*Pages 1--86 from  Microsoft Word - 35678*
 Federal  Communications  Commission  FCC  03-  335 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 
 In  the  Matter  of  )  ) 
 Section  257  Triennial  Report  to  Congress  )  ) 
 Identifying  and  Eliminating  )  Market  Entry  Barriers  ) 
 For  Entrepreneurs  and  Other  Small  Businesses  ) 


 REPORT 
 Adopted:  December  31,  2003  Released:  February  12,  2004 
 By  the  Commission:  Commissioner  Abernathy  issuing  a  separate  statement;  Commissioner  Martin  approving  in  part,  concurring  in  part,  and  issuing  a  separate  statement; 
 Commissioner  Adelstein  approving  in  part,  dissenting  in  part,  and  issuing  a  separate  statement;  and  Commissioner  Copps  dissenting  and  issuing  a  separate  statement 


 TABLE  OF  CONTENTS  PARAGRAPH  NUMBER 
 I.  INTRODUCTION  AND  EXECUTIVE  SUMMARY.................................................................  4 
 A.  Consumer  &  Governmental  Affairs  Bureau  ..................................................................  6 
 B.  Enforcement  Bureau.........................................................................................................  6 
 C.  International  Bureau  ........................................................................................................  6 
 D.  Media  Bureau....................................................................................................................  6 
 E.  The  Office  of  Communications  Business  Opportunities  ...............................................  7 
 F.  The  Office  of  Engineering  and  Technology  ....................................................................  7 
 G.  Wireless  Telecommunications  Bureau............................................................................  8 
 H.  Wireline  Competition  Bureau..........................................................................................  8 
 II.  REGULATORY  ACTIONS..........................................................................................................  9 
 A.  Consumer  &  Governmental  Affairs  Bureau  ..................................................................  9 
 1.  Consumer  Inquiries  &  Complaints  Division  ...................................................  10 
 2.  Intergovernmental  Affairs  Office.....................................................................  10 
 3.  Policy  Division....................................................................................................  11 
 4.  Disability  Rights  Office  .....................................................................................  11 
 5.  Telephone  Consumer  Protection  Act  ...............................................................  11 
 6.  National  Do-  Not-  Call  List  .................................................................................  12 
 7.  Call  Abandonment.............................................................................................  13 
 8.  Unsolicited  Facsimile  Advertising  ....................................................................  14 
1
 Federal  Communications  Commission  FCC  03-  335 
 2 
 9.  Website  or  Toll-  Free  Number  to  Access  Company-  Specific  Lists  and 
 to  Confirm  Requests  ..........................................................................................  14 
 10.  Slamming............................................................................................................  14 
 11.  Informal  Complaints  .........................................................................................  16 
 12.  Telecommunications  Relay  Service  ..................................................................  17 
 13.  Wireless  Communications  and  Public  Safety  Act  of  1999..............................  20 
 B.  Enforcement  Bureau.......................................................................................................  21 
 1.  Complaint  Mediation.........................................................................................  22 
 2.  Interconnection  Agreements.............................................................................  22 
 3.  Investigations......................................................................................................  22 
 4.  Small  Cable  System  Waivers  ............................................................................  23 
 5.  Forfeitures  ..........................................................................................................  23 
 C.  International  Bureau  ......................................................................................................  24 
 1.  Streamlining  Earth  Station  Licensing..............................................................  24 
 2.  Streamlining  214  Procedures  ............................................................................  25 
 3.  Spectrum.............................................................................................................  26 
 4.  Electronic  Filing  Initiatives...............................................................................  27 
 5.  Detariffing  International  Services  ....................................................................  28 
 6.  International  Settlements  Policy.......................................................................  29 
 7.  Satellite  Licensing  Reforms...............................................................................  30 
 8.  Submarine  Cable  Landing  Licenses.................................................................  30 
 9.  Reporting  Requirements  ...................................................................................  31 
 D.  Media  Bureau..................................................................................................................  31 
 1.  Biennial  Regulatory  Review  of  Broadcast  Ownership  Rules.........................  32 
 2.  Localism  Initiative  .............................................................................................  33 
 3.  Digital  Transition...............................................................................................  33 
 4.  DTV  Low  Power  Television  ..............................................................................  35 
 5.  Ancillary/  Supplementary  Use  of  DTV  Capacity.............................................  36 
 6.  Navigation  Devices.............................................................................................  37 
 7.  Digital  Audio  Broadcasting...............................................................................  37 
 8.  Low  Power  FM...................................................................................................  38 
 9.  Equal  Employment  Opportunity......................................................................  38 
 10.  Cable  Inside  Wiring...........................................................................................  39 
 11.  12  GHz  ................................................................................................................  39 
 12.  Cable  Operations  and  Licensing  System  .........................................................  40 
2
 Federal  Communications  Commission  FCC  03-  335 
 3 
 13.  Consolidated  Database  System  .........................................................................  40 
 E.  Office  of  Communications  Business  Opportunities  .....................................................  41 
 1.  Regulatory  Flexibility  Act  and  Small  Business  Act  Initiatives  ......................  41 
 2.  Ten  Year  Review  of  Rules  .................................................................................  42 
 3.  Special  Small  Business  Size  Standards  ............................................................  42 
 4.  Unified  Agenda  of  Federal  Regulatory  and  Deregulatory  Actions  ...............  42 
 5.  Office  of  the  National  Ombudsman..................................................................  43 
 6.  White  House  Initiative  on  Asian  Americans  and  Pacific  Islanders...............  43 
 F.  Office  of  Engineering  and  Technology..........................................................................  43 
 1.  Telecommunications  Certification  Bodies  .......................................................  44 
 2.  Mutual  Recognition  Agreements  ......................................................................  44 
 3.  Electronic  Equipment  Authorization...............................................................  44 
 4.  Spectrum  Management  .....................................................................................  44 
 5.  Ultra-  Wideband  Technology  ............................................................................  45 
 6.  Broadband  over  Power  Line  and  Wireless  Local  Area  Networks.................  46 
 7.  Low  Power  Radio  Service  .................................................................................  46 
 8.  Wireless  Medical  Telemetry  Service  ................................................................  46 
 9.  Broadcast  Auxiliary  Service  .............................................................................  46 
 10.  Spectrum  Policy  Task  Force  .............................................................................  47 
 G.  Wireless  Telecommunications  Bureau..........................................................................  47 
 1.  Secondary  Markets............................................................................................  48 
 2.  Rural  Initiatives  .................................................................................................  49 
 3.  Tribal  Lands  Initiatives.....................................................................................  50 
 4.  Competitive  Bidding  Incentives........................................................................  50 
 5.  Small  Geographic  Areas/  Spectrum  Blocks......................................................  53 
 6.  Band  Manager  Licensing  ..................................................................................  53 
 7.  Private  Wireless  Service  Access........................................................................  54 
 8.  Application  Processing  and  Filing....................................................................  56 
 9.  Outreach  Efforts  ................................................................................................  58 
 10.  Reporting  and  Other  Requirements.................................................................  59 
 11.  Implementation  Schedules  ................................................................................  60 
 H.  Wireline  Competition  Bureau........................................................................................  62 
 1.  Customer  Premises  Equipment  and  Enhanced  Services  Unbundling 
 Rules....................................................................................................................  62 
 2.  Customer  Proprietary  Network  Information..................................................  63 
3
 Federal  Communications  Commission  FCC  03-  335 
 4 
 3.  Streamlining  Measures......................................................................................  64 
 4.  Directory  Listing  Information  ..........................................................................  66 
 5.  Provision  of  Advanced  Services........................................................................  66 
 6.  Interconnection  and  Resale  Barriers  ...............................................................  67 
 7.  Impartial  Administration  of  Telecommunications  Numbers.........................  68 
 8.  Universal  Service................................................................................................  69 
 9.  Payphone  Regulation.........................................................................................  71 
 10.  Local  Competition  and  Broadband  Data  Gathering  Program......................  72 
 11.  Competitive  LEC  Access  Charges....................................................................  73 
 12.  Mandatory  IXC  Carrier  Detariffing................................................................  73 
 13.  Accounting  Reform............................................................................................  74 
 III.  LEGISLATIVE  PROPOSALS...................................................................................................  75 
 A.  Create  New  Tax  Incentive  Program..............................................................................  75 
 B.  Establish  a  Spectrum  Relocation  Fund  for  Federal  Incumbents................................  76 
 C.  Clarify  Authority  to  Conduct  Innovative  Spectrum  Auction  Designs  and  to 
 Facilitate  Relocation  of  Incumbent  Licensees  ..............................................................  76 
 D.  Expand  Authority  to  Authorize  Operation  of  Radio  Stations  without 
 Individual  Station  Licenses  ............................................................................................  76 
 E.  Amendment  to  Section  623(  d)........................................................................................  76 
 IV.  CONCLUSION  ............................................................................................................................  78 


 I.  INTRODUCTION  AND  EXECUTIVE  SUMMARY 
 1.  We  submit  this  Report  (2003  Report)  to  Congress  per  its  directions  in  Section  257  of  the  Communications  Act  of  1934,  as  amended  (Communications  Act).  1  As  Congress  articulated  in  Section 


 257,  our  mandate  is: 
 [T]  o  promote  the  policies  and  purposes  of  this  [Communications]  Act  favoring  a  diversity  of  media  voices,  vigorous  economic  competition,  technological 
 advancement,  and  promotion  of  the  public  interest,  convenience,  and  necessity.  2 
 To  attain  these  goals,  Congress  directed  us  to  identify  and  eliminate,  through  regulatory  action,  market  entry  barriers  for  entrepreneurs  and  other  small  businesses  in  the  provision  and  ownership  of 


 1  47  U.  S.  C.    257.  Congress  added  Section  257  to  the  Communications  Act  through  the  Telecommunications  Act  of 
 1996,  Public  Law  No.  104-  104,  110  Stat.  56  (1996)  (Telecommunications  Act  of  1996). 


 2  47  U.  S.  C.    257(  b). 
4
 Federal  Communications  Commission  FCC  03-  335 
 5 
 telecommunications  services  and  information  services,  or  in  the  provision  of  parts  or  services  to  providers  of  telecommunications  services  and  information  services.  3 
 2.  To  gauge  our  progress,  Congress  requires  us  to  submit,  every  three  years,  a  Report  that  details  our  regulatory  activity  in  these  areas  and  that  identifies  statutory  barriers  to  entry  for  entrepreneurs 
 and  other  small  businesses.  4  This  2003  Report  is  our  third  submission  pursuant  to  Section  257.  5 
 3.  The  Commission  proactively  continues  to  meet  its  obligations  under  Section  257  of  the  Act.  We  refine  our  polices  and  regulations,  on  a  dynamic  basis,  through,  among  other  things,  biennial 
 regulatory  reviews  and  administrative  streamlining,  to  eliminate  market  entry  barriers  for  entrepreneurs  and  small  businesses.  In  addition,  we  meet  with  members  of  the  small  business  community  and  other 
 governmental  entities,  such  as  the  Small  Business  Administration,  to  share  information  and  to  learn  how  we  can  act,  consistent  with  the  public  interest,  convenience,  and  necessity,  to  eliminate  market  entry 
 barriers  for  entrepreneurs  and  small  businesses.  Through  our  web  portal,  which  hosts  approximately  20  million  page  views  a  month,  6  personal  contacts,  and  hardcopy  publications,  we  keep  entrepreneurs  and 
 the  small  business  community  apprised  of  developments  in  the  telecommunications  field  germane  to  their  interests. 


 4.  On  the  legislative  front,  where  we  find  statutorily  created  market  entry  barriers  for  entrepreneurs  and  small  businesses,  we  bring  them  to  Congress  attention.  Our  Office  of  Legislative 
 Affairs  periodically  submits  proposals  for  Congress  consideration.  In  Section  III  of  this  2003  Report,  we  provide  a  set  of  legislative  proposals  that,  if  enacted,  will  either  eliminate  or  lower  statutory  barriers  to 
 market  entry  for  entrepreneurs  and  small  businesses. 
 5.  In  this  2003  Report,  we  provide  information  from  each  Commission  Bureau  and  Office  that  either  conducts  substantive  rulemakings  relevant  to  entrepreneurs  and  small  businesses  or  that  is 
 directly  engaged  with  the  small  business  community.  We  report  the  activities  as  taking  place  during  the  last  three  years. 


 3  Id.    257(  a). 
 4  Subsection  (c)  states:  PERIODIC  REVIEW.  Every  3  years  following  the  completion  of  the  proceeding 
 required  by  subsection  (a),  the  Commission  shall  review  and  report  to  Congress  on 


 (1)  any  regulations  prescribed  to  eliminate  barriers  within  its  jurisdiction  that  are  identified  under  subsection  (a)  and  that  can  be  prescribed  consistent  with  the  public  interest,  convenience,  and 
 necessity;  and 
 (2)  the  statutory  barriers  identified  under  subsection  (a)  that  the  Commission  recommends  be  eliminated  consistent  with  the  public  interest,  convenience,  and  necessity. 


 47  U.  S.  C.    257(  c). 
 5  See  Section  257  Report  to  Congress,  15  FCC  Rcd  15,  376  (2000)  (2000  Report);  Section  257  Proceeding  to  Identify 
 and  Eliminate  Market  Entry  Barriers  for  Small  Businesses,  12  FCC  Rcd  16,  802  (1997)  (1997  Report). 
 6  In  2003,  as  evaluated  by  Brown  University  researchers,  the  Commissions  website  ranked  2  nd  among  federal 
 websites.  The  previous  year,  it  ranked  1  st  ,  and  in  2001  it  ranked  3  rd  ,  which  was  up  from  the  4  th  place  ranking  Brown  University  researchers  gave  it  in  2000.  The  researchers  used  such  measures  as  online  services,  attention  to  privacy 


 and  security,  disability  access,  foreign  language  translation,  website  personalization,  and  e-  mail  responsiveness  to  rate  the  various  websites. 
5
 Federal  Communications  Commission  FCC  03-  335 
 11 
 13.  The  purpose  of  these  many  meetings,  discussions,  and  workshops  is  to  address  the  particular  concerns  of  tribal  and  other  providers  of  telecommunications  services  to  Indian  Country,  most 
 of  which  are  small  businesses.  The  gatherings  provide  important  information  to  tribal  leaders  on  telecommunications  technologies,  on  private  and  public  resources  available  to  assist  tribal  nations,  and  on 
 developing  strategies  to  improve  telecommunications  services  on  reservations.  Our  goal  is  to  develop  ways  in  which  barriers  to  entry  and  functioning  of  small  telecommunications  businesses  in  Indian 
 Country  can  be  avoided  or  overcome. 
 3.  Policy  Division 
 14.  In  the  2002  reorganization,  the  CGB  added  a  Policy  Division,  which  is  dedicated  to  the  creation  and  review  of  consumer-  related  policy.  The  Policy  Division  is  responsible  for  the  development 


 of  consumer  policy  concerning  Commission-  regulated  entities,  including  common  carrier,  broadcast,  wireless,  satellite,  and  cable  companies. 


 15.  Through  rulemakings  and  orders  for  which  it  has  primary  responsibility,  and  by  commenting  on  rulemakings  and  orders  originating  in  other  Bureaus  and  Offices,  the  Policy  Division 
 ensures  that  consumer  interests  are  considered  in  all  Commission  policy-  making  activities.  The  Policy  Divisions  activities  include  issuing  orders  resolving  complaints  concerning  unauthorized  changes  in 
 telecommunications  providers  (slamming),  conducting  rulemakings  on  slamming  and  other  consumer  policy  issues,  including  a  rulemaking  pursuant  to  the  Telephone  Consumer  Protection  Act  of  1991 
 (TCPA),  8  which  restricts  unsolicited  advertising  using  the  telephone  and  facsimile  machine,  and  tracking  informal  inquiries  and  complaints  to  identify  trends  that  affect  consumers. 


 4.  Disability  Rights  Office 
 16.  The  DRO  is  very  involved  in  the  review  and  creation  of  consumer  policy  as  it  pertains  to  ensuring  that  persons  with  disabilities  have  access  to  telecommunications  products  and  services.  This 


 increased  role  for  the  DRO  ensures  that  issues  affecting  persons  with  disabilities  receive  proper  attention  and  appropriate  action. 


 17.  The  main  issues  the  DRO  handles  are  those  related  to  telecommunications  relay  services  (TRS)  and  Section  255  of  the  Telecommunications  Act.  9  The  DRO  is  responsible  for  the  certification  of 
 the  states  TRS  programs  and  their  compliance  with  the  Commissions  Rules.  In  addition  to  its  own  rulemaking  efforts,  the  DRO  also  works  with  other  Commission  Bureaus  and  Offices  on  issues  that  affect 
 persons  with  disabilities,  such  as  closed  captioning  (Media  Bureau)  or  hearing  aid  compatibility  of  wireless  phones  (Wireless  Telecommunications  Bureau). 


 18.  The  following  is  a  discussion  of  the  CGBs  rulemaking  proceedings  as  they  relate  to  small  businesses. 
 5.  Telephone  Consumer  Protection  Act 
 19.  On  July  3,  2003,  the  Commission  released  a  Report  and  Order  10  revising  the  rules  that  it  adopted  in  1992  pursuant  to  the  TCPA,  which  Congress  passed  in  1991.  In  the  TCPA,  Congress  created  a 


 8  Telephone  Consumer  Protection  Act  of  1991,  Pub.  L.  No.  102-  243,  105  Stat.  2394  (1991)  codified  at  47  U.  S.  C.   
 227.  The  TCPA  amended  Title  II  of  the  Communications  Act,  47  U.  S.  C.    201  et  seq. 
 9  47  U.  S.  C.    255. 


 10  Rules  and  Regulations  Implementing  the  Telephone  Consumer  Protection  Act  of  1991,  Report  and  Order,  18  FCC 
 Rcd  14,  014  (2003)  (Report  and  Order). 
11
 Federal  Communications  Commission  FCC  03-  335 
 12 
 balance  between  individual  privacy  and  legitimate  telemarketing  practices.  The  Commission  crafted  its  1992  rules  to  achieve  this  balance. 
 20.  In  the  past  decade,  the  adoption  of  developing  technologies  allowed  telemarketers  to  reach  more  persons  by  phone  and  facsimile.  Their  new  marketing  techniques,  however,  are  causing 
 concerns  about  consumers  privacy.  Last  year,  the  Commission  revisited  its  1992  rules  to  enhance  privacy  protections  while  avoiding  unnecessary  burdens  on  the  telemarketing  industry,  consumers,  and 
 regulators. 
 21.  The  Commission  released  a  Notice  of  Proposed  Rulemaking  and  Memorandum  Opinion  and  Order  (2002  Notice)  in  September  2002,  11  seeking  comment  on  whether  it  should  revise  its  1992 
 rules  to  carry  out  more  effectively  Congress  TCPA  directives.  In  particular,  the  Commission  sought  comment  on  the  use  of  automatic  telephone  dialing  systems,  artificial  or  prerecorded  voice  messages,  and 
 telephone  facsimile  machines.  The  Commission  also  sought  comment  on  the  effectiveness  of  company-specific  Do-  Not-  Call  lists  and  the  possibility  of  establishing  a  national  Do-  Not-  Call  List,  as  well  as  the 
 effect  of  the  Commissions  proposed  policies  and  rules  on  small  businesses.  12 
 22.  On  March  11,  2003,  President  Bush  signed  into  law  the  Do-  Not-  Call  Implementation  Act  (Do  Not  Call  Act),  13  which  required  the  Commission  to  issue  a  final  rule  in  the  pending  2002  Notice 
 proceeding  within  180  days  of  March  11,  2003,  and  to  consult  with  the  Federal  Trade  Commission  (FTC)  to  ensure  consistency  with  rules  the  FTC  promulgated  in  2002. 


 23.  As  detailed  below,  the  Commission  considered  significant  alternatives  in  developing  the  new  rules. 
 6.  National  Do-  Not-  Call  List 
 24.  Although  many  businesses,  including  small  businesses,  objected  to  a  national  Do-  Not-Call  List,  the  Commission  determined  that  a  national  Do-  Not-  Call  List  was  necessary  to  carry  out 


 Congress  TCPA  directives.  14  The  Commission  declined  to  exempt  local  solicitations  and  small  businesses  from  the  national  Do-  Not-  Call  List,  because  doing  so  would  undermine  the  effectiveness  of 
 the  national  Do-  Not-  Call  rules  in  protecting  consumer  privacy.  15 
 25.  In  addition,  the  Commission  declined  to  permit  businesses  to  register  their  numbers  on  the  national  Do-  Not-  Call  List  because  the  TCPA  expressly  contemplates  a  national  Do-  Not-  Call  database 


 for  residential  telephone  subscribers.  Businesses  may,  nevertheless,  request  that  their  numbers  be  added  to  a  specific  companys  Do-  Not-  Call  list. 


 11  Rules  and  Regulations  Implementing  the  Telephone  Consumer  Protection  Act  of  1991,  Notice  of  Proposed 
 Rulemaking  and  Memorandum  Opinion  and  Order,  17  FCC  Rcd  17,  459  (2002)  (2002  Notice). 


 12  On  July  25,  2003,  the  American  Teleservices  Association  requested  judicial  review  and  a  stay  of  the  new  rules 
 with  the  U.  S.  10  th  Circuit  Court  of  Appeals.  The  court  denied  the  stay  request  on  September  26,  2003;  the  petition  for  review  is  pending. 


 13  Do-  Not-  Call  Implementation  Act,  Pub.  L.  No.  108-  10,  117  Stat.  557  (2003),  to  be  codified  at  15  U.  S.  C.    1601. 
 14  We  note  that  political  and  religious  speech  calls  are  not  precluded  by  the  national  Do-  Not-  Call  List.  Report  and 
 Order,  18  FCC  Rcd  at  14,  039,  para.  37. 


 15  Id.  at  14,  043-  44. 
12
 Federal  Communications  Commission  FCC  03-  335 
 13 
 26.  To  minimize  the  cost  to  small  businesses  of  purchasing  the  national  Do-  Not-  Call  List,  the  Commission  considered  an  alternative  and  determined  that  businesses  may  obtain  five  area  codes  free-  of-charge. 
 Because  many  small  businesses  telemarket  within  a  local  area,  providing  them  with  five  area  codes  at  no  cost  should  help  reduce  or  eliminate  the  costs  of  purchasing  the  national  Do-  Not-  Call  List. 
 Furthermore,  small  businesses  can  gain  access  to  the  national  Do-  Not-  Call  List  in  an  efficient,  cost-effective  manner  via  the  Internet. 


 27.  To  reduce  the  potential  for  confusion  by  both  consumers  and  businesses  alike,  the  Commission  declined  to  create  a  specific  exemption  from  the  Do-  Not-  Call  List  for  small  businesses.  The 
 exemptions  adopted,  for  calls  made  to  consumers  with  whom  a  seller  has  an  established  business  relationship  16  and  to  those  who  furnish  express  agreement  to  be  called,  provide  small  businesses  with  a 
 reasonable  opportunity  to  conduct  their  business. 
 28.  The  Commission  also  considered  modifying,  for  small  businesses,  the  time  frames  for  (1)  processing  consumers  Do-  Not-  Call  requests;  (2)  retaining  consumer  Do-  Not-  Call  records;  and  (3) 


 comparing  company  calling  lists  to  the  national  Do-  Not-  Call  List.  In  doing  so,  the  Commission  recognized  the  limitations  on  small  businesses  of  processing  requests  in  a  timely  manner.  Therefore, 
 large  and  small  businesses  have  up  to  thirty  days  from  the  date  of  request  to  honor  Do-  Not-  Call  requests. 
 29.  The  Commission  also  determined  to  reduce  the  retention  period  of  Do-  Not-  Call  records  from  ten  years  to  five  years.  This  modification  should  benefit  businesses  that  are  concerned  about 


 telephone  numbers  that  change  hands  over  time.  Finally,  the  Commission  considered  allowing  small  businesses  additional  time  to  compare  their  customer  call  lists  to  the  national  Do-  Not-  Call  database,  but 
 the  Commission  chose  to  require  all  businesses  to  compare  their  calling  lists  to  the  national  Do-  Not-  Call  List  registry  every  ninety  days. 


 7.  Call  Abandonment 
 30.  In  the  2002  Notice,  the  Commission  requested  information  on  the  use  of  predictive  dialers  and  the  harms  that  result  when  predictive  dialers  abandon  calls.  The  Commission  determined  that 


 a  3%  maximum  rate  on  abandoned  calls  balances  the  interests  of  businesses  that  derive  economic  benefits  from  predictive  dialers  and  consumers  who  find  calls  delivered  by  predictive  dialers  intrusive.  The 
 Commission  believes  that  this  3%  rate  will  also  benefit  small  businesses  that  are  affected  by  interruptions  from  hang-  ups  and  dead  air  calls. 


 31.  We  measure  the  3%  rate  over  a  thirty  day  period,  rather  than  on  a  per-  day  basis.  We  believe  that  measuring  the  3%  rate  over  a  longer  period  will  reduce  the  overall  number  of  abandoned 
 calls,  yet  permit  telemarketers  to  manage  individual  calling  campaigns  effectively.  The  3%  rate  will  also 
 16  The  Commission  modified  the  current  definition  of  established  business  relationship  to  limit  its  duration  to 
 eighteen  months  from  any  purchase  or  transaction  and  three  months  from  any  inquiry  or  application.  These  timeframes  strike  an  appropriate  balance  between  industry  practices  and  consumer  privacy  interests.  The 


 Commission  defined  an  established  business  relationship  as: 
 a  prior  or  existing  relationship  formed  by  a  voluntary  two-  way  communication  between  a  person  or  entity  and  a  residential  subscriber  with  or  without  an  exchange  of  consideration,  on  the  basis  of 
 the  subscribers  purchase  or  transaction  with  the  entity  within  the  eighteen  (18)  months  immediately  preceding  the  date  of  the  telephone  call  or  on  the  basis  of  the  subscribers  inquiry  or 
 application  regarding  products  or  services  offered  by  the  entity  within  the  three  (3)  months  immediately  preceding  the  date  of  the  call,  which  relationship  has  not  been  previously  terminated 
 by  either  party. 
 Id.  at  14,  079. 
13
 Federal  Communications  Commission  FCC  03-  335 
 14 
 permit  telemarketers  to  comply  more  easily  with  the  recordkeeping  requirements  associated  with  the  use  of  predictive  dialers. 
 8.  Unsolicited  Facsimile  Advertising 
 32.  The  record  revealed  that  facsimile  advertising  can  both  benefit  and  harm  small  businesses  with  limited  resources.  The  Commission  reversed  its  prior  conclusion  that  an  established  business 


 relationship  provides  companies  with  the  necessary  express  permission  to  send  facsimiles  to  their  customers.  Under  the  amended  rules,  a  business  may  advertise  by  facsimile  only  with  the  prior,  written 
 express  permission  of  the  facsimile  recipient.  Businesses  may  obtain  such  written  permission  through  direct  mail,  websites,  or  during  interaction  with  customers  in  their  stores.  These  alternatives  will  benefit 
 small  businesses  and  consumers  who  are  inundated  with  unwanted  facsimile  advertisements.  On  August  18,  2003,  the  Commission,  upon  its  own  motion,  extended  the  effective  date  to  January  1,  2005  for 
 facsimile  advertisers  to  comply  with  the  consent  requirements.  17 
 9.  Website  or  Toll-  Free  Number  to  Access  Company-  Specific  Lists  and  to  Confirm  Requests 


 33.  Finally,  the  Commission  declined  to  require  businesses  to  provide  a  website  or  toll-  free  number  for  consumers  to  request  placement  on  company-  specific  Do-  Not-  Call  lists  or  to  respond 
 affirmatively  to  Do-  Not-  Call  requests  or  otherwise  provide  some  means  of  confirmation  for  consumers  to  ascertain  whether  a  company  added  their  names  to  its  Do-  Not-  Call  list,  because  those  requirements  would 
 be  costly  to  small  businesses.  This  action  should  reduce  both  the  potential  cost  and  resource  burdens  of  maintaining  company-  specific  lists  for  small  businesses  that  engage  in  telemarketing. 


 10.  Slamming 
 34.  On  August  15,  2000,  the  Commission  released  its  Third  Report  and  Order  and  Second  Order  on  Reconsideration  (Third  Report  and  Order),  18  in  which  it  adopted  rules  proposed  in  the  Second 


 Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking  (Section  258  Order)  19  to  implement  Section  258  of  the  Communications  Act  as  amended  by  the  Telecommunications  Act  of  1996.  20 


 35.  Section  258  of  the  Communications  Act  prohibits  any  telecommunications  carrier  from  submitting  or  executing  an  unauthorized  change  in  a  subscribers  selection  of  a  provider  of  telephone 
 exchange  service  or  telephone  toll  service,  a  practice  known  as  slamming.  The  rules  the  Commission  adopted  in  the  Section  258  Order  improved  the  carrier  change  process  for  consumers  and  carriers,  and 
 made  it  more  difficult  for  unscrupulous  carriers  to  perpetrate  slams. 


 17  Rules  and  Regulations  Implementing  the  Telephone  Consumer  Protection  Act  of  1991,  Order  on  Reconsideration, 
 2003  WL  21961003  (2003). 
 18  Implementation  of  the  Subscriber  Carrier  Selection  Changes  Provisions  of  the  Telecommunications  Act  of  1996 
 and  Policies  and  Rules  Concerning  Unauthorized  Changes  of  Consumers  Long  Distance  Carriers,  Third  Report  and  Order  and  Second  Order  on  Reconsideration,  15  FCC  Rcd  15,  996  (2000)  (Third  Report  and  Order). 


 19  Implementation  of  the  Subscriber  Carrier  Selection  Changes  Provisions  of  the  Telecommunications  Act  of  1996; 
 Policies  and  Rules  Concerning  Unauthorized  Changes  of  Consumers  Long  Distance  Carriers,  Second  Report  and  Order  and  Further  Notice  of  Proposed  Rule  Making,  14  FCC  Rcd  1508  (1998)  (Section  258  Order),  stayed  in  part, 


 MCI  WorldCom  v.  FCC,  No.  99-  1125  (D.  C.  Cir.  May  18,  1999)  (Stay  Order),  motion  to  dissolve  stay  granted,  MCI  WorldCom  v.  FCC,  No.  99-  1125  (D.  C.  Cir.  June  27,  2000)  (Order  Lifting  Stay). 


 20  47  U.  S.  C.    258(  a);  Telecommunications  Act  of  1996. 
14
 Federal  Communications  Commission  FCC  03-  335 
 15 
 36.  In  the  Section  258  Order,  the  Commission  established  a  comprehensive  framework  designed  to  close  loopholes  that  carriers  use  to  slam  consumers  and  to  bolster  certain  aspects  of  our 
 slamming  rules  to  increase  their  deterrent  effect.  The  Commission  also  broadened  the  scope  of  the  slamming  rules  to  encompass  all  carriers  and  imposed  more  rigorous  verification  measures. 


 37.  In  the  First  Reconsideration  Order,  21  the  Commission  amended  certain  aspects  of  the  slamming  liability  rules,  granting  in  part  petitions  for  reconsideration  of  the  Section  258  Order.  Although 
 the  petitions  raised  a  broad  range  of  issues  relating  to  the  slamming  rules,  the  First  Reconsideration  Order  addressed  only  those  issues  relating  to  the  Commissions  slamming  liability  rules,  which  the  U.  S. 
 D.  C.  Circuit  Court  of  Appeals  stayed. 
 38.  When  the  Commission  released  the  Section  258  Order,  it  recognized  that  additional  revisions  to  the  slamming  rules  could  further  improve  the  preferred  carrier  (PC)  change  process  and 
 prevent  unauthorized  changes.  Thus,  concurrent  with  the  release  of  the  Section  258  Order,  the  Commission  issued  a  Further  Notice  of  Proposed  Rulemaking  (Further  Notice)  and  sought  comment  on 
 the  following  proposals:  (1)  permitting  the  authorization  and  verification  of  PC  changes  over  the  Internet;  (2)  requiring  resellers  to  obtain  their  own  carrier  identification  codes  (CICs),  or,  in  the  alternative,  some 
 type  of  pseudo-  CIC  that  would  provide  underlying  facilities-  based  carriers  and  subscribers  of  resellers  with  a  way  to  identify  the  service  provider;  (3)  modifying  the  independent  third-  party  verification 
 method;  (4)  defining  the  term  subscriber  for  purposes  of  authorizing  PC  changes;  (5)  requiring  carriers  to  submit  reports  on  the  number  of  slamming  complaints  they  receive;  (6)  creating  a  registration 
 requirement  for  all  providers  of  interstate  telecommunications  services;  and  (7)  requiring  unauthorized  carriers  to  remit  to  authorized  carriers  certain  amounts  in  addition  to  the  amount  paid  by  slammed 
 subscribers. 
 39.  On  June  30,  2000,  President  Bush  signed  into  law  the  Electronic  Signatures  in  Global  and  National  Commerce  Act  (E-  Sign  Act),  22  which  was  relevant  to  the  slamming  rules  and  to  some  of  the 
 issues  pending  in  this  proceeding.  Particularly  affected  was  our  proposal  in  the  Further  Notice  to  allow  the  authorization  and  verification  of  PC  changes  using  the  Internet.  With  certain  exceptions,  not  relevant 
 here,  the  provisions  of  the  E-  Sign  Act  took  effect  on  October  1,  2000. 
 40.  In  the  Third  Report  and  Order,  the  Commission  adopted  a  number  of  the  proposals  discussed  in  the  Further  Notice,  and  addressed  the  remaining  issues  raised  on  reconsideration  of  the 
 Section  258  Order.  Specifically,  the  Commission  amended  the  current  carrier  change  authorization  and  verification  rules  to  permit  the  use  of  Internet  letters  of  agency  (LOA)  in  a  manner  consistent  with  the 
 new  E-  Sign  Act,  directed  the  North  American  Numbering  Plan  Administration  (NANPA)  to  eliminate  the  requirement  that  carriers  purchase  Feature  Group  D  access  in  order  to  obtain  a  CIC,  provided  further 
 guidance  on  independent  third-  party  verification,  defined  the  term  subscriber,  required  each  carrier  to  submit  a  bi-  annual  report  on  the  number  of  slamming  complaints  it  receives,  and  expanded  the  existing 
 registration  requirement  on  carriers  providing  interstate  telecommunications  service  to  include  additional  facts  that  will  assist  our  enforcement  efforts. 


 41.  This  Third  Report  and  Order  also  contained  a  Second  Order  on  Reconsideration  (Reconsideration),  upholding  the  rules  governing  the  submission  of  PC  freeze  orders,  the  handling  of  PC 


 21  Implementation  of  the  Subscriber  Carrier  Selection  Changes  Provisions  of  the  Telecommunications  Act  of  1996; 
 Policies  and  Rules  Concerning  Unauthorized  Changes  of  Consumers  Long  Distance  Carriers,  First  Order  on  Reconsideration,  15  FCC  Rcd  8158  (2000)  (First  Reconsideration  Order). 


 22  See  Electronic  Signatures  in  Global  and  National  Commerce  Act,  S.  761,  106  th  Cong.,  2  nd  Sess.  (signed  into  law 
 June  30,  2000). 
15
 Federal  Communications  Commission  FCC  03-  335 
 16 
 change  requests  and  freeze  orders  in  the  same  transaction,  and  the  automated  submission  and  administration  of  freeze  orders  and  changes.  In  addition,  the  Commission  reaffirmed  its  decision  not  to 
 preempt  state  regulations  governing  verification  procedures  for  PC  change  requests  that  are  consistent  with  the  provisions  of  Section  258. 


 42.  The  clarifications  and  minor  modifications  the  Commission  made  to  its  slamming  rules  in  the  Reconsideration  will  benefit  all  carriers,  including  small  carriers,  by  providing  certainty  and  guidance 
 in  the  PC  change  process.  For  instance,  the  Commission  declined  to  adopt  a  thirty  day  period  during  which  an  LOA  confirming  a  carrier  change  request  is  considered  valid  because  it  does  not  provide  enough 
 flexibility  for  submitting  carriers.  Instead,  the  Commission  adopted  a  sixty  day  limit  as  a  reasonable  time  frame,  which  will  provide  flexibility  but  will  also  avoid  consumer  confusion  that  may  be  produced  by  an 
 indefinite  time  period.  We  do  not  expect  that  the  sixty  day  time  limit  will  have  any  significant  economic  impact. 


 43.  On  February  16,  2001,  the  Commission  released  an  Order  amending  and  clarifying,  on  its  own  motion,  certain  aspects  of  the  reporting  and  registration  requirements  it  adopted  in  the  Third  Report 
 and  Order.  For  example,  these  actions  include  the  requirement  that  carriers  providing  telephone  exchange  service  or  telephone  toll  service  or  both  submit  semiannual  slamming  complaint  reports.  In 
 addition,  the  Order  provides  further  clarification  and  modification  with  regard  to  the  carriers  to  which  the  registration  requirement  applies  and  the  information  that  such  carriers  must  provide. 


 44.  We  anticipate  that  these  clarifications  and  amendments  will  eliminate  or  minimize  any  possible  confusion  for  all  affected  carriers,  including  small  entity  carriers.  Without  these  changes, 
 carriers  might  have  been  unclear  as  to  whether  they  had  a  duty  to  comply  with  the  reporting  and  registration  requirements. 


 11.  Informal  Complaints 
 45.  On  February  28,  2002,  the  Commission  released  a  Notice  of  Proposed  Rulemaking  (NPRM),  in  which  it  sought  comment  on  a  proposal  to  create  a  consumer  complaint  process  patterned 


 after  our  Section  208  informal  complaint  rules,  and  to  extend  this  process  to  all  entities  we  regulate.  23  Currently,  the  informal  complaint  rules  apply  only  to  complaints  against  common  carriers.  The 
 Commission,  in  the  NPRM,  noted  that  we  handle  informal  complaints  against  regulated  entities  other  than  common  carriers  in  a  less  structured  manner,  which  results  in  a  lack  of  predictability  for  consumers  in 
 filing  complaints  and  for  industry  in  receiving  and  responding  to  complaints.  Our  stated  goal  of  this  proceeding  is  to  establish,  to  the  maximum  extent  possible,  a  consistent  procedure  for  the  handling  of  all 
 informal  consumer  complaints.  We  did  not,  however,  propose  to  limit  or  otherwise  alter  any  remedies  and  procedural  options  in  areas  in  which  we  already  established  specific  informal  complaint  procedures. 


 46.  The  Commission  also  sought  comment  on  whether  the  streamlining  proposals,  if  adopted,  would  impose  an  unnecessary  burden  on  small  regulated  entities,  as  defined  by  the  Regulatory  Flexibility 
 Act  (RFA).  24  For  example,  in  the  NPRM,  the  Commission  asked  whether  it  should  extend  the  time  for  small  entities  to  respond  to  complaints  to  avoid  taxing  their  limited  time  and  financial  resources.  The 


 23  Establishment  of  Rules  Governing  Procedures  to  Be  Followed  When  Informal  Complaints  Are  Filed  by 
 Consumers  Against  Entities  Regulated  by  the  Commission,  Notice  of  Proposed  Rulemaking,  Amendment  of  Subpart  E  of  Chapter  1  of  the  Commissions  Rules  Governing  Procedures  to  Be  Followed  When  Informal  Complaints  Are 


 Filed  Against  Common  Carriers,  and  2000  Biennial  Regulatory  Review,  Memorandum  Opinion  and  Order,  17  FCC  Rcd  3919  (2002)  (NPRM). 


 24  Regulatory  Flexibility  Act  of  1980,  as  amended,  5  U.  S.  C.    601-  612. 
16
 Federal  Communications  Commission  FCC  03-  335 
 17 
 Commission  requested  commenters  to  make  specific  suggestions  regarding  how  the  proposals  described  in  the  NPRM  might  be  adjusted  in  the  case  of  small  regulated  entities. 
 12.  Telecommunications  Relay  Service 
 47.  Title  IV  of  the  Americans  with  Disabilities  Act  (ADA),  which  is  codified  at  Section  225  of  the  Communications  Act,  25  mandates  that  the  Commission  ensure  that  interstate  and  intrastate  TRS  are 


 available,  to  the  extent  possible  and  in  the  most  efficient  manner,  to  individuals  in  the  U.  S.  with  hearing  and  speech  disabilities. 


