*Pages 1--307 from  Microsoft Word - 6035.doc*
 Federal  Communications  Commission  Biennial  Regulatory  Review  2000
 Updated  Staff  Report  January  17,  2000
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 TABLE  OF  CONTENTS
 I.  OVERVIEW..................................................................................................................................  1
 II.  BACKGROUND...........................................................................................................................  1
 A.  LEGAL  AUTHORITY.................................................................................  1  B.  SUMMARY  OF  1998  BIENNIAL  REGULATORY  REVIEW..............................  2
 III.  THE  2000  BIENNIAL  REGULATORY  REVIEW..................................................................  3
 A.  METHOD  AND  SCOPE  OF  REVIEW  ...........................................................  4
 B.  ANALYTICAL  FRAMEWORK  .....................................................................  5  C.  STRUCTURE  OF  THE  STAFF  REPORT  ......................................................  6
 IV.  SUMMARY  OF  REVIEWS  BY  COMMON  CARRIER,  INTERNATIONAL,  AND  WIRELESS  TELECOMMUNICATIONS  BUREAUS  .......................................................................  7
 A.  COMMON  CARRIER  BUREAU  ...................................................................  7  1.  Scope  of  Review......................................................................................................................  8
 2.  Recent  and  Ongoing  Activities.................................................................................................  9
 3.  New  Initiatives.......................................................................................................................  14
 4.  Other  Issues...........................................................................................................................  16
 B.  INTERNATIONAL  BUREAU  .....................................................................  17  1.  Scope  of  Review....................................................................................................................  18
 2.  Recent  and  Ongoing  Activities...............................................................................................  18
 3.  New  Initiatives.......................................................................................................................  22
 C.  WIRELESS  TELECOMMUNICATIONS  BUREAU.........................................  27  1.  Scope  of  Review....................................................................................................................  28
 2.  Recent  and  Ongoing  Activities...............................................................................................  29
 3.  New  Initiatives.......................................................................................................................  31
 4.  Other  Issues...........................................................................................................................  33
 V.  SUMMARY  OF  REVIEW  BY  MASS  MEDIA  BUREAU.........................................................  34
 1.  Recent  and  Ongoing  Activities...............................................................................................  36
 2.  New  Initiatives.......................................................................................................................  46
 VI.  SUMMARY  OF  REVIEWS  BY  OTHER  BUREAUS  AND  OFFICES  .................................  46
 A.  CABLE  SERVICES  BUREAU....................................................................  46  1.  Recent  and  Ongoing  Activities...............................................................................................  47
 2.  New  Initiatives.......................................................................................................................  49
 B.  CONSUMER  INFORMATION  BUREAU  ........................................................  50  1.  Recent  and  Ongoing  Activities...............................................................................................  51
 2.  New  Initiatives.......................................................................................................................  51
 C.  ENFORCEMENT  BUREAU.......................................................................  53  1.  Recent  and  Ongoing  Activities...............................................................................................  53
 D.  OFFICE  OF  COMMUNICATIONS  BUSINESS  OPPORTUNITIES  ...................  54  1.  Recent  and  Ongoing  Activities...............................................................................................  54
 E.  OFFICE  OF  ENGINEERING  AND  TECHNOLOGY  .......................................  57  1.  Recent  and  Ongoing  Activities...............................................................................................  57
 2.  New  Initiatives.......................................................................................................................  60
 3.  Other  Issues...........................................................................................................................  62
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 F.  OFFICE  OF  GENERAL  COUNSEL  ............................................................  62  1.  Recent  and  Ongoing  Activities...............................................................................................  62
 G.  OFFICE  OF  THE  MANAGING  DIRECTOR.................................................  63  1.  Recent  and  Ongoing  Activities...............................................................................................  63
 2.  New  Initiatives.......................................................................................................................  65
 VII.  CONCLUSION........................................................................................................................  66
 APPENDIX  I:  1998  BIENNIAL  REGULATORY  REVIEW  PROCEEDINGS................................  1
 A.  PROCEEDINGS  INITIATED    COMPLETED/  SIGNIFICANT  ORDERS  ISSUED  1  1.  Telecommunications  Providers  (Common  Carriers)  .................................................................  1
 2.  Other  .......................................................................................................................................  3
 B.  PROCEEDINGS  INITIATED    PENDING  .....................................................  4  1.  Telecommunications  Providers  (Common  Carriers)  .................................................................  4
 2.  Other  .......................................................................................................................................  4
 APPENDIX  II:  LIST  OF  COMMENTING  PARTIES.........................................................................  I
 APPENDIX  III:  STAFF  ACKNOWLEDGEMENTS..........................................................................  I
 APPENDIX  IV:  RULE  PART  ANALYSIS..........................................................................................  1
 PART  1    PRACTICE  AND  PROCEDURE........................................................................................  1
 DESCRIPTION...............................................................................................  1
 PURPOSE  .....................................................................................................  2  ANALYSIS.....................................................................................................  3
 Advantages  .....................................................................................................................................  3
 Disadvantages  .................................................................................................................................  3
 Recent  Efforts  .................................................................................................................................  3
 INITIAL  RECOMMENDATION  .........................................................................  3
 COMMENTS..................................................................................................  4  RECOMMENDATION......................................................................................  4
 PART  1,  SUBPART  E    COMPLAINTS,  APPLICATIONS,  TARIFFS,  AND  REPORTS  INVOLVING  COMMON  CARRIERS    FORMAL  COMPLAINTS  ................................................  5
 DESCRIPTION...............................................................................................  5  PURPOSE......................................................................................................  5
 ANALYSIS.  ....................................................................................................  5  Status  of  Competition......................................................................................................................  5
 Advantages  .....................................................................................................................................  5
 Disadvantages.  ................................................................................................................................  6
 Recent  Efforts.  ................................................................................................................................  6
 INITIAL  RECOMMENDATION.  (FORMAL  COMPLAINTS)  ...................................  6
 COMMENTS..................................................................................................  6  RECOMMENDATION......................................................................................  6
 INITIAL  RECOMMENDATION.  (INFORMAL  COMPLAINTS)  ................................  6  COMMENTS..................................................................................................  7
 RECOMMENDATION......................................................................................  7
 PART  1,  SUBPART  F    WIRELESS  TELECOMMUNICATIONS  SERVICES  APPLICATIONS  AND  PROCEDURES............................................................................................................................  8
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 DESCRIPTION...............................................................................................  8
 PURPOSE  .....................................................................................................  8  ANALYSIS.....................................................................................................  8
 Status  of  Competition......................................................................................................................  8
 Advantages  .....................................................................................................................................  8
 Disadvantages  .................................................................................................................................  9
 Recent  Efforts  .................................................................................................................................  9
 INITIAL  RECOMMENDATION  .........................................................................  9  COMMENTS..................................................................................................  9
 RECOMMENDATION......................................................................................  9
 PART  1,  SUBPART  I    PROCEDURES  IMPLEMENTING  THE  NATIONAL  ENVIRONMENTAL  POLICY  ACT  OF  1969...................................................................................  10
 DESCRIPTION.............................................................................................  10  PURPOSE  ...................................................................................................  10
 ANALYSIS...................................................................................................  11  Status  of  Competition....................................................................................................................  11
 Advantages  ...................................................................................................................................  11
 Disadvantages  ...............................................................................................................................  11
 Recent  Efforts  ...............................................................................................................................  11
 INITIAL  RECOMMENDATION  .......................................................................  12  COMMENTS................................................................................................  12
 RECOMMENDATION....................................................................................  12
 PART  1,  SUBPART  J  -  POLE  ATTACHMENT  COMPLAINT  PROCEDURES...........................  13
 DESCRIPTION.............................................................................................  13  PURPOSE  ...................................................................................................  13
 ANALYSIS...................................................................................................  13  Status  of  Competition....................................................................................................................  13
 Advantages  ...................................................................................................................................  13
 Disadvantages  ...............................................................................................................................  14
 Recent  Efforts  ...............................................................................................................................  14
 INITIAL  RECOMMENDATION  .......................................................................  14  COMMENTS................................................................................................  14
 RECOMMENDATION....................................................................................  15
 PART  1,  SUBPART  Q    COMPETITIVE  BIDDING  PROCEEDINGS..........................................  16
 DESCRIPTION.............................................................................................  16
 PURPOSE  ...................................................................................................  16  ANALYSIS...................................................................................................  16
 Status  of  Competition....................................................................................................................  16
 Advantages  ...................................................................................................................................  17
 Disadvantages  ...............................................................................................................................  17
 Recent  Efforts  ...............................................................................................................................  17
 INITIAL  RECOMMENDATION  .......................................................................  18
 PART  1,  SUBPART  T    EXEMPT  TELECOMMUNICATIONS  COMPANIES............................  19
 DESCRIPTION.............................................................................................  19  PURPOSE  ...................................................................................................  19
 ANALYSIS...................................................................................................  19
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 Status  of  Competition....................................................................................................................  19
 Advantages  ...................................................................................................................................  19
 Disadvantages  ...............................................................................................................................  19
 RECOMMENDATION....................................................................................  19
 COMMENTS................................................................................................  19  RECOMMENDATION....................................................................................  19
 PART  2,  SUBPART  B    ALLOCATION,  ASSIGNMENT,  AND  USE  OF  RADIO  FREQUENCIES  .............................................................................................................................................................  20
 DESCRIPTION.............................................................................................  20  PURPOSE  ...................................................................................................  20
 ANALYSIS...................................................................................................  20  Status  of  Competition....................................................................................................................  20
 Advantages  ...................................................................................................................................  20
 Disadvantages  ...............................................................................................................................  20
 Recent  Efforts  ...............................................................................................................................  20
 INITIAL  RECOMMENDATION  .......................................................................  20  COMMENTS................................................................................................  20
 RECOMMENDATION....................................................................................  20
 PART  2,  SUBPART  J    EQUIPMENT  AUTHORIZATION  PROCEDURES  ................................  21
 DESCRIPTION.............................................................................................  21  PURPOSE  ...................................................................................................  21
 ANALYSIS...................................................................................................  21  Status  of  Competition....................................................................................................................  21
 Advantages  ...................................................................................................................................  21
 Disadvantages  ...............................................................................................................................  21
 Recent  Efforts  ...............................................................................................................................  21
 INITIAL  RECOMMENDATION  .......................................................................  21
 COMMENTS................................................................................................  21  RECOMMENDATION....................................................................................  22
 PART  3    AUTHORIZATION  AND  ADMINISTRATION  OF  ACCOUNTING  AUTHORITIES  IN  MARITIME  AND  MARITIME  MOBILE-  SATELLITE  RADIO  SERVICES.  ...............................  23
 DESCRIPTION.............................................................................................  23  PURPOSE  ...................................................................................................  23
 ANALYSIS...................................................................................................  23  Status  of  Competition....................................................................................................................  23
 Advantages  ...................................................................................................................................  23
 Disadvantages  ...............................................................................................................................  23
 Recent  Efforts  ...............................................................................................................................  23
 INITIAL  RECOMMENDATION  .......................................................................  24  COMMENTS................................................................................................  24
 RECOMMENDATION....................................................................................  24
 PART  15  RADIO  FREQUENCY  DEVICES  .....................................................................................  25
 DESCRIPTION.............................................................................................  25  PURPOSE  ...................................................................................................  25
 ANALYSIS...................................................................................................  25  Status  of  Competition....................................................................................................................  25
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 Advantages  ...................................................................................................................................  25
 Disadvantages  ...............................................................................................................................  25
 Recent  Efforts  ...............................................................................................................................  25
 INITIAL  RECOMMENDATION  .......................................................................  25
 COMMENTS................................................................................................  25  RECOMMENDATION....................................................................................  26
 PART  17    CONSTRUCTION,  MARKING,  AND  LIGHTING  OF  ANTENNA  STRUCTURES  ..  27
 DESCRIPTION.............................................................................................  27  PURPOSE  ...................................................................................................  27
 ANALYSIS...................................................................................................  27  Status  of  Competition....................................................................................................................  27
 Advantages  ...................................................................................................................................  27
 Disadvantages  ...............................................................................................................................  27
 Recent  Efforts  ...............................................................................................................................  28
 INITIAL  RECOMMENDATION  .......................................................................  28
 COMMENTS................................................................................................  28  RECOMMENDATION....................................................................................  29
 PART  18    INDUSTRIAL,  SCIENTIFIC  AND  MEDICAL  EQUIPMENT.....................................  30
 DESCRIPTION.............................................................................................  30  PURPOSE  ...................................................................................................  30
 ANALYSIS...................................................................................................  30  Status  of  Competition....................................................................................................................  30
 Advantages  ...................................................................................................................................  30
 Disadvantages  ...............................................................................................................................  30
 Recent  Efforts  ...............................................................................................................................  30
 INITIAL  RECOMMENDATION  .......................................................................  30  COMMENTS................................................................................................  30
 RECOMMENDATION....................................................................................  30
 PART  20    COMMERCIAL  MOBILE  RADIO  SERVICES,  SECTION  20.  6      CMRS  SPECTRUM  AGGREGATION  LIMIT...................................................................................................................  31
 DESCRIPTION.............................................................................................  31
 PURPOSE  ...................................................................................................  31  ANALYSIS...................................................................................................  31
 Status  of  Competition....................................................................................................................  31
 Advantages  ...................................................................................................................................  31
 Disadvantages  ...............................................................................................................................  32
 Recent  Efforts  ...............................................................................................................................  32
 INITIAL  RECOMMENDATION  .......................................................................  32  COMMENTS................................................................................................  32
 RECOMMENDATION....................................................................................  33
 PART  20,  SECTION  20.  11      INTERCONNECTION  TO  FACILITIES  OF  LOCAL  EXCHANGE  CARRIERS  .........................................................................................................................................  34
 DESCRIPTION.............................................................................................  34  PURPOSE  ...................................................................................................  34
 ANALYSIS...................................................................................................  35  Status  of  Competition....................................................................................................................  35
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 Advantages  ...................................................................................................................................  35
 Disadvantages  ...............................................................................................................................  35
 Recent  Efforts  ...............................................................................................................................  35
 INITIAL  RECOMMENDATION  .......................................................................  36
 COMMENTS................................................................................................  36  RECOMMENDATION....................................................................................  36
 PART  20,  SECTION  20.  12    RESALE  AND  ROAMING  ................................................................  37
 RESALE..............................................................................................................................................  37
 DESCRIPTION.............................................................................................  37  PURPOSE  ...................................................................................................  37
 ANALYSIS...................................................................................................  37  Status  of  Competition....................................................................................................................  37
 Advantages  ...................................................................................................................................  38
 Disadvantages  ...............................................................................................................................  38
 Recent  Efforts  ...............................................................................................................................  38
 INITIAL  RECOMMENDATION  .......................................................................  38  COMMENTS................................................................................................  38
 RECOMMENDATION....................................................................................  39
 ROAMING..........................................................................................................................................  39
 DESCRIPTION.............................................................................................  39  PURPOSE  ...................................................................................................  39
 ANALYSIS...................................................................................................  39  Status  of  Competition....................................................................................................................  39
 Advantages  ...................................................................................................................................  40
 Disadvantages  ...............................................................................................................................  40
 Recent  Efforts  ...............................................................................................................................  40
 INITIAL  RECOMMENDATION  .......................................................................  40  COMMENTS................................................................................................  40
 RECOMMENDATION....................................................................................  40
 PART  20,  SECTION  20.  18    911  SERVICE......................................................................................  41
 DESCRIPTION.............................................................................................  41
 PURPOSE  ...................................................................................................  41  ANALYSIS...................................................................................................  41
 Status  of  Competition....................................................................................................................  41
 Advantages  ...................................................................................................................................  41
 Disadvantages  ...............................................................................................................................  42
 Recent  Efforts  ...............................................................................................................................  42
 INITIAL  RECOMMENDATION  .......................................................................  42  COMMENTS................................................................................................  42
 RECOMMENDATION....................................................................................  42
 PART  20,  SECTION  20.  20      CONDITIONS  APPLICABLE  TO  PROVISION  OF  CMRS  SERVICE  BY  LOCAL  EXCHANGE  CARRIERS  ...........................................................................  43
 DESCRIPTION.............................................................................................  43  PURPOSE  ...................................................................................................  43
 ANALYSIS...................................................................................................  43
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 Advantages  ...................................................................................................................................  43
 Disadvantages  ...............................................................................................................................  44
 Recent  Efforts  ...............................................................................................................................  44
 INITIAL  RECOMMENDATION  .......................................................................  44
 COMMENTS................................................................................................  44  REPLY  COMMENTS.....................................................................................  44
 RECOMMENDATION....................................................................................  45
 PART  21  DOMESTIC  PUBLIC  FIXED  RADIO  SERVICES  .......................................................  46
 DESCRIPTION.............................................................................................  46  PURPOSE  ...................................................................................................  46
 ANALYSIS...................................................................................................  46  Status  of  Competition....................................................................................................................  46
 Advantages  ...................................................................................................................................  47
 Disadvantages  ...............................................................................................................................  47
 Recent  Efforts  ...............................................................................................................................  47
 INITIAL  RECOMMENDATION  .......................................................................  47  COMMENTS................................................................................................  47
 RECOMMENDATION....................................................................................  48
 PART  22    PUBLIC  MOBILE  SERVICES.......................................................................................  49
 DESCRIPTION.............................................................................................  49
 PURPOSE  ...................................................................................................  49  ANALYSIS...................................................................................................  50
 Status  of  Competition....................................................................................................................  50
 Advantages  ...................................................................................................................................  50
 Disadvantages  ...............................................................................................................................  50
 Recent  Efforts  ...............................................................................................................................  50
 INITIAL  RECOMMENDATION  .......................................................................  51  COMMENTS................................................................................................  51
 RECOMMENDATION....................................................................................  51
 PART  22,  SUBPART  E    PAGING  AND  RADIOTELEPHONE  SERVICE...................................  52
 DESCRIPTION.............................................................................................  52
 PURPOSE  ...................................................................................................  52  ANALYSIS...................................................................................................  52
 Status  of  Competition....................................................................................................................  52
 Advantages  ...................................................................................................................................  53
 Disadvantages  ...............................................................................................................................  53
 Recent  Efforts  ...............................................................................................................................  53
 INITIAL  RECOMMENDATION  .......................................................................  53  COMMENTS................................................................................................  53
 RECOMMENDATION....................................................................................  53
 PART  22,  SUBPART  F    RURAL  RADIOTELEPHONE  SERVICE..............................................  54
 DESCRIPTION.............................................................................................  54
 PURPOSE  ...................................................................................................  54  ANALYSIS...................................................................................................  54
 Status  of  Competition....................................................................................................................  54
 Advantages  ...................................................................................................................................  54
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 Disadvantages  ...............................................................................................................................  55
 Recent  Efforts  ...............................................................................................................................  55
 INITIAL  RECOMMENDATION  .......................................................................  55  COMMENTS................................................................................................  55
 RECOMMENDATION....................................................................................  55
 PART  22,  SUBPAR  T  G    AIR-  GROUND  RADIOTELEPHONE  SERVICE.................................  56
 DESCRIPTION.............................................................................................  56  PURPOSE  ...................................................................................................  56
 ANALYSIS...................................................................................................  56  Status  of  Competition....................................................................................................................  56
 Advantages  ...................................................................................................................................  57
 Disadvantages  ...............................................................................................................................  57
 INITIAL  RECOMMENDATION  .......................................................................  57  COMMENTS................................................................................................  57
 RECOMMENDATION....................................................................................  57
 PART  22,  SUBPART  H  CELLULAR  RADIOTELEPHONE  SERVICE.......................................  58
 DESCRIPTION.............................................................................................  58  PURPOSE  ...................................................................................................  58
 ANALYSIS...................................................................................................  58  Status  of  Competition....................................................................................................................  58
 Advantages  ...................................................................................................................................  59
 Disadvantages  ...............................................................................................................................  59
 Recent  Efforts  ...............................................................................................................................  59
 INITIAL  RECOMMENDATION  .......................................................................  59  COMMENTS................................................................................................  60
 RECOMMENDATION....................................................................................  60
 PART  22,  SUBPART  I    OFFSHORE  RADIOTELEPHONE  SERVICE  .......................................  61
 DESCRIPTION.............................................................................................  61  PURPOSE  ...................................................................................................  61
 ANALYSIS...................................................................................................  61  Status  of  Competition....................................................................................................................  61
 Advantages  ...................................................................................................................................  61
 Disadvantages  ...............................................................................................................................  61
 Recent  Efforts  ...............................................................................................................................  61
 RECOMMENDATION....................................................................................  61
 PART  22,  SUBPART  J    REQUIRED  NEW  CAPABILITIES  PURSUANT  TO  THE  COMMUNICATIONS  ASSISTANCE  FOR  LAW  ENFORCEMENT  ACT  (CALEA)...................  62
 DESCRIPTION.............................................................................................  62  PURPOSE  ...................................................................................................  62
 ANALYSIS...................................................................................................  62  Status  of  Competition....................................................................................................................  62
 Advantages  ...................................................................................................................................  62
 Disadvantages  ...............................................................................................................................  62
 Recent  Efforts  ...............................................................................................................................  63
 INITIAL  RECOMMENDATION  .......................................................................  63  COMMENTS................................................................................................  63
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 REPLY  COMMENTS.....................................................................................  63
 RECOMMENDATION....................................................................................  63
 PART  23    INTERNATIONAL  FIXED  PUBLIC  RADIOCOMMUNICATION  SERVICES  ........  64
 DESCRIPTION.............................................................................................  64  PURPOSE  ...................................................................................................  64
 ANALYSIS...................................................................................................  65  Status  of  Competition....................................................................................................................  65
 Advantages  ...................................................................................................................................  65
 Disadvantages  ...............................................................................................................................  65
 Recent  Efforts  ...............................................................................................................................  65
 INITIAL  RECOMMENDATION  .......................................................................  65  COMMENTS................................................................................................  65
 RECOMMENDATION....................................................................................  65
 PART  24    PERSONAL  COMMUNICATIONS  SERVICES.........................................................  66
 DESCRIPTION.............................................................................................  66  PURPOSE  ...................................................................................................  67
 ANALYSIS...................................................................................................  67  Status  of  Competition....................................................................................................................  67
 Advantages  ...................................................................................................................................  68
 Disadvantages  ...............................................................................................................................  68
 Recent  Efforts  ...............................................................................................................................  68
 INITIAL  RECOMMENDATION  .......................................................................  68
 COMMENTS................................................................................................  69  RECOMMENDATION....................................................................................  69
 PART  25    SATELLITE  COMMUNICATIONS  ..............................................................................  70
 DESCRIPTION.............................................................................................  70  PURPOSE  ...................................................................................................  70
 ANALYSIS...................................................................................................  70  Status  of  Competition....................................................................................................................  70
 Advantages  ...................................................................................................................................  71
 Disadvantages  ...............................................................................................................................  71
 Recent  Efforts  ...............................................................................................................................  72
 INITIAL  RECOMMENDATION  .......................................................................  72
 COMMENTS................................................................................................  73  RECOMMENDATION....................................................................................  73
 PART  26    GENERAL  WIRELESS  COMMUNICATIONS  SERVICES........................................  74
 DESCRIPTION.............................................................................................  74  PURPOSE  ...................................................................................................  74
 ANALYSIS...................................................................................................  74  Status  of  Competition....................................................................................................................  74
 Advantages  ...................................................................................................................................  74
 Disadvantages  ...............................................................................................................................  74
 Recent  Efforts  ...............................................................................................................................  74
 INITIAL  RECOMMENDATION  .......................................................................  75
 COMMENTS................................................................................................  75  RECOMMENDATION....................................................................................  75
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 PART  27    MISCELLANEOUS  WIRELESS  COMMUNICATIONS  SERVICES  .........................  76
 DESCRIPTION.............................................................................................  76  PURPOSE  ...................................................................................................  76
 ANALYSIS...................................................................................................  77  Status  of  Competition....................................................................................................................  77
 Advantages  ...................................................................................................................................  77
 Disadvantages  ...............................................................................................................................  77
 Recent  Efforts  ...............................................................................................................................  77
 INITIAL  RECOMMENDATION  .......................................................................  78  COMMENTS................................................................................................  78
 RECOMMENDATION....................................................................................  78
 PART  32    UNIFORM  SYSTEM  OF  ACCOUNTS  ..........................................................................  79
 DESCRIPTION.............................................................................................  79  PURPOSE  ...................................................................................................  79
 ANALYSIS...................................................................................................  80  Status  of  Competition....................................................................................................................  80
 Advantages  ...................................................................................................................................  80
 Disadvantages  ...............................................................................................................................  80
 Recent  Efforts  ...............................................................................................................................  81
 INITIAL  RECOMMENDATION  .......................................................................  81  COMMENTS................................................................................................  82
 RECOMMENDATION....................................................................................  82
 PART  36    JURISDICTIONAL  SEPARATIONS  PROCEDURES..................................................  83
 DESCRIPTION.............................................................................................  83  PURPOSE  ...................................................................................................  83
 ANALYSIS...................................................................................................  83  Status  of  Competition....................................................................................................................  83
 Advantages  ...................................................................................................................................  84
 Disadvantages  ...............................................................................................................................  84
 Recent  Efforts  ...............................................................................................................................  84
 INITIAL  RECOMMENDATION  .......................................................................  84  COMMENTS................................................................................................  85
 RECOMMENDATION....................................................................................  85
 PART  42    PRESERVATION  OF  RECORDS  OF  COMMON  CARRIERS  ...................................  86
 DESCRIPTION.............................................................................................  86
 PURPOSE  ...................................................................................................  86  ANALYSIS...................................................................................................  86
 Status  of  Competition....................................................................................................................  86
 Advantages  ...................................................................................................................................  86
 Disadvantages  ...............................................................................................................................  86
 Recent  Efforts  ...............................................................................................................................  87
 INITIAL  RECOMMENDATION  .......................................................................  87  COMMENTS................................................................................................  87
 RECOMMENDATION....................................................................................  87
 PART  43    REPORTS  OF  COMMUNICATIONS  COMMON  CARRIERS  AND  CERTAIN  AFFILIATES......................................................................................................................................  88
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 DESCRIPTION.............................................................................................  88
 PURPOSE  ...................................................................................................  88  ANALYSIS...................................................................................................  89
 Status  of  Competition....................................................................................................................  89
 Advantages  ...................................................................................................................................  89
 Disadvantages  ...............................................................................................................................  89
 Recent  Efforts  ...............................................................................................................................  89
 INITIAL  RECOMMENDATION  .......................................................................  90  COMMENTS................................................................................................  91
 RECOMMENDATION....................................................................................  91
 PART  51    INTERCONNECTION....................................................................................................  92
 DESCRIPTION.............................................................................................  92
 PURPOSE  ...................................................................................................  92  ANALYSIS...................................................................................................  93
 Status  of  Competition....................................................................................................................  93
 Advantages  ...................................................................................................................................  93
 Disadvantages  ...............................................................................................................................  93
 Recent  Efforts  ...............................................................................................................................  93
 INITIAL  RECOMMENDATION  .......................................................................  93  COMMENTS................................................................................................  93
 RECOMMENDATION....................................................................................  94
 PART  52    NUMBERING..................................................................................................................  95
 DESCRIPTION.............................................................................................  95  PURPOSE  ...................................................................................................  95
 ANALYSIS...................................................................................................  95  Status  of  Competition....................................................................................................................  95
 Advantages  ...................................................................................................................................  95
 Disadvantages  ...............................................................................................................................  96
 Recent  Efforts  ...............................................................................................................................  96
 INITIAL  RECOMMENDATION  .......................................................................  96  COMMENTS................................................................................................  96
 RECOMMENDATION....................................................................................  96
 PART  53    SPECIAL  PROVISIONS  CONCERNING  BELL  OPERATING  COMPANIES..........  97
 DESCRIPTION.............................................................................................  97  PURPOSE  ...................................................................................................  97
 ANALYSIS...................................................................................................  97  Status  of  Competition....................................................................................................................  97
 Advantages  ...................................................................................................................................  98
 Disadvantages  ...............................................................................................................................  98
 Recent  Efforts  ...............................................................................................................................  98
 INITIAL  RECOMMENDATION  .......................................................................  98  COMMENTS................................................................................................  98
 RECOMMENDATION....................................................................................  99
 PART  54    UNIVERSAL  SERVICE.................................................................................................  100
 DESCRIPTION...........................................................................................  100  PURPOSE  .................................................................................................  100
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 ANALYSIS.................................................................................................  101  Status  of  Competition...................................................................................................................  101
 Advantages  ..................................................................................................................................  101
 Disadvantages  ..............................................................................................................................  101
 Recent  Efforts  ..............................................................................................................................  101
 INITIAL  RECOMMENDATION  .....................................................................  102
 COMMENTS..............................................................................................  102  RECOMMENDATION..................................................................................  102
 PART  59    INFRASTRUCTURE  SHARING...................................................................................  103
 DESCRIPTION...........................................................................................  103  PURPOSE  .................................................................................................  103
 ANALYSIS.................................................................................................  103  Status  of  Competition...................................................................................................................  103
 Advantages  ..................................................................................................................................  103
 Disadvantages  ..............................................................................................................................  103
 Recent  Efforts  ..............................................................................................................................  103
 INITIAL  RECOMMENDATION  .....................................................................  104
 COMMENTS..............................................................................................  104  RECOMMENDATION..................................................................................  104
 PART  61    TARIFFS.........................................................................................................................  105
 DESCRIPTION...........................................................................................  105  PURPOSE  .................................................................................................  105
 ANALYSIS.................................................................................................  105  Status  of  Competition...................................................................................................................  105
 Advantages  ..................................................................................................................................  106
 Disadvantages  ..............................................................................................................................  106
 Recent  Efforts  ..............................................................................................................................  106
 INITIAL  RECOMMENDATION  .....................................................................  107  COMMENTS..............................................................................................  107
 RECOMMENDATION..................................................................................  107
 PART  63    EXTENSION  OF  LINES,  NEW  LINES,  AND  DISCONTINUANCE,  REDUCTION,  OUTAGE  AND  IMPAIRMENT  OF  SERVICE  BY  COMMON  CARRIERS;  AND  GRANTS  OF
 RECOGNIZED  PRIVATE  OPERATING  AGENCY  STATUS  ......................................................  109
 DESCRIPTION...........................................................................................  109
 PURPOSE  .................................................................................................  109  ANALYSIS.................................................................................................  110
 Status  of  Competition...................................................................................................................  110
 Advantages  ..................................................................................................................................  110
 Disadvantages  ..............................................................................................................................  110
 Recent  Efforts  ..............................................................................................................................  110
 INITIAL  RECOMMENDATION  .....................................................................  111  COMMENTS..............................................................................................  112
 RECOMMENDATION..................................................................................  112
 PART  64    MISCELLANEOUS  RULES  RELATING  TO  COMMON  CARRIERS,  SUBPART  A    TRAFFIC  DAMAGE  CLAIMS  ........................................................................................................  113
 DESCRIPTION...........................................................................................  113
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 PURPOSE  .................................................................................................  113
 ANALYSIS.................................................................................................  113  Status  of  Competition...................................................................................................................  113
 Advantages  ..................................................................................................................................  113
 Disadvantages  ..............................................................................................................................  113
 Recent  Efforts  ..............................................................................................................................  113
 INITIAL  RECOMMENDATION  .....................................................................  113  COMMENTS..............................................................................................  113
 RECOMMENDATION..................................................................................  114
 PART  64,  SUBPART  B    RESTRICTIONS  ON  INDECENT  TELEPHONE  MESSAGE  SERVICES.........................................................................................................................................  115
 DESCRIPTION...........................................................................................  115  PURPOSE  .................................................................................................  115
 ANALYSIS.................................................................................................  115  Status  of  Competition...................................................................................................................  115
 Advantages  ..................................................................................................................................  115
 Disadvantages  ..............................................................................................................................  115
 Recent  Efforts  ..............................................................................................................................  116
 RECOMMENDATION..................................................................................  116
 PART  64,  SUBPART  C    FURNISHING  OF  FACILITIES  TO  FOREIGN  GOVERNMENTS  FOR  INTERNATIONAL  COMMUNICATIONS.....................................................................................  117
 DESCRIPTION...........................................................................................  117  PURPOSE  .................................................................................................  117
 ANALYSIS.................................................................................................  117  Status  of  Competition...................................................................................................................  117
 Advantages  ..................................................................................................................................  117
 Disadvantages  ..............................................................................................................................  117
 Recent  Efforts  ..............................................................................................................................  117
 INITIAL  RECOMMENDATION  .....................................................................  117  COMMENTS..............................................................................................  118
 RECOMMENDATION..................................................................................  118
 PART  64,  SUBPART  D    PROCEDURES  FOR  HANDLING  PRIORITY  SERVICES  IN  EMERGENCIES  ...............................................................................................................................  119
 DESCRIPTION...........................................................................................  119  PURPOSE  .................................................................................................  119
 ANALYSIS.................................................................................................  119  Status  of  Competition...................................................................................................................  119
 Advantages  ..................................................................................................................................  119
 Disadvantages  ..............................................................................................................................  119
 Recent  Effort................................................................................................................................  119
 INITIAL  RECOMMENDATION  .....................................................................  119  COMMENTS..............................................................................................  119
 RECOMMENDATION..................................................................................  119
 PART  64,  SUBPART  E    USE  OF  RECORDING  DEVICES  BY  TELEPHONE  COMPANIES  ..  120
 DESCRIPTION...........................................................................................  120  PURPOSE  .................................................................................................  120
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 ANALYSIS.................................................................................................  120  Status  of  Competition...................................................................................................................  120
 Advantages  ..................................................................................................................................  120
 Disadvantages  ..............................................................................................................................  120
 Recent  Effort................................................................................................................................  120
 INITIAL  RECOMMENDATION  .....................................................................  120
 COMMENTS..............................................................................................  120  RECOMMENDATION..................................................................................  120
 PART  64,  SUBPART  F    TELECOMMUNICATIONS  RELAY  SERVICES  AND  RELATED  CUSTOMER  PREMISES  EQUIPMENT  FOR  PERSONS  WITH  DISABILITIES.......................  121
 DESCRIPTION...........................................................................................  121  PURPOSE  .................................................................................................  121
 ANALYSIS.................................................................................................  121  Status  of  Competition...................................................................................................................  121
 Advantages  ..................................................................................................................................  121
 Disadvantages  ..............................................................................................................................  122
 Recent  Efforts  ..............................................................................................................................  122
 INITIAL  RECOMMENDATION  .....................................................................  122  COMMENTS..............................................................................................  122
 RECOMMENDATION..................................................................................  122
 PART  64,  SUBPART  G    FURNISHING  OF  ENHANCED  SERVICES  AND  CUSTOMER  PREMISES  EQUIPMENT  BY  BELL  OPERATING  COMPANIES;  TELEPHONE  OPERATOR
 SERVICES.........................................................................................................................................  123
 DESCRIPTION...........................................................................................  123  PURPOSE  .................................................................................................  124
 ANALYSIS.................................................................................................  124  Status  of  Competition...................................................................................................................  124
 Advantages  ..................................................................................................................................  124
 Disadvantages  ..............................................................................................................................  124
 Recent  Efforts  ..............................................................................................................................  124
 INITIAL  RECOMMENDATION  .....................................................................  125  COMMENTS..............................................................................................  125
 RECOMMENDATION..................................................................................  125
 PART  64,  SUBPART  H    EXTENSION  OF  UNSECURED  CREDIT  FOR  INTERSTATE  AND  FOREIGN  COMMUNICATIONS  SERVICES  TO  CANDIDATES  FOR  FEDERAL  OFFICE....  126
 DESCRIPTION...........................................................................................  126  PURPOSE  .................................................................................................  126
 ANALYSIS.................................................................................................  126  Status  of  Competition...................................................................................................................  126
 Advantages  ..................................................................................................................................  126
 Disadvantages  ..............................................................................................................................  126
 Recent  Efforts  ..............................................................................................................................  127
 INITIAL  RECOMMENDATION  .....................................................................  127  COMMENTS..............................................................................................  127
 RECOMMENDATION..................................................................................  127
 PART  64,  SUBPART  I    ALLOCATION  OF  COSTS.....................................................................  128
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 DESCRIPTION...........................................................................................  128
 PURPOSE  .................................................................................................  128  ANALYSIS.................................................................................................  128
 Status  of  Competition...................................................................................................................  128
 Advantages  ..................................................................................................................................  128
 Disadvantages  ..............................................................................................................................  128
 Recent  Efforts  ..............................................................................................................................  129
 INITIAL  RECOMMENDATION  .....................................................................  129  COMMENTS..............................................................................................  129
 RECOMMENDATION..................................................................................  130
 PART  64,  SUBPART  J    INTERNATIONAL  SETTLEMENTS  POLICY  AND  MODIFICATION  REQUESTS........................................................................................................................................  131
 DESCRIPTION...........................................................................................  131  PURPOSE  .................................................................................................  131
 ANALYSIS.................................................................................................  131  Status  of  Competition...................................................................................................................  131
 Advantages  ..................................................................................................................................  132
 Disadvantages  ..............................................................................................................................  132
 Recent  Efforts  ..............................................................................................................................  132
 INITIAL  RECOMMENDATION  .....................................................................  132  COMMENTS..............................................................................................  132
 RECOMMENDATION..................................................................................  132
 PART  64,  SUBPART  K    CHANGING  LONG  DISTANCE  SERVICE.........................................  133
 DESCRIPTION...........................................................................................  133  PURPOSE  .................................................................................................  133
 ANALYSIS.................................................................................................  133  Status  of  Competition...................................................................................................................  133
 Advantages  ..................................................................................................................................  133
 Disadvantages  ..............................................................................................................................  133
 Recent  Efforts  ..............................................................................................................................  133
 INITIAL  RECOMMENDATION  .....................................................................  134  COMMENTS..............................................................................................  134
 RECOMMENDATION..................................................................................  134
 PART  64,  SUBPART  L    RESTRICTIONS  ON  TELEPHONE  SOLICITATION........................  135
 DESCRIPTION...........................................................................................  135
 PURPOSE  .................................................................................................  135  ANALYSIS.................................................................................................  135
 Status  of  Competition...................................................................................................................  135
 Advantages  ..................................................................................................................................  135
 Disadvantages  ..............................................................................................................................  135
 Recent  Efforts  ..............................................................................................................................  135
 INITIAL  RECOMMENDATION  .....................................................................  135  COMMENTS..............................................................................................  135
 RECOMMENDATION..................................................................................  136
 PART  64,  SUBPART  M    PROVISION  OF  PAYPHONE  SERVICE.............................................  137
 DESCRIPTION...........................................................................................  137
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 PURPOSE  .................................................................................................  137
 ANALYSIS.................................................................................................  137  Status  of  Competition...................................................................................................................  137
 Advantages  ..................................................................................................................................  137
 Disadvantages  ..............................................................................................................................  137
 Recent  Efforts  ..............................................................................................................................  137
 INITIAL  RECOMMENDATION  .....................................................................  138  COMMENTS..............................................................................................  138
 RECOMMENDATION..................................................................................  138
 PART  64,  SUBPART  N    EXPANDED  INTERCONNECTION.....................................................  139
 DESCRIPTION...........................................................................................  139  PURPOSE  .................................................................................................  139
 ANALYSIS.................................................................................................  139  Status  of  Competition...................................................................................................................  139
 Advantages  ..................................................................................................................................  139
 Disadvantages  ..............................................................................................................................  139
 Recent  Efforts  ..............................................................................................................................  139
 INITIAL  RECOMMENDATION  .....................................................................  140  COMMENTS..............................................................................................  140
 RECOMMENDATION..................................................................................  140
 PART  64,  SUBPART  O    INTERSTATE  PAY-  PER-  CALL  AND  OTHER  INFORMATION  SERVICES.........................................................................................................................................  141
 DESCRIPTION...........................................................................................  141  PURPOSE  .................................................................................................  141
 ANALYSIS.................................................................................................  141  Status  of  Competition...................................................................................................................  141
 Advantages  ..................................................................................................................................  141
 Disadvantages  ..............................................................................................................................  141
 Recent  Efforts  ..............................................................................................................................  141
 INITIAL  RECOMMENDATION  .....................................................................  141  COMMENTS..............................................................................................  142
 RECOMMENDATION..................................................................................  142
 PART  64,  SUBPART  P    CALLING  PARTY  TELEPHONE  NUMBER;  PRIVACY  (ALSO  KNOWN  AS  CALLER  ID)............................................................................................................  143
 DESCRIPTION...........................................................................................  143  PURPOSE  .................................................................................................  143
 ANALYSIS.................................................................................................  143  Status  of  Competition...................................................................................................................  143
 Advantages  ..................................................................................................................................  143
 Disadvantages  ..............................................................................................................................  143
 Recent  Efforts  ..............................................................................................................................  143
 INITIAL  RECOMMENDATION  .....................................................................  144
 COMMENTS..............................................................................................  144  RECOMMENDATION..................................................................................  144
 PART  64,  SUBPART  Q    IMPLEMENTATION  OF  SECTION  273(  D)(  5)  OF  THE  COMMUNICATIONS  ACT:  DISPUTE  RESOLUTION  REGARDING  EQUIPMENT
 STANDARDS.....................................................................................................................................  145
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 DESCRIPTION...........................................................................................  145
 PURPOSE  .................................................................................................  145  ANALYSIS.................................................................................................  145
 Status  of  Competition...................................................................................................................  145
 Advantages  ..................................................................................................................................  145
 Disadvantages  ..............................................................................................................................  145
 Recent  Efforts  ..............................................................................................................................  145
 INITIAL  RECOMMENDATION  .....................................................................  145  COMMENTS..............................................................................................  145
 RECOMMENDATION..................................................................................  145
 PART  64,  SUBPART  R    GEOGRAPHIC  RATE  AVERAGING  AND  RATE  INTEGRATION  .146
 DESCRIPTION...........................................................................................  146
 PURPOSE  .................................................................................................  146  ANALYSIS.................................................................................................  146
 Status  of  Competition...................................................................................................................  146
 Advantages  ..................................................................................................................................  146
 Disadvantages  ..............................................................................................................................  146
 Recent  Efforts  ..............................................................................................................................  146
 INITIAL  RECOMMENDATION  .....................................................................  147  COMMENTS..............................................................................................  147
 RECOMMENDATION..................................................................................  147
 PART  64,  SUBPART  S    NONDOMINANT  INTEREXCHANGE  CARRIER  CERTIFICATIONS  REGARDING  GEOGRAPHIC  RATE  AVERAGING  AND  RATE  INTEGRATION
 REQUIREMENTS.............................................................................................................................  148
 DESCRIPTION...........................................................................................  148  PURPOSE  .................................................................................................  148
 ANALYSIS.................................................................................................  148  Status  of  Competition...................................................................................................................  148
 Advantages  ..................................................................................................................................  148
 Disadvantages  ..............................................................................................................................  148
 Recent  Efforts  ..............................................................................................................................  148
 INITIAL  RECOMMENDATION  .....................................................................  148  COMMENTS..............................................................................................  148
 RECOMMENDATION..................................................................................  149
 PART  64,  SUBPART  T    SEPARATE  AFFILIATE  REQUIREMENTS  FOR  INCUMBENT  INDEPENDENT  LOCAL  EXCHANGE  CARRIERS  THAT  PROVIDE  IN-  REGION,
 INTERSTATE  DOMESTIC  INTEREXCHANGE  SERVICES  OR  IN-  REGION  INTERNATIONAL  INTEREXCHANGE  SERVICES  ....................................................................  150
 DESCRIPTION...........................................................................................  150  PURPOSE  .................................................................................................  150
 ANALYSIS.................................................................................................  150  Status  of  Competition...................................................................................................................  150
 Advantages  ..................................................................................................................................  150
 Disadvantages  ..............................................................................................................................  150
 Recent  Efforts  ..............................................................................................................................  151
 INITIAL  RECOMMENDATION  .....................................................................  151  COMMENTS..............................................................................................  151
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 RECOMMENDATION..................................................................................  151
 PART  64,  SUBPART  U    CUSTOMER  PROPRIETARY  NETWORK  INFORMATION............  152
 DESCRIPTION...........................................................................................  152
 PURPOSE  .................................................................................................  152  ANALYSIS.................................................................................................  152
 Status  of  Competition...................................................................................................................  152
 Advantages  ..................................................................................................................................  152
 Disadvantages  ..............................................................................................................................  152
 Recent  Efforts  ..............................................................................................................................  152
 INITIAL  RECOMMENDATION  .....................................................................  152  COMMENTS..............................................................................................  153
 RECOMMENDATION..................................................................................  153
 PART  64,  SUBPART  V    TELECOMMUNICATIONS  CARRIER  SYSTEMS  SECURITY  AND  INTEGRITY  PURSUANT  TO  THE  COMMUNICATIONS  ASSISTANCE  FOR  LAW
 ENFORCEMENT  ACT  (CALEA)  ....................................................................................................  154
 DESCRIPTION...........................................................................................  154  PURPOSE  .................................................................................................  154
 ANALYSIS.................................................................................................  154  Status  of  Competition...................................................................................................................  154
 Advantages  ..................................................................................................................................  154
 Disadvantages  ..............................................................................................................................  154
 Recent  Efforts  ..............................................................................................................................  154
 INITIAL  RECOMMENDATION  .....................................................................  154
 COMMENTS..............................................................................................  154  RECOMMENDATION..................................................................................  155
 PART  64,  SUBPART  W    REQUIRED  NEW  CAPABILITIES  PURSUANT  TO  THE  COMMUNICATIONS  ASSISTANCE  FOR  LAW  ENFORCEMENT  ACT  (CALEA)..................  156
 DESCRIPTION...........................................................................................  156  PURPOSE  .................................................................................................  156
 ANALYSIS.................................................................................................  156  Status  of  Competition...................................................................................................................  156
 Advantages  ..................................................................................................................................  156
 Disadvantages  ..............................................................................................................................  156
 Recent  Efforts  ..............................................................................................................................  156
 INITIAL  RECOMMENDATION  .....................................................................  156  COMMENTS..............................................................................................  157
 RECOMMENDATION..................................................................................  157
 PART  64,  SUBPART  X    SUBSCRIBER  LIST  INFORMATION..................................................  158
 DESCRIPTION...........................................................................................  158  PURPOSE  .................................................................................................  158
 ANALYSIS.................................................................................................  158  Status  of  Competition...................................................................................................................  158
 Advantages  ..................................................................................................................................  158
 Disadvantages  ..............................................................................................................................  158
 Recent  Efforts  ..............................................................................................................................  158
 INITIAL  RECOMMENDATION  .....................................................................  158
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 COMMENTS..............................................................................................  158
 RECOMMENDATION..................................................................................  159
 PART  64,  SUBPART  Y    TRUTH-  IN-  BILLING  REQUIREMENTS  FOR  COMMON  CARRIERS  ............................................................................................................................................................  160
 DESCRIPTION...........................................................................................  160  PURPOSE  .................................................................................................  160
 ANALYSIS.................................................................................................  160  Status  of  Competition...................................................................................................................  160
 Advantages  ..................................................................................................................................  160
 Disadvantages  ..............................................................................................................................  160
 Recent  Efforts  ..............................................................................................................................  161
 INITIAL  RECOMMENDATION  .....................................................................  161  COMMENTS..............................................................................................  161
 RECOMMENDATION..................................................................................  161
 PART  65    INTERSTATE  RATE  OF  RETURN  PRESCRIPTION  PROCEDURES  AND  METHODOLOGIES.........................................................................................................................  162
 DESCRIPTION...........................................................................................  162  PURPOSE  .................................................................................................  162
 ANALYSIS.................................................................................................  162  Status  of  Competition...................................................................................................................  162
 Advantages  ..................................................................................................................................  162
 Disadvantages  ..............................................................................................................................  163
 Recent  Efforts  ..............................................................................................................................  163
 INITIAL  RECOMMENDATION  .....................................................................  163  COMMENTS..............................................................................................  163
 RECOMMENDATION..................................................................................  164
 PART  68    CONNECTION  OF  TERMINAL  EQUIPMENT  TO  THE  TELEPHONE  NETWORK  ............................................................................................................................................................  165
 DESCRIPTION...........................................................................................  165  PURPOSE  .................................................................................................  165
 ANALYSIS.................................................................................................  165  Status  of  Competition...................................................................................................................  165
 Advantages  ..................................................................................................................................  166
 Disadvantages  ..............................................................................................................................  166
 Recent  Efforts  ..............................................................................................................................  166
 INITIAL  RECOMMENDATION  .....................................................................  166
 COMMENTS..............................................................................................  167  RECOMMENDATION..................................................................................  167
 PART  69    ACCESS  CHARGES  ......................................................................................................  168
 DESCRIPTION...........................................................................................  168  PURPOSE  .................................................................................................  168
 ANALYSIS.................................................................................................  168  Status  of  Competition...................................................................................................................  168
 Advantages  ..................................................................................................................................  169
 Disadvantages  ..............................................................................................................................  169
 Recent  Efforts  ..............................................................................................................................  169
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 INITIAL  RECOMMENDATION  .....................................................................  169
 COMMENTS..............................................................................................  170  RECOMMENDATION..................................................................................  171
 PART  73,  RADIO  BROADCAST  SERVICES    THE  BROADCAST  OWNERSHIP  RULES  ....  172
 DESCRIPTION...........................................................................................  172  PURPOSE  .................................................................................................  172
 ANALYSIS.................................................................................................  172  Status  of  Competition...................................................................................................................  172
 Advantages  ..................................................................................................................................  172
 Disadvantages  ..............................................................................................................................  172
 RECENT  EFFORTS....................................................................................  172  INITIAL  RECOMMENDATION  .....................................................................  173
 Local  Radio  Ownership  Rule........................................................................................................  173
 Local  Television  Multiple  Ownership  Rule...................................................................................  173
 Radio-  Television  Cross-  Ownership  Rule......................................................................................  173
 Daily  Newspaper/  Broadcast  Cross-  Ownership  Rule......................................................................  173
 National  Television  Multiple  Ownership  Rule  ..............................................................................  173
 Dual  Network  Rule.......................................................................................................................  173
 Experimental  Broadcast  Station  Multiple  Ownership  Rule  (74.132)..............................................  174
 Cable/  Television  Cross-  Ownership  Rule  (76.501(  a))  ....................................................................  174
 COMMENTS..............................................................................................  174  RECOMMENDATION..................................................................................  176
 PART  80    STATIONS  IN  THE  MARITIME  SERVICES,  SUBPARTS  J  (PUBLIC  COAST  STATIONS)  AND  Y  (COMPETITIVE  BIDDING  PROCEDURES)  ..............................................  178
 DESCRIPTION...........................................................................................  178  PURPOSE  .................................................................................................  178
 ANALYSIS.................................................................................................  178  Status  of  Competition...................................................................................................................  178
 Advantages  ..................................................................................................................................  179
 Disadvantages  ..............................................................................................................................  179
 Recent  Efforts  ..............................................................................................................................  179
 INITIAL  RECOMMENDATION  .....................................................................  180
 COMMENTS..............................................................................................  180  RECOMMENDATION..................................................................................  180
 PART  90    PRIVATE  LAND  MOBILE  RADIO  SERVICES..........................................................  181
 DESCRIPTION...........................................................................................  181  PURPOSE  .................................................................................................  181
 ANALYSIS.................................................................................................  182  Status  of  Competition...................................................................................................................  182
 Advantages  ..................................................................................................................................  182
 Disadvantages  ..............................................................................................................................  182
 Recent  Efforts  ..............................................................................................................................  182
 INITIAL  RECOMMENDATION  .....................................................................  182  COMMENTS..............................................................................................  183
 RECOMMENDATION..................................................................................  183
 PART  90,  SUBPART  L    REGULATIONS  FOR  AUTHORIZATION  AND  USE  OF  FREQUENCIES  IN  THE  470-  512  MHZ  BAND...............................................................................  184
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 DESCRIPTION...........................................................................................  184
 PURPOSE  .................................................................................................  184  ANALYSIS.................................................................................................  185
 Status  of  Competition...................................................................................................................  185
 Advantages  ..................................................................................................................................  185
 Disadvantages  ..............................................................................................................................  185
 Recent  Efforts  ..............................................................................................................................  185
 INITIAL  RECOMMENDATION  .....................................................................  185  COMMENTS..............................................................................................  185
 RECOMMENDATION..................................................................................  185
 PART  90,  SUBPARTS  M  (INTELLIGENT  TRANSPORTATION  SYSTEMS  RADIO  SERVICE)  AND  X  (COMPETITIVE  BIDDING  RULES  FOR  THE  LOCATION  AND  MONITORING
 SERVICE)..........................................................................................................................................  186
 DESCRIPTION...........................................................................................  186  Location  and  Monitoring  Systems  (LMS)  .....................................................................................  186
 Dedicated  Short  Range  Communications  Service  (DSRCS)..........................................................  186
 PURPOSE  .................................................................................................  187
 ANALYSIS.................................................................................................  187  Status  of  Competition...................................................................................................................  187
 Advantages  ..................................................................................................................................  187
 Disadvantages  ..............................................................................................................................  187
 Recent  Efforts  ..............................................................................................................................  187
 INITIAL  RECOMMENDATION  .....................................................................  187  COMMENTS..............................................................................................  187
 RECOMMENDATION..................................................................................  188
 PART  90,  SUBPART  P      PAGING  OPERATIONS  IN  THE  929  MHZ  BAND..............................  189
 DESCRIPTION...........................................................................................  189  PURPOSE  .................................................................................................  189
 ANALYSIS.................................................................................................  189  Status  of  Competition...................................................................................................................  189
 Advantages  ..................................................................................................................................  189
 Disadvantages  ..............................................................................................................................  189
 Recent  Efforts  ..............................................................................................................................  189
 INITIAL  RECOMMENDATION  .....................................................................  190
 COMMENTS..............................................................................................  190  RECOMMENDATION..................................................................................  190
 PART  90,  SUBPARTS  S  (REGULATIONS  FOR  LICENSING  AND  USE  OF  FREQUENCIES  IN  THE  800  AND  900  MHZ  BANDS),  AND  U  AND  V  (COMPETITIVE  BIDDING  PROCEDURES
 FOR  THE  900  AND  800  MHZ  SERVICE)  .......................................................................................  191
 DESCRIPTION...........................................................................................  191
 PURPOSE  .................................................................................................  191  ANALYSIS.................................................................................................  192
 Status  of  Competition...................................................................................................................  192
 Advantages  ..................................................................................................................................  192
 Disadvantages  ..............................................................................................................................  192
 Recent  Efforts  ..............................................................................................................................  192
 INITIAL  RECOMMENDATION  .....................................................................  193
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 COMMENTS..............................................................................................  193
 RECOMMENDATION..................................................................................  193
 PART  90,  SUBPARTS  T  (REGULATIONS  FOR  LICENSING  AND  USE  OF  FREQUENCIES  IN  THE  220-  222  MHZ  BAND)  AND  W  (COMPETITIVE  BIDDING  PROCEDURES  FOR  THE  220
 MHZ  SERVICE)................................................................................................................................  194
 DESCRIPTION...........................................................................................  194  PURPOSE  .................................................................................................  194
 ANALYSIS.................................................................................................  194  Status  of  Competition...................................................................................................................  194
 Advantages  ..................................................................................................................................  194
 Disadvantages  ..............................................................................................................................  195
 Recent  Efforts  ..............................................................................................................................  195
 INITIAL  RECOMMENDATION  .....................................................................  195  COMMENTS..............................................................................................  196
 RECOMMENDATION..................................................................................  196
 PART  95    PERSONAL  RADIO  SERVICES,  SUBPART  F    218-  219  MHZ  SERVICE...............  197
 DESCRIPTION...........................................................................................  197  PURPOSE  .................................................................................................  197
 ANALYSIS.................................................................................................  197  Status  of  Competition...................................................................................................................  197
 Advantages  ..................................................................................................................................  198
 Disadvantages  ..............................................................................................................................  198
 Recent  Efforts  ..............................................................................................................................  198
 INITIAL  RECOMMENDATION  .....................................................................  198  COMMENTS..............................................................................................  198
 RECOMMENDATION..................................................................................  198
 PART  100    DIRECT  BROADCAST  SATELLITE  SERVICE.......................................................  199
 DESCRIPTION...........................................................................................  199  PURPOSE  .................................................................................................  199
 ANALYSIS.................................................................................................  199  Status  of  Competition...................................................................................................................  199
 Advantages  ..................................................................................................................................  199
 Disadvantages  ..............................................................................................................................  200
 Recent  Efforts  ..............................................................................................................................  200
 INITIAL  RECOMMENDATION  .....................................................................  201  COMMENTS..............................................................................................  201
 RECOMMENDATION..................................................................................  201
 PART  101    FIXED  MICROWAVE  SERVICES.............................................................................  202
 DESCRIPTION...........................................................................................  202
 PURPOSE  .................................................................................................  202  ANALYSIS.................................................................................................  203
 Status  of  Competition...................................................................................................................  203
 Advantages  ..................................................................................................................................  203
 Disadvantages  ..............................................................................................................................  203
 Recent  Efforts  ..............................................................................................................................  203
 INITIAL  RECOMMENDATION  .....................................................................  204
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 COMMENTS..............................................................................................  204
 RECOMMENDATION..................................................................................  204
 PART  101,  SUBPART  G    24  GHZ  SERVICE  AND  DIGITAL  ELECTRONIC  MESSAGE  SERVICE...........................................................................................................................................  206
 DESCRIPTION...........................................................................................  206  PURPOSE  .................................................................................................  206
 ANALYSIS.................................................................................................  206  Status  of  Competition...................................................................................................................  206
 Advantages  ..................................................................................................................................  206
 Disadvantages  ..............................................................................................................................  207
 Recent  Efforts  ..............................................................................................................................  207
 INITIAL  RECOMMENDATION  .....................................................................  207  COMMENTS..............................................................................................  207
 RECOMMENDATION..................................................................................  207
 PART  101,  SUBPARTS  L  (LOCAL  MULTIPOINT  DISTRIBUTION  SERVICE  (LMDS))  AND  M  (COMPETITIVE  BIDDING  PROCEDURES  FOR  LMDS)  ............................................................  208
 DESCRIPTION...........................................................................................  208  PURPOSE  .................................................................................................  208
 ANALYSIS.................................................................................................  208  Status  of  Competition...................................................................................................................  208
 Advantages  ..................................................................................................................................  209
 Disadvantages  ..............................................................................................................................  209
 Recent  Efforts  ..............................................................................................................................  210
 INITIAL  RECOMMENDATION  .....................................................................  210  COMMENTS..............................................................................................  210
 RECOMMENDATION..................................................................................  210
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 1
 I.  OVERVIEW
 1.  This  Staff  Report  summarizes  the  findings  of  an  extensive  review  of  the  Federal
 Communications  Commissions  rules.  Each  Bureau  and  Office  reviewed  the  rules  pertinent  to  its
 operations  to  determine  whether  to  recommend  that  the  Commission  modify  or  eliminate  any
 rules.  Accompanying  this  written  report  is  a  rule  part  analysis  that  identifies  the  Commissions
 rule  parts,  explains  the  purpose,  benefits  and  disadvantages  of  the  particular  rule  or  rule  part,  and
 lists  any  staff  recommendation  for  modifying  or  repealing  any  rules  within  each  part.  The  report
 and  analysis  are  steps  in  the  Commissions  process  of  conducting  biennial  regulatory  reviews
 pursuant  to  section  11  of  the  Communications  Act  of  1934,  as  amended  (Communications  Act),
 and  section  202(  h)  of  the  Telecommunications  Act  of  1996  (1996  Act).  1
 II.  BACKGROUND
 A.  Legal  Authority
 2.  The  Telecommunications  Act  of  1996,  was  intended  to  promote  competition
 and  reduce  regulation  in  order  to  secure  lower  prices  and  higher  quality  services  for  American
 telecommunications  consumers  and  encourage  the  rapid  deployment  of  new  telecommunications
 technologies.  2  The  1996  Act  significantly  amended  the  Communications  Act  of  1934  to  permit
 and  encourage  competition  in  various  communications  markets.  Congress  anticipated  that,  as
 competition  developed,  market  forces  would  reduce  the  need  for  regulation.  3  Therefore,  in
 addition  to  requiring  the  Commission  to  take  certain  actions  to  open  markets  to  competition,
 Congress  required  the  Commission  to  review  certain  regulations  every  two  years  and  to  modify  or
 repeal  those  regulations  that  are  no  longer  necessary  in  the  public  interest.  4
 3.  Section  11  of  the  Communications  Act,  which  was  added  by  the  1996  Act,
 provides:
 (a)  Biennial  Review  of  Regulations.    In  every  even-  numbered  year  (beginning  with
 1998),  the  Commission  
 (1)  shall  review  all  regulations  issued  under  this  Act  in  effect  at  the  time  of  the
 review  that  apply  to  the  operations  or  activities  of  any  provider  of
 telecommunications  service;  and
 (2)  shall  determine  whether  any  such  regulation  is  no  longer  necessary  in  the
 public  interest  as  the  result  of  meaningful  economic  competition  between
 providers  of  such  service.
