We  especially  need  to  clarify  that  the  standstill  in  todays  decision  also  applies  to  carriers  using  the  high  frequency  portion  of  the  loop. 


 I  hope  we  can  hammer  out  greater  certainty  on  these  issues  very  soon.  Reconsideration  is  a  good  idea.  But  I  cannot  and  will  not  be  party  to  any  policy  that  permits  competition-  killing 
 price  increases  before  we  achieve  permanent  rules.  I  hope  permanent  rules  will  come  quickly,  but  given  all  the  volatilities  we  face  in  this  summer  of  2004,  it  is  not  unimaginable  that  it  might 
 take  more  than  six  months  until  we  achieve  them.  By  then  this  Commissions  version  of  Survivor  might  be  over,  and  those  left  standing  could  number  less  than  a  handful.  Thats  not 
 what  the  1996  Act,  competition,  consumer  well-  being  or  good  regulation  is  all  about. 
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 DISSENTING  STATEMENT  OF  COMMISSIONER  JONATHAN  S.  ADELSTEIN 
 Re:  Unbundled  Access  to  Network  Elements,  WC  Docket  No.  04-  313;  Review  of  Section  251  Unbundling  Obligations  of  Incumbent  Local  Exchange  Carriers,  CC  Docket  No.  01-  338. 
 For  all  involved,  this  Order  continues  the  one  step  forward,  two  steps  back  saga  of  the  local  competition  provisions  of  the  Telecommunications  Act  of  1996.  After  eight  years  of 
 divisive  litigation  and  a  summer  of  promises,  the  Commission  adopts  an  approach  that  prolongs  the  regulatory  uncertainty  for  incumbents,  competitors,  and  consumers  alike.  Indeed,  the  only 
 things  that  are  certain  here  are  that  consumer  prices  will  go  up  and  that  the  telecommunications  industry  will  fight  the  same  old  battles  come  the  new  year. 


 Through  this  Order,  the  Commission  adopts  an  ambiguous  approach  that  is  perhaps  designed  to  give  a  little  to  everyone  but  that  ultimately  grants  stability  to  none.  The  Order  leaves 
 unclear  which  elements  are  available  to  competitors  and  at  what  prices  they  will  be  available.  It  is  difficult  to  imagine  how  either  competitors  or  incumbents  will  plan  for  the  future,  develop 
 business  plans,  or  seek  investor  support  with  this  foggy  vision  into  the  long-  term  framework.  If  savvy  industry  players  will  be  left  wondering  about  the  rules  of  the  game,  consumers  surely  will 
 have  little  guidance  about  how  to  choose  among  the  ever-  dwindling  list  of  providers. 
 In  response  to  this  ambiguity,  this  Order  promises  Commission  action  before  the  end  of  this  year.  Promises  of  swift  action  are  laudable,  but,  rather  than  deferring  the  difficult  decisions, 
 we  should  be  working  right  now  to  develop  permanent  rules  that  provide  certainty  for  all  involved.  At  the  very  minimum,  it  is  unfair  to  incumbents,  competitors,  and  consumers  to  hide 
 the  ball  with  the  ambiguous  approach  adopted  here. 
 If  regulatory  certainty  is  elusive  in  this  Order,  what  is  clear  is  that  prices  for  consumers  are  likely  to  rise.  Rather  than  respond  to  the  D.  C.  Circuits  decision  on  a  tailored  and  responsive 
 basis,  this  Order  calls  for  higher  rates  for  consumers  and  competitors  without  any  linkage  to  the  requirements  of  the  statute.  For  new  customers  in  particular  these  rates  could  rise  dramatically 
 without  any  consideration  of  impairment,  the  statutory  touchstone  when  deciding  which  elements  should  be  available  at  cost-  based  prices. 


 Though  I  cannot  join  this  Order,  I  have  appreciated  recent  dialogues  with  my  colleagues.  I  was  disappointed  that  we  could  not  take  limited  action  to  provide  meaningful  protection  for 
 carriers  serving  small  business  customers,  but  remain  open  to  reconsideration  of  these  issues.  A  more  daunting  but  equally  pressing  challenge  now  is  to  move  forward  as  expeditiously  as 
 possible  with  the  final  rulemaking  process.  Our  chief  goal  now  should  be  to  develop  permanent  rules  for  all  UNEs  as  soon  as  possible,  so  that  the  American  public  and  the  telecom  industry  will 
 understand  what  the  choices  and  price  tag  will  be.  The  Act  and  the  American  consumer  deserve  no  less. 
47