 48.  Title  IV  aims  to  further  Congress  goal  of  Universal  Service  by  providing,  to  individuals  with  hearing  or  speech  disabilities,  telephone  services  that  are  functionally  equivalent  to  those  available  to 
 individuals  without  such  disabilities.  Since  the  establishment  of  this  mandate,  the  Commission  took  numerous  steps  to  increase  the  availability  of  TRS,  and  to  ensure  that  TRS  users  have  access  to  the  same 
 services  available  to  all  telephone  service  users.  26 
 a.  Memorandum  Opinion  and  Order  and  FNPRM 
 49.  On  November  9,  2000,  the  Interstate  TRS  Advisory  Council  and  the  TRS  Fund  Administrator  (Advisory  Council  and  Fund  Administrator,  respectively)  proposed  guidelines  for  interstate 


 cost  recovery  for  traditional  TRS,  speech-  to-  speech  relay  (STS),  and  video  relay  services  (VRS). 
 50.  They  filed  recommendations  in  response  to  the  March  6,  2000  Improved  TRS  Order,  27  which  required  the  Advisory  Council  and  the  Fund  Administrator  to  develop  cost  recovery  guidelines  for 


 these  services.  On  April  6,  2001,  Hamilton  Telephone  Company  (Hamilton)  filed  a  request  for  clarification  of  the  scope  of  the  VRS  rules  and  for  a  two  year  waiver  of  certain  provisions  relating  to  VRS 
 contained  in  the  Improved  TRS  Order.  28 


 25  47  U.  S.  C.    225  et  seq. 
 26  Telecommunications  Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  and  the  Americans  with 
 Disabilities  Act  of  1990,  Order,  8  FCC  Rcd  8385  (1993)  (1993  Suspension  Order);  Telecommunications  Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  and  the  Americans  with  Disabilities  Act  of  1990,  Order,  10  FCC 


 Rcd  12,  775  (1995)  (1995  Interim  Suspension  Order);  Telecommunications  Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  and  the  Americans  with  Disabilities  Act  of  1990,  Memorandum  Opinion  and  Order,  10  FCC 
 Rcd  10,  927  (1995)  (Alternative  Plan  Order).  The  Commission  extended  the  suspension  seven  times,  with  the  most  recent  extension  expiring  on  May  26,  2001.  The  Commission,  later  suspended  the  rules  pending  the  adoption  of 
 final  rules.  See  1993  Suspension  Order,  8  FCC  Rcd  8385;  1995  Interim  Suspension  Order,  10  FCC  Rcd  12,  775;  Alternative  Plan  Order,  10  FCC  Rcd  10,  927;  Telecommunications  Services  for  Individuals  with  Hearing  and  Speech 
 Disabilities,  and  the  Americans  with  Disabilities  Act  of  1990,  Order,  12  FCC  Rcd  12,  196  (1997)  (1997  Suspension  Order);  Telecommunications  Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  and  the  Americans  with 
 Disabilities  Act  of  1990,  Order,  13  FCC  Rcd  15,  453  (1998)  (1998  Suspension  Order);  Telecommunications  Relay  Services,  and  the  Americans  with  Disabilities  Act  of  1990,  Order,  15  FCC  Rcd  6675  (1999)  (1999  Suspension 
 Order);  Telecommunications  Relay  Services,  and  the  Americans  with  Disabilities  Act  of  1990,  Order,  15  FCC  Rcd  15,  823  (2000)  (2000  Suspension  Order);  Telecommunications  Relay  Services  and  the  Americans  with  Disabilities 
 Act  of  1990,  Second  Further  Notice  of  Proposed  Rulemaking,  16  FCC  Rcd  5803  (2001)  (Coin  Sent-  Paid  Second  Further  Notice). 


 27  Telecommunications  Relay  Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  Report  and  Order  and 
 Further  Notice  of  Proposed  Rulemaking,  15  FCC  Rcd  5140  (2000)  (Improved  TRS  Order);  Order  on  Reconsideration,  16  FCC  Rcd  4054  (2000). 


 28  Hamilton  Telephone  Company,  Request  for  Clarification  and  Temporary  Waivers  (filed  Apr.  6,  2001). 
17
 Federal  Communications  Commission  FCC  03-  335 
 18 
 51.  On  December  21,  2001,  the  Commission  released  a  Memorandum  Opinion  and  Order  and  Further  Notice  of  Proposed  Rulemaking  (MO&  O  and  FNPRM)  addressing  Hamiltons  request  for 
 clarification.  29  Therein,  the  Commission  concluded  that  the  cost  recovery  guidelines  adopted  in  the  MO&  O  and  FNPRM  would  have  no  adverse  economic  impact  on  small  entities  because  it  designed  the 
 rules  to  allow  all  providers,  including  small  entities,  to  be  accurately  reimbursed.  Given  that  the  Advisory  Council,  which  suggested  guidelines  for  the  proposed  rules,  consists  of  members  of  state  regulatory 
 bodies,  relay  users,  members  of  the  disabilities  community,  large  and  small  TRS  providers,  and  large  and  small  TRS  contributors,  the  cost  recovery  measures  adopted  in  the  MO&  O  resulted  from  industry  and 
 small  business  input. 
 52.  The  Commission  considered  certain  alternatives  and  found  the  measures  adopted  in  its  proceeding  to  be  the  most  appropriate.  For  example,  for  Spanish  language  relay,  the  Commission 
 considered  the  alternative  of  requiring  that  the  costs  be  collected  separately  and  tested  to  determine  whether  they  are  significantly  different  from  English  relay  costs.  After  analyzing  the  issues,  the 
 Commission  concluded  that  Spanish  and  English  relay  costs  were  sufficiently  similar  to  calculate  reimbursement  based  on  completed  conversation  minutes  for  both  Spanish  and  English  relay. 


 53.  In  addition,  because  of  the  unique  characteristic  of  the  developing  VRS  market,  the  Commission  declined  to  adopt  permanently  the  alternatives  suggested  by  the  Advisory  Council  and  the 
 Fund  Administrator,  i.  e.,  the  recommendation  to  use  the  same  methodology  for  rate  development  in  place  today  for  traditional  TRS  interstate  cost  recovery  for  the  development  of  a  VRS  reimbursement  rate.  The 
 Commission  also  declined  to  develop,  as  an  alternative,  a  VRS  reimbursement  rate  based  on  completed  conversation  minutes  of  use  at  a  national  average  reimbursement  rate.  The  Commission  sought  additional 
 comments  on  these  issues. 
 54.  The  MO&  O  directs  the  Fund  Administrator  to  adopt  an  interim  VRS  cost  recovery  rate  using  the  average  per  minute  compensation  methodology  used  for  traditional  TRS.  Use  of  an  interim 
 methodology  will  allow  the  Commission  additional  time  to  consider  further  VRS  cost  recovery  and  evaluate  the  comments  anticipated  on  these  recommendations  in  response  to  the  Further  Notice.  Thus, 
 while  we  considered  significant  alternatives,  the  Commission  believes  that  the  actions  it  took  in  the  MO&  O  are  in  the  best  interests  of  all  entities,  including  small  businesses. 


 b.  Declaratory  Ruling  and  Second  FNPRM 
 55.  On  April  22,  2002,  the  Commission  released  a  Declaratory  Ruling  and  Second  FNPRM  (Declaratory  Ruling)  30  addressing  a  Petition  for  Clarification  (Petition)  filed  by  WorldCom,  Inc. 


 (WorldCom)  on  December  22,  2000.  31  In  its  Petition,  WorldCom  requested  that  the  Commission  clarify  that  IP  Relay  is  eligible  for  reimbursement  from  the  interstate  TRS  Fund. 


 56.  The  Commission  concluded  that  IP  Relay  falls  within  the  statutory  definition  of  TRS  and  that  providers  of  such  services  are  eligible  to  recover  their  costs  in  accordance  with  Section  225  of  the 
 Act.  As  a  result  of  the  WorldCom  Petition  and  comments,  the  Commission  issued  the  Declaratory  Ruling 
 29  Telecommunications  Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  Memorandum  Opinion  and 
 Order  and  Further  Notice  of  Proposed  Rulemaking,  16  FCC  Rcd  22,  948  (2001). 
 30  Provision  of  Improved  Telecommunications  Relay  Services  and  Speech-  to-  Speech  Services  for  Individuals  with 
 Hearing  and  Speech  Disabilities,  Declaratory  Ruling  and  Second  Further  Notice  of  Proposed  Rulemaking,  17  FCC  Rcd  7779  (2002). 


 31  WorldCom,  Petition  for  Clarification,  Telecommunications  Services  for  Individuals  with  Hearing  and  Speech 
 Disabilities  (filed  Dec.  22,  2000). 
18
 Federal  Communications  Commission  FCC  03-  335 
 19 
 to  allow  WorldCom  to  recover  its  costs. 
 57.  This  item  imposes  a  regulatory  burden  on  the  interstate  Fund  Administrator,  requiring  it  to  pay  qualified  providers  of  IP  TRS  for  their  costs  associated  with  TRS.  The  interstate  TRS  Fund  is  a 
 not-  for-  profit  organization,  and  therefore  is  a  small  organization,  defined  as  any  not-  for-  profit  enterprise  which  is  independently  owned  and  operated  and  is  not  dominant  in  its  field.  32 


 58.  Because  the  interstate  TRS  Fund  is  the  only  entity  affected  by  the  Declaratory  Ruling,  the  Commission  concluded  that  a  substantial  number  of  small  entities  will  not  be  affected  by  the 
 Declaratory  Ruling.  Therefore,  the  requirements  of  the  Declaratory  Ruling  will  not  have  a  significant  economic  impact  on  a  substantial  number  of  small  entities. 


 c.  Fifth  Report  and  Order 
 59.  On  October  25,  2002,  the  Commission  released  its  Fifth  Report  and  Order  on  TRS  33  (Fifth  Report  and  Order  on  TRS),  in  which  it  concluded  that  carriers  need  not  provide  coin  sent-  paid  TRS 


 calls  from  payphones,  because  it  was  infeasible  to  provide  coin  sent-  paid  relay  service  through  payphones  at  that  time,  and  because  coin  sent-  paid  functionality  was  not  necessary  to  achieve  functional  equivalence. 


 60.  The  ADA  requires  the  Commission  to  establish  functional  requirements,  guidelines,  and  operational  procedures  for  TRS,  and  to  establish  minimum  standards  for  carriers  provisioning  of  TRS. 
 To  achieve  functional  equivalence  to  telephone  services  available  to  voice  users,  Congress  directed,  among  other  things,  that  the  Commission  prohibit  TRS  providers  from  failing  to  fulfill  the  obligations  of 
 common  carriers  by  refusing  calls.  34  In  the  First  Report  and  Order  on  TRS,  35  the  Commission  interpreted  this  ADA  mandate  to  require  TRS  providers  to  handle  any  type  of  call  normally  provided  by 
 common  carriers,  such  as  coin  sent-  paid  calls  (i.  e.,  calls  made  by  depositing  coins  in  a  coin-  operated  public  payphone). 


 61.  Subsequent  concerns  about  the  technical  difficulties  associated  with  handling  coin  sent-paid  calls  through  TRS  centers,  however,  resulted  in  the  Commission  repeatedly  suspending  the  mandate 
 for  TRS  providers  to  handle  these  types  of  calls.  For  example,  because  no  current  technological  solution  to  the  coin  sent-  paid  issue  appears  feasible  at  this  time,  the  Fifth  Report  and  Order  on  TRS  eliminated  the 
 coin  sent-  paid  requirement  and  encouraged  specific  outreach  and  education  programs  to  inform  TRS  users  of  their  options  when  placing  calls  from  payphones. 


 62.  As  discussed  below,  no  steps  are  needed  to  minimize  the  economic  impact  of  the  Fifth  Report  and  Order  on  TRS  on  small  businesses  nor  is  it  necessary  to  consider  alternatives  to  minimize  the 
 economic  impact  on  small  businesses.  First,  the  requirements  in  the  Fifth  Report  and  Order  on  TRS  will  have  minimal  impact  on  small  entities  because  the  requirements  pertain  to  actions  already  being 


 32  According  to  Independent  Sector,  The  New  Nonprofit  Almanac  &  Desk  Reference  (2002),  nationwide  there  are 
 approximately  1.6  million  small  organizations  in  the  U.  S. 
 33  Telecommunications  Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  and  the  Americans  with 
 Disabilities  Act  of  1990,  Fifth  Report  and  Order,  17  FCC  Rcd  21,  233  (2002)  (Fifth  Report  and  Order  on  TRS). 
 34  47  U.  S.  C.  225(  d)(  1)(  E). 


 35  Telecommunications  Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  and  the  Americans  with 
 Disabilities  Act,  First  Report  and  Order,  6  FCC  Rcd  4657  (1991). 
19
 Federal  Communications  Commission  FCC  03-  335 
 20 
 undertaken  under  the  Alternative  Plan,  36  including  the  provision  of  free  local  calling  from  payphones  and  the  submission  of  a  one-  time  report  to  the  Commission  twelve  months  after  final  rules  are  adopted  in  this 
 proceeding,  detailing  the  steps  taken  to  comply  with  the  consumer  education  recommendations  contained  in  the  Fifth  Report  and  Order  on  TRS. 


 63.  Second,  although  the  Fifth  Report  and  Order  on  TRS  recommends  an  extensive  consumer  outreach  program,  the  program  is  only  recommended,  not  required.  Consequently,  the  Commission 
 concluded  that  its  action  should  not  adversely  affect  any  small  entities.  On  the  other  hand,  the  recommendations  aid  all  affected  entities,  including  small  businesses,  as  states  and  carriers  consider  such 
 costs  when  entering  into  their  contracts  and  determining  their  general  overhead  expenses. 
 13.  Wireless  Communications  and  Public  Safety  Act  of  1999 
 64.  On  December  11,  2001,  the  Commission  released  its  Fifth  Report  and  Order  and  Memorandum  Opinion  and  Order  on  Reconsideration  37  (Order)  taking  further  steps  to  implement 


 provisions  of  the  Wireless  Communications  and  Public  Safety  Act  of  1999  (911  Act),  38  which  Congress  enacted  to  promote  public  safety  through  the  deployment  of  a  seamless,  nationwide  emergency 
 communications  infrastructure  that  includes  wireless  communications  services. 
 65.  In  the  Order,  the  Commission  adopted  a  (1)  maximum  period,  generally  ending  nine  months  after  the  release  of  the  Order,  for  carriers  to  transition  to  routing  911  calls  to  a  public  safety 
 answering  point  (PSAP)  in  areas  where  one  has  been  designated  or,  in  areas  where  a  PSAP  has  not  yet  been  designated,  either  to  an  existing  statewide  established  default  point,  if  one  exists,  or,  if  not,  to  an 
 appropriate  local  emergency  authority;  (2)  addressed  steps  the  Commission  would  take  to  encourage  and  support  states  in  their  efforts  to  develop  and  implement  end-  to-  end  emergency  communications 
 infrastructure  and  programs  for  the  improved  delivery  of  emergency  services  to  the  public;  and,  (3)  clarified  that  VHF  Public  Coast  Station  licensees  are  not  required  to  use  911  dialing  for  accessing 
 emergency  services  to  the  extent  that  they  are  providing  maritime  services. 
 66.  The  Commission  did  not  establish  less  stringent  requirements  for  small  entities  in  this  proceeding  because  the  critical  public  safety  issues  of  concern  and  because  of  legislative  mandate.  The 
 results  of  delayed  or  insufficient  response  to  wireless  911  calls  can  be  equally  fatal  whether  the  carrier  involved  is  a  large  or  small  entity. 


 67.  When  given  alternatives  that  do  not  compromise  the  public  safety  goals  of  the  911  Act,  but  offer  all  entities  the  flexibility  to  carry  out  their  responsibilities  in  a  way  that  is  tailored  to  their 
 individual  locality  and  respective  needs,  the  Commission  chose  the  more  flexible  option.  For  example,  in 


 36  Telecommunications  Relay  Services  and  the  Americans  with  Disabilities  Act  of  1990,  Memorandum  Opinion  and 
 Order,  10  FCC  Rcd  10,  927  (1995)  (Alternative  Plan  Order).  In  1993,  an  industry  team  was  created  to  resolve  the  technical  problems  associated  with  handling  coin  sent-  paid  relay  calls.  Industry  proposed  the  Alternative  Plan  to 


 enable  individuals  to  make  relay  calls  from  payphones  using  payment  methods  other  than  coins.  In  the  Alternative  Plan  Order,  the  Commission  concluded  that  providing  coin  sent-  paid  relay  service  was  not  technically  feasible  at 
 that  time  but  that  the  technology  proposed  by  industry  would  have  serious  drawbacks.  Based  on  its  findings,  the  Commission  suspended  the  TRS  coin  sent-  paid  requirement  until  August  26,  1997,  and  adopted  the  Alternative  Plan 
 for  the  two  year  interim  period. 
 37  Implementation  of  911  Act,  Fifth  Report  and  Order,  Memorandum  Opinion  and  Order  on  Reconsideration,  16 
 FCC  Rcd  22,  264  (2001)  (Order). 
 38  Wireless  Communications  and  Public  Safety  Act  of  1999,  Pub.  L.  No.  106-  81,  enacted  Oct.  26,  1999,  113  Stat. 
 1286,  amending  the  Communications  Act,    222,  251  (911  Act). 
20
 Federal  Communications  Commission  FCC  03-  335 
 21 
 areas  where  there  is  neither  a  PSAP  nor  a  statewide  default  answering  point,  many  of  which  are  served  by  small  carriers  or  are  governed  by  small  entities,  an  existing  local  law  enforcement  agency,  such  as  a 
 county  sheriff,  could  serve  as  the  local  emergency  authority. 
 68.  Similarly,  the  Commission  recognized  the  need  for  a  transition  period,  noting  the  fluid  nature  of  technology,  and  provided  a  flexible  transition  period  that  will  allow  both  large  and  small  carriers 
 time  to  complete  the  technological  updates  and  coordination  that  may  be  necessary  to  provide  911  services,  and  to  educate  the  public  regarding  911  services. 


 69.  Also,  in  establishing  a  flexible  transition  period,  the  Commission  recognized  that  individual  service  areas  face  different  technical  and  operational  measures.  The  Commission  thus 
 provided,  for  example,  different  timetables  for  operation  depending  on  whether  a  designated  PSAP  is  in  place. 


 70.  The  Commission,  faced  with  a  legislative  mandate  to  monitor  the  progress  of  carriers  in  the  transition  to  911,  39  adopted  a  requirement  for  carriers  to  file  transition  reports  on  a  limited  basis.  The 
 adopted  requirement  states  that  only  those  carriers  providing  service  in  areas  where  911  is  not  in  use  as  the  emergency  number  on  the  date  of  enactment  of  the  911  Act  file  two  reports.  40 


 71.  The  filing  of  the  reports  is  limited  to  those  counties  where  there  is  no  911  service,  those  counties  that  are  in  the  process  of  implementing  911,  and  those  counties  that  have  basic  911  service  only 
 in  some  parts.  The  first  report  was  due  on  March  11,  2002,  three  months  after  the  December  11,  2001  release  of  the  Order.  Further,  the  Commission  ordered  that  the  second  report  must  be  filed  with  the 
 Commission  within  fifteen  calendar  days  after  the  end  of  a  carriers  transition  period.  Although  the  actual  regulation  is  less  burdensome  overall  on  all  carriers,  it  is  likely  that  those  entities  that  do  not  yet  offer  911 
 service  would  be  small  entities  as  defined  by  the  Small  Business  Administration  (SBA).  Hence,  it  is  likely  that  such  a  filing  requirement  may  impact  rural  and  small  carriers. 


 72.  The  Commission  recognizes  that  the  burden  for  making  progress  towards  911  implementation  will  fall,  during  the  transition  period,  mainly  on  small  and  rural  entities  because  they  are 
 most  likely  to  have  the  most  progress  to  make  in  implementing  911.  In  establishing  the  limited  transition  report  requirement,  the  Commission  suggested  carriers  might,  at  their  option,  consolidate  reporting  and 
 eliminate  redundant  reports  by  filing  the  two  transition  reports  collectively,  thus  saving  time  and  money.  41  The  Commission  intends  that  the  transition  reports  will  provide  it  with  information  leading  to  solutions  to 
 the  unique  problems  faced  by  small  entities  in  the  implementation  of  911  service.  In  addition,  the  Commission  hopes  the  reporting  process  will  generate  a  cooperative  dialogue  regarding  how  entities  with 
 similar  problems  can  resolve  such  issues. 
 B.  Enforcement  Bureau 
 73.  Since  its  inception  in  1999,  the  Enforcement  Bureau  took  a  number  of  steps  to  reduce  barriers  to  entry  for  small  businesses.  The  Enforcement  Bureau  made  it  easier  and  less  costly  for  small 


 businesses  to  bring  anti-  competitive  behavior  to  the  Commissions  attention,  and  to  resolve  disputes  with  other  carriers.  The  Commission  took  strong  enforcement  action  to  deter  illegal,  anti-  competitive  behavior 


 39  Id.  (requiring  the  Commission  to  ensure  an  expeditious  transition  to  911). 
 40  Order,  16  FCC  Rcd  at  22,  281,  para.  43. 
 41  Id.  at  22,282,  para.  45. 
21
 Federal  Communications  Commission  FCC  03-  335 
 22 
 on  the  part  of  the  largest  carriers.  And,  when  small  businesses  themselves  are  the  targets  of  enforcement  actions,  the  Commission  tailors  its  enforcement  actions  to  their  size. 
 1.  Complaint  Mediation 
 74.  To  expedite  problem  solving  among  common  carrier  industry  participants,  the  Enforcement  Bureaus  Market  Disputes  Resolution  Division  engages  in  informal  mediation  of  most 


 formal  complaints  and  pre-  complaint  disputes.  This  type  of  alternative  dispute  resolution  facilitates  private  resolution,  obviating  the  need  for  costly  litigation.  This  also  frees  Commission  resources  for 
 unresolved  disputes  that  result  in  formal  complaints,  and,  therefore,  reduces  the  average  amount  of  time  it  takes  the  Commission  to  decide  those  complaints.  The  Enforcement  Bureau  mediated  over  sixty  disputes 
 in  2002  and  successfully  resolved  almost  two-  thirds  of  those  disputes. 
 2.  Interconnection  Agreements 
 75.  The  Commission  recently  decided  two  complaint  cases  filed  with  the  Market  Disputes  Resolution  Division  affirming  that  the  Commission  has  jurisdiction  (shared  with  states)  to  resolve 


 disputes  arising  from  interconnection  agreements.  42  Procedurally,  these  actions  confirm  that  rivals  of  the  largest  telephone  companies  may  use  the  Commission  as  an  additional  forum  to  resolve  interconnection 
 agreement  disputes.  43  Substantively,  in  both  cases  the  competitive  local  exchange  carrier  (LEC)  prevailed  on  at  least  some  of  its  claims  that  the  large  incumbent  LECs  were  engaging  in  anti-  competitive 
 behavior.  44 
 3.  Investigations 
 76.  The  Enforcement  Bureaus  Investigations  and  Hearings  Division  investigates  allegations  of  anticompetitive  or  discriminatory  conduct  by  telecommunications  carriers,  which  could  result  in 


 barriers  to  market  entry  by  small  competitors.  We  design  these  investigations  to  identify,  correct,  and  deter  violations  of  the  Communications  Act  and  the  Commissions  Rules  through  monetary  forfeitures 
 and  other  enforcement  tools.  The  investigations  also  enable  the  Enforcement  Bureau  to  spot  significant  industry  problems  and  identify  bad  actors,  without  the  filing  of  formal  complaints.  In  one  area  of 
 particular  interest,  the  Investigations  and  Hearings  Division  initiated  a  Section  271  compliance  review  program.  45  Competing  carriers  can  view  on  the  Commissions  website  the  engagement  letters  that 
 describe  the  program,  identify  the  areas  of  interest  in  the  review,  and  identify  the  attorney-  auditor  team  responsible  for  the  compliance  review.  46 


 42  Core  Communications,  Inc.  and  Z-  Tel  Communications,  Inc.  v.  SBC  Communications,  Inc.,  Memorandum 
 Opinion  and  Order,  18  FCC  Rcd  7568  (2003)  (Core  and  Z-  Tel  v.  SBC),  petition  for  recon.  pending;  Core  Communications,  Inc.  v.  Verizon  Maryland  Inc.,  Memorandum  Opinion  and  Order,  18  FCC  Rcd  7962  (2003)  (Core 


 v.  Verizon),  petition  for  recon.  pending. 
 43  See  Core  and  Z-  Tel  v.  SBC,  18  FCC  Rcd  at  7574,  para.  13;  Core  v.  Verizon,  18  FCC  Rcd  at  7971,  para.  22. 


 44  See  Core  and  Z-  Tel  v.  SBC,  18  FCC  Rcd  at  7576,  para.  20;  Core  v.  Verizon,  18  FCC  Rcd  at  7975-  76,  paras.  31-  33. 
 45  See  47  U.  S.  C.    271. 
 46  See  http://  www.  fcc.  gov/  eb/  LoTelComp/  271.  html. 
22
 Federal  Communications  Commission  FCC  03-  335 
 23 
 77.  The  Investigations  and  Hearings  Divisions  recent  work  resulted  in  three  separate  consent  decrees  with  former  Bell  Operating  Companies  (BOCs)  totaling  $13.6  million.  47  Each  consent  decree 
 resolved  investigations  into  whether  the  companies  got  a  jump  start  on  competitors  in  the  long  distance  market  in  their  former  Bell  regions.  The  Commission  also  recently  imposed  a  $6  million  forfeiture  in  a 
 fourth  enforcement  action.  48  The  Commission  found  in  that  case  that  SBC  unlawfully  denied  competitors  access  to  the  shared  transport  unbundled  network  element  in  SBCs  former  Ameritech  states.  49 


 4.  Small  Cable  System  Waivers 
 78.  The  Enforcement  Bureau,  through  its  Spectrum  Enforcement  Division,  issued  more  than  280  orders  granting  small  cable  television  systems  temporary  waivers  of  the  requirement  in  Section 


 11.11(  a)  of  the  Commissions  Rules  that  cable  systems  serving  fewer  than  10,000  subscribers  from  a  headend  install  Emergency  Alert  System  (EAS)  equipment  and  begin  transmitting  national  EAS  alerts 
 and  weekly  and  monthly  EAS  tests  by  October  1,  2002.  The  Enforcement  Bureau  granted  the  temporary  waivers,  which  range  from  twelve  to  thirty  months,  based  on  a  showing  that  the  cost  of  installing  EAS 
 equipment  would  impose  a  financial  hardship  on  the  small  cable  systems.  Most  of  the  systems  that  received  waivers  serve  fewer  than  500  subscribers  per  headend. 


 5.  Forfeitures 
 79.  Finally,  in  determining  the  amount  of  monetary  forfeitures  to  impose  on  small  businesses,  the  Commission  applies  section  503(  b)(  2)(  D)  of  the  Act,  which  requires  the  Commission  to  consider  a 


 targets  ability  to  pay.  50  The  Commission  reduced  proposed  forfeitures  on  this  basis  in  numerous  cases.  This  analysis  includes  applications,  as  necessary,  of  Section  223  of  the  Small  Business  Regulatory 
 Enforcement  Fairness  Act  of  1996  (SBREFA),  which  requires,  inter  alia,  that  federal  agencies  establish  a  policy  or  program  .  .  .  to  provide  for  the  reduction,  and  under  appropriate  circumstances  for  the  waiver, 
 of  civil  penalties  for  violations  of  a  statutory  or  regulatory  requirement  by  a  small  entity.  51  Since  October  1,  2002,  when  the  Commission  began  tracking  its  enforcement  actions  against  small  entities,  the 
 Enforcement  Bureau  issued  nine  Notices  of  Apparent  Liability  to  companies  claiming  small  entity  status. 


 47  See  Qwest  Communications  Intl,  Inc.,  Order,  18  FCC  Rcd  10,  299  (2003)  ($  6.5  million  consent  decree  in  which 
 Qwest  admitted  to  provisioning  long  distance  services  in  its  local  service  region  before  receiving  Commission  authorization);  Verizon  Telephone  Companies,  Order,  18  FCC  Rcd.  3492  (2003)  ($  5.  7  million  consent  decree  in 


 which  Verizon  admitted  to  marketing  long  distance  services  in  its  local  service  region  before  receiving  Commission  authorization);  BellSouth  Corp.,  Order,  File  Nos.  EB-  02-  IH-  0683  and  EB-  02-  IH-  0805,  2003  WL  21664691  (rel.  July 
 17,  2003)  ($  1.  4  million  consent  decree  resolving  two  investigations  into  whether  BellSouth  provisioned  and  marketed  long  distance  services  before  receiving  Commission  authorization,  and  related  non-  discrimination  and 
 separate  affiliate  requirements). 
 48  See  SBC  Communications,  Inc.,  Forfeiture  Order,  17  FCC  Rcd  19,  923  (2003),  petition  for  review  pending  sub 
 nom.  SBC  Communications,  Inc.  v.  FCC,  No.  03-  1147  (D.  C.  Cir.  filed  May  23,  2003). 
 49  See  id. 


 50  47  U.  S.  C.    503(  b)(  2)(  D);  see  The  Commission's  Forfeiture  Policy  Statement  and  Amendment  of  Section  1.80  of 
 the  Rules  to  Incorporate  the  Forfeiture  Guidelines,  Report  and  Order,  12  FCC  Rcd  17,  087,  17,  101,  para.  27  (1997),  recon.  denied,  15  FCC  Rcd  303  (1999)  (Policy  Statement);  47  C.  F.  R.    1.  80(  b)(  4),  Note  to  (b)(  4). 


 51  Pub.  L.  No.  104-  121,  110  Stat.  847  (1996);  see  Policy  Statement,  12  FCC  Rcd  at  17,  109,  paras  51-  52. 
23
 Federal  Communications  Commission  FCC  03-  335 
 25 
 applications  proposing  to  use  the  C-  band  fixed-  satellite  service  frequencies  (3700-  4200  MHz/  5925-  6425  MHz)  to  communicate  with  all  satellites  authorized  to  provide  service  to  the  U.  S.  54 
 84.  As  part  of  the  2000  Biennial  Regulatory  Review  process,  the  Commission  instituted  a  rulemaking  proceeding  to  consider  whether  to  increase  the  proportion  of  earth  station  applications  that 
 can  be  considered  on  a  routine  basis.  55  In  addition,  the  Commission  invited  comment  on  two  proposals  for  streamlining  the  procedures  for  non-  routine  earth  station  applications  considered  on  a  case-  by-  case 
 basis.  One  procedure  would  allow  the  Commission  to  require  the  applicant  proposing  a  small  antenna  to  operate  at  a  lower  power  level,  to  compensate  for  the  use  of  the  smaller  antenna  diameter.  56  The  second 
 procedure  would  allow  applicants  to  submit  affidavits  from  operators  of  satellites  potentially  affected  by  the  proposed  non-  routine  earth  station,  showing  that  the  operation  of  the  non-  routine  earth  station  had 
 been  coordinated  with  other  affected  satellite  systems.  57  The  Commission  is  also  considering  a  number  of  other  streamlining  measures,  such  as  allowing  routine  Ku-  band  temporary-  fixed  earth  stations  to  begin 
 operations  immediately  upon  placement  of  the  application  on  Public  Notice,  rather  than  waiting  for  license  grant.  58  The  Commission  issued  the  Further  Notice  of  Proposed  Rulemaking  to  consider 
 additional  proposals  advanced  by  the  satellite  industry.  These  industry  proposals  include  revisions  to  the  Part  25  technical  requirements  that  would  enable  the  Commission  to  consider  more  earth  station 
 applications  on  a  routine  basis.  59  These  proposed  changes  to  the  Commission  Rules,  if  adopted,  would  lead  to  further  streamlining  of  the  Commissions  procedures  benefiting  all  applicants,  especially  small 
 businesses. 
 2.  Streamlining  214  Procedures 
 85.  The  Commission  implemented  numerous  streamlining  procedures  to  reduce  administrative  regulatory  barriers  to  entry  into  the  U.  S.  international  telecommunications  service  market, 


 many  of  which  benefit  small  businesses.  As  early  as  1985,  the  Commission  began  a  process  of  streamlining  its  Section  214  international  telecommunications  licensing  procedures.  60  In  1996,  the 
 Commission  streamlined  the  application  process  for  certain  categories  of  international  Section  214  authorizations  by  creating  an  expedited  process  for  global,  facilities-  based  Section  214  applications.  61  In 
 1999,  the  Commission  continued  its  efforts  to  reduce  possible  barriers  to  entry  by  increasing  the  number  of  applications  to  provide  international  service  eligible  for  streamlined  processing.  62  The  Commission 


 54  See  Commission  Launches  C-  Band  Earth  Station  Streamlining  Initiative,  Public  Notice,  15  FCC  Rcd  24,  075 
 (2000). 
 55  See  Part  25  Earth  Station  Streamlining  NPRM,  15  FCC  Rcd  25,  128. 


 56  Id.  at  25,  135-  36,  paras.  15-  19. 
 57  Id.  at  25,  136-  37,  paras.  20-  24. 
 58  Id.  at  25,143,  para.  42. 
 59  Part  25  Earth  Station  Streamlining  Further  NPRM,  17  FCC  Rcd  18,  587-  88,  paras.  25-  28. 
 60  47  U.  S.  C.    214;  see  International  Competitive  Carrier  Policies,  Report  and  Order,  102  FCC2d  812  (1985), 
 recon.  denied  60  RR2d  1435  (1986);  modified,  Regulation  of  International  Common  Carrier  Services,  Report  and  Order,  7  FCC  Rcd  7331  (1992). 


 61  See  Streamlining  the  International  Section  214  Authorization  Process  and  Tariff  Requirements,  Report  and  Order, 
 11  FCC  Rcd  12,  884  (1996). 


 62  Id.;  see  1998  Biennial  Regulatory  Review-  Review  of  International  Common  Carrier  Regulations,  Report  and 
 Order,  14  FCC  Rcd  4909  (1999). 
25
 Federal  Communications  Commission  FCC  03-  335 
 26 
 also  sought  to  increase  foreign  investment  in  U.  S.  international  telecommunications  by  streamlining  the  application  process  for  companies  affiliated  with  foreign  carriers  following  a  finding  that  such  investment 
 furthers  the  public  interest,  63  and  by  reducing  regulatory  and  reporting  requirements  on  companies  doing  business  with  foreign  carriers.  These  deregulatory  efforts  significantly  reduce  barriers  to  entry  for  small 
 businesses  seeking  to  attract  foreign  capital  or  to  provide  U.  S.  international  telecommunications  services. 
 86.  In  2002,  as  part  of  the  2000  Biennial  Regulatory  Review  process,  the  Commission  took  steps  further  to  remove  unnecessary  burdens  on  international  carriers.  In  the  International  2000  Biennial 
 Review  Order,  the  Commission  revised  the  rules  for  pro  forma  transfers  and  assignments  of  international  Section  214  authorizations  to  give  carriers  greater  flexibility  in  structuring  transactions.  64  These  changes 
 assist  all  carriers,  including  small  businesses,  by  making  the  rules  more  consistent  with  those  procedures  used  for  other  service  authorizations,  particularly  for  the  Commercial  Mobile  Radio  Service  (CMRS).  65 


 3.  Spectrum 
 87.  Wireless  mobile  telecommunications  in  the  U.  S.,  aided  by  the  on-  going  joint  efforts  of  industry  and  government,  are  developing  into  global  systems.  Higher  capacity  systems,  with  enhanced 


 and  more  flexible  service  capabilities,  continue  to  develop.  Demand  for  these  devices  continues  to  escalate,  and  when  coupled  with  the  growing  attractiveness  of  new  high  performance  features,  spectrum 
 becomes  an  even  more  precious  commodity.  The  Commission  is  part  of  an  effort  to  make  more  spectrum  available  for  new  wireless  services.  Internationally,  within  the  schedule  of  ITU  activities,  the 
 Commission  works  with  other  agencies  to  find  additional  spectrum  for  licensed  and  unlicensed,  domestic  and  global  wireless  services.  Additional  spectrum  utilization  opportunities  can  arise  either  through 
 efficiencies  brought  about  by  further  advances  in  technology,  i.  e.,  by  compressing  existing  user  requirements  into  less  bandwidth,  or  by  the  allocation  of  additional  spectrum  via  domestic  or  global 
 allocation  processes.  The  International  Bureau  is  coordinating  many  activities  using  both  approaches. 
 88.  The  Commission  works  closely  with  terrestrial  and  satellite  wireless  industry  representatives  preparing  and  attending  ITU,  the  World  Radiocommunication  Conference  (WRC)  and 
 study  groups  in  the  radio  communication,  telecommunication,  and  development  sectors.  Here,  experience  proves  that  advances  in  technology  and  standardization  will  ultimately  lead  to  significant  growth  in  small 
 business  opportunities,  including  export,  whether  it  is  in  equipment  design  and  manufacture,  new  software  development,  creative  applications  of  existing  intellectual  property,  or  the  provision  of  new 
 services.  The  International  Bureau  is  fully  committed  to  making  every  effort  to  optimize  spectrum  utility  to  facilitate  the  entry  of  new  users,  including  small  businesses,  and  to  promote  new  and  innovative  uses. 
 For  example,  the  WRC  made  spectrum  allocations  and  decisions  regarding  various  new  satellite  and  terrestrial  wireless  services,  including  Wi-  Fi,  which  allows  wireless  communication  within  short-  ranges, 
 and  broadband-  in-  flight,  which  provides  high-  speed  Internet  access  to  airline  passengers. 
 89.  The  importance  of  spectrum  to  small  new  firms  is  illustrated  by  the  agreement  reached  in  mid-  2000,  after  two  years  of  negotiations,  between  the  U.  S.  and  Mexico  delineating  provisions  for  the 
 coordination  and  use  of  frequencies  by  Satellite  Digital  Audio  Radio  Services  (DARS)  and  terrestrial  services  including  the  Wireless  Communications  Services  (WCS)  in  the  border  area.  The  agreement  is  a 


 63  See  Market  Entry  and  Regulation  of  Foreign-  affiliated  Entities,  Report  and  Order,  11  FCC  Rcd  3873,  3881 
 (1995). 


 64  2000  Biennial  Regulatory  Review:  Amendment  of  Parts  43  and  63  of  the  Commissions  Rules,  IB  Docket  00-  231, 
 Report  and  Order,  17  FCC  Rcd  11,  416  (2002)  (International  2000  Biennial  Regulatory  Review  Order)  review  pending  sub  nom.  Cellco  Partnership  et  al.  v.  FCC,  case  nos.  02-  1262,  02-  1268  (D.  C.  Cir). 


 65  International  2000  Biennial  Regulatory  Review  Order,  17  FCC  Rcd  at  11,  418,  para.  4. 
26
 Federal  Communications  Commission  FCC  03-  335 
 27 
 major  benefit  for  the  small  businesses  seeking  to  develop  DARS  service  as  it  establishes  long-  term  stability  for  DARS,  WCS,  and  other  terrestrial  systems  operating  in  the  border  area.  This  agreement  will 
 benefit  both  U.  S.  and  Mexican  consumers.  It  is  a  significant  step  forward  in  the  introduction  of  new  nationwide  radio  programming  with  compact  disc  quality  sound.  The  U.  S.  licensed  two  satellite  DARS 
 providers,  Sirius  Satellite  Radio  and  XM  Satellite  Radio,  which  have  initiated  service  to  the  public  and  together  account  for  more  than  1.2  million  subscribers  as  of  the  end  of  2003. 


 4.  Electronic  Filing  Initiatives 
 90.  To  reduce  paper  filings  and  make  use  of  new  Internet  technologies  to  improve  processing  efficiency,  the  International  Bureau  developed  a  consolidated  licensing  and  application  processing  system 


 known  as  the  International  Bureau  Filing  System  (IBFS).  Implementation  of  the  pilot  IBFS  web  modules  began  in  February  1999.  The  IBFS  allows  for  electronic  filing  of  applications  for  International  Bureau 
 service  areas,  facilitating  the  following  applications  and  filings:  (1)  space  station  authorization  and  special  temporary  authority;  (2)  earth  station  authorization  and  special  temporary  authority;  (3)  space  and  earth 
 station  application  for  modification  of  current  authorization;  (3)  Section  214  international  authorization  and  special  temporary  authority;  (4)  cable  landing  license;  (5)  accounting  rate  change;  (6)  recognized 
 operating  agency;  (7)  international  signaling  point  code;  (8)  request  for  data  network  identification  code;  (9)  and  foreign  carrier  affiliation  notification  filings. 


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


 92.  Moreover,  the  IBFS  demystifies  the  process,  making  it  easier  for  applicants  to  initiate  filings,  especially  the  new  entrants  to  the  market,  without  the  need  to  retain  outside  counsel.  The  IBFS 
 provides  access  to  valuable  processing  and  technical  data  for  new  entrants  and  the  general  public.  For  example,  persons  can  check  the  status  of  applications  by  accessing  the  IBFS  from  personal  computers.  In 
 addition,  users  are  easily  able  to  identify  the  competitors  in  a  service  area  using  the  IBFSs  powerful  search  engine,  from  any  web-  ready  location. 


 93.  The  International  Bureau  strongly  encourages  electronic  filing  via  the  IBFS,  but  permits  many  applicants  to  opt  for  paper  filing.  The  Commission,  however,  is  working  towards  a  five  year  goal 
 that  calls  for  100%  electronic  filing  of  applications  to  the  extent  that  applicants  have  access  to  electronic  media,  66  and  the  Commission  now  accepts  credit  card  payment  of  application  fees  associated  with  IBFS 
 filings. 
 94.  During  2003,  in  connection  with  its  actions  on  satellite  licensing  reforms,  the  Commission  will  complete  its  move  to  mandatory  electronic  filing  for  satellite  space  station  applications, 
 routine  earth  station  filings  and  associated,  non-  docketed  comments  and  petitions,  and  the  new  Schedule  S,  the  Commissions  form  for  capturing  satellite  space  station  technical  data.  The  measures: 


 66  FCC  Chairman  William  E.  Kennard,  A  New  FCC  for  the  21  st  Century:  Draft  Strategic  Plan  (Aug.  1999). 
27
 Federal  Communications  Commission  FCC  03-  335 
 28 
 Improve  Public  Access  to  Data  Almost  all  satellite  applications  and  routine  earth  station  applications  are  now  filed  electronically  or  will  be  by  the  end  of  2003.  As  a  result,  the  public  will  have  instant  access 
 to  filings  via  the  Internet.  This  is  particularly  significant  to  those  members  of  the  public  and  small  businesses  without  regular  representation  in  Washington,  D.  C. 