 (b)  Effect  of  Determination.    The  Commission  shall  repeal  or  modify  any  regulation  it
 determines  to  be  no  longer  necessary  in  the  public  interest.
 4.  Section  202  of  the  1996  Act  addresses  matters  regarding  broadcast  ownership.
 Section  202(  h)  provides:
 1  47  U.  S.  C.    161;  Telecommunications  Act  of  1996,  Pub.  Law  No.  104-  104,    202,  110  Stat.  56  (1996).
 2  1996  Act,  introductory  statement.
 3  See  Joint  Managers  Statement,  S.  Conf.  Rep.  No.  104-  230,  104th  Cong.,  2d  Sess.  113  (1996)  at  1
 (stating  that  the  1996  Act  would  establish  a  pro-  competitive,  deregulatory  national  policy  framework).
 4  47  U.  S.  C.    161;  1996  Act,    202(  h).
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 The  Commission  shall  review  its  rules  adopted  pursuant  to  this
 section  and  all  of  its  ownership  rules  biennially  as  part  of  its
 regulatory  reform  review  under  section  11  of  the
 Communications  Act  of  1934  and  shall  determine  whether  any
 of  such  rules  are  not  in  the  public  interest  as  the  result  of
 competition.  The  Commission  shall  repeal  or  modify  any
 regulation  it  determines  to  be  no  longer  in  the  public  interest.
 5.  Section  11  and  section  202(  h),  collectively,  require  the  Commission:  (1)  to
 review  biennially  its  regulations  that  pertain  to  (a)  the  operations  or  activities  of
 telecommunications  service  providers,  5  and  (b)  broadcast  ownership;  and  (2)  to  determine
 whether  those  regulations  are  no  longer  necessary  in  the  public  interest  as  a  result  of  meaningful
 economic  competition.  Following  such  review,  the  Commission  is  directed  to  modify  or  repeal
 any  such  regulations  that  are  no  longer  necessary  in  the  public  interest.  6
 6.  In  addition  to  these  statutory  requirements,  the  Commission  has  discretion  to
 suspend,  modify,  revoke  or  waive  any  of  its  regulations  for  good  cause,  pursuant  to  other
 applicable  requirements,  such  as  the  Administrative  Procedure  Act.  7  Thus,  for  example,  the
 Commission  may  consider  whether  circumstances  other  than  economic  competition  justify
 modification  or  repeal  of  particular  rules.
 B.  Summary  of  1998  Biennial  Regulatory  Review
 7.  In  1998,  the  Commission  reviewed  all  of  its  regulations.  The  Commission  did
 not  attempt  to  identify  or  limit  its  review  to  rules  that  apply  to  the  operations  or  activities  of
 telecommunications  service  providers.  8  For  the  1998  review:  (1)  each  of  the  operating  bureaus
 and  the  Office  of  Engineering  and  Technology  conducted  a  review  of  the  rules  under  their
 jurisdiction;  and  (2)  members  of  the  Office  of  Plans  and  Policy,  the  Chief  Economist  and  his
 staff,  and  members  of  the  Competition  Division  in  the  Office  of  General  Counsel  conducted  a
 parallel  review  of  Commission  rules.  These  reviews  were  not  limited  to  whether  "meaningful
 economic  competition"  justified  changes,  but  instead  considered  whether,  for  any  reason,
 modification  or  elimination  of  a  rule  would  serve  the  public  interest.
 8.  The  team  from  the  Office  of  Plans  and  Policy/  Chief  Economist/  Competition
 Division  used  the  following  questions  in  its  review:
 Is  the  original  or  present  purpose  of  the  regulation  still  valid?
 5  Telecommunications  service  is  the  offering  of  telecommunications  for  a  fee  directly  to  the  public  or
 to  such  classes  of  users  as  to  be  effectively  available  to  the  public.  47  U.  S.  C.    153(  46).
 6  Congress  also  directed  the  Commission  to  forbear  from  applying  its  regulations  or  provisions  of  the
 Communications  Act  to  a  telecommunications  carrier  or  telecommunications  service,  or  class  of
 telecommunications  carriers  or  telecommunications  services,  if,  inter  alia,  the  enforcement  of  such
 regulation  or  provision  is  not  necessary  for  the  protection  of  consumers  and  if  forbearance  is  consistent
 with  the  public  interest.  47  U.  S.  C.    160(  a).  In  determining  whether  forbearance  is  consistent  with  the
 public  interest,  the  Commission  must  consider  whether  forbearance  would  enhance  competition  among
 telecommunications  service  providers.  47  U.  S.  C.    160(  b).
 7  47  C.  F.  R.    1.3.
 8  47  U.  S.  C.    161.
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 If  a  valid  purpose  for  the  regulation  exists,  how  well  does  the  regulation  achieve  the
 purpose?
 Even  if  a  regulation  achieves  its  purpose,  do  the  burdens  it  creates  outweigh  its
 advantages?
 Is  there  a  less  burdensome  alternative  that  will  produce  similar  benefits?
 Does  the  regulation  overlap,  interfere,  or  conflict  with  other  regulations  such  that
 modification  is  warranted?
 9.  The  Commission  received  substantial  public  input.  For  example,  each  of  the
 Bureaus,  together  with  the  Office  of  General  Counsel,  hosted  a  series  of  public  fora  to  solicit
 ideas  regarding  rules  that  might  warrant  repeal  or  modification.  In  addition,  staff  received  input
 during  a  series  of  meetings  held  by  practice  groups  of  the  Federal  Communications  Bar
 Association.
 10.  The  1998  Biennial  Regulatory  Review  led  to  the  initiation  of  a  wide  range  of
 deregulatory  and  streamlining  proposals.  9  For  example,  the  Commission  initiated  32  proceedings
 and  modified  or  eliminated  hundreds  of  rules,  particularly  ones  that  affected  the  operations  and
 activities  of  telecommunications  service  providers.
 III.  THE  2000  BIENNIAL  REGULATORY  REVIEW
 11.  This  review  builds  upon  the  work  completed  in  the  1998  Biennial  Regulatory
 Review,  and  establishes  a  foundation  for  future  reviews.  In  particular,  the  2000  Biennial
 Regulatory  Review  provides  more  detailed  documentation  of  the  staffs  review.  The  review
 process  is  incremental,  however,  and  staff  expects  that  even  more  comprehensive  documentation
 may  be  provided  in  future  years.  In  addition,  staff  recommends  that  the  Commission  consider
 setting  forth  an  analysis  similar  to  the  analysis  used  in  this  staff  report  whenever  the  Commission
 adopts  new  rules.  Such  an  analysis  may  include  the  reason  for  the  rule,  whether  the  rule
 effectively  accomplishes  its  intended  purpose,  and,  if  relevant,  the  status  of  competition  at  the
 time  the  rule  is  enacted.  Conducting  such  an  analysis  at  the  time  new  rules  are  adopted  might
 help  ensure  that  new  regulatory  requirements  are  carefully  tailored  to  achieve  their  intended
 regulatory  goals.  Such  analysis  might  also  significantly  reduce  the  burdens  associated  with  future
 biennial  reviews.
 12.  In  evaluating  the  rules,  staff  applied  a  consistent  analysis  to  determine  whether  to
 recommend  modification  or  elimination  of  Commission  rules.  Staffs  review  considered  (1)  the
 purpose  of  the  rule;  (2)  the  advantages  of  the  rule;  10  (3)  the  disadvantages  of  the  rule;  11  (4)  what
 impact  competitive  developments  have  had  on  the  rule;  and  (5)  whether  to  recommend
 modification  or  revocation  of  the  rule.  This  analysis  allowed  the  staff  to  make  reasoned
 determinations  about  whether  a  rule  should  be  changed  or  eliminated  either  because  of
 competitive  developments,  or  for  other  reasons.  For  example,  staff  considered  whether  the
 9  See  Appendix  I  for  a  listing  of  the  completed  and  ongoing  proceedings  that  were  initiated  as  a  result  of
 the  1998  Biennial  Regulatory  Review.
 10  This  includes  consideration  of  how  adroitly,  precisely,  and  cost-  effectively  the  rule  addresses  the
 problem  at  issue.
 11  This  includes  consideration  of  whether  the  rule  is  over-  or  under-  inclusive  in  its  scope,  and  whether
 compliance  imposes  unnecessary  costs.
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 underlying  purpose  of  the  rule  is  still  relevant,  and,  if  so,  whether  that  purpose  could  be
 accomplished  more  effectively  in  another  manner.
 13.  Although  there  may  be  other  ways  to  determine  whether  a  Commission  rule
 continues  to  be  necessary  in  the  public  interest,  staff  believes  that  the  analysis  it  used  is  a
 reasonable  way  to  carry  out  the  requirements  of  section  11  and  section  202(  h).  In  addition,  the
 analysis  staff  used  is  relatively  easy  to  apply,  and  permits  consideration  of  all  relevant  factors  in
 determining  whether  a  rule  should  be  modified  or  revoked.  Staff  therefore  recommends  that  the
 Commission  adopt  this  analysis  when  it  makes  public  interest  determinations.
 A.  Method  and  Scope  of  Review
 14.  The  Commission  has  devoted  substantial  time  and  resources  to  the  2000  Biennial
 Regulatory  Review.  In  the  fall  of  1999,  Commission  staff  began  to  create  a  computer  database  of
 Commission  rules.  In  early  2000,  a  team  consisting  of  representatives  from  each  Bureau  and
 Office  began  to  develop  a  method  for  conducting  the  staff  review.  The  team  agreed  to  a
 framework  and  analysis  that  each  Bureau  and  Office  would  use  in  reviewing  its  rules.  This
 framework  was  intended  to  ensure  a  well-  reasoned  and  consistent  review  across  the  agency.  That
 framework  included  the  following:
 a.)  Each  Bureau  and  Office  would  endeavor  to  look  at  all  of  its
 rules    not  only  rules  that  are  specifically  implicated  by  sections
 11  and  202(  h)    and  consider  whether  repeal  or  modification
 might  be  appropriate.
 The  benefits  associated  with  modifying  or  eliminating  regulations  are  not  limited  to  the  rules
 implicated  in  sections  11  and  202(  h).  The  team  determined  that  a  broad  review  of  Commission
 rules,  even  beyond  the  scope  of  statutory  requirements,  could  provide  significant  benefits.  The
 team  reasoned,  for  example,  that  eliminating  unnecessary  regulations  would  likely  reduce
 compliance  costs  of  service  providers,  which  in  turn  could  reduce  charges  to  consumers.
 Similarly,  the  team  deemed  it  reasonable  to  consider  whether  any  regulations  could  be  modified
 so  that  they  achieve  their  intended  goals  more  effectively  or  in  a  less  burdensome  manner.  In
 addition,  the  team  determined  that  its  decision  to  conduct  a  broad  rule  review  would  reduce  the
 potential  for  disagreement  about  what  rules  are  subject  to  the  mandatory  review  requirements  in
 sections  11  and  202(  h).
 b.)  As  noted  above,  the  team  determined  that  each  Bureau  and
 Office  would  use  a  consistent  analysis,  which  would  consider  the
 advantages  and  disadvantages  of  the  existing  rules  and  what
 impact,  if  any,  competitive  developments  have  had  on  each  rule.
 Each  Bureau  and  Office  would  consider  whether  revocation  or
 modification  might  be  appropriate  for  any  reason.  The  review
 would  not  be  limited  to  whether  changes  were  warranted  as  a
 result  of  competition.
 Although  sections  11  and  202(  h)  require  the  Commission  to  determine  whether  rules  remain  in
 the  public  interest  as  a  result  of  developments  in  competition,  the  team  determined  that  there
 might  be  other  relevant  bases  for  modifying  or  revoking  a  rule.  For  example,  a  rule  might  be
 obsolete  as  a  result  of  technological  developments.  Or  modification  might  be  appropriate  as  a
 result  of  changes  in  industry  practices  or  judicial  decisions,  or  because  a  rule  is  duplicative  of  or
 contradictory  to  other  rules.  Although  the  Commission  has  worked  hard  to  keep  its  rules  current
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 with  industry,  judicial,  and  other  developments,  the  biennial  regulatory  review  process  provides
 another  opportunity  to  ensure  that  the  Commissions  rules  are  up-  to-  date.
 15.  The  team  also  recognized  that,  even  where  competition  develops,  it  will  not
 always  and  immediately  eliminate  the  need  for  regulation.  For  example,  there  may  be  certain
 segments  of  the  market  that  would  not  receive  service  of  acceptable  quality  or  at  affordable  rates
 absent  regulation.  Thus,  even  if  a  regulation  generally  is  no  longer  necessary  in  the  public
 interest  as  a  result  of  competition,  there  may  be  reasons  to  retain  it,  at  least  with  respect  to  certain
 segments  of  the  market.
 c.)  Staff  would  prepare  a  report  that  summarizes  the  review
 conducted  by  each  Bureau  and  Office.  In  addition,  staff  would
 provide  a  written  description  of  the  analysis  used  in  reviewing
 each  rule  part  implicated  by  sections  11  or  202(  h).
 The  staff  report  includes  highlights  of  the  staffs  review,  as  well  as  recommendations  for
 Commission  action.  The  staff  report  is  not  limited  to  rules  that  are  subject  to  the  biennial
 regulatory  review  requirements  of  sections  11  and  202(  h).
 16.  The  rule  part  analysis  provides  additional  documentation  of  the  staffs  review  of
 each  rule  part  that  is  implicated  by  section  11  or  section  202(  h).  It  is  intended  to  enable  the
 public  to  understand  the  reasoning  behind  the  staffs  review  and  recommendation.  The  analysis
 strives  to  encompass  any  rule  that  might  affect  the  operations  or  activities  of  telecommunications
 service  providers.
 17.  The  team  recognized  that  completing  a  comprehensive  rule  review,  as  it
 proposed,  would  be  time-  consuming  and  labor  intensive.  The  team  concluded  that  it  should  give
 priority  to  satisfying  statutory  requirements,  and  thus  would  focus  its  efforts  on  completing  the
 rule  analysis  for  rules  that  are  implicated  by  sections  11  and  202(  h).
 18.  The  analysis  generally  documents  review  by  rule  part,  but  it  identifies  many  of
 the  individual  rules  that  the  staff  recommends  be  modified  or  repealed.  Staff  determined  that  in
 most  instances,  providing  analysis  at  the  rule  part  level  was  sufficient  to  identify  the  reasoning
 used  and  the  basis  for  the  recommendations.  In  some  instances,  however,  staff  determined  that  it
 should  include  its  analysis  of  rule  subparts.  For  example,  where  only  portions  of  the  rule  part  are
 implicated  by  section  11,  or  where  more  than  one  Bureau  or  Office  shares  responsibility  for
 overseeing  a  rule  part,  the  analysis  may  be  done  by  subpart.
 B.  Analytical  Framework
 19.  The  analytical  framework  that  staff  used  for  this  Biennial  Regulatory  Review
 recognizes  that  significant  economic  benefits  can  be  achieved  by  fostering  competition.
 Although  regulation  may  sometimes  be  necessary  to  correct  market  failures  or  prevent  the  accrual
 of  excessive  market  power,  12  in  most  instances  market  forces  will  yield  economically  efficient
 results.  Staffs  review  thus  sought  to  maximize  the  potential  for  self-  correcting  market  action,
 and  to  suggest  deregulatory  action  warranted  by  economic  and  technological  developments.  Staff
 considered  factors  such  as  the  effect  a  rule  has  on  competitive  entry  into  specific  services,
 whether  the  rule  encourages  resource-  efficient  technologies,  the  effect  of  the  rule  on  costs  for  the
 12  For  a  broad  discussion  of  the  causes  of  market  failure  see  A.  Mas-  Colell,  M.  D.  Whinston,  and  J.  R.
 Green,  MICROECONOMIC  THEORY,  (1995),  Chapters  11-  14.
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 industry  and  the  agency,  and  whether  developments  in  the  definition  and  structure  of  the  relevant
 market  would  suggest  that  the  elimination  or  modification  of  the  rule  is  appropriate.  Staff  paid
 particular  attention  to  rules  that  seek  to  limit  the  exercise  of  market  power  in  markets
 transitioning  to  a  more  competitive  structure.
 20.  The  staff  also  recognized  that  some  of  the  Commissions  goals  might  require
 regulatory  action  even  when  developments  like  those  mentioned  above  are  taken  into
 consideration.  For  example,  the  Commission  has  sought  to  ensure  that  all  Americans  have  access
 to  the  widest  variety  of  telecommunications  services  and  that  audiences  have  access  to  diverse
 media  sources.  Staff  attempted  to  consider  all  of  the  Commissions  stated  policy  concerns  when
 it  reviewed  the  agencys  rules.
 C.  Structure  of  the  Staff  Report
 21.  As  stated  above,  staff  endeavored  to  review  all  of  the  Commissions  rules  rather
 than  limit  its  review  to  rules  covered  explicitly  by  section  11  of  the  Communications  Act  and
 section  202(  h)  of  the  1996  Act.  Staff  determined  that  a  broad  review  of  the  Commissions  rules
 could  provide  significant  benefits,  although  it  gave  priority  to  the  rules  that  are  implicated  in
 sections  11  and  202(  h).
 22.  Each  Bureau  and  Office  conducted  this  review  by  seeking  input  from  staff  and
 industry  groups.  In  conducting  this  review,  staff  considered  (1)  the  purpose  of  the  rule;  (2)  the
 advantages  of  the  rule;  (3)  the  disadvantages  of  the  rule;  and  (4)  the  impact  competitive
 developments  may  have  had  on  the  need  for  the  rule.
 23.  This  Report  summarizes  staffs  review  of  the  Commissions  rules,  the  status  of
 ongoing  and  recent  initiatives,  and  recommendations  on  whether  specific  rules  should  be  kept  in
 place,  modified,  or  repealed.  The  staffs  recommendations  are  also  reported  in  the  attached  rule
 part  analysis.  The  rule  part  analysis  summarizes  staffs  findings  and  comments  that  have  been
 submitted  in  response  to  the  September  19,  2000  Public  Notice.  The  analysis  of  each  rule
 includes  two  recommendation  sections.  The  Initial  Recommendation  section  is  based  upon
 staffs  review  of  the  rule  at  the  time  of  the  release  of  the  September  19,  2000  Staff  Report.  The
 Recommendation  section  is  based  upon  further  reflection  by  the  staff  and  any  comments  that
 were  submitted  to  the  Commission  in  response  to  the  Public  Notice.
 24.  This  Staff  Report  is  merely  one  step  in  the  Commissions  2000  Biennial
 Regulatory  Review.  Section  11  and  section  202(  h)  mandate  Commission  determinations.  A
 Commission  Report  is  being  released  concurrently  with  this  Staff  Report.  The  Commission
 would  determine  what  if  any  regulations  are  no  longer  necessary  in  the  public  interest,  in
 accordance  with  section  11  and  section  202(  h).
 25.  Pursuant  to  the  Commissions  determinations,  staff  expects  that  the  Commission
 would  initiate  proceedings  to  modify  or  eliminate  selected  rules.  These  proceedings  would
 conform  with  Commission  procedural  rules  and  the  Administrative  Procedure  Act.  Some  of  these
 proceedings  have  been  initiated  already,  while  others  will  be  initiated  next  year.  13  The  statute
 does  not  require  the  Commission  to  repeal  or  modify  its  rules  by  the  end  of  2000.  14
 13  See  Appendix  I.
 14  See  generally  47  U.  S.  C.    161.
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 IV.  SUMMARY  OF  REVIEWS  BY  COMMON  CARRIER,  INTERNATIONAL,  AND  WIRELESS  TELECOMMUNICATIONS  BUREAUS
 A.  Common  Carrier  Bureau
 26.  The  Common  Carrier  Bureau  advises  the  Commission  regarding  the  regulation  of
 telecommunications  service  providers,  including  issues  related  to  interstate  telecommunications
 service,  interstate  access  service,  and  local  exchange  competition.  The  Bureau  administers  rules
 and  policies  designed  to  foster  competition  in  telecommunications  markets,  promote  widespread
 availability  of  telecommunications,  and  protect  consumers.
 27.  The  Common  Carrier  Bureau  has  focused  in  recent  years  on  adopting  market-opening
 and  universal  service  rules  for  the  local  exchange  and  long  distance  markets.  The
 Bureau  has  also  focused  on  review  of  applications  by  Bell  Operating  Companies  to  provide  long
 distance  service  as  well  as  review  of  telecommunications  company  mergers.  In  addition,  the
 Bureau  has  devoted  considerable  resources  to  consideration  of  the  regulatory  reforms  that  should
 occur  as  competition  in  the  provision  of  telecommunications  services  develops.
 28.  In  evaluating  the  state  of  competition,  the  Bureau  has  found  that  the  long  distance
 services  market  is  competitive,  but  competition  in  the  local  exchange  and  exchange  access
 markets  is  nascent.  While  incumbent  local  exchange  carriers  (LECs)  and  the  new  local  exchange
 entrants  disagree  about  the  extent  to  which  local  competition  has  developed,  competition  for  local
 exchange  services  has  taken  root  and  is  increasing.
 29.  Three  recent  reports  concerning  competitive  developments  in  the  local  exchange
 market  conclude  that  competition  is  growing,  although  competitive  local  exchange  carriers  still
 serve  only  a  very  small  portion  of  local  exchange  lines.  Telecommunications  @  the
 Millennium,  a  report  by  the  FCC  Office  of  Plans  and  Policy,  states  that  [  o]  n  the  fourth
 anniversary  of  the  Act,  we  see  competition  in  the  local  market  beginning  to  take  hold.  15  The
 report  states  that,  in  1996,  when  the  Act  was  passed,  competitors  had  a  one  percent  share  of  the
 local  market,  16  adding  that  [  t]  heir  share  of  the  local  market  has  increased  to  4  percent  of  lines
 served  and  over  6  percent  of  local  service  revenue.  17  The  report  states  that  [  l]  ocal  competitors
 have  been  particularly  successful  in  the  business  market,  where  competitors  have  added  65
 percent  of  all  new  lines  deployed  in  the  third  quarter  of  1999.  18  The  report  adds  that  more
 people  are  beginning  to  see  wireless  telephones  as  substitutes  for  their  wireline  services  19  in  light
 of  dramatic  price  decreases  and  increases  in  service  quality.  These  trends  are  further  explored  in
 Local  Telephone  Competition  at  the  New  Millennium,  a  report  by  the  FCC  Common  Carrier
 Bureau.  20  A  report  by  the  United  States  General  Accounting  Office,  Development  of
 15  Telecommunications  @  the  Millennium,  at  17  (rel.  Feb.  8,  2000).
 16  Id.  at  18.
 17  Id.  These  data  include  independent  competitive  LECs  and  the  local  exchange  operations  of  large  long
 distance  carriers.  Id.  at  17-  18.
 18  Id.  at  18.
 19  Id.  at  22.
 20  Local  Telephone  Competition  at  the  New  Millennium,  CCB  (rel.  Aug.  2000)  (summarizing  Dec.  31,
 1999  data  from  FCC  Forms  477  and  499-  A).
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 8
 Competition  in  Local  Telephone  Markets,  states  that,  [  t]  o  date,  little  competition  has  emerged
 in  local  telephone  markets,  21  but  concludes  that  further  competition  seems  likely  to  develop  in
 local  telephone  markets.  22  The  report  notes  that  competing  carriers,  .  .  .  are  using  all  entry
 modes  envisioned  by  the  act,  legal  and  regulatory  issues  are  .  .  .  becoming  clarified,  and  the
 packaging  of  varied  telecommunications  services  may  enable  firms  providing  other
 telecommunications  services  to  effectively  compete  for  local  telephone  customers.  23  In  the  past
 few  months,  however,  new  competitors  have  experienced  increased  difficulty  obtaining  capital
 necessary  to  fund  expansion  and  several  carriers  have  experienced  serious  financial  difficulties.
 30.  In  contrast  to  the  market  for  local  exchange  and  exchange  access  service,  the
 markets  for  long  distance  and  customer  premises  equipment  (CPE)  are  competitive  and  have  been
 increasingly  deregulated.  Long  distance  prices  (international  and  domestic),  as  approximated  by
 average  revenue  per  minute,  have  fallen  by  34  percent  since  1993.  24  Similarly,  a  vibrantly
 competitive  market  has  developed  for  CPE,  and,  as  a  result,  basic  voice  telephones  are  now
 available  from  an  array  of  suppliers  with  a  myriad  of  options  at  extremely  low  prices.  25
 31.  It  is  against  this  background  that  we  begin  our  second  Biennial  Regulatory
 Review  of  rules  for  common  carriers.
 1.  Scope  of  Review
 32.  As  part  of  the  review  process,  initiated  by  the  Year  2000  Biennial  Regulatory
 Review  Working  Group,  the  Common  Carrier  Bureau  has  reviewed  all  of  the  rules  within  each  of
 the  following  parts  that  affect  common  carriers.
 Part  32    Uniform  System  of  Accounts  -  Establishes  mandatory  minimum  accounting
 standards  for  certain  common  carriers.
 Part  36    Jurisdictional  Separations  -  Contains  an  outline  of  the  separations  procedures
 designed  primarily  for  the  allocation  of  property  costs,  revenues,  expenses,  taxes  and
 reserves  between  the  state  and  interstate  jurisdictions.
 Part  42    Record  Retention  Requirements  -  Prescribes  the  regulations  governing  the
 preservation  of  records  of  communications  common  carriers.
 Part  43    Reporting  Requirements  -  Prescribes  specific  filing  requirements  for
 communications  common  carriers  and  certain  of  their  affiliates.
 Part  51    Interconnection  -  Establishes  interconnection  obligations  for  LECs.
 Part  52    Numbering  -  Establishes  conditions  for  the  administration  and  use  of
 telecommunications  numbers  for  provision  of  telecommunications  services  in  the  United
 States.
 Part  53    Special  Provisions  Concerning  Bell  Operating  Companies  -  Establishes  special
 requirements  applicable  to  the  Bell  Operating  Companies,  pursuant  to  47  U.  S.  C.    271
 and  272.
 21  Development  of  Competition  in  Local  Telephone  Markets,  at  4  (rel.  Jan.  2000).
 22  Id.  at  6.
 23  Id.
 24  Telecommunications  @  the  Millennium,  at  3.
 25  2000  Biennial  Regulatory  Review  of  Part  68  of  the  Commissions  Rules  and  Regulations,  Notice  of
 Proposed  Rulemaking,  15  FCC  Rcd  10525,  10529  (2000)  (Part  68  NPRM).
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 9
 Part  54    Universal  Service  -  Establishes  the  mechanisms  to  ensure  the  provision  of
 Universal  Service.
 Part  59    Infrastructure  Sharing  -  Establishes  the  general  duty  of  incumbent  LECs  to
 make  available  to  certain  qualifying  carriers  network  infrastructure,  facilities,  functions,
 technology,  and  information.
 Part  61    Tariffs  -  Prescribes  the  framework  for  the  initial  establishment  of  and
 subsequent  revisions  to  tariff  publications  for  certain  carriers.
 Part  63  -  Extension  of  Lines  -  Prescribes  a  regulatory  framework  for  construction  of
 wireline  common  carrier  infrastructure.
 Part  64    Miscellaneous  -  Addresses  a  broad  range  of  common  carrier  issues.
 Part  65    Rate  of  Return  -  Establishes  procedures  and  methodologies  for  Commission
 prescription  of  an  authorized  unitary  interstate  exchange  access  rate  of  return  and
 individual  authorized  rates  of  return  for  the  interstate  exchange  access  rates  of  certain
 other  carriers.
 Part  68    Connections  of  Terminal  Equipment    Permits  direct  connection  to  the  network
 of  registered  terminal  equipment.  Provides  uniform  technical  standards  for  equipment  to
 prevent  network  harm  and  ensure  that  telephones  are  compatible  with  hearing  aids.
 Part  69    Access  Charges  -  Establishes  rules  for  access  charges  for  interstate  or  foreign
 access  services  for  incumbent  LECs.
 2.  Recent  and  Ongoing  Activities
 33.  Recently,  the  Commission  has  begun  a  number  of  proceedings  designed  to
 reduce  or  simplify  wireline  common  carrier  regulation  in  light  of  increasing  local  exchange
 competition  and  other  industry  developments.  Among  other  things,  the  Commission  is  currently
 conducting  rulemaking  proceedings  to  review:  (1)  Part  32  of  the  Rules,  Uniform  System  of
 Accounts  for  Class  A  and  B  Telephone  Companies,  and  the  Commissions  ARMIS  (Automated
 Reporting  Management  Information  System)  information  reporting  system  for  incumbent  LECs;
 (2)  Part  36  of  the  Rules,  Jurisdictional  Separations;  and  (3)  Part  68  of  the  Rules,  Connection  of
 Terminal  Equipment  to  the  Telephone  Network.  In  addition,  the  Commission  initiated  several
 common  carrier  rulemakings  as  part  of  the  1998  Biennial  Regulatory  Review.  26
 26  The  1998  Biennial  Regulatory  Review  common  carrier  proceedings  include:  (1)  1998  Biennial
 Regulatory  Review    Review  of  Accounting  and  Cost  Allocation  Requirements,  USTA  Petition  for
 Rulemaking,  CC  Docket  No  98-  81;  (2)  1998  Biennial  Regulatory  Review  -  Review  of  ARMIS  Reporting
 Requirements,  CC  Docket  No.  98-  117;  (3)  1998  Biennial  Regulatory  Review    Testing  New  Technology,
 CC  Docket  No.  98-  94;  (4)  1998  Biennial  Regulatory  Review    Repeal  of  Part  62  of  the  Commissions  Rules,
 CC  Docket  No.  98-  195;  (5)  Policy  and  Rules  Concerning  the  Interstate,  Interexchange
 Marketplace/  Implementation  of  Section  254(  g)  of  the  Communications  Act  of  1934,  CC  Docket  No.  98-  183;
 (6)  1998  Biennial  Regulatory  Review  -  Petition  for  Section  11  Biennial  Regulatory  Review  filed  by  SBC
 Communications,  CC  Docket  No.  98-  177;  (7)  1998  Biennial  Regulatory  Review    Streamlined  Contributor
 Reporting  Requirements  Associated  with  Administration  of  Telecommunications  Services,  North  American
 Numbering  Plan,  Local  Number  Portability,  and  Universal  Service  Support  Mechanisms,  CC  Docket  No.
 98-  171;  (8)  1998  Biennial  Regulatory  Review    Modifications  to  Signal  Power  Limitations  Contained  in
 Part  68  of  the  Commissions  Rules,  CC  Docket  No.  98-  163;  (9)  1998  Biennial  Regulatory  Review    Review
 of  Depreciation  Requirements  for  Incumbent  Local  Exchange  Carriers,  CC  Docket  No.  98-  137;  (10)  1998
 Biennial  Regulatory  Review  -  Part  61  of  the  Commissions  Rules  and  Related  Tariffing  Requirements,  CC
 Docket  No.  98-  131;  (11)  1998  Biennial  Regulatory  Review    Elimination  of  Part  41  Telegraph  and
 Telephone  Franks,  CC  Docket  No.  98-  119;  and  (12)  1998  Biennial  Regulatory  Review  -  Review  of
 Computer  III  and  ONA  Safeguards,  CC  Docket  No.  98-  10.  Most  of  these  proceedings  have  already  been
 completed.  The  procedural  status  of  each  of  these  proceedings  is  provided  in  Appendix  II.
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 10
 a)  Accounting  and  ARMIS  Requirements
 34.  The  Commission  is  currently  conducting  a  comprehensive  review  of  its  Part  32
 accounting  and  related  rules  and  its  ARMIS  reporting  requirements.  This  comprehensive  review
 will  complement  the  Biennial  Regulatory  Review  process  and  ensure  that  the  goal  of  continued
 deregulation  is  vigorously  pursued.  27  This  review  will  consider  the  need  for  various  accounting
 and  reporting  requirements  and  whether  they  impose  unnecessary  burdens  on  incumbent  LECs  as
 local  exchange  competition  develops.  Resolution  of  these  issues  could  have  a  significant  effect
 on  State  commissions  because  most  of  them  rely  on  the  FCC  accounting  and  reporting
 requirements.
 35.  The  review  is  being  conducted  in  three  phases.  Phase  1,  which  was  completed  in
 March  2000,  was  designed  to  focus  on  immediate  streamlining  measures.  28  Phase  2  examine[  s]
 broader  and  more  extensive  deregulatory  measures.  29  Phase  3  will  consider  issues  raised  by  a
 long-  term  transition  to  deregulation.
 36.  The  Commission  took  the  following  specific  steps  to  streamline  its  accounting
 requirements  in  Phase  1:  (1)  eliminated  the  expense  matrix  filing  requirement;  (2)  allowed
 carriers  to  reduce  the  cost  allocation  manual  (CAM)  audit  requirement  from  an  annual  financial
 statement  audit  to  a  biennial  attestation  engagement;  (3)  relaxed  the  affiliate  transactions
 requirements  for  services;  (4)  eliminated  the  15-  day  pre-  filing  requirement  for  certain  CAM
 changes;  (5)  eliminated  the  30-  day  notification  requirement  for  establishment  of  temporary  or
 experimental  accounts;  (6)  allowed  carriers  to  record  contingent  liabilities  without  agency  review;
 (7)  eliminated  the  reclassification  requirement  for  certain  property  held  for  future  use;  and  (8)
 eliminated  the  reclassification  requirement  for  certain  plant  under  construction.  30  The  Phase  1
 Order  also  streamlined  the  ARMIS  reporting  requirements  by,  among  other  things,  eliminating
 certain  Tables,  eliminating  reporting  items  from  a  number  of  Tables,  and  establishing  new
 threshold  levels  for  certain  reporting  items.  31
 37.  The  Commission  issued  a  Notice  of  Proposed  Rulemaking  in  Phase  2  and  Phase  3
 of  this  proceeding  on  October  18,  2000.  32  In  Phase  2,  the  Commission  sought  comment  on  the
 following  streamlining  measures:  (1)  eliminating  a  quarter  of  the  accounts  used  by  the  largest
 incumbent  carriers;  (2)  eliminating  approximately  half  of  the  current  reporting  requirements  in
 the  ARMIS  43-  07  Reports;  (3)  eliminating  the  cost  allocation  manual  filing  and  audit
 requirements  for  mid-  sized  carriers;  and  (4)  increasing  the  income  threshold  that  determines
 27  Common  Carrier  Bureau  Announces  Initiative  to  Undertake  Comprehensive  Review  of  Part  32  and
 ARMIS  Requirements,  Public  Notice,  14  FCC  Rcd  6345  (1999).
 28  Id.  at  6346.
 29  Id.
 30  Comprehensive  Review  of  the  Accounting  Requirements  and  ARMIS  Reporting  Requirements  for
 Incumbent  Local  Exchange  Carriers:  Phase  1  (Phase  1  Order),  Report  and  Order,  CC  Docket  No.  99-  253,
 FCC  00-  78,  Mar.  8,  2000.
 31  Phase  1  Order,  FCC  00-  78  at  4.
 32  2000  Biennial  Regulatory  Review  --  Comprehensive  Review  of  the  Accounting  Requirements  and
 ARMIS  Reporting  Requirements  for  Incumbent  Local  Exchange  Carriers:  Phase  2  and  Phase  3,  CC  Docket
 No.  00-  199,  FCC  00-  364  (rel.  Oct.  18,  2000).
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 11
 which  carriers  must  file  certain  ARMIS  reports.  Phase  2  comments  are  due  December  21,  2000
 with  replies  due  January  30,  2001.  In  Phase  3,  the  Commission  requested  comment  on  a  number
 of  issues  raised  by  the  long  term  transition  to  accounting  and  reporting  deregulation.  Comments
 are  due  January  30,  2001  and  replies  are  due  February  28,  2001.
 38.  The  Commission  issued  a  Notice  of  Proposed  Rulemaking  on  November  9,  2000,
 seeking  comment  on  whether  to  streamline  service  quality  reporting  in  ARMIS.  33  Comments  are
 due  January  12,  2000,  while  reply  comments  are  due  February  16,  2001.
 b)  Jurisdictional  Separations
 39.  The  Commission  has  instituted  a  review  of  the  Part  36  jurisdictional  separations
 procedures,  which  govern  the  division  of  the  carriers  regulated  costs  between  the  state  and
 federal  jurisdictions.  34  The  costs  allocated  to  the  interstate  jurisdiction  by  Part  36  are  recovered
 through  charges  regulated  by  the  FCC,  and  the  costs  allocated  to  the  state  jurisdiction  are
 recovered  through  charges  regulated  by  the  states.
 40.  The  Commission  stated  that  the  purpose  of  the  Separations  Reform  Notice  was  to
 consider  what  changes  to  our  separations  procedures  might  be  appropriate  in  light  of  legal,
 technological  and  market  structure  changes  affecting  telecommunications.  The  Commission
 specifically  requested  comment  on:  (1)  what  changes  in  the  law  and  within  the  industry  may
 warrant  revision  of  the  separations  process;  (2)  the  criteria  that  should  be  used  in  evaluating  the
 existing  separations  procedures  and  proposals  for  reform;  (3)  whether  separations  rules  are
 needed  during  the  transition  to  a  competitive  market;  (4)  a  number  of  specific  industry  proposals
 for  replacement  of  the  existing  separations  procedures;  and  (5)  how  various  options  for
 separations  reform  would  affect  revenue  requirements  and  prices.  35
 41.  Pursuant  to  the  requirements  of  section  410(  c)  of  the  1996  Act,  the  Commission
 referred  these  issues  to  the  Federal-  State  Joint  Board  established  in  the  separations  reform
 proceeding  for  the  preparation  of  a  recommended  decision.  36  On  July  21,  2000,  the  Joint  Board
 recommended  that  the  Commission  freeze  certain  elements  of  the  separations  process,  including
 the  jurisdictional  allocation  factors,  for  five  years  while  the  Joint  Board  and  the  Commission
 continue  to  review  issues  regarding  comprehensive  separations  reform.  37
 33  2000  Biennial  Regulatory  Review    Telecommunications  Service  Quality  Reporting  Requirements,
 Notice  of  Proposed  Rulemaking,  CC  Docket  No.  00-  229,  FCC  00-  399  (rel.  Nov.  9,  2000).
 34  Jurisdictional  Separations  Reform  and  Referral  to  the  Federal-  State  Joint  Board,  Notice  of  Proposed
 Rulemaking,  12  FCC  Rcd  22120  (1997)  (Separations  Reform  Notice).
 35  Separations  Reform  Notice,  12  FCC  Rcd  at  22139.
 36  Id.  at  22124.
 37  Jurisdictional  Separations  Reform  and  Referral  to  the  Federal-  State  Joint  Board,  CC  Docket  No.  80-286,
 Recommended  Decision,  FCC  00-  2  (rel.  July  21,  2000).  The  Commission  sought  comment  on  the
 Joint  Board  Recommendation.  Comment  Sought  on  Recommended  Decision  Issued  by  Federal-  State  Joint
 Board  on  Jurisdictional  Separations,  CC  Docket  No.  80-  286,  DA  00-  1865  (Aug.  15,  2000).
35
 12
 c)  Part  68  Equipment  Registration
 42.  Prior  to  the  adoption  of  the  Part  68  rules,  in  1975,  incumbent  LECs  generally
 prohibited  direct  connection  of  third  party  customer  premises  equipment  (CPE)  to  their  networks,
 thus  maintaining  an  essential  monopoly  over  the  provision  of  CPE.  38  Under  Part  68,  the
 incumbent  LECs  must  permit  direct  connection  to  the  public  switched  telephone  network  of  CPE
 that  is  certified  as  meeting  certain  technical  standards,  which  are  designed  to  prevent  harm  to  the
 public  switched  network.  39  The  Commission  has  developed  these  technical  standards,  and  played
 a  major  role  in  ensuring  product  compliance  with  these  requirements.  40  A  vibrantly  competitive
 market  for  the  provision  of  CPE  has  developed,  resulting  in  an  enormous  increase  in  the  variety
 of  CPE  available  to  consumers  and  major  price  reductions.  41
 43.  The  Common  Carrier  Bureau  held  a  series  of  public  fora  on  Part  68  to  address
 streamlining  issues  in  July  1999.  42  On  May  22,  2000,  the  Commission  released  the  Part  68
 NPRM,  which  sought  comment  on  options  to  streamline  the  process  by  which  technical  criteria
 are  established  for  CPE.  43  The  Commission  also  proposed  to  streamline  the  registration  process
 for  CPE  by  ending  its  direct  review  of  applications  and  issuance  of  grants  for  such  equipment.
 44.  In  the  Part  68  Order  44  ,  the  Commission  eliminated  regulations  governing  the
 development  of  technical  standards  and  certification  procedures  for  telecommunications
 equipment  such  as  telephones,  fax  machines,  or  modems.  Specifically,  the  Commission
 privatized  the  process  for  establishing  technical  criteria  for  CPE  and  eliminated  the  requirement
 that  manufacturers  or  CPE  seek  Commission  approval  of  the  equipment.  This  action  is  expected
 to  save  manufacturers  millions  of  dollars  a  year,  and  bring  innovative  equipment  to  the
 marketplace  faster,  thereby  increasing  the  choices  available  to  consumers,  without  harming  the
 38  The  Commissions  rules  define  CPE  as  equipment  employed  on  the  premises  of  a  person  other  than  a
 carrier  to  originate,  route  or  terminate  telecommunications.  47  C.  F.  R.  153(  14).
 39  The  Commissions  Part  68  rules  are  designed  to  ensure  that  equipment  directly  connected  to  the  public
 switched  network  will  not:  (1)  result  in  electrical  hazards  to  telephone  company  personnel;  (2)  damage
 telephone  company  equipment;  (3)  cause  the  malfunction  of  telephone  company  billing  equipment;  or  (4)
 degrade  service  to  persons  other  than  the  user  of  the  equipment  involved,  persons  the  equipment  user  calls,
 or  those  who  call  the  user.  47  C.  F.  R.    68.  3.  Equipment  manufacturers  are  not  required  to  comply  with  the
 technical  standards  in  Part  68,  but  CPE  that  is  not  certified  as  meeting  these  standards  cannot  be  directly
 connected  to  the  public  switched  network  and  have  limited  marketability.  The  U.  S.  Customs  Service  also
 prohibits  the  importation  of  terminal  equipment  that  is  not  registered  pursuant  to  Part  68.  See  19  U.  S.  C.  
 3109.
 40  CPE  can  now  be  certified  as  complying  with  the  Part  68  requirements  by  private  Telecommunications
 Certification  Bodies  as  well  as  the  Commission.  47  C.  F.  R.    160.
 41  2000  Biennial  Regulatory  Review  of  Part  68  of  the  Commissions  Rules  and  Regulations,  Notice  of
 Proposed  Rulemaking,  15  FCC  Rcd  10525,  10528  (2000)  (Part  68  NPRM).
 42  Common  Carrier  Bureau  Will  Hold  Fora  on  Deregulation/  Privatization  of  Equipment  Registration  and
 Telephone  Network  Connection  Rules  (47  C.  F.  R.  Part  68),  CC  Docket  No.  99-  216,  Public  Notice,  DA  99-1108,
 June  10,  1999.
 43  Part  68  NPRM,  15  FCC  Rcd  at  10532-  34.
 44  2000  Biennial  Regulatory  Review  of  Part  68  of  the  Commissions  Rules  and  Regulations,  Order,  FCC
 00-  400  (rel.  Dec.  21,  2000).
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 13
 telephone  network  and  with  a  minimal  federal  role.  Once  the  Order  becomes  effective,
 equipment  manufacturers  and  suppliers  will  be  able  to  demonstrate  conformity  to  the  appropriate
 technical  criteria  either  by  seeking  certification  from  a  Telecommunications  Certification  Body
 (TCB),  or  Administrative  Council  for  Terminal  Attachment.
 45.  The  Commission  will  continue  to  enforce  the  requirement  that  CPE  not  cause
 harm  to  the  network.  In  addition,  the  Commission  rules  will  continue  to  require  that  providers  of
 telecommunications  permit  connection  to  the  telephone  network  of  any  CPE  that  meets  the
 technical  criteria  developed  by  industry.  Finally,  aggrieved  parties  may  request  that  the
 Commission  conduct  a  de  novo  review  of  the  technical  criteria.
 d)  Universal  Service  Reform  for  Rural  Carriers
 46.  The  Commission  has  also  taken  steps  to  begin  consideration  of  rural  carrier
 universal  service  issues  (in  consultation  with  the  Federal-  State  Joint  Board  on  Universal  Service
 (Joint  Board)).  In  1997  the  Joint  Board  created  a  Rural  Task  Force  to  study  possible  universal
 service  reforms  for  rural  telephone  companies.  The  Rural  Task  Force  submitted  a  report  with
 recommendations  to  the  Joint  Board  on  September  29,  2000.  45  On  October  4,  2000,  the
 Commission  released  a  public  notice  seeking  comment  on  the  rural  task  force  recommendation.  46
 On  November  13,  2000,  the  Joint  Board  held  an  en  banc  hearing  on  the  Rural  Task  Forces
 report.  The  Joint  Board  will  make  its  recommendations  to  the  Commission,  on  the  basis  of  the
 Rural  Task  Forces  report.
 47.  In  addition,  in  1999  the  Common  Carrier  Bureau  granted  the  request  of  nine  rural
 companies  and  removed  the  individual  caps  placed  on  the  rural  companies  high-  cost  loop
 support  as  a  condition  for  grant  of  a  study  area  waiver.  47  On  August  4,  2000,  in  response  to
 requests  from  more  than  25  additional  rural  telephone  companies,  the  Bureau  removed  these  caps
 for  all  affected  rural  telephone  companies,  effective  January  1,  2000.  48  The  Commission  is  also
 considering  a  comprehensive  interstate  access  charge  and  interstate  universal  service  reform  plan
 for  rate-  of-  return  carriers  sponsored  by  an  industry  coalition  known  as  the  Multi-  Association
 Group  (MAG).  49
 45  Federal-  State  Joint  Board  on  Universal  Service,  Rural  Task  Force  Recommendation  to  the  Federal-State
 Joint  Board  on  Universal  Service,  CC  Docket  No.  96-  45  (rel.  Sept.  29,  2000).
 46  Federal-  State  Joint  Board  on  Universal  Service  Seeks  Comment  on  Rural  Task  Force
 Recommendation,  Public  Notice,  CC  Docket  No.  96-  45,  FCC  00J-  3  (rel.  Oct.  4,  2000).
 47  Petitions  for  Waiver  and  Reconsideration  Concerning  Sections  36.  611,  36.  612,  61.  41(  c)(  2),  69.605(  c),
 69.3(  e)(  11)  and  the  Definition  of  Study  Area  Contained  in  Part  36  Appendix    Glossary  of  the
 Commissions  Rules  Filed  by  Copper  Valley  Telephone,  Inc.,  et  al,  Memorandum  Opinion  and  Order  on
 Reconsideration,  AAD  Docket  No.  93-  93,  DA  1845  (rel.  Sept.  9,  1999).
 48  Petitions  for  Waiver  Concerning  the  Definition  of  Study  Area  Contained  in  Part  36  Appendix-Glossary
 of  the  Commissions  Rules,  Accent  Communications,  Inc.,  et  al.,  Order,  CC  Docket  No.  96-  45,
 DA  00-  176  (rel.  Aug.  4,  2000).
 49  Improved  Regulation  of  Interstate  Services  of  Non-  Price  Cap  Incumbent  Local  Exchange  Carriers  and
 Interexchange  Carriers,  Notice  of  Proposed  Rulemaking,  CC  Docket  No.  00-  256,  FCC  00-  448  (rel.  Jan.  5,
 2001).
37
 14
 3.  New  Initiatives
 48.  In  addition  to  the  recent  and  ongoing  actions  discussed  above,  the  staff
 recommends  that  the  Commission  address  various  other  issues.  These  issues  include  intercarrier
 compensation,  modification  of  the  separate  subsidiary  requirement  for  independent  telephone
 company  provision  of  inter-  exchange  service,  and  eliminating  outdated  rules.
 a)  Intercarrier  Compensation
 49.  The  staff  recommends  that  the  Commission  consider  whether  the  sometimes
 conflicting  rules  used  for  calculating  intercarrier  compensation  for  the  origination  and  termination
 of  traffic  can  be  streamlined  and  harmonized.  At  present,  the  transport  and  termination
 provisions  in  sections  251  and  252  of  the  Communications  Act  and  the  Commissions
 implementing  regulations  in  47  C.  F.  R.    51.  701-  717  govern  the  way  the  incumbent  LECs  and
 competitive  LECs  (CLECs)  compensate  one  another  for  call  completion.  The  Part  69  access
 charge  rules  generally  govern  the  compensation  that  incumbent  LECs  receive  for  the  use  of  their
 services  in  the  origination  and  termination  of  interstate  interexchange  traffic.  Access  charge
 structures,  generally  similar  to  that  in  Part  69  of  the  Commission  rules  and  adopted  by  individual
 states,  govern  compensation  for  the  origination  and  termination  of  intrastate  interexchange  traffic.
 Moreover,  Information  Service  Provider  (ISP)  traffic  is  exempt  from  interstate  access  charges.
 Instead,  ISPs  generally  pay  incumbent  LECs  local  exchange  business  rates  for  their  connections
 to  the  LEC  local  network.  50
 50.  Since  passage  of  the  Telecommunications  Act  of  1996,  the  Commission  has  been
 adjusting  incumbent  LECs  access  charges  to  reflect  costs.  This  has  resulted  in  price  reductions
 totaling  $6.4  billion.  51  The  Commission  most  recently  reduced  access  charges  paid  by  long
 distance  carriers  by  $3.2  billion.  52  This  action  furthers  the  Commissions  objective  of  developing
 a  more  economic  approach  to  access  charges  while  balancing  various,  and  sometimes  competing
 interests    including  the  promotion  of  competition  and  deregulation,  the  maintenance  of
 affordable  prices  for  consumers,  and  the  avoidance  of  rate-  shock  for  consumers.  53
 51.  The  staff  recommends  that  the  Commission  seek  comment  on  a  broad  range  of
 economic,  legal  and  policy  issues  raised  by  the  current  system  of  intercarrier  compensation  for
 the  origination  and  termination  of  traffic,  and  seek  to  identify  alternative  approaches  that  are
 50  This  exemption  was  originally  adopted  by  the  Commission  in  1983.  MTS  and  WATS  Market
 Structure,  97  FCC  2d  682,  711  (1983),  affd  sub  nom.  National  Assn  of  Reg.  Util.  Commissioners  v.  FCC,
 737  F.  2d  1095,  1136-  37  (D.  C.  Cir.  1984),  cert.  denied,  469  U.  S.  1227  (1985).  The  Commission  reaffirmed
 this  exemption  in  1988  and  1997.  Amendments  of  Part  69  of  the  Commissions  Rules  Relating  to  Enhanced
 Service  Providers,  3  FCC  Rcd  2631,  2633  (1988);  Access  Charge  Reform,  12  FCC  Rcd  15982,  16133-  34,
 affd  sub  nom.  Southwestern  Bell  v.  FCC,  153  F.  3d  523,  542  (8  th  Cir.  1998).
 51  FCC  Reduces  Access  Charges  by  $3.  2  Billion;  Reductions  Total  $6.  4  Billion  Since  1996
 Telecommunications  Act  (CC  Docket  Nos.  96-  262,  94-  1,  99-  249,  and  96-  45),  FCC  News,  May  31,  2000,  at
 1.
 52  Id.
 53  Access  Charge  Reform,  Price  Cap  Performance  Review  for  Local  Exchange  Carriers,  Low-  Volume
 Long  Distance  Users,  Federal-  State  Joint  Board  on  Universal  Service,  Sixth  Report  and  Order  in  CC
 Dockets  Nos.  96-  262  and  94-  1,  Report  and  Order  in  CC  Docket  No.  99-  249,  Eleventh  Report  and  Order  in
 CC  Docket  No.  96-  45,  15  FCC  Rcd  12962  (2000)(  CALLS  Order).
38
 15
 more  consistent  with  the  long  term  development  of  competition.  54  One  purpose  of  such  a
 proceeding  would  be  to  explore  whether  a  single  consistent  approach  to  intercarrier  compensation
 for  traffic  origination  and  termination  could  be  developed.  Staff  believes  that  an  appropriate,
 consolidated  set  of  rules  could  reduce  opportunities  for  arbitrage,  eliminate  incentives  for
 inefficient  market  entry  strategies,  and  reduce  transaction  costs.  The  staff  further  recommends
 that  the  Commission  evaluate  alternative  compensation  mechanisms  in  terms  of  their  effect  on
 local  exchange,  exchange  access,  and  interstate  interexchange  competition.  This  proceeding
 should  also  consider  the  need  for  transitional  mechanisms  to  ease  the  implementation  of  a  new
 approach  to  intercarrier  compensation  for  traffic  origination  and  termination,  and  how  to  avoid
 dislocations.
 b)  Independent  Incumbent  LEC  Separate  Subsidiary
 52.  The  staff  also  recommends  that  the  Commission  seek  comment  on  modifying
 Part  64,  subpart  T  to  exclude  small  rural  incumbent  LECs,  as  defined  in  section  3(  37)  of  the  Act,
 from  the  requirement  that  independent  incumbent  LECs  provide  interexchange  service  through  a
 separate  subsidiary.  Staff  also  recommends  that  with  respect  to  all  other  independent  LECs,  the
 Commission  consider  limited  waiver  requests  of  the  separate  subsidiary  requirement  if  the
 prohibition  on  joint  ownership  of  equipment  creates  hardship  for  an  independent  incumbent
 LEC.  55
 c)  Eliminating  Outdated  Rules
 53.  The  staff  recommends  that  the  Commission  remove  portions  of  the  rules  that  are
 outdated.  For  example,  in  the  Part  69  Access  Charge  rules,  as  well  as  elsewhere,  rules
 establishing  a  transition  period  may  remain  in  place  even  after  the  transition  has  been  completed.
 The  provisions  listed  below,  are  examples  of  rules  that  should  be  eliminated,  in  whole  or  in  part,
 for  this  reason.
 36.701    Lifeline  connection  assistance  expense  allocation    general.
 51.211    Toll  Dialing  Parity  Implementation.
 51.515(  b)-(  c)    Application  of  access  charges.
 53.101    Joint  marketing  of  local  and  long  distance  services  by  interLATA  carriers.
 53.201(  a)-(  b)    Services  for  which  a  separate  272  affiliate  is  required.
 54.701(  b)-(  e)    Administrator  of  universal  service  support  mechanisms.
 64.1320    Payphone  compensation  verification  and  reports.
 64.1903(  c)    Obligations  of  all  incumbent  independent  local  exchange  carriers.
 69.116    Universal  service  fund.
 54  Such  a  proceeding  would  potentially  affect  provisions  of  Parts  51,  61,  and  69.
 55  See  ITTA  Comments  at  8-  9.
39
 16
 69.117    Lifeline  assistance.
 69.126    Nonrecurring  charges.
 69.127    Transitional  equal  charge  rule.
 69.612    Long  term  and  transitional  support.
 4.  Other  Issues
 a)  Comments
 54.  The  Commission  sought  public  comment  on  the  September  Staff  Report.  USTA,
 ITTA,  OPASTCO,  NECA,  WorldCom,  Sprint  and  GSA  filed  comments  on  wireline  Common
 Carrier  issues.  ITTA,  WorldCom  and  GSA  filed  replies.  The  staff  met  with  interested  parties
 and  considered  the  Petition  for  Rulemaking  filed  by  USTA  in  August  1999  addressing  2000
 Biennial  Regulatory  Review  issues,  and  the  comments  filed  in  response  to  it.  56  USTA  reiterated
 many  of  these  concerns  in  its  comments  on  the  September  Staff  Report.  GSA  also  commented  on
 the  September  Staff  Report,  strongly  urging  the  Commission  not  to  reduce  regulation  before  it  is
 warranted  by  increased  competition.  The  staff  continues  to  believe  that  the  ongoing  proceedings
 and  proposed  initiatives  discussed  above  address  many  but  not  all  of  the  major  common  carrier
 concerns  expressed  by  USTA.  For  example,  USTA  sought  numerous  additional  changes  to  Part
 36  (concerning  jurisdictional  separations),  to  Part  32  (governing  the  Uniform  System  of
 Accounts),  and  to  the  ARMIS  reporting  requirements.  As  discussed  above,  most  of  these  matters
 are  being,  or  will  be,  addressed  by  the  Commission.  USTA  also  proposed  rule  changes  to  Parts
 61  and  69.  These  proposals  generally  would  reorganize  and  streamline  these  parts  by  creating
 separate  rule  parts  to  govern  tariff  filings,  rate-  of-  return  LEC  pricing,  and  price  cap  LEC  pricing.
 USTA  also  proposed  substantially  greater  pricing  flexibility  for  incumbent  LEC  access  charges.
 The  staff  does  not  recommend  that  the  Commission  initiate  specific  new  proceedings  at  this  time
 to  address  the  Part  61  and  69  concerns  raised  by  USTA  in  the  context  of  this  biennial  regulatory
 review.  First,  many  of  these  issues  have  been  addressed.  For  example,  issues  related  to  price  cap
 LECs  were  considered  in  the  Coalition  for  Affordable  Local  and  Long  Distance  Services
 (CALLS)  proceeding  and  other  proceedings  addressing  pricing  flexibility.  57  In  addition,  many  of
 the  rate-  of-  return  LEC  access  reform  and  pricing  flexibility  issues  raised  by  USTA  are  the  subject
 of  pending  proceedings  or  are  scheduled  for  consideration.
 55.  In  addition,  the  Independent  Telephone  and  Telecommunications  Alliance
 (ITTA)  commented  on  the  September  Staff  Report,  urging  the  Commission  to  undertake
 additional  regulatory  relief  for  mid-  sized  carriers.  As  indicated  above,  GSA  urged  the
 Commission  to  proceed  cautiously  with  reduced  regulatory  and  reporting  requirements.  Some  of
 these  issues  are  already  being  addressed  in  on-  going  proceedings.  For  example,  the  Commission
 has  proposed  reduced  accounting  and  reporting  requirements  for  mid-  sized  carriers.  Other  issues
 raised  by  ITTA  are  addressed  in  Appendix  IV  in  the  context  of  relevant  parts  of  the  rules.
 56  Petition  for  Rulemaking  of  the  United  States  Telephone  Association,  filed  Aug.  11,  1999.  The
 Cincinnati  Bell  Telephone  Company,  Roseville  Telephone  Company  and  SBC  Communications  filed
 comments  in  response  to  the  USTA  petition.  The  Bell  Atlantic  Telephone  Company,  MCI  WorldCom,  and
 USTA  filed  replies.
 57  CALLS  Order,  15  FCC  Rcd  12962.
40
 17
 56.  OPASTCO,  NTCA  and  NECA  also  raised  a  number  of  specific  issues  for
 consideration  in  the  context  of  the  2000  Biennial  Regulatory  Review  in  filings  prior  to  the
 September  Staff  Report  and/  or  in  comments  on  the  September  Staff  Report.  These  issues  include
 for  example,  (1)  streamlining  accounting,  jurisdictional  separations  and  other  cost  allocation
 requirements;  (2)  universal  service  funding  caps;  (3)  compensation  for  local  number  portability
 services  and  directory  listing  information;  (4)  establishment  of  a  small  telecom  company  federal
 advisory  committee;  (5)  requirements  affecting  customer  data  and  billing;  (6)  avoidance  of
 unnecessary  data  reporting  requirements;  (7)  average  cost  schedule  review  and  reporting
 requirements;  (8)  elimination  of  the  requirement  for  annual  NECA  elections;  and  (9)
 implementation  of  government  mandates  such  as  CALEA.  The  staff  recognizes  the  importance
 of  these  issues  given  the  unique  circumstances  of  small  telephone  companies  and  the  customers
 they  serve.  Accordingly,  we  recommend  that  the  Commission  redouble  its  efforts  to  ensure
 appropriate  accommodations  for  small  telephone  companies.  As  one  of  these  efforts,  the  staff
 recommends  that  the  Commission  begin  proceedings  to  lift  the  separate  subsidiary  requirement
 for  the  provision  of  interexchange  services  for  small  rural  carriers  as  defined  in  Section  251(  f)(  1)
 of  the  Act.  Many  of  the  other  specific  issues  raised  by  OPASTCO  and  NTCA  are  currently  under
 consideration  by  the  Commission  or  are  scheduled  for  consideration.  We  also  recommend  that
 the  Commission  consider  simplifying  review  of  the  average  schedules  and  changing  the  schedule
 for  NECA  Board  elections.  In  addition,  we  note  that  the  Commission  will  have  the  opportunity  to
 consider  lifting  the  cap  on  universal  service  funding  for  small  companies  in  the  ongoing  rural
 carrier  universal  service  proceeding.  We  do  not  recommend  that  the  Commission  initiate  a  new
 broad  based  proceeding  focused  on  small  telephone  company  concerns  as  part  of  this  Biennial
 Regulatory  Review  because  we  believe  that  such  issues  can  be  addressed  most  expeditiously  in
 other  contexts.  Similarly,  we  are  reluctant  to  recommend  that  the  Commission  establish  a  small
 telecom  federal  advisory  committee,  as  we  believe  that  this  would  lead  to  unnecessary
 complications  and  delays  in  addressing  small  telephone  company  concerns.  These  parties  are
 free,  however,  to  petition  for  specific  rulemakings.  We  will  consider  those  petitions  and  make
 appropriate  recommendations  to  the  Commission.
 B.  International  Bureau
 57.  The  International  Bureau  administers  policy  for  the  authorization  and  regulation
 of  international  telecommunications  facilities  and  services,  as  well  as  policy  for  licensing  and
 regulating  satellite  facilities  and  services.  The  Bureau  represents  the  Commission  in  international
 fora,  as  well  as  in  bilateral  and  multilateral  meetings.  58  The  Bureau  directs  and  coordinates
 negotiations  with  Mexico,  Canada  and  other  countries  regarding  spectrum  use  and  interference
 protection.  The  Bureau  provides  assistance  in  telecommunications  trade  negotiations,  and
 provides  regulatory  assistance  and  training  programs  to  foreign  governments.
 58.  The  International  Bureau  seeks  to  facilitate  the  introduction  of  new  services,  and
 to  provide  customers  with  more  choices,  more  innovative  services,  and  competitive  prices.  The
 2000  Biennial  Regulatory  Review  complements  the  Bureaus  streamlining  efforts.  The  Bureau
 has  taken  a  proactive  approach  in  its  rulemakings  to  remove  unnecessary  regulatory  constraints,
 wherever  possible  and  practicable.  It  continually  reviews  its  rules  and  policies  to  respond  to
 changing  conditions  and  developments  in  the  industry.
 58  Major  fora  include  the  World  Radio  Conference  and  the  International  Telecommunication  Union
 (ITU),  at  which  the  Bureau  represents  the  Commission  in  matters  such  as  spectrum  planning,  terrestrial  and
 satellite  issues,  standards,  and  broadcasting.
41
 18
 1.  Scope  of  Review
 59.  The  International  Bureau  reviewed  all  of  the  rules  that  it  administers.
 Specifically,  the  Bureau  reviewed:
 Part  1    Practice  and  Procedure    In  addition  to  procedural  rules  of  general  applicability  to  all
 Commission  licensees,  certain  rules  within  Part  1  explicitly  address  international
 telecommunications  service  providers.
 Part  23    International  Fixed  Public  Radio  Communication  Services    Contains  rules
 applicable  to  international  terrestrial  fixed  communications  systems,  including  general
 licensing  and  application  filing  requirements,  technical  standards,  and  operations.
 Part  25    Satellite  Communications    Contains  rules  applicable  to  satellite  communications,
 including  general  licensing  and  application  filing  requirements,  technical  standards,  and
 operations.
 Part  43    Reports  of  Communication  Common  Carriers  and  Certain  Affiliates    Contains
 rules  requiring  certain  reports  by  common  carriers,  including  reports  regarding  different
 facets  of  international  telecommunications.
 Part  63    Extension  of  Lines,  and  Discontinuance,  Reduction,  Outage  and  Impairment  of
 Service  by  Common  Carriers;  and  Grants  of  Recognized  Private  Operating  Agency  Status  
 Contains  rules  applicable  to  common  carriers,  including  application  filing  requirements  for
 international  section  214  authorizations.
 Part  64    Miscellaneous  Rules  Relating  to  Common  Carriers    Subpart  J  contains  rules
 regarding  the  Commissions  settlements  policy.
 Part  73    Radio  Broadcast  Services    Subpart  F  contains  rules  applicable  to  international
 broadcast  stations.
 Part  100    Direct  Broadcast  Satellite  Service    Contains  rules  applicable  to  direct  broadcast
 satellite  service,  including  technical  and  operating  requirements.
 2.  Recent  and  Ongoing  Activities
 a)  Satellite  Licensing
 60.  Part  25  and  Part  100  of  the  Commissions  rules  form  the  basis  for  the
 Commissions  Open  Skies  policy  under  which  a  wide  range  of  systems  have  been  licensed  to
 provide  satellite  services.  59  Through  this  policy,  the  Bureau  attempts  to  accommodate  the
 maximum  number  of  systems  possible  to  provide  a  particular  service  to  maximize  entry  and
 competition  in  the  satellite  service  market.
 (1)  Space  Segment  Authorization
 61.  The  Commission  has  already  taken  steps  to  streamline  the  space  segment  portion
 of  the  satellite  licensing  process.  First,  the  Commission  eliminated  section  319(  d)  waiver
 procedures  to  permit  companies  to  begin  construction,  at  their  own  risk,  prior  to  being  licensed.  60
 Second,  the  Commission  relaxed  the  rules  governing  space  station  licensee  reports.  Third,
 DISCO  I  eliminated  the  distinction  between  U.  S.-  licensed  domestic  satellites  and  international
 separate  satellite  systems,  and  the  new  rules  allow  satellites  to  provide  both  domestic  and
 59  47  C.  F.  R.  Parts  25  and  100.
 60  See  Streamlining  the  Commissions  Rules  and  Regulations  for  Satellite  Application  and  Licensing
 Procedures,  Report  and  Order,  11  FCC  Rcd  21581  (1996)  (1996  Satellite  Streamlining  Order).
42
 19
 international  services.  61  Fourth,  DISCO  II  adopted  a  framework  to  evaluate  requests  by  foreign
 satellite  operators  to  provide  service  in  the  United  States.  62  DISCO  II  also  established  the
 Permitted  Space  Station  List.  Once  placed  on  the  list,  non-  U.  S.  satellite  operators  can  provide
 fixed-  satellite  service  in  the  United  States.
 62.  For  direct  broadcast  satellite  (DBS)  service,  the  Commission  issued  an  NPRM.
 The  NPRM  proposes  to  consolidate  and  harmonize  the  Commissions  Satellite  rules,  to  eliminate
 the  Commissions  separate  Part  100  rules  for  DBS,  and  incorporate  the  rules  into  Part  25.  63
 (2)  International  Satellite  Coordination
 63.  The  International  Telecommunication  Union  (ITU)  has  established  a  satellite
 coordination  process  to  facilitate  the  harmonious  use  of  satellite  orbits  and  spectrum  among
 Administrations.  64  Satellite  coordination  occurs  by  negotiating  mutually  satisfactory  solutions
 among  the  affected  parties.  All  space  segment  licenses  that  the  Commission  issues  must  comply
 with  ITU  coordination  requirements  and  international  agreements.  To  eliminate  delay  of  pending
 international  coordination  needed  by  U.  S.  satellite  systems,  however,  the  Commission  moves
 forward  with  space  segment  applications  and  typically  approves  them  before  coordination  is
 complete.  All  authorizations  are  subject  to  possible  changes  that  may  be  necessary  to  conform  to
 final  coordination  agreements.  This  approach  saves  satellite  applicants  substantial  time.  In
 addition,  the  Commission  has  developed  processes  that  allow  U.  S.  satellite  operators  to  negotiate
 directly  with  satellite  operators  of  other  countries.  The  Commission  reviews  and  finalizes  any
 operator  arrangements  before  agreeing  to  them.  This  process  saves  staff  resources  and  permits
 the  satellite  operators  to  have  some  decisional  role  in  the  authorization  process.
 64.  The  staff  and  the  industry  also  are  working  together  to  propose  solutions  to  the
 backlog  of  coordination  filings  at  the  ITU.  There  is  a  need  to  reduce  the  time  it  takes  for  the  ITU
 to  process  a  coordination  request  because  it  has  a  direct  effect  on  the  international  coordination
 process  and  on  our  licensing  process.
 (3)  Earth  Station  Licensing
 65.  In  general,  earth  stations  are  licensed  for  10  years.  The  Commission  also  issues  a
 single  blanket  license  for  a  large  number  of  technically  identical  earth  stations  (e.  g.,  very  small
 aperture  terminal  earth  stations  (VSATs),  and  Satellite  News  Gathering  and  mobile  earth
 stations).  In  1999,  the  International  Bureau  streamlined  its  processing  of  certain  earth  station
 applications.  Specifically,  the  Bureau  instituted  an  auto-  grant  process  that  automatically  grants
 61  Amendment  to  the  Commissions  Regulatory  Policies  Governing  Domestic  Fixed  Satellites  and
 Separate  International  Satellite  Systems,  and  DBS  Petition  for  Declaratory  Rulemaking  Regarding  the  Use
 of  Transponders  to  provide  International  DBS  Service,  Report  and  Order,  11  FCC  Rcd  2429,  2430  (1996)
 (DISCO  I).
 62  Amendment  of  the  Commissions  Regulatory  Policies  to  Allow  Non-  U.  S.-  Licensed  Space  Stations  to
 Provide  Domestic  and  International  Satellite  Service  in  the  United  States,  Report  and  Order,  12  FCC  Rcd
 24094  (1997)  (DISCO  II),  recon.,  15  FCC  Rcd  7202  (1999)  (DISCO  II  First  Reconsideration  Order).
 63  Policies  and  Rules  for  the  Direct  Broadcast  Satellite  Service,  IB  Docket  No.  98021,  Notice  of
 Proposed  Rulemaking,  13  FCC  Rcd  6907  (1998).
 64  Within  the  ITU,  Member  States  (Administrations/  Governments)  and  Sector  Members  (private  entities)
 cooperate  to  maintain  and  extend  telecommunications  globally.
43
 20
 routine  satellite  earth  station  applications  proposing  to  use  the  Ku-  band  fixed-  satellite  service
 frequencies  (14.0-  14.5  GHz  /  11.  7-  12.2  GHz)  to  communicate  with  all  satellites  authorized  to
 provide  service  to  the  United  States  (the  Permitted  List).  65  Such  routine  earth  station
 applications  are  considered  granted  35  days  from  the  date  on  which  the  application  appears  on
 public  notice  as  accepted  for  filing,  provided  that  no  objections  are  filed  during  the  public
 comment  period.  These  changes  were  consistent  with  the  increased  competition  and  consumer
 demand  in  the  satellite  marketplace.
 66.  The  Bureau  also  reduced  the  number  of  emission  designators  required  to  be
 identified  in  applications  for  digital  systems.  66  This  modification  significantly  reduces  the  time
 necessary  to  enter  earth  station  information  into  the  Commissions  database,  and  largely
 eliminates  the  need  for  earth  station  operators  to  file  modification  applications  when  they  wish  to
 add  a  new  emission.
 67.  The  Commission  also  modified  its  Part  25  rules  to  provide  earth  station
 applicants  greater  flexibility  in  applying  for  and  renewing  earth  station  licenses.  67  For  example,
 the  Commission  simplified  rules  for  license  renewals  for  temporary  fixed  earth  stations  and
 VSATs.  The  Commission  extended  the  licensing  term  for  VSATs  to  10  years.  Additionally,  the
 Bureau  created  new  procedures  to  allow  Special  Temporary  Authority  to  be  granted  readily  for
 use  by  satellite  earth  stations  if  the  applicant  is  able  to  demonstrate  extraordinary  circumstances.
 Furthermore,  the  Bureau  issued  a  Public  Notice  that  committed  to  placing  routine  applications  on
 public  notice  within  10  business  days  of  receipt  by  the  Bureau,  if  the  applications  include  all
 required  information.  68
 b)  Section  214  Applications
 68.  The  Commission  has  taken  great  strides  to  streamline  its  international  214
 application  processes.  In  1996,  the  Commission  created  an  expedited  process  for  global,
 facilities-  based  section  214  applications.  69  The  Commission  created  global  section  214
 authorizations,  reduced  paperwork  obligations,  streamlined  tariff  requirements  for  non-  dominant
 international  carriers,  and  ensured  that  essential  information  is  readily  available  to  all  carriers  and
 users.  The  new  regulations  facilitate  entry  into  the  international  telecommunications  market  and
 the  expansion  of  international  services.
 65  See  Commission  Launches  Earth  Station  Streamlining  Initiative,  Public  Notice,  DA  99-  1259  (June  25,
 1999).
 66  Emission  designators  are  a  shorthand  method  used  to  define  the  frequency  bandwidth  and  the
 modulation  technique  and  type  of  service  or  combination  of  services.
 67  See  1996  Satellite  Streamlining  Order,  11  FCC  Rcd  at  21594-  96.
 68  See  International  Bureau  to  Streamline  Satellite  and  Earth  Station  Processing,  Public  Notice,  Report
 No.  SPB-  140  (rel.  Oct.  28,  1998).  Furthermore,  the  Commission  recently  proposed  rules  to  streamline  the
 coordination  process  between  satellite  and  terrestrial  services  in  shared  frequency  bands.  See  FWLL
 Request  for  Declaratory  Ruling,  IB  Docket  No.  00-  263,  OnSat  Petition  for  Declaratory  Order,  SAT-  PDR-19990910-
 0091,  Notice  of  Proposed  Rule  Making,  FCC  00-  369  (rel.  Oct.  24,  2000).
 69  See  Streamlining  the  International  Section  214  Authorization  Process  and  Tariff  Requirements,  Report
 and  Order,  11  FCC  Rcd  12884  (1996).  The  Commission  had  begun  the  international  Section  214
 streamlining  process  in  1985.  See  International  Competitive  Carrier  Policies,  Report  and  Order,  102  FCC
 2d  812  (1985);  recon.  denied,  60  RR2d  1435  (1986);  modified,  Regulation  of  International  Common  Carrier  Services,  Report  and  Order,
 7  FCC  Rcd  7331  (1992).
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 21
 69.  In  March  1999,  as  part  of  its  1998  Biennial  Regulatory  Review  process,  the
 Commission  took  additional  steps  to  reduce  regulatory  burdens  on  providers  of  international
 telecommunications  services.  The  Commission  streamlined  its  procedures  for  granting
 international  section  214  authorizations  to  provide  international  services,  and  increased  the
 categories  of  applications  eligible  for  streamlined  processing.  70  After  adoption  of  the  rules,  most
 new  carriers  are  authorized  to  provide  international  services  on  most  international  routes  14  days
 after  public  notice  of  an  application.  Carriers  already  providing  service  can  complete  pro  forma
 transactions  and  assignments  of  their  authorizations  without  prior  Commission  approval  and
 provide  service  through  their  wholly  owned  subsidiaries  without  separate  Commission  approval.
 Carriers  under  common  ownership  with  an  already-  authorized  carrier  are  able  to  provide  the  same
 authorized  services  after  a  minimal  waiting  period.  Authorized  carriers  are  able  to  use  any
 authorized  U.  S.-  licensed  or  non-  U.  S.-  licensed  undersea  cable  systems  to  provide  their  authorized
 services.  The  vast  majority  of  international  section  214  applications  now  qualify  for  streamlined
 processing.
 c)  Foreign  Participation
 70.  The  Commission  has  sought  to  foster  an  increasingly  competitive  international
 telecommunications  market  by  adopting  policies  that  promote  the  shift  away  from  government-owned
 monopolies  and  toward  private  sector  competition.  For  example,  the  Commission  has
 simplified  its  own  licensing  rules  in  ways  that  have  facilitated  entry  into  the  U.  S.  market  by
 foreign  private  sector  competitors.  In  addition,  Commission  broadened  the  class  of  foreign-affiliated
 applicants  eligible  for  streamlined  processing.  The  competitive  conditions  created  by
 the  World  Trade  Organization  (WTO)  basic  telecommunications  agreement  and  the  rules  adopted
 in  the  Foreign  Participation  Order  significantly  reduced  the  possibility  of  market  distortion,  and
 thereby  allowed  the  Commission  to  reduce  scrutiny  of  many  applications  and  afford  those
 applications  streamlined  processing.  71  In  the  Foreign  Participation  Reconsideration  Order,  the
 Commission  clarified  and  revised  certain  aspects  of  our  foreign  carrier  affiliation  notification  rule
 to  respond  to  carrier  concerns  about  the  purpose  and  application  of  our  rule.  72  In  that  proceeding,
 the  Commission  reduced  the  prior  notification  period  from  60  to  45  days,  and  exempted  certain
 classes  of  foreign  carriers  from  the  requirement  to  submit  prior  notification.  73
 d)  International  Settlements  Policy
 71.  The  Commission  has  taken  action  to  remove  regulatory  impediments  and  to
 increase  competition  in  the  international  telecommunications  marketplace  through  reform  of  the
 longstanding  international  settlements  policy.  In  1999,  in  the  ISP  Reform  Order,  the  Commission
 adopted  sweeping  deregulatory  inter-  carrier  settlement  arrangements  between  U.  S.  carriers  and
 70  See  1998  Biennial  Regulatory  Review-  Review  of  International  Common  Carrier  Regulations,  Report
 and  Order,  14  FCC  Rcd  4909  (1999)  (1998  International  Common  Carrier  Biennial  Regulatory  Review
 Order),  recon.  pending.
 71  See  Rules  and  Policies  on  Foreign  Participation  in  the  U.  S.  Telecommunications  Market,  Report  and
 Order  and  Order  on  Reconsideration,  12  FCC  Rcd  23  891  (1997)  (Foreign  Participation  Order),  recon.  15
 FCC  Rcd  18158  (2000).
 72  Rules  and  Policies  on  Foreign  Participation  in  the  U.  S.  Telecommunications  Market,  IB  Docket  97-
 142,  Order  on  Reconsideration,  15  FCC  Rcd  18158  (2000)  (Foreign  Participation  Reconsideration  Order).
 73  Id.
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 foreign  non-  dominant  carriers  on  competitive  routes.  74  Specifically,  the  Commission:  (1)
 eliminated  the  international  settlements  policy  and  contract  filing  requirements  for  arrangements
 with  foreign  carriers  that  lack  market  power;  (2)  eliminated  the  international  settlements  policy
 for  arrangements  with  all  carriers  on  routes  where  rates  to  terminate  U.  S.  calls  are  at  least  25
 percent  lower  than  the  relevant  settlement  rate  benchmark  previously  adopted  by  the  Commission
 in  its  Settlement  Rate  Benchmark  Order;  75  (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  international  settlements  policy  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  international  settlements  policy  render  the
 flexibility  policy  largely  superfluous.  The  Commission  noted  that  the  revisions  to  its  rules  will
 increase  opportunities  to  smaller  carriers  and  will  allow  the  market,  rather  than  government
 regulation,  to  govern  settlement  arrangements  between  carriers  in  competitive  markets.  These
 changes  promote  lower  prices  and  greater  innovation  in  international  telecommunications
 services  for  U.  S.  consumers.
 e)  Automation
 72.  The  International  Bureau  has  made  substantial  progress  in  its  ongoing  efforts  to
 automate  its  processes.  For  example,  the  Bureau  implemented  a  computerized  notification
 system  to  enable  the  ITU  and  other  international  entities  to  provide  data  to  the  Commission
 electronically.  In  January  2000,  the  International  Bureau  successfully  completed  the  transition
 from  a  paper  and  diskette  distribution  format,  the  ITU  Weekly  Information  Circular  (WIC),  to  a
 new  computer-  based  CD-  ROM  system,  the  Radiocommunication  Bureau  International  Frequency
 Information  Circular  (BRIFIC),  for  terrestrial  service  notifications.  The  BRIFIC  system  saves
 tune  and  resources  by  completely  replacing  our  reliance  on  paper  notifications  for  these  services.
 3.  New  Initiatives
 a)  Earth  Station  Licensing
 73.  In  December,  the  Commission  released  a  Notice  of  Proposed  Rulemaking  to
 streamline  earth  station  and  space  station  licensing.  76  The  NPRM  proposes  technical  changes  that
 would  streamline  the  earth  station  licensing  process.  In  addition,  the  NPRM  proposes  the
 electronic  filing  of  earth  station  applications.
 74  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).
 75  See  International  Settlement  Rates,  Report  and  Order,  12  FCC  Rcd  19806  (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).
 76  2000  Biennial  Regulatory  Review    Streamlining  and  Other  Revisions  of  the  Part  25  of  the
 Commissions  Rules  Governing  the  Licensing  of,  and  Spectrum  Usage  by,  Satellite  Network  Earth  Stations
 and  Space  Stations,  IB  Docket  No  00-  248,  Notice  of  Proposed  Rulemaking,  FCC  00-  435  (rel.  Dec.  14,
 2000).
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 23
 b)  Space  Segment  Authorizations
 74.  Currently  it  takes  the  Commission  a  minimum  of  just  over  two  years  to  grant  a
 space  station  application.  The  satellite  network  licensing  process  takes  several  years  longer  when
 there  is  no  spectrum  allocation  (International  or  Domestic),  when  no  service  rules  exist  for  the
 proposed  system,  or  when  there  are  other  countries  ahead  of  the  United  States  in  the  ITU
 coordination  process.
 75.  The  Bureaus  current  processing  round  approach  requires  substantial  staff  time
 and  resources  to  resolve  all  of  the  issues  associated  with  a  particular  pool  of  applications.  77  On
 the  other  hand,  a  processing  round  approach  sets  parameters  for  licensing  in  an  orderly  fashion,
 and  take  into  account  mutual  exclusivity  considerations.  Through  processing  rounds,  the
 Commission  can  identify  the  name,  type  and  number  of  applications  for  a  particular  service  and
 avoid  considering  applications  subsequently  filed  that  may  be  mutually  exclusive  with  previously
 filed  applications.
 76.  The  major  criticism  of  the  current  process  is  that  service  rulemakings  and
 international  coordination  take  too  long  to  complete.  The  International  Bureau  has  made
 concerted  efforts  to  streamline  the  satellite  licensing  process.  The  staff  believes  that  further
 improvements  are  warranted.  The  Bureau  is  examining  new  options  to  improve  and  streamline
 the  space  segment  licensing  process  as  it  relates  to  the  development  of  new  service  rules  and
 international  coordination.  The  Bureau  plans  to  develop  specific  procedural  and  substantive
 proposals  for  new  licensing  approaches  and  to  establish  goals  for  implementation.
 77.  The  Bureau  is  also  continuing  to  work  with  the  industry  to  re-  examine  the  entire
 satellite  network  licensing  process.  The  International  Bureau  has  convened  several  meetings  with
 representatives  of  the  U.  S.  and  foreign  satellite  industry,  including  geostationary  (GSO)
 companies,  non-  geostationary  (NGSO)  companies,  direct  broadcast  satellite  (DBS)  providers,
 fixed  satellite  service  (FSS)  operators  and  mobile  satellite  service  providers  (MSS),  to  discuss
 satellite  space  station  licensing.  Input  from  these  industry  meetings  will  be  useful  in  the  Bureaus
 new  initiatives.
 c)  Parts  23,  25  and  100
 78.  The  staff  recommends  that  the  Commission  consider  repealing  section  25.141  78
 and  subpart  H  79  of  its  rules.  The  staff  also  recommends  that  the  Commission  review  sections
 25.140  80  and  25.144  81  of  its  rules.  Section  25.140  requires  that  each  applicant  for  a  fixed  satellite
 77  Where  two  or  more  applicants  seek  licenses  for  more  spectrum  than  is  available,  the  applications  are
 considered  to  be  mutually  exclusive.  See  Ashbacker  v.  FCC,  326  U.  S.  327  (1945).  Under  Ashbacker,
 where  such  mutual  exclusivity  exists,  the  Commission  must  conduct  a  hearing  to  resolve  the  conflicting
 requests.
 78  47  C.  F.  R.    25.  141.  The  Commission  reallocated  radio-  determination  satellite  service  (RDSS)
 spectrum  to  the  Mobile  Satellite  Service  (MSS).  Therefore,  it  appears  that  the  RDSS  rules  in  section
 25.141  no  longer  serve  any  purpose.
 79  47  C.  F.  R.  Subpart  H.  Subpart  H  is  intended  to  govern  the  administration  of  Section  304  of  the
 Communications  Satellite  Act  of  1962.  The  ORBIT  Act  recently  signed  into  law  states  that  Section  304  of
 the  Communications  Satellite  Act  will  cease  to  be  effective.  Any  rule  established  to  administer  Section  304
 therefore  also  should  be  eliminated.
 80  47  C.  F.  R.    25.  140.
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 24
 service  (FSS)  authorization  demonstrate  that  it  is  legally,  financially,  technically  and  otherwise
 qualified  to  proceed  expeditiously  with  the  construction,  launch  and/  or  operation  of  each
 proposed  space  station  immediately  after  the  grant  of  the  requested  authorization.  82  If  the
 Commission  determines  that  financial  qualifications  are  still  necessary,  we  recommend  that  the
 Commission  review  the  rules  to  determine  whether  a  different  showing  of  financial  qualifications
 is  warranted.  We  recommend,  however,  that  the  Commission  retain  its  technical  and  legal
 qualifications  in  their  current  form.
 79.  Section  25.144  includes  the  licensing  provisions  for  the  2.3  GHz  satellite  digital
 audio  radio  service  (DARS).  The  staff  recommends  that  the  Commission  eliminate  the
 subsection  in  25.144  that  identifies  the  specific  DARS  applicants  eligible  for  the  auction.  This
 subsection  is  no  longer  necessary  because  DARS  licenses  have  already  been  issued.  The  staff
 recommends,  however,  that  the  Commission  retain  the  actual  auction  procedures  for  DARS  in
 Part  25.
 80.  The  Commission  has  already  initiated  a  proceeding  to  streamline  the  DBS  rules
 by  integrating  the  Part  100  DBS  service  rules  into  Part  25  (Satellite  Communications),  by
 eliminating  duplicative  rule  sections  and  by  consolidating  existing  rule  sections  as  appropriate.  83
 The  staff  recommends  that  Part  23  be  retained  in  its  entirety  pending  an  in-  depth  Commission
 review  to  determine  how  the  few  remaining  licensees  are  using  this  service  and  to  project  when
 submarine  cable  and  satellite  will  fully  supplant  this  service.
 d)  Section  214  Applications
 81.  In  November,  the  Commission  released  an  NPRM  which  proposed  changes  to
 several  of  our  rules  relating  to  international  telecommunications  services.  84  Specifically,  the
 Commission  proposed  to  amend  the  rule  concerning  pro  forma  assignments  and  transfers  of
 control  of  international  Section  214  authorizations  to  more  closely  correspond  to  those  used  for
 the  assignment  and  transfer  of  control  of  Commercial  Mobile  Radio  Service  (CMRS)  licenses.  In
 that  proceeding,  the  Commission  also  proposed  to  amend  several  rules  to  clarify  the  intent  of
 those  rules  and  to  eliminate  certain  rules  that  no  longer  have  any  application.  The  staff
 recommends  adoption  of  those  proposed  rule  changes.
 e)  Submarine  Cable
 82.  In  recent  years,  there  has  been  an  explosive  growth  in  the  number  and  capacity  of
 submarine  cables.  In  particular,  the  development  of  the  Internet  has  dramatically  increased
 demand  for  submarine  cable  capacity.  To  address  issues  relating  to  increased  demand,  the  rapid
 pace  of  technological  development,  and  the  emergence  of  non-  traditional  ownership  and
 financing  structures  in  the  submarine  cable  marketplace,  the  International  Bureau  held  a  public
 81  47  C.  F.  R.    25.  144.
 82  47  C.  F.  R.    25.  140.
 83  Policies  and  Rules  for  the  Direct  Broadcast  Satellite  Service  ,  IB  Docket  No.  98-  21,  Notice  of
 Proposed  Rule  Making,  13  FCC  Rcd  6907  (1998).
 84  2000  Biennial  Regulatory  Review,  Amendment  of  Parts  43  and  63  of  the  Commissions  Rules,  IB
 Docket  00-  231,  Notice  Of  Proposed  Rule  Making,  FCC  00-  407  (rel.  Nov.  30,  2000).
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 25
 forum  in  November  1999.  85  The  Bureau  also  has  held  numerous  meetings  with  individual
 industry  participants  about  ways  the  Commission  might  reform  its  regulation  of  the  submarine
 cable  landing  licensing  process  to  further  promote  competition.
 83.  On  the  basis  of  the  public  forum  and  meetings  with  industry  in  June,  the
 Commission  adopted  a  Notice  of  Proposed  Rulemaking  to  continue  the  Commissions  efforts  to
 streamline  the  submarine  cable  landing  licensing  process.  86  In  the  NPRM,  the  Commission
 proposed  pro-  competitive  streamlining  that  incorporates  competitive  safeguards  to  allow  for  and
 encourage:  (1)  more  certainty  and  flexibility  for  participants  in  the  application  process;  (2)
 increased  investment  and  infrastructure  development  by  multiple  providers;  (3)  expansion  of
 available  submarine  cable  capacity;  and  (4)  decreased  application  processing  time.  This
 streamlining  effort  will  benefit  U.  S.  consumers  by  eliminating  regulatory  delay  and  enhancing  the
 competitiveness  of  U.  S.  service  providers  in  the  world  market.
 f)  Reporting  Requirements
 84.  The  Bureau  staff  reviewed  the  rules  in  Part  43  relating  to  reporting  requirements
 of  carriers  providing  international  telecommunications  services.  In  addition,  Bureau  staff  met
 with  industry  representatives  to  solicit  suggestions  on  how  to  improve  the  reporting  requirements.
 The  Bureau  recommends  that  the  Commission  undertake  a  proceeding  to  review  the  reporting
 requirements.  The  staff  finds  that  these  reporting  requirements  can  be  modified  to  reflect  changes
 that  have  occurred  in  the  telecommunications  industry.  While  these  reports  aid  the  Commission,
 industry,  and  international  agencies  in  planning  and  understanding  international
 telecommunications  markets,  the  staff  believes  that  the  reporting  burdens  can  be  reduced  without
 eliminating  these  benefits.
 85.  The  staff  recommends  that  some  of  the  rules  relating  to  reports  filed  by  carriers
 providing  international  telecommunications  services  be  modified,  and  that  others  be  eliminated.
 The  staff  has  determined  that  reports  regarding  the  division  of  international  toll  communications
 charges  are  no  longer  needed.  The  purpose  of  those  reports  is  to  monitor  telegraph
 communications,  which  are  no  longer  a  major  component  of  telecommunications.  This  reporting
 requirement  also  duplicates  other  rules.  This  reporting  requirement  can  be  eliminated  prior  to  its
 sunset  date.  The  Bureau  also  recommends  that  the  instruction  manual  for  reports  of  International
 Telecommunications  Traffic  be  revised  to  reflect  all  the  changes  that  have  occurred  over  the  past
 several  years.  In  the  2000  International  Biennial  Regulatory  Review  NPRM,  the  Commission
 proposes  to  eliminate  Section  43.  81  which  sets  forth  the  requirement  for  reports  of  carriers  owned
 by  foreign  telecommunications  entities.  87  The  staff  recommends  elimination  of  that  rule.
 g)  International  Broadcasting  Stations
 86.  International  broadcasting  stations  are  broadcast  stations  operating  on  certain
 high  frequency  bands  whose  transmissions  are  intended  to  be  received  directly  by  the  general
 85  See  International  Bureau  to  Hold  Public  Forum  on  Submarine  Cable  Landing  Licenses,  Public  Notice,
 DA  99-  2148,  Oct.  8,  1999.
 86  See  Review  of  Commission  Consideration  of  Applications  under  the  Cable  Landing  License  Act,  Notice
 of  Proposed  Rulemaking,  15  FCC  Rcd  20789  (2000).
 87  2000  Biennial  Regulatory  Review,  Amendment  of  Parts  43  and  63  of  the  Commissions  Rules,  IB
 Docket  00-  231,  Notice  Of  Proposed  Rule  Making,  FCC  00-  407  (rel.  Nov.  30,  2000).
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 26
 public  in  foreign  countries.  88  The  staff  reviewed  the  Commissions  rules  governing  international
 broadcasting  stations  89  and  determined  that  five  of  these  rules  should  be  revised  to  reflect  actions
 taken  at  recent  World  Radio  Conferences  (WRCs).  90  First,  the  staff  recommends  that  the
 Commission  modify  section  73.  701(  g)  -  (j)  and  (l)  of  the  rules,  91  to  reflect  the  Final  Acts  of  WRC
 97  (Geneva),  which  reduced  the  number  of  seasonal  schedules  per  year  (and  thus  the  number  of
 times  per  year  that  licensees  have  to  file  for  frequency  assignments)  from  four  to  two.  In
 addition,  the  staff  recommends  that  the  Commission  change  the  starting  and  ending  dates  in  the
 rule  to  the  last  Sunday  in  March  and  the  last  Sunday  in  September,  and  change  the  reference
 month  in  section  73.701(  l)  to  specify  either  July  or  December.  Second,  the  staff  recommends  that
 the  Commission  modify  section  73.  702(  f)(  1)  of  the  rules,  92  to  include  additional  bands  approved
 for  international  broadcasting  use  by  the  World  Radio  Assembly  Conference  (WRAC)  92.  93
 Third,  the  staff  recommends  that  the  Commission  replace  the  target  zone  map  in  section  73.703
 of  the  rules  94  with  the  current  ITU  target  zone  map.  Fourth,  the  staff  recommends  that  the
 Commission  change  the  frequency  control  tolerance  specified  in  section  73.  756(  c)  of  the  rules,  95
 to  the  current  ITU  regulation  standard  of  10  Hz.  96  Finally,  the  staff  recommends  that  the
 Commission  modify  the  last  sentence  of  section  73.  766  of  the  rules  97  to  change  the  highest
 modulating  frequency  from  5  kHz  to  4.  5  kHz,  to  reflect  a  provision  in  the  Final  Acts  of  WARC-87.
 These  changes  would  bring  the  Commissions  international  broadcasting  rules  into
 conformance  with  current  international  provisions,  make  the  rules  easier  to  use,  and  avoid  the
 confusion  that  could  result  from  different  Commission  and  international  requirements.
 h)  Detariffing  International  Services
 87.  The  Commission  is  in  the  process  of  detariffing  interstate  domestic  interexchange
 services  offered  by  non-  dominant  interexchange  carriers  (IXCs).  98  Similar  to  the  domestic
 88  International  broadcast  stations  operate  on  frequencies  between  5950  and  26100  kHz.  47  C.  F.  R.  
 73.701(  a).  There  are  both  government  and  non-  government  international  broadcasting  stations,  and  only
 the  latter  are  licensed  by  the  Commission.  Id.
 89  See  47  C.  F.  R.    73.  701-  73.  788.
 90  See  47  C.  F.  R.    73.  701-  73.  788.
 91  47  C.  F.  R.    73.  701(  g)  -  (j)  and  (l).
 92  47  C.  F.  R.    73.  702(  f)(  1).
 93  The  Final  Acts  of  WRAC  92  set  January  1,  1996  as  the  effective  implementation  date  for  exclusive
 use  by  international  broadcasting  of  the  following  additional  frequency  bands:  9775-  9900  kHz,  11650-11700
 kHz,  11975-  12050  kHz,  13600-  13800  kHz,  15450-  15600  kHz,  17550-  17700  kHz  and  21750-  21850
 kHz.
 94  47  C.  F.  R.    73.  703.
 95  47  C.  F.  R.    73.  756(  c).
 96  Appendix  2  of  the  ITU  Radio  Regulations  requires  international  broadcasting  station  transmitters  to
 meet  a  frequency  control  tolerance  of  10  Hz  for  transmitters  using  double  sideband  operation.
 97  47  C.  F.  R.    73.  766.
 98  See  In  the  Matter  of  Policy  and  Rules  Concerning  the  Interstate  Interexchange  Marketplace;
 Implementation  of  Section  254(  g)  of  the  Communications  Act  of  1934,  as  amended,  Report  and  Order,  11
 FCC  Rcd  9564  (1996);  Second  Report  and  Order,  11  FCC  Rcd  20730  (1996),  stay  granted,  MCI
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 interexchange  market,  the  international  interexchange  market  has  seen  a  substantial  increase  in
 the  level  of  competition.  In  light  of  this  change,  the  Commission  released  an  NPRM  proposing  to
 extend  the  complete  detariffing  regime  adopted  for  domestic,  interexchange  services  to  the
 international  services  of  non-  dominant  interexchange  carriers,  including  Commercial  Mobile
 Radio  Service  providers  and  U.  S.  carriers  classified  as  dominant  solely  due  to  foreign
 affiliations.  99  The  staff  recommends  that  the  Commission  adopt  the  rule  changes  set  out  in  that
 NPRM.  Detariffing  international  interexchange  services  will  reduce  the  burdens  placed  on
 carriers  and  the  Commission.  The  Commission  will  still  be  able  to  (1)  ensure  that  rates  are  just
 and  reasonable  and  not  unreasonably  discriminatory;  (2)  protect  consumers  by  requiring  carriers
 to  disclose  their  rates  publicly  and  through  use  of  the  section  208  complaint  process;  100  and  (3)
 promote  the  public  interest  by  furthering  competition  in  the  international  interexchange
 marketplace.
 88.  In  the  International  Detariffing  NPRM,  the  Commission  also  proposes  to  amend
 Section  43.  51  to  clarify  that  the  contracts  filing  requirements  only  apply  to  U.  S.  carrier  contracts
 for  common  carrier  service  between  U.  S.  and  foreign  points  involving:  (1)  a  U.  S.  carrier  that  has
 been  classified  as  dominant  for  reasons  on  nay  route  included  in  the  contract,  except  for  carriers
 classified  as  dominant  on  that  route  solely  due  to  a  foreign  carrier  affiliation,  101  and  (2)  a  foreign
 carriers  that  posses  market  power  in  its  market.  102  The  staff  recommends  that  the  Commission
 adopt  the  changes  to  Section  43.51  set  out  in  that  NPRM.  This  will  reduce  burdens  on  carriers
 and  the  Commission.  Given  the  increasing  level  of  competition  in  telecommunications  markets,
 the  staff  does  not  believe  that  these  contracts  need  to  be  filed.  The  Commission  and  carriers
 should  be  able  to  ascertain  when  anti-  competitive  behavior  occurs  even  if  the  contracts  are  not
 filed,  and  the  Commission  has  authority  to  obtain  the  contracts  if  it  needs  to  review  them.
 C.  Wireless  Telecommunications  Bureau
 89.  The  Wireless  Telecommunications  Bureau  (Wireless  Bureau  or  WTB)  is
 responsible  for  licensing  and  regulating  all  wireless  communications  services  other  than
 broadcast  and  satellite  services.  Wireless  communications  services  include  commercially
 provided  services  such  as  cellular,  Personal  Communications  Services  (PCS),  and  paging,  as  well
 as  public  safety  and  other  private  radio  services.
 90.  The  functions  of  the  Wireless  Bureau  largely  derive  from  Title  III  of  the
 Communications  Act,  which  governs  licensing  of  spectrum  in  general  and  wireless  services  in
 particular.  The  vast  majority  of  the  Commissions  regulations  affecting  wireless  carriers  consist
 of  (1)  allocation  and  service  rules,  (2)  procedural  rules  concerning  licensing  and  auctions,  and  (3)
 technical  and  operational  rules.
 Telecommunications  Corp.  v.  FCC,  No.  96-  1459  (D.  C.  Cir.  Feb.  13,  1997);  Order  on  Reconsideration,  12
 FCC  Rcd  15014  (1997);  Second  Order  on  Reconsideration  and  Erratum,  14  FCC  Rcd  6004  (1999);  stay
 lifted  and  aff'd,  MCI  WorldCom,  Inc.,  et  al.  v.  FCC,  209  F3d  760  (D.  C.  Cir.  2000).
 99  2000  Biennial  Regulatory  Review;  Policy  and  Rules  Concerning  the  International  Interexchange
 Marketplace,  IB  Docket  No.  00-  202,  Notice  of  Propose  Rule  Making,  15  FCC  Rcd  20008
 (2000)(  International  Detariffing  NPRM).
 100  47  U.  S.  C.    208.
 101  See  47  C.  F.  R.    63.  10.
 102  International  Detariffing  NPRM  at  32-  40.
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 91.  The  market  for  wireless  carriers  has  changed  dramatically  in  recent  years  as  a
 result  of  entry  by  new  wireless  competitors,  substantial  growth,  and  increased  competition  in  the
 wireless  market.  In  1993,  Congress  granted  authority  to  the  Commission  to  award  wireless
 licenses  by  auction.  103  Since  that  time,  the  Commission  has  conducted  30  spectrum  auctions  for
 services  such  as  broadband  and  narrowband  PCS,  Specialized  Mobile  Radio  (SMR),  Wireless
 Communications  Service  (WCS),  Local  Multipoint  Distribution  Service  (LMDS),  and  numerous
 other  fixed  and  mobile  wireless  services.  104  This  unprecedented  wave  of  new  licensing  has
 resulted  in  a  dramatic  increase  in  the  number  of  competing  wireless  service  providers.  105
 92.  As  a  result  of  increased  wireless  licensing  and  new  competition,  the  Commission
 has  substantially  deregulated  many  aspects  of  wireless  services.  For  example,  in  1994,  pursuant
 to  authority  granted  under  section  332  of  the  Communications  Act,  the  Commission  eliminated
 all  federal  rate  regulation  of  CMRS  providers,  and  preempted  all  state  rate  regulation  as  well.  106
 In  1996,  the  Commission  revised  its  technical  and  operational  rules  to  give  CMRS  carriers
 flexibility  to  provide  fixed  as  well  as  mobile  services,  so  that  carriers  could  better  respond  to
 customer  demands  for  new  and  innovative  services.  107  The  dynamic  and  rapidly  evolving  nature
 of  the  wireless  industry  continues  to  make  it  important  for  the  Commission  to  review  its  wireless
 regulations  on  a  regular  basis.
 1.  Scope  of  Review
 93.  As  part  of  the  review  process  initiated  by  the  2000  Biennial  Regulatory  Review
 Working  Group,  WTB  has  reviewed  the  following  rule  parts  that  affect  wireless
 telecommunications  carriers.
 Part  1    Practice  and  Procedure    In  addition  to  procedural  rules  of  general  applicability
 to  all  Commission  licensees,  subpart  F  relates  to  licensing  and  application  procedures  for
 wireless  services,  and  subpart  Q  contains  auction  rules  for  wireless  services.
 Part  17    Construction,  Marking,  and  Lighting  of  Antenna  Structures    Establishes
 construction,  marking,  and  lighting  requirements  for  antenna  structures  that  affect
 aviation  safety,  and  sets  forth  procedures  for  registering  such  structures  with  the
 Commission.
 Part  20    Commercial  Mobile  Radio  Services    Contains  rules  that  are  generally
 applicable  to  all  CMRS  providers,  including  the  CMRS  spectrum  cap,  resale  and  roaming
 rules,  and  E911  requirements.
 103  Omnibus  Budget  Reconciliation  Act  of  1993,  Pub.  Law  No.  103-  66,  107  Stat.  312.  See  47  U.  S.  C.  
 309(  j).
 104  See  http://  www.  fcc.  gov/  wtb/  auctions.
 105  See  Fourth  Annual  Report  and  Analysis  of  Competitive  Market  Conditions  With  Respect  to
 Commercial  Mobile  Services,  14  FCC  Rcd  10145  (1999).  See  also  Implementation  of  Section  6002(  b)  of
 the  Omnibus  Budget  Reconciliation  Act  of  1993,  Annual  Report  and  Analysis  of  Competitive  Market
 Conditions  With  Respect  to  Commercial  Mobile  Services,  FCC  00-  289  (adopted  Aug.  3,  2000)  (Fifth
 Competition  Report).
 106  Implementation  of  Sections  3(  n)  and  332  of  the  Communications  Act,  Second  Report  and  Order,  9  FCC
 Rcd  1411  (1994).
 107  Amendment  of  the  Commissions  Rules  to  Permit  Flexible  Service  Offerings  in  the  Commercial  Mobile
 Radio  Services,  First  Report  and  Order,  11  FCC  Rcd  8965  (1996).
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 29
 Part  22    Public  Mobile  Services    Contains  licensing,  technical,  and  operational  rules
 for  cellular,  paging,  air-  to-  ground,  and  other  mobile  services.
 Part  24    Personal  Communications  Services    Contains  auction,  licensing,  technical,  and
 operational  rules  for  Broadband  and  Narrowband  PCS.
 Part  26    General  Wireless  Communications  Service    Contains  auction,  licensing,
 technical,  and  operational  rules  for  the  General  Wireless  Communications  Service
 (GWCS).
 Part  27    Wireless  Communications  Service    Contains  auction,  licensing,  technical,  and
 operational  rules  for  the  Wireless  Communications  Service  (WCS).