 Simplify  Filing  of  Earth  Station  Application  Before  the  end  of  2003,  the  new  312EZ  form  for  routine  earth  stations  will  make  the  earth  station  application  process  error-  free.  The  312EZ  form  will  be 
 interactive  and  will  have  built-  in  edit  checks,  of  particular  benefit  to  smaller  firms  that  do  not  file  such  applications  with  sufficiency  to  gain  specialized  filing  expertise. 


 Facilitate  Intelligent  Use  of  Data  The  Commissions  newly  established  Schedule  S  ensures  that  technical  space  station  data  is  submitted  in  a  standardized  format  that  will  enhance  the  Commissions 
 spectrum  management,  homeland  security,  and  data-  sharing  requirements. 
 95.  During  2004,  the  International  Bureau  plans  to  complement  the  electronic  filing  initiatives  identified  above  by  redesigning  the  IBFS  home  page  to  be  customizable,  easier  to  navigate,  and 
 contain  enhanced  features  such  as  a  watch  list  to  track  applications. 
 96.  We  are  making  all  these  changes  to  the  IBFS  and  procedures  for  processing  applications  with  the  goals  of  making  the  process  more  user-  friendly  and  efficient.  Achievement  of  these  goals  will 
 make  it  easier  for  small  businesses  to  file  applications  on  their  own  and  pass  on  those  efficiencies  to  other  small  businesses  and  consumers. 


 5.  Detariffing  International  Services 
 97.  In  July  2001,  as  part  of  the  2000  Biennial  Regulatory  Review  process,  the  Commission  reduced  a  significant  regulatory  burden  placed  on  many  small  firms  by  eliminating  the  requirement  that 


 non-  dominant  carriers  file  tariffs  for  international  interexchange  services.  In  the  International  Detariffing  Order,  67  the  Commission  concluded  that  significant  changes  in  the  international  services  market  have 
 benefited  consumers  and  competition  in  the  past  several  years  and  that  support  the  detariffing  of  international  interexchange  services.  In  particular,  the  international  interexchange  marketplace 
 experienced  increased  privatization  and  liberalization,  rapidly  declining  international  settlement  rates,  and  a  greater  number  of  providers  of  international  interexchange  services.  Therefore,  the  Commission  forbore 
 from  the  tariffing  requirements  in  Section  203  of  the  Communications  Act,  68  as  those  requirements  applied  to  non-  dominant  carriers  providing  international  interexchange  services.  The  tariffing 
 requirements  continue  to  apply  to  a  small  category  of  carriers,  such  as  those  that  are  classified  as  dominant  for  reasons  other  than  an  affiliation  with  a  foreign  carrier  that  possesses  market  power. 


 98.  In  addition,  in  the  International  Detariffing  Order,  the  Commission  further  reduced  the  regulatory  burden  on  non-  dominant  carriers,  many  of  which  are  small  businesses,  by  clarifying  that  the 
 contract  filing  requirements  in  Section  43.51  of  the  Commissions  Rules  apply  solely  to:  (1)  carriers  classified  as  dominant  for  reasons  other  than  foreign  affiliation;  and  (2)  carriers,  whether  classified  as 
 dominant  or  non-  dominant,  contracting  directly  for  services  with  foreign  carriers  that  possess  market  power.  69 


 67  2000  Biennial  Regulatory  Review:  Policy  and  Rules  Concerning  the  International,  Interexchange  Marketplace, 
 Report  and  Order,  16  FCC  Rcd  10,  647  (2001)  (International  Detariffing  Order). 


 68  47  U.  S.  C.    203. 


 69  47  C.  F.  R.    43.  51(  a)-(  b). 
28
 Federal  Communications  Commission  FCC  03-  335 
 29 
 6.  International  Settlements  Policy 
 99.  The  Commission  is  taking  action  to  remove  regulatory  impediments  and  to  increase  competition  in  the  international  telecommunications  marketplace  through  reform  of  the  longstanding 


 ISP.  70  In  1999,  in  the  ISP  Reform  Order,  the  Commission  adopted  sweeping  deregulatory  inter-  carrier  settlement  arrangements  between  U.  S.  carriers  and  foreign  non-  dominant  carriers  on  competitive  routes.  71 
 Specifically,  the  Commission:  (1)  eliminated  the  ISP  and  contract  filing  requirements  for  arrangements  with  foreign  carriers  that  lack  market  power;  (2)  eliminated  the  ISP  for  arrangements  with  all  carriers  on 
 routes  where  rates  to  terminate  U.  S.  calls  are  at  least  25%  lower  than  the  relevant  settlement  rate  benchmark  previously  adopted  by  the  Commission  in  its  Benchmark  Order;  72  (3)  adopted  changes  to 
 contract  filing  requirements  to  permit  U.  S.  carriers  to  file,  on  a  confidential  basis,  arrangements  with  foreign  carriers  with  market  power  on  routes  where  the  ISP  is  removed;  (4)  adopted  procedural  changes  to 
 simplify  accounting  rate  filing  requirements;  and  (5)  eliminated  the  flexibility  policy  in  recognition  that  the  reforms  to  the  ISP  render  the  flexibility  policy  largely  superfluous. 


 100.  The  Commissions  primary  goal  underlying  this  policy  is  and  will  continue  to  be  the  protection  of  U.  S.  consumers,  including  small  businesses,  from  potential  harm  caused  by  instances  of 
 insufficient  competition  in  the  global  telecommunications  market.  To  the  extent  that  small  businesses  utilizing  international  telecommunications  have  fewer  resources  than  large  global  corporations  to  deal 
 with  instances  of  insufficient  competition,  such  protection  reduces  or  eliminates  disadvantages  in  the  procurement  of  telecommunications  services  and  enhances  the  chances  of  successful  market  entry  and 
 firm  viability.  As  a  result  of  U.  S.  policies  and  increasing  competition  internationally,  the  average  U.  S.  settlement  rate  fell  substantially  over  the  last  several  years  as  have  U.  S.  calling  prices.  73 


 101.  In  October  2002,  the  Commission  initiated  a  rulemaking  proceeding  to  examine  possible  further  reform  of  the  ISP,  the  Commissions  benchmarks  and  international  simple  resale  (ISR)  policies  in 
 light  of  greater  participation  in  the  U.  S.-  international  market,  lower  international  settlement  rates,  and  greater  competition  in  foreign  markets.  74  Specifically,  the  Commission  sought  comment  on  the 
 competitive  status  of  the  U.  S.-  international  market  and  whether  removing  the  ISP  from  certain  U.  S.  -international  routes  would  benefit  consumers  by  promoting  greater  competition,  while  still  preventing  any 
 anticompetitive  harm  from  foreign  carriers  and  otherwise  protecting  the  public  interest.  Moreover,  the 


 70  The  ISP  provides  a  regulatory  framework  within  which  U.  S.  carriers  negotiate  with  foreign  carriers  to  provide 
 bilateral  U.  S.-  international  services.  There  are  three  elements  of  the  ISP  that  serve  as  conditions  on  U.  S.  carriers  entering  into  agreements  with  foreign  carriers:  (1)  all  U.  S.  carriers  must  be  offered  the  same  effective  accounting 


 rate  and  same  effective  date  for  the  rate  (  nondiscrimination);  (2)  U.  S.  carriers  are  entitled  to  a  proportionate  share  of  U.  S.-  inbound,  or  return,  traffic  based  upon  their  proportion  of  U.  S.-  outbound  traffic  (  proportionate  return);  and 
 (3)  the  accounting  rate  is  divided  evenly  50-  50  between  U.  S.  and  foreign  carriers  for  U.  S.  inbound  and  outbound  traffic  (  symmetrical  settlement  rates).  See  47  C.  F.  R.    43.  51(  e). 


 71  See  1998  Biennial  Regulatory  Review:  Reform  of  the  International  Settlements  Policy  and  Associated  Filing 
 Requirements  (Phase  II),  Report  and  Order  and  Order  on  Reconsideration,  14  FCC  Rcd  7963  (1999)  (ISP  Reform  Order). 


 72  See  International  Settlement  Rates,  Report  and  Order,  12  FCC  Rcd  19,  806  (1997)  (Benchmarks  Order),  affd  sub 
 nom.  Cable  and  Wireless  P.  L.  C.  v.  FCC,  166  F.  3d  1224  (D.  C.  Cir.  1999),  Report  and  Order  on  Reconsideration  and  Order  Lifting  Stay,  14  FCC  Rcd  9256  (1999)  (Benchmarks  Reconsideration  Order). 


 73  See  International  Settlements  Policy  Reform;  International  Settlement  Rates,  Notice  of  Proposed  Rulemaking,  17 
 FCC  19,  954,  19,  964-  66  (2002)  (ISP  Reform  Notice). 


 74  Id. 
29
 Federal  Communications  Commission  FCC  03-  335 
 30 
 Commission  requested  comment  on  the  success  of  its  policies  to  lower  international  accounting  and  termination  rates  and  whether  the  Commission  should  consider  further  revisions  to  these  policies.  The 
 Commission  also  inquired  whether  foreign  mobile  termination  rates  may  be  eroding  the  benefits  of  the  Commissions  accounting  rate  policies  to  the  detriment  of  U.  S.  consumers  and  competition,  and  if  so, 
 how  the  Commission  should  effectively  address  the  issue  and  better  inform  U.  S.  consumers, 
 7.  Satellite  Licensing  Reforms 
 102.  The  Commission  took  several  steps  to  modernize  its  satellite  licensing  procedures.  These  measures  expedite  the  satellite  licensing  process  and  facilitate  public  access  to  the  Commission, 


 particularly  regarding  satellite  license  filings.  These  measures  advance  the  Commissions  strategic  goals  of  modernizing  the  Commission  and  facilitating  efficient  spectrum  management,  while  at  the  same  time, 
 increasing  transparency  and  easing  public  participation  for  all  entities,  including  small  business. 
 103.  In  April  2003,  the  Commission  adopted  a  new  first-  come,  first-  served  approach  for  satellite  space  station  licensing  to  speed  delivery  of  satellite  services  to  consumers.  75  This  reform  will 
 increase  regulatory  certainty,  advance  the  digital  migration,  facilitate  spectrum  efficiency,  and  continue  U.  S.  leadership  in  the  global  satellite  industry.  After  developing  a  substantial  public  record,  the 
 Commission  adopted  a  flexible  and  agile  framework  and  a  market-  based  licensing  scheme  for  the  future.  The  Commissions  goal  in  adopting  this  framework  is  to  create  a  regulatory  environment  in  which 
 satellite  providers  large  and  small  can  respond  quickly  and  efficiently  to  the  challenges  of  a  competitive  telecommunications  industry,  and,  ultimately  to  provide  new  satellite  services  to  consumers  as 
 expeditiously  as  possible.  The  Commission  also  adopted  in  June  2003  two  interactive  forms  that  will  facilitate  the  application  process  for  satellite  and  earth  station  licenses,  most  of  which  are  applications 
 small  businesses  file. 
 8.  Submarine  Cable  Landing  Licenses 
 104.  In  December  2001,  the  Commission  adopted  new  streamlining  procedures  for  processing  applications  for  submarine  cable  landing  licenses,  including  transfers  of  control  of  such  licenses.  76  These 


 measures  facilitate  the  expansion  of  capacity  and  facilities-  based  competition  in  the  submarine  cable  market  and  enable  submarine  cable  applicants  and  licensees  to  respond  timely  to  the  demands  of  the 
 market.  We  anticipate  that  the  reforms  will  save  time  and  resources  for  both  industry  and  government,  while  preserving  the  Commissions  ability  to  guard  against  anti-  competitive  behavior.  These 
 improvements  are  significant  because  over  two-  thirds  of  U.  S.  international  traffic  is  carried  on  submarine  cables. 


 105.  The  approach  the  Commission  adopted  in  the  Submarine  Cable  Report  and  Order  tracks  the  streamlining  procedures  and  competitive  safeguards  it  adopted  for  Section  214  authorizations  of 
 international  telecommunications  services.  77  We  now  can  act  on  many  applications  that  qualify  for 
 75  Amendment  of  the  Commission's  Space  Station  Licensing  Rules  and  Policies,  First  Report  and  Order  and  Further 
 Notice  of  Proposed  Rulemaking  (rel.  May  19,  2003)  (First  Space  Station  Reform  Order)  (http://  hraunfoss.  fcc.  gov/  edocs_  public/  attachmatch/  FCC-  03-  102A1doc). 


 76  Review  of  Commission  Consideration  of  Applications  under  the  Cable  Landing  License  Act,  Report  and  Order,  16 
 FCC  Rcd  22,  167  (2001)  (Submarine  Cable  Report  and  Order).  See  also  Letter  from  Alan  Larson,  Under  Secretary  of  State  for  Economic,  Business,  and  Agricultural  Affairs,  U.  S.  Department  of  State,  to  Chairman  Michael  Powell, 


 Federal  Communications  Commission  (dated  Dec.  3,  2001)  (facilitating  Commission  adoption  of  new  45  day  streamlining  process  through  30  day  notification  to  State  Department  under  Exec.  Order  No.  10530). 


 77  See  Streamlining  the  International  Section  214  Authorization  Process  and  Tariff  Requirements,  Report  and  Order, 
 11  FCC  Rcd  12,  884  (1996)  (International  214  Streamlining  Order);  1998  Biennial  Regulatory  Review  Review  of  (continued....) 
30
 Federal  Communications  Commission  FCC  03-  335 
 31 
 streamlining  in  the  forty-  five  day  period  following  Public  Notice,  a  significant  improvement  over  prior  processing  times.  Further,  licensees  that  seek  and  receive  our  approval  to  amend  their  existing  licenses  to 
 add  a  new  pro  forma  condition  can  complete  future  pro  forma  transfers  of  control  and  assignments  without  prior  Commission  approval.  The  new  rules  also  ease  burdens  on  small  carriers  and  investors  by 
 providing  that  entities  that  do  not  own  or  control  a  landing  station  in  the  U.  S.  or  have  a  less  than  5%  interest  in  a  proposed  cable  system  generally  do  not  have  to  be  licensees  on  the  cable  system.  Through 
 codification  of  the  routine  cable  landing  license  conditions,  the  Commission  provides  clarity  and  certainty  to  licensees  and  the  public.  The  new  procedures  also  provide  for  the  grant  of  many  applications  by  Public 
 Notice  instead  of  by  written  order,  simplifying  the  process  for  applicants  and  the  Commission.  All  of  these  enhancements  provide  benefits  to  smaller  carriers. 


 9.  Reporting  Requirements 
 106.  The  Commission  is  continually  reviewing  its  reporting  requirements  to  determine  whether  revision  would  lessen  the  burdens  placed  on  carriers  while  maintaining  their  important  purpose. 


 The  information  provides  the  Commission,  other  government  agencies,  state  regulators,  international  organizations,  industry,  and  the  public  with  valuable  information  on  market  and  other  industry  trends  and 
 developments.  This  information  is  helpful  to  the  Commission  in  identifying  developments  in  regulatory  issues,  monitoring  compliance  with  existing  rules  and  policies,  and  evaluating  the  effects  of  policy 
 choices. 
 107.  In  December  2002,  in  the  International  2000  Biennial  Regulatory  Review  Order,  the  Commission  took  actions  to  reduce  reporting  requirements  on  CMRS  carriers  and  to  eliminate  an 
 outdated  rule.  78  At  the  request  of  CMRS  carriers,  the  Commission  reviewed  the  reporting  requirements  for  carriers  providing  international  service  and  found  that  it  was  no  longer  necessary  for  CMRS  carriers 
 providing  resale  of  international  switched  services  to  file  quarterly  traffic  and  revenue  reports  pursuant  to  Section  43.61  of  the  Commissions  Rules.  The  Commission  also  eliminated  an  outdated  rule  that 
 required  certain  foreign-  owned  carriers  to  file  with  the  Commission  annual  revenue  and  traffic  reports  with  respect  to  all  common  carrier  telecommunication  services  they  offered  in  the  U.  S.  In  addition,  the 
 International  Bureau  Staff  Report  to  the  2002  Biennial  Regulatory  Review  recommended  that  the  Commission  undertake  proceedings  to  consider  revision  of  a  number  of  other  reporting  requirements  and 
 obligations.  The  Commission  has  begun  work  on  two  of  these  proceedings  and  expects  to  release  Notices  of  Proposed  Rulemakings  in  the  near  future. 


 D.  Media  Bureau 
 108.  In  March  2002,  as  part  of  FCC  Chairman  Michael  K.  Powells  reorganization  plan  promoting  a  more  efficient,  responsive,  and  effective  organizational  structure,  the  Commission  combined 


 the  former  Cable  Services  Bureau  and  the  former  Mass  Media  Bureau  to  form  the  new  Media  Bureau.  The  Media  Bureau  develops,  recommends,  and  administers  policy  and  licensing  programs  relating  to 
 electronic  media,  including  cable  television,  broadcast  television,  and  radio  in  the  U.  S.  and  its  territories.  The  Media  Bureau  also  handles  post-  licensing  matters  regarding  Direct  Broadcast  Satellite  service.  The 
 Media  Bureau,  and  its  predecessor  bureaus,  made  myriad  efforts  on  behalf  of  small  entities  in  the  broadcast  and  cable  sectors.  In  its  many  proceedings,  including  the  comprehensive  media  ownership 
 review  and  proceedings  impacting  the  transition  from  analog  to  digital  television  (DTV)  transmission,  the 


 (...  continued  from  previous  page)  International  Common  Carrier  Regulations,  Report  and  Order,  14  FCC  Rcd  4909  (1999)  (1998  International 
 Biennial  Review  Order);  2000  Biennial  Regulatory  Review,  17  FCC  Rcd  11,  416. 
 78  Id. 
31
 Federal  Communications  Commission  FCC  03-  335 
 32 
 Media  Bureau  developed  rules,  policies,  and  procedures  that  help  to  remove  barriers  to  entry  for  entrepreneurs  and  small  businesses.  In  addition,  the  Media  Bureau  instituted  several  web-  based 
 initiatives  that  make  the  task  of  contacting  the  Commission,  filing  requisite  forms  and  applications,  and  staying  abreast  of  current  information  more  simple  and  cost  efficient,  particularly  for  smaller  licensees 
 and  permit  holders.  A  more  thorough  examination  of  several  specific  Media  Bureau  actions  to  eliminate  market  entry  barriers  for  entrepreneurs  and  small  businesses  follows  below. 


 1.  Biennial  Regulatory  Review  of  Broadcast  Ownership  Rules 
 109.  In  June  2003,  the  Commission  adopted  new  rules  and  policies  regarding  multiple  ownership  of  radio  and  television  broadcast  stations  pursuant  to  the  congressional  mandate  of  Section 


 202(  h)  of  the  Telecommunications  Act  of  1996,  which  requires  the  Commission  to  reassess  its  broadcast  ownership  rules  every  two  years,  and  to  modify  or  eliminate  those  rules  found  no  longer  necessary  in  the 
 public  interest  as  a  result  of  competition.  79  In  its  third  Biennial  Regulatory  Review  proceeding,  the  Commission  reviewed  all  six  broadcast  ownership  rules  and  it:  (1)  replaced  the  newspaper/  broadcast 
 cross-  ownership  and  radio-  television  cross-  ownership  rules  with  new  Cross  Media  Limits;  (2)  revised  the  market  definition  for  local  radio  multiple  ownership  and  the  way  it  counts  stations  for  compliance  with 
 the  local  radio  ownership  rule;  (3)  revised  the  local  TV  multiple  ownership  rule;  (4)  raised  the  national  TV  ownership  cap  to  45%;  and  (5)  retained  the  dual  network  rule.  The  Commission  grandfathered 
 existing  combinations  of  broadcast  stations  that  exceed  the  new  ownership  limits.  Thus,  no  divestiture  is  required.  However,  as  part  of  an  initiative  to  address  the  concerns  raised  by  small  businesses,  the 
 Commission  developed  new  transferability  procedures.  Under  these  procedures,  existing  combinations  that  exceed  the  ownership  limits  may  be  sold  to  certain  eligible  entities.  An  eligible  entity  is  defined  as 
 an  entity  that  would  qualify  as  a  small  business  consistent  with  the  SBAs  standards  for  its  industry  grouping.  80  In  adopting  these  transferability  provisions,  the  Commission  stated  its  belief  that  small 
 businesses  that  qualify  as  eligible  entities  require  greater  flexibility  than  do  larger  entities  for  the  disposition  of  assets.  Thus,  these  entities  may  transfer  any  existing  grandfathered  combination  generally 
 without  restriction.  A  qualified  small  business  may  not,  however,  transfer  a  grandfathered  combination  acquired  after  the  adoption  date  of  the  Biennial  Report  and  Order  to  an  entity  other  than  another  qualified 
 small  business  unless  it  has  held  the  combination  for  at  least  three  years.  Moreover,  the  Commission  committed  to  issuing  a  Notice  of  Proposed  Rulemaking  to  address  issues  relating  to  advancing  minority 
 and  female  ownership  of  broadcast  media.  The  Commission  indicated  that  it  would  refer  the  question  of  how  best  to  ensure  that  interested  buyers,  including  small  businesses,  are  aware  of  broadcast  properties 
 for  sale  to  the  Federal  Advisory  Committee  on  Diversity  for  further  inquiry.  81  Chairman  Powell 


 79  2002  Biennial  Regulatory  Review  Review  of  the  Commissions  Broadcast  Ownership  Rules  and  Other  Rules 
 Adopted  Pursuant  to  Section  202  of  the  Telecommunications  Act  of  1996,  18  FCC  Rcd  13,  620  (2003)  (Biennial  Report  and  Order).  On  September  3,  2003,  the  U.  S.  3  rd  Circuit  Court  of  Appeals  stayed  the  effective  date  of  the  rule 


 changes  contained  in  the  Biennial  Report  and  Order.  In  its  order,  the  Court  stated  that  the  prior  ownership  rules  [will]  remain  in  effect  pending  resolution  of  these  proceedings.  Prometheus  Radio  Project  v.  FCC,  No.  03-  3388,  at 
 3  (3  rd  Cir.  Sept.  3,  2003)  (per  curiam)  (order  granting  motion  to  stay  effective  date  of  the  Commissions  new  ownership  rules). 


 80  In  addition  to  the  SBAs  standards,  the  Commission  decided  that  control  of  the  eligible  entity  purchasing  the 
 grandfathered  combination  must  meet  one  of  the  following  control  tests.  The  eligible  entity  must  hold  (1)  30%  or  more  of  the  stock/  partnership  shares  of  the  corporation/  partnership,  and  more  than  50%  voting  power,  (2)  15%  or 


 more  of  the  stock/  partnership  shares  of  the  corporation/  partnership,  and  more  than  50%  voting  power,  with  no  other  person  or  entity  controlling  more  than  25%  of  the  outstanding  stock,  or  (3)  if  the  purchasing  entity  is  a  publicly 
 traded  company,  more  than  50%  of  the  voting  power.  Biennial  Report  and  Order,  18  FCC  Rcd  at  13,  810,  para.  489. 
 81  Chairman  Powell  announced  his  intention  to  form  a  Federal  Advisory  Committee  (Committee)  to  assist  the 
 Commission  in  formulating  new  ways  to  create  opportunities  for  minorities  and  women  in  the  communications  (continued....) 
32
 Federal  Communications  Commission  FCC  03-  335 
 33 
 announced  his  intention  to  form  a  Federal  Advisory  Committee  (Committee)  to  assist  the  Commission  in  formulating  new  ways  to  create  opportunities  for  minorities  and  women  in  the  communications  sector.  82 
 The  Committee  was  formed  in  furtherance  of  the  FCCs  responsibilities  under  the  Communications  Act  to  make  available,  so  far  as  possible  to  all  the  people  of  the  United  States,  without  discrimination  on  the 
 basis  of  race,  color,  religion,  national  origin,  or  sex,  a  rapid,  efficient,  Nation-  wide  .  .  .  wire  and  radio  communication  service  .  .  .  .  83  The  Committee  includes  four  subcommittees  that  examine  distinct  issues 
 impacting  the  participation  of  minorities  and  women  in  communications:  (1)  Financial  Issues;  (2)  Transactional  Transparency  and  Related  Outreach;  (3)  Career  Advancement;  and  (4)  New  Technologies. 
 The  Committee  held  its  initial  meeting  on  September  29,  2003  at  FCC  headquarters  in  Washington,  D.  C.  84  The  Committees  next  meeting  is  scheduled  for  January  26,  2004  at  FCC  headquarters. 


 2.  Localism  Initiative 
 110.  In  August  2003,  Chairman  Powell  announced  a  series  of  initiatives  to  enhance  localism  among  radio  and  television  broadcasters.  Part  of  that  effort  included  formation  of  a  Localism  Task  Force 


 to  advise  the  Commission  on  steps  it  can  take  and,  if  warranted,  to  make  legislative  recommendations  to  Congress  that  would  strengthen  localism  in  broadcasting.  The  Localism  Task  Force  will  play  a  critical 
 role  in  gathering  empirical  data  and  grassroots  information  on  broadcast  localism.  Toward  that  end,  the  Localism  Task  Force  organized  a  series  of  public  hearings  on  localism  around  the  country.  85  The  purpose 
 of  the  hearings  is  to  gather  information  from  consumers,  industry,  civic  organizations,  and  others  on  broadcasters  service  to  their  local  communities.  The  general  public  is  afforded  time  to  register  its  views 
 through  an  open  microphone  format.  The  initial  hearing  was  conducted  in  Charlotte,  North  Carolina  on  October  22,  2003.  86  A  subsequent  hearing  has  been  announced  for  January  28,  2004  in  San  Antonio, 
 Texas.  87 
 3.  Digital  Transition 
 111.  The  Commission  adopted  a  number  of  initiatives  in  the  transition  to  DTV  transmission  that  have  benefited  small  broadcasters.  In  the  First  DTV  Periodic  Review  Memorandum  Opinion  and 


 Order,  the  Commission  took  several  steps  to  allow  broadcasters  to  save  both  on  construction  and 


 (...  continued  from  previous  page)  sector.  Public  Notice  (rel.  May  19,  2003)  (http://  hraunfoss.  fcc.  gov/  edocs_  public/  attachmatch/  DOC-  234645A1.  pdf). 
 The  Committee  held  its  initial  meeting  on  September  29,  2003  at  FCC  headquarters  in  Washington,  D.  C.  News  Release  (Sept.  30,  2003)  (http://  hraunfoss.  fcc.  gov/  edocs_  public/  attachmatch/  DOC-  239398A1.  pdf). 


 82  Public  Notice  (May  19,  2003)  (http://  hraunfoss.  fcc.  gov/  edocs_  public/  attachmatch/  DOC-  234645A1.  pdf). 
 83  See  47  U.  S.  C.    151;  see  also  47  U.  S.  C.    257  (directing  the  FCC  to  work  toward  elimination  of  market  entry 
 barriers  in  order  to  promote  the  policies  and  purposes  of  this  Act  favoring  diversity  of  media  voices,  vigorous  economic  competition,  technological  advancement,  and  promotion  of  the  public  interest,  convenience  and 


 necessity). 
 84  News  Release  (Sept.  30,  2003)  (http://  hraunfoss.  fcc.  gov/  edocs_  public/  attachmatch/  DOC-  239398A1.  pdf). 


 85  News  Release  (Oct.  3,  2003)  (http://  hraunfoss.  fcc.  gov/  edocs_  public/  attachmatch/  DOC-  239578A2.  pdf). 
 86  The  transcript  of  the  hearing  is  available  online  at  http://  hraunfoss.  fcc.  gov/  edocs_  public/  attachmatch/  DOC-242307A1. 
 pdf. 


 87  Public  Notice  (Dec.  11,  2003)  (http://  hraunfoss.  fcc.  gov/  edocs_  public/  attachmatch/  DA-  03-  3911A1.  pdf). 
33
 Federal  Communications  Commission  FCC  03-  335 
 34 
 operating  costs,  including  power  expenses.  88  Partially  in  response  to  smaller  market  broadcasters  concerns  about  their  ability  to  obtain  financing  to  construct  DTV  facilities  sufficient  to  replicate  analog 
 service  areas,  thereby  limiting  the  operational  experience  needed  to  determine  which  core  channel  is  superior  for  DTV  transmission,  the  Commission  decided  to  allow  stations  to  construct  initial  DTV 
 facilities  designed  to  serve  at  least  their  communities  of  license,  while  still  retaining  for  the  time  being  DTV  interference  protection  to  provide  full  replication  at  a  later  date.  The  Commission  also  determined 
 that  it  would  continue  to  provide  DTV  interference  protection  to  the  maximized  service  area  specified  in  outstanding  DTV  construction  permits  for  facilities  in  excess  of  those  specified  in  the  DTV  Table  of 
 Allotments.  The  Commission  temporarily  deferred  the  replication  protection  and  channel  election  deadlines  established  in  the  First  DTV  Periodic  Report  and  Order.  The  Commission  stated,  however, 
 that  in  the  next  DTV  periodic  report  it  would  establish  a  firm  date  by  which  broadcasters  must  either  replicate  their  NTSC  service  areas  or  lose  DTV  service  protection  of  the  unreplicated  areas,  and  by  which 
 broadcasters  with  authorizations  for  maximized  digital  facilities  must  either  provide  service  to  the  coverage  area  specified  in  their  maximization  authorizations  or  lose  DTV  service  protection  to  the 
 uncovered  portions  of  those  areas.  The  Commission  also  stated  that  it  would  establish  a  deadline  by  which  broadcasters  with  two  in-  core  allotments  must  elect  which  channel  they  will  use  at  the  end  of  the 
 transition.  The  Commission  stated  that  these  replication,  maximization,  and  channel  election  deadlines  may  be  earlier  than,  but  will  in  no  event  be  later  than,  the  latest  of  either  the  end  of  2006  or  the  date  by 
 which  85%  of  the  television  households  in  a  licensees  market  are  capable  of  receiving  the  signals  of  digital  broadcast  stations.  In  addition,  the  Commission  allowed  DTV  stations  subject  to  the  May  1,  2002, 
 or  May  1,  2003,  construction  deadlines  to  operate  initially  at  a  reduced  schedule  by  providing,  at  a  minimum,  a  digital  signal  during  prime  time  hours,  consistent  with  their  simulcast  obligations.  By 
 permitting  stations  to  elect  a  more  graduated  approach  to  providing  DTV  service,  the  Commission  allowed  stations,  including  small  broadcasters,  to  focus  their  energies  initially  on  providing  digital  service 
 to  their  core  communities,  while  allowing  stations  to  increase  operating  hours  and  expand  their  coverage  area  as  the  transition  progresses. 


 112.  Additionally,  in  the  First  DTV  Periodic  Review  Memorandum  Opinion  and  Order,  the  Commission  decided  to  consider,  on  a  case-  by-  case  basis,  whether  it  should  afford  a  broadcaster 
 additional  time  to  construct  its  DTV  facilities  where  the  cost  of  meeting  the  minimum  build-  out  requirements  exceeds  the  stations  financial  resources.  To  qualify  under  this  standard,  the  applicant  must 
 provide  an  itemized  estimate  of  the  cost  of  meeting  the  minimum  build-  out  requirements  and  a  detailed  statement  explaining  why  its  financial  condition  precludes  such  an  expenditure.  A  brief  downturn  in  the 
 economy  is  not  sufficient  grounds  for  a  showing  of  financial  hardship.  Commission  records  show  that  some  772  commercial  and  212  noncommercial  educational  stations  availed  themselves  of  this  process  and 
 were  granted  at  least  one  six  month  extension  to  construct  their  DTV  facilities. 
 113.  The  Commission  addressed  further  concerns  of  small  broadcasters  in  a  Notice  of  Proposed  Rulemaking  (NPRM)  initiating  the  second  periodic  review.  89  Having  temporarily  deferred 
 channel  election  deadlines  to  the  next  periodic  review,  the  Commission  sought  comment  in  this  NPRM  on  establishing  a  deadline  that  gives  broadcasters  with  two  in-  core  channels  enough  time  to  make  an 
 informed  decision  about  which  of  their  two  core  channels  would  be  most  suitable  to  use  for  digital  broadcasting.  The  Commission  indicated  its  continuing  belief  that  stations  that  choose  to  begin  service  at 
 lower  power  should  be  given  an  opportunity  to  increase  power  and  to  test  for  interference  or  other  service 


 88  Review  of  the  Commissions  Rules  and  Policies  Affecting  the  Conversion  to  Digital  Television,  16  FCC  Rcd  5946 
 (2001)  (First  DTV  Periodic  Report  and  Order),  on  recon.,  Memorandum  Opinion  and  Order  on  Reconsideration,  16  FCC  Rcd  20,  594  (2001)  (First  DTV  Periodic  Review  MO&  O). 


 89  Second  Periodic  Review  of  the  Commissions  Rules  and  Policies  Affecting  Conversion  to  Digital  Television, 
 Public  Interest  Obligations  of  TV  Broadcast  Licensees,  18  FCC  Rcd  1279  (2003)  (Second  Periodic  Review). 
34
 Federal  Communications  Commission  FCC  03-  335 
 35 
 problems  at  those  higher  power  levels  before  they  are  required  to  decide  which  of  their  two  channels  is  preferable  for  DTV  operations.  The  Commission  proposed  that  commercial  and  noncommercial 
 broadcast  licensees  with  two  in-  core  assigned  channels  make  their  final  election  by  May  1,  2005;  this  tentative  date  provides  three  years  for  commercial  broadcasters  and  two  years  for  noncommercial 
 broadcasters  after  the  applicable  digital  construction  deadline  to  make  the  channel  election.  The  Commission  also  sought  comment  on  whether  those  noncommercial  broadcasters  that  were  not  already 
 airing  a  digital  signal  anticipated  meeting  the  May  1,  2003  construction  deadline,  and,  if  not,  what  obstacles  were  preventing  completion  of  construction.  The  Commission  invited  comment  on  what  steps, 
 if  any,  it  should  take  to  assist  noncommercial  stations  in  the  transition  to  DTV.  For  example,  in  the  NPRM,  the  Commission  asked  whether  it  should  apply  the  financial  hardship  standard  for  grant  of  an 
 extension  of  time  to  construct  a  DTV  station  differently  to  noncommercial  licensees.  The  Commission  also  asked  whether  it  should  permit  satellite  television  stations,  which  operate  in  small  or  sparsely 
 populated  areas  that  have  insufficient  economic  bases  to  support  full-  service  operations,  to  turn  in  their  analog  authorizations  and  flash-  cut  to  DTV  transmission  at  the  end  of  the  transition  period. 


 114.  In  addition,  the  Second  Periodic  Review  sought  further  comment  on  an  outstanding  Notice  of  Proposed  Rulemaking  (Childrens  DTV  Public  Interest  NPRM)  adopted  in  September  2000 
 regarding  childrens  television  obligations  of  DTV  broadcasters.  90  The  Childrens  DTV  Public  Interest  NPRM  proposed  clarifying  broadcaster  obligations  under  the  Childrens  Television  Act  and  related 
 Commission  guidelines  in  a  DTV  environment.  The  Childrens  DTV  Public  Interest  NPRM  focused  primarily  on  two  areas:  (1)  the  obligation  of  television  broadcast  licensees  to  provide  educational  and 
 informational  programming  for  children;  and  (2)  the  requirement  that  television  broadcast  licensees  limit  the  amount  of  advertising  in  childrens  programs.  It  sought  comment  on  how  the  Commission  should 
 apply  the  current  three  hour  childrens  core  educational  programming  processing  guideline  in  light  of  the  many  possible  ways  broadcasters  may  choose  to  use  their  DTV  spectrum;  whether  the  Commission 
 should  revise  or  adopt  the  current  preemption  rules  for  core  educational  programming  for  the  digital  environment;  and  whether  steps  should  be  taken  to  ensure  that  programs  designed  for  children  or  families 
 do  not  contain  product  promotions  that  are  unsuitable  for  children  to  watch.  The  Second  Periodic  Review  requested  comment  on  the  issues  and  their  impact  on  small  businesses. 


 115.  In  2002,  the  Commission  initiated  a  rulemaking  to  explore  possible  implementation  of  a  copy  protection  mechanism  for  digital  broadcast  television.  91  In  2003,  the  FCC  issued  a  Report  and 
 Order  and  Further  Notice  of  Proposed  Rulemaking  (Order),  92  adopting  an  anti-  piracy  mechanism,  known  as  the  broadcast  flag  to  prevent  the  indiscriminate  redistribution  of  digital  broadcast  signals.  Pursuant 
 to  this  Order,  products  that  are  capable  of  receiving  DTV  signals  over-  the-  air,  including  personal  computers,  must  have  the  capability  to  detect  and  give  effect  to  the  broadcast  flag  by  July  1,  2005.  The 
 Order  adopted  interim  measures  through  which  the  Commission  would  approve  robust  and  secure  content  protection  and  recording  technologies,  and  initiated  a  further  notice  seeking  comment  on  a  permanent 
 process  for  approving  such  technologies. 
 4.  DTV  Low  Power  Television 
 116.  Recognizing  the  challenges  presented  by  limited  spectrum  availability  and  the  constrained  budgets  of  many  stations  in  the  low  power  television  service,  the  Commission  earlier  this 


 90  Childrens  TV  Obligations  of  Digital  TV  Broadcasters,  15  FCC  Rcd  22,946  (2000)  (Childrens  DTV  Public 
 Interest  NPRM). 
 91  Digital  Broadcast  Copy  Protection,  17  FCC  Rcd  16,  027  (2002)  (NPRM). 


 92  Digital  Broadcast  Content  Protection,  18  FCC  Rcd  23,  500  (2003). 
35
 Federal  Communications  Commission  FCC  03-  335 
 36 
 year  initiated  a  Notice  of  Proposed  Rulemaking  (NPRM)  to  establish  rules,  policies,  and  procedures  for  the  digital  conversion  of  low  power  television  (LPTV),  Class  A  TV  stations,  TV  translator  stations,  and 
 TV  booster  stations.  93  LPTV  stations  operate  at  reduced  power  levels  and  serve  much  smaller  geographic  regions  than  full-  service  stations.  An  LPTV  station  may  be  the  only  television  station  in  an  area 
 providing  local  news,  weather,  and  public  affairs  programming.  Many  LPTV  stations  air  niche  programming,  often  locally  produced,  to  residents  of  specific  ethnic,  racial,  or  special  interest 
 communities.  A  TV  translator  station  is  a  low  power  television  broadcast  station  that  receives  the  signal  of  a  television  station  and  simultaneously  retransmits  it  on  another  TV  channel.  Licensees  often  use  these 
 stations  to  deliver  the  only  free  off-  air  television  service  available  to  rural  communities.  In  the  NPRM,  the  Commission  tentatively  concludes  that  digital  translator  stations  should  be  technically  capable  of 
 retransmitting  the  complete  signals  of  DTV  broadcast  stations  for  reception  by  the  general  public.  The  Commission  also  proposes  that  TV  channels  2-  13  and  14-  59  (except  channel  37,  which  is  reserved  for 
 radio  astronomy)  be  made  available  for  digital  LPTV  and  TV  translator  stations.  It  seeks  comment  on  whether  TV  channels  60-  69  should  also  be  made  available  for  digital  low  power  service  during  the 
 transition.  With  regard  to  application  filing  procedures,  the  Commission  tentatively  concludes  that  a  high  priority  should  be  given  to  facilitating  the  digital  transition  of  existing  analog  LPTV  and  TV  translator 
 and  Class  A  TV  licensees,  to  be  followed  by  a  separate  filing  procedure  of  ongoing  rolling  one-  day  filing  windows,  essentially  a  first-  come,  first-  served  filing  system.  The  Commission  seeks  comment  on 
 whether  certain  statutory  provisions  for  the  termination  of  analog  TV  service  apply  to  authorizations  in  the  LPTV  service  and,  if  not,  whether  the  Commission  should  consider  establishing  a  trigger-  based 
 mechanism  for  this  purpose,  similar  to  that  for  full-  service  television  stations,  but  distinct  to  account  for  the  significant  difference  between  full-  service  and  low  power  stations. 


 5.  Ancillary/  Supplementary  Use  of  DTV  Capacity 
 117.  Another  DTV  transition  policy  Order  addressed  Section  336  of  the  Communications  Act,  which  authorizes  the  Commission  to  permit  DTV  licensees  to  offer  revenue  generating  ancillary  or 


 supplementary  (  A  or  S)  services  on  their  digital  channels  as  long  as  their  provision  does  not  derogate  any  advanced  television  services  the  Commission  may  require.  Feeable  A  or  S  services  are  deemed  to  be 
 those  services  for  which  the  payment  of  a  subscription  fee  is  required  to  receive  such  services  or  for  which  the  licensee  receives  any  compensation  from  a  third-  party  other  than  commercial  advertisements 
 used  to  support  non-  subscription  broadcasting.  In  its  Report  and  Order  on  ancillary  or  supplementary  use  of  DTV  capacity  by  noncommercial  educational  (NCE)  licensees,  the  Commission  determined  that  (1) 
 NCE  licensees  may  offer  A  or  S  services  on  their  digital  channels;  (2)  NCE  licensees  must  pay  fees  on  revenues  generated  by  the  remunerative  use  of  their  excess  digital  capacity,  even  when  licensees  use  those 
 revenues  to  support  their  mission-  related  activities;  public  television  stations  must  primarily  furnish  an  educational,  nonprofit  and  noncommercial  broadcast  service  on  their  entire  digital  bitstream,  including  A 
 or  S  services;  and  (3)  that  the  prohibition  against  advertising  applies  to  broadcast  programming  streams  provided  by  NCE  licensees,  but  does  not  apply  to  any  A  or  S  services  presented  on  their  excess  DTV 
 channels  that  do  not  constitute  broadcasting.  94  The  Commission  found  that  NCE  TV  licensees  by  virtue  of  their  nonprofit,  noncommercial,  educational  broadcasting  operations  generate  less  revenue  than 
 commercial  TV  licensees  and  are  more  likely  than  commercial  TV  broadcasters  to  experience  financial  difficulties  in  constructing  their  DTV  facilities  and  making  the  transition  to  DTV  broadcasting.  The 
 Commission  intends  that  the  policies  it  adopted  in  the  Report  and  Order  enhance  NCE  TV  licensees  ability  to  obtain  funding  to  support  their  programming  and  operations  and  their  transition  to  DTV. 