 Part  80    Stations  in  the  Maritime  Services    Contains  auction,  licensing,  technical,  and
 operational  rules  for  Public  Coast  Stations  in  the  marine  radio  services.
 Part  90    Private  Land  Mobile  Radio  Services    Contains  auction,  licensing,  technical,
 and  operational  rules  for  800  and  900  MHz  SMR,  private  carrier  paging,  220  MHz
 Service,  Location  and  Monitoring  Service  (LMS),  and  private  land  mobile  services.
 Part  95    Personal  Radio  Services    Contains  licensing,  technical,  and  operational  rules
 for  the  218-  219  MHz  Service.
 Part  101    Fixed  Microwave  Services    Contains  auction,  licensing,  technical,  and
 operational  rules  for  private  and  common  carrier  fixed  microwave  services.  Includes
 specific  subparts  governing  LMDS,  24  GHz,  and  38-  39  GHz  services.
 2.  Recent  and  Ongoing  Activities
 94.  Prior  to  and  contemporaneously  with  the  2000  Biennial  Regulatory  Review,
 WTB  has  engaged  in  a  number  of  major  initiatives  to  streamline  and  eliminate  unnecessary  rules.
 a)  Universal  Licensing  Proceeding
 95.  In  the  Universal  Licensing  proceeding,  which  was  part  of  the  1998  Biennial
 Regulatory  Review,  the  Commission  furthered  the  implementation  of  the  Universal  Licensing
 System  (ULS)  by  consolidating  and  streamlining  its  licensing  rules  and  procedures  for  all
 wireless  services.  108  Major  accomplishments  in  this  proceeding  include:  (1)  establishing  an
 electronic  filing  requirement  for  all  wireless  services;  (2)  consolidating  all  wireless  licensing
 rules  into  Part  1;  (3)  reducing  the  number  of  wireless  application  forms  from  more  than  40
 different  application  forms  to  4  standardized  application  forms;  and  (4)  eliminating  obsolete  or
 burdensome  application  filing  rules  and  procedures  (e.  g.,  the  filing  of  microfiche  copies  of
 applications).
 b)  Part  90  Biennial  Regulatory  Review  Proceeding
 96.  This  proceeding,  also  initiated  as  part  of  the  1998  Biennial  Regulatory  Review,
 addresses  rules  applicable  to  Part  90  private  land  mobile  licensees.  109  In  the  Report  and  Order
 recently  adopted  in  this  proceeding,  the  Commission  took  the  following  actions:  (1)  lengthened
 108  Biennial  Regulatory  Review    Amendment  of  Parts  0,  1,  13,  22,  24,  26,  27,  80,  87,  90,  95,  97  and  101
 of  the  Commissions  Rules  to  Facilitate  the  Development  and  Use  of  the  Universal  Licensing  System  in  the
 Wireless  Telecommunications  Services,  Notice  of  Proposed  Rulemaking,  13  FCC  Rcd  9672  (1998);  Report
 and  Order,  13  FCC  Rcd  21027  (1998);  Memorandum  Opinion  and  Order  on  Reconsideration,  14  FCC  Rcd
 11145  (1998).
 109  1998  Biennial  Regulatory  Review    47  C.  F.  R.  Part  90    Private  Land  Mobile  Radio  Services,  Notice  of
 Proposed  Rulemaking,  13  FCC  Rcd  21133  (1998);  Report  and  Order,  FCC  00-  235  (rel.  July  12,  2000).
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 license  terms  for  Part  90  licensees  from  5  to  10  years,  which  increases  licensee  flexibility  and
 reduces  filing  burdens;  (2)  extended  the  construction  period  for  private  land  mobile  licensees
 from  8  to  12  months;  and  (3)  streamlined,  clarified,  and  eliminated  other  Part  90  rules.
 c)  Amendment  of  the  Commissions  Part  97  Amateur  Radio  Rules
 97.  This  proceeding  simplified  licensing  classifications  in  the  Amateur  Radio
 Service,  streamlined  and  updated  Amateur  license  examination  procedures,  and  eliminated  other
 outdated  rules.  110
 d)  Pro  Forma  Assignments  and  Transfers
 98.  In  1998,  the  Commission  granted  section  10  forbearance  of  section  310(  d),  which
 required  prior  Commission  approval  for  most  pro  forma  assignments  and  transfers  involving
 wireless  telecommunications  carriers.  111  This  action  enables  telecommunications  carriers  to  carry
 out  non-  substantial  transfers  and  assignments  without  regulatory  delays,  subject  only  to  the
 requirement  that  they  notify  the  Commission  of  the  change.
 e)  Local  Number  Portability
 99.  In  1999,  the  Commission  granted  a  petition  by  the  Cellular  Telecommunications
 Industry  Association  to  extend  the  deadline  for  CMRS  providers  to  establish  a  local  number
 portability  (LNP)  capability  in  their  networks.  112  As  a  result  of  the  Commissions  decision  to
 apply  section  10  forbearance  in  this  case,  the  LNP  implementation  deadline  for  CMRS  providers
 has  been  extended  until  November  2002.  This  will  give  CMRS  providers  greater  flexibility  as
 they  build  out  their  systems  and  increase  capacity  to  meet  growing  consumer  demand  for  wireless
 services.
 f)  LMDS  Eligibility
 100.  In  June  2000,  the  Commission  adopted  the  Third  Report  and  Order  in  CC  Docket
 No.  92-  97,  in  which  it  allowed  the  Local  Multipoint  Distribution  Service  (LMDS)  eligibility
 restriction  to  sunset  on  June  30,  2000.  113  The  LMDS  eligibility  restriction  prohibited  local
 exchange  carriers  and  incumbent  cable  companies  from  having  an  attributable  interest  in  any
 LMDS  A  block  license  that  overlapped  with  ten  percent  or  more  of  the  population  in  their
 110  1998  Biennial  Regulatory  Review    Amendment  of  Part  97  of  the  Commissions  Amateur  Service
 Rules,  Notice  of  Proposed  Rulemaking,  13  FCC  Rcd  15798  (1998);  Report  and  Order,  15  FCC  Rcd  315
 (1999).
 111  Federal  Communications  Bar  Associations  Petition  for  Forbearance  from  Section  310(  d)  of  the
 Communications  Act  Regarding  Non-  Substantial  Assignments  of  Wireless  Licenses  and  Transfers  of
 Control  Involving  Telecommunications  Carriers,  Memorandum  Opinion  and  Order,  13  FCC  Rcd  6293
 (1998).
 112  Cellular  Telecommunications  Industry  Associations  Petition  for  Forbearance  from  Commercial
 Mobile  Radio  Services  Number  Portability  Obligations,  Memorandum  Opinion  and  Order,  14  FCC  Rcd
 3092  (1999),  recon.,  15  FCC  Rcd  4727  (2000).
 113  In  the  Matter  of  Rulemaking  to  Amend  Parts  1,  2,  21,  and  25  of  the  Commissions  Rules  to  Redesignate
 the  27.  5-  29.  5  GHz  Frequency  Band,  to  Reallocate  the  29.  5-  30.  0  GHz  Frequency  Band,  to  Establish  Rules
 and  Policies  for  Local  Multipoint  Distribution  Service  and  for  Fixed  Satellite  Services,  CC  Docket  No.  92-
 237,  Third  Report  and  Order  and  Memorandum  Opinion  and  Order,  FCC  00-  223  (rel.  June  27,  2000).
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 service  areas.  In  the  Third  Report  and  Order,  the  Commission  concluded  that  allowing  this
 eligibility  restriction  to  sunset  would  promote  the  public  interest.  After  reviewing  the  restriction,
 the  Commission  found  that  the  record  did  not  support  a  conclusion  that  open  eligibility  posed  a
 significant  threat  of  competitive  harm  in  specific  markets;  indeed,  the  Commission  concluded  that
 open  eligibility  may  improve  the  availability  of  services,  particularly  in  rural  areas.
 g)  Streamlining  Initiatives
 101.  The  Wireless  Bureau  has  engaged  in  a  comprehensive  effort  to  streamline  its
 procedures,  to  resolve  pending  applications  and  requests  expeditiously,  and  to  operate  more
 efficiently.  Some  of  the  Bureaus  more  significant  accomplishments  are:
 (1)  Deploying  the  ULS.  This  has  resulted  in  electronic  filing  of  more  than  60  percent  of
 wireless  applications.
 (2)  Expediting  the  licensing  process  via  auctions.  The  Bureau  has  conducted  twelve
 auctions  since  January  1999,  in  which  more  than  7,000  licenses  have  been  auctioned.
 (3)  Eliminating  the  case  backlog.  Between  March  1999  and  March  2000,  the  Bureau
 reduced  by  99  percent  a  backlog  of  more  than  64,000  applications  that  had  been  pending
 for  more  than  one  year,  and  implemented  tracking  procedures  to  prevent  future  backlogs.
 (4)  Resolving  pending  matters  quickly.  In  2000,  the  Bureau  processed  more  than
 500,000  license  applications,  issued  more  than  900  decisions  on  delegated  authority,  and
 had  133  orders  adopted  by  the  Commission.
 (5)  Processing  license  transfers  and  assignments  efficiently.  From  November  1,  1999,  to
 October  31,  2000,  the  Bureau  processed  approximately  29,000  transfer  and  assignment
 applications,  including  such  major  transactions  as  AT&  T/  Vanguard,  Bell
 Atlantic/  Vodafone,  Nextel/  Geotek,  Omnipoint/  Voicestream,  Arch/  PageNet,
 Voicestream/  Aerial,  TeleCorp/  Tritel,  SBC  Wireless/  BS  Mobility  (to  create  Cingular),
 Neoworld/  Geotek  Creditors,  Bell  Atlantic-  GTE-  Vodafone-  Air  Touch  divestitures,  TLA
 Spectrum/  Saco  River  Telephone  and  Telegraph.  For  transfer  and  assignment  applications
 processed  in  the  new  ULS,  74  percent  were  processed  in  90  days  or  less,  and  90  percent
 were  processed  in  180  days  or  less.
 3.  New  Initiatives
 102.  In  general,  the  Bureau  has  not  recommended  repeal  or  significant  modification  of
 allocation  and  service  rules,  procedural  rules  concerning  licensing  and  auctions,  and  technical  and
 operational  rules.  The  staff  has  determined  that  these  rules  are  integral  to  the  basic  licensing  and
 spectrum  management  functions  performed  by  the  Bureau  and  the  Commission  under  Title  III  of
 the  Communications  Act.  The  continued  need  for  these  rules  is  not  diminished  by  increased
 competition  in  the  wireless  marketplace.  Indeed,  without  basic  rules  of  the  road  for  spectrum
 use,  the  ability  of  wireless  carriers  to  compete  would  be  significantly  impaired.
 103.  Nevertheless,  the  Bureau  has  determined  that  there  are  several  areas  where
 competitive  conditions,  technological  changes,  or  administrative  efficiency  may  warrant  changing
 or  eliminating  regulations.  In  addition,  the  Bureau  and  the  Biennial  Regulatory  Review  Working
 Group  have  received  numerous  suggestions  from  outside  parties,  such  as  the  Cellular
 Telecommunications  Industry  Association  (CTIA),  the  Personal  Communications  Industry
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 32
 Association  (PCIA),  and  the  Federal  Communications  Bar  Association  (FCBA),  of  possible  areas
 for  streamlining  or  eliminating  wireless  rules.
 a)  Part  22  Cellular  Rules
 104.  The  Commissions  rules  regulating  cellular  telephone  service,  contained  in  Part
 22,  were  largely  adopted  in  the  early  1980s  when  the  service  was  initiated.  114  At  the  time  these
 rules  were  adopted,  the  two  cellular  carriers  in  each  market  (one  of  which  in  each  market  was
 affiliated  with  the  incumbent  LEC)  were  the  only  providers  of  mobile  telephony.  This  created  a
 duopoly  for  this  service.  In  addition,  those  cellular  licenses  not  granted  to  incumbent  LECs
 were  awarded  primarily  by  lottery.  This  caused  the  Commission  to  adopt  regulations  to  prevent
 speculation  and  trafficking  in  licenses.  Finally,  to  ensure  technical  uniformity  in  the  deployment
 of  cellular,  the  rules  included  detailed  technical  requirements  for  the  provision  of  analog  cellular
 service.  Since  these  rules  were  adopted,  PCS  and  SMR  providers  have  entered  the  mobile
 telephony  market  and  have  changed  the  competitive  landscape.  The  Commission  has  replaced
 the  lottery  process  with  licensing  by  auction.  There  has  also  been  significant  advances  in  wireless
 technology,  including  the  development  of  several  competing  digital  interfaces.  As  a  result  of
 these  changes,  many  of  the  Part  22  cellular  rules  adopted  in  the  duopoly  era  appear  to  be
 unnecessary.  Therefore,  the  Bureau  staff  recommends  initiating  a  rulemaking  to  review  the
 cellular  rules  and  to  consider  which  of  these  rules  are  obsolete  as  a  result  of  competitive  or
 technological  developments.  The  Bureau  staff  also  recommends  review  of  rules  regulating  other
 Part  22  services,  such  as  paging  and  air-  to-  ground  service,  on  the  same  basis.
 b)  License  Renewal  Procedures
 105.  In  most  instances,  wireless  licenses  must  be  renewed  every  10  years.  As  a
 practical  matter,  granting  renewal  of  wireless  licenses  has  proved  to  be  virtually  automatic  except
 where  the  licensee  has  violated  Commission  rules,  which  only  occurs  in  a  very  small  percentage
 of  cases.  However,  the  renewal  process  in  some  instances  places  significant  burdens  on
 licensees.  In  a  small  but  significant  number  of  cases,  the  Bureau  has  encountered  problems  with
 late-  filed  renewal  applications,  in  many  instances  involving  public  safety  licensees  that  provide
 essential  emergency  services  to  their  communities.  To  address  these  issues,  the  staff  recommends
 initiating  a  proceeding  that  would  consider  possible  changes  to  renewal  procedures  for  wireless
 licenses.  Among  the  options  that  could  be  considered  are:  (1)  extending  license  terms  beyond  10
 years,  which  is  now  permitted  as  a  result  of  a  1996  amendment  of  Section  307(  c)  of  the  Act;  and
 (2)  implementing  automatic  or  default  renewal  procedures  to  avoid  late  filing  problems.  Reform
 of  renewal  procedures  was  an  issue  specifically  raised  by  CTIA  and  other  industry  representatives
 in  meetings  with  Bureau  staff.
 c)  Privatization  of  Microwave  Licensing
 106.  Under  its  Part  101  rules,  the  Commission  licenses  some  private  and  common
 carrier  microwave  services  on  a  site-  by-  site,  frequency-  by-  frequency  basis.  Although  this
 licensing  procedure  facilitates  efficient  use  of  the  spectrum,  the  licensing  process  is
 administratively  complex  and  resource-  intensive  for  applicants  and  the  Commission.  In  some
 instances  (e.  g.,  LMDS,  39  GHz),  the  Commission  has  converted  from  site-  based  licensing  of
 microwave  services  to  a  geographic  area  licensing  approach,  which  reduces  the  need  for
 Commission  approval  of  individual  facilities  within  the  licensing  area.  Band  manager  licensing
 also  represents  a  possible  approach  to  addressing  administrative  burdens  in  the  licensing  process:
 114  See  47  C.  F.  R.    22.  900  et  seq.
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 the  Commission  has  recently  initiated  the  use  of  band  manager  licensing  in  the  700  MHz  Guard
 Band,  and  has  stated  in  the  Balanced  Budget  Act  proceeding  that  band  manager  licensing  could
 be  used  in  other  services  as  well.  Nevertheless,  certain  services  may  continue  to  be  licensed  on  a
 site-  by-  site,  frequency-  by-  frequency  basis.  In  such  cases,  the  staff  recommends  initiating  a
 proceeding  that  would  consider  the  possibility  of  partially  privatizing  the  licensing  process  in
 these  services,  to  the  extent  consistent  with  our  statutory  licensing  responsibility.  If  implemented,
 certain  licensing  functions  within  designated  spectrum  could  be  performed  by  private
 coordinators,  including,  for  example,  maintenance  of  a  licensee  database.  -d)
 CMRS  Spectrum  Cap  Review
 107.  The  CMRS  spectrum  cap,  set  forth  in  section  20.6  of  the  rules,  limits  the
 aggregate  amount  of  broadband  PCS,  cellular,  and  SMR  spectrum  that  an  entity  can  hold  in  any
 market.  115  The  rule  was  adopted  in  the  CMRS  Third  Report  and  Order  prior  to  the  initiation  of
 broadband  PCS  licensing.  116  In  the  September  1999  Spectrum  Cap  Report  and  Order,  the
 Commission  considered  whether  to  retain,  modify,  or  eliminate  the  spectrum  cap.  117  The
 Commission  concluded  that  the  cap  continued  to  serve  the  public  interest  by  preventing  undue
 concentration  in  the  CMRS  market.  The  Commission  also  concluded  that  the  cap  should  be
 relaxed  in  some  respects,  including  liberalizing  certain  of  the  attribution  rules  and  allowing
 aggregation  of  up  to  55  MHz  of  spectrum  in  rural  areas  (as  opposed  to  the  45  MHz  limit  in  major
 markets).  Finally,  the  Commission  stated  that  it  would  again  review  the  spectrum  cap  in  the  2000
 Biennial  Regulatory  Review.  In  accordance  with  this  directive,  the  Bureau  plans  to  prepare  a
 Notice  of  Proposed  Rulemaking  for  Commission  consideration  later  this  year  that  will  initiate  this
 review,  taking  into  consideration  existing  competitive  conditions  and  technological  developments
 that  could  affect  the  continued  need  for  the  cap.  As  part  of  the  same  proceeding,  the  Bureau  will
 also  recommend  review  of  the  cellular  cross-  ownership  rule,  which  prevents  entities  from  holding
 attributable  interests  in  cellular  licenses  on  both  channel  blocks  in  overlapping  geographic
 areas.  118
 4.  Other  Issues
 108.  The  Bureau  is  also  considering  several  other  possible  areas  for  new  Biennial
 Regulatory  Review  initiatives.  For  example,  the  Bureau  is  reviewing  its  procedures  for
 environmental  clearance  of  tower  sites  under  the  National  Environmental  Policy  Act  (NEPA)  to
 determine  whether  it  can  implement  its  responsibilities  under  NEPA  more  effectively  and
 efficiently.  The  Bureau  has  also  received  Biennial  Regulatory  Review  suggestions  from  outside
 parties  such  as  CTIA  and  PCIA,  including:  streamlining  procedures  for  submission  of
 confidential  information;  streamlining  and  consolidating  reporting  obligations  applicable  to
 wireless  carriers  (e.  g.,  TRS,  Universal  Service,  broadband  competition,  regulatory  fees);  and
 115  47  C.  F.  R.    20.  6.
 116  Implementation  of  Sections  3(  n)  and  332  of  the  Communications  Act,  Third  Report  and  Order,  9  FCC
 Rcd  7988  (1994).
 117  1998  Biennial  Regulatory  Review    Spectrum  Aggregation  Limits  for  Wireless  Telecommunications
 Carriers,  Cellular  Telecommunications  Industry  Associations  Petition  for  Forbearance  From  the  45  MHz
 CMRS  Spectrum  Cap,  Report  and  Order,  15  FCC  Rcd  9219  (1999)  (Spectrum  Cap  Report  and  Order).  See
 also  WT  Docket  No.  98-  205,  Memorandum  Opinion  and  Order  on  Reconsideration  (rel.  Nov.  8,  2000).
 118  47  C.  F.  R.  22.  942.
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 reviewing  our  buildout  requirements  for  different  wireless  services.  The  Bureau  has  taken  these
 suggestions  under  consideration  and  will  announce  further  initiatives  as  appropriate.
 V.  SUMMARY  OF  REVIEW  BY  MASS  MEDIA  BUREAU
 109.  The  Mass  Media  Bureau  advises  the  Commission  in  matters  pertaining  to  radio
 stations,  television  stations,  Multipoint  Distribution  Service  (MDS),  Multichannel  Multipoint
 Distribution  Service  (MMDS),  and  Instructional  Television  Fixed  Service  (ITFS)  facilities.  The
 Bureau  is  responsible  for  licensing  these  services  and  administers  Commission  rules  and  policies
 pertaining  to  these  services,  including  ownership  rules.  The  Bureau  has  been  engaged  in  a
 thorough  review  of  its  rules  and  policies  to  promote  competition  and  diversity,  to  minimize
 unwarranted  regulatory  burdens,  and  to  streamline  our  licensing  processes.  These  rules  are
 located  in  Parts  73,  74,  and  21  of  Title  47  of  the  Code  of  Federal  Regulations.
 110.  A  variety  of  video  outlets  currently  serve  over  102  million  television  households
 in  the  United  States.  119  The  average  television  household  in  the  United  States  can  receive  13
 over-  the-  air  television  stations,  while  36  percent  of  all  homes  can  receive  15  or  more  stations  and
 9  percent  can  receive  20  or  more  stations.  120  Over  10,400  cable  systems  pass  by  96  million
 homes  and  serve  almost  67  million  television  households.  121  Sixty-  four  percent  of  all  subscribers
 have  at  least  54  channels  and  over  98  percent  have  a  minimum  of  30  channels.  122  Other  video
 providers  include  Direct  Broadcast  Satellite,  MMDS,  satellite  master  antenna  television,  home
 satellite  dishes,  and  open  video  systems.
 111.  Over  12,600  radio  stations  are  currently  on  the  air.  Listeners  in  over  half  of  the
 Arbitron  radio  markets  are  served  by  20  or  more  commercial  radio  stations,  and  listeners  in  over
 90  percent  of  the  markets  are  served  by  10  or  more  commercial  radio  stations.  123  The  1996  Act
 eliminated  the  Commissions  national  radio  ownership  limits  and  relaxed  the  local  radio
 ownership  limits.  In  response,  the  radio  industry  has  consolidated  ownership  during  the  past  four
 years,  with  the  number  of  radio  owners  declining  by  approximately  1,100.  Thus,  there  are  now
 approximately  4,000  owners  of  commercial  radio  stations.  The  average  number  of  owners  of
 commercial  radio  stations  in  Arbitron  radio  metro  markets  has  declined  by  3  (from  14  to  11)  since
 the  1996  Act.  Prior  to  the  1996  Act,  the  largest  radio  group  owner  had  fewer  than  40  radio
 stations  nationwide.  By  September  2000,  the  largest  radio  group  owner  had  over  1000  radio
 stations,  and  there  were  several  radio  owners  with  more  than  100  radio  stations.  As  a  result  of
 this  consolidation,  approximately  two-  thirds  of  all  commercial  radio  stations  are  owned  as  part  of
 radio  groups.  124
 119  U.  S.  Television  Household  Estimates,  Nielsen  Media  Research,  Sept.  2000.
 120  Nielsen  Media  Research,  Television  Audience  1996,  1997.
 121  Annual  Assessment  of  the  Status  of  Competition  in  Markets  for  the  Delivery  of  Video  Programming,  15
 FCC  Rcd  978  (2000),  at  Appendix  B.
 122  Id.  at  Table  B-  4.
 123  These  station  counts  include  all  in-  market  stations  and  selected  out-  of-  market  stations  listed  in  BIAs
 Investing  in  Radio,  2000  Market  Report,  1  st  Edition,  Table  2.
 124  A  radio  station  is  generally  considered  part  of  a  group  if  the  owner  has  more  than  2  stations.
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 112.  Commercial  broadcasters  fund  their  activities  by  selling  advertisers  access  to
 their  audiences  (they  receive  no  revenue  from  listeners  or  viewers).  125  Broadcast  programming  is
 limited  to  the  geographic  reach  of  any  given  stations  signal.  This  creates  an  incentive  for
 broadcast  networks  to  forge  arrangements  with  many  stations,  thereby  expanding  their  geographic
 reach  and  attracting  a  broader  range  of  advertisers.  Once  broadcast  television  transitions  to  a
 digital  service,  DTV  could  provide  multiple  streams  of  video  programming  and  allow
 broadcasters  to  charge  subscriber  fees  for  several  program  services.
 113.  Section  202(  h)  of  the  1996  Act  requires  the  Commission  to  review  its  ownership
 rules  biennially  to  determine  whether  any  of  such  rules  are  necessary  in  the  public  interest  as  the
 result  of  competition.  The  Commission  has  undertaken  a  number  of  deregulatory  initiatives  with
 respect  to  the  broadcast  ownership  rules.  The  Bureau  is  committed  to  reevaluating  regulatory
 standards  on  an  ongoing  basis  to  respond  to  changes  in  the  broadcast  industry.
 114.  One  important  policy  goal  for  mass  media,  and  one  of  the  most  important
 purposes  of  the  Commissions  multiple  ownership  rules,  is  to  encourage  diversity  in  the
 ownership  of  broadcast  stations  in  order  to  ensure  that  a  diversity  of  viewpoints  is  available  over
 the  airwaves.  126  As  the  Supreme  Court  stated,  it  has  long  been  a  basic  tenet  of  national
 communications  policy  that  the  widest  possible  dissemination  of  information  from  diverse  and
 antagonistic  sources  is  essential  to  the  welfare  of  the  public.    127  This  diversity  policy  is
 consistent  with  the  First  Amendment  goal  of  fostering  the  marketplace  of  ideas  128  and
 encouraging  uninhibited,  robust,  and  wide-  open  debate.  129  For  these  reasons,  the  Supreme
 Court  has  stated  that  it  has  no  difficulty  in  concluding  that  the  Commissions  interest  in
 promoting  widespread  dissemination  of  information  from  a  multiplicity  of  sources  is  an
 important  governmental  interest;  indeed,  the  Supreme  Court  has  stated  that  assuring  that  the
 public  has  access  to  a  multiplicity  of  information  sources  is  a  governmental  purpose  of  the
 highest  order,  for  it  promotes  values  central  to  the  First  Amendment.  130
 125  See  Review  of  the  Commissions  Regulations  Governing  Television  Broadcasting,  Television  Satellite
 Stations  Review  of  Policy  and  Rules,  Further  Notice  of  Proposed  Rulemaking,  10  FCC  Rcd  3535  (1995).
 126  We  have  previously  observed  that  our  ownership  rules  seek  to  foster  outlet  and  source  diversity  as
 a  means  of  promoting  a  diversity  of  viewpoints.  In  the  Matter  of  Review  of  the  Commissions  Regulations
 Governing  Television  Broadcasting,  Further  Notice  of  Proposed  Rulemaking,  10  FCC  Rcd  3524,  3549-  50,
   60-  61  (1995).  Outlet  diversity  refers  to  a  variety  of  delivery  services  (e.  g.,  broadcast  stations)  that
 select  and  present  programming  directly  to  the  public.  Source  diversity  refers  to  a  variety  of  program
 producers  and  owners.  10  FCC  Rcd  at  3549-  50,    61.  Both  outlet  and  source  diversity  are  integral  to  the
 ultimate  goal  of  providing  the  public  with  a  variety  of  viewpoints.  The  Commission  has  felt  that  without  a
 diversity  of  outlets,  there  would  be  no  real  viewpoint  diversity    if  all  programming  passed  through  the
 same  filter,  the  material  and  views  presented  to  the  public  would  not  be  diverse.  Similarly,  the
 Commission  has  felt  that  without  diversity  of  sources,  the  variety  of  views  would  necessarily  be
 circumscribed.  Id.
 127  Turner  Broadcasting  System,  Inc.  v.  FCC,  512  U.  S.  622,  663  (1994)  (Turner  I)  (quoting  United  States
 v.  Midwest  Video  Corp.,  406  U.  S.  649,  668  n.  27  (1972)  (plurality  opinion)  (quoting  Associated  Press  v.
 United  States,  326  U.  S.  1,  20  (1945)).
 128  This  marketplace  of  ideas  metaphor  was  first  articulated  by  Justice  Holmes.  See  Abrams  v.  United
 States,  250  U.  S.  616,  630  (1919)  (Holmes,  J.,  dissenting).
 129  New  York  Times  v.  Sullivan,  376  U.  S.  254,  270  (1964).
 130  Turner  I,  512  U.  S.  at  663.
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 115.  Broadcast  stations,  particularly  television  stations,  reach  large  audiences  and  are
 the  primary  source  of  news  and  entertainment  programming  for  Americans.  131  Broadcasters
 consequently  play  a  leading  role  in  airing  democratic  debate  and  shaping  cultural  attitudes.  For
 example,  the  manner  and  viewpoint  a  station  uses  in  presenting  the  news  can  have  a  substantial
 impact  on  local  elections.  A  television  drama  that  raises  controversial  or  important  societal  issues
 can  shape  cultural  attitudes  about  these  issues  in  significant  ways.  There  is  consequently  a  vital
 public  interest  in  ensuring  that  these  influential  outlets  for  communication  are  in  the  hands  of  a
 broad  number  of  different  owners.
 116.  The  strong  policy  of  promoting  diversity  is  relevant  to  determining  whether  a
 regulation  is  necessary  in  the  public  interest.  Whether  or  not  a  particular  ownership  combination
 has  anticompetitive  effects  in  the  sale  of  advertising  time  or  other  markets  in  which  broadcasters
 compete,  that  combination  may  reduce  the  diversity  of  voices  in  a  community.  Congress
 implicitly  recognized  this  by  maintaining  local  radio  ownership  limitations,  albeit  at  relaxed
 levels.  132  Congress  has  repeatedly  emphasized  its  concern  for  promoting  diversity  in  the  mass
 media,  notwithstanding  the  increasingly  competitive  nature  of  virtually  all  communications
 markets.  133  In  attempting  to  foster  diversity  through  structural  regulation,  the  Commission
 endorses  a  content-  neutral  method  that  does  not  evaluate  the  substance  of  any  stations  editorial
 decisions,  but  seeks  to  ensure  a  sufficient  number  of  independent  outlets  and  program  sources  to
 foster  a  diversity  of  independent  viewpoints  in  a  given  local  market.
 1.  Recent  and  Ongoing  Activities
 117.  On  August  6,  1999,  the  Commission  released  its  Local  Television  Ownership
 Report  and  Order  134  and  its  National  Television  Ownership  Report  and  Order.  135  As  discussed
 131  According  to  a  recent  survey,  almost  70  percent  of  adults  said  they  get  most  of  their  news  from
 television    almost  twice  the  number  that  list  newspapers  as  their  main  news  source.  See  Americas
 Watching,  March/  April,  1997,  Roper  Starch  Worldwide,  Inc.
 132  Congress  promotes  diversity  separate  and  apart  from  competition.  For  example,  Section  202(  b)  of  the
 1996  Act,  which  set  forth  new  ownership  limitations,  is  titled  Local  Radio  Diversity.  Pub.  Law  No.  104-
 104,  110  Stat.  56,  110  (1996)  (emphasis  added).  Moreover,  in  discussing  the  radio-  television  cross-ownership
 rule,  the  Conference  Report  to  the  1996  Act  noted  the  potential  for  public  interest  benefits  of
 [radio-  television  station  combinations]  when  bedrock  diversity  interest[  s]  are  not  threatened,  and  further
 stated  that  in  reviewing  this  rule  the  FCC  should  take  into  account  not  only  the  increased  competition
 facing  broadcasters  but  also  the  need  for  diversity  in  todays  radio  marketplace.  S.  Conf.  Rep.  104-  230,
 104  th  Cong.  2d  Sess.  163  (1996)  (emphasis  added).
 133  For  example,  the  1996  Act  directs  the  Commission,  in  Section  257,  in  identifying  and  eliminating
 market  entry  barriers  for  entrepreneurs  and  other  small  businesses  in  certain  services,  to  promote  the
 policies  and  purposes  of  this  Act  favoring  diversity  of  media  voices.  47  U.  S.  C.    257(  b).  Likewise,  the
 Cable  Competition  and  Consumer  Protection  Act  of  1992  sought  to  ensure  that  cable  television  operators
 do  not  have  undue  market  power,  and  promote  the  availability  to  the  public  of  a  diversity  of  views  and
 information.  Cable  Television  Consumer  Protection  and  Competition  Act  of  1992,  Pub.  Law  No.  102-
 385,    2(  b)  (1992),  106  Stat.  1460.
 134  In  the  Matter  of  Review  of  the  Commissions  Regulations  Governing  Television  Broadcasting;  and
 Television  Satellite  Stations  Review  of  Policy  and  Rules,  Report  and  Order,  14  FCC  Rcd  12903  (1999)
 (1999  Local  Television  Ownership  Report  and  Order).
 135  In  the  Matter  of  Broadcast  Television  National  Ownership  Rules;  Review  of  the  Commissions
 Regulations  Governing  Television  Broadcasting;  and  Television  Satellite  Stations  Review  of  Policy  and
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 more  fully  below,  the  Commission,  in  the  Local  Television  Ownership  Report  and  Order,  revised
 its  local  television  ownership  rules    the  TV  duopoly  rule  and  the  radio-  television  cross-ownership
 or  one-  to-  a-  market  rule    to  respond  to  ongoing  changes  in  the  broadcast  television
 industry.  The  new  rules  reflect  a  recognition  of  the  growth  in  the  number  and  variety  of  media
 outlets  in  local  markets,  as  well  as  significant  efficiencies  and  public  service  benefits  that  can  be
 obtained  from  joint  ownership.  At  the  same  time,  the  Commissions  amendments  reflect  its
 continuing  goals  of  ensuring  diversity  and  localism  and  guarding  against  undue  concentration  of
 economic  power  in  the  marketplace.  The  newly  adopted  rules  balance  these  competing  concerns
 and  are  intended  to  facilitate  further  development  of  competition  in  the  marketplace  and  to
 strengthen  the  potential  to  serve  the  public  interest.  In  the  National  Television  Ownership  Report
 and  Order,  the  Commission  modified  its  method  of  calculating  stations  audience  reach  and  made
 some  minor  changes  in  which  stations  would  be  counted  for  purposes  of  the  national  TV
 ownership  rule.
 118.  On  June  20,  2000,  the  Commission  released  its  1998  Biennial  Regulatory  Review
 Report,  136  which  discusses  all  of  the  Commissions  broadcast  ownership  rules  not  already
 considered  in  the  1999  Local  and  National  Television  Ownership  Report  and  Orders.  The  1998
 Biennial  Regulatory  Review  Report  considered  (1)  the  local  radio  ownership  rules,  including  the
 radio  market  definition;  (2)  the  daily  newspaper/  broadcast  cross-  ownership  rule;  (3)  the  national
 television  ownership  rule,  including  the  UHF  discount;  (4)  the  dual  network  rule;  (5)  the
 experimental  broadcast  station  ownership  rule;  and  (6)  the  cable/  television  cross-  ownership  rule.
 The  Report  then  stated  the  Commissions  conclusions  as  to  whether  the  rules  remain  necessary  in
 the  public  interest  in  view  of  competition.
 a)  Broadcast  Ownership  Rules
 (1)  Local  Radio  Ownership  Rule
 119.  In  1996,  the  Commission  revised  the  number  of  radio  stations  that  an  entity  may
 own  in  a  single  radio  market  under  section  73.3555(  a)  of  its  rules  in  accordance  with  section
 202(  b)  of  the  1996  Act.  137  The  Commission  also  reviewed  the  rule  in  its  1998  Biennial
 Regulatory  Review  Report.  On  the  basis  of  that  recently  concluded  review  under  the  biennial
 regulatory  review  requirements  of  the  1996  Act,  the  Commission  concluded  that  local  radio
 ownership  rules  generally  continue  to  serve  the  public  interest.  Noting  that  there  currently  are  far
 fewer  licensees  competing  against  each  other  in  many  communities  than  there  were  prior  to  the
 1996  Act,  the  1998  Biennial  Regulatory  Review  Report  concluded  that  the  existing  limitations
 remain  necessary  to  prevent  further  diminution  of  competition  and  diversity  in  the  radio  industry.
 120.  The  Commission,  however,  recognized  that  its  methodology  for  counting  the
 number  of  stations  a  party  owned  in  a  market  may  have,  under  certain  circumstances,  created
 results  that  were  inconsistent  with  congressional  intent.  138  For  example,  the  Commission  noted
 Rules,  MM  Docket  Nos.  96-  222,  91-  221,  and  87-  8,  Report  and  Order,  15  FCC  Rcd  20743  (1999)  (1999
 National  Television  Ownership  Report  and  Order).
 136  In  the  Matter  of  1998  Biennial  Regulatory  Review    Review  of  the  Commissions  Broadcast  Ownership
 Rules  and  Other  Rules  Adopted  Pursuant  to  Section  202  of  the  Telecommunications  Act  of  1996,  MM
 Docket  No.  98-  35,  Biennial  Regulatory  Review  Report,  15  FCC  Rcd  11508  (2000)(  1998  Biennial
 Regulatory  Review  Report).
 137  47  C.  F.  R.    73.  3555(  a).
 138  See,  e.  g.,  Pine  Bluff  Radio,  Inc.,  Memorandum  Opinion  and  Order,  14  FCC  Rcd  6594  (1999).
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 that  its  current  methodology  may  result  in  a  station  being  counted  as  part  of  a  market  but  not
 counted  against  a  licensees  cap  on  the  number  of  stations  it  may  own  in  that  market.  The
 Commission  therefore  has  issued  a  notice  of  proposed  rulemaking  seeking  comment  on  its
 methodology  for  defining  radio  markets,  counting  the  number  of  stations  within  those  markets,
 and  counting  the  number  of  stations  that  a  party  owns  in  a  radio  market.  139
 (2)  Local  Television  Multiple  Ownership  Rule
 121.  Section  73.3555(  b)  of  the  Commissions  rules  limits  the  number  of  television
 stations  an  entity  may  own  in  a  single  market.  140  The  1999  Local  Television  Ownership  Report
 and  Order  relaxed  this  rule  by  (1)  modifying  the  geographic  scope  from  the  Grade  B  contour
 overlap  approach  to  a  Nielsen  Designated  Market  Area  (DMA)  test  that  permits  common
 ownership  of  two  television  stations  in  separate  DMAs  without  regard  to  contour  overlap;  (2)
 allowing  common  ownership  of  two  television  stations  within  the  same  DMA  if  their  Grade  B
 contours  do  not  overlap  (a  continuation  of  the  previous  rule),  or  if  eight  independently-  owned,
 full  power  and  operational  TV  stations  (commercial  and  non-  commercial)  will  remain  post-merger,
 and  one  of  the  stations  to  be  merged  is  not  among  the  top  four-  ranked  stations  in  the
 market,  on  the  basis  of  audience  share  at  the  time  the  application  is  filed;  and  (3)  allowing  waiver
 of  the  new  rules  under  certain  circumstances.  As  the  Commission  stated  in  the  1999  Local
 Television  Ownership  Report  and  Order,  the  relaxed  rules  provide  measured  relaxation  of  the
 local  television  multiple  ownership  rule,  particularly  in  larger  television  markets.  The  rule  will
 allow  weaker  television  stations  in  a  market  to  combine,  either  with  each  other  or  with  a  larger
 station,  thereby  preserving  and  strengthening  these  stations  and  improving  their  ability  to
 compete.  These  station  combinations  will  allow  licensees  to  take  advantage  of  efficiencies  and
 cost  savings  that  can  benefit  the  public.  At  the  same  time,  the  station  rank  and  voice  criteria  are
 designed  to  protect  both  the  Commissions  core  competition  and  diversity  concerns.  141  Because
 the  local  television  multiple  ownership  rule  was  so  recently  relaxed,  the  staff  believes  that  no
 further  changes  are  warranted  at  this  time.  Instead,  staff  will  monitor  the  effects  of  deregulatory
 actions  on  the  marketplace  to  determine  whether  further  changes  are  warranted.
 (3)  Radio-  Television  Cross-  Ownership  Rule
 122.  Section  73.3555(  c)  of  the  Commissions  rules  limits  the  number  of  radio  and
 television  stations  that  an  entity  may  own  in  a  single  market.  142  The  1999  Local  Television
 Ownership  Report  and  Order  relaxed  the  Commissions  radio-  television  cross-  ownership  rule  to
 allow  common  ownership  of  a  television  station  (or  two  television  stations  if  permitted  under  our
 local  television  ownership  rules)  and  up  to  six  radio  stations  (any  combination  of  AM  or  FM
 stations,  to  the  extent  permitted  under  our  local  radio  ownership  rules)  in  any  market  where  at
 least  20  independent  voices  would  remain  post-  merger;  a  television  station  and  up  to  four  radio
 stations  (any  combination  of  AM  or  FM  stations,  to  the  extent  permitted  under  our  local  radio
 ownership  rules)  in  any  market  where  at  least  10  independent  voices  would  remain  post-  merger;
 and  a  television  station  and  one  radio  station  (AM  or  FM)  notwithstanding  the  number  of
 139  In  the  Matter  of  Definition  of  Radio  Markets,  MM  Docket  No.  00-  244,  FCC  00-  427  (adopted  Dec.  6,
 2000).
 140  47  C.  F.  R.    73.  3555(  b).
 141  1999  Local  Television  Ownership  Report  and  Order,  14  FCC  Rcd  at  12933,  para.  65.
 142  47  C.  F.  R.    73.  3555(  c).
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 independent  voices  in  the  market.  The  1999  Local  Television  Ownership  Report  and  Order  also
 eliminated  the  previous  five-  factor  case-  by-  case  waiver  standard  143  and  established  a  simplified
 waiver  standard.  144  The  Commission  stated  in  the  1999  Local  Television  Ownership  Report  and
 Order  that  it  relaxed  the  radio-  television  cross-  ownership  rule  to  balance  its  traditional  diversity
 and  competition  concerns  with  its  desire  to  permit  broadcasters  and  the  public  to  realize  the
 benefits  of  radio-  television  common  ownership.  The  relaxed  rule  recognizes  the  growth  in  the
 number  and  types  of  media  outlets,  the  clustering  of  cable  systems  in  major  population  centers,
 the  efficiencies  inherent  in  joint  ownership  and  operation  of  both  television  and  radio  stations  in
 the  same  market,  as  well  as  public  service  benefits  that  can  be  obtained  from  joint  operation.  The
 new  rule  also  ensures  the  application  of  a  clear,  reasonable  standard.  As  a  result,  the  rule  will
 ease  administrative  burdens  and  will  provide  predictability  to  broadcasters  in  structuring  their
 business  transactions.  145  Because  the  radio-  television  cross-  ownership  rule  was  so  recently
 relaxed,  the  staff  believes  that  no  further  changes  are  warranted  at  this  time.  Staff  will  monitor
 the  market  effects  of  deregulatory  actions  to  determine  whether  further  changes  are  warranted.
 (4)  Daily  Newspaper/  Broadcast  Cross-  Ownership  Rule
 123.  Section  73.3555(  d)  of  the  Commissions  rules  generally  prohibits  the  common
 ownership  of  a  broadcast  station  and  a  daily  newspaper  in  the  same  community.  146  The
 Commission  reviewed  this  rule  in  its  1998  Biennial  Regulatory  Review  Report.  In  that  review,
 the  Commission  recognized  that  even  though  media  markets  have  undergone  changes  since  the
 cross-  ownership  rule  was  adopted,  many  of  the  new  media  outlets  do  not  yet  appear  to  be
 substitutes  for  newspapers  or  broadcast  stations  on  the  local  level,  for  diversity  purposes.  The
 1998  Biennial  Regulatory  Review  Report  therefore  concluded  that  the  rule  should,  as  a  general
 matter,  be  retained  because  it  furthers  the  important  public  policy  goal  of  viewpoint  diversity  and
 continues  to  serve  the  public  interest.
 124.  While  electing  to  retain  the  rule,  the  Commission  recognized  that  situations  may
 arise  where  the  rule  may  not  be  necessary  in  the  public  interest  to  ensure  diversity  and
 competition.  For  example,  given  the  size  of  the  market  and  the  size  and  type  of  the  newspaper
 and  broadcast  station  involved,  there  may  be  sufficient  diversity  and  competition  even  if  a
 newspaper/  broadcast  combination  were  allowed.  The  Commission  indicated  in  the  1998  Biennial
 Regulatory  Review  Report  that  it  would  examine  these  types  of  situations  in  greater  detail.  The
 Commission  indicated  that  it  would  examine  whether  the  rule  needs  to  be  tailored  to  address
 143  1999  Local  Television  Ownership  Report  and  Order,  14  FCC  Rcd  at  12955-  57,    119-  22.  The  five
 factors  were:  (1)  the  potential  public  service  benefits  of  common  ownership  of  the  facilities,  such  as
 economies  of  scale,  cost  savings,  and  programming  benefits;  (2)  the  types  of  facilities  involved;  (3)  the
 number  of  media  outlets  already  owned  by  the  applicant  in  the  relevant  market;  (4)  any  financial
 difficulties  involving  the  station(  s);  and  (5)  issues  pertaining  to  the  level  of  diversity  and  competition
 within  the  affected  market.
 144  Waivers  of  the  new  rule  will  be  granted  only  in  situations  involving  a  failed  station,  as  defined  in  the
 Commissions  local  television  multiple  ownership  rules.  The  waiver  applicant  must  also  show  that  the  in-market
 buyer  is  the  only  entity  willing  and  able  to  operate  the  failed  station  and  that  the  sale  to  an  out-  of-market
 buyer  would  result  in  an  artificially  depressed  price  for  the  station.  1999  Local  Television
 Ownership  Report  and  Order,  14  FCC  Rcd  at  12948-  49,  at  para.  101,  12954,  at  para.  115.
 145  1999  Local  Television  Ownership  Report  and  Order,  14  FCC  Rcd  at  12948,  at  paras.  102-  03.
 146  47  C.  F.  R.    73.  3555(  d).
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 contemporary  market  conditions  and  would  issue  a  notice  of  proposed  rule  making  seeking
 comment  on  these  and  other  potential  modifications  of  the  rule.  147
 125.  On  October  1,  1996,  the  Commission  released  a  Notice  of  Inquiry  (NOI)  seeking
 comment  on  the  possible  revision  of  its  standards  for  waiver  of  the  daily  newspaper/  broadcast
 cross-  ownership  rule  with  respect  to  newspaper/  radio  combinations.  148  The  Newspaper/  Radio
 Cross-  Ownership  Waiver  Policy  NOI  sought  comment  on  whether  the  Commission  should  adopt
 objective  criteria  for  evaluating  these  waiver  requests  and,  if  so,  what  those  criteria  should  be.
 No  action  has  been  taken  in  this  proceeding.
 (5)  National  Television  Multiple  Ownership  Rule
 126.  Section  73.3555(  e)  of  the  Commissions  rules  prohibits  an  entity  from  owning
 television  stations  that  would  result  in  an  aggregate  national  audience  reach  exceeding  35
 percent.  149  The  current  cap  was  established  in  1996,  when  Congress  directed  the  Commission  to
 raise  the  national  cap  from  25  percent  to  35  percent.  150  The  1999  National  Television  Ownership
 Report  and  Order  generally  clarifies  that  no  market  will  be  counted  more  than  once  when
 calculating  the  35  percent  cap,  and  uses  DMAs,  rather  than  Arbitrons  Areas  of  Dominant
 Influence,  to  define  a  stations  market  for  the  purpose  of  calculating  national  audience  reach.  151
 More  recently,  the  Commission,  in  its  1998  Biennial  Regulatory  Review  Report,  addressed  the
 issue  of  whether  to  modify  the  35  percent  cap.  152  The  Commission  determined  that  its  recent
 changes  to  the  local  television  ownership  rule  should  be  observed  and  assessed  before  making
 any  further  changes  to  the  national  limit.  The  Commission  also  found  that  many  group  owners
 have  acquired  large  numbers  of  stations  nationwide  since  the  cap  was  increased  to  35  percent  in
 1996,  and  that  this  trend  needed  further  observation.  The  1998  Biennial  Regulatory  Review
 Report  therefore  did  not  alter  the  35  percent  cap.  153
 147  On  August  23,  1999,  the  Newspaper  Association  of  America  ("  NAA")  filed  an  Emergency  Petition  for
 Relief,  which  argues  in  favor  of  repeal  of  the  newspaper/  broadcast  cross-  ownership  rule.  The  NAA
 petition  was  treated  as  a  late-  filed  comment  and  accordingly  not  considered  in  the  1998  Biennial
 Regulatory  Review  proceeding.  However,  the  petition  is  included  in  the  record  of  the  proceeding  that  was
 initiated  to  seek  comment  on  this  staff  Report.
 148  In  the  Matter  of  Newspaper/  Radio  Cross-  Ownership  Waiver  Policy,  Notice  of  Inquiry,  11  FCC  Rcd
 13003  (1996)  (Newspaper/  Radio  Cross-  Ownership  Waiver  Policy  NOI).
 149  47  C.  F.  R.    73.  3555(  e)(  1).
 150  1996  Act,    202(  c)(  1).
 151  National  Television  Ownership  Report  and  Order,  at    35.
 152  On  November  18,  1999,  Fox  Television  Stations,  Inc.  filed  an  Emergency  Petition  for  Relief  and
 Supplemental  Comments  in  the  1998  Biennial  Regulatory  Review  proceeding  seeking,  among  other
 things,  repeal  of  the  national  broadcast  ownership  rule.  In  addition,  on  November  19,  1999,  Viacom,  Inc.
 filed  comments  in  that  proceeding  seeking  repeal  of  the  same  rule  and  the  dual  network  rule.  The  Fox  and
 Viacom  filings  were  not  considered  in  the  1998  Biennial  Regulatory  Review  proceeding  because  they  were
 untimely  filed.  1998  Biennial  Regulatory  Review  Report,  n.  76.  They  are  included,  however,  in  the  record
 of  the  proceeding  that  was  initiated  to  seek  comment  on  this  Staff  Report.
 153  1998  Biennial  Regulatory  Review  Report,  at  paras.  25-  30.
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 127.  Section  73.3555(  e)(  2)  provides  for  a  50  percent  UHF  discount  in  calculating
 the  national  audience  reach.  154  Because  the  UHF  discount  is  intended  to  recognize  the
 deficiencies  in  over-  the-  air  UHF  reception  in  comparison  to  VHF  reception,  UHF  stations  are  not
 credited  with  reaching  their  entire  market.  The  Commission  addressed  the  issue  of  whether  to
 retain  the  50  percent  UHF  discount  in  its  1998  Biennial  Regulatory  Review  Report  and  concluded
 that  the  signal  disparity  between  UHF  and  VHF  has  not  yet  been  eliminated.  The  1998  Biennial
 Regulatory  Review  Report  therefore  retains  the  50  percent  UHF  discount.  Because  the  signal
 disparity  should  be  diminished  by  digital  television,  however,  the  Report  stated  that  when  the
 transition  to  digital  television  is  near  completion,  the  Commission  will  issue  a  notice  of  proposed
 rulemaking  proposing  a  phased-  in  elimination  of  the  discount.
 (6)  Dual  Network  Rule
 128.  As  mandated  by  the  1996  Act,  section  73.658(  g)  of  the  Commissions  rules
 permits  a  broadcast  station  to  affiliate  with  a  network  organization  that  maintains  more  than  one
 broadcast  network,  unless  the  dual  or  multiple  networks  are  created  by  a  merger  between  ABC,
 CBS,  Fox,  or  NBC,  or  a  merger  between  one  of  these  four  established  networks  and  UPN  or
 WB.  155  The  Commission  reviewed  this  rule  in  its  1998  Biennial  Regulatory  Review  Report.  The
 Commission  recognized  that  the  rule,  as  it  applies  to  UPN  and  WB,  may  no  longer  be  necessary
 in  the  public  interest.  The  Commission  stated  that  the  opportunity  for  broadcast  networks  to
 create  and  maintain  multiple  broadcast  networks  may  place  networks  on  more  equal  footing  with
 cable,  satellite,  and  other  multi-  channel  video  programming  distributors.  The  Commission
 further  noted  that  because  the  emerging  networks  (UPN  and  WB)  are  nascent  subsidiaries  of  large
 program  producers,  their  merger  with  a  major  network  (ABC,  CBS,  Fox  or  NBC)  may  permit
 realization  of  substantial  economic  efficiencies  without  undue  harm  to  diversity  and  competition.
 The  Commission  has  issued  a  notice  of  proposed  rulemaking  to  consider  eliminating  the
 restriction  on  the  ownership  of  UPN  or  WB  by  one  of  the  four  established  networks  and  seeking
 comment  on  what,  if  any,  safeguards  should  be  imposed.  156  The  Commission,  however,  declined
 to  eliminate  the  prohibition  against  any  mergers  of  the  four  major  networks  because  of  significant
 concerns  about  competition  and  diversity.
 (7)  Experimental  Broadcast  Station  Multiple  Ownership  Rule
 129.  Section  74.134  of  the  Commissions  rules  prohibits  any  person  from  controlling
 two  or  more  experimental  broadcast  stations  unless  it  can  show  that  the  research  program  requires
 the  licensing  of  two  or  more  separate  stations.  157  The  Commission  reviewed  this  rule  in  its  1998
 Biennial  Regulatory  Review  Report  and  concluded  that  elimination  of  the  rule  would  not
 adversely  affect  diversity  and  competition.  The  Commission  stated  that  other  rules,  which
 require  experimental  stations  to  operate  for  research  purposes  and  bar  them  from  imposing
 154  47  C.  F.  R.    73.  3555(  e)(  2).  Section  73.3555(  e)(  2)  explains  that  national  audience  reach  is  based  on
 the  number  of  television  households  in  DMAs,  and  that  UHF  television  stations  are  credited  with  reaching
 only  50  percent  of  the  television  households  in  the  DMA.
 155  47  C.  F.  R.    73.  658(  g).
 156  In  the  Matter  of  Amendment  of  Section  73.  658(  g)  of  the  Commissions  Rules    The  Dual  Network  Rule,
 MM  Docket  No.  00-  108,  Notice  of  Proposed  Rule  Making,  15  FCC  Rcd  11253(  2000).
 157  47  C.  F.  R.    74.  134.
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 charges  for  transmitting  programming  and  from  offering  a  regular  program  service,  provide
 sufficient  safeguards  against  use  of  experimental  stations  for  commercial  purposes.  The
 Commission  has  issued  a  Notice  of  Proposed  Rulemaking  proposing  to  eliminate  the  rule.  158
 (8)  Cable/  Television  Cross-  Ownership  Rule
 130.  Section  76.501(  a)  of  the  Commissions  rules  prohibits  a  cable  system  from
 carrying  the  signal  of  a  television  station  if  the  system  owns  or  controls  a  TV  station  whose
 predicted  Grade  B  contour  overlaps  the  service  area  of  the  cable  system.  159  The  Commission
 reviewed  this  rule  in  its  1998  Biennial  Regulatory  Review  Report  and  concluded  that  the
 cable/  television  cross-  ownership  rule  promotes  competition  in  the  delivered  video  programming
 market.  The  Commission  noted  that,  despite  an  array  of  participants  in  the  delivered  video
 programming  market,  67  percent  of  television  households  subscribe  to  cable.  The  Commission
 also  noted  that  this  rule  prevents  other  forms  of  discrimination  that  could  degrade  competition  in
 the  delivered  video  programming  market.  The  1998  Biennial  Regulatory  Review  Report  therefore
 retains  the  rule.  The  staff  does  not  find  any  reason  to  alter  that  decision.  160
 b)  Other  Rules
 (1)  Broadcast  Attribution  Report  and  Order
 131.  The  1999  Attribution  Report  and  Order  amended  Note  2  to  section  73.3555  of
 the  Commissions  rules,  the  broadcast  attribution  rules,  which  determines  what  interests  should
 be  counted  in  applying  the  ownership  rules.  161  The  1999  Attribution  Report  and  Order  amended
 the  attribution  rules  to  improve  their  precision,  avoid  disruption  in  the  flow  of  capital  to
 broadcasting,  afford  clarity  and  certainty  to  regulatees  and  markets,  and  facilitate  application
 processing.  A  number  of  measures  were  adopted  in  the  1999  Attribution  Report  and  Order.  In
 particular,  the  Order  eliminated  the  cross-  interest  policy,  which  had  required  a  time-  consuming
 case-  by-  case  review,  and  adopted  instead  a  new  equity/  debt  plus  rule  that  addressed  some  of  the
 same  concerns.  In  addition,  the  Commission  raised  the  passive  investor  voting  stock  benchmark
 from  10  to  20  percent.  The  1999  Attribution  Report  and  Order  also  conformed  the
 cable/  Multipoint  Distribution  Service  attribution  rules  to  the  newly  adopted  broadcast  attribution
 criteria  and  amended  the  attribution  rules  regarding  cable/  television  cross-  ownership  and  the
 ITFS  cross-  leasing  rules.