 93  Amendment  of  Parts  73  and  74  of  the  Commissions  Rules  to  Establish  Rules  for  Digital  Low  Power  Television, 
 Television  Translator,  and  Television  Booster  Stations  and  to  Amend  Rules  for  Digital  Class  A  Television  Stations,  18  FCC  Rcd  18,  365  (2003). 


 94  Ancillary/  Supplementary  Use  of  DTV  Capacity  by  NCE  Licensees,  Report  and  Order,  16  FCC  Rcd  19,  042  (2001) 
 (Report  and  Order). 
36
 Federal  Communications  Commission  FCC  03-  335 
 37 
 6.  Navigation  Devices 
 118.  Section  629  of  the  Communications  Act  requires  the  Commission  to  adopt  regulations  to  assure  the  commercial  availability  of  navigation  devices  to  guarantee  consumers  the  opportunity  to 


 purchase  navigation  devices  from  sources  other  than  their  multichannel  video  program  distributor  (MVPD)  service  provider.  In  a  previous  Report  and  Order,  the  Commission  adopted  rules  to  implement 
 Section  629  and  expressed  its  intention  to  monitor  developments  to  evaluate  whether  progress  was  being  made  toward  the  goals  of  Section  629,  and,  if  necessary,  to  take  further  action  to  ensure  a  competitive 
 marketplace  and  consumer  choice  in  navigation  devices.  95  The  Commissions  Rules  require  MVPDs  to  unbundle  security  from  other  functions  of  the  navigation  device  and,  to  make  available  point-  of-deployment 
 modules  (PODs),  to  separately  perform  the  conditional  access  function.  96  Thus,  an  MVPD  subscriber  will  be  able  to  obtain  a  set-  top  box  without  the  security  features  (  host  device)  from  retailers 
 but  will  need  the  MVPD  to  provide  a  card-  sized  POD  module  for  security  functions.  In  2003,  the  Commission  adopted  the  Second  Report  and  Order  in  the  Navigation  Devices  proceeding.  This  Second 
 Report  and  Order  contains  technical,  labeling  and  encoding  rules  to  permit  TV  sets  to  be  built  with  plug  and  play  functionality  for  one-  way  digital  cable  services,  which  include  typical  cable  programming 
 services  and  premium  channels.  97  Because  of  potential  compliance  burdens  on  the  part  of  smaller  cable  operators,  the  cable  portions  of  the  rules  generally  apply  only  to  digital  cable  systems  with  750  MHz  or 
 greater  capacity.  In  order  to  make  sure  that  the  process  whereby  equipment  produced  in  accordance  with  the  rules  is  open  and  nondiscriminatory,  equipment  may  be  tested  in  third-  party  testing  facilities  and 
 decisions  relating  to  the  testing  and  certification  process  may  be  brought  to  the  Commission  for  review.  98  Further  comment  is  sought  on  whether  the  rules  governing  cable  system  transmissions  should  be  extended 
 to  digital  systems  with  an  activated  channel  capacity  of  550  MHz  or  greater.  The  Second  Report  and  Order  initiates  a  Second  Further  Notice  of  Proposed  Rulemaking  to  examine  other  potential  processes 
 regarding  these  outputs  and  technologies.  The  Second  Report  and  Order  also  includes  interim  procedures  for  approving  new  digital  output  and  content  protection  technologies. 


 7.  Digital  Audio  Broadcasting 
 119.  In  the  context  of  digital  radio  broadcast  services,  the  Commission  adopted  a  Report  and  Order  (DAB  First  Report  and  Order)  that  selected  in-  band  on-  channel  (IBOC)  as  the  sole  digital 


 technology  for  the  terrestrial  radio  broadcast  service.  99  The  DAB  First  Report  and  Order  announced  notification  procedures  that  will  allow  AM  and  FM  broadcasters  to  begin  digital  operations  immediately 
 on  an  interim  basis  using  the  IBOC  systems  developed  by  iBquity  Digital  Corporation.  The  Commission  stated  that  the  adoption  of  a  single  IBOC  transmission  standard  will  facilitate  the  development  and 
 commercialization  of  digital  services  for  terrestrial  broadcasters.  The  Commission  has  solicited  industry  assistance  to  develop  a  formal  standard.  Although  radio  broadcast  services  continue  to  serve  as  a 
 mainstay  of  mass  communications,  broadcasters  now  face  significant  technical  limitations  and  competitive  challenges.  Many  terrestrial  radio  broadcasters  view  DAB  not  only  as  a  technical 


 95  Implementation  of  Section  304  of  the  Telecommunications  Act  of  1996:  Commercial  Availability  of  Navigation 
 Devices,  Report  and  Order,  13  FCC  Rcd  14,  775  (1998)  (Navigation  Devices  Order). 
 96  47  C.  F.  R.    76.1204. 


 97  Implementation  of  Section  304  of  the  Telecommunications  Act  of  1996:  Commercial  Availability  of  Navigation 
 Devices,  Second  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rulemaking,  18  FCC  Rcd  20,  885  (2003). 
 98  Id. 


 99  Digital  Audio  Broadcasting  Systems  and  Their  Impact  on  the  Terrestrial  Radio  Broadcast  Service,  17  FCC  Rcd 
 19,  990  (2002)  (DAB  First  Report  and  Order). 
37
 Federal  Communications  Commission  FCC  03-  335 
 38 
 opportunity,  but  as  a  competitive  necessity.  The  transition  to  digital  audio  broadcasting  promises  the  benefits  that  have  generally  accompanied  digitalization  better  audio  fidelity,  more  robust  transmission 
 systems,  and  the  possibility  of  new  auxiliary  services.  Small  broadcasters  stand  to  benefit  from  this  development  that  brings  new  competitive  opportunities  to  offer  enhanced  broadcasting  sound  quality  and 
 a  range  of  new  supplementary  programming  services.  Implementation  of  digital  audio  broadcasting  is  voluntary,  thus,  broadcasters  can  initiate  the  service  on  their  own  time  frame  and  defer  costs  as  they  deem 
 appropriate. 
 8.  Low  Power  FM 
 120.  The  FY  2001  District  of  Columbia  Appropriations  Act  100  required  the  Commission  to  prescribe  third  adjacent  channel  protection  requirements  for  LPFM  stations.  It  also  directed  the 


 Commission  to  conduct  an  experimental  program  and  field  tests  to  determine  the  potential  for  third-adjacent  channel  interference  and  other  impacts  on  existing  broadcasters.  The  Commission  subsequently 
 selected  Mitre  Corporation  (Mitre)  to  complete  the  independent  tests. 
 121.  On  June  2,  2003,  Mitre  delivered  its  final  report  (Mitre  Report)  to  the  Commission.  The  Mitre  Report  concludes  that  reduction  or  elimination  of  third-  adjacent  channel  LPFM  minimum  distance 
 separation  requirements  is  possible  without  increasing  the  potential  for  interference  to  existing  stations.  The  Mitre  Report  also  recommends  that  Phase  II  listener  tests  and  economic  analyses  not  be  completed 
 due  to  the  lack  of  measurable  interference  produced  by  LPFM  stations. 
 122.  The  Commission  accepted  the  Mitre  Report  and  issued  a  Public  Notice  101  requesting  public  comment  on  it.  Twenty-  four  parties  filed  comments.  Eighteen  comments  supported  relaxation  of 
 third-  adjacent  channel  LPFM  minimum  distance  separation  requirements,  and  three  favored  retention  of  the  current  rule.  The  Commission  will  send  a  report  including  recommendations,  along  with  copies  of  the 
 Mitre  Report,  to  Congress. 
 9.  Equal  Employment  Opportunity 
 123.  In  January  2000,  the  Commission  adopted  new  broadcast  and  cable  Equal  Employment  Opportunity  (EEO)  rules  pursuant  to  remand  from  the  U.  S.  D.  C.  Circuit  Court  of  Appeals  Lutheran 


 Church  Missouri  Synod  v.  FCC  decision.  102  The  new  rules  retain  the  long-  standing  anti-  discrimination  provision  of  the  broadcast  and  cable  EEO  rules.  The  Commission  also  adopted  new  outreach  program 
 rules  that  it  intends  will  ensure  wide  dissemination  of  information  about  job  openings  so  that  all  qualified  candidates  are  able  to  compete  for  jobs  in  the  broadcast  and  cable  industries.  The  Commission  provided 
 two  different  outreach  program  options  to  offer  maximum  flexibility  to  broadcasters  in  designing  their  EEO  programs.  The  Commission  exempted  small  size  broadcasters  with  fewer  than  five  full-  time 
 employees  from  certain  outreach  programs  and  record-  keeping  requirements,  as  it  did  cable  entities  with  fewer  than  six  full-  time  employees.  In  addition,  the  Commission  permitted  station  employment  units 
 with  five  to  ten  full-  time  employees  to  perform  fewer  long-  term  outreach  initiatives,  such  as  internships,  job  fairs,  and  conferences. 


 100  D.  C.  Appropriations    FY  2001,  Pub.  L.  No.  106-  553,    632,  114  Stat.  2762,  2762A-  111  (2000). 
 101  DA  03-  2277,  Public  Notice  (rel.  July  11,  2003). 
 102  Review  of  the  Commissions  Broadcast  and  Cable  Equal  Employment  Opportunity  Rules  and  Policies,  15  FCC 
 Rcd  2329  (2000). 
38
 Federal  Communications  Commission  FCC  03-  335 
 39 
 124.  The  Commission  revised  its  EEO  rules  in  November  2002  following  a  separate  court  challenge  to  the  January  2000  EEO  rules.  103  The  new  broadcast  and  cable  rules  retain  the  anti-discrimination 
 provisions  of  the  former  rules  and  adopted  outreach  program  rules  for  wide  dissemination  of  job  information.  Similarly,  the  new  rules  offer  relief  to  small  size  and  small  market  broadcasters  and 
 cable  entities.  The  Commission  retains  its  policy  of  exempting  small  size  broadcasters  (fewer  than  five  full-  time  employees)  and  small  size  cable  entities  (fewer  than  six  full-  time  employees)  from  certain 
 outreach  programs  and  record-  keeping  requirements.  Additionally,  the  Commission  requires  station  employment  units  with  five  to  ten  full-  time  employees  and  station  employment  units  located  in  small 
 markets  to  perform  only  two,  rather  than  four,  menu  options,  i.  e.,  long-  term  outreach  initiatives,  every  two  years.  104 


 10.  Cable  Inside  Wiring 
 125.  In  a  proceeding  pertaining  to  cable  television  inside  wiring  rules,  the  Commission  adopted  rules  and  policies  intended  to  facilitate  competition  in  video  distribution  markets.  105  The 


 Commission  intends  that  the  new  rules  foster  opportunities  for  MVPDs  to  provide  service  in  multiple  dwelling  unit  (MDU)  buildings  by  establishing  procedures  regarding  how  and  under  what  circumstances 
 the  existing  cable  home  run  wiring  will  be  made  available  to  alternative  video  service  providers.  In  its  Order  on  Reconsideration,  the  Commission  modified  its  rules  to  provide  that:  (1)  in  the  event  of  sale,  the 
 home  run  wiring  be  made  available  to  the  MDU  owner  or  alternative  provider  during  the  24-  hour  period  prior  to  actual  service  termination  by  the  incumbent,  and  (2)  home  run  wiring  located  behind  the  sheet 
 rock  is  physically  inaccessible  for  purposes  of  determining  the  demarcation  point  between  home  wiring  and  home  run  wiring.  106  The  Commission  believes  that  these  rule  modifications  will  promote  competition 
 and  reduce  entry  barriers  into  MDUs  for  MVPDs.  The  Commission  also  provided  relief  for  small  non-cable  MVPDs  (less  than  1000  subscribers  or  serving  less  than  1000  units)  from  the  annual  reporting 
 requirements  of  the  Commissions  signal  leakage  rules.  These  reporting  requirements  mandate  that  cable  operators  file  annually  with  the  Commission  certain  information  relating  to  their  use  of  the  aeronautical 
 radio  frequency  bands.  Relief  from  the  annual  reporting  requirement  will  allow  small  non-  cable  MVPDs  to  focus  on  the  prevention  of  leaks  by  devoting  their  scarce  resources  primarily  to  maintenance,  leakage 
 detection,  and  repair. 
 11.  12  GHz 
 126.  In  the  area  of  Cable  Television  Relay  Services  (CARS),  the  Commission  adopted  a  Report  and  Order  amending  Part  78  of  its  Rules  to  expand  the  class  of  entities  eligible  for  CARS  licenses 


 103  Review  of  the  Commissions  Broadcast  and  Cable  Equal  Employment  Opportunity  Rules  and  Policies,  17  FCC 
 Rcd  24,  018  (2002). 
 104  The  scope  of  the  small  market  station  exemption  extends  to  any  station  employment  unit  consisting  solely  of  a 
 station  or  stations  licensed  to  a  community  that  is  located  in  a  county  that  is  outside  of  all  metropolitan  areas,  as  defined  by  Office  of  Management  and  Budget,  or  is  located  in  a  metropolitan  area  that  has  a  population  of  fewer 


 than  250,000  persons.  Id.  at  24,  070,  para.  170. 
 105  Telecommunications  Services,  Inside  Wiring,  Customer  Premises  Equipment;  In  the  Matter  of  Implementation  of 
 the  Cable  Television  Consumer  Protection  and  Competition  Act  of  1992:  Cable  Home  Wiring,  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rulemaking,  13  FCC  Rcd  3659  (1997). 


 106  Telecommunications  Services  Inside  Wiring,  First  Order  on  Reconsideration  and  Second  Report  and  Order,  18 
 FCC  Rcd  1342  (2003). 
39
 Federal  Communications  Commission  FCC  03-  335 
 40 
 to  include  all  MVPDs.  107  Eligible  services  use  the  12  GHz  and  18  GHz  CARS  bands  for  microwave  relays  pursuant  to  Part  78  of  the  Commissions  Rules,  which  govern  licensing  and  operations  of  fixed  or 
 mobile  CARS  stations.  Licensees  use  CARS  principally  as  a  video  transmission  service  for  intermediate  links  in  a  distribution  network.  A  primary  and  continuing  use  of  the  12  GHz  CARS  band  is  to  deliver 
 signals  over  long  distances  between  reception  points  and  communities.  Licensees  do  not  use  CARS  to  provide  service  or  relay  signals  directly  to  subscribers,  but,  instead,  use  it  to  transmit  television  broadcast 
 and  low  power  television  and  related  audio  signals,  among  other  signals,  from  one  point  to  another  point.  Prior  to  the  Commissions  modification  of  these  rules,  franchised  cable  systems  and  wireless  cable 
 systems  were  eligible  for  CARS  licenses,  but  private  cable  operators  (PCOs)  and  other  formerly  non-eligible  MVPDs  (NMVPDs)  were  not.  The  Commissions  action  created  opportunities  for  small  entities 
 such  as  PCOs  and  other  NMVPDs  to  compete  with  incumbent  providers  of  video  programming  in  the  12  GHz  CARS  frequency  band.  The  new  rules  will  allow  new  entrants,  many  of  which  we  deem  small 
 entities,  to  access  the  12  GHz  CARS  frequency  on  an  equal  basis  with  franchised  cable  operators  and  other  users. 


 12.  Cable  Operations  and  Licensing  System 
 127.  The  Commission  continues  to  provide  enhanced  electronic  filing  systems  to  the  various  media  industries.  Electronic  conversion  of  several  of  the  forms  used  by  cable  and  broadcast  media  has 


 occurred  and  allows  applicants  and  other  users  to  file  Commission  documents  with  greater  speed  and  efficiency.  One  initiative  in  this  area  is  the  implementation  of  the  Cable  Operations  and  Licensing 
 System  (COALS).  108  In  adopting  the  Report  and  Order  instituting  the  new  system,  the  Commission  stated  that  the  filing  of  forms  and  applications  for  the  Multichannel  Video  and  Cable  Television  Services 
 would  make  license  and  cable  operational  information  more  accessible  to  the  Commissions  staff,  the  MVPD  industry,  and  the  general  public.  Further,  electronic  filing  may  produce  additional  resource  and 
 cost  benefits  to  small  entities.  To  facilitate  electronic  filing  and  review,  the  Commission  created  three  new  forms:  FCC  Form  321  to  standardize  the  format  in  which  MVPDs  provide  notification  regarding 
 usage  of  aeronautical  frequencies;  FCC  Form  322  to  standardize  the  format  for  cable  community  registrations;  and  FCC  Form  324  to  standardize  the  format  used  when  a  cable  operator  needs  to  notify  the 
 Commission  of  a  change  in  name,  mailing  address,  or  operational  status.  Additionally,  the  Commission  modernized  FCC  Form  320  (annual  signal  leakage  report),  FCC  Form  325  (signal  and  frequency 
 distribution  data),  and  FCC  Form  327  (CARS).  The  Commission  provided  for  a  transitional  period  prior  to  instituting  mandatory  electronic  filing  of  the  forms.  It  recognized  that  some  small  cable  operators 
 serving  rural  areas  may  not  have  access  to  computers  with  the  hardware  or  capability  to  utilize  the  software  necessary  to  submit  their  applications  electronically.  Thus,  the  Commission  ruled  that  electronic 
 filing  of  each  form  will  become  mandatory  six  months  after  that  form  becomes  available  for  filing  electronically. 


 13.  Consolidated  Database  System 
 128.  The  Media  Bureau  continues  to  update  and  make  additional  forms  available  for  electronic  filing  through  its  Consolidated  Database  System  (CDBS).  Currently,  CDBS  supports  electronic  filing  of 


 a  number  of  FCC  forms,  including  several  of  the  most  frequently  utilized  broadcast  applications,  such  as,  FCC  Form  301  (Application  for  Construction  Permit  for  Commercial  Broadcast  Station),  FCC  Form  302- 


 107  Amendment  of  Eligibility  Requirements  in  Part  78  Regarding  12  GHz  Cable  Television  Relay  Service,  17  FCC 
 Rcd  9930  (2002). 
 108  Amendment  of  the  Commissions  Rules  for  Implementation  of  its  Cable  Operations  And  Licensing  System 
 (COALS)  to  Allow  for  Electronic  Filing  of  Licensing  Applications,  Forms,  Registrations  and  Notifications  in  the  Multichannel  Video  and  Cable  Television  Service  and  the  Cable  Television  Relay  Service,  18  FCC  Rcd  5162  (2003). 
40
 Federal  Communications  Commission  FCC  03-  335 
 41 
 DTV  (Application  for  Digital  TV  Broadcast  Station  License),  FCC  Form  314  (Application  for  Consent  to  Assignment  of  Broadcast  Station  Construction  Permit  or  License),  FCC  Form  319  (Application  for  Low 
 Power  FM  Broadcast  Station  License),  and  FCC  Form  323  (Ownership  Report).  The  Commissions  expansion  of  the  electronic  filing  capability  benefits  small  entities  by  helping  them  to  obtain  Commission 
 authorizations  and  approvals  more  independently  and  access  information  more  readily. 
 129.  Additionally,  the  Media  Bureau  endeavors  to  assist  licensees  and  applicants  via  its  section  of  the  Commissions  website,  www.  fcc.  gov/  mb.  The  Media  Bureaus  webpage  provides  links  to 
 each  of  its  divisions  (Industry  Analysis,  Policy,  Engineering,  Audio  and  Video),  as  well  as  special  links  to  pages  of  significant  interest  to  the  public,  such  as  media  ownership  and  DTV.  As  part  of  its  efforts  to 
 inform  and  support  licensees  during  the  upcoming  eight  year  renewal  cycle,  the  Media  Bureau  established  a  renewal  page,  www.  fcc.  gov/  mb/  renewal  to  provide  current  information  on  license  expiration  dates,  the 
 revised  FCC  Form  302-  S  (Renewal  of  License  for  Commercial  or  Noncommercial  Educational  AM,  FM,  TV,  Class  A  TV,  FM  Translator,  TV  Translator,  LPTV  or  Low  Power  FM  Broadcast  Station),  and  the 
 renewal  process.  The  renewal  page  identifies  staff  support  resources  and  includes  step-  by-  step  instructions  on  completing  the  renewal  form.  Thus,  small  entities  have  the  necessary  tools  to  navigate  the 
 renewal  process  more  efficiently  and  successfully. 
 E.  Office  of  Communications  Business  Opportunities 
 130.  The  Commission  created  the  Office  of  Communications  Business  Opportunities  (OCBO)  in  1994  to  promote  business  opportunities  for  entrepreneurs  and  small  businesses,  including  minority  and 


 women-  owned  small  businesses.  OCBO  oversees  the  administration  of  the  Commissions  obligations  under  the  RFA  and  the  Small  Business  Act,  109  including  agency  regulatory  review  provisions.  OCBOs 
 staff  participates  in  conferences  and  seminars  throughout  the  country  to  keep  the  public  informed  about  entrepreneurial  and  small  business  opportunities  in  the  telecommunications  sector.  In  May  2002,  OCBO 
 held  a  small  business  financing  seminar,  at  which  venture  capitalists,  private  capital  fund  representatives,  and  government  officials  from  the  Commission,  the  SBA,  the  Department  of  Commerce,  and  the 
 Department  of  Agriculture  discussed  issues  of  interest  to  the  small  business  community.  110  As  part  of  the  Commissions  outreach  to  small  businesses,  OCBO  maintains  a  database  of  approximately  3,000  small 
 businesses  to  which  it  sends  information  regarding  Commission  actions,  including  new  service  opportunities.  In  addition,  OCBOs  page  on  the  Commissions  website  contains  vital  information 
 concerning  Commission  rulemakings  and  service  opportunities  for  the  small  business  community. 
 1.  Regulatory  Flexibility  Act  and  Small  Business  Act  Initiatives 
 131.  Following  the  dictates  of  the  SBREFA  amendments  to  the  RFA,  111  the  Commission  works  diligently  to  make  its  RFA  analyses  precise  and  helpful,  including  a  focus  on  plain  language.  As 


 the  Commission  writes  rulemakings  relating  to  the  many  communications  services  it  regulates,  such  as  TV,  FM  radio,  paging,  and  amateur  radio,  it  conducts  numerous  RFA  analyses  describing  each  service 
 and  the  extent  of  the  small  entity  participation  within  each.  Through  diligent  monitoring  of  existing  services  and  recognition  of  new  service  areas,  the  Commission  constantly  revises  its  service  sector 
 analyses.  Consequently,  the  Commission  provides  full  and  accurate  analyses  and  certifications  in  the  100  or  more  rulemaking  items  it  adopts  each  year.  One  of  OCBOs  most  important  functions,  as  related  to 


 109  Small  Business  Act,  15  U.  S.  C.    632. 
 110  FCC  Holds  2002  Small  Business  Financing  Seminar,  News  Release  (May  2,  2002). 
 111  SBREFA  came  into  force  as  part  of  Title  II  of  the  Contract  With  America  Advancement  Act  of  1996,  Pub.  L.  No. 
 104-  121,  110  Stat.  847  (1996)  (CWAAA). 
41
 Federal  Communications  Commission  FCC  03-  335 
 42 
 RFA  analyses,  is  to  recommend  alternatives  to  regulations  that  would  have  an  adverse  impact  on  small  entities. 
 132.  From  April  2002  to  March  of  2003,  OCBO  staff  conducted  RFA  training  for  all  Commission  Bureau  and  Offices  that  engage  in  rulemakings.  Two-  hundred  and  sixty-  three  staff  members 
 attended  the  sessions.  Building  on  the  success  of  those  sessions,  on  November  6,  2003,  the  Commission  partnered  with  the  SBA  to  offer  additional  training  for  Commission  staff  engaged  in  rulemakings  to 
 further  their  understanding  of  the  effect  the  Commissions  Rules  have  on  small  businesses  and  to  inform  them  how  they  can,  during  the  deliberative  process,  formulate  policies  that  will  benefit  small 
 businesses.  112  Beginning  in  2004,  the  Commission  will  embark  on  a  major  Small  Entity  Compliance  Guide  (Compliance  Guide)  program,  which  OCBO  developed.  The  Compliance  Guide  program,  after 
 initial  training  for  staff,  will  result  in  the  release  of  guides  that  are  better  geared  towards  assisting  small  businesses  in  understanding  how  the  Commissions  newly  released  rules  apply  to  them. 


 2.  Ten  Year  Review  of  Rules 
 133.  During  2002,  OCBO  completed  an  updated,  comprehensive  listing  of  Commission  Rules  subject  to  review  under  the  RFAs  ten-  year  review  of  rules  provision.  113  Section  610  requires  agencies 


 to  publish  in  the  Federal  Register  a  plan  for  the  periodic  review  of  rules  that  have  a  significant  economic  impact  on  a  substantial  number  of  small  entities.  The  Commissions  submission  identifies  hundreds  of 
 rules  that  could  be  amended  or  rescinded  in  an  effort  to  serve  better  the  public  interest.  The  Commissions  record  of  compliance  with  this  requirement  is  now  among  the  top  of  sixty  or  so  federal 
 agencies. 
 3.  Special  Small  Business  Size  Standards 
 134.  Federal  departments  and  agencies  that  promulgate  regulations  that  affect  small  businesses  usually  use  the  SBAs  size  criteria  as  they  develop  the  regulations.  114  To  ensure  that  our  initiatives 


 accurately  target  small  entity  participation  in  the  telecommunications  sector,  OCBO  also  works  closely  with  the  SBAs  Office  of  Size  Standards  to  create  any  necessary  new  telecommunications  small  business 
 size  standards.  To  accomplish  this,  we  also  send  the  SBA  descriptions  and  analyses  of  proposed  size  standards  prior  to  the  Commissions  adoption  of  a  Notice  of  Proposed  Rulemaking,  and,  thereafter,  send 
 the  SBA  additional  comments  and  documentation  at  each  stage  of  the  rulemaking  process.  At  the  end  of  the  process,  prior  to  final  Commission  consideration  of  the  new  size  standard,  the  Commission  sends  a 
 formal  request  for  approval  to  the  SBA  Administrator. 
 4.  Unified  Agenda  of  Federal  Regulatory  and  Deregulatory  Actions 
 135.  OCBO  submits  a  Report  for  publication  in  the  semi-  annual  Unified  Agenda  of  Federal  Regulatory  and  Deregulatory  Actions  (Unified  Agenda),  which  provides  information  to  the  public 


 regarding  Commission  regulations  under  development.  115  The  Unified  Agenda  has  appeared  in  the  Federal  Register  twice  each  year  since  1983.  It  helps  governmental  agencies  comply  with  their 


 112  FCC  Office  of  Communications  Business  Opportunities  Hosts  Small  Business  Regulatory  Training  Program, 
 News  Release  (Nov.  6,  2003). 


 113  See  5  U.  S.  C.    610. 


 114  See  15  U.  S.  C.    632. 
 115  See  5  U.  S.  C.    602.  The  Government  Services  Administrations  Regulatory  Information  Service  Center 
 publishes  the  Unified  Agenda  in  the  Spring  and  Fall  of  each  year. 
42
 Federal  Communications  Commission  FCC  03-  335 
 43 
 obligations  under  the  RFA,  other  statutes,  and  Executive  Orders.  As  a  part  of  the  Fall  2003  Unified  Agenda,  the  Commission  listed  and  described  134  ongoing  rulemaking  proceedings.  116  These 
 descriptions  assist  the  public  in  becoming  involved  in  the  regulatory  process,  and  aid  the  regulated  community  in  complying  with  existing  regulations. 


 5.  Office  of  the  National  Ombudsman 
 136.  OCBO  coordinates  the  Commissions  responses  to  small  entity-  related  enforcement  matters  with  the  SBAs  Office  of  the  National  Ombudsman  (Ombudsman).  One  avenue  for  assistance  is 


 the  Ombudsmans  written  comment  (complaint)  procedures.  Using  a  one  page  Federal  Agency  Appraisal  Form,  a  small  business  may  submit  to  the  Ombudsman  any  complaints,  suggestions,  or  compliments 
 concerning  a  federal  agencys  enforcement  action.  The  Ombudsman  then  forwards  the  form,  along  with  any  other  documentation,  to  the  agency  for  review.  OCBO  is  certified  as  the  Commissions  formal 
 contact  for  this  function.  OCBO  also  annually  attends  an  Ombudsman  public  hearing,  during  which  OCBO  describes  the  Commissions  efforts  to  assist  small  entities  with  the  Commissions  enforcement 
 programs.  OCBO,  in  coordination  with  the  Enforcement  Bureau,  responds  to  a  number  of  inquiries  during  the  year  and  sends  an  annual  letter  to  the  Ombudsman  describing  the  Commissions  enforcement 
 initiatives  on  behalf  of  small  entities.  Annually,  the  Ombudsman  submits  a  report  to  Congress  in  which  it  describes  the  efforts  of  federal  agencies,  including  the  Commission. 


 6.  White  House  Initiative  on  Asian  Americans  and  Pacific  Islanders 
 137.  President  Bush  signed  Executive  Order  13216  on  June  6,  2001,  committing  his  administration  to  increase  opportunities  and  improve  the  quality  of  life  for  Asian  Americans  and  Pacific 


 Islanders  (AAPIs)  through  greater  participation  in  federal  programs  where  they  may  be  underserved.  117  To  implement  its  mandate,  the  Executive  Order  designated  the  Secretary  of  the  Department  of  Health  and 
 Human  Services  to  initiate  a  federal  Inter-  agency  Working  Group  (IWG).  The  IWG,  which  consists  of  representatives  of  thirty-  four  participating  federal  agencies,  oversees  the  development  of  all  federal 
 policies  and  initiatives  addressing  AAPI  populations,  particularly  with  respect  to  the  development  of  programs  and  services  for  underserved  AAPI  populations. 


 138.  OCBOs  Director  is  the  Commissions  representative  to  the  IWG.  A  separate  group,  the  Coordinating  Committee  (CC),  was  created  to  implement  the  policies  and  programs  designed  by  the  IWG. 
 The  CC  consists  of  staff  members  selected  from  each  of  the  thirty-  four  currently  involved  federal  departments  and  agencies.  At  present,  an  OCBO  Attorney-  Adviser  serves  on  the  CC. 


 139.  Given  our  mission  to  promote  business  opportunities  in  telecommunications,  we  have  focused  our  efforts  on  promotion  of  AAPI  economic  and  community  development  and  on  health-  related 
 issues.  We  seek  to  cooperate  with  other  agencies  that  are  interested  in  using  telecommunications  technologies  to  provide  business  related  information  services,  and  healthcare  and  other  services,  to  rural, 
 remote,  and  otherwise  underserved  populations. 
 F.  Office  of  Engineering  and  Technology 
 140.  The  Office  of  Engineering  and  Technology  took  several  actions  in  the  last  three  years  intended  to  remove  barriers  and  lessen  burdens  for  small  businesses.  It  reduced  time  to  market  and 


 regulatory  costs  for  new  unlicensed  devices  by  expanding  the  role  of  domestic  Telecommunications  Certification  Bodies  (TCB)  and  by  pursuing  additional  Mutual  Recognition  Agreements  (MRA)  to  ease 


 116  The  Spring  2003  Unified  Agenda  included  128  Commission  rulemakings.  See  68  Fed.  Reg.  31,  310-  01  (2003). 
 117  President  Clinton  signed  the  underlying  Executive  Order,  No.  13125,  on  June  7,  1999. 
43
 Federal  Communications  Commission  FCC  03-  335 
 44 
 the  marketing  of  domestically-  produced  devices  in  other  countries.  It  also  expanded  its  Electronic  Equipment  Authorization  System  to  increase  public  access  to  information  about  equipment.  To  provide 
 additional  entrepreneurial  opportunities  and  to  provide  better  tools  for  all  businesses,  the  Commission  enabled  a  proliferation  of  innovative  unlicensed  devices,  advanced  ultra-  wideband  (UWB)  technology, 
 and  is  exploring  the  capability  of  the  countrys  electrical  utility  infrastructure  to  carry  broadband  service.  In  addition,  it  enhanced  the  capabilities  for  users  of  the  Low  Power  Radio  Service  (LPRS)  and  the 
 Broadcast  Auxiliary  Service  (BAS),  and  established  a  Wireless  Medical  Telemetry  Service  (WMTS),  whose  device  providers  include  small  businesses.  The  Chairman  convened  a  Spectrum  Policy  Task  Force 
 (SPTF)  to  provide  recommendations  to  the  Commission  on  changes  to  spectrum  policy  that  could  increase  the  public  benefits  derived  from  the  use  of  the  radio  spectrum.  The  SPTFs  recommendations 
 include  policies  that  will  provide  greater  market  access  for  new  technologies  and  service,  which  are,  very  often,  the  province  of  entrepreneurs  and  small  businesses. 


 1.  Telecommunications  Certification  Bodies 
 141.  The  Commission  is  taking  several  actions  to  streamline  further  and  simplify  the  processes  for  authorization  of  equipment.  The  Commission  established  standardized  testing  procedures  and 


 undertook  regular  and  extensive  training  of  the  private  TCBs  to  expand  the  types  of  equipment  that  the  TCBs  can  authorize.  As  a  result,  TCB  authorizations  increased  eight  to  nine  times  in  the  last  three  years, 
 speeding  new  devices  to  market  for  the  benefit  of  the  numerous  small  companies  whose  devices  are  subject  to  the  equipment  approval  process.  Additionally,  this  increased  the  workload  and  productivity  of 
 the  independent  test  labs  that  provide  this  and  related  services. 
 2.  Mutual  Recognition  Agreements 
 142.  The  Commission  also  significantly  expanded  its  MRAs  with  other  countries,  whereby  the  signatories  to  an  MRA  mutually  agree  to  recognize  the  equipment  authorizations  provided  by  authorized 


 laboratories  or  other  authorized  entities,  thereby  greatly  increasing  the  ease  of  international  marketing  for  makers  of  all  kinds  of  equipment.  As  of  July  2003,  there  were  over  160  small  businesses  designated  to 
 test  or  approve  equipment  to  foreign  technical  requirements.  The  list  of  designated  U.  S.  Conformity  Assessment  Bodies  (CABs),  as  well  as  the  list  of  participating  countries,  continues  to  grow.  These 
 measures  enhance  market  opportunities  for  small  businesses  and  manufacturers  that  supply  parts  and  services  to  telecommunications  service  providers,  and  also  to  those  that  engage  in  compliance  testing  of 
 equipment,  all  fifteen  of  which  are  small  start-  up  enterprises.  These  measures  also  promote  competition  in  the  provision  of  telecommunications  products  and  electronic  equipment  and  speed  delivery  of  products 
 to  the  public. 
 3.  Electronic  Equipment  Authorization 
 143.  The  Commission  also  continues  expansion  of  the  Electronic  Equipment  Authorization  System.  In  the  last  three  years,  the  Commission  increased  public  access  to  equipment  authorization  by: 


 (1)  making  all  application  information  (except  confidential  and  pending  information)  electronically  available  to  all  users  via  the  Internet;  (2)  increased  Internet  search  options  allowing  greater  flexibility  in 
 accessing  equipment  authorization  information;  and  (3)  revising  approximately  75%  of  all  web  pages  to  be  Section  508  compliant,  thereby  increasing  accessibility  to  all  users. 


 4.  Spectrum  Management 
 144.  Through  various  spectrum  management  efforts,  the  Commission  endeavors  to  facilitate  new  and  innovative  services  and  to  encourage  the  involvement  of  small  entities  and  entrepreneurs  in 


 telecommunications.  Specifically,  the  Commission  enabled  the  proliferation  of  unlicensed  services. 
44
 Federal  Communications  Commission  FCC  03-  335 
 45 
 First,  the  Commission  revised  its  rules  for  spread  spectrum  devices  to  facilitate  the  development  of  new  and  innovative  technology  that  is  often  used  for  wireless  applications  that  employ  high  data  rates.  118  In 
 particular,  it  revised  the  rules  for  Spread  Spectrum  Devices  to  allow  greater  flexibility  for  different  types  of  modulation  and  transmission  systems.  This  allows  manufacturers  flexibility  to  design  and  market  a 
 more  diverse  set  of  products  that  operate  efficiently  in  the  unlicensed  bands.  The  rule  changes  will  also  allow  for  greater  spectrum  sharing  by  removing  regulatory  barriers  to  the  introduction  of  new  non-interfering 
 technologies.  The  Commission  also  proposed  revisions  to  its  Part  2  and  Part  15  Rules  to  permit  the  use  of  advanced  antenna  technologies  and  ease  antenna  replacement  restrictions  for  Part  15 
 devices.  These  changes  would  significantly  enhance  the  ability  of  wireless  internet  service  providers  (WISPs),  especially  in  rural  areas,  where  start-  up  companies  are  beginning  to  provide  high-  speed  date 
 service.  119  The  same  initiative  looks  at  ways  to  provide  greater  flexibility  in  the  approval  and  use  of  component  or  modular  transmission  systems,  many  of  whose  component  parts  small  companies 
 manufacture.  120  The  Commission  also  provided  for  wireless  medical  telemetry  service  in  Part  95,  as  well  as  the  current  bands  in  Part  15.  Additionally,  it  harmonized  its  AC  line  conducted  limits  in  Parts  15  and 
 18  with  the  international  limits  in  Comit  International  Spcial  des  Perturbations  Radiolectriques  (CISPR)  Publication  22.  121  This  will  help  manufacturers  make  one  piece  of  equipment  that  can  be  sold 
 worldwide  instead  of  making  multiple  products  to  meet  different  national  standards.  In  turn,  this  will  reduce  consumer  costs  and  increase  business  profits. 


 5.  Ultra-  Wideband  Technology 
 145.  The  Commission  continues  to  promote  the  development  and  deployment  of  one  of  the  newest  innovative  wireless  offerings:  UWB  technology.  UWB  technology  can  be  employed  for  a  vast 


 array  of  new  applications  that  have  the  potential  to  provide  significant  benefits  for  businesses  and  consumers.  Examples  of  UWB  applications  include  radar  imaging  of  objects  buried  under  the  ground  or 
 behind  walls,  and  short-  range,  high-  speed  data  transmissions.  Small  businesses  manufacture  these  devices,  which  provide  important  survey  information  for  architects,  planners,  builders,  and  a  variety  of  public  and 
 private  infrastructure  participants,  many  of  which  are  small  businesses.  The  Commission  began  investigating  UWB  technology  in  1998,  122  and  established  regulations  that  permitted  the  marketing  and 
 operation  of  certain  types  of  new  products  incorporating  UWB  technology  in  2002.  123  Most  recently,  the  Commission  affirmed  the  existing  UWB  rules  with  the  expectation  that  a  variety  of  new  UWB  devices  will 
 be  deployed  in  the  next  twelve  to  eighteen  months.  124 


 118  Amendment  of  Part  15  of  the  Commissions  Rules  Regarding  Spread  Spectrum  Devices,  Report  and  Order,  17 
 FCC  Rcd  10,  755  (2002). 
 119  Modification  of  Parts  2  and  15  of  the  Commissions  Rules  for  Unlicensed  Devices  and  Equipment  Authorization, 
 Notice  of  Proposed  Rulemaking,  2003  WL  22136267  (2003). 


 120  Id. 


 121  The  English  translation  is  International  Special  Committee  on  Interference. 
 122  Revision  of  Part  15  of  the  Commissions  Rules  Regarding  Ultra-  Wideband  Transmission  Systems,  FCC  98-  208, 
 Notice  of  Inquiry,  13  FCC  Rcd  16,  376  (1998);  Notice  of  Proposed  Rulemaking,  12  FCC  Rcd  12,  086  (2000). 