 158  In  the  Matter  of  Elimination  of  Experimental  Broadcast  Ownership  Restrictions,  MM  Docket  No.  00-105,
 Notice  of  Proposed  Rule  Making,  15  FCC  Rcd  11196(  2000).
 159  47  C.  F.  R.    76.  501(  a).
 160  On  January  27,  2000,  the  WB  Television  Network  filed  Supplemental  Comments  in  the  1998  Biennial
 Regulatory  Review  proceeding.  These  comments,  untimely  filed  in  the  former  proceeding,  are  included  in
 the  record  of  this  instant  proceeding.
 161  In  the  Matter  of  Review  of  the  Commissions  Regulations  Governing  Attribution  of  Broadcast  and
 Cable/  MDS  Interests;  Review  of  the  Commissions  Regulations  and  Policies  Affecting  Investment  in  the
 Broadcast  Industry;  and  Reexamination  of  the  Commissions  Cross-  Interest  Policy,  Report  and  Order,  14
 FCC  Rcd  12559  (1999)  (1999  Attribution  Report  and  Order).
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 (2)  Main  Studio  and  Public  File  Report  and  Order
 132.  The  Main  Studio  and  Public  File  Rules  Report  and  Order  provided  broadcasters
 greater  flexibility  in  choosing  where  to  locate  their  main  studios,  required  commercial  and
 noncommercial  educational  stations  to  locate  the  public  files  at  their  main  studio,  and  allowed
 licensees  to  maintain  all  or  part  of  the  files  in  a  computer  database,  rather  than  in  paper  files.  162
 The  Main  Studio  and  Public  File  Rules  Report  and  Order  further  clarified  what  must  be
 contained  in  the  public  inspection  files.  The  Commissions  goals  in  amending  these  rules  was  to
 strike  an  appropriate  balance  between  ensuring  that  the  public  has  reasonable  access  to  each
 stations  main  studio  and  public  file,  minimizing  regulatory  burdens  on  licensees,  and
 establishing  rules  that  are  easy  to  administer  and  understand.  In  its  Memorandum  Opinion  and
 Order  on  reconsideration  of  the  1999  Attribution  Report  and  Order,  the  Commission  eliminated
 the  single  majority  shareholder  attribution  exemption,  while  grandfathering  existing  holdings,  and
 revised  the  filing  requirements  for  Local  Marketing  Agreements  (LMAs),  among  other
 revisions.  163
 (3)  Call  Sign  Report  and  Order
 133.  The  Call  Sign  Report  and  Order  amended  several  rules  to  ease  and  speed  call
 sign  request  processing.  164  Specifically,  the  Call  Sign  Report  and  Order  amended  the
 Commissions  rules  to  replace  the  requirement  that  parties  file  written  requests  for  the  registration
 or  change  of  call  signs  with  a  new  on-  line  call  sign  inquiry,  reservation,  and  authorization  system
 that  is  accessible  through  the  Internet.  165  The  Commission  further  amended  its  low-  power
 television  station  identification  rules  to  allow  low-  power  television  permittees  and  licensees  to  be
 assigned  four-  letter  call  signs,  via  the  Internet  on-  line  process,  in  lieu  of  five-  character
 alphanumeric  call  signs.  166  These  revised  rules  will  streamline  the  Commissions  call  sign
 assignment  procedures.  Implementation  of  the  on-  line  system  enhances  the  speed  and  certainty
 of  radio  and  television  broadcast  station  call  sign  assignments,  thereby  providing  better  service  to
 all  broadcast  station  licensees  and  permittees.
 (4)  Competitive  Bidding  for  Commercial
 Broadcast  and  Instructional  Television  Fixed  Service  Licenses
 134.  The  Commission  traditionally  used  comparative  hearings  to  decide  among
 mutually  exclusive  applications  to  provide  commercial  broadcast  service,  and  it  has  used  a  system
 162  In  the  Matter  of  Review  of  the  Commissions  Rules  Regarding  the  Main  Studio  and  Local  Public
 Inspection  Files  of  Broadcast  Television  and  Radio  Stations,  Report  and  Order,  13  FCC  Rcd  15691  (1998),
 revised  in  part  on  reconsideration,  14  FCC  Rcd  11113  (1999)  (Main  Studio  and  Public  File  Rules  Report
 and  Order).  See  also  47  C.  F.  R.    73.1125;  73.  3526  and  73.  3527.
 163  Memorandum  Opinion  and  Order,  MM  Docket  Nos.  94-  150,  92-  51,  and  87-  154,  FCC  00-  xxx  (adopted
 Dec.  14,  2000).
 164  In  the  Matter  of  1998  Biennial  Regulatory  Review    Amendment  of  Parts  73  and  74  Relating  to  Call
 Sign  Assignments  for  Broadcast  Stations,  Report  and  Order,  14  FCC  Rcd  1235  (1998)  (Call  Sign  Report
 and  Order).
 165  47  C.  F.  R.    73.  3550.
 166  47  C.  F.  R.    74.  783.
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 of  random  selection  to  award  certain  types  of  broadcast  licenses,  such  as  low-  power  television
 and  television  translator  licenses.  As  a  result  of  the  Balanced  Budget  Act  of  1997,  which
 expanded  the  Commissions  competitive  bidding  authority  under  section  309(  j)  of  the
 Communications  Act,  as  amended,  167  the  Commission  no  longer  has  the  option  of  resolving
 competing  applications  for  commercial  broadcast  stations  by  comparative  hearings,  except  for
 certain  applications  filed  before  July  1,  1997.  In  addition,  the  Balanced  Budget  Act  removed  the
 Commissions  authority  to  resolve  competing  applications  for  commercial  broadcast  stations  by  a
 system  of  random  selection.  In  response  to  these  legislative  changes,  the  Competitive  Bidding
 First  Report  and  Order  168  adopted  new  competitive  bidding  rules  to  select  among  mutually
 exclusive  applications  for  new  commercial  full-  power  radio  station  licenses,  analog  television
 station  licenses,  and  a  variety  of  secondary  commercial  broadcast  service  licenses  (low-  power
 television,  FM  translator,  and  television  translator  services).  169  In  contrast  to  the  comparative
 hearing  process,  the  competitive  bidding  rules  provide  a  more  streamlined  method  for  awarding
 authorizations,  and,  as  a  result,  expedite  service  to  the  public.
 (5)  1998  Nontechnical  Streamlining  Report  and  Order
 135.  The  Commission  recently  concluded  a  review  of  its  broadcast  rules  and
 application  procedures.  The  Nontechnical  Streamlining  Report  and  Order  made  fundamental
 changes  in  the  Commissions  broadcast  application  and  licensing  procedures  to  reduce
 unwarranted  applicant  and  licensee  burdens,  while  preserving  the  publics  ability  to  participate
 fully  in  the  broadcast  licensing  process.  170  The  Commission  extended  the  construction  period  for
 all  broadcast  stations  to  three  years  (from  18  months  for  radio  stations  and  24  months  for
 television  stations),  but  tightened  standards  for  granting  extensions.  With  respect  to  the
 procedures  for  transfer  and  assignment  applications,  the  Commission  eliminated  the  prohibition
 on  for-  profit  sales  of  unbuilt  stations.  171  In  addition,  applicants  now  certify  that  their  sales  and
 organizational  documents  comply  with  Commission  policy  and  rules.  172  Similarly,  staff  no  longer
 167  Pub.  Law  No.  105-  33,  111  Stat.  251  (1997).
 168  In  the  Matter  of  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding
 for  Commercial  Broadcast  and  Instructional  Television  Fixed  Service  Licenses;  Reexamination  of  the
 Policy  Statement  on  Comparative  Broadcast  Hearings;  and  Proposals  to  Reform  the  Commissions
 Comparative  Hearing  Process  to  Expedite  the  Resolution  of  Cases,  First  Report  and  Order,  13  FCC  Rcd
 15920  (1998),  on  reconsideration,  14  FCC  Rcd  8724,  on  further  reconsideration,  14  FCC  Rcd  12541
 (1999).
 169  While  concluding  in  the  Report  and  Order  that  the  channels  reserved  for  ITFS  were  not  exempt  from
 competitive  bidding,  the  Commission  announced  that,  given  the  instructional  nature  of  the  ITFS  service
 and  the  long-  standing  reservation  of  the  ITFS  spectrum  for  noncommercial  educational  use,  it  would
 request  Congress  to  clarify  whether  it  intended  the  Commissions  expanded  auction  authority  to  include
 ITFS.  First  Report  and  Order,  13  FCC  Rcd  at  15999-  16002.
 170  In  the  Matter  of  1998  Biennial  Regulatory  Review    Streamlining  of  Mass  Media  Applications,  Rules,
 and  Processes;  Policies  and  Rules  Regarding  Minority  and  Female  Ownership  of  Mass  Media  Facilities,
 Report  and  Order,  13  FCC  Rcd  23056  (1998),  on  reconsideration,  14  FCC  Rcd  17525  (1999)  (1998
 Nontechnical  Streamlining  Report  and  Order).
 171  47  C.  F.  R.    73.  3597.
 172  While  copies  of  sales  agreements  are  no  longer  required  as  part  of  the  application  for  assignment  or
 transfer,  the  documents  must  still  be  filed  for  the  purpose  of  making  the  contracts  and  agreements  available
 to  the  public  in  the  Commissions  public  reference  room.
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 routinely  reviews  contour  overlap  maps;  applicants  now  certify  compliance  with  multiple
 ownership  rules.  173  In  addition,  broadcast  licensees  now  file  ownership  reports  every  two  years,
 rather  than  yearly.  The  Nontechnical  Streamlining  Report  and  Order  also  applied  the  two-  year
 ownership  report  filing  requirement  to  noncommercial  educational  broadcasters  and  eliminated
 the  requirement  that  a  noncommercial  educational  licensee  file  an  ownership  report  within  30
 days  after  any  change  in  previously  reported  information.  174  Both  commercial  and
 noncommercial  educational  licensees,  however,  must  file  a  new  ownership  report  within  30  days
 of  consummating  authorized  license  assignments  or  transfers  of  control  of  licensee  entities.
 136.  In  addition  to  streamlining  the  application  procedures,  the  Commission  adopted
 new  certification-  based  application  procedures  and  mandatory  electronic  filing  rules  for  fifteen
 key  Mass  Media  Bureau  broadcast  application  and  reporting  forms.  These  changes  are  designed
 to  make  filings  easier,  faster,  and  more  resistant  to  error.  For  example,  electronic  filing
 automatically  notifies  applicants  of  any  critical  errors  in  their  applications,  and  allows  the  public
 to  view  the  applications  on  the  Commissions  web  site.  When  fully  implemented,  these  reforms
 will  significantly  reduce  burdens  on  applicants  and  Commission  staff,  facilitate  application
 processing,  and  result  in  more  accurate  databases  and  easier  public  access  to  information.
 Electronic  submission  furthers  the  Commissions  long-  standing  commitment  to  using  new
 information  technologies  for  enhancing  service  to  licensees  and  to  the  public.  Electronic  filing  of
 certain  of  these  forms  became  mandatory  on  November  1,  2000.
 (6)  1999  Technical  Streamlining  Report  and  Order
 137.  On  June  15,  1998,  the  Commission  released  a  notice  of  proposed  rulemaking
 seeking  comment  on  streamlining  AM  and  FM,  noncommercial  educational  (NCE)  FM,  and  FM
 translator  technical  rules.  175  The  Commission  addressed  many  of  the  proposals  from  the
 Technical  Streamlining  Notice  in  the  1999  Technical  Streamlining  First  Report  and  Order.  176  The
 1999  Technical  Streamlining  First  Report  and  Order  in  this  proceeding  extended  first-  come,
 first-  served  processing  to  applications  for  minor  changes  to  AM,  NCE  FM,  and  FM  translator
 facilities.  177  The  1999  Technical  Streamlining  First  Report  and  Order  also  expanded  the
 definition  of  minor  change  in  these  services  to  conform  more  closely  to  the  commercial  FM
 definition.  The  expanded  minor  change  application  definition  permits  expeditious  processing
 of  most  facility  modifications  under  our  efficient  and  proven  first-  come,  first-  served  rules.
 173  While  copies  of  contour  overlap  maps  are  no  longer  required  as  an  exhibit  to  the  application,  the  maps
 must  still  be  filed  for  the  purpose  of  making  the  maps  available  to  the  public  in  the  Commissions  public
 reference  room.
 174  47  C.  F.  R.    73.  3615.
 175  In  the  Matter  of  1998  Biennial  Regulatory  Review    Streamlining  of  Radio  Technical  Rules  in  Parts  73
 and  74  of  the  Commissions  Rules,  Notice  of  Proposed  Rulemaking  and  Order,  13  FCC  Rcd  14849  (1998)
 (Technical  Streamlining  Notice).
 176  In  the  Matter  of  1998  Biennial  Regulatory  Review    Streamlining  of  Radio  Technical  Rules  in  Parts  73
 and  74  of  the  Commissions  Rules,  First  Report  and  Order,  14  FCC  Rcd  5272  (1999)  (1999  Technical
 Streamlining  First  Report  and  Order).  The  proposals  upon  which  the  Commission  has  not  yet  acted  pertain
 to  whether  the  Commission  should  allow  negotiated  interference  agreements  between  or  among  FM
 broadcast  stations  to  accept  new  or  increased  interference  in  connection  with  substantial  facilities
 improvements.  Technical  Streamlining  Notice,  13  FCC  Rcd  at  14857-  63,  paras.  17-  27.
 177  47  C.  F.  R.    73.3571,  73.  3573,  and  74.1233.
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 Finally,  the  1999  Technical  Streamlining  First  Report  and  Order  amended  the  Commissions
 contingent  application  rule,  which  had  prohibited  the  filing  of  coordinated  facility  modifications.
 The  revised  rule  permits  the  simultaneous  filing  of  up  to  four  related  minor  change  FM  station
 construction  permit  applications.  178
 138.  In  October  2000  the  Commission  adopted  the  Second  Report  and  Order  in  the
 radio  technical  streamlining  proceeding.  179  The  Order  amends  commercial  FM  distance
 separation  restrictions  to  provide  all  stations  with  minimum  relief  of  six  kilometers  from  basic
 spacing  requirements  and  provides  special  spacing  relief  for  all  commercial  stations  in  Puerto
 Rico  and  the  Virgin  Islands.  It  also  gives  additional  facility  siting  flexibility  to  noncommercial
 educational  FM  stations  by  modifying  the  second-  adjacent  channel  interference  standard  to  more
 closely  conform  to  the  less  restrictive  commercial  FM  standard.  The  Order  establishes,  on  a
 going  forward  basis,  an  NCE  FM  principal  community  coverage  standard.  Finally,  the  Order
 creates  a  new  station  class,  Class  C-  zero,  for  stations  operating  at  100  kilowatts  effective  radiated
 power  with  antenna  heights  of  between  300  and  450  meters  above  average  terrain.  The
 Commission  also  adopted  a  procedure  for  downgrading  current  Class  C  stations  to  the  new  class
 where  there  is  a  competing  demand  for  the  radio  spectrum  and  the  blocking  Class  C  station
 chooses  not  to  modify  its  facilities  to  the  new  Class  C  minimum  antenna  height.
 2.  New  Initiatives
 139.  The  Commission  has  significantly  reduced  the  burdens  of  its  mass  media  rules
 and  policies  over  the  past  few  years.  Bureau  staff  is  in  the  process  of  reviewing  petitions  for
 reconsideration  of  the  rules  the  Commission  adopted  in  the  1999  Local  and  National  Television
 Reports  and  Orders  as  well  as  the  1999  Attribution  Report  and  Order.  Moreover,  the  Bureau  is
 initiating  several  rulemaking  proceedings,  as  described  above,  that  are  based  on  the
 Commissions  findings  in  its  1998  Biennial  Regulatory  Review  Report  on  the  mass  media
 ownership  rules.
 VI.  SUMMARY  OF  REVIEWS  BY  OTHER  BUREAUS  AND  OFFICES
 A.  Cable  Services  Bureau
 140.  The  Cable  Services  Bureau  advises  the  Commission  in  matters  pertaining  to  the
 regulation  and  development  of  cable  television  and  other  multichannel  video  programming
 services.  The  Bureau  administers  rules  and  policies  regarding  cable  television  service  and
 systems,  including,  for  example,  ownership  of  cable  systems;  promotion  of  competition;  pole
 attachment  issues;  the  preemption  of  restrictions  on  devices  designed  for  over-  the-  air  television
 broadcast  signals,  and  the  accessibility  of  video  programming  to  persons  with  disabilities.
 141.  Section  11  and  section  202(  h)  of  the  1996  Act  do  not  specifically  refer  to  cable
 operators  and  cable  regulation.  The  Bureau  does  administer  section  224  of  the  Communications
 Act  and  the  Commissions  rules  for  pole  attachments  (Part  I,  subpart  J),  which  provide  cable
 operators  and  telecommunications  providers  with  nondiscriminatory  access  to  a  utilitys  poles,
 178  47  C.  F.  R.    73.  3517.  Two  applications  are  related  if  the  grant  of  one  is  necessary  to  permit  the  grant
 of  the  second  application.  Thus,  the  lead  application  in  a  group  typically  will  not  be  contingent  on  any
 other  application,  but  nevertheless  will  be  counted  as  a  related  application.  1999  Technical  Streamlining
 Report  and  Order,  14  FCC  Rcd  at  5282  n.  43.
 179  Second  Report  and  Order  on  Technical  Streamlining,  FCC  00-  368,  (rel.  Nov.  1,  2000).
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 ducts,  conduits,  and  right  of  ways  (see  section  XV  below).  The  Bureaus  review  of  the  rules  it
 administers,  however,  is  consistent  with  the  general  spirit  and  purpose  of  section  11,  which
 directs  the  Commission  to  review  and  repeal  or  modify  regulations  applicable  to  providers  of
 telecommunications  services  that  are  determined  to  be  no  longer  necessary  in  the  public  interest.
 1.  Recent  and  Ongoing  Activities
 a)  Effective  Competition  Orders
 142.  Under  the  1992  Cable  Act  and  the  Commissions  implementing  rules,  only  cable
 systems  that  are  not  subject  to  effective  competition  may  be  regulated  under  the  cable  rate
 rules.  180  Cable  systems  that  are  subject  to  effective  competition  are  not  rate  regulated.  A  cable
 operator  that  believes  that  it  should  not  be  subjected  to  the  cable  rate  rules  must  file  a  petition
 with  the  Commission  showing  that  it  is  subject  to  effective  competition  in  its  franchise  area.  181
 Since  1992,  the  Cable  Services  Bureau  has  addressed  over  200  effective  competition  petitions.
 b)  Satellite  Home  Viewer  Improvement  Act
 143.  Recent  amendments  to  the  Satellite  Home  Viewer  Improvement  Act  (SHVIA)
 give  consumers  more  choices  in  how  they  receive  broadcast  stations  at  home.  182  Most
 significantly,  the  amendments  give  satellite  carriers  the  right  to  retransmit  local  stations  back  into
 local  markets.  The  legislation  directs  the  Commission  to  conduct  numerous  rulemakings  and
 inquiries  within  one  year,  including  retransmission  consent  and  must  carry  requirements  for
 satellite  carriers;  network  non-  duplication;  sports  blackout  and  syndicated  exclusivity;
 improvement  of  predictive  models;  enforcement  procedures;  designation  of  signal  testers  and  an
 inquiry  into  signal  standards.  183  The  Commission  has  already  issued  five  Orders,  four  Notices  of
 Proposed  Rulemaking  and  a  Notice  of  Inquiry  addressing  SHVIA  requirements.  The  Cable
 Services  Bureau  continues  work  on  additional  SHVIA  requirements.
 c)  Horizontal  Ownership
 144.  Section  613  (f)(  1)(  A)  of  the  Communications  Act  requires  the  Commission  to
 prescribe  rules  and  regulations  establishing  reasonable  limits  on  the  number  of  cable  subscribers
 a  person  is  authorized  to  reach  through  cable  systems  owned  by  such  a  person,  or  in  which  such  a
 person  has  an  attributable  interest.  184  The  rules  adopted  by  the  Commission  in  response  to
 613(  f)(  1)(  A)  are  known  as  the  horizontal  ownership  rules.  185
 145.  The  Third  Report  and  Order  adopted  by  the  Commission  in  October  1999,  inter
 alia,  permits  cable  operators  to  have  no  more  than  a  30  percent  share  of  nationwide  multichannel
 180  47  U.  S.  C.    623(  a)(  2);  47  C.  F.  R.    76.  905  (a).
 181  47  C.  F.  R.    76.  907.
 182  The  Satellite  Home  Improvement  Act  of  1999  (SHVIA),  Title  I  of  the  Intellectual  Property  and
 Communications  Omnibus  Reform  Act  of  1999  (IPACORA),  Pub.  Law  No.  106-  113,  113  Stat.  1501.
 183  Id.
 184  47  U.  S.  C.  533.
 185  47  C.  F.  R    76.  503.
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 video  programming  distributor  (MVPD)  subscribers.  The  United  States  Court  of  Appeals  for  the
 District  of  Columbia  Circuit  recently  upheld  the  constitutionality  of  section  613(  f)(  1)(  A).  186  A
 petition  for  reconsideration  of  the  Third  Report  and  Order  was  filed  on  January  3,  2000.  A
 decision  on  the  petition  is  pending.  In  addition,  several  cable  operators  filed  petitions  for  review
 of  the  Third  Report  and  Order  with  the  United  States  Court  of  Appeals  for  the  District  of
 Columbia  Circuit.  These  petitions  are  pending.
 d)  Mandatory  Carriage  of  Digital  Television  Signals
 146.  Local  television  stations  receive  access  to  a  cable  operators  cable  system  either
 through  request,  as  with  must  carry,  or  through  negotiation,  as  with  retransmission  consent.
 Sections  614  and  615  of  the  Communications  Act  contain  the  must  carry  requirements  for
 commercial  and  noncommercial  television  stations,  respectively.  Commercial  television  stations
 may  invoke  mandatory  carriage  rights  within  their  local  market  areas.  Noncommercial  television
 stations  are  considered  qualified,  and  may  invoke  such  rights  if  they  (1)  are  licensed  to  a
 community  within  fifty  miles  of  the  principal  headend  of  the  cable  system;  or  (2)  place  a  Grade  B
 contour  over  the  cable  operators  principal  headend.  Low  power  television  stations  have  rights  to
 invoke  mandatory  carriage  if  they  meet  six  qualifying  statutory  criteria;  however,  a  cable  operator
 cannot  carry  a  low  power  station  in  lieu  of  a  full  power  station.
 147.  The  Communications  Act  of  1934,  as  amended  by  the  1992  Cable  Act,  instructs
 the  Commission  to  commence  a  proceeding  to  determine  whether  changes  in  the  mandatory
 carriage  rules  are  necessary  to  accommodate  advances  in  television  broadcast  signal  standards,
 such  as  the  advent  of  digital  broadcast  television  signals  on  cable  television  systems.  187  In  1995
 and  1996,  the  Commission  received  comments  on  digital  television  signal  carriages  issues  from
 broadcasters,  cable  operators,  cable  programmers,  equipment  manufacturers,  public  interest
 groups  and  other  interested  parties  in  response  to  questions  posed  in  the  Fourth  Further  Notice  of
 Proposed  Rulemaking  in  MM  Docket  87-  268.  To  refresh  the  record  and  reflect  recent  changes  in
 technology,  policy  and  law,  the  Commission  released  a  new  Notice  of  Proposed  Rulemaking  in
 July  1998  asking  for  new  and  updated  information  and  arguments.  188
 e)  Navigation  Devices
 148.  Navigation  devices  are  television  set-  top  boxes,  converter  boxes,  interactive
 communications  equipment,  and  other  equipment  that  a  consumer  uses  to  access  video
 programming.  The  devices  are  most  commonly  recognized  as  the  boxes  on  top  of  many
 televisions  that  are  used  to  access  cable  television.  Section  629  of  the  1996  Act  requires  the
 Commission  to  assure  that  navigation  devices  used  in  conjunction  with  multi  channel
 programming  distribution  are  commercially  available  from  sources  other  than  cable  operators,
 e.  g.,  made  available  to  consumers  through  retail  stores.  The  Commissions  rules  relating  to
 navigation  devices  are  located  at  47  C.  F.  R.    76.1200-  1210.  In  May  1999,  the  Commission
 adopted  an  Order  on  Reconsideration  that  exempted,  as  of  July  1,  2000,  equipment  that  performs
 analog-  only  conditional  access  from  the  requirement  that  multi-  channel  video  programming
 186  Time  Warner  Entertainment  Co.,  L.  P.  v.  United  States  of  America,  211  F.  3d  1313  (D.  C.  Cir.  2000).
 187  47  U.  S.  C.    534  (b)(  4)(  B).
 188  Carriage  of  the  Transmissions  of  Digital  Television  Broadcast  Stations,  Memorandum  Opinion  and
 Order  and  Notice  of  Proposed  Rulemaking,  13  FCC  Rcd  15092  (1998).
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 distributors  separate  the  security  function  from  non-  security  functions.  189  The  Commission  did
 not  think  it  worthwhile  for  the  industry  to  construct  a  separate  analog  security  module  that  will
 soon  be  obsolete  because  of  the  industrys  transition  from  analog  to  digital  programming.  The
 rules  adopted  were  upheld  on  appeal  by  the  United  States  Court  of  Appeals  for  the  District  of
 Columbia  Circuit.  190
 f)  Inside  Wiring
 149.  In  October  1997,  the  Commission  adopted  a  Report  and  Order  and  Second
 Further  Notice  of  Proposed  Rulemaking  that  amended  its  cable  inside  wiring  rules  to  enhance
 competition  in  the  video  distribution  marketplace.  191
 150.  The  Report  and  Order  was  intended  to  provide  opportunities  for  new  entrants
 seeking  to  compete  in  distributing  video  programming,  particularly  multi-  channel  video
 programming  distributors  seeking  to  provide  service  in  multi-  dwelling  unit  buildings  (MDUs).
 Specifically,  the  Commissions  rules  establish  procedures  for  the  disposition  of  cable  home  run
 wiring  where  the  incumbent  MVPD  no  longer  has  a  legally  enforceable  right  to  remain  in  the
 building.  192  The  Second  Further  Notice  seeks  comment  on  the  benefits  or  disadvantages  of
 exclusive  contracts  in  promoting  a  competitive  environment,  and  whether  there  are  circumstances
 where  the  Commission  should  adopt  restrictions  on  exclusive  contracts  in  order  to  further
 promote  competition  in  the  MDU  marketplace.  193
 2.  New  Initiatives
 151.  The  Cable  Services  Bureaus  review  of  the  existing  rules  and  procedures
 suggests  a  number  of  areas  that  should  benefit  from  further  review.  First,  the  Bureau  has
 suggested  and  the  Commission  has  adopted  a  proposal  to  revise  the  rules  governing  the  filing  of
 applications  and  forms  to  facilitate  electronic  filing.  The  Cable  Operations  and  Licensing  System
 (COALS),  a  new  electronic  filing  system,  should  significantly  enhance  availability  of  cable
 system  information  to  the  cable  industry  and  the  public,  and  reduce  the  cost  of  filing  applications
 and  obtaining  information.  194
 152.  The  Cable  Services  Bureau  also  recommends  that  the  Commission  conduct  a
 general  review  of  the  rules  to  eliminate  specific  sections  that  are  no  longer  relevant  or  correct  in
 light  of  judicial  decisions  or  the  elimination  of  certain  statutory  requirements.  Included  in  this
 category  of  changes  would  be:  (1)  the  elimination  of  those  portions  of  the  rate  rules  pertaining  to
 189  Commercial  Availability  of  Competitive  Navigation  Devices,  Order  on  Reconsideration,  14  FCC  Rcd
 7596  (1999).
 190  General  Instrument  Corp.  v.  FCC,  213  F.  3d  724  (D.  C.  Cir.,  June  6,  2000).
 191  Telecommunications  Services  Inside  Wiring:  Customer  Premises  Equipment,  and  Implementation  and
 Competition  Act  of  1992:  Cable  Home  Wiring,  Report  and  Order  and  Second  Notice  of  Proposed
 Rulemaking,  13  FCC  Rcd  3659  (1997).  The  Commission  is  currently  reviewing  the  petitions  for
 reconsideration  and  comments  filed  in  this  proceeding.
 192  13  FCC  Rcd  3680.
 193  13  FCC  Rcd  at  3778.
 194  Amendment  of  the  Commissions  Rules  for  Implementation  of  its  Cable  Operations  and  Licensing
 System,  CSB  Docket  00-  78,  Notice  of  Proposed  Rule  Making,  FCC  00-  165,  May  23,  2000.
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 cable  programming  services  tier  (non-  basic)  rates  which,  pursuant  to  section  623(  c)(  4),  sunset  on
 April  1,  1999;  (2)  elimination  of  the  rules  based  on  section  505  of  the  1996  Act,  including  section
 76.227,  relating  to  incompletely  scrambled  sexually-  oriented  programming  that  were  found  to  be
 unconstitutional  by  the  recent  Supreme  Court  decision  in  United  States  v.  Playboy  Entertainment
 Group,  Inc.,  No.  96-  1682  (decided  May  22,  2000);  195  and  (3)  deletion  of  section  76.209,  applying
 the  fairness  doctrine  to  cablecast  programming.
 153.  As  part  of  the  Biennial  Regulatory  Review  Process,  the  Cable  Services  Bureau
 met  with  several  attorneys  who  work  with  cable  issues  and  other  industry  representatives.  In
 these  meetings,  the  Bureau  staff  sought  to  obtain  an  outside  perspective  as  to  how  the  cable  rules
 could  be  modified  to  serve  the  public  better  as  competition  in  the  industry  develops.  As  a  result
 of  these  discussions,  the  bureau  will  be  considering  other  changes  to  the  rules,  including  changes
 in  the  remaining  rate  rules  on  the  basic  service  tier  to  ensure  that  the  process  continues  to  function
 properly  and  efficiently  after  elimination  of  cable  programming  service  tier  regulation.
 B.  Consumer  Information  Bureau
 154.  The  Consumer  Information  Bureau  (CIB),  which  was  created  in  November  1999
 along  with  the  new  Enforcement  Bureau,  was  established  to  provide  easy  access  to  information
 about  communications  services,  as  well  as  to  serve  as  a  consumer  and  disability  rights  voice  at
 the  Commission.  CIBs  creation  consolidated  consumer  information  and  complaint  processing
 responsibilities  from  multiple  bureaus,  thus  eliminating  duplication  of  services  and  providing
 consumers  with  a  single  point  of  contact  with  the  FCC.
 155.  A  key  priority  of  CIB  is  to  help  ensure  that  information  is  readily  available,
 because  competitive  markets  work  best  when  consumers  have  the  information  required  to  make
 informed  choices.  CIB  develops,  recommends,  coordinates  and  administers  the  Commissions
 consumer  information  program  to  enhance  the  publics  understanding  of  the  Commissions
 policies,  goals,  objectives,  and  regulatory  requirements.  This  serves  to  facilitate  public
 participation  in  the  Commissions  proceedings.
 156.  CIBs  Reference  Information  Center  (RIC)  is  the  official  Commission  custodian
 for  designated  records,  and  handles  the  intake  processing,  organization  and  maintenance,
 reference  services,  retirement,  and  retrieval  of  these  records.  It  provides  a  convenient  one-  stop
 shop  for  its  clients,  including  industry,  attorneys,  academic  researchers  and  consumers,  to
 research  and  obtain  relevant  and  available  information.  RIC  is  also  responsible  for  managing  and
 maintaining  the  Electronic  Comment  Filing  System.  This  system,  which  allows  comments  to  be
 filed  with  the  Commission  remotely,  facilitates  public  participation  in  Commission  proceedings.
 157.  CIB  has  two  consumer  centers,  one  in  Gettysburg,  Pennsylvania,  the  other
 located  at  the  FCCs  Portals  headquarters.  These  centers,  which  comprise  the  Consumer
 Information  Network  Division  (CIND),  respond  to  over  100,000  consumer  inquiries  each  year,
 and  process  and  serve  informal  complaints.  CIB  also  enforces  the  Commissions  new  telephone
 slamming  rules.  196
 195  The  Supreme  Court  concluded  that  section  505  of  the  1996  Act,  which  provides  statutory  authority  for
 47  C.  F.  R.    76.  227,  violates  the  First  Amendment.
 196  See  http://  www.  fcc.  gov/  slamming.
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 158.  CIBs  Strategic  Information  Office  (SIO)  is  charged  with  collecting  and
 analyzing  information  received  in  the  bureau  from  incoming  consumer  complaints  and  inquiries,
 consumer  fora,  and  other  industry  sources.  This  allows  SIO  to  serve  as  an  early  warning  system
 to  the  Commission  about  consumer  trends.
 159.  Finally,  CIB  also  contains  the  Disability  Rights  Office  (DRO).  DRO  conducts
 rulemakings  on  disability  related  issues  and  advises  other  bureaus  and  offices  on  rulemakings  and
 other  proceedings  pertaining  to  disability  access.  It  also  helps  consumers  resolve  disability
 complaints,  and  works  with  industry  and  other  entities  to  facilitate  the  provision  of  accessible
 services  and  equipment.
 1.  Recent  and  Ongoing  Activities
 160.  CIBs  Consumer  Education  Office  (CEO)  furthers  the  Bureaus  mission  to
 educate  the  public  about  important  Commission  regulatory  programs,  through  consumer  and
 industry  fora  and  workshops.  CEO  has  held  three  fora  to  facilitate  discussions  between  industry
 groups,  state  agencies,  and  consumer  groups.  These  were  on  (1)  billing  practices;  (2)  customer
 service;  and  (3)  telecommunications  issues  affecting  Hispanic  people.  CEO  has  also  published  a
 guidebook  on  how  consumers  can  participate  in  Commission  proceedings,  and  consumer
 education  pamphlets  on  selecting  the  right  telephone  service  plan,  wireless  services,  and  how  to
 understand  long-  distance  and  dial-  around  advertising.  197
 161.  In  conjunction  with  other  Commission  bureaus  and  offices,  CEO  continues  to
 develop  consumer  alerts,  education  campaigns  and  public  service  announcements  to  give
 consumers  information  about  their  rights  and  information  so  that  they  can  protect  themselves
 against  unscrupulous  practices
 162.  CIB  staff  is  working  on  the  Commissions  tribal  initiatives  to  address  the
 problem  of  limited  availability  of  basic  and  advanced  services  in  many  tribal  regions,  and  to
 ensure  that  basic  and  advanced  telecommunications  services  are  made  available  in  those
 geographical  areas.  CIB  will  continue  to  work  on  other  outreach  initiatives  to  underserved
 communities.
 163.  These  non-  regulatory  initiatives  will  educate  consumers  so  that  they  can  make
 better,  more  informed  choices  about  telecommunications  services,  and  more  fully  enjoy  the  fruits
 of  competitive  markets.  CIB  is  also  initiating  a  federal  advisory  committee  on  consumer  and
 disability  issues.  This  committee  will  be  designed  to  solicit  ongoing  input  on  a  variety  of  subject
 matters  including  lifeline  services,  slamming,  digital  television,  captioning  and  relay  services.
 2.  New  Initiatives
 164.  In  the  September  Staff  Report,  the  staff  recommended  that  the  Commission
 consider  reviewing  its  informal  complaint  rules,  47  C.  F.  R.    1.  716-  718.  The  rules  do  not
 specify  the  documentation  consumers  must  file  with  the  Commission  to  complete  their
 complaints.  This  leads  to  repetitive  filings  from  consumers,  particularly  if  the  primary  filing
 lacks  sufficient  information  to  resolve  the  informal  complaint.  Commenters  agree  that  the  rules
 should  specify  the  type  of  documentation  that  a  consumer  must  file  with  the  complaint.  198  The
 197  See  http://  www.  fcc.  gov/  marketsense.  This  pamphlet  is  also  available  by  contacting  the  FCC.
 198  WorldCom  Comments  at  2;  Alloy  Comments  at  10.
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 rules  also  do  not  prescribe  a  specific  time  frame  for  carriers  to  respond  to  an  informal  complaint.
 If  consumers  have  not  received  a  response  to  an  informal  complaint  in  a  specific  period  of  time,
 consumers  may  file  duplicative  formal  complaints.  Such  complaints  are  costly  to  consumers  and
 carriers,  and  may  require  unnecessary  expenditure  of  Commission  resources.  WorldCom  states
 that  the  Commission  should  retain  its  flexibility  in  determining  a  timeframe  within  which  a
 carrier  must  respond  to  a  complaint  rather  than  set  a  specific  time  period.  199  Staff  believes  that  a
 review  of  the  informal  complaint  rules  will  best  address  these  issues.  Finally,  these  rules
 traditionally  have  applied  to  informal  wireline  complaints,  while  other  complaints  have  been
 handled  in  a  less  structured  manner.  This  has  led  to  a  lack  of  predictability  for  consumers  in
 filing  complaints,  and  industry  in  receiving  complaints.  Staff  also  recommends  reviewing  these
 rules,  to  determine  whether  their  scope  should  be  expanded  to  cover  all  informal  complaints.
 165.  DRO  advises  other  bureaus  and  offices  on  compliance  with  section  255  of  the
 1996  Act,  which  mandates  access  to  telecommunications  services  for  Americans  with  disabilities,
 as  well  as  other  substantive  proceedings  addressing  disability  issues.  For  example,  DRO  worked
 closely  with  the  Common  Carrier  Bureau  on  drafting  new  rules  requiring  access  to
 telecommunications  relay  services  (TRS)  and  requiring  that  improvements  be  made  to  the
 provision  of  these  services  themselves.  These  new  rules  require  that  speech-  to-  speech  relay
 service  be  provided,  and  also  encourage  competition  in  the  video  relay  market  by  making  that
 service  eligible  for  reimbursement  from  the  TRS  fund.  200  DRO  also  worked  closely  with  the
 Mass  Media  Bureau  on  drafting  rules  requiring  video  description  and  with  the  Cable  Services
 Bureau  on  rules  requiring  visual  access  to  televised  emergency  programming  for  deaf  and  hard  of
 hearing  people.  DRO  intends  to  propose  additional  rulemakings  in  the  future  on  appropriate
 issues  in  order  to  fulfill  its  mandate.  Staff  also  intends  to  continue  working  with  the  Wireless
 Telecommunications  Bureau  on  the  Commissions  E-  911  rules  to  ensure  that  these  public  safety
 points  are  accessible  to  Americans  with  disabilities.
 166.  DRO  also  conducts  public  outreach  and  education  on  disability  issues.  It  works
 closely  with  the  public  to  ensure  that  individuals  with  disabilities  are  aware  of  their  rights,  and
 with  industry  to  ensure  that  service  providers  are  complying  with  the  law  and  providing
 appropriate  telecommunications  services.
 167.  DROs  education  efforts  included  a  TRS  forum  in  March  2000,  201  which
 presented  an  opportunity  for  consumers  and  industry  representatives  to  exchange  ideas  with  the
 Commission  and  state  relay  administrators  about  the  provision  of  TRS,  common  concerns  of  TRS
 administrators,  consumers,  and  providers,  and  variations  among  states  approaches  to  TRS.  The
 forum  also  discussed  the  extent  to  which  new  technologies,  services,  and  features  should  be  made
 available  to  TRS  users.
 168.  DRO  also  provides  materials  in  accessible  alternative  formats,  so  individuals
 with  disabilities  have  access  to  Commission  proceedings.  DRO  has  created  an  e-  mail  mailing  list
 199  WorldCom  Comments  at  2  -  3.  WorldCom  also  asks  that  the  Commission  work  to  increase  the  speed
 at  which  it  notifies  carriers  that  an  informal  complaint  has  been  filed.  Id.
 200  Telecommunications  Relay  Services  and  Speech-  to-  Speech  Services  for  Individuals  with  Hearing  and
 Speech  Disabilities,  Report  and  Order,  15  FCC  Rcd  5140  (2000).
 201  See  FCC  to  Convene  a  Public  Forum  on  Telecommunications  Relay  Services,  Public  Notice,  Feb.  18,
 2000,  at  http://  www.  fcc.  gov/  Bureaus/  Consumer_  Information/  Public_  Notices/  2000/  pnci0018.  html.
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 to  keep  consumers  apprised  of  relevant  happenings  concerning  disability  access  at  the
 Commission.
 C.  Enforcement  Bureau
 169.  The  Commission  established  the  Enforcement  Bureau  in  November  1999.  The
 new  Enforcement  Bureau  has  responsibility  for  ensuring  that  regulated  entities  comply  with  the
 Communications  Act  and  the  Commissions  implementing  rules.  The  consolidation  of  most
 enforcement  functions  into  one  bureau  is  consistent  with  the  regulatory  reform  goals  of  section
 11,  because  it  makes  it  easier  for  competitors  and  consumers  to  get  prompt  and  clear  resolution  of
 disputes.  Consolidating  enforcement  activity  into  a  single  bureau  promotes  consistent  and
 predictable  enforcement  policies.  It  also  maximizes  the  efficiency  of  the  Commissions
 enforcement  program  by  allowing  the  agency  to  establish  enforcement  priorities  and  make  the
 best  use  of  limited  Commission  resources.
 170.  Clear,  consistent  and  swift  enforcement  action  is  increasingly  important  as
 competition  develops  and  deregulation  occurs.  The  statutory  and  rule  provisions  that  remain  will
 be  those  that  are  necessary  even  in  a  competitive  environment,  such  as  those  that  provide  a
 structure  for  competition  to  flourish,  help  users  of  communications  services  benefit  from
 competitive  communications  services,  and  ensure  that  spectrum  is  used  in  a  manner  that  prevents
 harmful  interference  and  promotes  public  safety.  In  particular,  the  Enforcement  Bureau  is  a
 critical  part  of  the  agencys  plan  to  preserve  and  promote  the  competitive  gains  that  have  been
 made  under  the  1996  Act  and  the  Commissions  implementing  regulations.  To  ensure  fair
 competition,  all  competitors  must  play  by  the  rules  and  follow  the  law.  Companies  may  not  gain
 a  competitive  advantage  through  unfair  market  practices.  With  the  enhanced  focus  on
 enforcement,  companies  know  that,  if  they  violate  communications  law  or  the  Commissions
 rules,  there  will  be  significant  consequences.  In  this  way,  the  competitive  marketplace  envisioned
 by  Congress  will  work,  and  the  benefits  of  that  competition  will  flow  to  consumers.
 1.  Recent  and  Ongoing  Activities
 171.  Although  the  Enforcement  Bureau  generally  does  not  engage  in  rulemaking
 activity  or  have  responsibility  for  maintaining  or  revising  substantive  Commission  rules,  the
 agency  has  taken  steps  during  the  past  few  years  in  the  area  of  enforcement  to  further  the
 deregulatory  goals  of  the  1996  Act.  For  example,  the  Commission  revamped  and  streamlined  its
 procedural  rules  governing  the  resolution  of  formal  complaints  against  common  carriers  filed
 pursuant  to  section  208  of  the  Communications  Act.  These  changes  were  designed  to  resolve
 disputes  more  quickly  and  efficiently  than  under  prior  rules.
 172.  Most  significantly,  under  the  new  rules  Enforcement  Bureau  staff  has  stepped  up
 its  efforts  to  mediate  disputes  between  the  parties  both  before  and  after  a  formal  complaint  is  filed
 at  the  Commission.  These  mediation  efforts  often  result  in  quick  and  efficient  resolution  of
 disputes.  Business  solutions  achieved  by  the  parties  through  Commission-  assisted  mediation
 avoid  the  expense  and  delay  that  can  accompany  formal  litigation  before  the  agency.
 173.  The  revised  rules  also  require  that  a  complaining  party  provide  all  factual  support
 for  its  case  in  its  initial  pleadings.  This  minimizes  the  need  for  time-  consuming  and  resource-intensive
 discovery.  In  addition,  the  rules  provide  for  the  staff  to  convene  an  initial  status
 conference  with  the  parties  shortly  after  the  defendant  files  its  answer.  This  presents  an
 opportunity  to  simplify  or  narrow  the  issues,  obtain  admissions  of  fact  or  stipulations  by  the
 parties,  settle  some  or  all  of  the  matters  in  controversy,  and  develop  a  schedule  for  the  remainder
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 of  the  case.  This  proactive  case  management  tool  helps  ensure  prompt  and  efficient  case
 resolution.
 174.  In  addition,  the  agency  created  an  Accelerated  Docket  procedure  in  1998  that
 results  in  quicker  formal  decisions  from  the  agency  for  certain  formal  complaints  selected  by
 Bureau  staff.  Once  a  particular  dispute  is  accepted  by  the  staff  onto  the  Accelerated  Docket,  the
 procedure  is  designed  to  lead  to  a  written  staff-  level  decision  within  60  days  from  the  filing  of  the
 complaint.  Because  this  procedure  may  lead  to  a  mini-  trial  with  testimony  by  witnesses  subject
 to  cross-  examination,  it  is  particularly  well  suited  for  cases  involving  difficult  factual  disputes.
 The  Accelerated  Docket  rules  require  staff-  supervised  pre-  filing  settlement  discussions  between
 the  parties.  Many  disputes  are  settled  without  the  need  to  file  a  formal  complaint.
 175.  The  efficiencies  generated  by  the  new  complaint  procedures,  combined  with  an
 increased  emphasis  on  mediation  and  aggressive  case  management,  have  resulted  in  a  significant
 reduction  in  the  number  of  pending  formal  common  carrier  complaints  at  the  Commission.  By
 reducing  the  backlog  of  pending  cases,  the  staff  can  respond  more  quickly  to  new  disputes  as  they
 are  filed  and  resolve  them  in  a  timely  fashion.  Quick  and  clear  resolution  of  disputes  is  critical  to
 enhancing  competition  and  enabling  consumers  to  obtain  the  benefits  of  that  competition.
 D.  Office  Of  Communications  Business  Opportunities
 176.  Section  257(  c)  of  the  Communications  Act  202  requires  the  Commission  to  report
 triennially  to  Congress  on  the  steps  taken  to  eliminate  market  entry  barriers  for  entrepreneurs  and
 other  small  businesses  in  telecommunications.  Section  257  was  enacted  as  part  of  the  1996  Act  203
 and  focuses  on  two  areas:  (1)  the  provision  and  ownership  of  telecommunications  services  and
 information  services  and  (2)  the  provision  of  parts  or  services  to  providers  of
 telecommunications  services  and  information  services.  204  Pursuant  to  the  requirements  of
 section  257,  the  Commission,  in  1996,  initiated  a  proceeding  205  to  identify  market  entry  barriers.
 In  1997  the  Commission  issued  a  report  (  1997  Report)  206  referencing  the  policy  objectives  set
 forth  in  section  257    favoring  [1]  diversity  of  media  voices,  [2]  vigorous  economic  competition,
 [3]  technological  advancement,  and  [4]  promotion  of  the  public  interest,  convenience,  and
 necessity  207    and  describing  a  variety  of  measures  taken  by  the  Commission  to  fulfill  those
 policies.
 1.  Recent  and  Ongoing  Activities
 177.  The  Commission  has  just  completed  its  second  report  under  section  257  (  2000
 Report).  The  2000  Report,  which  was  delivered  to  Congress  on  August  9,  2000,  reflects  the
 202  47  U.  S.  C.    257(  c).
 203  Telecommunications  Act  of  1996,  Pub.  Law  No.  104-  104,  110  Stat.  56  (1996).
 204  47  U.  S.  C.    257(  a).
 205  See  In  the  Matter  of  Section  257  Proceeding  to  Identify  and  Eliminate  Market  Entry  Barriers  for  Small
 Businesses,  Notice  of  Inquiry,  11  FCC  Rcd  6280  (1996).
 206  See  In  the  Matter  of  Section  257  Proceeding  to  Identify  and  Eliminate  Market  Entry  Barriers  for  Small
 Businesses,  Report,  12  FCC  Rcd  16802  (1997).
 207  47  U.  S.  C.    257(  b).
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 Commissions  continuing  compliance  with  the  four  policy  objectives  set  forth  supra.  The  report
 sets  forth  the  Commissions  Five-  Year  Strategic  Plan  and  the  role  of  that  plan  in  eliminating
 market  entry  barriers.  Following  the  discussion  of  the  strategic  plan,  the  bulk  of  the  2000  Report
 describes  regulatory  and  other  initiatives  undertaken  by  the  Commissions  bureaus  and  offices
 since  1997  to  remove  market  entry  barriers  and  other  impediments  confronting  small  businesses.
 The  report  also  analyzes  efforts  to  overcome  unique  obstacles  facing  minority-  owned  and
 women-  owned  small  businesses,  discusses  this  Biennial  Regulatory  Review,  addresses
 responsibilities  under  the  Regulatory  Flexibility  Act  (RFA)  and  the  Small  Business  Act,  208  and
 introduces  the  agencys  new  electronic  filing  systems.  Finally,  the  report  sets  forth  some
 proposed  legislative  initiatives.  The  2000  Report  is  available  to  the  public  on  the  Commissions
 website  at  http://  www.  fcc.  gov/  Bureaus/  OCBO/  fcc00279.html.  As  a  follow  up,  the  Commission
 held  a  public  forum  on  December  12,  2000,  during  which  five  studies  on  market  entry  barriers
 facing  small,  woman    and  minority    owned  businesses  were  released.  209
 178.  RFA  Analyses  and  Certifications  Since  enactment  of  the  Small  Business
 Regulatory  Enforcement  Fairness  Act  of  1996  (  SBREFA)  amendments  210  to  the  RFA,  the
 Commission  has  strived  to  make  its  RFA  analyses  more  extensive,  precise,  and  helpful,  and  to
 include  a  focus  on  plain  language.  For  instance,  because  the  agency  typically  writes  rulemakings
 tailored  to  the  various  and  numerous  communications  services  it  regulates  (e.  g.,  FM  radio,
 paging,  satellite  services),  the  agency  has  undertaken  numerous  RFA  analyses  describing  each
 service  and  the  extent  of  the  small  entity  participation  within  each.  This  has  required  frequent
 revision  of  the  service  sector  analyses,  as  new  services  are  created  and  additional  licenses  for
 traditional  services  are  issued.  In  this  way,  the  agency  attempts  to  ensure  full  and  accurate
 analyses  and  certifications  in  the  agencys  150  or  more  rulemaking  items  per  year.
 179.  Special  initiatives.  Special  initiatives  have  included  internal  training  sessions
 for  Commission  staff  on  the  RFA  process  and  a  special  RFA  presentation  conducted  by  the  Small
 Business  Administrations  (SBAs)  Office  of  Advocacy  to  train  Commission  staff.  The
 presentation  was  held  on  October  12,  1999,  and  featured  the  SBAs  Chief  Counsel  for  Advocacy,
 Jere  Glover.  On  October  30,  2000,  Mr.  Glover  and  selected  staff  returned  to  brief  high    level
 Commission  decision    makers.  Going  forward,  the  FCC  is  committed  to  working  with  SBA  and
 the  small  business  community  to  develop  regulatory  policies  and  procedures  that  are  no  more
 burdensome  than  necessary  to  achieve  the  intended  goals.  Another  initiative  was  the  resolution
 of  the  Commissions  treatment  of  small  incumbent  local  exchange  carriers  (LECs)  under  the
 RFA.  In  the  1997  Report,  the  Commission  stated  that  it  did  not  believe  that  small  incumbent
 LECs  qualified  as  small  businesses  under  the  RFA  because  such  businesses  appeared  to  be
 dominant  in  their  field  or  operation  due  to  their  current  control  of  bottleneck  facilities.  211
 Following  a  letter  on  the  subject  from  the  Office  of  Advocacy  and  a  meeting  between  agency
 208  Regulatory  Flexibility  Act  of  1980,  as  amended,  5  U.  S.  C.    601  et  seq.;  Small  Business  Act,  15  U.  S.  C.
   632.
 209  See  FCC  News  Release,  Office  of  the  Chairman,  Studies  Indicate  Need  to  Promote  Wireless  and
 Broadcast  License  Ownership  by  Small,  Women    and  Minority    Owned  Businesses  (Dec.  12,  2000).
 210  The  Small  Business  Regulatory  Enforcement  Fairness  Act  of  1996  (SBREFA)  was  signed  into  law
 as  Title  II  of  the  Contract  With  America  Advancement  Act  of  1996,  Pub.  Law  No.  104-  121,  110  Stat.  847
 (1996)  (CWAAA).
 211  1997  Report,  12  FCC  Rcd  at  16853  at  para  94.
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 staffs,  the  Commission  in  1999  decided  to  revise  the  language  of  its  decisions  to  make  clear  that
 small  incumbent  LECs  are  among  the  small  businesses  included  in  its  analyses  under  the  RFA.  212
 180.  Annual  Ten-  Year  Review  of  Rules,  5  U.  S.  C.    610.  During  1999,  the
 Commission  completed  and  published  an  updated,  comprehensive  listing  of  Commission  rule
 sections  subject  to  review  under  the  RFAs  annual  ten-  year  review  of  rules  provision,  5  U.  S.  C.
   610.  Section  610  requires  that  agencies  publish  in  the  Federal  Register  a  plan  for  the  periodic
 review  of  rules  that  have  a  significant  economic  impact  on  a  substantial  number  of  small  entities.
 The  recent  Commission  plan  provides  a  list  of  hundreds  of  rules  in  an  effort  to  assist  the  public  in
 identifying  rules  that  might  be  amended  or  rescinded  in  the  public  interest.  In  addition,  the
 Commission  has  explored  the  creation  of  a  computer  software  program  that,  utilizing  historical
 Code  of  Federal  Regulations  data,  would  track  rules  over  a  ten-  year  period  and  significantly
 reduce  the  administrative  work  currently  required  to  undertake  a  section  610  review.  If  the
 Commission  were  to  accomplish  this  goal,  it  could  share  the  computer  program  with  other  federal
 agencies  subject  to  section  610  obligations,  thereby  assisting  those  agencies  as  well.
 181.  Special  Small  Business  Size  Standards,  15  U.  S.  C.    632.  To  ensure  that  the
 agencys  initiatives  accurately  target  small  entity  participation  in  the  telecommunications
 industry,  the  Commission  works  closely  with  the  SBAs  Office  of  Size  Standards  to  create  new
 telecommunications  small  business  size  standards.  In  particular,  in  recent  years,  the  agency  has
 coordinated  extensively  with  both  the  SBA  Office  of  Size  Standards  and  the  Office  of  Advocacy
 to  create  informal  guidelines  to  keep  the  SBA  apprised  of  size  standard  initiatives.  The
 Commissions  policy  is  to  send  to  the  SBA  descriptions  and  analyses  of  proposed  size  standards
 prior  to  adoption  of  the  Notice  of  Proposed  Rulemaking  in  such  proceedings,  and  thereafter  to
 send  SBA  additional  comments  and  documentation  at  each  step  of  the  way.  At  the  end  of  the
 process,  the  Commission  sends  a  formal  request  for  approval  to  the  SBA  Administrator,  prior  to
 final  Commission  consideration  of  the  new  size  standard.  This  close  coordination  has  particularly
 helped  the  Commission  to  initiate  radio  spectrum  auctions,  where  the  goals  are  to  make  efficient
 use  of  the  spectrum,  give  all  Americans  access  to  telecommunications  services,  and  promote
 economic  growth.
 182.  Semi-  annual  Unified  Agenda,  5  U.  S.  C.    602.  The  Commission  participates
 in  the  semi-  annual  publication  of  the  Unified  Agenda  of  Federal  Regulatory  and  Deregulatory
 Actions,  which  provides  information,  in  a  uniform  format,  about  regulations  that  the  government
 is  considering  or  reviewing.  213  The  Unified  Agenda  has  appeared  in  the  Federal  Register  twice
 each  year  since  1983.  It  helps  agencies  comply  with  certain  obligations  under  the  RFA,  other
 statutes,  and  Executive  Orders.  As  a  part  of  the  October  2000  Unified  Agenda  compilation,  the
 Commission  listed  and  described  137  ongoing  rulemaking  proceedings.  These  descriptions  assist
 the  public  in  becoming  involved  in  the  regulatory  process,  and  assist  the  regulated  community  in
 complying  with  existing  regulation.
 212  Since  1996,  the  Commission  had  consistently  included  small  incumbent  LECs  in  its  analyses,  but  had
 stated  that  it  was  doing  so  out  of  an  abundance  of  caution  concerning  the  status  of  incumbent  LECs.
 213  See,  e.  g.,  65  Fed.  Reg.  73305,  74850  (Nov.  30,  2000).  The  Unified  Agenda  is  typically  published  in
 April  and  October  of  each  year.  The  Unified  Agenda  project  is  overseen  by  the  General  Services
 Administrations  Regulatory  Information  Service  Center.
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 E.  Office  of  Engineering  and  Technology
 183.  The  Office  of  Engineering  and  Technology  (OET),  in  addition  to  providing
 technical  and  engineering  support  to  all  of  the  bureaus  and  offices,  has  primary  responsibility  for
 the  management  and  allocation  of  non-  government  spectrum,  the  authorization  of
 telecommunications  equipment  and  RF  regulated  devices,  and  the  administration  of  the
 Experimental  Radio  Service.  OET  has  specific  responsibility  for  Parts  2,  5,  15  and  18  of  the
 Commissions  Rules.  214  All  of  the  rules  governing  these  responsibilities  were  reviewed  by  staff.
 OET  sought  recommendations  regarding  rules  and  procedures  that  should  be  modified  or
 eliminated.
 1.  Recent  and  Ongoing  Activities
 184.  OET  has  responsibility  for  authorizing  radio  frequency  equipment  and  devices
 and  has  endeavored  in  the  past  several  years  to  privatize  and  standardize  this  work.  In  addition  to
 instituting  electronic  filing  and  streamlining  the  experimental  radio  service  215  and  equipment
 authorization  rules  and  processes,  216  the  Commission  modified  the  equipment  authorization  rules
 to  allow  designated  private  parties  to  issue  equipment  authorizations.  217  The  Commission  has
 also  worked  diligently  to  implement  Mutual  Recognition  Agreements  (MRAs),  which  permit
 designated  parties  in  other  countries  to  issue  equipment  authorizations.  218
 185.  Through  various  spectrum  management  efforts,  the  Commission  has  endeavored
 to  facilitate  new,  innovative  and  competitive  services.  Specifically,  the  Commission  has
 facilitated  the  proliferation  of  unlicensed  services  through  the  allocation  of  spectrum  for  the
 Unlicensed  National  Information  Infrastructure  (UNII)  and  authorization  of  UNII  devices.  219
 These  devices  provide  short-  range,  high-  speed  wireless  digital  communications  that  support
 wireless  local  area  networks  and  facilitate  wireless  access  to  the  national  information
 infrastructure.  The  Commission  has  allocated  millimeter  wave  spectrum  for  unlicensed  devices
 214  47  C.  F.  R.  Parts  2,  5,  15  and  18.
 215  Amendment  of  Part  5  of  the  Commissions  Rules  to  Revise  the  Experimental  Radio  Service
 Regulations,  Report  and  Order,  FCC  98-  283,  13  FCC  Rcd  21391  (1998).
 216  Amendment  of  Parts  2,  15,  18,  and  Other  Parts  of  the  Commissions  Rules  to  Simplify  and  Streamline
 the  Equipment  Authorization  Process  for  Radio  Frequency  Equipment,  Report  and  Order,  FCC  98-  58,  13
 FCC  Rcd  11415  (1998).
 217  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
 Global  Mobile  Personal  Communications  by  Satellite  Arrangements,  Report  and  Order,  FCC  98-  338,  13
 FCC  Rcd  24687  (1998).
 218  See  FCC  Provides  Further  Information  on  the  Accreditation  Requirements  for  Telecommunication
 Certification  Bodies,  Public  Notice,  DA  99-  1640,  Aug.  17,  1999;  Office  of  Engineering  and  Technology
 and  Common  Carrier  Bureau  Announce  the  Designation  of  Telecommunication  Certification  Bodies
 (TCBs)  to  Approve  Radio  Frequency  and  Telephone  Terminal  Equipment,  Public  Notice,  DA  00-  1123,
 June  2,  2000.
 219  Amendment  of  Part  15  of  the  Commissions  Rules  to  Provide  for  Unlicensed  National  Information
 Infrastructure  Devices  at  5  GHz,  Report  and  Order,  FCC  97-  5,  12  FCC  Rcd  1576,  Memorandum  Opinion
 and  Order,  13  FCC  Rcd  14355  (1998).
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 that  provide  short-  range  communications.  220  These  unlicensed  devices  can  be  used  for  such
 diverse  services  as  vehicle  radar  systems  for  collision  avoidance,  computer-  to-  computer  wireless
 connections,  and  improved  access  to  libraries  and  information  databases.  The  Commission
 revised  its  rules  for  spread  spectrum  devices  to  facilitate  the  development  of  new  and  innovative
 technology  often  used  for  high  data  rate  wireless  applications.  221  The  Commission  recently
 proposed  the  possibility  of  permitting  operation  of  one  of  the  newest  innovative  wireless
 technologies,  ultra-  wideband  technology.  222  This  new  technology  can  be  used  for  a  variety  of
 applications  such  as  radar  imaging  of  objects  under  the  ground  or  behind  walls,  and  for  wireless
 communications  such  as  short-  range  high-  speed  data  transmissions  suitable  for  broadband  access
 to  the  Internet.
 186.  In  addition  to  unlicensed  spectrum,  the  Commission  allocated  spectrum  for
 Dedicated  Short  Range  communications  systems  operating  in  the  Intelligent  Transportation
 System  radio  service.  223  These  services  and  systems  can  provide  short  range  wireless  information
 links  between  vehicles  and  roadside  systems,  and  can  improve  traveler  safety,  decrease  traffic
 congestion,  facilitate  the  reduction  of  air  pollution  and  help  conserve  fossil  fuels.  The
 Commission  allocated  spectrum  for  a  new  wireless  medical  telemetry  service  and  established
 service  rules  that  provide  interference  protection  for  the  potentially  life  critical  equipment  used  in
 hospitals  and  health  care  facilities  that  transmit  patient  measurement  data  such  as  pulse  and
 respiration  rates  to  nearby  receivers.  224  The  Commission  allocated  spectrum  transferred  from
 Government  to  non-  Government  use  for  fixed  and  mobile  (base  station)  terrestrial  wireless
 service  and  proposed  spectrum  pairing  to  encourage  the  introduction  of  new  services,  such  as
 wireless  local  exchange  and  exchange  access  service  in  rural  areas.  225  The  Commission  issued  a
 Spectrum  Policy  Statement  articulating  the  principles  to  guide  the  Commissions  reallocation  of
 approximately  200  MHz  of  spectrum  over  the  next  three  to  five  years.  226  Consistent  with  the
 220  Amendment  of  Parts  2  and  15  of  the  Commissions  Rules  to  Permit  Use  of  Radio  Frequencies  Above
 40  GHz  for  New  Radio  Applications,  Third  Report  and  Order,  13  FCC  Rcd  15074  (1998),  on  recon,  Third
 Memorandum  Opinion  and  Order,  15  FCC  Rcd  10515  (2000).
 221  Amendment  of  Part  15  of  the  Commissions  Rules  Regarding  Spread  Spectrum  Devices,  Notice  of
 Proposed  Rulemaking,  14  FCC  Rcd  13046  (1999),  First  Report  and  Order,  FCC  00-  312  (rel.  Aug.  31,
 2000).
 222  Revision  of  Part  15  of  the  Commissions  Rules  Regarding  Ultra-  Wideband  Transmission  Systems,
 Notice  of  Inquiry,  13  FCC  Rcd  16376  (1998);  Notice  of  Proposed  Rulemaking,  FCC  00-  163  (rel.  May  15,
 2000).
 223  Amendment  of  Parts  2  and  90  of  the  Commissions  Rules  to  Allocate  the  5.  850-  5.925  GHz  Band  to  the
 Mobile  Service  for  Dedicated  Short  Range  Communications  of  Intelligent  Transportation  Services,  Report
 and  Order,  14  FCC  Rcd  18221  (1999).
 224  Amendment  of  Parts  2  and  95  of  the  Commissions  Rules  to  Create  a  Wireless  Medical  Telemetry
 Service,  Notice  of  Proposed  Rule  Making,  14  FCC  Rcd  16719  (1999),  Report  and  Order,  15  FCC  Rcd
 11206  (2000).
 225  Amendment  of  the  Commissions  Rules  with  Regard  to  the  3650-  3700  MHz  Government  Transfer
 Band,  (ET  Docket  No.  98-  237)  and  the  4.  9  GHz  Band  Transferred  from  Federal  Government  Use  (WT
 Docket  No.  00-  32),  First  Report  and  Order  and  Second  Notice  of  Proposed  Rulemaking,  FCC  00-  363  (rel.
 Oct.  24,  2000).
 226  Principles  for  Reallocation  of  Spectrum  to  Encourage  the  Development  of  Telecommunications
 Technologies  for  the  New  Millennium,  Spectrum  Policy  Statement,  14  FCC  Rcd  19868  (1999).
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 Spectrum  Policy  Statement,  the  Commission  recently  proposed  to  reallocate  27  megahertz
 transferred  from  Government  to  non-  Government  use  in  small  band  segments  for  use  to  enable
 the  development  of  new  technologies  and  services  and  provide  additional  spectrum  relief  for
 congested  private  land  mobile  frequencies.  227  In  addition,  Commission  staff  released  an  interim
 spectrum  study  report  on  the  feasibility  of  accommodating  third  generation  mobile  systems  in  the
 2500-  2690  MHz  band.  228
 187.  The  Commission  also  adopted  a  Secondary  Markets  Policy  Statement  setting
 forth  principles  for  promoting  the  efficient  use  of  radio  spectrum  by  encouraging  the  development
 of  secondary  markets  and  identifying  key  areas  the  Commission  will  focus  on  in  its  efforts  to
 foster  the  development  of  secondary  markets.  229  As  a  first  step  in  this  effort,  the  Commission  has
 proposed  rule  changes  to  enable  wider  use  of  spectrum  rights  leasing  by  licenses  of  wireless  radio
 spectrum.  230  The  Commission  also  proposed  rule  changes  to  facilitate  the  development  and
 deployment  of  software  defined  radios.  231  In  a  software  defined  radio,  functions  formerly
 performed  solely  in  hardware  are  performed  by  software.  This  innovation,  which  makes  a  radio
 programmable,  could  facilitate  interoperability  between  radio  services,  improve  efficient  use  of
 spectrum,  expand  opportunities  for  broadband  communication  access  for  all  persons,  increase
 competition  among  telecommunications  service  providers,  decrease  equipment  costs  for
 consumers,  and  increase  worldwide  market  opportunities  for  US  manufacturer  of  all  sizes.
 188.  The  Commission  anticipates  these  new  spectrum  allocations,  rules  and  principles,
 will  enable  a  broad  range  of  new  radio  communications  services,  such  as  expanded  wireless
 services,  advanced  mobile  services,  and  new  spectrum-  efficient  private  land  mobile  systems.  The
 development  of  a  broad  range  of  new  devices  and  communications  options  will  stimulate
 economic  development  and  the  growth  of  new  industries  and  promote  the  ability  of
 manufacturers,  including  small  businesses  and  entrepreneurs  to  compete  both  domestically  and
 globally.
 189.  As  follow-  ups  to  proceedings  initiated  as  part  of  OETs  1998  Biennial
 Regulatory  Review  efforts,  the  Commission  proposed  changes  to  its  rules  regarding  conducted
 emission  limits  in  Parts  15  and  18  of  the  rules  232  to  make  them  more  effective  in  controlling
 interference  to  communications  services  and  to  reduce  the  burden  of  these  regulations.  Review  of
 the  rules  regulating  radio  frequency  lighting  devices  resulted  in  the  relaxation  of  the  line-conducted
 emission  limits  in  Part  18  of  the  rules  for  RF  lighting  devices  operating  in  the  2.2-  2.8
 227  Reallocation  of  the  216-  220  MHz,  1390-  1395  MHz,  1427-  1429  MHz,  1427-  1432  MHz,  1432-  1435
 MHz,  1670-  1675  MHz,  and  2385-  2390  MHz  Government  Transfer  Bands,  Notice  of  Proposed  Rulemaking,
 FCC  00-  395  (rel.  Nov.  20,  2000).
 228  Spectrum  Study  of  the  2500-  2690  MHz  Band:  The  Potential  for  Accommodating  Third  Generation
 Mobile  Systems,  Staff  Interim  Report,  ET  Docket  No.  00-  232  (rel.  Nov.  15,  2000).
 229  Principles  for  Promoting  the  Efficient  Use  of  Spectrum  by  Encouraging  the  Development  of  Secondary
 Markets  for  Spectrum,  (Secondary  Markets  Policy  Statement),  FCC  00-  401  (rel.  Dec.  1,  2000).
 230  Promoting  Efficient  Use  of  Spectrum  through  Elimination  of  Barriers  to  the  Development  of  Secondary
 Markets,  Notice  of  Proposed  Rulemaking,  WT  Docket  No.  00-  230,  FCC  00-  402  (rel.  Nov.  27,  2000).
 231  Inquiry  Regarding  Software  Defined  Radios,  Notice  of  Inquiry,  ET  Docket  00-  47,  15  FCC  Rcd  5930
 (2000),  Notice  of  Proposed  Rulemaking,  FCC  00-  430,  (rel.  Dec  8,  2000).
 232  47  C.  F.  R.  Part  15  and  Part  18.
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 MHz  band.  233  The  Commission  is  continuing  to  examine  the  possible  relaxation  of  the  rules  for
 RF  lighting  devices  operating  in  the  2450  MHz  band.  234  As  part  of  the  2000  Biennial  Regulatory
 Review  process,  the  Commission  recently  privatized  the  customer  premises  equipment  approval
 process.  235
 2.  New  Initiatives
 190.  The  Commission  has  rules  that  restrict  human  exposure  to  radio  frequency  (RF)
 emissions  in  radio  devices.  Currently,  radio  devices  such  as  cellular  and  PCS  telephones
 manufactured  and  marketed  in  the  United  States  must  meet  certain  requirements  regarding  RF
 emissions.  Specific  Absorption  Rate  (SAR)  is  a  measure  of  human  exposure  to  radio  signals.
 Notwithstanding  intensive  efforts  both  domestically  and  internationally  by  private  standards-setting
 organizations,  SAR  measurement  techniques  are  not  currently  standardized.  Staff
 recommended  that  the  Commission  take  steps  to  facilitate  development  of  standardized  SAR
 measurement  techniques.  A  standard  SAR  measurement  procedure  can  make  the  already
 dynamic  market  for  such  equipment  even  more  dynamic  by  increasing  alternatives  for  approval,
 and  improving  the  speed  and  predictability  of  the  approval  process.  Alloy  LLC  urged  the
 Commission  to  rely  upon  industry  standard  setting  bodies  rather  than  undertake  a  rulemaking
 proceeding.  Staff  continues  to  recommend  that  the  Commission  facilitate  the  development  of
 standardized  SAR  measurement  techniques.
 191.  The  industry  standard  setting  committee  ANSI  C63  has  developed  an  equipment
 testing  procedure  for  unlicensed  PCS  systems.  236  The  new  procedure,  C.  63.  17,  removes
 ambiguities  in  the  test  procedure.  The  staff  recommended  incorporating  the  new  standard  into  the
 Commissions  rules  by  reference  in  order  to  update  current  test  procedures.  No  comments  were
 received  on  this  staff  recommendation.
 192.  The  explosive  growth  in  the  international  market  for  mobile  communications
 devices  such  as  cellular  and  PCS  phones  and  marine  and  aviation  devices  has  resulted  in  the
 manufacture  of  products  that  operate  in  dual  modes  or  on  frequencies  not  authorized  for  such
 operation  in  every  country  where  the  products  are  marketed.  When  such  products  are  approved
 for  sale  in  the  United  States,  our  rules  are  ambiguous  as  to  whether  the  product  complies  with
 standards  applicable  for  operation  in  international  markets.  The  staff  recommended  resolution  of
 the  ambiguity  by  clarifying  whether  dual  mode  products  approved  in  the  United  States  must
 comply  with  other  applicable  international  standards.  Alloy  LLC  urged  the  Commission  to
 examine  this  issue  in  the  context  of  a  Notice  of  Proposed  Rulemaking.  Staff  concurs  that  the
 clarification  would  be  resolved  in  a  full  notice  and  comment  rulemaking.
 233  See  In  the  Matter  of  1998  Biennial  Regulatory  Review    Amendment  of  Part  18  of  the  Commissions
 Rules  to  Update  Regulations  for  RF  Lighting  Devices,  First  Report  and  Order,  14  FCC  Rcd  9840  (1999).
 234  See  In  the  matter  of  1998  Biennial  Regulatory  Review    Amendment  of  Part  18  of  the  Commissions
 Rules  to  Update  Regulations  for  RF  Lighting  Devices,  Notice  of  Proposed  Rulemaking,  13  FCC  Rcd  11307
 (1998).
 235  2000  Biennial  Regulatory  Review  Regulatory  Review  of  Part  68  of  the  Commissions  Rules  and
 Regulations,  CC  Docket  No.  99-  216,  Notice  of  Proposed  Rulemaking,  15  FCC  Rcd  10525,  Report  and
 Order,  FCC  00-  400  (rel  Dec.  28,  2000).
 236  See  American  National  Standard  for  Method  of  Measurement  of  the  Electromagnetic  Operational
 Compatibility  of  Unlicensed  Personal  Communications  Services  (UPCS)  Devices,  ANSI  C63.  17  (Mar.  24,
 1998).
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 193.  In  the  past  decade  commercial  utilization  of  spectrum  above  2  GHz  has  increased
 significantly.  Licensed  and  unlicensed  devices  operating  above  2  GHz  have  proliferated,  in  part
 because  technical  advances  have  made  such  devices  affordable.  When  the  Commission  first
 authorized  services  and  devices  in  this  spectrum,  radiated  emission  limits  were  established.  At
 that  time,  the  Commission  had  a  significant  accumulation  of  information  on  emissions  below  2
 GHz,  but  very  little  information  on  emissions  above  2  GHz.  Emission  limits  affect  the  design  and
 performance  of  devices,  and  prevent  interference  among  devices.  However,  unnecessarily
 restrictive  limits  can  impede  innovation  and  development  of  new  markets.  Accordingly,  the  staff
 recommended  reviewing  Commission  rules  on  intentional  and  unintentional  emission  limits
 above  2  GHz  to  determine  whether  the  limits  are  appropriate.  No  comments  were  received  on
 this  staff  recommendation.
 194.  Current  Commission  rules  prohibit  unlicensed  periodic  (intermittent)
 transmitters  at  40  MHz  and  above  70  MHz  from  transmitting  continuous  data  signals.  237  The
 original  rationale  for  this  prohibition  was  that  efficient  utilization  of  the  spectrum  by  multiple
 users  was  facilitated  by  limiting  the  amount  of  data  transmissions  within  the  band.  Use  of  current
 technology,  however,  results  in  the  opposite  conclusion.  The  staff  believes  this  rule  can  be
 updated  to  permit  data  transmissions  and  enable  some  new  types  of  unlicensed  wireless  systems
 without  changing  the  effect  and  intent  of  the  original  rule.  No  comments  were  received  on  this
 staff  recommendation.
 195.  At  present,  the  highest  electromagnetic  radio-  frequency  spectrum  for  which
 commercial  service  rules  exist  is  77  GHz.  As  a  result  of  a  program  of  the  Defense  Advanced
 Research  Projects  Agency,  semiconductor  device  technology  at  92-  95  GHz  is  now  available.
 Propagation  in  this  band  is  relatively  good,  compared  to  other  nearby  frequencies,  due  to  limited
 radio  absorption  by  oxygen  molecules.  The  short  wavelengths  generated  in  this  oxygen
 window  band  can  be  effectively  utilized  by  very  small  narrow  beam  antennas  for  high  speed
 transmissions  and  high  frequency  reuse.  The  staff  recommended  exploring  possible  use  of  this
 band,  including  seeking  initial  inquiry  on  whether  the  band  is  appropriate  for  licensed  or
 unlicensed  use  and  for  shared  commercial  and  Government  use.  238  No  comments  were  received
 on  this  recommendation.
 196.  TIA  recommended  five  technical  rule  revisions.  TIA  suggested  revision  of  Part
 2.1055(  a)(  2)  to  include  Family  Radio  Service  devices  within  the  test  temperature  ranges  of  -20  C
 to  50  C.  Current  rules  do  not  specifically  specify  the  test  temperature  range  for  Family  Radio
 Service  devices  therefore  they  must  be  tested  under  the  general  temperature  range  established  in
 subpart  (a)(  1)  of  the  rules.  Staff  concurs  with  TIAs  recommendation.
 197.  TIA  proposes  revision  of  the  test  procedures  for  Part  90  push-  to-  talk  devices  to
 reduce  the  duty  cycle  from  50%  to  15%.  Staff  believe  the  current  procedure  should  not  be
 relaxed.  A  50%  duty  cycle  is  possible  for  moderate  periods  of  time  and  testing  the  devices  to
 ensure  compliance  at  this  level  is  appropriate.  TIA  further  recommends  several  specific  changes
 to  the  Part  15  rules.  Specifically,  TIA  notes  an  error  in  Part  15.  121(  b)  regarding  scanning
 receivers,  requests  modification  of  the  labeling  requirements  in  rule  15.19,  and  requests
 clarification  of  the  equipment  authorizations  required  for  composite  devices.  Staff  believes  there
 is  merit  in  some  of  TIAs  suggestions  and  recommends  initiation  of  a  review  of  the  Part  15  rules.
 237  47  C.  F.  R.  15.  231.
 238  See  FCCs  Office  of  Engineering  and  Technology  to  Host  Forum  on  90  GHz  Technologies,  Public
 Notice,  DA  00-  1191,  May  31,  2000,  and  Public  Notice,  DA  00-  1504,  July  6,  2000.
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 3.  Other  Issues
 198.  The  staffs  thorough  review  of  the  Commissions  allocation  and  standards  rules
 revealed  a  handful  of  rules  adopted  some  time  ago  that  address  legacy  systems  or  demographic
 locations  that  have  changed  significantly.  Some  of  these  rules  or  standards  were  instituted  at  the
 behest  of  the  National  Telecommunications  and  Information  Administration  at  the  Department  of
 Commerce,  acting  pursuant  to  47  U.  S.  C.    305  on  behalf  of  the  Executive  Branch,  to  protect
 Federal  Government  systems.  The  staff  recommends  revisiting  with  NTIA  whether  certain
 restrictions  on  non-  government  systems  remain  necessary.  No  comments  were  received  on  this
 recommendation.
 199.  In  1983,  the  Commission  reviewed  all  of  the  technical  rules  to  identify  rules  that
 might  unnecessarily  discourage  technical  innovation.  239  In  view  of  the  tremendous  growth  and
 innovation  in  telecommunications  and  radio  systems  and  devices  over  the  past  decade,  technical
 rules  that  are  design-  based  as  opposed  to  performance-  based  could  be  thwarting  innovation  and
 growth.  Accordingly,  the  staff  recommends  that  technical  staff  for  OET,  working  with  technical
 staff  from  the  other  Bureaus  and  Offices,  again  review  the  technical  rules  to  ensure  they  permit
 flexibility  while  preventing  interference  and  ensuring  spectrum  efficiency.  No  comments  were
 received  on  this  recommendation.
 F.  Office  of  General  Counsel
 200.  The  Office  of  General  Counsel  (OGC)  advises,  makes  recommendations,  and
 defends  the  Commission  on  legal  issues  that  arise  in  a  wide  range  of  Commission  activities.
 OGC  does  not  have  primary  responsibility  for  drafting  or  overseeing  compliance  with  substantive
 Commission  rules,  but  it  does  recommend  and  oversee  compliance  with  a  variety  of  procedural
 rules.  For  example,  OGC  is  involved  in  setting  procedures  for  rulemakings,  hearings,  and  other
 proceedings.  These  rules  are  included  in  Parts  0  and  1  of  Title  47  of  the  Code  of  Federal
 Regulations.
 201.  OGC  is  committed  to  establishing  processes  that  encourage  participation  by  a
 broad  a  range  of  interested  parties,  in  a  convenient  manner,  and  without  unnecessary  expense.  At
 the  same  time,  OGC  works  to  ensure  that  the  Commissions  procedures  conform  to  the  notice  and
 comment  requirements  of  the  Administrative  Procedure  Act  (APA),  and  that  parties  have  access
 to  comments  and  other  information  that  the  Commission  may  consider  in  making  its  decisions.
 1.  Recent  and  Ongoing  Activities
 202.  In  1997,  the  Commission  revised  its  rules  governing  ex  parte  presentations  in
 Commission  proceedings.  240  Those  revisions  were  intended  to  make  the  rules  simpler  and  clearer.
 In  1999,  the  Commission  found  that,  although  its  experience  with  the  revised  rules  generally  was
 positive,  further  minor  revisions  were  warranted.  241  The  Commission  modified  its  rules  regarding
 which  persons  would  be  treated  as  parties  for  purposes  of  determining  ex  parte  status.  The
 Commission  also  changed  the  ex  parte  status  of  certain  types  of  proceedings  from  restricted  to
 239  A  Re-  examination  of  Technical  Regulations,  Report  and  Order,  FCC  84-  521,  99  FCC  2d  903  (1984).
 240  See  47  C.  F.  R.    1.  1200  et  seq.
 241  Amendment  of  47  C.  F.  R.    1.1200  et  seq.  Concerning  Ex  Parte  Presentations  in  Commission
 Proceedings,  Memorandum  Opinion  and  Order,  14  FCC  Rcd  18831  (1999).
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 permit-  but-  disclose.  The  Commission  determined  that  presentations  to  Commission
 representatives  by  administrators,  such  as  the  Universal  Service  Administrative  Company  (i.  e.,
 the  entity  that  administers  universal  service),  would  be  exempt.  In  addition,  a  person  seeking
 Commission  preemption  is  required  to  serve  its  preemption  request  upon  any  state  or  local
 government  identified  in  the  request.  These  revisions  were  intended  to  further  simplify  and
 clarify  the  Commissions  ex  parte  rules,  enhance  the  fairness  of  the  Commissions  processes,  and
 facilitate  the  publics  ability  to  communicate  with  the  Commission.
 203.  In  1998,  the  Commission  revised  its  rules  and  clarified  its  policies  concerning  the
 treatment  of  competitively  sensitive  information  that  carriers  and  others  provide  to  the
 Commission.  The  Commission  adopted  a  model  protective  order  for  use  in  its  proceedings.  242
 G.  Office  of  the  Managing  Director
 204.  The  Office  of  the  Managing  Director  (OMD)  provides  management  and
 administrative  support  to  the  Commissions  bureaus  and  offices.  It  administers  management  and
 administrative  policy  programs  and  directives  supporting  the  deregulatory  efforts  of  bureaus  and
 offices  and  their  goals  to  increase  competition.  The  rules  administered  by  OMD  do  not  regulate
 telecommunications  service  providers  directly.  Traditionally,  however,  OMD  has  exercised
 jurisdiction  over  certain  portions  of  Parts  0,  1,  and  3  of  Title  47  of  the  Code  of  Federal
 Regulations.  OMD  staff  conducted  a  review  of  these  regulations  to  determine  whether  to
 recommend  that  any  of  these  rules  be  repealed  or  modified.
 205.  Initially,  staff  determined  whether  a  section  of  the  Communications  Act  was
 involved.  For  example,  Part  0  contains  the  Commissions  rules  implementing  the  Freedom  of
 Information  Act  (FOIA)  and  the  Privacy  Act,  and  Part  1  contains  rules  implementing  the  Debt
 Collection  Improvement  Act  (DCIA)  and  the  Ethics  in  Government  Act.  Other  government
 agencies  have  primary  responsibility  for  implementing  these  statutes.  Therefore,  the  staff  did  not
 recommend  changes  to  these  rules.  The  staff  reviewed  rules  based  on  the  Communications  Act  to
 determine  whether  enactment  of  the  1996  Act  affected  the  operation  of  these  rules,  and  whether
 there  had  been  any  significant  market  changes  or  other  developments  that  might  affect  the  current
 rules  and  warrant  modification  or  repeal.
 206.  As  the  Commission  proceeds  with  its  reorganization,  OMD  will  continue  to
 support  bureaus  and  offices  to  ensure  that  its  organization  leads  to  increased  efficiency  and
 effectiveness.  OMD  will  conduct  annual  reviews  and  will  perform  verifications  as  required.
 Oversight  of  accounting  procedures  will  also  continue.  OMD  will  regularly  evaluate  its  rules  to
 determine  whether  they  should  be  modified  or  eliminated  in  light  of  changing  competitive  market
 conditions.
 1.  Recent  and  Ongoing  Activities
 207.  Part  0  covers  the  organization  and  general  description  of  the  Commissions
 organization  and  operations.  This  section  concerns  regulations  pertaining  to  the  administrative
 functions  of  the  different  bureaus  and  offices,  delegations  of  authority  to  the  Commissioners,
 bureaus  and  offices,  the  operation  of  the  public  reference  rooms,  and  the  agencys  printed
 publications.  Generally,  these  rules  are  amended  whenever  there  is  a  reorganization.  The
 Commission  periodically  reviews  its  organizational  structure  to  ensure  that  it  provides  for  the
 242  Examination  of  Current  Policy  Concerning  the  Treatment  of  Confidential  Information  Submitted  to  the
 Commission,  Report  and  Order,  FCC  98-  184,  13  FCC  Rcd  24816  (1998).
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 most  efficient  and  effective  structure  for  the  Commissions  functions.  The  Commission  amended
 rules  implementing  the  FOIA  to  reflect  the  Electronic  Freedom  of  Information  Act,  243  but  the
 rules  may  require  further  updating  to  reflect  the  restructuring  of  reference  room  operations
 following  the  move  to  the  Portals  and  the  availability  of  public  records  on  the  agencys  Internet
 website.
 208.  Part  1,  subpart  A  involves  pleadings,  filing  periods,  and  motions  for  extension  of
 time.  These  rules  are  administered  by  Office  of  the  Secretary.  The  Commission  recently  made
 minor  changes  to  some  of  these  rules,  and  staff  does  not  recommend  further  changes  at  this
 time.  244  Part  1  also  covers  statutory  charges  and  procedures  for  payment  of  fees.  These  sections
 are  reviewed  annually  and  in  some  cases  biannually,  pursuant  to  the  Communications  Act.
 209.  Part  3  involves  the  certification  and  monitoring  of  accounting  authorities.  The
 Associate  Managing  Director  for  Financial  Operations  recently  revised  these  rules  to  reflect  the
 Commissions  new  location.  Last  year  the  Commission  modified  these  rules  to  phase  out  the
 Commissions  Accounting  Authority  [US01]  and  to  privatize  this  function.  245
 210.  Each  fiscal  year,  according  to  Section  9(  a)  of  the  Communications  Act,  as
 amended,  the  Office  of  the  Managing  Director  revises  the  FCCs  Schedule  of  Regulatory  Fees.
 These  fees  are  assessed  to  recover  the  costs  of  enforcement,  policy  and  rulemaking,  and
 international  and  user  information  activities.  In  FY  2000,  the  amount  of  fees  that  Congress
 required  the  Commission  to  collect  was  $185,  754,  000.  To  collect  this  amount,  the  Schedule  of
 Regulatory  Fees  was  proportionally  adjusted  for  each  service  subject  to  a  fee  based  on  payment
 unit  and  revenue  information,  and  the  resulting  fee  table  was  set  forth  in  the  proceeding,
 Assessment  and  Collection  of  Regulatory  Fees  for  Fiscal  Year  2000,  Report  and  Order,  adopted
 by  the  Commission  on  June  30,  2000  and  released  on  July  10,  2000.  Collection  of  FY  2000
 Regulatory  Fees  commenced  on  September  11,  2000  and  ended  September  22,  2000.
 211.  OMD  has  been  active  in  its  efforts  to  ensure  that  its  programs  and  activities  are  in
 compliance  with  the  Privacy  Act  and  its  implementing  policy  guidance.  In  September  2000,
 OMD  sent  the  Commission's  response  to  the  Office  of  Management  and  Budget's  (OMB)
 Agency  Biennial  Computer  Matching  Report,  detailing  the  Commission's  new  matching
 programs,  cost-  benefit  analysis  information,  and  other  information  related  to  computer  matching.
 In  October  2000,  the  Commission  published  a  notice  in  the  Federal  Register  246  containing  the
 Commission's  31  systems  of  records  under  the  Privacy  Act,  eliminating  unnecessary  or  outdated
 systems  and  ensuring  that  all  agency  systems  of  records  fully  comply  with  OMB's  directives
 implementing  the  Privacy  Act.  In  another  matter  related  to  privacy  concerns,  the  Commission
 was  asked  to  submit  comments  on  a  General  Accounting  Office  (GAO)  report  to  House  Majority
 Leader,  Dick  Armey,  and  W.  J.  Billy  Tauzin,  Chairman  of  the  Subcommittee  on
 243  Amendment  of  Part  O  of  the  Commissions  Rules  to  Implement  The  Electronic  Freedom  of  Information
 Act  Amendments  of  1996,  Report  and  Order,  13  FCC  Rcd  3419  (1997).
 244  Amendment  of  the  Commissions  Rules  of  Practice  and  Procedure,  Order,  14  FCC  Rcd  7593  (1999).
 245  1998  Biennial  Regulatory  Review  -  Review  of  Accounts  Settlement  in  the  Maritime  Mobile  and
 Maritime  Mobile-  Satellite  Radio  Services,  Order,  14  FCC  Rcd  13504  (1999).  The  Commission  concluded
 that  it  would  cease  operating  as  an  accounting  authority  for  settling  accounts  for  maritime  mobile,  maritime
 satellite,  aircraft  and  handheld  terminal  radio  services.  The  Commission  will  transition  to  full  privatization
 of  the  account-  settlement  function.
 246  65  FR  63468.
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 Telecommunications,  Trade  and  Consumer  Protection,  evaluating  privacy  notices  of  selected
 Federal  web  sites.  247  It  should  be  noted  that  GAOs  evaluation  of  the  FCC  web  site  found  that  the
 Commission  had  implemented  several  privacy  features  recommended  by  the  FTCs  Fair
 Information  Principles.
 2.  New  Initiatives
 212.  In  August  1999,  FCC  Chairman  William  Kennard  delivered  to  Congress  the
 FCCs  Strategic  Plan  for  the  21  st  Century.  The  Strategic  Plan  has  as  one  of  its  goals  to  Create  a
 Model  Agency  for  the  Digital  Age.  248  One  of  the  objectives  under  this  goal  is  for  the  agency  to
 Lead  the  Way  in  the  Information  Age.  The  Office  of  the  Managing  Director  seeks  to  meet  this
 objective  through  the  development  and  implementation  of  an  intelligent,  integrated,  information
 management  system  known  as  the  Intelligent  Gateway  or  Gateway.  The  Gateway  will  help
 the  FCC  develop  its  website  into  a  model  of  accessibility  and  information  availability.
 213.  Once  funded,  designed,  and  implemented,  the  Gateway  will  ensure  swift,
 accurate,  and  complete  access  to  information  by  the  public,  and  will  promote  information  sharing
 among  the  Bureaus  and  Offices.  As  a  result,  the  agency  will  reduce  duplicative  staff  efforts  and
 will  make  available,  in  ways  useful  for  both  internal  and  external  consumption,  information  about
 the  number  and  priority  of  its  pending  tasks.
 214.  At  least  one  industry  group  has  expressed  an  interest  in  the  public  tracking  of
 items  on  circulation  before  the  Commission.  As  the  Gateway  develops,  we  recommend  that  the
 Commission  consider  whether  to  use  it  to  permit  the  public  to  track  items  as  they  move  through
 the  Commission,  prior  to  adoption.
 215.  The  Office  of  Management  and  Budget  has  directed  federal  agencies  under  the
 Government  Paperwork  Elimination  Act  (GPEA)  to  implement  procedures  that  allow  individuals
 or  entities  the  option  to  submit  information  or  transact  with  Federal  Agencies  electronically,  when
 practicable,  and  to  maintain  records  electronically,  when  practicable.  GPEA  also  includes  an
 electronic  signature  mechanism  to  provide  verification  and  security  for  documents.  The
 Performance  Evaluation  and  Records  Management  Office  is  in  the  process  of  implementing  these
 procedures.
 216.  The  Commission  implemented  an  on  line  registration  system,  the  Commission
 Registration  System  (CORES),  for  all  entities  filing  applications  or  making  payments  to  the
 Commission.  Over  time,  the  CORES  registration  will  be  used  by  all  Commission  systems  that
 handle  financial  transactions,  authorizations  of  service  and  enforcement  activities.  CORES  will
 provide  the  means  for  the  Commission  to  administer  more  effectively  its  financial  management
 responsibility.  OMD  is  currently  working  on  a  Notice  of  Proposed  Rulemaking  to  make  the
 CORES  Federal  Registration  Number  (FRN)  a  mandatory  submission  requirement.  The  FRN
 will  enable  the  Commission  to  better  manage  the  financial  systems  of  the  agency  and  improve
 compliance  with  various  statutes  that  govern  the  financial  operations  of  the  Federal  Government.
 247  Internet  Privacy:  Comparison  of  Federal  Agency  Practices  with  FTC's  Fair  Information  Principles,
 GAO/  AIMD-  00-  296R,  Federal  Agencies  Fair  Information  Practices,  September  11,  2000.
 248  Draft  Strategic  Plan:  A  New  FCC  for  the  21  st  Century,  p.  9.
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 VII.  CONCLUSION
 217.  This  Staff  Report  summarizes  staffs  findings  and  recommendations  resulting
 from  an  extensive  review  of  the  Federal  Communications  Commissions  rules.  Staff  reviewed  all
 of  the  Commissions  rules  rather  than  limit  its  review  to  rules  covered  explicitly  by  section  11  of
 the  Communications  Act  and  section  202(  h)  of  the  1996  Act.  Staff  determined  that  a  broad
 review  of  the  Commissions  rules  could  provide  significant  benefits,  although  it  gave  priority  to
 the  rules  that  are  implicated  in  sections  11  and  202(  h).
 218.  This  Staff  Report  is  an  important  intermediate  step  in  the  Commissions  2000
 Biennial  Regulatory  Review  as  section  11  and  section  202(  h)  mandate  Commission
 determinations.  A  Commission  Report  is  being  released  concurrently  with  this  Staff  Report.  The
 Commission  Report  would  determine  whether  any  regulations  are  no  longer  necessary  in  the
 public  interest,  in  accordance  with  section  11  and  section  202(  h).  Pursuant  to  the  Commissions
 determinations,  staff  expects  that  the  Commission  would  initiate  proceedings  to  modify  or
 eliminate  selected  rules.  These  proceedings  would  conform  with  Commission  procedural  rules
 and  the  Administrative  Procedure  Act.  Some  of  these  Proceedings  have  been  initiated  already,
 while  others  will  be  initiated  next  year.  249
 249  For  a  list  of  the  proceedings  that  have  already  been  initiated,  see  Appendix  I  (B).
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 APPENDIX  I:  1998  BIENNIAL  REGULATORY  REVIEW  PROCEEDINGS
 A.  PROCEEDINGS  INITIATED    COMPLETED/  SIGNIFICANT  ORDERS  ISSUED
 1.  Telecommunications  Providers  (Common  Carriers)
 Streamline  and  consolidate  rules  governing  application  procedures  for  wireless  services  to
 facilitate  introduction  of  electronic  filing  via  the  Universal  Licensing  System.  1998  Biennial
 Regulatory  Review    Amendment  of  Parts  0,  1,  13,  22,  24,  26,  27,  80,  87,  90,  95,  97,  and  101  of
 the  Commission's  Rules  to  Facilitate  the  Development  and  Use  of  the  Universal  Licensing  System
 in  the  Wireless  Telecommunications  Services,  WT  Dkt  No.  98-  20,  NPRM,  FCC  98-  25  (rel.  March
 19,  1998),  R&  O,  FCC  98-  234  (rel.  Oct.  21,  1998).
 Streamline  the  equipment  authorization  program  by  implementing  the  recent  mutual  recognition
 agreement  with  Europe  and  providing  for  private  equipment  certification.  1998  Biennial
 Regulatory  Review    Amendment  of  Parts  2,  25  and  68  of  the  Commission's  Rules  to  Further
 Streamline  the  Equipment  Authorization  Process  for  Radio  Frequency  Equipment,  Modify  the
 Equipment  Authorization  Process  for  Telephone  Terminal  Equipment,  Implement  Mutual
 Recognition  Agreements  and  Begin  Implementation  of  the  Global  Mobile  Personal
 Communications  by  Satellite  (GMPCS)  Arrangements,  GEN  Dkt  No.  98-  68,  NPRM,  FCC  98-  92
 (rel.  May  18,  1998),  R&  O,  FCC  98-  338  (rel.  Dec.  23,  1998).
 Eliminate  rules  concerning  the  provision  of  telegraph  and  telephone  franks.  1998  Biennial
 Regulatory  Review    Elimination  of  Part  41  Telegraph  and  Telephone  Franks,  CC  Dkt  No.  98-119,
 NPRM,  FCC  98-  152  (rel.  July  21,  1998),  R&  O,  FCC  98-  344  (rel.  Feb.  3,  1999).
 In  addition  to  addressing  issues  remanded  by  the  Ninth  Circuit,  reexamine  the  nonstructural
 safeguards  regime  governing  the  provision  of  enhanced  services  by  the  Bell  Operating
 Companies  (BOCs)  and  consider  elimination  of  requirement  that  BOCs  file  Comparably  Efficient
 Interconnection  (CEI)  plans.  Computer  III  Further  Remand  Proceedings:  Bell  Operating
 Company  Provision  of  Enhanced  Services;  1998  Biennial  Regulatory  Review    Review  of
 Computer  III  and  ONA  Safeguards  and  Requirements,  CC  Dkt  Nos.  95-  20  and  98-  10,  FNPRM,
 FCC  98-  8  (rel.  Jan.  30,  1998),  R&  O,  FCC  99-  36  (rel.  Mar.  10,  1999).
 Provide  for  a  blanket  section  214  authorization  for  international  service  to  destinations  where  the
 carrier  has  no  affiliate;  eliminate  prior  review  of  pro  forma  transfers  of  control  and  assignments
 of  international  section  214  authorizations;  streamline  and  simplify  rules  applicable  to
 international  service  authorizations  and  submarine  cable  landing  licenses.  1998  Biennial
 Regulatory  Review    Review  of  International  Common  Carrier  Regulations,  IB  Dkt  No.  98-  118,
 NPRM,  FCC  98-  149  (rel.  July  14,  1998),  R&  O,  FCC  99-  51  (rel.  Mar.  23,  1999).
 Removal  or  reduction  of,  or  forbearance  from  enforcing,  regulatory  burdens  on  carriers  filing  for
 technology  testing  authorization.  1998  Biennial  Regulatory  Review    Testing  New  Technology,
 CC  Dkt  No.  98-  94,  NOI,  FCC  98-  118  (rel.  June  11,  1998),  Policy  Statement,  FCC  99-  53  (rel.
 Apr.  2,  1999).
 Deregulate  or  streamline  policies  governing  settlement  of  accounts  for  exchange  of  telephone
 traffic  between  U.  S.  and  foreign  carriers.  1998  Biennial  Regulatory  Review    Reform  of  the
 International  Settlements  Policy  and  Associated  Filing  Requirements,  IB  Dkt  No.  98-  148,  NPRM,
 FCC  98-  190  (rel.  Aug.  6,  1998),  R&  O,  FCC  99-  73  (rel.  May  6,  1999).
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 2
 Deregulate  radio  frequency  (RF)  lighting  requirements  to  foster  the  development  of  new,  more
 energy  efficient  RF  lighting  technologies.  1998  Biennial  Regulatory  Review    Amendment  of
 Part  18  of  the  Commissions  Rules  to  Update  Regulations  for  RF  Lighting  Devices,  ET  Dkt  No.
 98-  42,  NPRM,  FCC  98-  53  (rel.  Apr.  9,  1998),  R&  O,  FCC  98-  135  (rel.  June  6,  1999).
 Modify  accounting  rules  to  reduce  burdens  on  carriers.  1998  Biennial  Regulatory  Review  
 Review  of  Accounting  and  Cost  Allocation  Requirements,  CC  Dkt  No.  98-  81,  NPRM,  FCC  98-
 108  (rel.  June  17,  1998),  R&  O,  FCC  99-  106  (rel.  June  30,  1999).
 Eliminate  duplicative  or  unnecessary  common  carrier  reporting  requirements.  1998  Biennial
 Regulatory  Review    Review  of  ARMIS  Reporting  Requirements,  CC  Dkt  No.  98-  117,  NPRM,
 FCC  98-  147  (rel.  July  17,  1998),  R&  O,  FCC  99-  107  (rel.  June  30,  1999).
 Privatize  the  administration  of  international  accounting  settlements  in  the  maritime  mobile  and
 maritime  satellite  radio  services.  1998  Biennial  Regulatory  Review    Review  of  Accounts
 Settlement  in  the  Maritime  Mobile  and  Maritime  Mobile-  Satellite  Radio  Services  and  Withdrawal
 of  the  Commission  as  an  Accounting  Authority  in  the  Maritime  Mobile  and  the  Maritime  Mobile-Satellite
 Radio  Services  Except  for  Distress  and  Safety  Communications,  IB  Dkt  No.  98-  96,
 NPRM,  FCC  98-  123  (rel.  July  17,  1998),  R&  O  and  FNPRM,  FCC  99-  150  (rel.  July  13,  1999).
 Streamline  and  rationalize  information  and  payment  collection  from  contributors  to
 Telecommunications  Relay  Service,  North  American  Numbering  Plan  Administration,  Universal
 Service,  and  Local  Number  Portability  Administration  funds.  1998  Biennial  Regulatory  Review  
 Streamlined  Contributor  Reporting  Requirements  Associated  with  Administration  of
 Telecommunications  Relay  Services,  North  American  Numbering  Plan,  Local  Number
 Portability,  and  Universal  Service  Support  Mechanisms,  CC  Dkt  No.  98-  171,  NPRM,  FCC  98-
 233  (rel.  Sept.  25,  1998),  R&  O,  FCC  99-  175  (rel.  July  15,  1999).
 Repeal  Part  62  rules  regarding  interlocking  directorates  among  carriers.  1998  Biennial  Regulatory
 Review    Repeal  of  Part  62  of  the  Commissions  Rules,  CC  Dkt  No.  98-  195,  NPRM,  FCC  98-  294
 (rel.  Nov.  17,  1998),  R&  O,  FCC  99-  163  (rel.  July  16,  1999).
 Simplify  Part  61  tariff  and  price  cap  rules.  1998  Biennial  Regulatory  Review    Part  61  of  the
 Commission's  Rules  and  Related  Tariffing  Requirements,  CC  Dkt  No.  98-  131,  NPRM,  FCC  98-
 164  (rel.  July  24,  1998),  R&  O,  FCC  99-  173  (rel.  Aug.  8,  1999).
 Consider  modifications  or  alternatives  to  the  45  MHz  CMRS  spectrum  cap  and  other  CMRS
 aggregation  limits  and  cross-  ownership  rules.  1998  Biennial  Regulatory  Review    Review  of
 CMRS  Spectrum  Cap  and  Other  CMRS  Aggregation  Limits  and  Cross-  Ownership  Rules,  WT  Dkt
 No.  98-  205,  NPRM,  FCC  98-  308  (rel.  Dec.  18,  1998),  R&  O,  FCC  99-  244  (rel.  Sept.  22,  1999).
 Eliminate  or  streamline  various  rules  prescribing  depreciation  rates  for  common  carriers.  1998
 Biennial  Regulatory  Review    Review  of  Depreciation  Requirements  for  Incumbent  Local
 Exchange  Carriers,  CC  Dkt  No.  98-  137,  NPRM,  FCC  98-  170  (rel.  Oct.  14,  1998),  MO&  O,  FCC
 99-  397  (rel.  Dec.  30,  1999),  FNPRM,  FCC  00-  119  (rel.  Apr.  3,  2000).
 In  NPRM  portion,  consider  forbearance  from  additional  requirements  regarding  telephone
 operator  services  applicable  to  commercial  mobile  radio  service  providers  (CMRS)  and,  more
 generally,  forbearance  from  other  statutory  and  regulatory  provisions  applicable  to  CMRS
 providers.  Personal  Communications  Industry  Associations  Broadband  Personal
 Communications  Services  Alliances  Petition  for  Forbearance  For  Broadband  Personal
92
 3
 Communications  Services;  1998  Biennial  Regulatory  Review  -  Elimination  or  Streamlining  of
 Unnecessary  and  Obsolete  CMRS  Regulations;  Forbearance  from  Applying  Provisions  of  the
 Communications  Act  to  Wireless  Telecommunications  Carriers,  WT  Dkt  No.  98-  100,  MO&  O  and
 NPRM,  FCC  98-  134  (rel.  July  2,  1998),  First  R&  O,  FCC  00-  311  (rel.  Sept.  8,  2000).
 2.  Other
 Amend  cable  and  broadcast  annual  employment  report  due  dates  to  streamline  and  simplify  filing.
 1998  Biennial  Regulatory  Review    Amendment  of  sections  73.  3612  and  76.  77  of  the
 Commissions  Rules  Concerning  Filing  Dates  for  the  Commissions  Equal  Employment
 Opportunity  Annual  Employment  Reports,  MO&  O,  FCC  98-  39  (rel.  Mar.  16,  1998).
 Streamline  broadcast  filing  and  licensing  procedures.  1998  Biennial  Regulatory  Review  
 Streamlining  of  Mass  Media  Applications,  Rules  and  Processes,  MM  Dkt  No.  98-  43,  NPRM,
 FCC  98-  57  (rel.  Apr.  3,  1998),  R&  O,  FCC  98-  281  (rel.  Nov.  25,  1998),  on  recon.,  14  FCC  Rcd
 17525  (1999).
 Provide  for  electronic  filing  for  assignment  and  change  of  radio  and  TV  call  signs.  1998  Biennial
 Regulatory  Review    Amendment  of  Part  73  and  Part  74  Relating  to  Call  Sign  Assignments  for
 Broadcast  Stations,  MM  Dkt  No.  98-  98,  NPRM,  FCC  98-  130  (rel.  June  30,  1998),  R&  O,  FCC  98-
 324  (rel.  Dec.  16,  1998).
 Simplify  and  unify  Part  76  cable  pleading  and  complaint  process  rules.  1998  Biennial  Regulatory
 Review    Part  76  -  Cable  Television  Service  Pleading  and  Complaint  Rules,  CS  Dkt  No.  98-  54,
 NPRM,  FCC  98-  68  (rel.  Apr.  22,  1998),  R&  O,  FCC  98-  348  (rel.  Jan.  8,  1999).
 Streamline  the  Gettysburg  reference  facilities  so  that  electronic  filing  and  electronic  access  can
 substitute  for  the  current  method  of  written  filings/  access.  1998  Biennial  Regulatory  Review  
 Amendment  of  Part  0  of  the  Commissions  Rules  to  Close  the  Wireless  Telecommunications
 Bureaus  Gettysburg  Reference  Facility,  WT  Dkt  No.  98-  160,  NPRM,  FCC  98-  217  (rel.  Sept.  18,
 1998),  R&  O,  FCC  99-  45  (rel.  Mar.  24,  1999).
 Streamline  and  consolidate  public  file  requirements  applicable  to  cable  television  systems.  1998
 Biennial  Regulatory  Review    Streamlining  of  Cable  Television  Services  Part  76  Public  File  and
 Notice  Requirements,  CS  Dkt  No.  98-  132,  NPRM,  FCC  98-  159  (rel.  July  20,  1998),  R&  O,  FCC
 99-  12  (rel.  Mar.  26,  1999).
 Streamline  AM/  FM  radio  technical  rules  and  policies.  1998  Biennial  Regulatory  Review  
 Streamlining  of  Radio  Technical  Rules  in  Parts  73  and  74  of  the  Commission's  Rules,  MM  Dkt
 No.  98-  93,  NPRM,  FCC  98-  117  (rel.  June  15,  1998),  First  R&  O,  FCC  99-  55  (rel.  Mar.  30,  1999),
 Second  R&  O,  FCC  00-  368  (rel.  Nov.  1,  2000).
 Modify  or  eliminate  Form  325,  annual  cable  television  system  report.  1998  Biennial  Regulatory
 Review    "Annual  Report  of  Cable  Television  System,"  Form  325,  Filed  Pursuant  to  Section
 76.403  of  the  Commission's  Rules,  CS  Dkt  No.  98-  61,  NPRM,  FCC  98-  79  (rel.  Apr.  30,  1998),
 R&  O,  FCC  99-  13  (rel.  Mar.  31,  1999).
 Streamline  application  of  Part  97  amateur  service  rules.  1998  Biennial  Regulatory  Review  
 Amendment  of  Part  97  of  the  Commission's  Amateur  Service  Rules,  WT  Dkt  No.  98-  143,  NPRM,
 FCC  98-  1831  (rel.  Aug.  10,  1998),  R&  O,  FCC  99-  412  (rel.  Dec.  30,  1999).
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 Conduct  broad  inquiry  into  broadcast  ownership  rules  not  the  subject  of  other  pending
 proceedings.  1998  Biennial  Regulatory  Review    Review  of  the  Commissions  Broadcast
 Ownership  Rules  and  Other  Rules  Adopted  Pursuant  to  section  202  of  the  Telecommunications
 Act  of  1996,  MM  Dkt  No.  98-  35,  NOI,  FCC  98-  37  (rel.  Mar.  13,  1998),  Report,  FCC  00-  191  (rel.
 June  20,  2000).