 123  Revision  of  Part  15  of  the  Commissions  Rules  Regarding  Ultra-  Wideband  Transmission  Systems,  First  Report 
 and  Order,  17  FCC  Rcd  7435  (2002),  Erratum,  17  FCC  Rcd  10,  505  (2002). 
 124  Revision  of  Part  15  of  the  Commissions  Rules  Regarding  Ultra-  Wideband  Transmission  Systems,  Memorandum 
 Opinion  and  Order  and  Further  Notice  of  Proposed  Rule  Making,  18  FCC  Rcd  3857  (2003). 
45
 Federal  Communications  Commission  FCC  03-  335 
 46 
 6.  Broadband  over  Power  Line  and  Wireless  Local  Area  Networks 
 146.  The  Commission  also  engaged  in  several  technical  and  operational  studies  to  support  and  promote  new  technologies  that  both  aid  small  business  operations  and  also  directly  provide  new 


 opportunities  for  small  businesses.  These  include  broadband  over  power  line  (BPL),  which  would  provide  Internet  service  over  the  existing  power  grid,  enhancing  broadband  access  for  all  businesses  and 
 providing  business  opportunities  for  the  suppliers  of  this  equipment  and  technology.  Another  example  is  wireless  local  area  networks  (WLANs),  which  greatly  increase  business  flexibility  and  productivity,  and 
 provide  manufacturing  and  marketing  opportunities  for  suppliers  of  this  equipment  and  service. 
 147.  In  April  2003,  the  Commission  initiated  a  Notice  of  Inquiry  to  obtain  information  on  a  variety  of  issues  related  to  BPL  systems.  125  BPL  technologies  could  play  an  important  role  in  providing 
 additional  competition  in  the  offering  of  broadband  infrastructure  to  all  entities,  regardless  of  their  size  or  location.  For  example,  BPL  could  offer  Internet  and  high-  speed  broadband  access  to  businesses  and 
 entrepreneurs  in  rural  and  underserved  areas  places  that  are  difficult  to  serve  due  to  the  high  costs  associated  with  upgrading  existing  infrastructure  and  interconnecting  communication  nodes  with  new 
 technologies. 
 7.  Low  Power  Radio  Service 
 148.  In  addition,  the  Commission  elevated  the  LPRS  in  the  216-  217  MHz  band  from  secondary  to  primary  status.  This  action  will  protect  the  investment  various  businesses  have  made  in 


 LPRS  devices  for  use  at  such  locations  as  theaters,  arenas,  and  stadiums.  126 
 8.  Wireless  Medical  Telemetry  Service 
 149.  Similarly,  the  Commission  allocated  the  bands  608-  614  MHz,  1395-  1400  MHz,  and  1429-  1432  MHz  to  the  WMTS  used  in  hospitals  and  other  medical  facilities.  This  action  provides  much 


 needed,  dedicated  spectrum  to  WMTS  devices  that  were  experiencing  interference  due  to  operating  in  the  television  and  land  mobile  bands.  127  Subsequent  to  that  action,  the  Commission  further  modified  the 
 WMTS  allocation  by  relocating  the  WMTS  to  the  1427-  1429.5  MHz  band  from  the  1429-  1432  MHz  band  to  allow  licensees  to  use  the  spectrum  more  efficiently  because  the  spectrum  sharing  environment  will  be 
 more  favorable  at  the  lower  end  of  the  band.  128 
 9.  Broadcast  Auxiliary  Service 
 150.  The  Commission  also  took  action  to  simplify  and  expand  opportunity  for  aural  and  TV  BAS  licensees  to  use  digital  modulation  techniques  in  all  of  their  allocated  frequency  bands.  This  action 


 eliminated  the  need  for  entities  to  file  requests  for  waivers  and  Special  Temporary  Authority  (STA),  thus 


 125  Inquiry  Regarding  Carrier  Current  Systems,  including  Broadband  over  Power  Line  Systems,  Notice  of  Inquiry,  18 
 FCC  Rcd  8498  (2003). 


 126  Reallocation  of  the  216-  220  MHz,  1390-  1395  MHz,  1427-  1429  MHz,  1429-  1432  MHz,  1432-  1435  MHz 
 Government  Transfer  Bands,  and  Amendment  of  Parts  2  and  95  of  the  Commission's  Rules  to  Create  a  Wireless  Medical  Telemetry  Service,  and  Amendments  to  Part  90  of  the  Commission's  Rules  Concerning  Private  Land  Mobile 


 Radio  Services,  Report  and  Order,  17  FCC  Rcd  368  (2002). 
 127  Amendment  of  Parts  2  and  95  of  the  Commission's  Rules  to  Create  a  Wireless  Medical  Telemetry  Service,  ET 
 Docket  99-  255,  Report  and  Order,  15  FCC  Rcd  11,  206  (2000). 


 128  See  supra  n.  126. 
46
 Federal  Communications  Commission  FCC  03-  335 
 47 
 saving  businesses  the  time  it  takes  to  prepare  these  requests  and  their  associated  filing  fees.  This  decision  also  injected  more  flexibility  into  the  rules  so  that  entities  can  better  design  their  systems  to  perform  more 
 reliably  at  reduced  cost.  The  Commission  also  permitted  motion  picture  and  television  producers  to  operate  new  wireless  assist  video  devices  on  certain  unused  VHF  and  UHF  TV  channels.  This  will 
 provide  a  more  cost  effective  means  for  producers  to  monitor  multiple  camera  angles  when  producing  program  material.  129 


 10.  Spectrum  Policy  Task  Force 
 151.  The  Chairman  convened  a  SPTF  to  provide  recommendations  to  the  Commission  on  changes  to  spectrum  policy  that  could  increase  the  public  benefits  derived  from  the  use  of  radio  spectrum. 


 In  creating  the  SPTF,  the  Chairman  initiated  the  first  ever  comprehensive  and  systematic  review  of  spectrum  policy  at  the  Commission.  130  The  SPTF  made  many  recommendations  designed  to  assist 
 licensees  and  manufacturers  of  all  sizes.  A  prominent  element  of  the  SPTFs  recommendations  was  its  conclusion  that  spectrum  access  was  more  of  a  problem  than  spectrum  scarcity  and  that  the  Commission 
 should  work  to  increase  opportunities  for  technologically  innovative  and  economically  efficient  spectrum  use.  In  other  words,  the  SPTFs  recommendations  were  shaped  by  the  general  conclusion  that  spectrum 
 policy  must  evolve  towards  more  flexible  and  market-  oriented  regulatory  models.  These  policies  countenance  greater  market  access  for  new  technologies  and  services,  which  are,  very  often,  the  province 
 of  entrepreneurs  and  small  businesses.  Further,  the  SPTF  recommended  that  the  Commission  consider  a  balance  among  three  general  models  for  assigning  spectrum  usage  rights:  (1)  an  exclusive  use  model; 
 (2)  a  commons  model,  and  (3)  a  command  and  control  model.  By  applying  each  of  these  models  appropriately,  the  SPTF  concluded  that  all  entities  would  potentially  be  able  to  gain  more  flexibility  in 
 more  spectrum.  With  respect  to  rural  areas,  the  SPTF  stated  that  the  Commission  should  explore  ways  to  promote  spectrum  access  and  flexibility,  including  flexible  regulation  of  power  levels,  utilization  of 
 secondary  markets  mechanisms  to  encourage  leasing  of  spectrum  usage  rights,  and  consideration  of  rural  issues  in  defining  geographic  licensing  areas. 


 152.  The  Commission  also  continues  its  efforts  to  provide  accessible  information  to  the  public,  small  businesses,  local  governments,  manufacturers,  and  telecommunications  service  providers.  For 
 example,  the  Commission  created  a  Radio  Spectrum  Home  Page  on  the  Internet  so  that  entities  can  more  easily  research  spectrum  issues  that  affect  their  operations.  131 


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


 G.  Wireless  Telecommunications  Bureau 
 154.  During  the  past  three  years,  the  Wireless  Telecommunications  Bureau  initiated  and  advanced  several  new  rulemaking  proceedings,  as  well  as  continued  to  implement  ongoing  policies, 


 129  Revisions  to  Broadcast  Auxiliary  Rules  in  Part  74  and  Conforming  Technical  Rules  for  Broadcast  Auxiliary 
 Service,  Cable  Television  Relay  Service  and  Fixed  Services  in  Parts  74,  78,  and  101  of  the  Commission's  Rules,  Report  and  Order,  17  FCC  Rcd  22,  979  (2002). 


 130  See  Spectrum  Policy  Task  Force  Report,  ET  Docket  No.  02-  135  (rel.  Nov.  2002)  (SPTF  Report).  The  SPTF 
 Report  and  other  related  materials  can  be  found  at  www.  fcc.  gov/  sptf.  See  also  Commission  Seeks  Public  Comment  on  Spectrum  Policy  Task  Force  Report,  Public  Notice,  17  FCC  Rcd  24,  316  (2002). 


 131  http://  www.  fcc.  gov/  oet/  spectrum/. 
47
 Federal  Communications  Commission  FCC  03-  335 
 48 
 which  reduce  barriers  to  entry  for  small  businesses.  The  initiatives  concerning  secondary  markets,  rural  access,  and  tribal  lands  enhance  the  ability  of  small  businesses  and  entrepreneurs  to  obtain  access  to 
 wireless  spectrum  and  provide  new  services.  Through  continued  implementation  of  its  competitive  bidding  procedures  in  recent  auctions,  the  Commission  offers  significant  incentives  to  encourage  the 
 participation  of  small  businesses  in  obtaining  new  wireless  licenses.  The  Commission  also  designed  several  auctions  to  enhance  participation  of  small  businesses  by  offering  license  areas  in  smaller  sizes  that 
 may  be  more  suited  for  such  businesses.  Similarly,  in  band  manager  licensing  the  Commission  improved  opportunities  for  small  businesses  to  obtain  ready  access  to  discrete  portions  of  spectrum,  in  the  amount 
 and  for  the  period  they  need,  consistent  with  their  business  plans.  In  licensing  policies  that  permit  sharing  of  spectrum  among  private  wireless  service  licensees,  the  Commission  enables  small  businesses  in  the 
 same  geographic  area  to  meet  their  respective  needs  by  combining  limited  resources  to  use  transmitters  and  equipment  services  offered  by  a  single  provider  under  multiple  licensing.  Finally,  through  its 
 recent  actions  to  streamline  several  service  rules,  add  flexibility  to  construction  requirements,  expand  outreach  efforts  to  explain  its  policies  and  processes,  improve  license  application  and  filing  procedures, 
 lessen  reporting  requirements,  and  develop  implementation  schedules  more  appropriate  for  small  businesses,  the  Commission  continues  to  act  to  reduce  burdens  on  small  businesses  and  facilitate  their 
 entry  into  the  field  of  wireless  radio  service  providers. 
 1.  Secondary  Markets 
 155.  The  Commission  is  making  significant  advances  in  facilitating  broader  access  to  the  valuable  wireless  spectrum  resource  by  a  variety  of  entities,  including  entrepreneurs  and  small  businesses, 


 through  the  development  of  secondary  markets  in  wireless  radio  spectrum.  In  November  2000,  the  Commission  concurrently  adopted  a  Policy  Statement  and  a  Notice  of  Proposed  Rulemaking  (Secondary 
 Markets  NPRM),  in  which  it  proposed  a  framework  to  enable  the  development  of  these  secondary  markets.  132  The  Commission  set  forth  several  goals  to  guide  its  efforts  to  eliminate  regulatory  barriers 
 that  hinder  access  to  spectrum  and  to  promote  more  efficient  use  of  spectrum.  As  discussed  in  the  Secondary  Markets  NPRM,  these  goals  include  removing  regulatory  uncertainty  and  establishing  clear 
 policies  and  rules  concerning  spectrum  leasing  arrangements  in  the  wireless  radio  services.  133  Recently,  the  SPTF  strongly  endorsed  this  approach,  as  well  as  other  Commission  efforts  to  promote  access  to 
 spectrum  through  secondary  markets.  134 
 156.  In  May  2003,  the  Commission  adopted  a  Report  and  Order  (Secondary  Markets  Report  and  Order),  in  which  it  implemented  policies  and  procedures  to  facilitate  two  different  categories  of 
 spectrum  leasing  arrangements.  These  changes  further  the  ability  of  licensees  and  entities  that  seek  to  gain  access  to  spectrum,  including  entrepreneurs  and  small  businesses,  to  enter  into  arrangements  best 
 suited  the  parties  respective  needs  and  business  models.  135  Consistent  with  the  goals  of  the  Secondary 
 132  See  generally  Principles  for  Promoting  Efficient  Use  of  Spectrum  By  Encouraging  the  Development  of  Secondary 
 Markets,  Policy  Statement,  15  FCC  Rcd  24,  178  (2000)  (Policy  Statement);  Promoting  Efficient  Use  of  Spectrum  Through  Elimination  of  Barriers  to  the  Development  of  Secondary  Markets,  Notice  of  Proposed  Rulemaking,  15 


 FCC  Rcd  24,  203  (2000)  (Secondary  Markets  NPRM). 
 133  See  Secondary  Markets  NPRM,  15  FCC  Rcd  at  24,  204-  05,  paras.  1-  4.  In  particular,  the  Commission  proposed  to 
 remove  regulatory  uncertainty  and  clarify  the  respective  responsibilities  of  licensees,  spectrum  lessees,  and  the  Commission  with  regard  to  spectrum  leasing  arrangements,  all  in  a  manner  consistent  with  our  statutory  mandates 


 and  public  interest  objectives.  See  id.  at  24,215-  15,  paras.  27-  62,  24,  227-  33,  paras.  70-  82. 
 134  See  supra,  para.  151  and  n.  130. 


 135  Promoting  Efficient  Use  of  Spectrum  Through  Elimination  of  Barriers  to  the  Development  of  Secondary  Markets, 
 Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  18  FCC  Rcd  20,  604  (2003)  (Secondary  Markets  Report  and  Order). 
48
 Federal  Communications  Commission  FCC  03-  335 
 49 
 Markets  NPRM,  the  Commission  designed  this  framework  to:  (1)  remove  unnecessary  regulatory  barriers  to  the  development  of  secondary  markets  in  spectrum  usage  rights;  and  (2)  create  significantly  broader 
 access  to  valuable  spectrum  resources  by  enabling  a  wide  array  of  facilities-  based  providers  of  broadband  and  other  communications  services  to  enter  into  spectrum  leasing  arrangements  with  wireless  radio 
 service  licensees.  Facilitating  the  development  of  secondary  markets  enhances  and  complements  several  of  the  Commissions  major  policy  initiatives  and  public  interest  objectives,  including  significant  efforts  to 
 enhance  economic  opportunities  and  access  for  the  provision  of  telecommunications  services  by  designated  entities,  including  small  businesses,  rural  telephone  companies,  and  businesses  owned  by 
 members  of  minority  groups  and  women. 
 2.  Rural  Initiatives 
 157.  The  Commission  continues  to  pursue  innovative  policies  to  enhance  access  to  spectrum  by  rural  services  providers,  including  small  businesses.  In  December  2002,  the  Commission  commenced 


 a  proceeding  with  the  issuance  of  a  Notice  of  Inquiry  (Rural  Notice  of  Inquiry)  seeking  comment  on  the  effectiveness  of  its  current  regulatory  tools  in  facilitating  the  delivery  of  spectrum-  based  services  to  rural 
 areas.  136  In  addition,  we  requested  comment  on  the  extent  to  which  rural  telephone  companies  and  other  entities  seeking  to  serve  rural  areas  have  opportunities  to  acquire  spectrum  and  provide  spectrum-  based 
 services  pursuant  to  Sections  309(  j)(  3)  and  309(  j)(  4)  of  the  Communications  Act.  137 
 158.  In  September  2003,  the  Commission  adopted  a  Notice  of  Proposed  Rulemaking  (Rural  Access  NPRM),  in  which  the  Commission  continues  to  examine  ways  to  promote  the  rapid  and  efficient 
 deployment  of  quality  spectrum-  based  services  in  rural  areas.  138  The  Rural  Access  NPRM  builds  upon  the  record  developed  in  response  to  the  Rural  Notice  of  Inquiry,  including  comments  as  to  how  the 
 Commission  could  modify  its  policies  to  encourage  further  the  provision  of  wireless  services  in  rural  areas.  The  Rural  Access  NPRM  also  draws  upon  the  findings  and  recommendations  of  the  SPTF,  which 
 identified  and  evaluated  potential  changes  in  the  Commissions  spectrum  policy  that  would  increase  public  benefits  from  spectrum-  based  services.  139  As  a  complement  to  the  measures  the  Commission  took, 
 the  proposals  set  forth  in  the  Rural  Access  NPRM  seek  to  minimize  regulatory  costs  and  eliminate  unnecessary  regulatory  barriers  to  the  deployment  of  spectrum-  based  services  in  rural  areas.  As  reflected 
 in  the  proposals  set  forth  in  the  Rural  Access  NPRM,  the  Commission  believes  there  are  additional  spectrum  policy  initiatives  it  can  adopt  to  reduce  the  overall  cost  of  regulation  and  increase  flexibility  in  a 
 manner  that  will  facilitate  access,  capital  formation,  build-  out,  and  coverage  in  rural  areas. 


 136  Facilitating  the  Provision  of  Spectrum-  Based  Services  to  Rural  Areas  and  Promoting  Opportunities  for  Rural 
 Telephone  Companies  to  Provide  Spectrum-  Based  Services,  Notice  of  Inquiry,  17  FCC  Rcd  25,  554  (2002)  (Rural  Notice  of  Inquiry). 


 137  Id.  Section  309(  j)(  3)  generally  requires  the  Commission  to  promote  the  development  and  rapid  deployment  of 
 new  technologies,  products  and  services  for  the  benefit  of  the  public,  including  those  residing  in  rural  areas,  without  administrative  or  judicial  delays.  It  further  requires  the  Commission  to  promote  opportunity  and  competition  by 


 avoiding  excessive  concentration  of  licenses  and  by  disseminating  licenses  among  a  wide  variety  of  applicants,  including  small  businesses,  rural  telephone  companies,  and  businesses  owned  by  members  of  minority  groups  and 
 women.  See  generally  47  U.  S.  C.    309(  j)(  3).  Section  309(  j)(  4)(  D)  requires  that  in  prescribing  regulations,  the  Commission  ensure  that  small  business    and  businesses  owned  by  members  of  minority  groups  and  women  are 
 given  the  opportunity  to  participate  in  the  provision  of  spectrum-  based  services,  and  for  such  purposes,  consider  the  use  of  tax  certificates,  bidding  preferences,  and  other  procedures.  See  id.    309(  j)(  4)(  D). 


 138  Facilitating  the  Provision  of  Spectrum-  Based  Services  to  Rural  Areas  and  Promoting  Opportunities  for  Rural 
 Telephone  Companies  to  Provide  Spectrum-  Based  Services,  18  FCC  Rcd  20,  802  (2003)  (Rural  Access  NPRM). 


 139  See  supra,  para.  151  and  n.  130. 
49
 Federal  Communications  Commission  FCC  03-  335 
 50 
 3.  Tribal  Lands  Initiatives 
 159.  Similar  to  our  actions  in  the  Rural  Access  NPRM  to  promote  the  deployment  of  services  in  rural  areas,  in  June  2000,  the  Commission  adopted  a  Report  and  Order  and  Further  Notice  of  Proposed 


 Rulemaking,  in  which  the  Commission  adopts  rules  and  policies  that  provide  incentives  for  wireless  telecommunications  carriers  to  serve  individuals  living  on  underserved  tribal  lands.  140  As  the 
 Commission  stated  previously,  Congress,  through  the  Telecommunications  Act  of  1996,  instructed  the  Commission  to  help  ensure  that  all  Americans  have  access  to  affordable  telecommunications  services.  141 
 Because  many  tribal  lands,  particularly  those  in  the  western  U.  S.,  are  geographically  isolated,  142  obtaining  the  lowest  cost  for  providing  basic  telephone  service  to  the  reservation  population  may  often  require  use 
 of  a  terrestrial  wireless  technology,  a  satellite  technology,  or  a  combination  of  both.  Terrestrial  wireless  technology  includes  both  mobile  services,  such  as  cellular  and  personal  communications  service  (PCS), 
 and  fixed  wireless  local  loop  services. 
 160.  In  March,  2003,  the  Commission  adopted  a  Second  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rulemaking,  in  which  it  extended  the  certification  period  from  ninety  days  to 
 180  days  to  provide  licensees  and  tribal  authorities  more  time  to  complete  the  certification  process.  143  Also,  in  order  to  seek  further  ways  to  encourage  greater  participation  in  the  existing  tribal  lands  bidding 
 credit  program,  the  Commission  sought  additional  comment  on  whether  it  should  make  certain  modifications  to  the  program,  including:  (1)  reconsidering  the  current  construction  obligations  on  carriers 
 utilizing  the  tribal  lands  bidding  credit;  (2)  possible  modifications  to  the  bidding  credit  amount  and  methodology;  (3)  accounting  for  year  2000  Census  information  regarding  tribal  lands  penetration  rates; 
 and  (4)  giving  credit  to  tribal  lands  carriers  for  providing  service  to  non-  tribal  lands  with  comparably  low  penetration  rates.  144 


 4.  Competitive  Bidding  Incentives 
 161.  The  Commission  continues  to  offer  a  number  of  incentives  to  encourage  the  participation  of  small  businesses  in  the  auction  process,  consistent  with  the  mandates  set  forth  in  Section  309(  j)  of  the 


 Communications  Act.  145  For  example,  in  the  auction  of  broadband  PCS  licenses,  the  Commission 
 140  Extending  Wireless  Telecommunications  Services  to  Tribal  Lands,  Report  and  Order  and  Further  Notice  of 
 Proposed  Rulemaking,  15  FCC  Rcd  11,  794  (2000). 


 141  See,  e.  g.,  Truth-  in-  Billing  and  Billing  Format,  First  Report  and  Order  and  Further  Notice  of  Proposed 
 Rulemaking,  14  FCC  Rcd  7492,  7523-  24,  para.  51,  Errata,  14  FCC  Rcd  17,  090  (1999).  See  also  Telecommunications  Act  of  1996,    706. 


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


 143  Extending  Wireless  Telecommunications  Services  to  Tribal  Lands,  Second  Report  and  Order  and  Second  Further 
 Notice  of  Proposed  Rulemaking,  18  FCC  Rcd  4775  (2003). 
 144  Id.  at  4783-  88,  paras.  21-  35. 


 145  The  Omnibus  Budget  Reconciliation  Act  of  1993  added  Section  309(  j)  to  the  Communications  Act.  See  Pub.  L. 
 No.  103-  66,  Title  VI,    6002(  a),  107  Stat.  312,  387  (1993).  Section  309(  j)  originally  authorized  the  Commission  to  employ  competitive  bidding  to  choose  from  among  mutually  exclusive  applications  for  initial  licenses  in  services 


 where  the  licensee  receives  compensation  from  subscribers.  In  1997,  Congress  expanded  the  Commissions  auction  authority.  Specifically,  the  Balanced  Budget  Act  of  1997  amended  Section  309(  j)(  1)  to  require  the  Commission  to 
 award  mutually  exclusive  applications  for  initial  licenses  or  permits  using  competitive  bidding  procedures,  except  in  limited  circumstances.  See  47  U.  S.  C.    309(  j)(  1)  (as  amended  by  the  Balanced  Budget  Act  of  1997,    3002).  As 
 (continued....) 
50
 Federal  Communications  Commission  FCC  03-  335 
 51 
 established  entrepreneurs  blocks  in  which  participation  was  limited  to  applicants  with  $125  million  or  less  in  annual  gross  revenues  for  the  previous  two  years  and  total  assets  of  $500  million  or  less.  146  In 
 addition,  many  auctions  conducted  since  the  2000  Report  offered  small  business  bidding  credits,  which  are  available  to  businesses  whose  gross  revenues  do  not  exceed  a  specific  threshold.  147  The  Commission 
 intends  these  bidding  credits  to  encourage  participation  in  the  competitive  bidding  process  by  entities  that  otherwise  might  have  difficulty  gaining  access  to  capital.  148 


 162.  Recent  statistics  indicate  that  a  significant  portion  of  both  small  businesses  and  rural  telephone  cooperatives  that  participated  in  spectrum  auctions  received  small  business  bidding  credits.  For 
 instance,  in  the  twenty-  nine  auctions  completed  by  the  Commission  as  of  September  18,  2002  that  offered  small  business  bidding  credits,  84%  of  the  qualified  bidders  that  identified  themselves  as  rural  telephone 
 cooperatives  and  79%  of  all  qualified  bidders  were  eligible  to  receive  a  small  business  bidding  credit.  149  Other  incentives  the  Commission  designed  to  encourage  auction  participation  by  small  businesses  have, 
 in  the  past,  included  reduced  upfront  payments,  150  installment  payment  plans  with  favorable  interest 
 (...  continued  from  previous  page)  noted  previously,  Section  309(  j)(  3)  requires  the  Commission  to  promote  opportunity  and  competition,  inter  alia,  by 
 avoiding  excessive  concentration  of  licenses  and  by  disseminating  licenses  among  a  wide  variety  of  applicants,  including  small  businesses,  rural  telephone  companies,  and  businesses  owned  by  members  of  minority  groups  and 
 women.  See  generally  47  U.  S.  C.    309(  j)(  3).  Section  309(  j)(  4)(  D)  requires  that  the  Commission  seek  to  ensure  that  small  business    and  businesses  owned  by  members  of  minority  groups  and  women  are  given  the  opportunity 
 to  participate  in  the  provision  of  spectrum-  based  services,  and  for  such  purposes,  consider  the  use  of  tax  certificates,  bidding  preferences,  and  other  procedures.  In  the  2000  Report,  the  Commission  acknowledged  the  challenges  that 
 small  businesses  face  in  their  efforts  to  acquire  geographic  area  licenses.  Accordingly,  many  of  the  Commissions  spectrum  assignment  and  wireless  licensing  procedures  serve  to  facilitate  market  opportunities  for  small  businesses. 


 146  Implementation  of  Section  309(  j)  of  the  Communications  Act  Competitive  Bidding,  Fifth  Report  and  Order,  9 
 FCC  Rcd  5522,  5585,  para.  121  (1994)  (Competitive  Bidding  Fifth  Report  and  Order);  see  also  Implementation  of  Section  309(  j)  of  the  Communications  Act  Competitive  Bidding,  Sixth  Report  and  Order,  11  FCC  Rcd  136  (1995). 


 147  See,  e.  g.,  Reallocation  and  Service  Rules  for  the  698-  746  MHz  Spectrum  Band  (Television  Channels  52-  59), 
 Report  and  Order,  17  FCC  Rcd  1022,  1088,  1092,  paras.  173,  178  (2002)  (35%  bidding  credit  for  entrepreneurs,  25%  bidding  credit  for  very  small  businesses,  and  a  15%  bidding  credit  for  small  businesses);  Amendments  to  Parts 


 1,  2,  27  and  90  of  the  Commission's  Rules  to  License  Services  in  the  216-  220  MHz,  1390-  1395  MHz,  1427-  1429  MHz,  Report  and  Order,  17  FCC  Rcd  9980,  10,  022-  23,  para.  106  (2002)  (25%  bidding  credit  for  very  small 
 businesses,  and  a  15%  bidding  credit  for  small  businesses);  Amendment  of  Parts  2  and  25  of  the  Commissions  Rules  to  Permit  Operation  of  NGSO  FSS  Systems  Co-  Frequency  with  GSO  and  Terrestrial  Systems  in  the  Ku-  Band 
 Frequency  Range,  Memorandum  Opinion  and  Order  and  Second  Report  and  Order,  17  FCC  Rcd  9614,  para.  4  (2002)  (15%  bidding  credit  for  entrepreneurs,  25%  bidding  credit  for  small  businesses,  and  a  35%  bidding  credit  for 
 very  small  businesses);  Amendment  of  Commission's  Rules  Concerning  Maritime  Communications,  Second  Memorandum  Opinion  and  Order  and  Fifth  Report  and  Order,  17  FCC  Rcd  6685  (2002)  (25%  bidding  credit  for 
 small  businesses  and  a  35%  bidding  credit  for  very  small  businesses);  Amendments  to  Parts  1,  2,  87  and  101  of  the  Commissions  Rules  to  License  Fixed  Service  at  24  GHz,  Report  and  Order,  15  FCC  Rcd  16,  934,  16,  936,  para.  2 
 (2000)  (24  GHz  R&  O);  Amendment  of  the  Commissions  Rules  Regarding  the  37.  0-  38.6  GHz  and  38.  6-  40.  0  GHz  Bands,  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  12  FCC  Rcd  18,  600,  18,  625,  para. 
 47  (1997)  (25%  bidding  credit  for  small  businesses  and  a  35%  bidding  credit  for  very  small  businesses). 
 148  Implementation  of  Section  309(  j)  of  the  Communications  Act  Competitive  Bidding,  Second  Report  and  Order,  9 
 FCC  Rcd  2348,  2391,  para.  242  (1994). 


 149  These  calculations  are  based  on  data  available  at  the  Commissions  Auction  Form  175  database 
 (http://  auctionfiling.  fcc.  gov/  form175/  index.  htm). 
 150  See,  e.  g.,  Competitive  Bidding  Fifth  Report  and  Order,  9  FCC  Rcd  at  5600,  para.  155  (25%  reduction  for  all 
 broadband  PCS  C  block  small  business  applicants). 
51
 Federal  Communications  Commission  FCC  03-  335 
 52 
 rates,  151  and  reduced  down  payments  on  winning  bids.  The  Commission  also  established  an  exemption  for  rural  telephone  cooperatives  from  the  requirement  that  the  gross  revenues  of  entities  controlled  by  an 
 applicants  officers  and  directors  are  attributed  to  the  applicant  for  the  purpose  of  determining  eligibility  for  small  business  preferences,  including  bidding  credits.  152  The  Commission  anticipates  that  this  action 
 will  increase  the  ability  of  rural  telephone  cooperatives  to  participate  in  spectrum  auctions  and  provide  service  in  rural  areas. 


 163.  Finally,  in  2002  the  Commission  took  additional  action  to  facilitate  auction  participation  by  all  entities,  including  small  businesses.  The  Wireless  Telecommunications  Bureau,  pursuant  to 
 delegated  authority  from  the  Commission,  streamlined  competitive  bidding  procedures  for  the  service-specific  competitive  bidding  rules  and  portions  of  the  Part  1  general  competitive  bidding  rules.  153  This 
 action  eliminated  approximately  sixty-  six  pages  of  redundant  and  unnecessary  rules  from  the  Code  of  Federal  Regulations,  154  thereby  providing  clearer  guidance  to  future  auction  participants. 


 151  See,  e.  g.,  Amendment  of  Part  90  of  the  Commissions  Rules  to  Facilitate  Future  Development  of  SMR  Systems  in 
 the  800  MHz  Frequency  Band,  First  Report  and  Order,  Eighth  Report  and  Order,  and  Second  Further  Notice  of  Proposed  Rulemaking,  11  FCC  Rcd  1463,  1574,  para.  248  (1995);  Allocation  of  Spectrum  Below  5  GHz  Transferred 


 from  Federal  Government  Use,  Second  Report  and  Order,  11  FCC  Rcd  624,  662-  663,  paras.  96-  98  (1996).  In  the  Part  1  Third  Report  and  Order,  the  Commission  suspended  the  installment  payment  program.  See  Amendment  of 
 the  Part  1  Rules  Competitive  Bidding  Procedures,  Third  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rulemaking,  13  FCC  Rcd  374,  397-  98,  para.  38  (1997)  (Part  1  Third  Report  and  Order).  The  Commission  noted 
 therein  that  Congress  did  not  require  the  use  of  installment  payments  in  all  auctions,  but,  rather,  recognized  them  as  one  means  of  promoting  the  objectives  of  Section  309(  j)(  3).  Specifically,  Section  309(  j)(  4)  of  the  Communications 
 Act  states  that  the  Commission  shall,  in  prescribing  regulations  pursuant  to  these  objectives  and  others,  consider  alternative  payment  schedules  and  methods  of  calculation,  including  lump  sums  or  guaranteed  installment  payments, 
 with  or  without  royalty  payments,  or  other  schedules  or  methods  that  promote  the  objectives  described  in  paragraph  (3)(  B)  .  .  .  .  See  47  U.  S.  C.    309(  j)(  4)(  A)  (emphasis  added).  Section  3007  of  the  Balanced  Budget  Act  requires 
 that  the  Commission  conduct  certain  future  auctions  in  a  manner  that  ensures  that  all  proceeds  from  such  bidding  are  deposited  in  the  U.  S.  Treasury  not  later  than  September  30,  2002.  See  Section  3001  of  the  Omnibus  Consolidated 
 Appropriations  Act  for  1997,  P.  L.  104-  208,  110  Stat.  3009  (1997).  In  weighing  the  competing  objectives  in  Section  309(  j)  of  promoting  the  development  and  rapid  deployment  of  new  spectrum-  based  services  and  ensuring  that 
 designated  entities  are  given  the  opportunity  to  participate  in  the  provision  of  such  services,  the  Commission  determined  that  installment  payments  should  not  be  used  in  the  immediate  future  until  we  assess  the  efficacy  of  this 
 type  of  program  in  meeting  Congresss  objectives.  Part  1  Third  Report  and  Order,  13  FCC  Rcd  at  397-  98,  para.  38.  In  the  Part  1  Fifth  Report  and  Order,  the  Commission  adhered  to  its  previous  decision  to  suspend  the  installment 
 payment  program.  The  Commission  did  not  receive  any  response  to  our  request  for  comment  on  ways  to  provide  an  effective  installment  payment  program  while  at  the  same  time  minimizing  significant  concerns  (e.  g.,  licensee  default 
 or  difficulty  meeting  financial  obligations  to  the  Commission).  Amendment  of  Part  1  of  the  Commissions  Rules  Competitive  Bidding  Procedures,  Order  on  Reconsideration  of  the  Third  Report  and  Order,  Fifth  Report  and  Order, 
 and  Fourth  Further  Notice  of  Proposed  Rule  Making,  15  FCC  Rcd  15,  293,  15,  321-  22,  paras.  54-  55  (2000). 
 152  See  Amendment  of  Part  1  of  the  Commission's  Rules  Competitive  Bidding  Procedures,  Second  Order  on 
 Reconsideration  of  the  Third  Report  and  Order  and  Order  on  Reconsideration  of  the  Fifth  Report  and  Order,  18  FCC  Rcd  10,  180,  10,  186-  95,  paras.  10-  20  (2003).  A  bidding  credit  is  a  payment  discount  on  a  winning  bid  determined  at 


 the  conclusion  of  the  bidding  process. 
 153  Amendment  of  Parts  1,  21,  22,  24,  25,  27,  73,  74,  80,  90,  95,  100,  and  101  of  the  Commission  Rules  Competitive 
 Bidding,  Order,  17  FCC  Rcd  6534  (WTB  2002)  (Competitive  Bidding  Amendment);  Erratum,  17  FCC  Rcd  11,146  (WTB  2002). 


 154  Competitive  Bidding  Amendments,  17  FCC  Rcd  at  6535,  para  1. 
52
 Federal  Communications  Commission  FCC  03-  335 
 53 
 5.  Small  Geographic  Areas/  Spectrum  Blocks 
 164.  An  additional  means  by  which  the  Commission  seeks  to  enhance  participation  in  spectrum  auctions  is  by  adopting  service  areas  of  various  sizes.  In  a  number  of  services,  for  instance,  we 


 license  areas  of  varying  sizes,  ranging  from  small  to  large,  in  order  to  attract  a  diverse  group  of  prospective  bidders.  155  Larger  entities  may  seek  to  acquire  licenses  that  cover  whole  regions  of  the 
 country,  while  other  entities,  such  as  rural  telephone  cooperatives,  may  be  interested  in  obtaining  licenses  to  serve  only  particular  rural  areas.  After  seeking  comment,  the  Commission  varied  the  size  of  the 
 geographic  service  area  depending  upon  the  nature  of  the  service  provided  and  the  likely  users.  By  continuing  to  vary  the  size  of  the  service  area  based  on  the  needs  of  the  likely  users,  we  will  promote 
 economic  opportunity  for  a  wide  variety  of  applicants,  including  entrepreneurs  and  small  businesses.  Another  way  in  which  the  Commission  seeks  to  enhance  spectrum  auction  participation  is  by  offering  an 
 array  of  spectrum  block  sizes  in  each  geographic  area  to  present  ample  opportunities  for  participation  by  rural  telephone  companies  and  small  businesses.  156 


 165.  The  Commission  recently  auctioned  eighteen  MHz  of  spectrum,  in  two  blocks  of  spectrum,  in  the  lower  700  MHz  band.  The  C  block,  composed  of  twelve  MHz  of  this  spectrum,  which 
 the  Commission  auctioned  in  relatively  small  geographic  area  licenses  (MSAs  and  RSAs)  in  an  effort  to  promote  opportunities  for  small  and  rural  wireless  providers  to  obtain  spectrum.  The  Commission 
 auctioned  six  additional  MHz  of  spectrum  in  the  D  block  in  larger  geographic  area  licenses,  known  as  Economic  Area  Grouping  (EAG).  The  Commission  completed  an  initial  auction  of  the  C  and  D  blocks  of 
 the  Lower  700  MHz  Band  in  September  2002  (Auction  No.  44).  In  that  auction,  102  winning  bidders  won  484  licenses.  Seventy-  two  of  the  winning  bidders  claimed  small  business,  very  small  business,  or 
 entrepreneur  status,  and  obtained  a  total  of  329  licenses.  The  Commission  made  available  the  licenses  that  went  unsold  in  that  auction  in  a  second  auction  (Auction  No.  49),  which  closed  on  June  13,  2003.  In 
 the  second  auction,  thirty-  five  bidders  won  251  licenses,  with  seventeen  of  these  winning  bidders  claiming  small  or  very  small  business  status  and  winning  sixty  licenses,  while  nine  winning  bidders 
 claimed  entrepreneur  status  and  won  154  licenses.  The  Commissions  decision  to  license  a  significant  portion  of  the  Lower  700  MHz  Band  over  these  small  geographic  areas  helped  to  better  balance  the 
 playing  field  such  that  small  and  rural  providers  had  an  opportunity  to  participate  in  the  auction  and  the  provision  of  spectrum-  based  services. 


 6.  Band  Manager  Licensing 
 166.  Following  the  2000  Report,  the  Commission  applied  the  concept  of  band  manager  157  licensing,  which  it  first  created  in  2000  in  the  700  MHz  Guard  Band  Manager  proceeding,  158  to  other 


 155  For  example,  in  the  lower  700  MHz  Band  auction,  we  used  Rural  Service  Areas  (RSAs)  and  Metropolitan 
 Statistical  Areas  (MSAs),  collectively  designated  Cellular  Market  Areas  (CMAs),  of  which  there  are  734  geographic  units  for  the  entire  U.  S.  (306  MSAs  and  428  RSAs).  In  the  800  MHz  Specialized  Mobile  Radio  (Upper  10  MHz), 


 220  MHz,  General  Wireless  Communications  Service  and  Location  and  Monitoring  Service  auctions,  we  used  Economic  Areas  (EAs)  to  license  the  services.  In  the  Local  Multipoint  Distribution  Service  (LMDS)  auction,  we 
 used  Basic  Trading  Areas  (BTAs)  to  license  the  service. 
 156  For  example,  in  the  lower  700  MHz  Band  auction,  we  divided  the  five  spectrum  blocks  available  in  a  given 
 geographic  areas  as  follows:  three  12  MHz  paired  blocks,  with  each  block  consisting  of  a  pair  of  six  MHz  segments,  and  two  six  MHz  blocks  of  contiguous,  unpaired  spectrum. 


 157  As  we  indicated  in  the  2000  Report,  Guard  Band  Managers,  a  new  class  of  commercial  licensee,  engage  solely  in 
 the  business  of  leasing  spectrum  to  third-  parties  on  a  for-  profit  basis.  The  Guard  Band  Manager  licensee  may  subdivide  its  spectrum  in  any  manner  it  chooses  and  make  it  available  to  system  operators,  including  small 


 businesses,  or  directly  to  end  users  for  fixed  or  mobile  communications,  consistent  with  the  frequency  coordination  and  interference  rules  specified  for  these  bands.  Generally,  band  manager  licensing  has  many  potential  benefits, 
 (continued....) 
53
 Federal  Communications  Commission  FCC  03-  335 
 54 
 bands.  Band  manager  licensing  increases  opportunities  for  small  businesses  to  gain  ready  access  to  discrete  portions  of  wireless  spectrum,  in  the  amount  and  for  the  area  and  period  they  need,  by  leasing  the 
 amount  of  spectrum  they  need  from  band  manager  licensees.  This  process  involves  fewer  transactional  costs  and  regulatory  burdens  than  that  associated  with  acquiring  large,  full-  term  geographic  area  licenses 
 by  means  of  assignment  or  the  competitive  bidding  process.  700  MHz  Guard  Band  Managers  are  in  the  process  of  developing  equipment  and  business  plans  while  broadcast  incumbency  and  other  issues  are 
 resolved.  The  Commission  extended  the  spectrum  leasing  benefits  set  forth  in  band  manager  licensing  to  the  1390-  1392  MHz,  1670-  1675  MHz,  and  2385-  2390  MHz  bands,  and  the  paired  1392-  1395  and  1432-1435 
 MHz  Government  Transfer  Bands.  159  In  October,  2002,  the  Commission  further  extended  the  concept  of  band  manager  licensing  to  the  already  licensed  220  MHz  services,  through  the  grant  of  a 
 waiver  to  a  current  geographic  area/  nationwide  licensee  to  provide  band  management  services  in  that  band.  160 


 7.  Private  Wireless  Service  Access 
 167.  In  addition  to  being  able  to  obtain  licenses  through  competitive  bidding,  the  Commissions  Rules  also  provide  for  licensing  of  shared,  non-  exclusive  private  land  mobile  radio 


 (PLMR)  spectrum  on  a  first-  come,  first-  served  basis.  161  By  this  process,  many  small  businesses  or  entities  in  a  given  geographic  area  might  be  assigned  the  same  spectrum,  increasing  the  amount  of 
 frequency  re-  use  that  is  possible  compared  to  the  alternative  of  exclusive  use  with  set  distance  separations.  162  Small  businesses  or  entities  in  the  same  geographic  area,  each  licensed  for  shared 
 spectrum  in  this  way,  often  combine  resources  to  use  transmitters  and  equipment  offered  by  a  single  (often  third-  party)  provider  under  a  concept  called  multiple  licensing.  163  Additionally,  a  given  licensee, 


 (...  continued  from  previous  page)  including:  (1)  enabling  the  licensee  to  engage  in  market-  based  transactions  in  wireless  capacity  at  a  time  when 
 access  to  spectrum  is  a  critical  need  for  a  wide  variety  of  wireless  operations;  (2)  providing  spectrum  users,  including  small  businesses,  with  more  flexibility  in  obtaining  access  to  the  amount  of  spectrum,  in  terms  of  quantity, 
 length  of  time,  and  geographic  area,  that  best  suits  their  needs;  (3)  facilitating  the  development  of  a  free  market  in  spectrum  could  result  in  more  efficient  use  of  this  limited  resource;  and  (4)  streamlining  the  day-  to-  day  management 
 of  this  spectrum.  Several  of  the  spectrum  leasing  features  of  band  manager  licensing  have  been  incorporated  into  the  spectrum  leasing  policies  recently  adopted  by  the  Commission  in  the  Secondary  Markets  Report  and  Order. 