 Streamline  Part  90  private  land  mobile  services  rules.  1998  Biennial  Regulatory  Review    47
 C.  F.  R.  Part  90    Private  Land  Mobile  Radio  Services,  WT  Dkt  No.  98-  182,  NPRM,  FCC  98-  251
 (rel.  Oct.  20,  1998),  R&  O,  FCC  00-  235  (rel.  July  12,  2000).
 B.  PROCEEDINGS  INITIATED    PENDING
 1.  Telecommunications  Providers  (Common  Carriers)
 Modify  Part  68  rules  that  limit  the  power  levels  at  which  any  device  attached  to  the  network  can
 operate  to  allow  use  of  56  Kbps  modems.  1998  Biennial  Regulatory  Review    Modifications  to
 Signal  Power  Limitations  Contained  in  Part  68  of  the  Commissions  Rules,  CC  Dkt  No.  98-  163,
 NPRM,  FCC  98-  221  (rel.  Sept.  16,  1998).
 Modify  or  eliminate  Part  64  restrictions  on  bundling  of  telecommunications  service  with
 customer  premises  equipment.  1998  Biennial  Regulatory  Review    Policy  and  Rules  Concerning
 the  Interstate,  Interexchange  Marketplace/  implementation  of  Section  254(  g)  of  the
 Communications  Act  of  1934,  as  Amended/  Review  of  the  Customer  Premises  Equipment  and
 Enhanced  Services  Unbundling  Rules  in  the  Interexchange,  Exchange  Access  and  Local
 Exchange  Markets,  CC  Dkt  Nos.  98-  183  and  96-  61,  FNPRM,  FCC  98-  258  (rel.  Oct.  9,  1998).
 Seek  comment  on  various  deregulatory  proposals  of  SBC  Communications,  Inc.  not  already
 subject  to  other  biennial  regulatory  review  proceedings.  1998  Biennial  Regulatory  Review  
 Petition  for  Section  11  Biennial  Regulatory  Review  filed  by  SBC  Communications,  Inc.,
 Southwestern  Bell  Telephone  Company,  Pacific  Bell,  and  Nevada  Bell,  CC  Dkt  No.  98-  177,
 NPRM,  FCC  98-  238  (rel.  Nov.  24,  1998).  [Proceeding  superceded  by  Common  Carrier  Bureau
 Announces  Agenda  for  Initial  Workshop  for  Phase  I  of  the  Comprehensive  Review  of
 Commissions  Accounting  and  Reporting  Requirements  and  Treatment  of  Ex  Parte  Presentations
 in  Related  Proceedings,  Public  Notice,  DA  99-  758  (rel.  Apr.  19,  1999);  Common  Carrier  Bureau
 Announces  Initiative  to  Undertake  Comprehensive  Review  of  Part  32  and  ARMIS  Requirements,
 Public  Notice,  DA  99-  695  (rel.  Apr.  12,  1999);  In  the  Matter  of  Comprehensive  Review  of  the
 Accounting  Requirements  and  ARMIS  Reporting  Requirements  for  Incumbent  Local  Exchange
 Carriers:  Phase  1,  CC  Dkt  No.  99-  253,  NPRM,  FCC  99-  174  (rel.  July  14,  1999);  Report  and
 Order,  FCC  00-  78  (rel.  Mar,  8,  2000)].
 2.  Other
 Review  current  Part  15  and  Part  18  power  line  conducted  emissions  limits  and  consider  whether
 the  limits  may  be  relaxed  to  reduce  the  cost  of  compliance  for  a  wide  variety  of  electronic
 equipment.  1998  Biennial  Regulatory  Review    Conducted  Emissions  Limits  Below  30  MHz  for
 Equipment  Regulated  Under  Parts  15  and  18  of  the  Commission's  Rules,  ET  Dkt  No.  98-  80,  NOI,
 FCC  98-  102  (rel.  June  8,  1998),  NPRM,  FCC  99-  296  (rel.  Oct.  18,  1999).
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 i
 APPENDIX  II:  LIST  OF  COMMENTING  PARTIES
 FOR  THE  SEPTEMBER  2000  STAFF  REPORT
 Comments:
 Alloy  LLC
 Cellular  Telecommunications  Industry  Association
 Coalition  of  Independent  Cellular  Carriers
 General  Services  Administration
 Hughes  Network  Systems  Independent  Telephone  &  Telecommunications  Alliance
 National  Association  of  Broadcasters
 National  Exchange  Carrier  Association
 Newspaper  Association  of  America
 Organization  for  the  Promotion  and  Advancement  of  Small  Telecommunications  Companies,
 Sprint  Corporation
 Telecommunications  Industry  Association
 Telecommunicat  ions  Management  Informat  ion  Systems  Coalit  ion
 United  States  Telecom  Company
 Verizon  Wireless
 Winstar  Communications,  Inc.
 Wireless  Communications  Association  International,  Inc.  WorldCom,  Inc.
 Reply  Comments:
 Cellular  Telecommunication  Industry  Association
 General  Services  Administration
 Independent  Telephone  &  Telecommunications  Alliance
 WorldCom,  Inc.,
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 APPENDIX  III:  STAFF  ACKNOWLEDGEMENTS
 We  would  like  to  recognize  the  following  staff  for  their  participation  in  the  2000  Biennial  Review
 Working  Group:
 Cable  Services  Bureau  Consumer  Information  Bureau
 Kathleen  Costello  Margaret  Egler
 William  Johnson  Peter  Friedman
 Cheryl  King  Sumita  Mukhoty
 Cheryl  Kornegay
 John  Norton
 Quyen  Truong  Enforcement  Bureau
 Lisa  Fowlkes
 Common  Carrier  Bureau  Tonya  Rutherford  Joseph  Scavetta
 John  Adams  Wayne  Toivanen
 Tom  Beers  Richard  Welch
 Scott  Bergmann
 Stephen  Burnett
 Anthony  Butler  International  Bureau
 Anthony  Dale
 Andy  Firth  Thomas  N.  Albers
 Neil  Fried  Rebbeca  Arbogast
 Tiffany  Jamison  James  G.  Ballis
 Jake  Jennings  Breck  Blalock
 Louise  Klees-  Wallace  Kathleen  Campbell
 Bob  Loube  Alfred  Davidson
 Susan  Magnotti  Pamela  Gerr
 Andrew  Mulitz  Anna  Gomez
 Mark  Nadel  Howard  Griboff
 Claudia  Pabo  Selina  Khan
 Susan  Pies  David  Krech
 Debra  Sabourin  Kathy  O'Brien
 Katherine  Schroeder  Susan  O'Connell
 Marty  Schwimmer  Thomas  E.  Polzin
 Douglas  Slotten  Ronald  Repasi
 Richard  Smith  Jackie  Ruff
 Robin  Smolen  Marilyn  Simon
 Ceci  Stephens  Ken  Stanley
 Antoinette  Stevens  Sheryl  Todd
 Gayle  Teicher  Mark  Uretsky
 Alan  Thomas  Alifya  Vasi
 Sheryl  Todd  Doug  Webbink
 Michele  Walters
 Sharon  Webber
 Jack  Zinman
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 ii
 Mass  Media  Bureau  Office  of  Legislative  and  Intergovernmental  Affairs
 Mania  Baghdadi
 Sharon  Bertelson  Sherille  Ismail
 Deborah  Dupont  Stephen  Klitzman
 Charles  Dziedzic  Sheryl  Wilkerson
 Judy  Herman
 Jamila  Bess  Johnson
 Brad  Lerner  Office  of  the  Managing  Director
 Mary  Beth  Murphy
 Cynthia  Thomas  Judy  Boley
 Andra  Cunningham
 Regina  Dorsey
 Office  of  Communications  Business  Kathy  Fagan  Opportunities  Patricia  Rawlings
 Renee  Licht
 Helen  Hillegass  Mark  Reger
 Eric  Jensen  Mary  Beth  Richards
 Eric  Malinen  Magalie  Salas
 Frank  Montero  Larry  Schecker
 Les  Smith
 Ron  Stone
 Office  of  Engineering  and  Technology
 Rebecca  Dorch  Office  of  Plans  and  Policy
 Michael  Marcus
 Ken  Nichols  Pat  DeGraba
 Pam  Megna
 Lisa  Sockett
 Office  of  General  Counsel
 Susan  Aaron  Wireless  Telecommunications  Bureau
 Lisa  Gelb
 Jane  Halprin  Dennis  Butler
 Daniel  Harrold  Ken  Burnley
 Joel  Kaufman  David  Furth
 Jeffrey  Lanning  Chris  Gacek
 Phyllis  Morgan  Robert  Hardy
 Marilyn  Sonn  Jay  Jackson
 William  Trumpbour  Don  Johnson
 Debra  Weiner  Elizabeth  Lyle
 Jamison  Prime
 John  Spencer
 Frank  Stillwell
 Greg  Vadas
97
 1
 APPENDIX  IV:  RULE  PART  ANALYSIS
 PART  1    PRACTICE  AND  PROCEDURE
 Description
 Part  1  contains  rules  governing  general  practice  and  procedure  before  the  Commission,  including
 rules  and  procedures  governing  applications  and  licensing,  rulemakings,  complaints,  hearings,
 and  a  variety  of  other  Commission  processes.  Part  1  also  contains  miscellaneous  rules
 implementing  certain  statutes  other  than  the  Communications  Act  that  affect  Commission
 processes,  such  as  the  National  Environmental  Policy  Act,  the  Equal  Access  to  Justice  Act,  and
 the  Anti-  Drug  Abuse  Act.  Some  of  these  rules  apply  generally  to  all  entities  that  conduct
 business  before  the  Commission,  others  apply  to  specific  groups  of  licensees  or  other  regulated
 entities,  while  others  apply  solely  to  the  Commission  and  its  staff.
 Part  1  contains  19  subparts:
 Subpart  A    General  Rules  of  Practice  and  Procedure    General  rules  for  filing  of
 pleadings  with  and  appearances  before  the  Commission;  procedures  for  miscellaneous
 Commission  proceedings,  including  forfeitures,  license  modifications,  revocation  or
 cease  and  desist  proceedings,  consent  orders,  reconsiderations  (other  than
 reconsiderations  in  rulemaking  proceedings),  and  applications  for  review.
 Subpart  B    Hearing  Proceedings    Procedural  rules  for  hearing  proceedings.
 Subpart  C    Rulemaking  Proceedings    Procedural  rules  for  rulemaking  proceedings.
 Subpart  D    Broadcast  Applications  and  Proceedings    Application  and  licensing  rules
 for  broadcasters.
 Subpart  E    Complaints,  Applications,  Tariffs,  and  Reports  Involving  Common  Carriers
   Procedural  rules  pertaining  to  filings  by  and  complaints  against  common  carriers.
 Subpart  F    Wireless  Telecommunications  Services  Applications  and  Procedures  
 Application  and  licensing  rules  for  wireless  services.
 Subpart  G    Schedule  of  Statutory  Charges  and  Procedures    Fee  schedule  for  application
 and  regulatory  fees  charged  by  the  Commission,  pursuant  to  sections  8  and  9  of  the
 Communications  Act.  1
 Subpart  H    Ex  Parte  Communications    Rules  governing  ex  parte  communications  and
 presentations  in  Commission  proceedings.
 Subpart  I    Procedures  Implementing  the  National  Environmental  Policy  Act  of  1969
 (NEPA)  2    Application  and  licensing  rules  for  FCC-  licensed  facilities  that  require
 environmental  clearance  under  NEPA  due  to  potential  impact  on  environmentally
 sensitive  areas.
 Subpart  J    Pole  Attachment  Complaint  Procedures    Complaint  procedures  applicable  to
 cable  companies  and  telecommunications  carriers  that  seek  to  obtain  non-  discriminatory
 1  47  U.  S.  C.    158,  159.
 2  42  USC    4321-  4347.
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 2
 access  to  utility  poles,  ducts,  conduits,  and  rights-  of-  way  on  reasonable  rates,  terms,  and
 conditions.
 Subpart  K    Implementation  of  the  Equal  Access  to  Justice  Act  (EAJA)  in  Agency
 Proceedings  3    Rules  and  procedures  for  parties  to  Commission  administrative
 proceedings  who  seek  recovery  of  attorneys  fees  and  expenses  pursuant  to  the  EAJA.
 Subpart  L    Random  Selection  Procedures  for  Mass  Media  Services    Rules  and
 procedures  for  use  of  lotteries  to  award  certain  categories  of  broadcast  licenses.  [Not
 applicable  to  telecommunications  carriers.]
 Subpart  N    Enforcement  of  Nondiscrimination  on  the  Basis  of  Handicap  in  Programs  or
 Activities  Conducted  by  the  Federal  Communications  Commission    Rules  implementing
 the  Rehabilitation,  Comprehensive  Services,  and  Disabilities  Amendments  of  1978,  4
 which  prohibits  Executive  agencies  from  discriminating  against  persons  with  disabilities
 in  programs  or  activities  conducted  by  the  agency.  [Not  applicable  to
 telecommunications  carriers.]
 Subpart  O    Collection  of  Claims  Owed  the  United  States    Rules  allowing  the
 Commission  to  collect  certain  debts  owed  to  the  United  States  through  administrative  or
 salary  offsets.
 Subpart  P    Implementation  of  the  Anti-  Drug  Abuse  Act  of  1998  5    Rules  requiring
 certain  Commission  applicants  to  certify  that  they  are  not  subject  to  denial  of  Federal
 Benefits  under  section  5301  of  the  ADAA  due  to  a  conviction  for  possession  or
 distribution  of  a  controlled  substance.
 Subpart  Q    Competitive  Bidding  Procedures    Rules  governing  the  mechanisms  and
 procedures  for  competitive  bidding  to  award  spectrum  licenses.
 Subpart  R    Implementation  of  section  4(  g)(  3)  of  the  Communications  Act:  Procedures
 Concerning  Acceptance  of  Unconditional  Gifts,  Donations,  and  Bequests    Rules
 restricting  acceptance  of  gifts  by  Commission  employees.  [Not  applicable  to
 telecommunications  carriers.]
 Subpart  S    Preemption  of  Restrictions  That  Impair  a  Viewers  Ability  to  Receive
 Television  Broadcast  Signals,  Direct  Broadcast  Satellites,  or  Multi-  Channel  Multipoint
 Distribution  Services    Rules  preempting  state  and  local  regulation  of  antennas  for
 reception  of  video  programming  via  broadcast,  satellite,  or  multipoint  distribution
 services.  [Not  applicable  to  telecommunications  carriers.]
 Subpart  T    Exempt  Telecommunications  Companies    Rules  implementing  provisions
 of  the  Telecommunications  Act  of  1996  by  which  a  public  utility  holding  company  may
 obtain  a  determination  from  the  Commission  of  status  as  an  Exempt  Telecommunications
 Company  (ETC).
 Purpose
 The  primary  purpose  of  the  Part  1  rules,  particularly  subparts  A  through  L  and  subpart  Q,  is  to
 establish  fair  and  equitable  rules  of  practice  and  procedure  before  the  Commission  for  applicants,
 3  5  U.  S.  C.    504.
 4  Pub.  Law  No.  95-  602,  92  Stat  2955  (1978)  (codified  at  29  U.  S.  C.    794).
 5  21  U.  S.  C.    862.
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 3
 licensees,  and  other  entities  regulated  by  the  Commission.  Other  subparts  of  Part  1  serve  other
 purposes,  such  as  compliance  with  external  statutory  mandates.
 Analysis
 Advantages
 The  procedural  rules  in  Part  1  provide  uniform  direction  to  applicants,  licensees,  and  other
 entities  in  a  wide  variety  of  Commission  proceedings.  Consolidation  of  the  Commissions
 procedural  rules  in  Part  1  helps  to  ensure  consistency  in  the  Commissions  processes  across
 services,  Bureaus,  and  offices.
 Disadvantages
 The  Part  1  rules  impose  inherent  administrative  burdens  on  applicants,  licensees,  and  other  parties
 that  practice  before  the  Commission.
 Recent  Efforts
 Certain  portions  of  the  Part  1  rules,  such  as  the  wireless  licensing  rules  (subpart  F),  the  ex  parte
 rules  (subpart  H),  and  the  Commissions  competitive  bidding  rules  (subpart  Q)  have  been
 modified  in  recent  rulemaking  proceedings.  6  In  addition,  Part  1  was  recently  amended  to  allow
 parties  to  file  comments  and  other  pleadings  electronically  via  the  Internet  in  informal  notice  and
 comment  rulemaking  proceedings  under  section  553  of  the  Administrative  Procedure  Act.  7  In
 that  Report  and  Order,  the  rules  were  also  amended  to  permit  electronic  filing  of  all  pleadings
 and  comments  in  proceedings  involving  petitions  for  rulemaking  and  Notice  of  Inquiry
 proceedings.  Since  that  time,  other  Bureaus  have  amended  Part  1  to  include  the  electronic  filing
 of  applications.
 Initial  Recommendation
 The  staff  recommends  no  significant  changes  to  the  Part  1  rules  at  this  time.  However,  as  the
 Commission  proceeds  to  implement  new  electronic  filing  initiatives,  further  amendment  of  the
 rules  is  envisioned.  In  addition,  the  staff  intends  to  closely  monitor  the  practical  application  of
 these  rules,  and  will  recommend  appropriate  rule  changes  in  the  future  if  the  rules  no  longer  best
 achieve  their  underlying  purposes.  [Note:  Staff  recommendations  with  respect  to  certain
 subparts  of  Part  1  are  discussed  in  the  sections  below.]
 6  See  Amendment  of  Parts  0,  1,  13,  22,  24  26,  27,  80,  87,  90,  95,  97,  and  101  of  the  Commission's  Rules
 to  Facilitate  the  Development  and  Use  of  the  Universal  Licensing  System  in  the  Wireless
 Telecommunications  Service,  Report  and  Order,  13  FCC  Rcd  21027  (1998)  (ULS  Report  and  Order);
 Amendment  of  47  C.  F.  R.    1.1200  et  seq.  Concerning  Ex  Parte  Presentations  in  Commission  Proceedings,
 Report  and  Order,  12  FCC  Rcd  7348  (1997);  Amendment  of  Part  1  of  the  Commission's  Rules    Competitive
 Bidding  Procedures,  Allocation  of  Spectrum  Below  5  GHz  Transferred  from  Federal  Government  Use,  Third
 Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  13  FCC  Rcd  374  (1997)  (modified
 by  Erratum,  DA  98-  419)  (rel.  Mar.  2,  1998).
 7  In  The  Matter  of  Electronic  Filing  of  Documents  in  Rulemaking  Proceedings,  Report  and  Order,  13
 FCC  Rcd  11322  (1998).
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 4
 Comments
 United  States  Telecom  Association  (USTA)  recommends  that  the  Commission  modify  its
 procedural  rules  that  the  Commission  resolve  waiver  requests  and  petitions  for  reconsideration
 within  one  year.  8  Any  filing  that  the  Commission  did  not  deny  within  a  year  would  be  deemed
 approved.  USTA  argues  that  failure  to  resolve  these  requests  in  a  timely  manner  creates
 uncertainty  for  carriers  and  customers.  ITTA  supports  USTAs  proposal,  9  and  urges  the
 Commission  to  adopt  a  90-  day  deadline  for  acting  on  petitions  filed  by  mid-  sized  carriers.  10
 WorldCom,  Inc.  opposes  USTAs  proposal,  and  argues  that  an  accelerated  timetable  would  divert
 the  Commission  from  more  important  tasks.  11  WorldCom  recommends  the  Commission  adopt  a
 cover  form  for  petitions  for  reconsideration,  applications  for  review  of  actions  taken  pursuant  to
 delegated  authority,  and  requests  for  waiver.  12  The  cover  form  would  contain  information  that
 would  help  the  Commission  determine  the  speed  with  which  the  applicants  request  should  be
 considered,  and  whether  the  request  was  frivolous.  13
 Recommendation
 Staff  does  not  recommend  adopting  USTAs  and  ITTAs  suggestion  to  adopt  a  time  limit  for
 resolving  petitions  for  reconsideration  and  waiver.  Parties  can  and  do  request  expedited
 consideration  in  particular  circumstances.  In  addition,  confusion  could  be  created  if  requests  for
 waiver  or  reconsideration  were  deemed  approved  absent  agency  action,  because  rule  changes
 could  occur  without  adequately  alerting  parties  who  might  be  affected  by  the  changes.
 Staff  does  not  recommend  initiating  a  rulemaking  proceeding  and  soliciting  comment  on
 WorldComs  proposal.  Staff  believes  that  requiring  parties  to  file  a  new  form  would  increase
 rather  than  decrease  regulatory  burdens.  Any  party  may,  however,  include  the  form  proposed  by
 WorldCom  or  another  document  intended  to  demonstrate  to  the  Commission  the  importance  or
 urgency  of  its  filing.
 8  USTA  at  p.  6.
 9  ITTA  reply  comments  at  p.  2.
 10  Id.  at  p.  3.
 11  WorldCom  reply  comments  at  p.  2.
 12  Id.
 13  Id.  At  2-  3.
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 5
 PART  1,  SUBPART  E    COMPLAINTS,  APPLICATIONS,  TARIFFS,  AND
 REPORTS  INVOLVING  COMMON  CARRIERS    FORMAL  COMPLAINTS
 Description
 These  rules  implement  section  208  of  the  Communications  Act  of  1934,  as  amended.  14  Section
 208  permits  any  person  to  lodge  a  complaint  with  the  Commission  against  a  common  carrier
 alleging  a  violation  of  the  Communications  Act.  Congress  amended  the  Communications  Act  in
 1996  to  establish  specific  procedures  and,  in  some  cases,  timeframes  for  complaints  concerning
 certain  new  statutory  provisions.  See,  for  example,  sections  260  (telemessaging),  271  (Bell
 operating  company  entry  into  long  distance  market),  274  (Bell  operating  company  provision  of
 electronic  publishing  service),  275  (Bell  operating  company  provision  of  alarm  monitoring
 service).  The  Commissions  formal  complaint  rules  implement  these  new  statutory  provisions.
 Purpose.
 These  rules  establish  procedures  for  Commission  receipt  and  review  of  formal  complaints  lodged
 against  common  carriers.  The  rules  are  designed  to  expedite  the  resolution  of  formal  complaints
 while  safeguarding  the  due  process  interests  of  the  affected  parties.  The  rules  are  also  intended  to
 foster  the  pro-  competitive,  deregulatory  goals  of  the  Telecommunications  Act  of  1996  by
 providing  for  prompt  and  efficient  enforcement  of  the  statute  and  the  Commissions  substantive
 rules  implementing  the  statute.
 Analysis.
 Status  of  Competition
 Because  section  208  permits  complaints  against  a  wide  range  of  common  carriers  involving  a  host
 of  obligations,  it  is  not  feasible  to  characterize  the  status  of  competition  with  respect  to  the  variety
 of  common  carriers  and  markets  subject  to  this  statutory  provision.
 Advantages
 The  rules  provide  procedures  to  expedite  resolution  of  disputes  involving  a  common  carrier.  The
 rules  permit  and  encourage  staff-  sponsored  mediation  between  the  parties  both  before  and  after  a
 formal  complaint  is  filed  at  the  Commission.  These  mediation  efforts  often  result  in  quick  and
 efficient  resolution  of  disputes.  Business  solutions  achieved  by  the  parties  through  Commission-assisted
 mediation  avoid  the  expense  and  delay  that  can  accompany  formal  litigation  before  the
 agency.
 The  rules  also  require  that  a  complaining  party  provide  all  factual  support  for  its  case  in  its  initial
 pleadings.  This,  in  turn,  minimizes  the  need  for  time-  consuming  and  resource-  intensive
 discovery.  In  addition,  the  rules  permit  the  staff  to  convene  an  initial  status  conference  with  the
 parties  shortly  after  the  defendant  files  its  answer.  This  presents  an  opportunity  to  simplify  or
 narrow  the  issues,  obtain  admissions  of  fact  or  stipulations  by  the  parties,  settle  some  or  all  of  the
 matters  in  controversy,  and  develop  a  schedule  for  the  remainder  of  the  case.  This  proactive  case
 management  tool  helps  ensure  prompt  and  efficient  case  resolution.
 14  47  U.  S.  C.    208.
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 6
 Moreover,  the  rules  provide  an  Accelerated  Docket  procedure  that  results  in  swift  decisions  from
 the  agency  for  certain  formal  complaints  selected  by  the  staff.  Once  a  particular  dispute  is
 accepted  onto  the  Accelerated  Docket,  the  procedure  is  designed  to  lead  to  a  written  staff-  level
 decision  within  60  days  from  the  filing  of  the  complaint.  Because  this  procedure  may  lead  to  a
 mini-  trial  with  testimony  by  witnesses  subject  to  cross-  examination,  it  is  particularly  well
 suited  for  cases  involving  difficult  factual  issues.  The  Accelerated  Docket  rules  require  staff-supervised
 pre-  filing  settlement  discussions  between  the  parties.  Thus,  enabling  the  settlement  of
 many  disputes  without  a  formal  complaint.
 Disadvantages.
 Formal  litigation  can  be  expensive  and  time-  consuming.  The  rules  attempt  to  minimize  these
 liabilities  by  enhancing  mediation  and  limiting  discovery,  while  recognizing  the  due  process
 interests  of  the  affected  parties.  Nevertheless,  section  208  creates  a  statutory  process  for  persons
 to  file  complaints  against  common  carriers  and  obligates  the  Commission  to  investigate  those
 complaints,  often  within  tight  timeframes.  Procedural  rules  are  thus  necessary  to  discharge  this
 statutory  directive.
 Recent  Efforts.
 As  noted  in  the  Staff  Report,  the  Commission  revamped  and  streamlined  these  rules  in  1997  and
 1998  in  light  of  the  pro-  competitive,  deregulatory  goals  of  the  Telecommunications  Act  of  1996.
 In  general,  the  1997  rule  changes  were  designed  to:  (1)  enable  parties  to  resolve  disputes  on  their
 own;  (2)  improve  the  utility  and  content  of  pleadings;  and  (3)  streamline  the  formal  complaint
 process.  The  1998  rule  changes  created  the  Accelerated  Docket  which  provides  a  framework  for
 expeditious  resolution  of  certain  carrier-  related  complaints.
 Initial  Recommendation.  (Formal  Complaints)
 The  staff  recommends  no  changes  to  the  rules  at  this  time  because  the  rules  were  recently
 revamped  and  streamlined.  However,  the  staff  intends  to  closely  monitor  the  practical  application
 of  all  the  rules  governing  formal  complaints  against  common  carriers.  The  staff  will  recommend
 appropriate  rules  changes  in  the  future  if  the  rules  no  longer  achieve  their  underlying  purposes,  or
 if  rule  changes  will  better  service  the  public  interest  in  light  of  competitive  developments  in  the
 marketplace.
 Comments
 No  comments  were  received  on  this  subpart.
 Recommendation
 See  initial  recommendation.
 Initial  Recommendation.  (Informal  Complaints)
 The  staff  recommended  that  the  Commission  review  the  informal  complaint  rules  because  these
 rules  do  not  specify  the  documentation  consumers  must  file  with  the  Commission  to  complete
 their  complaints  and  they  do  not  prescribe  a  specific  timeframe  for  carriers  to  respond  to  an
103
 7
 informal  complaint.  15  Staff  also  recommended  that  these  rules  be  reviewed  to  determine  whether
 their  scope  should  be  expanded  to  cover  all  informal  complaints.
 Comments
 Alloy  and  WorldCom  agree  that  the  rules  should  specify  the  type  of  documentation  that  a
 consumer  must  file  with  the  complaint.  16  WorldCom  also  states  that  the  Commission  should
 retain  its  flexibility  in  determining  a  timeframe  within  which  a  carrier  must  respond  to  a
 complaint.  17
 Recommendation
 Staff  continues  to  recommend  that  a  review  of  the  informal  complaint  rules  is  necessary  to
 address  the  issues  raised  in  the  staff  report  and  the  comments.
 15  September  Staff  Report  at  para.  162.
 16  WorldCom  Comments  at  2;  Alloy  Comments  at  10.
 17  WorldCom  Comments  at  2-  3.  WorldCom  also  asks  that  the  Commission  work  to  increased  the  speed
 at  which  it  notifies  carriers  that  an  informal  complaint  has  been  filed.  Id.
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 8
 PART  1,  SUBPART  F    WIRELESS  TELECOMMUNICATIONS  SERVICES
 APPLICATIONS  AND  PROCEDURES
 Description
 Part  1,  subpart  F  18  sets  forth  procedural  rules  governing  the  filing  of  applications  and  the  issuance
 of  wireless  licenses.  The  rules  cover  all  of  the  basic  types  of  applications  associated  with
 wireless  licensing,  including  initial  applications,  amendments  and  modifications,  waiver  requests,
 requests  for  special  temporary  authorization,  assignment  and  transfer  applications,  and  renewals.
 In  addition,  subpart  F  includes  rules  concerning  public  notices,  petitions  to  deny,  dismissal  of
 applications,  and  termination  of  licenses.
 The  subpart  F  rules  were  adopted  as  part  of  the  1998  Biennial  Regulatory  Review  in  the
 Universal  Licensing  proceeding,  WT  Docket  No.  98-  20.  19  The  Commission  initiated  this
 proceeding  in  connection  with  the  implementation  of  the  Universal  Licensing  System  (ULS),  an
 integrated,  automated  system  for  electronic  filing  and  processing  of  wireless  applications.  In  the
 Universal  Licensing  proceeding,  the  Commission  consolidated  and  streamlined  its  procedural
 rules  into  subpart  F,  which  replaced  numerous  service-  specific  rules  that  had  previously  applied
 to  different  wireless  services.  In  addition,  the  Commission  adopted  new  standardized  application
 forms  designed  for  use  in  ULS,  and  adopted  rules  requiring  all  wireless  telecommunications
 carriers,  as  well  as  certain  other  classes  of  wireless  licensees,  to  file  applications  electronically.  20
 Purpose
 The  purpose  of  subpart  F  is  to:  (1)  establish  uniform  procedures  for  the  licensing  of  all  wireless
 services;  (2)  minimize  filing  requirements;  and  (3)  ensure  the  collection  of  reliable  information
 from  applicants  and  licensees.
 Analysis
 Status  of  Competition
 It  is  not  feasible  to  characterize  the  status  of  competition  because  of  the  variety  of  providers  and
 markets  subject  to  this  rule.
 Advantages
 Consolidating  the  wireless  procedural  rules  into  a  single  subpart  provides  greater  clarity,
 consistency,  and  predictability  to  the  licensing  process  than  the  prior  array  of  sometimes
 inconsistent  service-  specific  rules,  forms,  and  procedures.  This  lessens  the  filing  burden  on
 applicants,  and  also  facilitates  more  rapid  and  efficient  processing  by  the  Commission.
 18  47  C.  F.  R.  Part  1,  subpart  F.
 19  Amendment  of  Parts  0,  1,  13,  22,  24  26,  27,  80,  87,  90,  95,  97,  and  101  of  the  Commission's  Rules  to
 Facilitate  the  Development  and  Use  of  the  Universal  Licensing  System  in  the  Wireless  Telecommunications
 Service,  98-  20,  Report  and  Order,  13  FCC  Rcd  21027  (1998)  (ULS  Report  and  Order).
 20  47  C.  F.  R.  1.913.
105
 9
 Disadvantages
 The  requirement  of  electronic  filing  for  all  wireless  telecommunications  carriers  imposes  certain
 technical  burdens  and  costs.  In  addition,  the  general  procedural  rules  contained  in  subpart  F
 impose  administrative  burdens  on  wireless  applicants  and  licensees  that  are  inherent  to  the
 licensing  process.
 Recent  Efforts
 The  Commission  made  minor  changes  to  those  rules  in  the  1999  reconsideration  of  the  ULS
 Report  and  Order.  21
 Initial  Recommendation
 The  staff  recommends  that  the  Commission  monitor  developments  as  the  Wireless
 Telecommunications  Bureau  completes  its  implementation  of  ULS  for  all  wireless  services  this
 year.
 Comments
 Alloy  suggests  that  the  Commission  review  its  Quiet  Zone  rules  to  streamline  the  approval
 process  for  modifications  of  wireless  facilities.  22  Alloy  asserts  that  the  Commission  could
 increase  the  efficiency  of  the  ULS  system  by  providing  a  method  to  search  licenses  by  market
 number,  and  by  allowing  ULS  users  to  view  microwave  licenses  in  the  exact  form  in  which  the
 paper  license  appears.
 Recommendation
 See  initial  recommendation.  Staff  note  that  the  ULS  Taskforce  is  currently  reviewing  these
 suggestions  and  working  to  find  ways  to  increase  the  usefulness  of  the  ULS  to  wireless  licenses
 and  the  general  public.  The  staff  intends  to  review  its  application  procedures  involving  Quiet
 Zones  to  determine  whether  they  can  be  made  more  efficient.
 21  Amendment  of  Parts  0,  1,  13,  22,  24  26,  27,  80,  87,  90,  95,  97,  and  101  of  the  Commission's  Rules  to
 Facilitate  the  Development  and  Use  of  the  Universal  Licensing  System  in  the  Wireless  Telecommunications
 Service,  Memorandum  Opinion  and  Order  on  Reconsideration,  14  FCC  Rcd  11476  (1999).
 22  Alloy  Comments  at  8.
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 10
 PART  1,  SUBPART  I    PROCEDURES  IMPLEMENTING  THE  NATIONAL  ENVIRONMENTAL  POLICY  ACT  OF  1969
 Description
 Subpart  I  of  the  Commissions  rules  23  implements  the  requirements  of  the  National
 Environmental  Policy  Act  (NEPA)  24  as  well  as  a  series  of  other  federal  environmental  laws,  such
 as  the  Endangered  Species  Act  of  1973,  as  amended,  25  The  National  Historic  Preservation  Act  of
 1966  NHPA),  26  the  Wilderness  Act  of  1964,  as  amended,  27  laws  relating  to  Indian  Ceremonial
 Sites  28  and  the  Wildlife  Refuge  Laws.  29  In  addition,  the  Commissions  environmental  rules
 implement  Executive  Orders  regarding  flood  plains  and  wetlands  regulation.  30  By  statute  and/  or
 as  set  forth  in  the  regulations  of  the  Council  on  Environmental  Quality  (CEQ),  31  the  Commission
 is  responsible  for  ensuring  compliance  with  these  laws.  The  rules  identify  certain  special  issues
 for  consideration,  including  the  impact  of  high-  intensity  white  lights  on  towers  in  residential
 neighborhoods  32  and  the  effect  of  radiofrequency  emissions  on  the  human  environment.  33
 Purpose
 The  purpose  of  the  Commissions  environmental  rules  is  to  identify  those  sensitive  environmental
 issues  which  Commission  licensees  must  address.  The  Commission  complies  with  NEPA  by
 requiring  its  licensees  to  assess  and,  if  found,  report  the  potential  environmental  consequences  of
 their  proposed  projects.
 If  a  federally-  licensed  facility,  such  as  the  construction  of  a  tower,  might  affect  the  environment
 in  one  of  the  ways  described  in  the  rules,  the  licensee  is  required  to  consider  the  potential
 environmental  effects  from  its  project,  to  describe  those  potential  effects  in  an  environmental
 assessment  (EA)  and  file  that  document  with  the  Commission.  34  The  Commission  has  concluded
 that  actions  not  identified  in  its  rules  are  categorically  excluded  from  environmental  review.  35
 23  The  Commissions  environmental  rules  are  codified  at  47  C.  F.  R.    1.  1301-  1.1319.
 24  42  USC    4321-  4347.
 25  16  USC    1531-  1543.
 26  Id.    470.
 27  Id.    1131-  1136.
 28  Id.    470aa.
 29  Id.    668dd.
 30  See  Executive  Orders  11988  (floodplains)  and  11990  (wetlands).
 31  40  C.  F.  R.    1501-  1508.
 32  47  C.  F.  R.    1.  1307(  a)(  8).
 33  Id.    1.  1307(  b).
 34  Id.    1.  1307(  a).
 35  Id.    1.  1306.
107
 11
 The  Commissions  environmental  rules  then  explain  what  information  is  required  in  an  EA,  36  the
 methods  for  the  public  to  file  objections  to  EAs,  37  and  those  situations  in  which  a  full
 environmental  impact  statement  must  be  completed,  38  as  required  by  NEPA.
 Analysis
 Status  of  Competition
 The  status  of  competition  is  irrelevant  to  the  analysis  of  this  rule.
 Advantages
 The  Commissions  environmental  rules  meet  the  Commissions  obligation  to  consider  the  affect
 on  the  environment,  of  facilities  proposed  by  its  licensees.  These  rules  streamline  compliance
 with  multiple  environmental  laws  and  focus  environmental  review  activities  on  those  that  have  a
 potential  to  significantly  affect  the  environment.  The  rules  rely  on  licensees  to  perform
 preliminary  analyses  to  determine  if  there  will  be  an  environmental  effect  by  contacting  expert
 state  and  federal  agencies.  Licensees  are  required  to  file  environmental  assessments  with  the
 Commission  only  where  there  may  be  an  environmental  effect.  In  those  cases  where  there  may
 be  an  effect  on  the  environment  a  detailed  evaluation  of  the  environmental  effect  is  performed  by
 the  licensee,  filed  with  the  Commission,  and  approved  prior  to  construction  of  the  proposed
 facilities.
 Disadvantages
 The  environmental  laws  as  implemented  by  the  Commission  can  create  administrative  burdens
 and  delays  in  the  implementation  of  federally-  licensed  projects.  Moreover,  the  expert  agencies
 contacted  by  licensees  to  determine  if  proposed  projects  will  have  an  environmental  effect  could
 be  burdened  by  the  number  of  requests  from  the  Commissions  licensees.  The  reliance  on  the
 licensees  to  make  the  initial  evaluation  of  environmental  effect  of  proposed  facilities  can  lead  to
 the  construction  of  facilities  that  have  an  adverse  effect  on  the  environment.  In  these  cases,
 licensees  generally  construct  without  contacting  expert  agencies  or  adequately  assessing  the
 effect  on  the  environment.
 Recent  Efforts
 The  Wireless  Telecommunications  Bureau  recently  sought  comment  on  a  Nationwide
 Programmatic  Agreement  that  would  adopt  streamlined  procedures  for  review  of  co-  locations  of
 antennas  under  the  NHPA.  39  This  Nationwide  Programmatic  Agreement  is  being  considered  for
 potential  execution  by  the  FCC,  the  National  Conference  of  State  Historic  Preservation  Officers,
 and  the  Advisory  Council  on  Historic  Preservation  (ACHP).  Members  of  the  staff  have  also
 36  Id.    1.1308,  1.  1311.
 37  Id.    1.  1313.
 38  Id.    1.  1314-  1.  1319.
 39  Wireless  Telecommunications  Bureau  Seeks  Comment  on  a  Draft  Programmatic  Agreement  with
 Respect  to  Co-  locating  Wireless  Antennas  on  Existing  Structures,  DA  00-  2907  (rel.  Dec.  26,  2000  (Co-location
 PN).
108
 12
 attended  various  environmental  seminars,  workshops,  and  meetings  to  identify  areas  where  the
 FCC  has  compliance  obligations,  to  explain  the  Commissions  rules,  and  to  evaluate  how  the
 FCCs  environmental  obligations  can  be  streamlined.
 The  Wireless  Telecommunications  Bureau  is  reviewing  the  NEPA  process  and  actively  working
 with  carriers,  tower  construction  and  management  companies,  the  ACHP,  and  the  SHPOs/  THPOs
 to  develop  a  programmatic  agreement  and  other  measures  to  facilitate  the  NEPA  process  and
 meet  the  concerns  raised  by  all  parties  involved.  The  ACHP  has  recently  confirmed  the  authority
 of  licensees,  applicants,  and  their  representatives  to  act  on  behalf  of  the  Commission  with  respect
 to  many  aspects  of  the  historic  preservation  review  process.  40
 Initial  Recommendation
 In  general,  the  staff  recommends  that  the  subpart  I  rules  be  retained  because  they  are  statutorily
 mandated  and  fulfill  important  public  interest  goals.  The  staff  also  recommends,  however,  that
 the  rules  be  evaluated  on  an  ongoing  basis  to  determine  whether  they  meet  the  Commissions
 environmental  obligations  and  can  be  streamlined  in  order  to  minimize  administrative  cost  and
 delay.
 Comments
 Sprint  asserts  that  the  application  of  NHPA  to  tower  siting  is  legally  unjustified,  discriminatory,
 and  administratively  burdensome.  41  Alloy,  Verizon,  CTIA,  and  Sprint  suggest  that  the
 Commission  streamline  its  process  for  reviewing  the  construction  of  facilities  under  the  NHPA
 and  NEPA,  particularly  by  exempting  certain  categories  of  construction  from  the  requirement  to
 prepare  an  EA.  42  For  example,  Alloy  and  Sprint  recommend  that  co-  locations  of  new  antennas
 on  existing  structures  should  be  subject  to  streamlined  procedures.  43
 Recommendation
 See  initial  recommendation.  Although  Sprint  asserts  that  the  Commissions  rules  implementing
 NHPA  should  not  apply  to  tower  siting  generally,  it  does  not  provide  any  specific  arguments  in
 support  of  this  assertion.  Regarding  carriers  concerns  about  streamlining  the  Commissions
 environmental  review  process  as  applied  to  tower  siting,  we  note  that  the  Commission  recently
 sought  comment  on  a  Nationwide  Programmatic  Agreement  that  would  adopt  streamlined
 procedures  for  review  of  co-  locations  of  antennas  under  the  NHPA.  44  The  Commission  will
 continue  to  work  actively  with  carriers,  tower  construction  and  management  companies,  and  other
 federal  and  state  agencies  to  streamline  the  environmental  review  process.
 40  Memorandum  from  John  M.  Fowler,  Executive  Director,  ACHP,  to  FCC,  SHPOs,  and  THPOs,  dated
 Sept.  21,  2000.
 41  Sprint  Comments  at  9.
 42  Alloy  Comments  at  9;  Verizon  Comments  at  10-  14;  CTIA  Comments  at  12-  14;  Sprint  Comments  at  9.
 43  Alloy  Comments  at  9;  Sprint  Comments  at  9.
 44  Co-  location  PN,  DA00-  2907.
109
 13
 PART  1,  SUBPART  J  -  POLE  ATTACHMENT  COMPLAINT  PROCEDURES
 Description
 Subpart  J  implements  section  224  of  the  Communications  Act  of  1934,  as  added  by  Pub.  Law  No.
 95-  234,  as  amended.  The  Telecommunications  Act  of  1996  45  significantly  amended  section  224.
 Subpart  J  contains  complaint  and  enforcement  procedures  to  ensure  that  telecommunications
 carriers  and  cable  system  operators  have  nondiscriminatory  access  to  a  utilitys  poles,  ducts,
 conduits  and  rights-  of-  way  with  rates,  terms  and  conditions  that  are  just  and  reasonable.  These
 rules  apply  to  states  that  have  not  certified  to  the  Commission  that  they  regulate  pole  attachments.
 Purpose
 The  purpose  of  subpart  J  is  to  provide  a  simple  and  expeditious  process  for  resolving  complaints
 filed  pursuant  to  section  224  of  the  Communications  Act  of  1934,  as  amended.  Subpart  J  sets
 forth  uniform  definitions,  procedures  and  requirements  for  an  aggrieved  party  to  seek  redress  for
 unjust  and  unreasonable  rates,  and  terms  and  conditions  which  impede  the  deployment  of  its
 facilities.
 Analysis
 Status  of  Competition
 The  relevant  market  is  the  existing  local  pool  of  poles,  ducts,  conduits  and  rights-  of-  way  to  which
 cable  or  telecommunications  service  providers,  out  of  necessity  or  business  convenience,  must
 attach  their  distribution  facilities.  At  the  time  of  adoption  of  section  224,  utilities  enjoyed  a
 superior  bargaining  position  over  attachers  in  negotiating  the  rates,  terms  and  conditions  for  pole
 attachments  due  to  the  utilities  monopoly  position  in  the  ownership  or  control  of  these
 facilities.  46  That  monopoly  position  has  not  changed,  hence  there  remains  the  possibility  of  anti-competitive
 practices  by  utilities  against  cable  or  competitive  telecommunications  providers  in
 the  absence  of  section  224.
 Advantages
 Subpart  J  provides  a  simple  and  expeditious  complaint  process  and  methodology  to  determine  a
 maximum  just  and  reasonable  pole  attachment  rate  a  utility  may  charge  an  attaching
 telecommunications  carrier  or  cable  system  operator.  Subpart  J  provides  a  means  for  parties  to
 predict  an  estimated  rate  a  utility  may  charge  by  using  an  established  set  of  formulas  based  on
 rebuttable  presumptions  and  generally  publicly  available  data  that  utilities  report  to  their
 respective  regulatory  agencies.  It  also  promotes  successful  negotiation  between  parties  and
 reduces  the  burden  which  might  otherwise  be  associated  with  rate  setting.
 45  Pub.  Law  No.  104-  104,  104  Stat.  56,  149-  151  (amending  47  U.  S.  C.    224).
 46  See  1977  Senate  Report,  S.  Rep.  No.  580,  95th  Cong.,  1st  Sess.  19,  20  (1977).
110
 14
 Disadvantages
 Subpart  J  imposes  certain  transaction  costs  on  the  parties  in  order  to  successfully  pursue  and
 respond  to  the  complaint  driven  rules.  This  process,  however,  has  been  kept  as  simple  and
 expeditious  as  possible  to  ensure  a  minimal  burden  on  the  parties.
 Recent  Efforts
 In  the  Pole  Fee  Order  47  the  Commission  refined  and  clarified  the  formula  used  to  calculate  the
 maximum  just  and  reasonable  rate  a  utility  may  charge  a  cable  service  or  telecommunications
 service  provider  for  attachments  to  a  pole,  duct,  conduit  or  right-  of-  way  prior  to  February  8,
 2001,  and  continuing  for  cable  operators  not  providing  telecommunications  services  after
 February  8,  2001.  Petitions  for  reconsideration  and/  or  clarification  of  this  order  are  pending.  In
 the  Telecommunications  Carrier  Report  and  Order,  48  the  Commission  adopted  a  separate
 methodology  for  attachments  by  telecommunications  service  providers,  including  cable  systems
 providing  telecommunications  services,  after  February  8,  2001,  as  mandated  by  section  224.
 Petitions  for  reconsideration  and/  or  clarification  of  this  order  are  pending.  In  the  Local
 Competition  Order,  49  the  Commission  enumerated  guidelines  concerning  the  reasonableness  of
 certain  terms  and  conditions  of  access.  These  guidelines  were  later  modified  and  refined  in  the
 Local  Competition  Reconsideration  Order.  50
 Initial  Recommendation
 The  Staff  report  concluded  that  Subpart  J  of  Part  I  is  necessary  to  implement  and  enforce  section
 224  of  the  Communications  Act.  The  argument  for  these  rules  has  been  bolstered  by  the  entry  of
 utilities  into  the  telecommunications  field.  Additionally,  because  the  Commission  has
 significantly  revised  and  clarified  this  rule  in  the  last  two  years,  modification  or  repeal  of  the
 Subpart  J  rules  is  not  recommended.
 Comments
 USTA  recommends  that  the  Commission  streamline  the  pole  attachment  rules.  USTA  believes
 that  Section  1.1417(  d),  which  requires  a  carrier  to  determine  an  average  number  of  attachers  per
 pole  based  on  three  demographic  zones  within  a  state,  creates  a  significant  administrative  burden
 and  makes  location  definitions  confusing,  overlapping  and  far  more  complex  than  necessary.
 USTA  also  argues  that  the  Commission  should  not  require  that  carriers  utilize  Part  32  to
 determine  the  operating  expenses  and  actual  capital  costs  used  to  set  pole  attachment  rates.
 USTA  submits  that  the  Commission  should  reconsider  a  decision  to  exclude  certain
 47  In  the  Matter  of  Amendment  of  the  Commissions  Rules  and  Policies  Governing  Pole  Attachments,
 Report  and  Order,  15  FCC  Rcd  6453  (2000).
 48  In  the  Matter  of  Implementation  of  Section  703(  e)  of  the  Telecommunications  Act  of  1996,  Report  and
 Order,  13  FCC  Rcd  6777  (1998);  rev.  in  part,  Gulf  Power,  et  al.,  v.  FCC,  208  F.  3d  1263  (11  th  Cir.,  rel.  Apr.
 11,  2000).  Petitions  for  rehearing  en  banc  have  been  filed  by  the  Commission  and  intervenors.
 49  Implementation  of  the  Local  Competition  Provisions  in  the  Telecommunications  Act  of  1996,  First
 Report  and  Order,  11  FCC  Rcd  15499  (1996).
 50  In  the  Matter  of  the  Local  Competition  Provisions  in  the  Telecommunications  Act  of  1996,  Order  on
 Reconsideration,  FCC  99-  266  (rel.  Oct.  26,  1999).
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 15
 administrative  expenses  in  the  Part  32  accounts  in  the  pole  attachment  formula,  and  objects  to  the
 Commission's  current  methodology  to  avoid  negative  pole  attachment  rates.  It  recommends  that
 the  Commission  allow  LECs  to  use  Generally  Accepted  Accounting  Principles  (GAAP)  without
 specifying  Part  32  accounts.
 Finally,  USTA  suggests  that  the  Commission  could  reduce  the  number  of  unnecessary  complaints
 if  it  utilized  general  presumptions  regarding  the  reasonability  of  pole  attachment  rates.  It
 proposes  that  the  Commission  adopt  a  presumption  that  a  rate  is  not  excessive  if  an  equal  or
 higher  rate  has  been  in  effect  for  a  period  of  over  twelve  months  without  complaint.
 Recommendation
 We  do  not  believe  that  USTAs  comments  require  a  change  from  our  conclusion  that  Subpart  J  of
 Part  I  is  necessary  to  enforce  section  224  of  the  Communications  Act.  We  are  not  persuaded  that
 we  need  reconsider  our  belief  that  the  pole  attachment  rules  should  be  maintained  without
 modification  or  repeal.  We  note,  however,  that  the  arguments  raised  by  USTA  are  pending
 before  us  in  various  petitions  filed  by  USTA  prior  to  the  release  of  the  Biennial  Review  Staff
 Report.  We  conclude  therefore  that  the  most  efficient  way  to  resolve  these  issues,  which  address
 substantive  changes  to  our  rules,  is  through  our  response  to  the  petitions  rather  than  through  the
 limited  focus  of  this  Biennial  Review.
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 16
 PART  1,  SUBPART  Q    COMPETITIVE  BIDDING  PROCEEDINGS
 Description
 Subpart  Q  implements  section  309(  j)  of  the  Communications  Act  of  1934,  as  added  by  the
 Omnibus  Budget  Reconciliation  Act  of  1993  51  and  the  Balanced  Budget  Act  of  1997.  52  Subpart  Q
 sets  forth  rules  governing  the  mechanisms  and  procedures  for  competitive  bidding  to  award
 spectrum  licenses.
 Purpose
 The  purpose  of  subpart  Q  is  to  establish  a  uniform  set  of  competitive  bidding  rules  and  procedures
 for  use  in  licensing  of  all  services  that  are  subject  to  licensing  by  auction.  The  rules  in  this
 subpart:  (1)  specify  which  services  are  eligible  for  competitive  bidding;  (2)  provide  competitive
 bidding  mechanisms  and  design  options;  (3)  establish  application,  disclosure  and  certification
 procedures  for  short-  and  long-  form  applications;  and  (4)  specify  down  payment,  withdrawal  and
 default  mechanisms.
 In  addition,  subpart  Q  contains  rules  that  define  eligibility  for  designated  entity  (i.  e.,  small
 business)  status,  and  includes  a  schedule  of  bidding  credits  for  which  designated  entities  may
 qualify  in  those  auctions  in  which  special  provisions  are  made  for  designated  entities.  53  The
 purpose  of  these  provisions  is  to  implement  section  309(  j)(  3)(  B)  of  the  Act,  which  states  that  an
 objective  of  designing  and  implementing  the  competitive  bidding  system  is  to  promot[  e]
 economic  opportunity  and  competition  and  ensur[  e]  that  new  and  innovative  technologies  are
 readily  accessible  to  the  American  people  by  avoiding  excessive  concentration  on  licenses  and
 disseminating  licenses  among  a  wide  variety  of  applicants,  including  small  businesses,  rural
 telephone  companies,  and  businesses  owned  by  members  of  minority  groups  and  women.  54
 Analysis
 Status  of  Competition
 For  the  purpose  of  this  document,  it  is  not  feasible  to  characterize  the  status  of  competition
 because  of  the  variety  of  markets  affected  by  this  rule.  For  a  detailed  analysis  on  competitive
 conditions  with  respect  to  commercial  mobile  services,  please  refer  to  the  Fifth  Annual  CMRS
 Competition  Report.  55
 51  See  Omnibus  Budget  Reconciliation  Act  of  1993,  Pub.  Law  No.  103-  66  (1993).
 52  See  Balanced  Budget  Act  of  1997,  Pub.  Law  No.  105-  33,    3002,  111  Stat.  251  (1997)  (amending  47
 U.  S.  C.    309(  j)).
 53  In  service-  specific  rule  making  proceedings,  the  Commission  continues  to  establish  the  appropriate
 size  standards  for  each  auctionable  service.
 54  47  U.  S.  C.    309(  j)(  3)(  B).
 55  Implementation  of  Section  6002(  b)  of  the  Omnibus  Budget  Reconciliation  Act  of  1993;  Annual  Report
 and  Analysis  of  Competitive  Market  Conditions  with  Respect  to  Commercial  Mobile  Services,  Fifth  Report,
 FCC  00-  289  (rel.  August  18,  2000)  (  Fifth  Annual  CMRS  Competition  Report).
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 17
 Advantages
 The  subpart  Q  competitive  bidding  rules  establish  procedures  for  the  efficient  licensing  of
 spectrum.  Use  of  auction  procedures  allows  for  substantially  faster  licensing  and  lesser  costs  than
 alternative  licensing  methods  such  as  comparative  hearings,  and  is  more  likely  to  result  in  award
 of  licenses  to  those  entities  that  value  the  spectrum  the  most  and  will  use  it  most  efficiently.
 Auction  rules  also  enable  the  Commission  to  recover  a  portion  of  the  value  of  the  spectrum  for
 the  benefit  of  the  public.
 Subpart  Q  is  the  result  of  the  Commissions  consolidation  of  its  auction  rules  in  the  Part  1
 rulemaking  proceeding  (WT  Docket  No.  97-  82).  Prior  to  the  Part  1  proceeding,  the  Commission
 implemented  service-  specific  auction  rules  for  each  new  auctioned  service.  Consolidating  the
 auction  rules  in  Part  1  has  resulted  in  more  consistency  and  predictability  in  the  auctions  process
 from  service  to  service.
 Disadvantages
 The  auction  rules  in  this  subpart  impose  certain  transaction  costs  on  auction  participants  (aside
 from  the  obligation  on  the  winning  bidder  to  pay  the  amount  bid).  These  auction-  related  costs
 may  be  somewhat  higher  than  the  cost  of  filing  a  lottery  application  but  significantly  less  than  the
 cost  of  a  comparative  hearing.  56  However,  they  also  tend  to  discourage  frivolous  or  speculative
 applications  and  are  critical  for  ensuring  the  integrity  of  the  auction  process.  In  addition,  certain
 aspects  of  the  auctions  process  (e.  g.,  setting  of  minimum  opening  bid  amounts,  bid  increments,
 and  bidding  credit  levels)  still  require  service-  specific  notice  and  comment  prior  to  each
 individual  auction.  Nonetheless,  the  delays  associated  with  auctions  are  significantly  less  than
 those  associated  with  other  licensing  mechanisms.