 158  See  Service  Rules  for  the  746-  764  and  776-  794  MHz  Bands,  and  Revisions  to  Part  27  of  the  Commission's  Rules, 
 Second  Report  and  Order,  15  FCC  Rcd  5299  (2000). 
 159  See  Amendments  to  Parts  1,  2,  27  and  90  of  the  Commissions  Rules  to  License  Services  in  the  216-  220  MHz, 
 1390-  1395  MHz,  1427-  1429  MHz,  1429-  1432  MHz,  1432-  1435  MHz,  1670-  1675  MHz,  and  2385-  2390  MHz  Government  Transfer  Bands,  Report  and  Order,  17  FCC  Rcd  9980,  9989-  92,  paras.  13-  20  (2002).  The  Commission 


 extended  the  spectrum  leasing  policies  set  forth  in  the  Secondary  Markets  Report  and  Order  to  these  bands.  See  Secondary  Markets  Report  and  Order,  at  para.  84. 


 160  See  Access  220,  LLC,  Request  for  Waivers  to  Provide  Band  Management  Services  Utilizing  Licenses  in  the  220-222 
 MHz  Band,  Memorandum  Opinion  and  Order,  17  FCC  Rcd  20,  464  (WTB  2002). 


 161  See  generally  47  C.  F.  R.  Part  90. 


 162  See  Implementation  of  Sections  309(  j)  and  332  of  the  Communications  Act  of  1934  as  Amended,  Notice  of 
 Proposed  Rule  Making,  14  FCC  Rcd  5206,  5217,  para.  14  (1999)  (Balanced  Budget  Act  NPRM). 


 163  See  47  C.  F.  R.    90.  185.  In  the  CMRS  Second  Report  and  Order,  the  Commission  concluded  that  multiple 
 licensing  was  still  permissible  as  a  matter  of  law  and  desirable  as  a  matter  of  public  policy  because  the  practical  realities  that  led  to  the  development  of  community  repeaters  continue  to  prevail,  namely,  that  most  Part  90 


 licensees  cannot  independently  afford  the  monthly  site  rent  for  a  tower  or  rooftop  that  could  provide  the  necessary  (continued....) 
54
 Federal  Communications  Commission  FCC  03-  335 
 55 
 whether  on  shared  spectrum  or  not,  may  share  the  use  of  its  particular  PLMR  license  with  other  small  businesses  or  entities  also  eligible  for  that  particular  spectrum.  164 
 168.  The  Commission  continues  to  encourage  partnering  between  PLMR  licensees,  such  as  public  safety  entities  and  utilities.  165  Each  of  these  sharing  paradigms  promotes  conservation  of  capital, 
 operational  efficiency,  and  cost  reduction  for  the  small  business  entity.  The  Commission  took  several  steps  to  increase  market  opportunities  for  such  private  licensees,  many  of  which  are  small  businesses.  For 
 example,  in  2002,  the  Commission  increased  business  opportunities  by  lifting  its  rule  that  prohibited  stations  licensed  in  the  microwave  services  as  private  systems  from  leasing  reserve  capacity  to  common 
 carriers.  166  Furthermore,  although  the  Commission  retained  its  prohibition  against  private  licensees  offering  common  carrier  services  without  first  becoming  licensed  as  common  carriers,  it  nonetheless 
 waived  the  filing  fees  associated  with  a  change  in  regulatory  status,  thereby  easing  financial  burdens  on  entities  desiring  to  enter  the  commercial  market.  167 


 169.  The  Commission  continues  to  ease  regulatory  burdens  and  lower  market  entry  barriers  for  small  businesses  by  streamlining  many  of  its  rules,  including  those  relating  to  private  wireless  services, 
 and  by  eliminating  unnecessary  or  burdensome  requirements.  For  example,  for  licensees  in  the  maritime  services,  the  Commission  is  considering  relaxing  license  posting  requirements,  and  permitting  the 
 maintenance  of  records  via  electronic  means.  168  Also,  in  November  2000,  the  Commission  adopted  the  Balanced  Budget  Act  Report  and  Order,  in  which  it  adopted  rules  and  policies  to  implement  Sections  309 
 (j)  and  337  of  the  Communications  Act,  as  amended  by  the  Balanced  Budget  Act  of  1997.  169  In  this  rulemaking,  the  Commission  amended  its  800  MHz  rules  to  permit  modification  of  certain  PLMR  stations 
 for  commercial  use  or  assignment  to  a  commercial  user.  The  Commission  found  that  permitting  private  license  conversion  or  assignment  to  a  commercial  user  would  create  additional  flexibility  for  both  PLMR 


 (...  continued  from  previous  page)  coverage,  and  that  if  each  entity  had  to  construct  a  separate  system,  it  would  be  difficult  to  coordinate.  See 
 Implementation  of  Sections  3(  n)  and  332  of  the  Communications  Act  Regulatory  Treatment  of  Mobile  Services,  Second  Report  and  Order,  9  FCC  Rcd  1411,  1430,  para.  47  (1994).  The  Commission  also  concluded  that  Congress 
 did  not  intend  such  arrangements  to  be  classified  as  a  "for-  profit"  CMRS  service  under  the  1993  Budget  Act.  Id.  at  1430-  31,  para.  49.  More  recently,  the  Commission  concluded  that  such  arrangements  also  do  not  constitute 
 commercially  available  communications  services  for  purposes  of  our  competitive  bidding  authority.  See  Balanced  Budget  Act  NPRM,  14  FCC  Rcd  at  5230-  32,  paras.  46-  50;  Implementation  of  Sections  309(  j)  and  332  of  the 
 Communications  Act  of  1934  as  Amended,  Report  and  Order  and  Further  Notice  of  Proposed  Rule  Making,  15  FCC  Rcd  22,  709,  22,750  n.  129  (2000). 


 164  See  47  C.  F.  R.    90.  179. 
 165  See,  e.  g.,  American  Electric  Power  Service  Corp.,  Order,  DA  00-  107  (WTB  PSPWD  rel.  Jan.  20,  2000); 
 Commonwealth  of  Pennsylvania,  Order,  14  FCC  Rcd  14,  029  (WTB  PSPWD  1999);  Central  and  South  West  Services,  Inc.,  Order,  13  FCC  Rcd  16,  162  (WTB  PSPWD  1998);  State  of  South  Carolina,  Order,  13  FCC  Rcd  8787 


 (WTB  1997);  Public  Utility  District  No.  1  of  Snohomish  County,  Order,  13  FCC  Rcd  7964  (WTB  PSPWD  PRB  1997);  Texas  Utilities  Services,  Inc.,  Order,  13  FCC  Rcd  4258  (WTB  1997). 


 166  Amendment  of  Part  101  of  the  Commissions  Rules  to  Streamline  Processing  of  Microwave  Applications  in  the 
 Wireless  Telecommunications  Services,  Report  and  Order,  17  FCC  Rcd  15,  040,  15,  048,  para.  12  (2002). 


 167  Id.  at  15,  048,  para.  13. 


 168  Amendment  of  the  Commissions  Rules  Concerning  Maritime  Communications,  Fourth  Further  Notice  of 
 Proposed  Rulemaking,  17  FCC  Rcd  227,  238-  39,  para.  22  (2001). 


 169  See  Implementation  of  Sections  309(  j)  and  332  of  the  Communications  Act  of  1934  as  Amended,  Report  and 
 Order,  15  FCC  Rcd  22,  709  (2000)  (Balanced  Budget  Act  Report  and  Order). 
55
 Federal  Communications  Commission  FCC  03-  335 
 56 
 licensees  seeking  to  fill  their  communications  needs  and  for  commercial  licensees  seeking  additional  spectrum.  170 
 170.  More  recently,  in  2002  the  Commission  released  a  Memorandum  Opinion  and  Order  and  Second  Report  and  Order  in  the  1998  Biennial  Regulatory  Review  of  Part  90  proceeding,  eliminating 
 eligibility  restrictions  on  the  Multi-  Use  Radio  Service  (MURS).  171  This  action,  which  allowed  any  entity  to  operate  MURS  on  Public  Safety  Pool  frequencies,  provided  small  entities  with  greater  licensing 
 opportunities.  Likewise,  the  Commissions  elimination  of  power  restrictions  on  seven  of  the  thirty-  one  dockside  channels  resulted  in  the  potential  to  pair  these  dockside  frequencies  with  the  other 
 Industrial/  Business  Pool  frequencies,  thereby  permitting  greater  opportunities  for  small  (and  other)  businesses  by  providing  for  increased  signal  coverage  and  more  reliable  communications.  In  2003,  the 
 Commission  designated  twenty-  five  channels  in  the  450-  470  MHz  band  for  low  power,  itinerant  operations.  172  This  allocation  will  enhance  business  opportunities  for  small  entities  such  as  plumbers, 
 electricians,  and  construction  companies  that  need  on-  site,  short  term  communications  on  an  itinerant  basis.  173  The  Commission  is  also  making  significant  strides  towards  accelerating  the  migration  to 
 narrowband  technology,  which  will  result  in  additional  vacant  spectrum,  thereby  providing  small  businesses  in  congested  areas  with  greater  opportunities  to  operate  their  own  radio  systems.  174 


 8.  Application  Processing  and  Filing 
 171.  The  Commission  is  taking  several  steps  to  ensure  that  its  application  processing  and  filing  rules  and  policies  do  not  present  barriers  for  small  businesses.  In  this  regard,  the  Commission 


 brought  competition  to  the  frequency  coordination  process,  unified  its  administrative  rules  for  filing  applications,  and  implemented  electronic  filing  and  online  information  resources  over  the  Internet.  As 
 described  below,  each  of  these  actions  constitutes  an  affirmative  step  toward  reducing  burdens  on  small  businesses  that  hold  wireless  radio  services  licenses. 


 a.  Frequency  Coordination 
 172.  In  the  Part  90  PLMR  services,  175  frequency  coordinators  analyze  applications  before  they  are  submitted  to  the  Commission  to  select  a  frequency  that  will  meet  the  applicants  needs,  while 


 minimizing  interference  to  licensees  already  using  the  frequency  band.  Frequency  coordinators  recommend  the  best  available  frequency  for  the  applicants  proposed  operations  to  the  Commission.  176 


 170  Id.  at  22,  760,  para.  109. 
 171  1998  Biennial  Regulatory  Review  47  C.  F.  R.  Part  90  Private  Land  Mobile  Radio  Services,  Memorandum 
 Opinion  and  Order  and  Second  Report  and  Order,  17  FCC  Rcd  9830,  9831,  para.  2  (2002)  (1998  Part  90  Biennial  Review). 


 172  See  Amendment  of  Part  90  of  the  Commissions  Rules  and  Policies  for  Applications  and  Licensing  of  Low  Power 
 Operations  in  the  Private  Land  Mobile  Radio  450-  470  MHz  Band,  Report  and  Order,  18  FCC  Rcd  3948,  3970,  para.  55  (2003). 


 173  Id. 
 174  See  Implementation  of  Sections  309(  j)  and  337  of  the  Communications  Act  of  1934  as  amended,  Promotion  of 
 Spectrum  Efficient  Technologies  on  Certain  Part  90  Frequencies,  Second  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  18  FCC  Rcd  3034,  3038,  para.  12  (2003). 


 175  47  C.  F.  R.  Part  90. 
 176  See  Balanced  Budget  Act  NPRM,  14  FCC  Rcd  at  5217,  para.  14. 
56
 Federal  Communications  Commission  FCC  03-  335 
 57 
 Applicants  utilize  frequency  coordinators  most  frequently  for  shared,  non-  exclusive  PLMR  spectrum.  In  the  bands  below  512  MHz,  which  are  mostly  shared  PLMR  spectrum,  the  Commission,  in  the  Refarming 
 proceeding,  consolidated  twenty  radio  services  into  two  broad  frequency  pools:  Public  Safety  and  Industrial/  Business.  177 


 173.  As  we  stated  in  the  2000  Report,  the  Commissions  Refarming  Second  Report  and  Order  178  adopted  rules  to  inject  competition  into  the  frequency  coordination  process.  179  In  1997, 
 frequency  coordinators  had  sole  control  over  the  frequencies  within  their  respective  radio  services.  180  Thereafter,  the  Commission  changed  that  process  to  allow,  generally,  coordination  of  any 
 Industrial/  Business  pool  frequency  by  any  of  the  coordinators  of  the  services  that  were  consolidated  into  the  pool. 


 174.  Today,  we  continue  along  these  lines  by  increasing  frequency  coordination  competition  in  additional  radio  services,  specifically  in  the  bands  above  800  MHz.  We  intend  this  competitive 
 coordination  to  lessen  market  entry  barriers  by  reducing  prices,  improving  coordination  services,  and  providing  more  flexibility  for  the  small  businesses  that  constitute  the  bulk  of  PLMR  licensees.  The 
 Commission  will  continue  to  explore  ways  in  which  to  stimulate  competition  among  frequency  coordinators. 


 b.  Electronic  Filing 
 175.  The  Commissions  goal  is  that  all  wireless  licensees  have  access  to  licensing  information  online  and  the  ability  to  file  license  applications  electronically  without  the  need  for  high-  end  computer 


 systems  or  specialized,  hard-  to-  obtain  software.  181  As  we  noted  in  the  2000  Report,  the  Commission  achieved  this  goal  for  the  wireless  radio  services  by  implementing  its  Universal  Licensing  System  (ULS). 
 The  ULS  is  an  online,  interactive  application  filing  system  and  research  facility  that  benefits,  in  several  ways,  small  businesses  that  are  licensees.  Because  electronic  filing  is  both  easily  accessible  and  simple, 
 the  development  of  the  ULS  greatly  reduced  the  cost  of  preparing  wireless  applications  and  pleadings,  while  increasing  the  speed  of  the  licensing  process,  for  all  licensees,  including  small  businesses.  In 
 addition,  application,  license,  and  Public  Notice  information  is  available  online.  In  this  connection,  the  Wireless  Telecommunications  Bureau  has  combined  ten  separate  licensing  databases  into  the  single  ULS 
 database,  eliminating  the  need  for  small  businesses  to  conduct  research  on  multiple  databases  and  be  familiar  with  multiple  database  formats.  The  Wireless  Telecommunications  Bureaus  portion  of  the 
 Commissions  website  (http://  wireless.  fcc.  gov)  provides  the  public  with  online  access  to  all  released  documents,  Public  Notices,  and  the  current  auction  schedule  (including  maps  and  channel  band  plans). 
 Further,  licensees  may  review  the  Commissions  weekly  Public  Notices  online.  Small  businesses  benefit  from  this  approach  by  having  the  capability  to  review  quickly  Commission  actions  and  proposed  actions 
 in  a  consistent  format  without  having  to  obtain  paper  copies. 


 177  See  Replacement  of  Part  90  by  Part  88  to  Revise  the  Private  Land  Mobile  Radio  Services  and  Modify  the  Policies 
 Governing  Them,  Second  Report  and  Order,  12  FCC  Rcd  14,  307,  14,  317,  para.  20  (1997)  (Refarming  Second  Report  and  Order). 


 178  Id. 
 179  Id.  at  14,  328,  para.  40. 
 180  Id. 
 181  In  the  1997  Report,  we  noted  that  the  Small  Business  in  Telecommunications  Association  suggested  that  the 
 Commission  should  design  its  electronic  filing  programs  so  that  they  can  be  used  on  less  sophisticated  computers,  and,  in  particular,  can  be  used  to  prepare  applications  on  computers  that  are  not  interconnected. 
57
 Federal  Communications  Commission  FCC  03-  335 
 58 
 176.  Since  the  2000  Report,  we  converted  all  wireless  radio  services  to  the  ULS,  with  the  exception  of  Multipoint  Distribution  Service/  Instructional  Television  Fixed  Service.  182  This  milestone 
 marked  the  end  of  the  Commissions  ULS  implementation  phase  and  began  a  new  phase  of  maintaining  and,  where  appropriate,  enhancing  the  ULS  to  serve  better  wireless  applicants  and  licensees,  including 
 small  businesses.  Some  of  the  enhancements  include  a  redesigned  license  search,  which  provides  more  search  options,  easier  navigation  for  reviewing  license  data,  and  a  more  convenient  layout  of  the  license 
 data.  The  redesign  of  the  ULS  license  search  involved  public  forums  where  the  Wireless  Telecommunications  Bureau  gathered  input  from  various  ULS  users,  including  small  businesses.  The 
 Wireless  Telecommunications  Bureau  also  automated  the  filing  of  FCC  Form  602,  which  certain  licensees  use  to  submit  ownership  information  to  the  Commission.  This  enhancement  provides  easily 
 accessible  electronic  filing  and  search  capabilities  for  all  entities  that  need  to  file  ownership  information  regarding  wireless  licenses  and  anyone  that  wants  to  search  for  ownership  information,  including  small 
 businesses.  Most  recently,  the  Wireless  Telecommunications  Bureau  began  to  redesign  and  enhance  online  filing  for  wireless  applicants  in  order  to  provide  an  even  simpler,  more  convenient,  and  direct 
 method  for  filing  wireless  applications.  This  should  provide  considerable  benefit  to  small  businesses  that  may  not  be  familiar  with  the  ULS,  as  one  of  our  goals  of  this  enhancement  is  to  have  the  ULS  mirror  the 
 look  and  feel  of  many  commercial  websites  and  commercially  available  software  used  to  submit  filings  of  various  kinds. 


 9.  Outreach  Efforts 
 177.  The  Wireless  Telecommunications  Bureau  operates  a  booth  at  many  industry  trade  shows,  including  those  regularly  attended  by  representatives  of  small  businesses.  The  booth  provides 


 hands-  on  training  in  use  of  the  Commissions  ULS  and  auction  bidding  software  over  the  Internet.  The  Commissions  outreach  program  also  includes  a  webpage  and  an  Auctions/  ULS  Hot  Line.  183  Members  of 
 the  Commission  and  its  staff  speak  at  numerous  industry,  trade  association,  public  interest  organization,  and  telecommunications  user  group  conferences  on  opportunities  in  wireless  services  licensed  by  the 
 Commission,  and  will  continue  with  this  outreach.  In  addition,  prior  to  the  start  of  each  service-  specific  Commission  auction,  the  Wireless  Telecommunications  Bureau  routinely  holds  seminars  for  bidders  to 
 provide  additional  information  about  auction  procedures.  We  offer  these  seminars  free-  of-  charge  and  provide  anyone  interested  in  specific  auctions  the  opportunity  to  see  presentations  on  radio  service  and 
 auction  rules  and  observe  a  demonstration  of  the  competitive  bidding  system. 
 178.  In  implementing  the  electronic  ULS,  the  Commission  established  a  task  force  to  receive  public  input  on  the  design  of  the  system  and  to  coordinate  efforts.  The  Wireless  Telecommunications 
 Bureau  conducted  numerous  interactive  demonstrations  for  licensees  and  their  representatives  on  the  proper  use  of  the  system  for  filing  license  applications  and  conducting  database  research.  We  announced 
 these  demonstrations  by  Public  Notice  and,  in  1999,  held  approximately  sixty  sessions  on  certain  topics  of  interest,  including:  (1)  finding  information  in  the  ULS  for  license  and  application  searches;  (2)  filing  and 
 researching  license  transfers  and  assignments;  and  (3)  general  application  filing  procedures.  As  stated  above,  our  implementation  of  the  ULS  resulted  in  substantial  benefits  to  all  applicants,  including  small 
 businesses.  The  Wireless  Telecommunications  Bureau  held  public  forums  and  issued  numerous  Public  Notices  to  educate  the  public  on  ULS  procedures  and  benefits,  and  to  obtain  public  input  on  ULS 
 issues.  184  We  maintain  an  electronic  mail  list  of  interested  parties,  to  whom  we  provide  updated  ULS 
 182  With  regard  to  the  MDS/  ITFS  services,  we  have  created  a  transitional  database  wherein  current  licensees  can 
 view  their  license  information  and  make  corrections  to  any  erroneous  data. 
 183  The  Auctions/  ULS  Hotline  telephone  number  is  1-  888-  225-  5322. 


 184  A  list  of  Commission  Public  Notices  concerning  the  ULS  is  available  on  the  Wireless  Telecommunications 
 Bureaus  ULS  Homepage  at  www.  fcc.  gov/  wtb/  uls. 
58
 Federal  Communications  Commission  FCC  03-  335 
 59 
 information  free-  of-  charge.  In  addition,  the  Wireless  Telecommunications  Bureau  also  maintains  a  toll-free  phone  line  and  e-  mail  address  185  to  assist  with  licensing  and  forms  questions  during  the  ULS 
 transition,  and  established  a  technical  support  hotline  and  e-  mail  address  186  to  assist  the  public  with  computer-  related  issues,  including  set-  up  and  configuration. 


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


 180.  The  Wireless  Telecommunications  Bureau  also  developed  a  wireless  facility  siting  page  that,  among  other  things,  provides  current  information  about  Commission  Rules  and  procedures.  The 
 webpage  provides  access  to  fact  sheets  and  rules  and  regulations  regarding  local  government  and  environmental  issues  related  to  wireless  facility  siting.  The  webpage  also  provides  links  to  the 
 Commissions  environmental  rules  and  federal  agencies  responsible  for  environmental  laws  that  are  of  concern  to  small  businesses  proposing  to  locate  on  communications  facilities  such  as  towers.  In  2001,  the 
 Commission  redesigned  its  Indian  Initiative  website  and  Auctions  website  and,  in  2002,  the  Commission  redesigned  its  websites  for  various  services,  including  PCS,  cellular,  and  paging.  These  informational  and 
 organizational  updates  are  part  of  the  Commissions  continuing  efforts  to  enhance  website  services  to  the  public. 


 181.  After  the  2000  Report,  the  Commission  offered  a  series  of  seminars,  most  recently  in  July  2003,  aimed  at  providing  information  to  Native  American  tribal  leaders  and  other  interested  parties  to 
 help  increase  telecommunications  services  to  tribal  residents.  The  Commission  brought  together  its  own  experts,  along  with  representatives  from  other  federal  government  agencies,  telecommunications 
 companies  and  emerging  technology  firms,  to  inform  tribal  governments  about  various  facets  of  telecommunications  services  and  how  different  technologies,  regulatory  rules,  and  government  programs 
 can  benefit  tribal  communities.  187  The  Commission  plans  to  continue  its  efforts  at  furthering  this  initiative. 


 10.  Reporting  and  Other  Requirements 
 182.  In  the  past  three  years,  the  Wireless  Telecommunications  Bureau  has  examined  ways  to  reduce  the  burden  or  impact  of  certain  regulatory  reporting  requirements  on  smaller  entities,  without 


 compromising  its  statutory  mandate  to  promote  the  public  interest.  An  example  of  the  Commissions  initiative  to  find  ways  to  strike  the  appropriate  balance  is  its  approach  to  instituting  new  regulatory 
 requirements  designed  to  ensure  access  to  wireless  services  for  persons  with  hearing  disabilities.  In  2000, 
 185  The  toll-  free  number  regarding  ULS  questions  is  1-  888-  225-  5322,  and  the  e-  mail  address  for  ULS  licensing  and 
 forms  questions  is  ulshelp@  fcc.  gov. 


 186  The  Technical  Support  telephone  number  is  202-  414-  1250  and  the  e-  mail  address  for  ULS  technical  questions  is 
 ulscomm@  fcc.  gov. 
 187  See  Federal  Communications  Commission  Announces  Wireless  Telecommunications  Bureau  Indian  Telecom 
 Training  Initiative  (ITTI)  2000  Fall  Seminar,  Public  Notice  (rel.  Feb.  29,  2000);  see  also  www.  fcc.  gov/  Indians. 
59
 Federal  Communications  Commission  FCC  03-  335 
 60 
 the  Commission  determined  that  it  would  remove  the  requirement  from  its  rules  that  carriers  provide  analog  service  compatible  with  Advanced  Mobile  Phone  Service  (AMPS)  specifications.  However,  in 
 making  this  determination,  the  Commission  established  a  five  year  transition  period,  to  take  into  account  both  the  need  for  carriers  and  manufacturers  to  develop  devices  that  are  digital  but  usable  by  persons  with 
 hearing  disabilities  and  to  lessen  the  impact  on  smaller  entities  with  potentially  fewer  resources.  188  The  Commission  also  took  steps  to  eliminate  reporting  requirements  that  might  unduly  burden  small  entities 
 with  respect  to  TRS  requirements.  In  implementing  its  June  30,  2002  final  deadline  by  which  all  digital  wireless  systems  were  to  be  capable  of  transmitting  911  calls  made  using  TTY  devices,  small  entities 
 were  allowed  to  fulfill  their  reporting  obligations  through  the  TTY  Forum.  189  Commenters  strongly  encouraged  the  Commission  to  allow  such  reporting  because  it  is  an  extremely  simple  and  inexpensive 
 method  of  reporting  for  all  entities,  including  small  entities,  and  does  not  have  a  negative  impact  on  the  Commissions  policy  goal  of  ensuring  greater  access  for  persons  with  hearing  disabilities. 


 183.  On  August  14,  2003,  the  Commission  released  a  Report  and  Order  modifying  the  exemption  for  wireless  phones  under  the  Hearing  Aid  Compatibility  Act  of  1988  (HAC  Act)  to  require 
 that  digital  wireless  phones  be  capable  of  being  used  effectively  with  hearing  aids.  190  In  its  Report  and  Order,  the  Commission  recognized  that  certain  manufacturers  and  service  providers  might  have  only  a 
 small  presence  in  the  market  and  that  affording  an  exemption  to  such  entities  would  not  harm  the  goal  of  ensuring  access  to  persons  with  hearing  disabilities.  For  those  manufacturers  and  service  providers,  the 
 Commission  adopted  a  de  minimis  exception.  In  instances  where  a  manufacturer  or  a  carrier  offers  no  more  than  two  digital  handset  models  in  the  U.  S.,  it  is  exempted  from  the  compatibility  requirements.  In 
 instances  where  a  manufacturer  or  carrier  offers  three  digital  wireless  handsets,  it  must  make  at  least  one  compliant  handset  available  within  two  years.  Furthermore,  to  the  extent  there  are  digital  wireless 
 providers  that  obtain  handsets  only  from  manufacturers  that  offer  more  than  two  digital  wireless  phone  models  in  the  U.  S.,  the  service  provider  would  likewise  be  exempt  from  the  rules.  Similarly,  if  a  service 
 provider  obtains  handsets  only  from  manufacturers  that  offer  three  digital  wireless  phone  models  in  the  U.  S.,  that  service  provider  would  have  to  offer  only  one  compliant  handset  model.  Additionally,  in 
 considering  the  possible  impact  of  our  rules  on  the  many  small  business  owners  that  act  as  agents  for  service  providers,  the  Commission  crafted  its  labeling  rules  to  allow  these  entities  flexibility  in  how  they 
 convey  the  information  to  persons  with  hearing  disabilities.  Thus,  in  implementing  its  HAC  Act  regulations,  the  Commission  served  two  equally  important  policy  goals:  (1)  promoting  the  ability  of  small 
 entities  to  compete  in  the  marketplace  and  (2)  providing  persons  with  hearing  disabilities  a  range  of  handset  choices  commensurate  to  those  available  to  persons  without  hearing  disabilities. 


 11.  Implementation  Schedules 
 184.  In  recent  years  the  Commission  has  made  progress  in  the  area  of  Enhanced  911  (E911)  implementation.  The  deployment  of  E911  requires  the  development  of  new  technologies  and  upgrades  to 


 local  PSAPs,  in  conjunction  with  a  coordinated  effort  among  public  safety  agencies,  wireless  carriers,  technology  vendors,  equipment  manufacturers,  and  local  wireline  carriers.  This  complex  collaboration 
 among  so  many  parties  necessitates  a  firm  commitment  from  all  to  meeting  deployment  goals.  Because  of  the  important  public  interest  benefits  associated  with  the  provision  of  E911  services,  the  Commission 


 188  See  Year  2000  Biennial  Regulatory  Review-  Amendment  of  Part  22  of  the  Commissions  Rules  to  Modify  or 
 Eliminate  Outdated  Rules  Affecting  the  Cellular  Radiotelephone  Service  and  Other  Commercial  Mobile  Radio  Services,  Report  and  Order,  17  FCC  Rcd  18,  401,  Erratum,  17  FCC  Rcd  22,  140  (2002). 


 189  See  Revision  of  the  Commissions  Rules  To  Ensure  Compatibility  with  Enhanced  911  Emergency  Calling 
 Systems,  Fourth  Report  and  Order,  15  FCC  Rcd  25,  216  (2000). 
 190  See  Section  68.  4(  a)  of  the  Commissions  Rules  Governing  Hearing  Aid-  Compatible  Telephones,  FCC  03-  168, 
 Report  and  Order,  18  FCC  Rcd  16,  753  (2003). 
60
 Federal  Communications  Commission  FCC  03-  335 
 61 
 has  considered  it  essential  to  maintain  uniform  E911  regulations  for  large  and  small  entities  alike,  and  has  retained  the  flexibility  to  provide  individualized  relief  from  these  rules  for  small  entities  on  a  showing  that 
 the  carrier  has  met  the  Commissions  waiver  standards.  Public  safety  is  considered  paramount  in  E911  implementation  because  a  delayed  or  less  than  adequate  response  to  a  wireless  911  call  can  be  disastrous 
 regardless  of  whether  a  small  carrier  or  large  carrier  is  involved.  Because  of  the  important  public  safety  aspect  of  these  rules,  we  often  must  balance  whatever  burdens  are  imposed  on  smaller  entities  in  the 
 implementation  of  E911  against  the  general  benefits  of  protecting  the  public  interest. 
 185.  Nevertheless,  the  Commission  recognizes  that  market  barriers  exist  and  seeks  to  minimize  the  significant  impact  on  affected  small  and  rural  entities  by  granting  relief  from  E911  through 
 the  provision  of  longer  implementation  schedules  for  smaller  entities  than  for  larger  entities.  Many  smaller  carriers  reported  to  the  Commission  about  market  barriers  such  as  their  inability  to  secure 
 commitments  from  vendors  for  necessary  technology  upgrades  (e.  g.,  the  vendors  are  currently  catering  to  the  larger  carriers),  and  their  inability  to  receive  necessary  E911  handsets  from  vendors  until  after  the 
 larger  carriers  receive  their  equipment.  To  ameliorate  the  apparent  market  disparities  between  large  and  small  carriers,  the  Commission  created  a  tiered  approach  to  E911  implementation  and  provided  different 
 dates  and  conditions  for  carriers  based  on  their  number  of  subscribers.  In  October  2001,  the  Commission  granted  relief  from  certain  provisions  of  the  Phase  II  E911  regulations  191  to  five  major  nationwide  CMRS 
 carriers  (Tier  I  Carriers).  192  In  July  2001,  the  Commission  granted  similar  relief  to  certain  non-  nationwide  carriers  (Tier  II  and  Tier  III  Carriers)  that  petitioned  for  relief  because  they  had  less  ability  than  the 
 nationwide  CMRS  carriers  to  obtain  special  vendor  commitments  necessary  to  deploy  E911  rapidly.  193  These  different  dates  and  conditions  are  further  reflected  in  the  different  reporting  requirements  to  which 
 we  require  large  and  small  carriers  to  adhere.  We  require  Tier  I  Carriers  to  file  quarterly  reports  with  the  Commission  each  year  until  2006  and  Tier  II  Carriers  until  2004.  To  minimize  the  burden  on  the  smallest 
 carriers,  we  limit  the  reporting  requirement  for  Tier  III  carriers  to  those  Tier  III  carriers  that  have  been  granted  relief  from  a  Commission  deadline.  Only  those  Tier  III  carriers  must  file  a  one-  time  Interim 
 Report  to  enable  the  Commission  to  monitor  their  deployment  progress.  194  The  Commission  also  made  efforts  to  reduce  the  burden  on  small  entities  in  other  aspects  of  E911  implementation.  One  notable 
 decision  in  which  the  Commission  demonstrated  concern  for  small  entities  was  the  Petition  of  the  City  of  Richardson  proceeding.  195  In  that  proceeding,  the  Commission  adopted  rules  clarifying  what  constitutes  a 


 191  Under  Phase  II  of  the  Commission's  wireless  E911  rules,  we  require  wireless  carriers  to  provide  the  location  of 
 wireless  911  callers,  a  capability  known  as  Automatic  Location  Identification  (ALI).  See  Revision  of  the  Commissions  Rules  to  Ensure  Compatibility  with  Enhanced  911  Emergency  Calling  Systems,  Report  and  Order  and 


 Further  Notice  of  Proposed  Rulemaking,  11  FCC  Rcd  18,  676  (1996).  For  additional  information  regarding  the  Commission's  wireless  E911  program,  see  www.  fcc.  gov/  e911. 


 192  Tier  I  Carriers  refer  to  the  five  nationwide  carriers,  AT&  T  Wireless  Services,  Inc.,  Cellco  Partnership  d/  b/  a 
 Verizon  Wireless,  Sprint  Spectrum  L.  P.  d/  b/  a  Sprint  PCS,  Cingular  Wireless  LLC,  and  Nextel  Communications,  Inc.  On  September  8,  2000,  the  Commission  granted  a  waiver  to  a  sixth  major  nationwide  carrier,  T-  Mobile  USA 


 (formerly  VoiceStream  Wireless),  which  we  also  consider  a  Tier  I  carrier. 
 193  For  a  definition  of  Tier  II  and  Tier  III  Carriers,  see  Revision  of  the  Commission's  Rules  to  Ensure 
 Compatibility  with  Enhanced  911  Emergency  Calling  Systems,  Phase  II  Compliance  Deadlines  for  Non-Nationwide  CMRS  Carriers,  Order  to  Stay,  17  FCC  Rcd  14,  841,  14,  847,  paras.  22-  24  (2002)  (Non-  Nationwide 


 Carriers  Order). 
 194  See  Wireless  Telecommunications  Bureau  Provides  Further  Guidance  on  Interim  Report  Filings  By  Small  Sized 
 Carriers,  Public  Notice,  18  FCC  Rcd  12,  845  (2003). 
 195  Revision  of  the  Commissions  Rules  to  Ensure  Compatibility  With  Enhanced  911  Emergency  Calling  Systems, 
 Petition  of  City  of  Richardson,  Texas,  16  FCC  Rcd  18,  982  (2001),  recon  granted  in  part  and  denied  in  part,  17  FCC  Rcd  24,  282  (2002). 
61
 Federal  Communications  Commission  FCC  03-  335 
 62 
 PSAP  request  so  as  to  trigger  a  wireless  carriers  obligation  to  provide  E911  service  to  that  PSAP.  The  Commissions  clarification  balances  the  goal  of  providing  carriers  of  all  sizes  with  the  tools  they  need  to 
 determine  whether  a  PSAP  will  be  E911  capable  with  the  goal  to  avoid  placing  unnecessary  burdens  on  PSAPs,  96%  of  which  qualify  as  small  entities.  Further,  in  response  to  petitions  filed  by  certain  Tier  III 
 carriers  seeking  temporary  relief  from  the  application  of  Phase  I  and  various  Phase  II  E911  deployment  and/  or  accuracy  obligations  imposed  under  section  20.18(  d)-(  h)  of  the  Commission  Rules,  the 
 Commission  granted  relief  to  those  Tier  III  carriers  that  had  requested  waiver  relief  no  greater  than  that  already  granted  to  similarly  situated  Tier  III  carriers  in  the  Non-  Nationwide  Carriers  Order,  and 
 temporarily  stayed  the  application  of  various  provisions  of  section  20.18  of  the  Commissions  Rules  to  other  Tier  III  carriers,  pending  resolution  of  their  petitions.  196  The  Commission  also  provided  guidance 
 with  regard  to  the  heavy  burden  a  carrier  bears  to  demonstrate  good  cause  for  waiver  relief,  in  view  of  the  countervailing  public  interest  in  rapid  and  full  deployment  of  E911.  A  carrier  must  show  that  its  request 
 is  as  narrowly  tailored  as  possible,  given  its  unique  circumstances,  and  that  it  is  taking  every  possible  step  to  achieve  full  compliance  as  quickly  as  possible.  197 


 H.  Wireline  Competition  Bureau 
 186.  Pursuant  to  the  statutory  directive,  the  Wireline  Competition  Bureau  (WCB)  took  numerous  steps  to  identify  and  eliminate  market  entry  barriers  for  entrepreneurs  and  small  businesses  in 


 the  provision  of  telecommunications  and  information  services  and  equipment.  For  example,  WCB  removed  regulations  that  prohibited  small  businesses  from  offering  consumer  packages  of 
 telecommunications  services  and  customer  premises  equipment  (CPE)  at  a  single  price,  thus  providing  small  businesses  the  flexibility  to  market  services  and  equipment  in  a  less  restrictive  manner.  WCB  also 
 resolved  several  issues  in  connection  with  a  carriers  use  of  customer  proprietary  network  information  (CPNI)  that  lessened  the  regulatory  burden  on  small  carriers.  Carriers  may  now  freely  choose  to  obtain 
 opt-  in  or  opt-  out  approval  for  certain  CPNI  uses,  depending  upon  the  carriers  needs  and  circumstances.  Other  WCB  activities  include:  new  streamlining  measures  for  carrier  authorization  requirements; 
 nondiscriminatory  access  to  local  directory  assistance  information;  and  various  orders  relating  to  advanced  services,  broadband  deployment,  interconnection  and  resale,  including  the  Commissions 
 comprehensive  Triennial  Review  Order.  Finally,  the  Bureau  instituted  several  proceedings  related  to  the  Universal  Service  program,  including  rules  for  increased  billing  transparency,  affordable  services  for  all 
 eligible  schools  and  libraries,  and  modified  interstate  access  charges  and  Universal  Service  mechanisms  for  incumbent  LECs  subject  to  rate  of  return  regulations.  A  more  detailed  examination  of  WCBs 
 activities  is  set  forth  below. 
 1.  Customer  Premises  Equipment  and  Enhanced  Services  Unbundling  Rules 
 187.  On  March  30,  2001,  consistent  with  the  Telecommunication  Act  of  1996s  directive  that  the  Commission  repeal  or  modify  any  regulation  it  determines  no  longer  in  the  public  interest,  the 


 Commission  released  an  Order  (CPE  Order)  that  reviewed  the  state  of  competition  in  the  customer  premises  equipment  (CPE)  and  enhanced  services  markets,  and  ultimately  eliminated  the  CPE  bundling 
 restriction  for  all  carriers.  198  For  enhanced  services,  the  Commission  retained  the  requirement  that 
 196  See  Revision  of  the  Commissions  Rules  To  Ensure  Compatibility  with  Enhanced  911  Emergency  Calling 
 Systems;  E911  Compliance  Deadlines  for  Non-  Nationwide  Tier  III  CMRS  Carriers,  Order  to  Stay,  18  FCC  Rcd  20,  987  (2003)  (the  Tier  III  carriers  covered  are  listed  in  the  appendices). 


 197  Id. 
 198  Policy  and  Rules  Concerning  the  Interstate,  Interexchange  Marketplace;  Implementation  of  Section  254(  g)  of  the 
 Communications  Act  of  1934,  as  amended;  1998  Biennial  Regulatory  Review  Review  of  Customer  Premises  Equipment  And  Enhanced  Services  Unbundling  Rules  In  the  Interexchange,  Exchange  Access  And  Local  Exchange 


 Markets,  Report  and  Order,  16  FCC  Rcd  7418  (2001)  (CPE  Order). 
62
 Federal  Communications  Commission  FCC  03-  335 
 63 
 facilities-  based  carriers  must  continue  to  offer  the  underlying  transmission  service  component  of  an  enhanced  service  on  nondiscriminatory  terms,  and  clarified  that  as  long  as  carriers  meet  this  requirement, 
 they  may  bundle  enhanced  services  with  telecommunications  services  at  a  single  price. 
 188.  The  only  economic  impact  the  CPE  Order  has  on  small  carriers  is  positive.  It  relieved  small  carriers  of  regulations  that  prohibited  them  from  offering  consumers  packages  of 
 telecommunications  services  and  CPE  at  a  single  price.  Removal  of  these  rules  provides  small  entities  the  necessary  flexibility  to  market  services  and  CPE  in  a  less  restrictive  manner. 


 189.  The  CPE  Order  also  confirmed  that  incumbent  LECs  must  offer  the  transmission  service  component  of  CPE  bundles  separately  on  a  nondiscriminatory  basis.  The  CPE  Order  benefits  consumers 
 by  enabling  them  to  take  advantage  of  innovative  and  attractive  packages  of  services  and  equipment;  fosters  increased  competition  in  the  markets  for  CPE,  enhanced,  and  telecommunications  services;  and 
 allows  the  Commission  to  repeal  regulatory  requirements  that  no  longer  make  sense  in  light  of  current  technological,  market,  and  legal  conditions. 


 2.  Customer  Proprietary  Network  Information 
 190.  The  Telecommunications  Act  of  1996  created  Section  222,  which  establishes  customer  proprietary  network  information  (CPNI)  requirements  that  apply  to  all  telecommunications  carriers.  199 


 After  the  2000  Report,  the  Commission  issued  several  orders  further  clarifying  the  CPNI  rules  and  their  operation.  200  Specifically,  on  August  28,  2001,  the  Commission  adopted  an  Order  (CPNI  Clarification 
 Order)  clarifying  the  status  of  its  CPNI  rules  in  light  of  a  U.  S.  Tenth  Circuit  Court  of  Appeals  order  that  vacated  a  portion  of  these  rules,  and  the  Commission  issued  a  Further  Notice  of  Proposed  Rulemaking 
 (Clarification  Order  Further  NPRM).  201  On  July  25,  2002,  the  Commission  released  an  Order  (Third  CPNI  Order)  resolving  several  issues  in  connection  with  carriers  use  of  CPNI,  and  it  issued  a  Third 
 Further  Notice  of  Proposed  Rulemaking.  202  These  orders  have  a  positive  impact  on  small  businesses. 
 191.  Overall,  the  requirements  the  Commission  adopted  in  the  Third  CPNI  Order  are  likely  to  lessen  the  regulatory  burden  on  small  carriers,  yet,  none  of  the  requirements  affect  small  carriers 
 disproportionately.  Among  other  actions  the  Commission  adopted  in  the  Third  CPNI  Order,  carriers  now  are  given  a  choice  of  obtaining  opt-  out  or  opt-  in  approval  for  certain  CPNI  uses.  For  instance,  if  a  small 
 carrier  only  intends  to  use  CPNI  internally  for  marketing  communications-  related  services,  it  will  only 
 199  47  U.  S.  C.    222.  CPNI  is  defined  as  (  A)  information  that  relates  to  the  quantity,  technical  configuration,  type, 
 destination,  location,  and  amount  of  use  of  a  telecommunications  service  subscribed  to  by  any  customer  of  a  telecommunications  carrier,  and  that  is  made  available  to  the  carrier  by  the  customer  solely  by  virtue  of  the  carrier-customer 


 relationship;  and  (B)  information  contained  in  the  bills  pertaining  to  telephone  exchange  service  or  telephone  toll  service  received  by  a  customer  of  a  carrier.  Id.    222(  h). 


 200  2000  Report,  15  FCC  Rcd  at  15,  395-  96,  paras.  49-  51. 
 201  Implementation  of  the  Telecommunications  Act  of  1996;  Telecommunications  Carriers  Use  of  Customer 
 Proprietary  Network  Information  and  Other  Customer  Information;  Implementation  of  the  Non-  Accounting  Safeguards  of  Sections  271  and  272  of  the  Communications  Act  of  1934,  as  Amended,  Clarification  Order  and 


 Second  Further  Notice  of  Proposed  Rulemaking,  16  FCC  Rcd  16,  506  (2001)  (CPNI  Clarification  Order). 
 202  Implementation  of  the  Telecommunications  Act  of  1996;  Telecommunications  Carriers  Use  of  Customer 
 Proprietary  Network  Information  and  Other  Customer  Information;  Implementation  of  the  Non-  Accounting  Safeguards  of  Sections  271  and  272  of  the  Communications  Act  of  1934,  as  Amended;  2000  Biennial  Regulatory 


 Review  Review  of  Policies  and  Rules  Concerning  Unauthorized  Changes  of  Consumers  Long  Distance  Carriers,  Third  Report  and  Order  and  Third  Further  Notice  of  Proposed  Rulemaking,  FCC  17  Rcd  14,  860  (2002)  (Third  CPNI 
 Order). 
63
 Federal  Communications  Commission  FCC  03-  335 
 64 
 have  to  obtain  opt-  out  approval  from  its  customers.  Carriers  that  use  opt-  out  approval  must  provide  notice  to  their  customers  every  two  years.  This  requirement  is  counterbalanced  because  carriers  that 
 choose  to  use  the  opt-  out  method  will  be  able  to  use  and  disclose  more  CPNI  for  marketing  than  under  the  previous  opt-  in  method.  Furthermore,  a  carrier  that  finds  the  burden  of  biennial  notices  outweighs  the 
 benefit  of  expanded  CPNI  access  can  choose  to  obtain  opt-  in  approval  from  its  customers  and  avoid  the  biennial  notice  requirement. 


 192.  Importantly,  the  Commission  also  streamlined  the  notice  requirements  for  carriers  to  obtain  limited,  one-  time  use  of  consumers  CPNI  for  the  duration  of  an  inbound  or  outbound  call  with  the 
 customer.  This  will  benefit  small  carriers  by  lowering  their  marketing  and  call  center  costs.  The  Commission  also  forbore  from  applying  its  CPNI  approval  regulations  to  PC  freezes,  allowing  small  and 
 large  carriers  alike  easier  access  to  PC  freeze  information.  203 
 193.  Overall,  these  requirements  lessen  the  regulatory  burden  on  small  carriers  by  allowing  carriers  to  obtain  customers  consent  through  an  opt-  out  approval  mechanism  to  use  customers  CPNI  for 
 marketing  communications-  related  services.  Further,  the  Third  CPNI  Order  specifically  allows  carriers  to  use  opt-  in  approval  for  all  CPNI  uses  should  a  carrier  determine  that  opt-  in  is  more  appropriate  for  its 
 individual  circumstances,  allowing  carriers  more  flexibility  regarding  their  customers  and  resources. 
 3.  Streamlining  Measures 
 a.  Part  63 
 194.  The  Commission,  through  its  streamlining  measures,  is  taking  steps  to  eliminate  market  barriers  and  promote  competition.  On  March  21,  2002,  the  Commission  released  an  Order  adopting  rules 


 to  govern  and  streamline  review  of  domestic  Section  214  transfer  of  control  applications.  204  By  adopting  these  rules,  the  Commission  reduced  the  burden  on  carriers  of  complying  with  the  Commissions 
 authorization  requirements  concerning  mergers  and  other  transactions  and,  at  the  same  time,  increased  the  predictability  and  transparency  of  these  requirements. 


 195.  Under  the  streamlined  procedures,  the  Commission  presumed  a  number  of  categories  of  transactions  involving  small  entities  to  be  of  the  kind  not  likely  to  raise  public  interest  concerns,  and  they 
 receive  automatic  approval  after  a  thirty  day  review  period  unless  otherwise  notified  by  the  Commission.  For  example,  transfer  applications  involving  domestic,  interstate  carriers  that  are  non-  dominant  in  the 
 provision  of  any  service  where  their  combined  post-  transaction  market  presence  is  unlikely  to  raise  public  interest  concerns  are  presumptively  streamlined.  In  addition,  these  streamlined  procedures  are 
 particularly  helpful  to  resellers,  to  small,  rural  carriers  and  to  domestic  carriers  in  bankruptcy  that  are  seeking  to  transfer  assets  or  services  that,  absent  the  cost-  saving  streamlined  review  procedures,  might 
 otherwise  be  unable  to  obtain  the  additional  financing  necessary  to  compete  for  customers  or  even  be  forced  to  discontinue  services  to  existing  customers  altogether.  The  streamlined  approach  reduces  the 
 business  and  legal  resources  applicants  may  need  to  expend  to  manage  applications  through  the  Commission  review  process  because  applicants  can  now  predict  the  level  of  scrutiny  the  Commission  will 
 give  applications.  The  streamlined  approach  also  offers  small  entities  the  benefit  of  business  certainty  by  designating  a  date  certain  on  which  the  Commission  would  permit  proposed  transactions  to  close. 
 Finally,  the  Section  214  Streamlining  Order  relieves  all  carriers  of  the  obligation  to  file  applications  for  approval  of  pro  forma  transactions. 


 203  For  a  related  discussion  on  preferred  carrier  or  PC  changes,  see  infra  paras.  34-  44. 
 204  Implementation  of  Further  Streamlining  Measures  for  Domestic  Section  214  Authorizations,  Report  and  Order, 
 17  FCC  Rcd  5517  (2002)  (Section  214  Streamlining  Order). 
64
 Federal  Communications  Commission  FCC  03-  335 
 65 
 b.  Part  68 
 196.  Part  68  of  the  Commissions  Rules  governs  the  connection  of  terminal  equipment  (TE)  to  the  public  switched  telephone  network  (PSTN),  and  to  wireline  facilities  owned  by  wireline 


 telecommunications  carriers  and  used  to  provide  private  line  services.  Under  Part  68,  wireline  carriers  must  allow  all  TE  to  connect  to  their  networks,  provided  that  the  TE  meets  technical  criteria  for 
 preventing  proscribed  harms  to  the  network  and  carrier  personnel.  Initially,  working  with  the  industry,  the  Commission  developed  the  technical  criteria  and  published  them  in  its  rules,  established  TE 
 certification  and  registration  processes,  maintained  a  database  of  approved  equipment,  and  provided  enforcement. 


 197.  In  the  2000  Biennial  Regulatory  Review  of  Part  68,  the  Commission  adopted  new  rules  streamlining  and  privatizing  the  standards  development  and  approval  process  for  TE.  205  It  transferred 
 responsibility  for  development  of  TE  technical  criteria  from  the  Commission  to  standards  bodies  accredited  under  the  organization  and  standards  committee  of  the  American  National  Standards  Institute 
 (ANSI).  In  addition,  it  created  the  Administrative  Council  for  Terminal  Attachments  (ACTA)  under  the  joint  sponsorship  of  the  Alliance  for  Telecommunications  Industry  Solutions  (ATIS)  and  the 
 Telecommunications  Industry  Association  (TIA).  ACTAs  primary  duties  are  to  publicize  draft  criteria  for  industry  review  and  to  publish  the  final  criteria  after  the  review  period  is  closed. 


 198.  The  Commission  also  examined  its  own  role  in  approving  TE  for  connection  to  the  PSTN.  It  concluded  that  although  an  organized  system  of  equipment  approval  procedures  requiring 
 appropriate  documentation  is  still  necessary,  it  was  no  longer  in  the  public  interest  to  continue  Commission  certification  and  registration  of  TE.  The  Commission  subsequently  ceased  performing  all 
 such  functions  other  than  consideration  of  appeal  requests.  The  Commission  affirmed  an  earlier  decision  allowing  suppliers  to  seek  TE  approval  from  TCBs.  206  It  also  permitted  a  second  method  of  approval,  via 
 Supplier  Declaration  of  Conformity  (SDoC),  to  applicable  rules  and  standards.  The  Commission  made  ACTA  responsible  for  establishing  and  maintaining  a  publicly  accessible  database  of  approved  TE  and  for 
 developing  labeling  standards  for  TE.  All  approved  TE  must  be  listed  in  ACTAs  database,  regardless  of  the  method  of  obtaining  approval. 


 199.  The  Commission  believes  these  measures  promote  competition  in  the  provision  of  telecommunications  products  and  electronic  equipment  by  permitting  the  connection  of  competitively 
 provided  TE,  and  speed  delivery  of  these  products  to  the  public.  The  Commission  also  believes  these  measures  enhance  market  opportunities  for  small  business,  such  as  those  that  engage  in  compliance 
 testing  of  equipment,  and  manufacturers  that  supply  parts  and  services  to  telecommunications  service  providers. 


 205  2000  Biennial  Regulatory  Review  of  Part  68  of  the  Commissions  Rules  and  Regulations,  Report  and  Order,  15 
 FCC  Rcd  24,  944  (2000). 


 206  Office  of  Engineering  and  Technology  and  Common  Carrier  Bureau  Announce  the  Designation  of 
 Telecommunications  Certification  Bodies  (TCBs)  to  Approve  Radiofrequency  and  Telephone  Terminal  Equipment,  Public  Notice,  15  FCC  Rcd  18,  705  (2000);  see  also  1998  Biennial  Regulatory  Review  Amendment  of  Parts  2,  25, 


 and  68  of  the  Commissions  Rules  to  Further  Streamline  the  Equipment  Authorization  Process  for  Radio  Frequency  Equipment,  Modify  the  Equipment  Authorization  Process  for  Telephone  Terminal  Equipment,  Implement  Mutual 
 Recognition  Agreements  and  Begin  Implementation  of  the  Global  Mobile  Personal  Communications  by  Satellite  (GMPCS)  Arrangements,  Report  and  Order,  13  FCC  Rcd  24,  687  (1998). 
65
 Federal  Communications  Commission  FCC  03-  335 
 66 
 4.  Directory  Listing  Information 
 200.  In  an  Order  released  January  23,  2001,  the  Commission  concluded  that  LECs  must  provide  competing  Directory  Assistance  (DA)  providers  that  qualify  under  Section  251(  b)(  3)  of  the 


 Telecommunications  Act  of  1996  with  nondiscriminatory  access  to  the  LECs  local  directory  assistance  databases,  and  must  do  so  at  nondiscriminatory  and  reasonable  rates.  207  These  requirements  will  have  a 
 significant  positive  economic  impact  on  a  substantial  number  of  small  competitive  DA  providers  and  small  directory  publishers  by  ensuring  the  ability  of  these  entities  to  provide  service  on  a  competitively 
 neutral  basis.  In  addition,  these  requirements  will  have  a  positive  economic  impact  on  some  competitive  LECs.  Many  competitive  LECs,  both  small  and  large,  rely  upon  small  competitive  DA  providers  to 
 outsource  their  DA  services;  the  requirements  should  result  in  more  competition  in  the  DA  arena,  and,  therefore,  a  savings  to  these  competitive  LECs.  208 


 5.  Provision  of  Advanced  Services 
 201.  As  Congress  contemplated  in  enacting  Section  251(  c)(  6),  the  Commissions  collocation  requirements  benefit  small  competitive  LECs  in  their  efforts  to  compete  against  incumbent  LECs,  both 


 large  and  small,  in  the  provision  of  telecommunications  services,  including  advanced  services.  In  the  Advanced  Services  First  Report  and  Order,  the  Commission  strengthened  its  collocation  rules  to  reduce 
 the  costs  and  delays  faced  by  carriers  that  seek  to  collocate  equipment  at  the  premises  of  incumbent  LECs.  In  GTE  v.  FCC,  the  U.  S.  D.  C.  Circuit  Court  of  Appeals  affirmed  several  of  those  rules,  but 
 vacated  others,  and  remanded  the  case  to  the  Commission.  209  In  the  Collocation  Remand  Order,  the  Commission  addressed  the  remanded  issues.  210  Then,  in  the  Order  on  Reconsideration,  the  Commission 
 addressed  a  petition  for  clarification  or  partial  reconsideration  of  the  Collocation  Remand  Order.  211  The  Commission  also  addressed  in  the  Fifth  Report  and  Order  a  number  of  additional  collocation  issues  raised 


 207  Provision  of  Directory  Listing  Information  under  the  Telecommunications  Act  of  1934,  as  Amended,  First  Report 
 and  Order,  16  FCC  Rcd  2736  (2001). 
 208  We  note  that  the  Commission  released  a  Notice  of  Proposed  Rulemaking  on  January  9,  2002,  seeking  comment 
 on  whether  the  Commission  should  take  any  additional  steps  to  promote  competition  in  the  retail  directory  assistance  market,  and  if  so,  whether  certain  suggested  solutions  would  be  feasible  or  appropriate.  Provision  of 


 Directory  Listing  Information  Under  the  Communications  Act  of  1934,  As  Amended,  The  Use  of  N11  Codes  and  Other  Abbreviated  Dialing  Arrangements,  Administration  of  the  North  American  Numbering  Plan,  Notice  of 
 Proposed  Rulemaking,  17  FCC  Rcd  1164  (2002)  (Retail  Directory  Assistance  NPRM).  Specifically,  the  Commission  sought  comment  on  whether  it  should  require  that  directory  assistance  be  provided  through 
 presubscription  to  411,  or  some  other  reasonable  alternative  method  of  promoting  competition  in  the  retail  directory  assistance  market.  Id.  The  Commission  considered  and  sought  comment  on  the  potential  impact  and  benefits  of 
 these  proposals  on  small  entities  in  accordance  with  the  Regulatory  Flexibility  Act.  Id.  at  1191-  96,  paras.  57-  72. 
 209  GTE  Service  Corp.  v.  FCC,  205  F.  3d  416  (D.  C.  Cir.  2000). 


 210  Deployment  of  Wireline  Services  Offering  Advanced  Telecommunications  Capability,  Fourth  Report  and  Order, 
 16  FCC  Rcd  15,  435  (2001)  (Collocation  Remand  Order),  affd  sub  nom.  Verizon  Tel.  Co.  v.  FCC,  292  F.  3d  903  (D.  C.  Cir.  2002). 


 211  Deployment  of  Wireline  Services  Offering  Advanced  Telecommunications  Capability,  Order  on  Reconsideration 
 of  Fourth  Report  and  Order,  and  Fifth  Report  and  Order,  17  FCC  Rcd  16,  960  (2002)  (Order  on  Reconsideration  or  Fifth  Report  and  Order). 
66
 Federal  Communications  Commission  FCC  03-  335 
 67 
 as  part  of  the  Second  Further  Notice.  212  Collectively,  these  actions  reduce  the  burdens  small  competitive  LECs  encounter  in  seeking  to  compete  without  unduly  burdening  incumbent  LECs. 
 202.  Among  other  actions,  in  the  Collocation  Remand  Order,  the  Commission  adopted  rules  for  determining  which  equipment  a  competitive  LEC  may  collocate  at  an  incumbent  LECs  premises.  In 
 addition  to  ensuring  that,  like  incumbent  LECs,  small  competitive  LECs  are  able  to  deploy  technologically  advanced  equipment,  these  rules  preclude  the  collocation  of  equipment  that  improperly 
 infringes  the  incumbent  LECs  property  interests.  The  Commission  also  required  incumbent  LECs  to  provide  cross-  connects  between  collocated  carriers  upon  reasonable  request.  This  rule  gives  small 
 competitive  LECs  that  provide  their  own  transport  the  opportunity  to  obtain  additional  customers,  while  other  small  competitive  LECs  can  minimize  their  transport  costs.  In  addition,  the  Commission  required 
 that  an  incumbent  LEC  allow  a  requesting  carrier  to  submit  physical  collocation  space  preferences  prior  to  assigning  that  carrier  space.  This  enables  a  competitive  carrier  to  request  the  space  that  best  fits  its 
 operational  needs. 
 203.  Subsequently,  in  the  Order  on  Reconsideration,  the  Commission  required  incumbent  LECs,  including  those  classified  as  small  entities,  to  include  their  cross-  connect  offerings  in  their  federal 
 tariffs.  To  minimize  any  unnecessary  regulatory  burdens,  however,  the  Commission  clarified  that  incumbents  shall  have  the  flexibility  to  include  the  rate,  terms,  and  conditions  under  which  they  provide 
 cross-  connects,  in  any  appropriate  federal  tariffs.  In  so  doing,  the  Commission  implicitly  rejected,  as  unnecessarily  burdensome,  alternatives  such  as  requiring  incumbent  LECs  to  use  individual  case  basis 
 (ICB)  pricing  in  these  tariffs  in  appropriate  circumstances.  The  Commission  rejected  as  inconsistent  its  prior  policy  of  precluding  all  use  of  ICB  pricing  for  cross-  connects.  Rejection  of  this  alternative  ensures 
 that  incumbent  LECs  have  an  additional  measure  of  flexibility  in  developing  their  federal  cross-  connect  tariffs. 


 6.  Interconnection  and  Resale  Barriers 
 204.  The  Telecommunications  Act  of  1996  added  Section  251  to  the  Communications  Act.  Section  251  imposes  specific  obligations  on  telecommunications  carriers  designed  to  promote 


 competition  in  local  exchange  markets  across  the  country.  Incumbent  carrier  compliance  with  the  obligations  set  forth  in  this  section  is  absolutely  necessary  for  achievement  of  Congress  pro-  competitive 
 goals  and  policies.  Section  251  establishes  the  general  interconnection  obligations  for  all  telecommunications  carriers,  delineates  further  obligations  for  LECs,  and  prescribes  additional 
 requirements  for  incumbent  LECs.  Section  252  generally  sets  forth  the  procedures  that  state  commissions,  incumbent  LECs,  and  new  entrants  must  follow  to  implement  the  requirements  of  Section 
 251  and  to  establish  specific  interconnection  arrangements.  As  we  stated  in  the  2000  Report,  the  Commission  continues  to  ensure  carrier  compliance  with  the  rights  and  obligations  set  forth  in  Section 
 251.  213 
 205.  In  the  Triennial  Review  Order,  the  Commission  undertook  a  comprehensive  evaluation  of  its  unbundling  rules  to  ensure  that  its  regulatory  framework  remains  current  and  faithful  to  Congress  pro-competitive 
 market-  opening  provisions.  The  Triennial  Review  Order  fulfills  the  commitment  the  Commission  undertook  in  its  1999  UNE  Remand  Order  214  to  reexamine,  in  three  years,  the  list  of  network 


 212  Deployment  of  Wireline  Services  Offering  Advanced  Telecommunications  Capability,  Order  on  Reconsideration 
 and  Second  Further  Notice  of  Rulemaking,  15  FCC  Rcd  17,  806  (2000)  (Collocation  Reconsideration  Order  or  Second  Further  Notice). 


 213  2000  Report,  15  FCC  Rcd  at  15,  386-  87,  paras.  26-  29. 
 214  Implementation  of  the  Local  Competition  Provisions  of  the  Telecommunications  Act  of  1996,  Third  Report  and 
 Order  and  Fourth  Further  Notice  of  Proposed  Rulemaking,  15  FCC  Rcd  3696  (1999)  (UNE  Remand  Order). 
67
 Federal  Communications  Commission  FCC  03-  335 
 68 
 elements  that  incumbent  LECs  must  offer  to  competitors  on  an  unbundled  basis,  and  responds  to  several  significant  judicial  rulings  issued  since  the  Commission  last  conducted  a  comprehensive  review  of  its 
 unbundling  rules.  215 
 206.  Among  other  actions,  in  the  Triennial  Review  Order,  216  the  Commission  adopted  rules  regarding  the  unbundling  of  network  elements.  The  Commission  also  modified  its  impairment  analysis  to 
 find  that  a  requesting  carrier  is  impaired  when  lack  of  access  to  a  facility  in  the  incumbent  LECs  network  poses  barriers  that  are  likely  to  make  entry  into  the  market  uneconomic.  These  can  include  both 
 operational  and  economic  barriers,  such  as  scale  economies,  sunk  costs,  first  mover  advantages,  absolute  cost  advantages,  and  barriers  within  the  control  of  the  incumbent  LEC.  In  adopting  this  interpretation,  the 
 Commission  considered  a  variety  of  factors  relating  to  the  size  of  regulated  entities  and  the  customers  they  serve.  The  Commission  considered  a  number  of  barriers  to  competitive  entry,  including  those  faced 
 by  small  competitors,  as  well  as  the  importance  of  scale  economies  as  they  relate  to  small  entities.  The  Triennial  Review  Order  also  affirms  that  incumbent  LECs  are  obligated  to  provide  access  to  UNEs  and 
 UNE  combinations.  The  Commission  intends  that  these  new  rules  will  promote  small  businesses  entry  into  the  market  for  competitive  local  service. 


 7.  Impartial  Administration  of  Telecommunications  Numbers 
 207.  In  undertaking  to  develop  national  numbering  resource  optimization  strategies,  the  Commission  seeks  to  fulfill  its  statutory  mandate  under  Section  251(  e)  of  the  Telecommunications  Act  of 


 1996,  which  grants  the  Commission  exclusive  jurisdiction  over  the  NANP.  217  Following  the  2000  Report,  the  Commission  released  the  Second  Report  and  Order,  Order  on  Reconsideration,  and  Second  Further 
 Notice  of  Proposed  Rulemaking,  in  which  the  Commission  took  the  following  steps  to  develop,  adopt,  and  implement  a  number  of  strategies  to  ensure  that  NANPs  numbering  resources  are  used  efficiently,  and 
 that  all  entities  have  the  numbering  resources  they  need  to  compete  in  the  rapidly  expanding  telecommunications  marketplace.  218 


 208.  First,  the  Commission  required  carriers  to  utilize  60%  of  their  existing  inventory  of  numbers  before  receiving  additional  resources  within  a  particular  rate  center.  The  threshold  increases  by 
 5%  each  year,  starting  June  30,  2001,  to  a  maximum  threshold  of  75%.  The  Commission  established  these  small,  yearly  percentage  increases  to  allow  carriers,  especially  small  carriers,  sufficient  time  to 
 maximize  their  utilization  levels.  Next,  the  Commission  decided  that  additional  rules  or  guidelines  will  not  be  enumerated  at  the  federal  level  with  regard  to  geographic  splits  or  all-  services  overlays.  Such  an 
 approach  allows  state  commissions  to  consider  the  surrounding  local  circumstances,  including  the  needs  of  small,  local  businesses,  in  deciding  whether  or  how  to  provide  area  code  relief.  219  Lastly,  the 


 215  See,  e.  g.,  Verizon  v.  FCC,  535  U.  S.  467  (2002);  Competitive  Telecommunications  Assn.  v.  FCC,  309  F.  3d  8 
 (D.  C.  Cir.  2002);  United  States  Telecom  Assn.  v.  FCC,  290  F.  3d  415  (D.  C.  Cir.  2002). 


 216  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,  Report  and  Order  on  Remand  and  Further  Notice  of  Proposed 


 Rulemaking,  18  FCC  Rcd  16,  978  (Triennial  Review  Order),  corrected  by  Errata,  18  FCC  Rcd  19,  020  (2003),  petitions  for  review  pending,  United  States  Telecom  Assn  v.  FCC,  D.  C.  Cir.  No.  00-  1012  (and  consolidated  cases). 


 217  47  U.  S.  C.    151(  e)(  1). 
 218  Numbering  Resource  Optimization,  Second  Report  and  Order,  Order  on  Reconsideration  and  Second  Further 
 Notice  of  Proposed  Rulemaking,  16  FCC  Rcd  306  (2000). 
 219  See  Petition  of  the  Connecticut  Department  of  Public  Utility  Control  for  Delegated  Authority  to  Implement 
 Specialized  Transitional  Overlays,  Memorandum  Opinion  and  Order,  18  FCC  Rcd  10,  946  (2003);  Wireline  (continued....) 
68
 Federal  Communications  Commission  FCC  03-  335 
 69 
 Commission  established  a  comprehensive  audit  program  to  verify  carriers  actual  need  for  numbering  resources,  in  accordance  with  federal  rules  and  industry  guidelines.  This  audit  program  consists  of  for 
 cause  and  random  audits.  For  small  carriers,  audits  will  help  to  ensure  that  large  businesses  are  not  hoarding  numbers  or  otherwise  preventing  small  carriers  from  gaining  access  to  numbering  resources. 


 209.  In  a  more  recent  Order,  the  Commission  continued  its  efforts  to  maximize  number  conservation  and  utilization  in  the  NANP.  In  the  Fourth  Report  and  Order,  the  Commission  reaffirmed 
 that  carriers  need  only  deploy  local  number  portability  (LNP)  in  switches  within  the  100  largest  MSAs  for  which  another  carrier  has  made  a  specific  request  for  the  provision  of  LNP.  220  By  maintaining  this 
 requirement,  the  Commission  did  not  impose  new  burdens  on  small  carriers  operating  in  the  100  largest  MSAs.  The  Commission  also  specifically  exempted  rural  telephone  companies  and  Tier  III  wireless 
 carriers  (carriers  with  500,000  or  fewer  customers)  that  have  not  received  a  request  to  provide  LNP  from  the  thousands-  block  number  pooling  requirement.  The  Commission  exempted  carriers  operating  in  rate 
 centers  where  they  are  the  only  service  provider  receiving  numbering  resources.  221 
 8.  Universal  Service 
 a.  Universal  Service  Fund 
 210.  Following  the  2000  Report,  the  Commission,  through  its  Universal  Service  programs,  helped  to  ensure  comparability  between  urban  and  rural  rates  and  services,  promoted  access  to  the 


 network  by  low  income  consumers,  and  effectuated  the  availability  of  telecommunications  services  and  access  to  the  Internet  by  schools,  libraries,  and  rural  health  care  providers.  Specifically,  in  an  Order 
 released  December  13,  2002,  the  Commission  minimized  significant  economic  impact  on  small  entities  by  adopting  modifications  to  the  revenue-  based  methodology  for  assessing  and  recovering  contributions 
 to  the  federal  Universal  Service  mechanisms.  222  In  modifying  the  existing  contribution  system,  the  Commission  adopted  rules  related  to  contribution  recovery  that  will  increase  billing  transparency  and 
 decrease  confusion  for  consumers  regarding  the  amount  of  Universal  Service  contributions  that  carriers  pass  through,  while  ensuring  that  carriers  continue  to  have  the  flexibility  to  recover  legitimate 
 administrative  costs  from  consumers  through  other  means.  In  light  of  these  changes,  the  Commission  prohibited  carriers  from  marking  up  federal  Universal  Service  line  items  above  the  contribution  factor. 
 These  actions  addressed  small  entity  concerns  regarding  recovery  practices.  The  Commission  also 
 (...  continued  from  previous  page)  Competition  Bureau  Seeks  Comment  on  the  Petition  of  the  California  Public  Utilities  Commission  and  of  the  People 
 of  the  State  of  California  to  Implement  Specialized  Overlay  Area  Codes,  Public  Notice,  18  FCC  Rcd  21,  331  (WCB  2003). 


 220  Numbering  Resource  Optimization;  Implementation  of  the  Local  Competition  Provisions  of  the 
 Telecommunications  Act  of  1996;  Telephone  Number  Portability,  Fourth  Report  and  Order  and  Fourth  Further  Notice  of  Proposed  Rulemaking,  18  FCC  Rcd  12,  472  (2003)  (Fourth  Report  and  Order). 


 221  The  Commission  received  more  than  20  petitions  for  waiver  concerning  rural  carriers  that  operate  in  areas 
 overlapping  the  largest  100  MSAs. 
 222  Federal-  State  Joint  Board  on  Universal  Service;  1998  Biennial  Regulatory  Review  Streamlined  Contributor 
 Reporting  Requirements  Associated  with  Administration  of  Telecommunications  Relay  Service,  North  American  Numbering  Plan,  Local  Number  Portability,  and  Universal  Service  Support  Mechanisms;  Telecommunications 


 Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  and  the  Americans  With  Disabilities  Act  of  1990;  Administration  of  the  North  American  Numbering  Plan  and  North  American  Numbering  Plan  Cost  Recovery 
 Contribution  Factor  and  Fund  Size;  Number  Resource  Optimization;  Telephone  Number  Portability;  Truth-  in-Billing  and  Billing  Format,  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rulemaking,  17  FCC  Rcd 
 24,  952  (2002). 
69
 Federal  Communications  Commission  FCC  03-  335 
 70 
 retained  the  de  minimis  exemption  for  carriers  whose  annual  contributions  would  be  less  than  $10,000  (i.  e.,  they  do  not  pay  in)  to  ensure  that  compliance  costs  associated  with  contributing  to  Universal  Service 
 do  not  exceed  actual  contribution  amounts. 
 b.  Schools  and  Libraries 
 211.  The  Congress  established  the  Schools  and  Libraries  Universal  Service  program  as  part  of  the  Telecommunications  Act  of  1996  to  provide  affordable  telecommunications  services  for  all  eligible 


 schools  and  libraries,  especially  those  in  rural  and  economically  disadvantaged  areas.  The  Commission  is  working  to  meet  this  statutory  goal.  Over  the  last  three  years,  the  Commission  made  multiple  advances 
 on  this  front.  First,  in  an  Order  released  in  2001,  the  Commission  adopted  a  rule  to  provide  additional  time  for  recipients  under  the  Schools  and  Libraries  Universal  Service  Support  Mechanism  (Support 
 Mechanism)  to  implement  contracts  or  agreements  with  service  providers  for  non-  recurring  services.  223  This  action  provides  schools  and  libraries  with  more  time  to  install  non-  recurring  services,  and  thereby 
 make  greater  use  of  their  Universal  Service  discounts. 
 212.  Next,  the  Commission  revised  Section  54.507(  a)  of  its  Rules  to  provide  that  unused  funds  from  the  Support  Mechanism  may  be  applied  to  stabilize  the  amount  of  contributions  to  the  Universal 
 Service  Fund  for  no  more  than  the  next  three  quarters,  beginning  with  the  third  quarter  of  2002.  224  Thereafter,  unused  funds  from  the  Support  Mechanism  will  be  carried  forward  for  use  in  subsequent 
 funding  years  of  the  schools  and  libraries  program.  The  revised  rules  benefit  small  entities  that  contribute  to  the  Universal  Service  Fund  by  stabilizing  or  reducing  contribution  requirements.  In  addition,  the 
 carryover  of  unused  funds  from  the  Support  Mechanism  benefits  small  entities  by  providing  additional  funds  that  may  be  committed  to  schools  and  libraries  pursuant  to  the  Support  Mechanism. 


 213.  Finally,  in  an  Order  released  April  30,  2003,  the  Commission  took  major  steps  to  streamline  the  operation  of  its  Support  Mechanism,  while  improving  its  oversight  over  the  support 
 mechanism.  225  Among  other  actions,  the  Commission  clarified  that  wireless  services  are  eligible  for  support  under  the  schools  and  libraries  Support  Mechanism  to  the  same  extent  wireline  services  are 
 eligible,  and  that  requests  for  wireline  and  wireless  services  must  be  reviewed  under  the  same  standard.  This  clarification  will  benefit  small  service  providers  by  ensuring  that  discounts  are  available  for  such 
 services.  In  addition,  consistent  with  its  desire  to  assist  small  entities,  the  Commission  directed  the  Universal  Service  Administrative  Company  to  develop  a  pilot  program  testing  an  online  list  of  internal 
 connections  equipment  that  is  automatically  eligible  for  discounts,  provided  the  uses  are  eligible  and  all  other  funding  requirements  are  satisfied.  This  program  is  likely  to  reduce  compliance  burdens  on  small 
 applicants  because  it  will  help  facilitate  the  application  process.  The  Order  also  allows  for  the  funding  of  discounts  for  voice  mail.  This  action  reduces  the  administrative  burden  on  all  schools  and  libraries 
 participating  in  the  program  because  they  will  no  longer  have  to  segregate  the  voice  mail  portion  of  their  phone  bills  when  they  apply  for  funding.  The  inclusion  of  voice  mail  will  have  a  positive  effect  on 
 entities  that  receive  discounts  for  telecommunications  in  that  this  commonly  used  service  is  now  eligible  for  discounts. 


 223  Federal-  State  Joint  Board  on  Universal  Service,  Report  and  Order,  16  FCC  Rcd  13,  510  (2001). 
 224  Schools  and  Libraries  Universal  Service  Support  Mechanism,  First  Report  and  Order,  17  FCC  Rcd  11,  521 
 (2002). 
 225  Schools  and  Libraries  Universal  Support  Mechanism,  Second  Report  and  Order  and  Further  Notice  of  Proposed 
 Rulemaking,  18  FCC  Rcd  9202  (2003). 
70
 Federal  Communications  Commission  FCC  03-  335 
 71 
 c.  Access  Charge  and  Universal  Service  Reform 
 214.  In  October  2001,  the  Commission  modified  the  interstate  access  charge  and  Universal  Service  support  system  for  incumbent  LECs  subject  to  rate-  of-  return  regulation.  226  Consistent  with 


 Congress  mandate,  the  Commission  sought  to  foster  competition  and  efficient  pricing  in  the  market  for  interstate  access  services,  and  to  create  Universal  Service  mechanisms  that  would  be  secure  in  an 
 increasingly  competitive  environment.  By  simultaneously  removing  implicit  support  from  the  rate  structure  and  replacing  it  with  explicit,  portable  support,  the  Commission  provided  a  more  equal  footing 
 for  competitors  in  local  and  long  distance  markets,  while  ensuring  that  consumers  in  all  areas  of  the  country,  especially  those  living  in  high-  cost,  rural  areas,  have  access  to  telecommunications  services  at 
 affordable  and  reasonably  comparable  rates. 
 215.  The  Commission  rationalized  the  rate  structure  for  recovery  of  interstate  access  costs  by  aligning  non-  traffic-  sensitive  costs  with  access  charges  employing  non-  traffic-  sensitive  features.  Thus, 
 the  Commission  gradually  increased  the  ceiling  on  the  subscriber  line  charge,  phased  out  the  carrier  common  line  charge  assessed  on  interexchange  carriers  (IXCs),  and  reassigned  certain  costs  among 
 access  categories  to  reflect  generally  a  more  cost-  causative  approach  to  access  charges.  As  one  of  our  goals,  we  seek  to  foster  competition  for  residential  subscribers  in  rural  areas  by  facilities-  based  carriers 
 and  to  enhance  incentives  for  IXCs  to  originate  service  in  rural  areas  and  facilitate  long  distance  toll  rate  averaging,  which  will  help  small  businesses  in  rural  areas. 


 216.  The  Commissions  action  also  removed  implicit  support  from  the  interstate  access  rate  structure  and  provided  for  its  recovery  through  the  Interstate  Common  Line  Support  mechanism,  one  of 
 the  Commissions  Universal  Service  support  programs.  Recovery  of  non-  traffic  sensitive  costs  through  per-  minute  rates  creates  an  implicit  support  flow  from  high-  to  low-  volume  users  of  interstate  long 
 distance  service  and  is  incompatible  with  a  competitive  market  for  local  exchange  and  exchange  access  services.  Some  rate-  of-  return  LECs  had  expressed  particular  concern  that  high  per-  minute  charges  may 
 place  them  at  a  disadvantage  in  competing  for  high-  volume  customers,  jeopardizing  an  important  source  of  revenue. 


 217.  The  Commission  addressed  several  specific  challenges  facing  small  carriers  serving  rural  and  high-  cost  areas.  Although  the  Commission  reduced  per-  minute  switched  access  charges  for  all  rate-of- 
 return  carriers,  those  small  carriers  retain  the  flexibility  to  establish  rates  based  on  their  own  costs  in  the  areas  they  serve,  rather  than  being  required  to  conform  to  a  prescribed  target  rate.  The  Commission 
 continues  to  permit  rate-  of-  return  carriers  to  set  interstate  rates  based  on  an  authorized  rate  of  return  of  11.25%.  Finally,  a  new,  uncapped  Universal  Service  support  mechanism  will  provide  certainty  and 
 stability  by  ensuring  that  the  rate  structure  modifications  adopted  do  not  affect  overall  recovery  of  interstate  access  costs  by  rate-  of-  return  carriers. 


 9.  Payphone  Regulation 
 218.  Section  276  of  the  Communications  Act  directs  the  Commission  to  take  a  number  of  actions  to  promote  competition  among  payphone  services.  227  On  January  31,  2002,  the  Commission 


 226  Multi-  Association  Group  (MAG)  Plan  for  Regulation  of  Interstate  Services  of  Non-  Price  Cap  Incumbent  Local 
 Exchange  Carriers  and  Interexchange  Carriers,  Second  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  Fifteenth  Report  and  Order,  and  Report  and  Order,  16  FCC  Rcd  19,  613  (2001)  (MAG  Order),  recon. 


 pending. 
 227  47  U.  S.  C.    276. 
71
 Federal  Communications  Commission  FCC  03-  335 
 72 
 released  an  Order  on  Wisconsin  intrastate  payphone  access  line  rates.  228  The  Commission  concluded  that  Section  276  requires  BOCs  to  set  their  intrastate  payphone  line  rates  in  compliance  with  the 
 Commissions  cost-  based  forward-  looking  new  services  test.  On  June  25,  2003,  the  Commission  adopted  a  rule  exempting  payphone  lines  from  the  presubscribed  IXC  charge  (PICC).  229  As  a  result  of 
 these  decisions,  the  payphone  market  is  more  competitive  because  small  payphone  providers  are  able  to  obtain  the  inputs  needed  from  BOCs  at  cost-  based  rates  and  will  not  be  required  to  pay  the  PICC,  which 
 contains  a  subsidy  to  other  incumbent  LEC  services. 
 10.  Local  Competition  and  Broadband  Data  Gathering  Program 
 219.  The  Commission  adopted  the  Local  Competition  and  Broadband  Data  Gathering  Program  to  establish  a  reporting  program  to  collect  basic  information  about  two  critical  areas  of  the 


 communications  industry:  (1)  the  deployment  of  broadband  services;  and  (2)  the  development  of  local  telephone  service  competition.  230  The  Commission  concluded  that  collecting  this  information  would 
 materially  improve  its  ability  to  develop,  evaluate,  and  revise  policy  in  these  rapidly  changing  areas  and  provide  valuable  benchmarks  for  Congress,  the  Commission,  other  policy  makers,  and  consumers. 


 220.  In  the  Data  Gathering  Order,  the  Commission  adopted  a  standardized  form  (FCC  Form  477)  to  collect  this  information.  The  Commission  structured  Form  477  to  include  separate  sections  on 
 deployment  of  broadband  services,  local  telephone  service  competition,  and  provision  of  mobile  telephone  service.  To  minimize  the  forms  impact  on  small  carriers,  the  Commission  established  a 
 separate  reporting  threshold  for  each  section  of  the  form.  The  Commission  requires  providers  to  complete  only  the  portions  of  the  form  for  which  they  meet  or  exceed  the  defined  reporting  thresholds.  For 
 broadband  reporting,  the  rules  require  any  facilities-  based  provider  with  at  least  250  full  or  one-  way  broadband  lines  (or  wireless  channels)  in  a  given  state  to  complete  applicable  portions  of  the  form  (Parts  I 
 and  V)  for  that  state.  For  local  competition  reporting,  the  rules  require  any  LEC  with  10,000  or  more  local  telephone  service  lines  (or  fixed  wireless  channels)  in  a  state  to  complete  applicable  portions  of  the 
 form  (Parts  II  and  V)  for  that  state.  Finally,  the  Commission  requires  facilities-  based  providers  of  mobile  telephone  services  to  complete  applicable  portions  of  Form  477  (Part  III)  for  each  state  in  which  they 
 serve  10,000  or  more  subscribers. 
 221.  In  establishing  these  reporting  thresholds,  [  t]  he  Commission  [tried]  to  craft  its  rules  in  such  a  manner  that  the  burdens  imposed  take  into  account  any  potentially  disparate  impact  such  rules  may 
 have  on  smaller  entities.  The  Commission  balanced  its  need  to  collect  reliable  and  comprehensive  data  with  its  desire  to  minimize  reporting  burdens,  particularly  for  smaller  entities  that  may  lack  significant 
 resources  to  devote  to  regulatory  compliance.  Specifically,  the  Commission  made  special  provision  to  exempt  most  small  carriers  from  the  requirement  to  report  local  competition  data.  231  The  Commission 
 adopted  a  threshold  of  10,000  voice  grade  lines  or  wireless  channels,  because  such  a  threshold  allows  the  Commission  to  collect  data  from  the  significant  participants  in  most  markets  without  imposing  burdens 
 on  entities  that  are  relatively  small.  The  Commission  estimated  that  approximately  200  of  the  nations  largest  LECs  would  meet  the  threshold  and  be  required  to  report  local  telephone  competition  data. 


 228  Wisconsin  Public  Service  Commission,  Order  Directing  Filings,  Memorandum  Opinion  and  Order,  17  FCC  Rcd 
 2051  (2002). 


 229  Access  Charge  Reform,  Order  on  Reconsideration,  18  FCC  Rcd  12,  626  (2003). 


 230  Local  Competition  and  Broadband  Reporting,  Report  and  Order,  15  FCC  Rcd  7717  (2000)  (Data  Gathering 
 Order). 


 231  Local  Competition  and  Broadband  Reporting,  Notice  of  Proposed  Rulemaking,  14  FCC  Rcd  18,100,  18,  111, 
 para.  25  (1999). 
72
 Federal  Communications  Commission  FCC  03-  335 
 73 
 222.  Regarding  the  broadband  reporting  threshold,  the  Commission  noted  that  Congress  directed  it  to  track  the  deployment  of  advanced  telecommunications  capability  to  all  Americans.  Given 
 the  broad  reach  of  this  directive,  the  Commission  concluded  that  it  should  establish  a  more  comprehensive  reporting  requirement  for  providers  of  broadband  services  to  ensure  that  it  did  not  miss 
 broadband  developments  by  smaller  entities,  for  example,  in  rural  areas.  The  Commission  further  concluded  that  a  250  broadband  line  or  wireless  channel  threshold  would  best  meet  its  needs.  To  balance 
 this  comprehensive  reporting  threshold,  however,  the  Commission  streamlined  the  broadband  section  of  the  reporting  form  to  include  only  the  most  essential  information,  in  as  simple  a  format  as  possible. 


 11.  Competitive  LEC  Access  Charges 
 223.  In  April  2001,  the  Commission  addressed  a  number  of  interrelated  issues  concerning  competitive  LEC  charges  for  interstate  switched  access  services  and  the  obligations  of  IXCs  to  exchange 


 access  traffic  with  competitive  LECs.  232  By  taking  action,  the  Commission  sought  to  ensure,  by  the  least  intrusive  means  possible,  that  competitive  LEC  access  charges  would  be  just  and  reasonable,  while 
 reducing  regulatory  arbitrage  opportunities  that  previously  existed  with  respect  to  tariffed  competitive  LEC  access  services.  The  Commission  revised  its  tariff  rules  to  align  tariffed  competitive  LEC  access 
 rates  more  closely  with  those  of  the  incumbent  LECs.  The  Commission  adopted  a  declining  benchmark  ceiling  rate  for  competitive  LEC  access  charges  until  it  reached  the  level  tariffed  by  the  incumbent  LEC. 
 The  Commission  presumes  that  competitive  LEC  access  rates  that  are  at  or  below  the  benchmark  are  just  and  reasonable  and  competitive  LECs  may  impose  them  by  tariff.  Above  the  benchmark,  the 
 Commission  requires  competitive  LEC  access  services  detariffed,  so  competitive  LECs  must  negotiate  higher  rates  with  IXCs. 


 224.  The  Commission  concluded  that  the  benchmark  approach  to  competitive  LEC  access  charges  minimize  the  impact  of  the  rules  on  small  entities  in  several  ways.  First,  it  allows  small  business 
 competitive  LECs  to  continue  to  enjoy  the  convenience  of  offering  a  tariffed  service,  an  advantage  sought  by  competitive  LECs,  many  of  which  may  be  relatively  new  and  small  businesses.  Second,  it  enables 
 small  IXCs  to  purchase  most  access  services  via  tariff,  rather  than  having  to  negotiate  agreements  with  every  competitive  LEC.  Finally,  the  approach  ensures  that  IXCs  will  continue  to  accept  and  pay  for 
 competitive  LEC  switched  access  services,  as  long  as  the  competitive  LECs  tariff  rates  are  within  the  Commissions  benchmarks.  233  Many  competitive  LECs  argued  that  such  an  outcome  was  essential  for 
 new,  relatively  small  competitive  LECs  to  continue  to  offer  services. 
 12.  Mandatory  IXC  Carrier  Detariffing 
 225.  On  July  31,  2001,  the  Commission  completed  the  steps  to  implement  detariffing  of  the  provision  of  interstate  long  distance  services  by  non-  dominant  IXCs  that  it  originally  had  ordered  in 


 1996.  234  The  Commission  concluded  that  a  policy  of  not  permitting  non-  dominant  IXCs  to  file  tariffs  for  such  services  would  advance  one  of  the  principal  goals  of  the  Telecommunications  Act  of  1996  the 
 promotion  of  increased  competition  in  all  telecommunications  markets,  including  those  that  are  already  open  to  competition,  particularly  long  distance  service  markets.  The  Commission  observed  that  when 
 interstate,  domestic,  interexchange  services  are  completely  detariffed,  consumers  will  be  able  to  take 
 232  Access  Charge  Reform,  Seventh  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  16  FCC  Rcd 
 9923  (2001). 


 233  We  note  that  many  competitive  LECs  sought  action  from  the  Commission  precisely  because  IXCs  threatened  to 
 cut  off  traffic  and  stopped  paying  for  competitive  LEC  switched  access  services. 
 234  Common  Carrier  Bureau  Extends  Transition  Period  for  Detariffing  Consumer  Domestic  Long  Distance  Services, 
 16  FCC  Rcd  2906  (2001). 
73
 Federal  Communications  Commission  FCC  03-  335 
 74 
 advantage  of  remedies  provided  by  state  consumer  protection  laws  and  contract  law  against  abusive  practices.  The  Commission  requires  non-  dominant  IXCs  to  make  available  to  the  public  information  on 
 the  rates,  terms,  and  conditions  for  all  of  their  interstate,  domestic,  interexchange  services. 
 226.  Subsequently,  the  U.  S.  D.  C.  Circuit  Court  of  Appeals  stayed  the  detariffing  decision.  235  On  reconsideration,  the  Commission  eliminated  the  public  disclosure  requirement,  236  but,  on  further 
 reconsideration,  the  Commission  reinstated  the  public  disclosure  requirement  and  added  that  IXCs  must  post  tariff  information  on  their  website  if  they  have  a  website.  237  The  U.  S.  D.  C.  Circuit  Court  of  Appeals 
 ultimately  affirmed  the  Commissions  decision  to  detariff  interstate,  domestic  interexchange  services. 
 227.  The  Commission  found  that  precluding  non-  dominant  IXCs  from  filing  tariffs  for  interstate,  domestic,  interexchange  services  would  enhance  competition  among  all  providers  of  such 
 services  (regardless  of  size),  promote  competitive  market  conditions,  and  establish  market  conditions  that  more  closely  resemble  an  unregulated  environment.  It  further  found  that  filing  tariffs  imposed  costs  on 
 carriers  that  attempt  to  make  new  service  offerings.  The  complete  detariffing  should  minimize  regulatory  burdens  on  all  non-  dominant  IXCs,  including  small  entities.  Furthermore,  the  increased  competition  that 
 detariffing  makes  available  to  consumers,  many  of  which  are  small  businesses,  leads  to  lower  prices  for  interstate,  domestic,  and  interexchange  services,  thereby  benefiting  all  consumers,  including  small 
 businesses. 
 13.  Accounting  Reform 
 228.  With  the  release  of  the  Phase  2  Report  and  Order  238  in  November  2001,  the  Commission  completed  the  second  phase  of  its  comprehensive,  biennial  review  of  the  accounting  and  reporting  rules 


 prescribed  for  incumbent  LECs.  That  review  led  to  four  major  accounting  and  reporting  reforms:  (1)  streamlining  of  the  accounting  requirements  prescribed  for  Class  A  and  Class  B  carriers;  (2)  relaxation  of 
 certain  aspects  of  the  affiliate  transactions  rules;  (3)  elimination  of  the  annual  cost  allocation  manual  (CAM)  filing  requirement  and  the  associated  independent  audit  requirement  for  mid-  sized  carriers;  and 
 (4)  reduction  of  the  Automated  Reporting  Management  Information  System  (ARMIS)  reporting  requirements  for  mid-  sized  carriers. 


 229.  Incumbent  LECs  record  their  costs  and  revenues  pursuant  to  the  Uniform  System  of  Accounts  (USOA)  prescribed  in  Part  32  of  the  Commissions  Rules.  239  In  the  Phase  2  Report  and  Order, 


 235  MCI  Telecommunications  Corp.  v.  FCC,  No.  96-  1459  (D.  C.  Cir.  Feb.  13,  1997). 
 236  Policy  and  Rules  Concerning  the  Interstate,  Interexchange  Marketplace,  Implementation  of  Section  254(  g)  of  the 
 Communications  Act  of  1934,  as  amended,  Order  on  Reconsideration,  12  FCC  Rcd  15,  014  (1997). 
 237  Policy  and  Rules  Concerning  the  Interstate,  Interexchange  Marketplace,  Implementation  of  Section  254(  g)  of  the 
 Communications  Act  of  1934,  as  amended,  Second  Order  on  Reconsideration  and  Erratum,  14  FCC  Rcd  6004  (1999). 


 238  2000  Biennial  Regulatory  Review  Comprehensive  Review  of  the  Accounting  Requirements  and  ARMIS 
 Reporting  Requirements  for  Incumbent  Local  Exchange  Carriers:  Phase  2;  Amendments  to  the  Uniform  System  of  Accounts  for  Interconnection;  Jurisdictional  Separations  Reform  and  Referral  to  the  Federal-  State  Joint  Board;  and 


 Local  Competition  and  Broadband  Reporting,  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  16  FCC  Rcd  19,  911  (2001)  (Phase  2  Report  and  Order),  on  recon.,  2000  Biennial  Regulatory  Review-  Comprehensive 
 Review  of  the  Accounting  Requirements  and  ARMIS  Reporting  Requirements  for  Incumbent  Local  Exchange  Carriers,  Order  on  Reconsideration,  17  FCC  Rcd  4766  (2002)  (Phase  2  Reconsideration  Order). 


 239  47  C.  F.  R.  Part  32. 
74
 Federal  Communications  Commission  FCC  03-  335 
 75 
 the  Commission  reduced  by  45%  the  number  of  Class  A  accounts  it  requires  the  largest  incumbent  LECs  to  maintain  and  by  27%  the  number  of  Class  B  accounts  it  requires  the  mid-  sized  and  small  incumbent 
 LECs  to  maintain.  The  Commission  also:  (1)  simplified  accounting  for  nonregulated  revenues;  (2)  eliminated  certain  inventory  requirements;  (3)  simplified  deferred  tax  accounting;  (4)  expanded  the 
 $2,000  expense  limit  rules  to  include  central  office  tools  and  test  equipment;  and  (5)  eliminated  the  requirement  for  a  revenue  study  analyzing  the  effect  of  proposed  accounting  standards  changes  prior  to 
 their  implementation. 
 230.  Prior  to  the  Phase  2  Report  and  Order,  Section  64.903  of  the  Commissions  Rules  required  incumbent  LECs  with  $121  million  or  more  in  annual  operating  revenues  to  file  CAMs  setting 
 forth  the  cost  allocation  procedures  they  use  to  allocate  costs  between  regulated  and  nonregulated  services,  240  and  Section  64.904  required  each  incumbent  LEC  that  filed  a  CAM  to  have  an  attest 
 engagement  or  financial  audit  performed  by  an  independent  auditor  every  two  years.  241  In  the  Phase  2  Report  and  Order,  the  Commission  revised  its  rules  to  eliminate  the  CAM  filing  requirement  and  the 
 independent  attest  engagement  or  audit  requirement  for  mid-  sized  incumbent  LECs.  The  Commission  also  eliminated  the  requirement  that  mid-  sized  incumbent  LECs  file  the  ARMIS  43-  02  USOA  Report,  43- 
 03  Joint  Cost  Report,  and  43-  04  Separations  and  Access  Report. 
 231.  Some  of  these  changes  will  affect  smaller  LECs.  For  example,  the  reduction  in  the  number  of  Class  B  accounts  and  the  reports  based  on  that  level  of  accounting  detail  will  reduce  those 
 burdens  on  smaller  LECs.  In  addition,  the  reduced  inventory  requirements  and  expanded  expensing  of  central  office  tools  and  test  equipment  permitted  by  the  revisions  further  reduce  small  LEC  accounting 
 costs. 
 III.  LEGISLATIVE  PROPOSALS 
 232.  Section  257(  c)(  2)  requires  us  to  identify  statutory  market  entry  barriers  that  Congress  can  eliminate,  consistent  with  the  public  interest,  convenience,  and  necessity.  242  In  this  Section,  we  submit 


 five  legislative  proposals  for  Congresss  consideration. 
 A.  Create  New  Tax  Incentive  Program 
 233.  We  propose  statutory  changes  to  provide  the  Commission  with  additional  authority  to  adopt  a  new  tax  incentive  program  benefiting  small  businesses.  Such  a  program  could  permit  deferral  of 


 taxes  on  any  gain  from  the  sales  of  telecommunications  businesses  to  small  telecommunications  firms,  including  disadvantaged  firms  and  firms  owned  by  minorities  or  women,  as  long  as  that  gain  is  reinvested 
 in  one  or  more  qualifying  replacement  telecommunications  businesses.  The  program  also  could  permit  tax  credits  for  sellers  who  offer  financing  on  sales  to  small  telecommunications  firms,  thereby  facilitating 
 sales  to  small  businesses.  It  could  also  include  strict  limits  on  the  size  of  eligible  purchasing  firms,  the  length  of  time  the  firm  must  hold  the  business  purchased,  and  the  dollar  value  of  eligible  transactions. 
 This  would  encourage  diversification  of  ownership  in  the  telecommunications  industry,  and  provide  entry  opportunities  for  small  businesses,  including  disadvantaged  businesses  and  businesses  owned  by 
 minorities  and  women. 


 240  47  C.  F.  R.    64.903. 
 241  47  C.  F.  R.    64.904. 
 242  47  U.  S.  C.    257(  c)(  2). 
75
 Federal  Communications  Commission  FCC  03-  335 
 76 
 B.  Establish  a  Spectrum  Relocation  Fund  for  Federal  Incumbents 
 234.  The  Commission  endorses  amendment  of  Section  113(  g)  of  the  National  Telecommunications  and  Information  Administration  Organization  Act  243  to  create  a  Spectrum 


 Relocation  Fund  (Fund)  that  would  streamline  the  reimbursement  process  for  Federal  Incumbents  in  spectrum  transferred  from  Government  to  non-  Government  use  (Government  transfer  spectrum).  Where 
 licenses  for  the  use  of  Government  transfer  spectrum  are  assigned  through  competitive  bidding,  auction  receipts  would  be  paid  into  the  Fund  and  Federal  Incumbents  would  be  reimbursed  for  their  relocation 
 costs  out  of  the  Fund.  This  Fund  would  reduce  market  entry  barriers  for  providers  of  new  wireless  communications  services,  including  small  businesses  and  other  new  entrants,  in  auctions  of  licenses  for 
 the  use  of  Government  transfer  spectrum  because  it  would  eliminate  uncertainties  associated  with  the  existing  reimbursement  scheme  under  which  new  licensees  are  responsible  for  paying  the  Federal 
 Incumbents  reimbursement  costs.  Further,  establishment  of  this  Fund  would  improve  the  economic  efficiency  of  these  auctions  by  increasing  the  likelihood  that  the  winning  bidders  are  the  parties  with  the 
 highest  valued  use  for  the  licenses. 
 C.  Clarify  Authority  to  Conduct  Innovative  Spectrum  Auction  Designs  and  to  Facilitate  Relocation  of  Incumbent  Licensees 


 235.  We  recommend  amendment  of  Section  309(  j)  of  the  Communications  Act  to  expressly  allow  the  Commission  to  employ  any  one  of  a  number  of  innovative  auction  designs,  whereby  spectrum 
 previously  licensed  to  incumbent  licensees  would  be  available  at  auction  with  different  rights.  244  Such  mechanisms  would  increase  the  value  of  spectrum  usage  rights  of  incumbent  licensees,  including  small 
 entities,  as  well  as  enable  new  licensees,  including  small  entities,  to  obtain  access  to  spectrum,  and  do  so  at  lower  transaction  costs,  so  that  it  can  be  put  to  its  most  highly  valued  use. 


 D.  Expand  Authority  to  Authorize  Operation  of  Radio  Stations  without  Individual  Station  Licenses 
 236.  The  Commission  recommends  amending  Section  307(  e)  of  the  Communications  Act  to  allow  the  Commission  greater  latitude  to  authorize  operation  of  radio  stations  by  rule  without  the  need  for 
 individual  licenses.  245  Currently,  Section  307(  e)(  1)  restricts  the  Commissions  use  of  such  authority  to  four  radio  services:  citizens  band,  radio  control,  aviation  (aircraft  stations)  and  marine  (certain  ship 
 stations).  246  Greater  flexibility  to  accommodate  unlicensed  use  without  being  restricted  to  these  four  specific  services  would  assist  the  Commission  to  better  optimize  spectrum  access. 


 E.  Amendment  to  Section  623(  d) 
 237.  The  Commission  recommends  that  Section  623(  d)  of  the  Communications  Act  247  be  amended  to  address  potentially  anticompetitive  pricing  practices  used  by  incumbent  cable  operators  that 


 may  impede  market  entry  by  competitors.  Entities  seeking  to  enter  a  local  cable/  broadband  market 
 243  47  U.  S.  C.    923(  g). 
 244  Section  309  of  the  Communications  Act  sets  out  the  Commissions  authority  with  respect  to  applications; 
 specifically,  309(  j)  authorizes  the  use  of  competitive  bidding  as  a  method  of  granting  licenses.  47  U.  S.  C.    309(  j). 
 245  47  U.  S.  C.    307(  e)(  1). 


 246  47  U.  S.  C.    307(  e)(  1)(  A)-(  D). 
 247  47  U.  S.  C.    623(  d). 
76
 Federal  Communications  Commission  FCC  03-  335 
 77 
 experience  difficulties  when  the  incumbent  cable  operator  in  the  market,  which  is  able  to  spread  costs  over  a  larger  subscriber  base,  offers  discounts  targeted  to  customers  of  the  would-  be  competitor.  A 
 number  of  new  competitors  have  complained  that,  when  they  enter  a  new  market  with  services  including  competitive  video,  telephony  and  broadband,  the  local  incumbent  cable  provider  targets  discounts  that  are 
 so  deep  that  the  new  entrant  cannot  effectively  compete  for  customers.  Such  tactics  normally  would  violate  the  uniform  pricing  requirements  of  Section  623(  d)  of  the  Communications  Act  and  Section 
 76.984(  a)  of  the  Commissions  Rules;  248  however,  if  an  MVPD  is  determined  by  the  FCC  to  be  subject  to  effective  competition,  the  uniform  pricing  requirements  no  longer  apply  to  that  operator  in  the  franchise 
 area.  Because  the  attempted  market  entry  of  the  would-  be  competitor  may  form  the  predicate  for  an  effective  competition  finding,  relief  under  existing  statutory  regulations  often  is  unavailable.  Lacking  an 
 effective  remedy,  some  potential  entrants  may  forego  entry  all  together,  thereby  denying  consumers  the  benefit  of  additional  competition. 


 238.  Section  623(  d)  currently  states  that  [  b]  ulk  discounts  to  multiple  dwelling  units  shall  not  be  subject  to  this  subsection,  except  that  a  cable  operator  of  a  cable  system  that  is  not  subject  to  effective 
 competition  may  not  charge  predatory  prices  to  a  multiple  dwelling  unit.  Upon  a  prima  facie  showing  by  a  complainant  that  there  are  reasonable  grounds  to  believe  that  the  discounted  price  is  predatory,  the  cable 
 system  shall  have  the  burden  of  showing  that  its  discounted  price  is  not  predatory.  We  recommend  that  Section  623(  d)  s  language  relating  to  bulk  discounts  and  predatory  pricing  be  expanded  to  apply  across 
 the  board,  without  regard  to  whether  the  cable  operator  is  subject  to  effective  competition  as  defined  in  the  statute. 


 248  47  C.  F.  R.    76.984(  a). 
77
 Federal  Communications  Commission  FCC  03-  335 
 78 
 IV.  CONCLUSION 
 239.  As  documented  in  this  2003  Report,  over  the  last  triennium,  the  Commission  continued  to  fulfill  its  ongoing  obligations  under  Section  257  of  the  Act.  We  are  mindful  of  the  role  that  entrepreneurs 


 and  small  businesses  serve  in  our  society.  In  particular,  we  recognize  their  contributions  to  the  countrys  economy.  Consequently,  where  appropriate,  we  tailor  our  policies  and  regulations  to  assist  these  smaller 
 players  in  the  telecommunications  field.  249  To  do  so  is  simply  good  business,  for  we  all  derive  a  benefit  when  they  succeed. 


 240.  We  hereby  submit  this  2003  Report  to  Congress. 


 FEDERAL  COMMUNICATIONS  COMMISSION 


 Marlene  H.  Dortch  Secretary 


 249  According  to  2001  U.  S.  Census  Bureau  data,  the  radio,  television,  telephone,  and  telegraph  sectors  add  $290 
 billion  to  the  GDP. 
78
 Federal  Communications  Commission  FCC  03-  335 
 2 
 In  short,  the  Commissions  promotion  of  competition,  broadband  deployment,  and  new  media  outlets  has  gone  a  long  way  toward  fulfilling  the  goals  set  forth  in  the  section  257  of  the  Act.  While  I  am 
 proud  of  our  record,  we  must  continue  to  search  for  new  ways  to  break  down  barriers  and  create  new  opportunities  for  entrepreneurs  and  other  small  businesses. 
80
 Federal  Communications  Commission  FCC  03-  335 
 1 
 DISSENTING  STATEMENT  OF  COMMISSIONER  MICHAEL  J.  COPPS 
 RE:  Section  257  Triennial  Report  to  Congress;  Identifying  and  Eliminating  Market  Entry  Barriers  for  Entrepreneurs  and  Other  Small  Businesses 
 Congress  understands  the  importance  of  small  business  to  our  country.  But  the  Commissions  2003  Small  Business  Report  will  lead  many  to  believe  that  the  FCC  does  not.  In  Section  257  of  the 
 Telecommunications  Act,  which  contains  the  mandate  to  produce  this  report,  Congress  told  the  FCC  to  start  taking  small  business  concerns  seriously.  Every  three  years  we  must  identify  the  market  entry 
 barriers  faced  by  small  businesses  in  the  communications  industry  and  report  on  the  specific  regulations  we  have  prescribed  to  eliminate  those  barriers.  Despite  this  Congressional  clarity,  todays  Report  does 
 not  fulfill  our  statutory  obligation.  Instead,  I  fear  that  the  Report  will  undermine  our  credibility  with  the  small  business  community.  To  me,  that  is  unacceptable.  So  I  find  myself  forced  to  dissent. 


 Section  257  creates  a  critical  reporting  requirement  for  the  Commission.  It  is  critical  because  small  business  is  the  engine  that  drives  Americas  economy.  Small  businesses  generate  two-  thirds  to 
 three-  quarters  of  new  jobs  annually  in  the  United  States.  Almost  98  percent  of  U.  S.  telecommunications  field  employers  are  small  businesses.  Much  of  the  future  of  the  telecommunications  industry  hinges  on 
 how  well  our  small  to  medium-  sized  businesses  do  in  the  national  and  international  economy.  This  is  not  only  because  of  the  huge  number  of  jobs  involved,  but  also  because  small  business  is  the  source  of  much 
 of  the  innovation  and  energy  for  the  economy  in  general  and  for  the  communications  sector  in  particular,  developing  13  to  14  times  more  patents  per  employee  than  larger  firms. 


 Recognizing  this,  Congress  directed  the  FCC  to  examine  the  market  entry  barriers  faced  by  small  businesses  and  entrepreneurs  and  then  to  detail  the  efforts  the  FCC  has  taken  to  eliminate  those  market 
 barriers.  Congress  created  this  requirement  to  force  the  Commission  to  explain  what  it  was  actively  doing  to  promote  entrepreneurship  and  to  prevent  the  Commission  from  catering  to  industry  giants  at  the 
 expense  of  small  business. 
 But  today  the  Commission  sends  Congress  a  report  that:  (1)  does  not  meet  the  specific  requirements  of  the  statute,  and  (2)  for  the  most  part  blithely  claims  that  three  years  of  proceedings 
 leading  to  the  removal  of  competition  and  consumer  protections  were  really  designed  to  help  entrepreneurs  all  along.  American  small  businesses  deserve  better  than  this. 


 The  Report  Fails  to  Meet  Section  257s  Statutory  Requirements 
 Section  257  states  that  the  Commission  must  report  to  Congress  every  three  years  on  any  regulations  prescribed  to  eliminate  barriers  within  its  jurisdiction  that  are  identified  by  subsection  (a)  and 
 that  can  be  prescribed  consistent  with  the  public  interest,  convenience  and  necessity.  1  The  barriers  identified  by  subsection  (a)  include  market  entry  barriers  for  entrepreneurs  and  other  small  businesses  in 
 the  provision  and  ownership  of  telecommunications  and  services  and  information  services,  or  in  the  provision  of  parts  or  services  to  providers  of  telecommunications  services  and  information  services.  2 


 Section  257  thereby  clearly  requires  the  Commission  to  identify  market  entry  barriers  faced  by  small  business  and  to  report  on  new  rules  that  it  has  promulgated  to  eliminate  those  barriers.  Instead,  we 
 have  a  slapdash  cataloging  of  miscellaneous  Commission  actions  over  the  past  three  years  that  fails  to 
 1  47  U.  S.  C.    257(  c)(  1). 


 2  47  U.  S.  C.    257(  a). 
81
 Federal  Communications  Commission  FCC  03-  335 
 2 
 comply  with  the  requirements  of  Section  257.  If  Congress  had  wanted  the  Commission  merely  to  list  its  proceedings  and  the  general  regulations  that  it  had  eliminated,  it  would  have  said  so.  In  this  particular 
 report,  the  importance  of  small  businesses  to  the  economy  and  the  legacy  of  small  businesses  facing  market  barriers  in  the  communications  industry  led  Congress  to  ask  the  Commission  to  report  on 
 proactive  steps  it  had  taken  to  establish  new  rules  to  help  small  business. 
 So  why  did  the  Commission  fail  to  report  on  new  initiatives  designed  to  eliminate  market  barriers  for  small  businesses,  and  thereby  fail  to  comply  with  the  statute?  It  may  be  because  this  Commission 
 does  not  have  a  small  business  record  to  brag  about. 
 We  should  be  more  forthright  with  Congress.  We  should  admit  that  the  Commission  has  not  articulated  a  plan  for  how  to  eliminate  market  barriers  for  small  business.  We  should  recognize  that  we 
 have  created  too  few  new  rules  designed  specifically  to  help  small  businesses.  And  maybe  most  importantly,  we  should  realize  that  some  of  this  Commissions  actions    indeed  more  than  a  few    have 
 harmed  small  businesses. 
 I  have  supported  some  of  the  decisions  made  by  this  Commission  and  opposed  others.  Although  I  could  give  numerous  examples  raised  in  this  Report,  let  me  highlight  just  two  of  the  major  actions  that 
 increase  market  barriers  for  small  businesses  and  that  I  opposed:  (1)  eliminating  media  consolidation  protections,  and  (2)  undermining  broadband  competition. 


 Eliminating  Media  Consolidation  Protections  Hurt  Small  Businesses 
 On  June  2,  the  Commission  voted  to  weaken  its  media  ownership  rules  and  open  the  door  to  more  media  control  by  ever  fewer  corporate  giants.  In  Section  257  Congress  expressly  commands  the 
 Commission  to  seek  to  promote  the  policies  and  purposes  of  this  Act  favoring  diversity  of  media  voices,  but  instead  the  Commission  surrendered  enormous  powers  over  our  news,  information  and 
 entertainment  to  a  handful  of  corporations. 
 In  adopting  this  decision,  the  Commission  failed  to  analyze  how  the  media  consolidation  it  allowed  affects  small  businesses.  The  Office  of  Advocacy  of  the  Small  Business  Administration  strongly 
 urged  the  Commission  to  conduct  such  an  analysis  prior  to  rushing  ahead  with  a  decision.  We  failed  do  so  then,  and  we  fail  to  do  so  in  this  Report. 


 Across  this  country,  in  the  many  hearings  and  forums  that  Commissioner  Adelstein  and  I  attended,  we  heard  that  weakening  media  concentration  rules  threatens  the  very  survival  of  small 
 businesses.  As  fewer  and  fewer  companies  control  our  media  outlets,  small  local  broadcasters  will  find  it  harder  and  harder  to  compete.  Media  analysts  expect  that  the  only  option  for  small  broadcasters  will  now 
 be  to  sell.  They  conclude  that  those  that  want  to  remain  will  face  an  extremely  tough  road.  During  our  hearings,  we  heard  from  small  broadcasters  that  had  already  been  squeezed  out  of  the  market,  who 
 explained  that  the  Commissions  decision  will  only  accelerate  this  trend.  Yet,  we  failed  even  to  consider  the  impact  of  our  decision  on  small  broadcasters. 


 In  addition,  other  small  businesses  will  find  it  harder  to  produce  and  sell  programming  as  national  vertically  integrated  conglomerates  control  local  distribution.  We  also  heard  from  small  businesses  that 
 consolidated  media  markets  are  more  expensive  for  advertisers,  and  that  this  may  hurt  small  businesses  ability  to  advertise  their  products  and  services,  particularly  if  they  seek  to  reach  niche  communities  or 
 minority  groups. 
 Amazingly,  the  Commission  states  that  only  one  aspect  of  its  biggest  decision  of  2003  affects  small  businesses.  The  June  2  decision  grandfathered  any  radio  ownership  clusters  that  exceed  our 
 ownership  limits.  But  it  also  allows  the  grandfathered  owners  to  sell  the  entire  cluster  to  a  small  business, 
82
 Federal  Communications  Commission  FCC  03-  335 
 3 
 which  can  turn  around  and  re-  sell  the  cluster,  after  only  a  few  years,  to  anyone  --  even  to  a  media  conglomerate.  The  Small  Business  Report,  like  the  June  2  decision,  claims  that  this  will  help  small 
 businesses,  but  fails  to  analyze  such  questions  as  whether  this  decision  will  encourage  a  regulatory  shell  game  that  threatens  to  make  a  mockery  of  the  radio  limits.  And  it  fails  to  address  the  harms  to  small 
 businesses  of  eliminating  media  concentration  protections  and  allowing  large  conglomerates  to  lock  up  the  available  stations  in  a  market. 


 The  June  2  decision  further  relegated  to  some  indeterminate  future  Notice  of  Proposed  Rulemaking  the  critical  question  of  how  access  to  capital  in  the  media  industry  acts  as  a  barrier  to  entry 
 for  small  businesses.  This  Report  again  fails  to  indicate  when  the  Commission  will  take  up  this  important  issue. 


 Undermining  Broadband  Competition  Hurt  Small  Businesses 
 The  Report  also  fails  to  recognize  that  many  of  the  FCCs  recent  telecom  competition  and  broadband  decisions  will  create  new  barriers  to  entry  for  small  businesses,  and  that  these  decisions  have 
 eliminated  earlier  Commission  efforts  to  break  barriers  down.  More  than  26  million  access  lines  are  provided  by  competitive  carriers  today,  many  of  which  are  entrepreneurial  upstarts.  Yet  when  it  comes  to 
 promoting  vigorous  economic  competition,  we  have  failed  these  new  entrants  by  closing  off  access  to  key  facilities  and  raising  barriers  for  entry  into  the  telecommunications  service  market. 


 Last  year,  in  the  Triennial  Review  Order,  the  Commission  undermined  competition  in  the  market  for  telecommunications  services  by  limiting  on  a  nationwide  basis  in  all  markets  for  all  customers 
 competitors  access  to  broadband  loop  facilities  whenever  an  incumbent  deploys  a  mixed  fiber/  copper  loop.  So  as  incumbents  deploy  fiber  anywhere  in  their  loop  plant,  they  are  relieved  of  the  unbundling 
 obligations  that  Congress  imposed  to  ensure  adequate  competition  in  the  local  market.  This  can  only  make  it  more  difficult  for  small  businesses  to  get  into  the  business  of  providing  telecommunications 
 services.  With  decisions  like  this,  the  Commission  constructs  barriers  to  vigorous  economic  competition  by  small  entities,  when  it  should  be  eliminating  them. 


 The  story  is  also  ominous  when  it  comes  to  the  market  for  broadband  information  services.  For  years,  the  Commission  has  had  in  place  policies  that  make  it  possible  for  information  services 
 entrepreneurs  to  access  incumbent  networks  on  nondiscriminatory  terms.  This  has  made  it  possible  for  small  businesses  like  independent  ISPs  to  provide  service  to  customers.  But  two  years  ago,  in  the 
 Wireline  Broadband  NPRM,  the  Commission  suggested  that  these  rules  that  keep  the  roads  of  the  Internet  open  to  all  are  no  longer  necessary.  Should  the  Commission  follow  through  with  this  proceeding,  it  will 
 allow  those  who  own  and  control  networks  to  set  up  toll  booths  on  the  onramps  to  the  Internet.  This  will  prevent  tomorrows  entrepreneurs  who  are  today  tinkering  away  in  garages  and  laboratories  and  office 
 cubicles  from  getting  nondiscriminatory  access  to  the  transmission  facilities  they  need  to  bring  their  innovations  to  market.  By  dismantling  these  rules,  the  Commission  will  raise  barriers  for  small 
 businesses  and  innovators  interested  in  providing  Internet-  based  information  services. 
 Conclusion 
 As  a  final  matter,  let  me  just  add  that,  although  this  Report  highlights  the  entry  barriers  faced  by  small  businesses  that  seek  to  provide  telecommunications  or  information  services,  this  Commission  has 
 failed  to  address  the  challenges  faced  by  small  businesses  as  consumers  of  telecommunications.  As  competition  falls  prey  to  consolidation  and  competitive  and  consumer  protections  are  eliminated,  small 
 businesses  will  see  prices  rise  and  choices  vanish.  Todays  small  business  men  and  women  face  limited  or  no  choice  for  many  services,  they  receive  the  same  kind  of  confusing  and  misleading  bills  that 
 individual  consumers  receive,  and  they  have  nowhere  to  turn  if  they  are  dissatisfied.  While  this  is  not  the  subject  of  this  Report,  it  needs  to  be  a  central  focus  of  Commission  attention. 
83
 Federal  Communications  Commission  FCC  03-  335 
 1 
 SEPARATE  STATEMENT  OF  COMMISSIONER  KEVIN  J.  MARTIN 
 Approving  in  Part,  Concurring  in  Part 
 RE:  Section  257  Triennial  Report  to  Congress;  Identifying  and  Eliminating  Market  Entry  Barriers  for  Entrepreneurs  and  Other  Small  Businesses 


 Todays  decision  outlines  five  legislative  proposals  for  Congresss  consideration.  These  proposals  appear  to  offer  statutory  changes  designed  to  lessen  market  entry  barriers.  While  these  proposals  all  appear 
 to  have  merit,  I  reserve  judgment  on  the  details  of  these  proposals,  given  that  the  Commissioners  were  provided  with  only  limited  time  to  consider  this  item. 
84
 Federal  Communications  Commission  FCC  03-  335 
 1 
 SEPARATE  STATEMENT  OF  COMMISSIONER  JONATHAN  S.  ADELSTEIN 
 Approving  in  Part,  Dissenting  in  Part 
 Re:  Section  257  Triennial  Report  to  Congress 
 This  Triennial  Report  requires  the  Commission  to  identify  and  report  to  Congress  on  how  it  eliminated  market  entry  barriers  for  entrepreneurs  and  other  small  businesses.  The  purpose  of  our 
 exercise  is  clear  from  the  statute    to  promote  the  policies  and  purposes  of  the  Communications  Act  favoring  diversity  of  media  voices,  vigorous  economic  competition,  technological  advancement,  and  the 
 promotion  of  the  public  interest,  convenience,  and  necessity. 
 I  share  a  strong  commitment  to  these  Congressional  goals.  Entrepreneurs  and  small  businesses  play  a  crucial  role  in  communications  industries,  from  providing  service  in  rural  and  underserved  areas,  to 
 encouraging  innovation  and  niche  operations,  to  bringing  a  unique  and  diverse  voice  to  the  public  airwaves,  and  countless  other  examples. 


 I  support  most  of  the  Report  and  the  legislative  recommendations.  I  commend  the  Bureaus  involved  for  the  dedication  to  small  business  interests  evidenced  in  the  actions  and  legislative  proposals 
 described  in  the  Report.  In  particular,  a  tax  incentive  program  benefiting  small  communications  businesses,  including  disadvantaged  firms  and  those  owned  by  women  or  minorities,  could  help  create 
 greatly-  needed  diversity  of  ownership  in  the  media  and  other  communications  industries.  Yet,  there  is  more  that  we  can  do  on  the  regulatory  front,  and  I  challenge  the  Bureaus  to  stay  vigilant  in  identifying  and 
 eliminating  market  entry  barriers. 
 I  dissent,  however,  to  any  suggestion  that  the  Commissions  new  broadcast  ownership  rules  will  promote  diversity  of  media  voices  or  eliminate  market  entry  barriers  for  entrepreneurs  and  other  small 
 businesses.  I  believe  they  will  have  the  opposite  effect.  Entrepreneurs  and  small  businesses,  as  well  as  the  general  public,  are  in  no  way  better  served  by  slashing  media  ownership  protections  and  thereby 
 allowing  fewer  media  companies  to  control  what  Americans  see,  hear  and  read. 
 A  license  to  use  the  public  airwaves  means  the  ability  to  promote  the  ideas,  news,  culture,  and  language  of  the  owners  choosing.  Unfortunately,  females  and  minorities  historically  have  been,  and 
 continue  to  be,  underrepresented  in  media  ownership.  As  reported  by  NTIA,  in  2000,  minority  broadcasters  owned  a  mere  4  percent  of  the  nations  commercial  radio  stations  and  1.9  percent  of  the 
 nations  commercial  television  stations    the  lowest  level  of  minority  television  ownership  since  the  tracking  of  such  data  began  in  1990.  Minority  ownership  of  broadcast  stations  has  fallen  by  14  percent 
 since  1997. 
 The  June  2003  Biennial  Regulatory  Review  of  Broadcast  Ownership  Rules  will  only  exacerbate  this  worrisome  trend.  The  new  rules  allow  a  massive  increase  in  consolidation  which  will  raise  the 
 already  high  entry  barriers  for  smaller  market  participants  or  new  entrants  in  the  media  industry.  Small  or  single-  station  entrants  will  find  themselves  increasingly  competing  with  large,  consolidated  group 
 owners.  In  more  concentrated  and  more  expensive  media  markets,  entrepreneurs  will  face  even  more  difficulties  raising  capital,  owning  outlets,  or  having  their  unique  voices  heard. 


 Todays  Report  describes  new  transferability  procedures  that,  in  my  view,  are  too  little  and  too  late.  The  transfer  of  entire  grandfathered  clusters  to  small  entities  will  rarely,  if  ever,  happen.  If  they 
 ever  come  on  the  market  at  all,  small  businesses  may  have  difficulty  raising  the  capital  needed  to  buy  the  expensive,  large  clusters  rather  than  single  stations  or  smaller  clusters.  Even  under  the  new  procedures, 
 the  small  business  can  flip  the  grandfathered  cluster  to  any  large  radio  or  media  conglomerate  after  only  three  years,  leaving  little  protection  against  a  front  company  buying  a  cluster  and  later  selling  it  to  further 
85
 Federal  Communications  Commission  FCC  03-  335 
 2 
 increase  the  bulk  of  well-  capitalized  radio  giants.  So  these  new  procedures  in  no  way  offset  the  damage  to  new  entrants  caused  by  the  overall  slashing  of  media  ownership  protections. 
 I  hope  that  I  am  proven  wrong.  Nevertheless,  no  entrepreneur  or  small  business  should  take  comfort  that  this  transferability  exception  will  come  anywhere  close  to  counteracting  the  damage  done  by 
 loosening  the  media  ownership  protections. 
86