 Recent  Efforts
 The  Commission  has  made  significant  changes  to  the  competitive  bidding  rules  of  subpart  Q  in
 recent  years.  The  overall  objectives  of  these  competitive  bidding  rulemakings  are:  (1)
 consolidation  of  competitive  bidding  rules;  and  (2)  the  establishment  of  a  uniform  set  of  rules.  In
 the  Part  1  Third  Report  and  Order,  57  the  Commission  made  substantive  amendments  and
 modifications  to  the  competitive  bidding  rules  for  all  auctionable  services.  These  changes  to  the
 rules  are  intended  to  streamline  regulations  and  eliminate  unnecessary  rules  wherever  possible,
 increase  the  efficiency  of  the  competitive  bidding  process,  and  provide  more  specific  guidance  to
 auction  participants.  The  changes  also  advance  the  auction  program  by  reducing  the  burden  on
 the  Commission  and  the  public  of  conducting  service-  by-  service  auction  rule  makings.  The
 Commission  recently  adopted  the  Part  1  Fifth  Report  and  Order,  58  which  amended  and  clarified
 56  See  FCC  Report  to  Congress  on  Spectrum  Auctions,  WT  Docket  No.  97-  150,  Report,  FCC  97-  353,
 Section  III,  pg.  8  (rel.  October  9,  1997)  (citing  studies  estimating  costs  of  $800  per  application  under  the
 lottery  system  and  $130,000  per  application  under  the  comparative  hearing  process).
 57  Amendment  of  Part  1  of  the  Commission's  Rules    Competitive  Bidding  Procedures,  Allocation  of
 Spectrum  Below  5  GHz  Transferred  from  Federal  Government  Use,  Third  Report  and  Order  and  Second
 Further  Notice  of  Proposed  Rule  Making,  13  FCC  Rcd  374  (1997)  (modified  by  Erratum,  DA  98-  419  (rel.
 Mar.  2,  1998).
 58  Amendment  of  Part  1  of  the  Commission's  Rules    Competitive  Bidding  Procedures,  Fifth  Report  and
 Order,  FCC  00-  274  (rel.  August  14,  2000)  (  Part  1  Fifth  Report  and  Order).
114
 18
 the  Part  1  subpart  Q  general  competitive  bidding  rules.  In  the  Part  1  Fifth  Report  and  Order,  the
 Commission  delegated  to  the  Wireless  Telecommunications  Bureau  the  authority  to  make  any
 revisions  to  the  Code  of  Federal  Regulations  that  are  necessary  to  conform  the  service-  specific
 auction  rules  to  the  Part  1  general  competitive  bidding  rules.
 Initial  Recommendation
 The  Commission  has  significantly  revised  and  streamlined  the  competitive  bidding  rules  in  this
 subpart  in  several  proceedings.  Therefore,  the  staff  concludes  that  significant  modification  or
 repeal  of  the  subpart  Q  rules  is  not  necessary  at  this  time.
 Comments
 None.
 Recommendation
 See  initial  recommendation.
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 19
 PART  1,  SUBPART  T    EXEMPT  TELECOMMUNICATIONS  COMPANIES
 Description
 Sections  1.5000  through  1.5007  59  implement  provisions  of  the  Telecommunications  Act  of  1996
 by  which  a  public  utility  holding  company  may  obtain  a  determination  from  the  Commission  of
 status  as  an  Exempt  Telecommunications  Company  (ETC).  By  obtaining  ETC  status  under  these
 procedures,  these  firms  become  exempt  from  the  line  of  business  restrictions  of  the  Public
 Utility  Holding  Company  Act  (PUHCA).  Those  restrictions,  which  are  subject  to  regulation  of
 the  Securities  and  Exchange  Commission,  would  otherwise  preclude  these  firms  from  entering
 markets  that  are  not  related  to  the  provision  of  public  utility  service.
 Purpose
 The  purpose  of  these  rules  is  to  enable  public  utility  holding  companies  to  enter  the
 telecommunications  industry  and  thereby  increase  the  number  of  possible  entrants  into  this
 industry.
 Analysis
 Status  of  Competition
 The  status  of  competition  is  irrelevant  to  the  analysis  of  this  rule.
 Advantages
 The  rules  achieve  the  purpose  in  a  very  effective,  streamlined  way  and  permit  swift  entry  into
 many  markets  by  ETCs.
 Disadvantages
 The  required  approval  process  may  slow  market  entry  slightly  in  some  cases.
 Recommendation
 Staff  recommends  that  these  rules  be  retained.
 Comments
 None.
 Recommendation
 See  initial  recommendation
 59  47  C.  F.  R.    1.5000-  1.  5007.
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 20
 PART  2,  SUBPART  B    ALLOCATION,  ASSIGNMENT,  AND  USE  OF  RADIO  FREQUENCIES
 Description
 Section  303(  c)  of  the  Communications  Act  of  1934,  as  amended,  authorizes  the  Commission  to
 assign  bands  of  frequencies  to  the  various  classes  of  stations.  Part  2,  subpart  B  implements  this
 authority  and  contains  the  Table  of  Allocations  which  identifies  the  services  allowed  in  each
 frequency  band.
 Purpose
 The  Table  of  Allocations  provides  a  basic  framework  for  each  radio  services  rules.
 Analysis
 Status  of  Competition
 The  status  of  competition  cannot  be  characterized  because  of  the  variety  of  services  and  markets
 affected  by  this  part.
 Advantages
 The  Table  of  Allocations  sets  out  what  radio  services  are  permitted  in  each  band  and  the  primary
 or  secondary  status  of  each.  Users  are  informed  of  what  other  classes  of  stations  may  enter  the
 band  or  adjacent  bands  and  what  priority  exists  with  respect  to  other  uses.
 Disadvantages
 For  some  new  radio  technologies,  a  two-  step  process  is  needed  to  implement  their  use:  first  the
 allocation  table  is  amended,  and  then  the  service  rules  are  adopted.  On  occasion,  the  Commission
 combines  these  two  steps.
 Recent  Efforts
 The  allocation  table  is  dynamic  and  is  regularly  amended  to  address  new  services  and  changes  to
 existing  services.
 Initial  Recommendation
 The  staff  recommends  retaining  the  table  in  its  current  form  and  continuing  the  present  procedure
 of  incremental  change  as  the  need  arises.
 Comments
 None  received.
 Recommendation
 See  initial  recommendation.
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 21
 PART  2,  SUBPART  J    EQUIPMENT  AUTHORIZATION  PROCEDURES
 Description
 Sections  302  and  303(  e)  of  the  Communications  Act  of  1934,  as  amended,  authorize  the
 Commission  to  regulate  radio  devices.
 Purpose
 Subpart  J  describes  the  general  application  procedure  and  general  technical  requirements  for
 equipment  authorization.
 Analysis
 Status  of  Competition
 The  status  of  competition  cannot  be  characterized  because  of  the  variety  of  services  and  markets
 affected  by  this  rule.
 Advantages
 This  subpart  delineates  procedures  and  requirements  for  compliance  with  technical  standards  for
 radio  frequency  equipment,  thereby  promoting  efficient  use  of  radio  spectrum.
 Disadvantages
 The  requirements  impose  some  regulatory  costs  on  equipment  manufacturers  and  the  required
 approvals  may  slow  market  entry  slightly.
 Recent  Efforts
 The  equipment  authorization  procedures  have  been  updated  to  decrease  the  regulatory  burden  on
 classes  of  equipment  shown  to  have  a  low  risk  of  interference  potential.
 Initial  Recommendation
 The  staff  recommended  that  this  subpart  clarify  the  conditions  under  which  equipment  designed
 for  operation  outside  the  US  could  be  marketed  in  the  US,  e.  g.  cellular  telephones  and  marine
 radios  with  both  US  and  foreign  modes.
 Comments
 The  Wireless  Communications  Division  of  the  Telecommunications  Industry  Association  60
 suggested  two  additional  changes  to  the  Rules:  (1)  to  amend  2.1055(  a)(  2)  to  reflect  the  present
 practice  that  Family  Radio  Service  transmitters  are  examined  at  temperatures  between  20
 degrees  and  +50  degrees  Celsius;  and  (2)  to  change  the  50%  duty  cycle  used  for  examining  Part
 90  devices  to  15%.
 60  See  Wireless  Communications  Division  of  the  Telecommunications  Industry  Association  comments  at
 4.
118
 22
 We  concur  with  the  first  recommendation  but  disagree  with  the  second.  A  50%  duty  cycle  is
 possible  for  moderate  periods  of  time  and  testing  of  the  device  to  ensure  compliance  at  this  level
 is  appropriate.
 Alloy  LLC  61  objected  to  a  staff  recommendation  to  clarify  what  equipment  approvals  are  required
 for  the  marketing  of  transmitters  that  include  modes  for  overseas  use.  The  staff  recommends
 proceeding  with  a  clarification  of  our  rules  in  the  context  of  a  notice  and  comment  rule  making
 proceeding.
 Recommendation
 See  initial  recommendation.
 61  See  Alloy  LLC  comments  at  11.
119
 23
 PART  3    AUTHORIZATION  AND  ADMINISTRATION  OF  ACCOUNTING  AUTHORITIES  IN  MARITIME  AND  MARITIME  MOBILE-  SATELLITE  RADIO
 SERVICES.
 Description
 This  rule  part  implements  47  U.  S.  C.  154(  i),  154(  j)  and  303(  r).  Part  3  sets  forth  rules  for
 authorizing,  controlling  and  monitoring  the  issuance  of  accounting  authority  identification  codes
 (AAIC).  The  rule  places  specific  reporting  requirements  on  authorized  Accounting  Authorities
 and  addresses  the  Commissions  enforcement  policy.  It  also  establishes  rules  to  monitor  the
 business  conduct  of  authorized  Accounting  Authorities.
 Accounting  Authorities  are  responsible  for  settling  accounts  for  public  correspondence  due  to
 foreign  administrations  for  messages  transmitted  at  sea  by  or  between  maritime  mobile  stations
 located  on  board  ships  subject  to  U.  S.  registry  and  utilizing  foreign  coast  and  coast  earth  station
 facilities.
 Purpose
 These  rules  ensure  that  settlements  of  accounts  for  U.  S.  licensed  ship  radio  stations  are  conducted
 in  accordance  with  the  International  Telecommunications  Regulations,  taking  into  account  the
 applicable  ITU-  T  recommendations.
 Analysis
 Status  of  Competition
 Not  relevant.
 Advantages
 These  rules  establish  and  formalize  procedures  for  controlling  the  issuance  of  accounting
 authority  identification  codes;  establish  rules  and  guidance  for  administering  accounting  authority
 activities;  address  ITU-  T  recommendations;  ensure  compliance  with  International
 Telecommunications  Regulations;  implement  specific  reporting  requirements;  and  provide  the
 opportunity  for  the  Commission  to  privatize  its  own  internal  accounting  authority  activities.
 Disadvantages
 Administrative  burden  of  monitoring  the  activities  of  private  accounting  authorities.
 Recent  Efforts
 The  International  Bureau  is  currently  drafting  a  Further  Notice  of  Proposed  Rule  Making
 (FNPRM)  which,  among  other  things,  considers  privatizing  the  role  currently  performed  by
 USO1,  the  Commissions  internal  accounting  authority.  For  years  USO1  has  handled  all
 communications  traffic,  not  otherwise  contracted  with  one  of  the  interim  accounting  authorities.
 With  the  implementation  of  Part  3  and  the  adoption  of  rules  proposed  in  the  pending  FNPRM,  the
 Commission  plans  to  get  out  of  the  business  of  settling  maritime  accounts  and  instead  will
 administer  and  monitor  the  activities  of  authorized  accounting  authorities.
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 24
 Initial  Recommendation
 Recommend  the  entire  rule  part  stand  as  written,  pending  IB  completion  of  its  current  rule
 making  to  privatize  the  Commissions  internal  accounting  authority  (USO1).
 Comments
 None  received.
 Recommendation
 See  initial  recommendation.
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 25
 PART  15  RADIO  FREQUENCY  DEVICES
 Description
 Section  302  of  the  Communications  Act  of  1934,  as  amended,  authorizes  the  Commission  to
 regulate  devices  which  may  interfere  with  radio  reception  and  requires  the  Commission  to  adopt
 regulations  forbidding  the  sale  of  equipment  capable  in  intercepting  domestic  cellular  radio
 telecommunications  service.
 Purpose
 The  purpose  of  Part  15  is  to  provide  technical  guidance  regarding  radio  devices,  including
 prevention  of  interference,  prohibitions  on  cellular  transmission  and  reception  interception.
 Analysis
 Status  of  Competition
 The  markets  affected  by  Part  15  are  competitive.
 Advantages
 The  requirements  of  Part  15  are  clear  and  competitively  neutral.
 Disadvantages
 The  requirements  impose  some  regulatory  costs  on  equipment  manufacturers  and  the  required
 approvals  may  slow  market  entry  slightly.
 Recent  Efforts
 The  Part  15  rules  are  continually  revised  to  address  evolving  technology.
 Initial  Recommendation
 The  staff  recommends  that  the  Commission  incorporate  the  new  ANSI  C63.17  test  procedure  for
 unlicensed  PCS  systems  into  the  rules;  review  emission  standards  above  2  GHz  in  view  of
 changes  in  licensed  services  at  these  frequencies;  and  amend  15.231  to  permit  data  transmission.
 Comments
 The  Wireless  Communications  Division  of  the  Telecommunications  Industry  Association  made
 several  suggestions  for  additional  changes.  First,  TIA  argued  that  the  Commission  should
 simplify  the  different  equipment  authorizations  needed  for  composite  devices  (e.  g.  wireless
 organizers).  Staff  agrees  with  this  suggestion.  Second,  TIA  recommended  that  the  Commission
 remove  the  requirement  for  two  FCC  IDs  for  composite  devices  connected  to  the  PSTN.  This
 change  has  been  proposed  in  the  NPRM  in  CC  Docket  99-  216.  62  Third,  TIA  proposes  a
 62  2000  Biennial  Regulatory  Review  of  Part  68  of  the  Commissions  Rules  and  Regulations,  CC  Docket
 No.  99-  216,  Notice  of  Proposed  Rulemaking,  15  FCC  Rcd  10525,  Report  and  Order,  FCC  00-  400  (rel.  Dec.
 28,  2000).
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 26
 rewording  of  15.121(  b)  which  deals  with  the  limiting  the  ability  of  scanners  to  receive
 commercial  land  mobile  signals  such  as  cellular  radiotelephone.  Staff  agrees  with  TIA  that  the
 present  wording  of  the  section  is  not  clear  and  recommends  proposing  a  revised  rule.  Finally,
 TIA  argues  that  the  Commission  should  add  a  new  15.19(  b)(  1)(  iii)  to  permit  the  use  of  the  FCC
 logo  to  indicate  equipment  had  been  approved  under  Declaration  of  Conformity  for  use  other  than
 home  of  office.  Staff  agrees  with  this  suggestion.
 Recommendation
 The  staff  recommends  the  incorporation  of  the  new  ANSI  C63.17  test  procedure  for  unlicensed
 PCS  systems;  a  review  of  the  emission  standards  above  2  GHz;  a  clarification  of  15.121(  b);  the
 amendment  of  15.231  to  permit  data  transmission;  and  finally,  the  addition  of  a  new
 15.19(  b)(  1)(  iii)  to  permit  the  use  of  the  FCC  logo  to  indicate  equipment  had  been  approved  under
 Declaration  of  Conformity  for  use  other  than  home  or  office.
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 27
 PART  17    CONSTRUCTION,  MARKING,  AND  LIGHTING  OF  ANTENNA  STRUCTURES
 Description
 Part  17  implements  section  303(  q)  of  the  Communications  Act  of  1934,  as  amended.  63  Part  17
 establishes  the  procedures  by  which  the  Commission  registers  and  assigns  painting  and  lighting
 requirements  to  those  antenna  structures  that  may  pose  a  physical  hazard  to  aircraft.  64  The  rules
 require  registration,  evaluation  and  approval  by  the  Commission,  in  conjunction  with  the
 recommendations  of  the  Federal  Aviation  Administration  (FAA),  of  any  proposed  construction  or
 modification  of  an  antenna  structure  that  is  a  potential  hazard  to  aircraft.  The  rules  also  require
 tower  owners  to  paint  and  light  their  antenna  structures  as  necessary  to  protect  air  navigation.
 The  Antenna  Structure  Registration  procedures  set  forth  in  Part  17  are  distinct  from  the  FCCs
 licensing  functions.  The  registration  of  an  antenna  structure  that  affects  air  navigation  is  a  pre-condition
 to  FCC  licensing  of  radio  facilities  at  a  particular  site.
 Purpose
 Part  17  ensures  that  tower  owners  do  not  construct  structures  that  may  pose  a  hazard  to  air
 navigation  and  FCC  licensees  do  not  site  facilities  on  such  structures  until  the  antenna  structures
 comply  with  federal  aviation  safety  requirements.
 Analysis
 Status  of  Competition
 Not  relevant.
 Advantages
 The  rules  are  limited  to  those  classes  of  antenna  structures  that  may  reasonably  be  expected  to
 pose  an  air  safety  hazard  (generally,  antenna  structures  that  are  taller  than  200  feet  or  that  are  in
 close  proximity  to  airports).  Antenna  structure  owners  are  responsible  for  compliance  with  the
 rules;  thus  there  is  a  single  point  of  contact  for  a  particular  antenna  structure.  This  eliminates  the
 need  for  each  party  on  a  multi-  tenant  structure  to  undertake  the  registration  process.
 Disadvantages
 The  Part  17  may  delay  the  commencement  of  service  when  proposed  facilities  must  be  studied  by
 the  FAA  and  registered  by  the  Commission  prior  to  construction.
 63  47  U.  S.  C.    303(  q).
 64  47  C.  F.  R.  Part  17.
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 28
 Recent  Efforts
 In  a  March  2000  Memorandum  Opinion  and  Order  on  Reconsideration,  the  Commission
 reaffirmed  the  antenna  structure  registration  procedures  adopted  in  1995,  65  and  clarified  several
 rules.  66  The  Commission  has  cross-  referenced  the  Part  17  rules  in  rulemaking  proceedings  for
 individual  radio  services.  67
 Initial  Recommendation
 The  staff  concludes  that  it  is  unnecessary  to  significantly  restructure  or  modify  the  Part  17  rules  at
 this  time.  However,  the  staff  has  identified  some  rules  that  could  be  modified  or  eliminated
 without  compromising  the  public  safety  goals.  These  rules  are  duplicative  or  inconsistent  with
 the  procedures  antenna  structure  owners  must  undertake  when  notifying  the  FAA,  68  create
 unnecessary  administrative  burdens  on  antenna  structure  owners,  69  or  are  apt  to  confuse  owners
 and  licensees  who  attempt  to  comply  with  our  Part  17  rules.  70
 Comments
 Commenters  agreed  with  staffs  recommendation  that  certain  Part  17  rules  could  be  modified  or
 eliminated  without  jeopardizing  the  Commissions  statutory  responsibility  to  prescribe  painting
 and  lighting  to  antenna  structures  as  necessary  to  protect  air  safety.  71  Commenters  requested  that
 the  FCC  work  with  the  FAA  to  further  streamline  procedures  in  this  area.  For  example,  both
 Alloy  and  CTIA  claim  that  although  Section  17.23  of  the  Commissions  rules  makes  mandatory
 the  provision  in  the  FAA  Advisory  Circular  AC  70/  7460  that  requires  owners  to  notify  the  FAA
 65  Streamlining  the  Commissions  Antenna  Structure  Clearance  Procedure,  Report  and  Order,  11  FCC
 Rcd  4272  (1995).
 66  Streamlining  the  Commissions  Antenna  Structure  Clearance  Procedure,  Memorandum  Opinion  and
 Order  on  Reconsideration,  FCC  00-  76  (rel.  Mar.  8,  2000).
 67  See,  e.  g.,  47  C.  F.  R.    1.923(  d)  (adopted  in  Amendment  of  Parts  0,  1,  13,  22,  24,  26,  27,  80,  87,  90,  95,
 97,  and  101  of  the  Commissions  Rules  to  Facilitate  the  Development  and  Use  of  the  Universal  Licensing
 System  in  the  Wireless  Telecommunications  Service,  Report  and  Order,  13  FCC  Rcd  21027  (1998)).
 68  47  C.  F.  R.    17.6(  c)  (duplicates  procedures  described  in  17.  4(  e));  17.  23  (should  reflect  version  1K  of
 the  FAA  advisory  circular);  17.  45  (because  the  applicable  FAA  advisory  circular  will  specify  the
 appropriate  temporary  warning  lights,  these  provisions  may  be  in  conflict);  17.  48  (telegraph  notification  is
 no  longer  acceptable);  17.  53  and  17.  54  (technical  specifications  duplicates  those  specifications
 incorporated  by  reference  to  the  FAA  advisory  circulars).
 69  47  C.  F.  R.    17.  4(  b),  (d)  (submission  of  paper  copy  of  FAA  study  no  longer  necessary);  17.  57
 (notification  is  now  made  via  FCC  Form  854);  17.  58  (Commission  previously  determined  that  there  is  no
 longer  a  basis  for  this  reporting  requirement).
 70  47  C.  F.  R.    17.24-  43,  associated  section  headings  and  notes  (there  is  no  need  to  retain  these  reserved
 sections  and  headings);  17.  4(  g)  and  17.49  (posting  and  logging  requirements  have  caused  confusion);  17.  22
 (should  say  that  specified  painting  and  lighting  will  be  printed  on  the  registration  document);  17.56  (  as
 soon  as  practical  time  frame  is  too  indefinite);  and  17.  57  (specify  which  owner  should  file  in  a  change
 of  ownership  situation).
 71  See,  e.  g.,  Comments  of  USTA  at  p.  9  (stating  that  USTA  supports  the  Commissions  efforts  to
 eliminate  duplication  and  confusion  regarding  the  Part  17  requirements).
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 29
 when  they  plan  to  voluntarily  paint  or  light  structures,  FAA  regional  offices  have  informed
 antenna  structure  owners  not  to  provide  such  notification.  72  Alloy  and  CTIA  also  urge  the  FCC  to
 work  with  the  FAA  to  insure  consistent  application  of  the  registration  exemption  embodied  in
 Section  17.14  (b)  of  the  Commissions  rules.  73
 Recommendation
 Same  as  above.  Some  of  the  specific  issues  addressed  by  commenters  are  beyond  the  scope  of
 the  rule  review  embodied  in  the  biennial  review.  The  rule  sections  identified  by  commenters  
 17.  23  (FAA  notification  of  voluntary  marking  and  lighting  by  operation  of  incorporation  of  FAA
 advisory  circular  procedures)  and  17.14(  b)  (the  20-  foot  exception  to  FAA  notification  of
 antenna  structure  construction  or  modification  for  purposes  of  mandatory  FCC  registration)  
 implicate  FAA  practices  and  procedures.  To  the  extent  that  FAA  procedures  create  undue
 burdens  or  inefficiencies,  such  problems  are  best  resolved  through  continued  inter-  agency
 coordination  and,  as  necessary,  modifications  to  the  FAAs  own  policies  and  rules.
 72  Comments  of  Alloy  at  p.  7;  Reply  Comments  of  CTIA  at  pp.  5-  6.
 73  Comments  of  Alloy  at  p.  7;  Reply  Comments  of  CTIA  at  p.  6.
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 30
 PART  18    INDUSTRIAL,  SCIENTIFIC  AND  MEDICAL  EQUIPMENT
 Description
 Section  302  of  the  Communications  Act  of  1934,  as  amended,  authorizes  the  Commission  to
 regulate  devices  which  may  interfere  with  radio  reception.  Part  18  deals  with  unlicensed  systems
 used  for  industrial,  scientific,  and  medical  applications.
 Purpose
 Part  18  provides  technical  guidance  regarding  industrial,  scientific  and  medical  equipment  used
 for  purposes  other  than  communications.  The  rules  minimize  the  likelihood  of  interference  to
 licensed  radio  services.
 Analysis
 Status  of  Competition
 The  markets  affected  by  Part  18  are  competitive.
 Advantages
 The  requirements  of  Part  18  are  clear  and  competitively  neutral.
 Disadvantages
 The  requirements  impose  some  regulatory  costs  on  equipment  manufacturers  and  may  slow
 market  entry  slightly.
 Recent  Efforts
 The  Part  18  rules  are  continually  revised  to  address  evolving  technology.
 Initial  Recommendation
 The  staff  recommends  no  changes  other  than  currently  pending  rulemakings.
 Comments
 No  comments  were  received.
 Recommendation
 See  initial  recommendation.
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 31
 PART  20    COMMERCIAL  MOBILE  RADIO  SERVICES,  SECTION  20.6    
 CMRS  SPECTRUM  AGGREGATION  LIMIT
 Description
 Section  20.6  74  limits  the  amount  of  broadband  PCS,  cellular,  and  SMR  spectrum  that  any  entity
 can  hold  in  a  common  geographic  area.  The  rule  further  defines  the  types  of  ownership  and  other
 interests  that  are  attributable  under  the  cap.  The  cap  was  adopted  in  1994,  75  and  modified  in
 1999.  76
 Purpose
 The  purposes  of  section  20.6  are  to  promote  competition  and  reduce  barriers  to  entry  in  the
 broadband  CMRS  market  by  preventing  any  wireless  carrier  from  gaining  undue  market  power
 and  preventing  excessive  concentration  of  CMRS  spectrum.
 Analysis
 Status  of  Competition
 As  described  in  the  Fifth  Competition  Report,  the  broadband  PCS  sector  has  engaged  in
 significant  buildout  in  recent  years.  77  However,  broadband  PCS  has  not  yet  achieved  full  parity
 with  cellular  as  a  facilities-  based  competitor.  The  Fifth  Competition  Report  also  notes  that  PCS
 providers  have  yet  to  achieve  the  same  level  of  geographic  coverage  or  subscribership  as  cellular,
 particularly  in  smaller  markets.  78
 Advantages
 The  spectrum  cap  minimizes  the  potential  for  anti-  competitive  behavior  by  avoiding  excessive
 concentration  of  licenses,  and  ensures  that  licenses  are  distributed  among  a  wide  variety  of
 parties.  By  applying  a  bright-  line  test  to  spectrum  aggregation,  the  rule  also  reduces  transaction
 costs  associated  with  case-  by-  case  review  of  such  transactions.
 74  47  C.  F.  R.    20.  6.
 75  Implementation  of  Sections  3(  n)  and  332  of  the  Communications  Act,  Regulatory  Treatment  of  Mobile
 Services,  Amendment  of  Part  90  of  the  Commissions  Rules  to  Facilitate  Future  Development  of  SMR
 Systems  in  the  800  MHz  Frequency  Band,  Amendment  of  Parts  2  and  90  of  the  Commissions  Rules  to
 Provide  for  the  Use  of  200  Channels  Outside  the  Designated  Filing  Areas  in  the  896-  901  MHz  and  935-  940
 MHz  Band  Allotted  to  the  Specialized  Mobile  Radio  Pool,  Third  Report  and  Order,  9  FCC  Rcd  7988,  7992
 (1994).
 76  1998  Biennial  Regulatory  Review,  Spectrum  Aggregation  Limits  for  Wireless  Telecommunications
 Carriers,  Cellular  Telecommunications  Industry  Associations  Petition  for  Forbearance  From  the  45  MHz
 CMRS  Spectrum  Cap,  Amendment  of  Parts  20  and  24  of  the  Commissions  Rules    Broadband  PCS
 Competitive  Bidding  and  Commercial  Mobile  Radio  Service  Spectrum  Cap,  Implementation  of  Sections
 3(  n)  and  332  of  the  Communications  Act,  Regulatory  Treatment  of  Mobile  Services,  Report  and  Order,  15
 FCC  Rcd  9219  (1999).
 77  Fifth  Competition  Report,  supra,  at  28-  29.
 78  Id  at  29.
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 32
 Disadvantages
 By  restricting  aggregation  of  spectrum,  the  spectrum  cap  may  limit  economies  of  scale  or  scope
 that  could  otherwise  be  achieved  by  carriers  subject  to  the  cap.  The  rule  also  potentially  limits
 carriers  ability  to  provide  new  services  to  the  extent  such  services  require  more  PCS,  cellular  and
 SMR  spectrum  resources  than  the  cap  allows.
 Recent  Efforts
 On  September  15,  1999,  the  Commission  adopted  a  Report  and  Order  that  retained  the  spectrum
 cap,  with  some  modifications.  79  The  Commission  maintained  the  original  45  MHz  cap  for  non-rural
 areas,  adopted  a  55  MHz  cap  for  rural  areas,  adopted  a  separate  ownership  attribution
 standard  of  40  percent  equity  ownership  by  passive  institutional  investors,  and  established  a
 waiver  mechanism  for  carriers  who  can  demonstrate  that  strict  application  of  the  cap  will  impair
 their  ability  to  provide  3G  or  other  innovative  services.  The  Commission  stated  in  the  Report  and
 Order  that  it  would  consider  whether  the  cap  should  be  retained,  repealed,  or  modified  in  the
 2000  Biennial  Regulatory  Review.  80  On  November  8,  2000,  the  Commission  reaffirmed  these
 decisions  on  reconsideration  with  minor  clarification.  81
 Several  carriers  filed  petitions  for  waiver  or  forbearance  with  respect  to  application  of  the
 spectrum  cap  to  the  C  and  F  Block  auction  that  began  on  December  12,  2000.  On  August  29,
 2000,  the  Commission  issued  the  Sixth  Report  and  Order  and  Order  on  Reconsideration  in  WT
 Docket  No.  97-  82,  which  held  that  the  spectrum  cap  would  apply  to  this  auction.  82
 Initial  Recommendation
 The  Commission  has  stated  that  the  spectrum  cap  will  be  reviewed  as  part  of  the  2000  Biennial
 Regulatory  Review.  The  staff  plans  to  prepare  a  Notice  of  Proposed  Rulemaking  for  Commission
 consideration  later  this  year.
 Comments
 Alloy,  CTIA,  Independent  Cellular  Carriers,  and  Verizon  all  state  that  the  Commission  should
 eliminate  the  45  MHz  CMRS  spectrum  cap.  83  The  Coalition  of  Independent  Cellular  Carriers
 believes  that  the  spectrum  cap  should  be  raised  to  55  MHz  because  55  MHz  represents  only
 34.375%  of  the  relevant  spectrum,  and  that  many  so-  called  metropolitan  areas,  especially  those
 served  by  unserved  area  licensees,  are  rural  in  nature.  84
 79  Id.
 80  Id.  at  25-  26.
 81  1998  Biennial  Regulatory  Review  Spectrum  Aggregation  Limits  for  Wireless  Telecommunications
 Carriers,  Memorandum  Opinion  and  Order  on  Reconsideration,  FCC  00-  376  (rel.  Nov.  8,  2000).
 82  Amendment  of  the  Commissions  Rules  Regarding  Installment  Payment  Financing  for  Personal
 Communications  Services  (PCS)  Licensees,  Sixth  Report  and  Order  and  Order  on  Reconsideration,  FCC
 00-  313  (rel.  Aug.  29,  2000).
 83  Comments  of  CTIA;  Comments  of  Independent  Cellular  Carriers;  Comments  of  Verizon.
 84  Comments  of  Independent  Cellular  Carriers  pp.  4-  5.
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 33
 CTIA  and  Alloy  argue  that  the  application  of  the  Section  11  biennial  review  criteria  supports  the
 elimination  of  the  spectrum  cap  because  the  CMRS  market  is  now  competitive.  85  Alloy  argues
 that  there  are  three  or  more  competing  broadband  CMRS  providers  in  markets  covering  nearly  90
 percent  of  the  nations  population  as  evidence  of  competition,  86  and  that  since  the  1998  Biennial
 Review,  prices  have  fallen  20  percent  and  more  than  two-  thirds  of  the  population  can  choose
 from  among  five  or  more  CMRS  providers.  87  CTIA  points  out  that  further  enforcement  of  the
 CMRS  spectrum  cap  is  inappropriate  in  a  wireless  market  in  which  at  least  11  million  people  can
 choose  from  among  seven  different  providers.
 Commenters  also  argue  that  the  spectrum  cap  hampers  market-  driven  actions.  Verizon  asserts
 that  the  spectrum  cap  distorts  licensees  demand  for  spectrum  and  undercuts  the  Commissions
 efforts  to  promote  a  secondary  spectrum  market.  88  Verizon  argues  that  the  spectrum  cap  affects
 the  reauction  of  numerous  PCS  licenses,  89  while  Alloy  notes  that  the  application  of  the  spectrum
 cap  in  the  C  and  F  Block  auction  will  preclude  carriers  from  increasing  their  spectrum  in  some  of
 the  most  congested  markets.  90  Alloy,  CTIA,  and  the  Coalition  of  Independent  Cellular  Carriers,
 argue  that  licensees  need  access  to  additional  spectrum  to  offer  such  services  as  third-  generation
 (  3G)  mobile  services,  91  and  new  and  enhanced  services  (e.  g.,  wireless  data).  92
 CTIA  also  notes  that  the  Commissions  decision  to  exclude  the  spectrum  auctioned  in  the  700
 MHz  band  from  the  spectrum  cap  is  inconsistent  given  the  Commissions  understanding  that  the
 700  MHz  band  may  be  used  for  mobile  services  and  comparable  to  the  cellular  broadband  PCS
 and  SMR  spectrum  for  which  the  CMRS  spectrum  cap  was  devised.  93
 Recommendation
 See  initial  recommendation.
 85  Comments  of  Alloy  at  p.  5;  Comments  of  CTIA  at  p.  3.
 86  Comments  of  Alloy  at  p.  5  citing  Fifth  CMRS  Competition  Report  at  6.
 87  Comments  of  Alloy  at  p.  5  and  Comments  of  CTIA  at  p.  3  both  citing  Fifth  Annual  Report  and
 Analysis  of  Market  Conditions  with  Respect  to  competitive  Mobile  Services,  FCC  00-  289,  at  4-  6  (rel.  Aug.
 18,  2000)  (Fifth  CMRS  Competition  Report).
 88  Comments  of  Verizon  at  p.  9.
 89  Id.  at  p.  10.
 90  Comments  of  Alloy  at  p.  5.
 91  Id.  at  pp.  5-  6;  Comments  of  CTIA  at  p.  5.
 92  Comments  of  Coalition  of  Independent  Cellular  Carriers  at  p.  4.
 93  Id.  at  p.  6  citing  Service  rules  for  the  746-  764  and  776-  794  MHz  Bands  and  Revisions  to  Part  27  of  the
 Commissions  rules,  First  report  and  Order,  15  FCC  Rcd  476  at  para.  52  (2000).
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 34
 PART  20,  SECTION  20.11      INTERCONNECTION  TO  FACILITIES  OF  LOCAL
 EXCHANGE  CARRIERS
 Description
 The  Section  20.11  rule  codifies  section  332(  c)(  1)(  B)  of  the  Act,  94  which  was  enacted  by  Congress
 as  part  of  the  Omnibus  Budget  Reconciliation  Act  of  1993.  95  Section  20.11  96  provides  that  local
 exchange  carriers  (LECs)  must  provide  reasonable  interconnection  to  commercial  mobile  radio
 service  (CMRS)  providers  on  request,  and  that  LECs  and  CMRS  providers  must  each  reasonably
 compensate  the  other  for  terminating  traffic  that  originates  on  their  respective  facilities.
 In  the  Telecommunications  Act  of  1996,  Congress  added  sections  251  and  252  to  the  Act.  These
 statutory  provisions  establish  interconnection  rights  among  all  telecommunications  carriers,  and
 set  forth  terms  and  conditions  under  which  interconnection  must  be  provided  by  one  carrier  to
 another.  97  While  enacting  sections  251  and  252,  Congress  also  left  section  332(  c)(  1)(  B)  of  the
 Act  intact.  In  the  1996  First  Local  Competition  Order,  the  Commission  codified  new
 interconnection  rules  in  Part  51  as  part  of  its  implementation  of  sections  251  and  252.  98  The
 Commission  also  concluded  that  in  light  of  Congress  retention  of  section  332(  c)(  1)(  B),  the
 Commission  retained  separate  authority  over  LEC-  CMRS  interconnection  pursuant  to  that
 section.  99  Because  the  Commission  viewed  sections  251,  252,  and  332  of  the  Act  as  furthering  a
 common  goal  with  respect  to  interconnection,  the  Commission  declined  at  that  point  to  further  act
 on  or  define  the  scope  of  its  section  332  interconnection  authority,  but  instead  amended  section
 20.11  to  require  that  LECs  and  CMRS  providers  comply  with  the  interconnection  rules  in  Part
 51.  100
 Section  20.  11  is  organized  into  three  lettered  sub-  parts:  Subsection  (a)  requires  LECs  to  provide
 the  type  of  interconnection  requested  by  mobile  radio  service  providers,  within  reason.
 Subsection  (b)  requires  LECs  and  CMRS  providers  to  reasonably  compensate  each  other  for
 terminating  traffic  that  originates  on  each  others  facilities.  Subsection  (c)  requires  LECs  and
 CMRS  providers  to  comply  with  the  Part  51  interconnection  rules.
 Purpose
 The  purpose  of  the  LEC-  CMRS  interconnection  rule  is  to  promote  competition  in  the
 telecommunications  market  by  ensuring  that  all  LECs  and  CMRS  providers  provide  reasonable
 interconnection  to  one  another  subject  to  reasonable  rates,  terms,  and  conditions.  The  rule
 94  47  U.  S.  C.    332(  c)(  1)(  B).
 95  See  47  U.  S.  C.    332.
 96  47  C.  F.  R.    20.  11.
 97  See  47  U.  S.  C.    251,  252.
 98  Implementation  of  the  Local  Competition  Provisions  in  the  Telecommunications  Act  of  1996,  CC
 Docket  No.  96-  68,  Interconnection  between  Local  Exchange  Carriers  and  Commercial  Mobile  Radio
 Service  Providers,  11  FCC  Rcd  15499,  16195  (1996)  (Local  Competition  First  Report  and  Order).
 99  Local  Competition  First  Report  and  Order  at    1023.
 100  47  C.  F.  R.    20.  11(  c).  See  also  Local  Competition  First  Report  and  Order  at  16195.
131
 35
 regulates  the  conduct  of  LECs  with  market  power  in  their  interconnection  relationships  with
 CMRS  providers.  Historically,  some  LECs  denied  or  restricted  interconnection  options  available
 to  CMRS  providers,  or  required  CMRS  providers  to  compensate  the  LEC  for  LEC-  originated
 traffic  that  terminated  on  the  CMRS  providers  network.  Congress  enacted  section  332(  c)(  1)(  B),
 and  the  Commission  adopted  section  20.  11  codifying  this  provision,  in  order  to  curtail  such
 practices.
 Analysis
 Status  of  Competition
 While  competition  in  the  local  exchange  and  access  markets  is  growing,  competitors  still  serve
 only  a  small  percentage  of  local  lines.
 Advantages
 Section  20.11  sets  forth  basic  requirements  for  reasonable  and  nondiscriminatory  interconnection
 arrangements  between  LECs  and  CMRS  providers,  but  does  not  impose  detailed  standards  or
 technical  requirements.  It  reduces  the  potential  for  anti-  competitive  behavior,  while  affording
 carriers  reasonable  flexibility  with  respect  to  the  terms  and  conditions  of  interconnection  so  long
 as  the  basic  requirements  of  the  rule  are  adhered  to.
 Disadvantages
 Section  20.11  imposes  certain  transaction  costs  on  carriers  to  ensure  that  their  interconnection
 arrangements  comply  with  the  rule,  and  may  lead  to  disputes  and  litigation  between  carriers  about
 what  constitutes  reasonable  interconnection  under  the  rule.  In  addition,  the  overlap  between
 this  rule  and  the  Part  51  interconnection  rules  may  cause  some  duplication  of  regulatory
 requirements.
 Recent  Efforts
 Since  the  addition  of  subsection  (c)  in  1996,  section  20.11  has  not  been  revised.  In  February
 2000,  Sprint  PCS  filed  an  analysis  of  CMRS  traffic-  sensitive  costs  of  terminating  local  calls
 originating  on  LECs  networks,  and  requested  the  Commission  to  consider  rules  that  would
 mandate  recovery  of  such  costs.  101  The  Commission  has  sought  comment  on  Sprints  filing.  102
 The  issue  is  still  pending  review.
 Although  section  20.11  has  not  been  judicially  challenged,  the  related  Part  51  rules  continue  to  be
 the  subject  of  litigation.  On  July  18,  2000,  on  remand  from  the  Supreme  Court,  the  Eighth
 Circuit  vacated  portions  of  the  FCCs  forward-  looking  pricing  methodology,  proxy  prices,  and
 wholesale  pricing  provisions.  103  To  the  extent  that  section  20.  11  requires  compliance  with  Part
 51,  this  litigation  affects  carriers  obligations  under  both  sets  of  rules.
 101  Letter  from  Sprint  Spectrum  L.  P.,  d/  b/  a  Sprint  PCS,  to  Thomas  J.  Sugrue,  (filed  Feb.  2,  2000).
 102  See  Comment  Sought  on  Reciprocal  Compensation  for  CMRS  Providers,  Public  Notice,  CC  Docket
 Nos.  96-  98,  95-  185,  and  WT  Docket  No.  97-  207  (rel.  May  11,  2000).
 103  See  Iowa  Utilities  Board  v.  F.  C.  C,  (8th  Cir.  July  18,  2000).
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 36
 Initial  Recommendation
 The  staff  recommends  retaining  section  20.11.  Although  there  is  some  overlap  with  the
 interconnection  requirements  of  Part  51,  retention  of  the  rule  is  appropriate  in  light  of  the  fact  that
 Congress  has  retained  the  separate  statutory  provision  in  section  332  governing  LEC-  CMRS
 interconnection.
 Comments
 USTA  states  that  Section  20.11  104  presently  needs  no  additional  clarification.  105  USTA  believes
 that  the  Commission  should  deny  Sprint  PCSs  request  for  the  Commission  to  consider  rules  that
 would  mandate  recovery  of  CMRS  traffic-  sensitive  costs  of  terminating  local  calls  originating  on
 LECs  networks.  106
 Recommendation
 Unchanged.
 104  47  C.  F.  R.    20.  11.
 105  USTA  Comments  at  10.
 106  USTA  Comments  at  10;  see  also  Comments  Sought  on  Reciprocal  Compensation  for  CMRS  Providers,
 Public  Notice,  CC  Docket  Nos.  96-  98,  95-  185,  and  WT  Docket  No.  97-  207  (rel.  May  11,  2000).
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 37
 PART  20,  SECTION  20.  12    RESALE  AND  ROAMING
 [Note:  Section  20.  12  addresses  two  distinct  issues:  resale  and  roaming.  This  analysis  deals  with
 each  separately.]
 RESALE
 Description
 Section  20.12(  b)  107  provides  that  any  carrier  of  Broadband  PCS  (except  those  C,  D,  E,  and  F
 block  PCS  licensees  that  do  not  own  and  control  and  are  not  owned  and  controlled  by  firms  also
 holding  cellular,  A  or  B  block  licenses),  Cellular  Radio  Telephone  Service,  or  Specialized  Mobile
 Radio  (SMR)  Services  that  offers  real-  time,  two-  way  interconnected  voice  service  with  switching
 capability  (  covered  CMRS  provider)  must  permit  resale  of  its  services.
 The  resale  provision  will  cease  to  be  effective  five  years  after  the  date  of  the  award  of  the  last
 group  of  initial  licenses  for  broadband  PCS.  The  Commission  has  determined  that  the  last  PCS
 award  date  for  purposes  of  this  rules  was  November  25,  1997.  Therefore,  the  resale  rule  is  set  to
 expire  on  November  24,  2002.  108  However,  resale  arrangements  will  continue  to  be  subject  to  the
 non-  discrimination  and  reasonableness  requirements  of  sections  201  and  202  of  the
 Communications  Act  109  after  that  date.
 Purpose
 The  purpose  of  the  resale  rule  is  to  promote  competition  in  the  wireless  telephony  market  by
 preventing  facilities-  based  covered  CMRS  carriers  from  restricting  resale  of  their  services.  The
 rule  promotes  competition  during  the  period  that  broadband  PCS  providers  are  building  out  their
 facilities-  based  networks  to  compete  with  incumbent  cellular  carriers.  The  Commission  has
 concluded  that  by  November  2002,  PCS  buildout  should  be  sufficient  to  obviate  the  need  for  the
 rule.  110
 Analysis
 Status  of  Competition
 As  described  in  the  Fifth  Competition  Report,  the  broadband  PCS  licensees  have  achieved
 significant  buildout  in  recent  years.  111  However,  broadband  PCS  has  not  yet  achieved  full  parity
 with  cellular  as  a  facilities-  based  competitor.  The  Fifth  Competition  Report  also  notes  that  PCS
 107  47  C.  F.  R.    20.  12(  b).
 108  Interconnection  and  Resale  Obligations  Pertaining  to  Commercial  Mobile  Radio  Services,
 Memorandum  Opinion  and  Order  on  Reconsideration,  14  FCC  Rcd  16340  (1999)  (CMRS  Resale
 Reconsideration  Order).
 109  47  U.  S.  C.    201,  202.
 110  Id.
 111  Fifth  Competition  Report,  supra,  at  28-  29.
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 38
 providers  have  yet  to  achieve  the  same  level  of  geographic  coverage  or  subscribership  as  cellular
 providers,  particularly  in  smaller  markets.  112
 Advantages
 The  resale  rule  provides  a  bright-  line  test  that  minimizes  potential  for  anti-  competitive
 behavior.  By  prohibiting  CMRS  carriers  from  restricting  resale  unless  the  carrier  demonstrates
 that  the  restriction  is  reasonable,  the  rule  ensures  no  carrier  may  offer  like  communications
 services  to  a  reseller  at  less  favorable  prices,  or  on  less  favorable  terms  or  conditions,  than  are
 available  to  similarly  situated  customers.
 Disadvantages
 The  resale  rule  imposes  administrative  costs  on  facilities-  based  carriers  associated  with
 negotiating  and  entering  into  resale  agreements,  resolving  disputes  with  resellers,  and  litigation  of
 compliance  issues.  The  rule  also  may  impose  technical  costs  associated  with  accommodating
 resellers  on  facilities-  based  networks  and  billing  of  resale  service.
 Recent  Efforts
 In  response  to  petitions  for  reconsideration  of  the  CMRS  Resale  Order,  the  Commission  recently
 conducted  a  comprehensive  review  of  the  resale  rule.  In  the  CMRS  Resale  Reconsideration
 Order,  adopted  on  September  15,  1999,  the  Commission  rejected  arguments  that  the  rule  should
 be  repealed  immediately,  and  determined  that  retaining  the  rule  (with  minor  modifications)  until
 the  November  2002  sunset  date  would  best  promote  competition  and  balance  the  costs  and
 benefits  of  the  rule.  113
 Initial  Recommendation
 The  staff  finds  no  need  to  make  further  recommendations  at  this  time.  The  staff  recommends  that
 the  Commission  continue  to  evaluate  the  resale  rule  in  light  of  competitive  conditions  in  the
 CMRS  market  sector.
 Comments
 Alloy  notes  that  the  CMRS  marketplace  is  highly  competitive  and  as  such  the  resale  rule  should
 be  eliminated  or  its  sunset  expedited  using  the  criteria  in  the  Section  11  biennial  review  process  to
 eliminate  rules  made  obsolete  by  the  development  of  competitive  market  forces.  114  Alloy  believes
 that  retention  of  the  resale  rule  is  not  in  the  public  interest  because  it  imposes  administrative  costs
 (e.  g,  negotiating  resale  agreements  and  resolving  disputes  and  litigation)  and  technical  costs  (e.  g.,
 billing).  115  Alloy  asserts  that  the  Commission  should  open  a  proceeding  to  examine  whether  the
 112  Id  at  29.
 113  CMRS  Resale  Reconsideration  Order  at  69.
 114  Comments  of  Alloy  at  p.  12.
 115  Id.
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 39
 sunset  for  the  resale  rule  can  be  accelerated,  or  whether  the  rules  should  be  eliminated  based  on
 current  market  conditions.  116
 Recommendation
 Unchanged.
 ROAMING
 Description
 Roaming  occurs  when  the  subscriber  of  one  CMRS  provider  utilizes  the  facilities  of  another
 CMRS  provider  with  which  the  subscriber  has  no  direct  pre-  existing  service  or  financial
 relationship  to  place  an  outgoing  call,  to  receive  an  incoming  call,  or  to  continue  an  in-  progress
 call.  Roaming  can  be  done  manually,  in  which  a  subscriber  establishes  a  relationship  with  the
 host  carrier  usually  by  providing  a  credit  card  number,  or  automatically,  in  which  the  subscriber
 does  nothing  more  than  turning  on  her  telephone.  Automatic  roaming  requires  a  contractual
 agreement  between  the  respective  carriers.
 Section  20.12(  c)  117  provides  that  any  covered  CMRS  carrier  must  provide  mobile  radio  service
 upon  request  to  any  subscriber  in  good  standing,  including  roamers,  while  the  subscriber  is  within
 any  portion  of  the  licensees  licensed  service  area,  assuming  that  the  subscriber  is  using
 technically  compatible  mobile  equipment.  The  rule  only  mandates  that  carriers  offer  manual
 roaming,  and  does  not  require  provision  of  automatic  roaming.  The  rule  was  adopted  in  1996.  118
 Purpose
 The  purposes  of  the  roaming  provision  are  to  ensure  seamless  service  to  wireless  customers  who
 roam  out  of  their  home  service  areas,  and  to  prevent  carriers  from  restricting  competition  and
 consumer  choice  through  refusal  to  provide  service  to  roamers.
 Analysis
 Status  of  Competition
 Most  cellular  carriers  have  reached  automatic  roaming  agreements  among  themselves,  even
 though  section  20.12  only  mandates  manual  roaming.  Carriers  such  as  AT&  T,  Nextel,  and
 Verizon  have  also  developed  nationwide  footprints  and  wide-  area  calling  plans  that  give  their
 customers  the  ability  to  receive  service  outside  their  local  area  without  paying  roaming  charges.
 However,  some  local  and  regional  carriers  have  alleged  that  they  have  been  unable  to  enter  into
 roaming  agreements  with  competing  carriers.  Consumers  ability  to  roam  may  also  be  limited
 because  they  can  only  roam  on  networks  that  use  the  same  technical  standard  (CDMA,  TDMA,
 GSM,  Iden)  as  the  home  carrier.
 116  Id.
 117  47  C.  F.  R.    20.  12(  c).
 118  Interconnection  and  Resale  Obligations  Pertaining  to  Commercial  Mobile  Radio  Services,  Second
 Report  and  Order  and  Third  Notice  of  Proposed  Rulemaking,  11  FCC  Rcd  9462  (1996)  (CMRS  Roaming
 Order).
136
 40
 Advantages
 The  roaming  rule  provides  a  clear  standard  and  it  is  minimally  intrusive  because  it  does  not
 require  CMRS  carriers  to  reconfigure  their  systems  to  support  technically  incompatible  roaming.
 Disadvantages
 Manual  roaming  obligations  impose  some  administrative  and  technical  burdens  associated  with
 caller  verification,  billing,  and  similar  issues.
 Recent  Efforts
 At  the  time  that  it  adopted  the  manual  roaming  rule,  the  Commission  also  issued  a  Third  Notice  of
 Proposed  Rulemaking  in  CC  Docket  94-  54  on  (1)  whether  to  sunset  the  manual  roaming  rule,  and
 (2)  whether  to  mandate  automatic  roaming  for  any  carriers.  119  On  August  28,  2000,  the
 Commission  released  a  Third  Report  and  Order  and  Memorandum  Opinion  and  Order  on
 Reconsideration,  in  which  it  affirmed  the  existing  manual  roaming  rule,  with  some  modification
 and  clarification.  120  On  October  4,  2000,  the  Commission  initiated  a  new  rulemaking  proceeding
 to  consider  the  impact  of  technological  advances  and  the  rapid  expansion  of  the  CMRS  market
 since  the  1996  Roaming  Order  on  issues  relating  to  both  automatic  and  manual  roaming.  121
 Initial  Recommendation
 The  staff  recommends  that  issues  relating  to  whether  to  retain,  eliminate,  or  sunset  the  roaming
 rule  be  addressed  in  the  upcoming  rulemaking  proceeding.
 Comments
 Alloy  states  the  swift  expansion  of  the  CMRS  market  along  with  growth  in  competition  since  the
 rule  was  adopted  in  1996  justify  the  initiation  of  a  new  rulemaking  proceeding  to  examine
 whether  to  eliminate  or  sunset  the  rule.  Alloy  also  points  out  that  the  Commission  may  want  to
 consider  the  roaming  rule  as  part  of  its  effort  to  evaluate  whether  there  is  an  ongoing  need  for
 cellular  providers  to  continue  to  set  aside  spectrum  for  analog  service.  122
 Recommendation
 See  initial  recommendation.
 119  Id.
 120  Interconnection  and  Resale  Obligations  Pertaining  to  Commercial  Mobile  Radio  Services,  Third
 Report  and  Order  and  Memorandum  Opinion  and  Order  on  Reconsideration,  FCC  00-  251  (adopted  July
 13,  2000;  released  August  28,  2000).
 121  Automatic  and  Manual  Roaming  Obligations  Pertaining  to  Commercial  Mobile  Radio  Service,  Notice
 of  Proposed  Rulemaking,  WT  Docket  No.  00-  193,  FCC  00-  361  (rel.  Oct.  31,  2000).
 122  Id.
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 41
 PART  20,  SECTION  20.18    911  SERVICE
 Description
 Section  20.18  123  requires  certain  broadband  CMRS  providers  (delineated  in  subpart  (a)  of  this
 rule)  to  comply  with  guidelines  set  by  the  Commission  for  the  implementation  of  Enhanced  911
 services  (E911)  for  all  of  their  customers,  including  those  customers  requiring  TTY  devices.
 The  rule  provides  for  implementation  of  E911  in  two  phases.  In  Phase  I,  CMRS  carriers  must
 implement  E911  capability  in  their  networks  to  provide  911  dispatchers  with  a  callback  number
 and  the  location  of  the  cell  site  that  received  the  call.  In  Phase  II,  carriers  must  provide
 Automatic  Location  Identification  (ALI)  capability  for  all  911  calls  placed  by  wireless  telephone
 users,  so  that  the  callers  location  can  be  more  accurately  determined.
 The  rule  provides  for  implementation  of  Phase  I  by  April  1,  1998.  In  Phase  II,  licensees  who
 employ  network-  based  solutions  must  provide  service  to  at  least  50  percent  of  their  coverage  area
 or  their  population  by  October  1,  2001,  and  licensees  employing  handset-  based  technologies  must
 ensure  that  at  least  50  percent  of  all  new  handsets  activated  are  location-  capable  by  October  1,
 2001.  124  Section  20.18  further  describes  who  must  comply  with  E911  requirements,  the  basic
 E911  service  that  CMRS  carriers  must  provide,  as  well  as  the  accuracy  percentage  and  timeframe
 in  which  these  services  must  be  deployed.  Finally,  the  rule  provides  alternative  requirements  for
 carriers  who  choose  to  employ  an  intermediary  dispatcher  rather  than  routing  their  customers
 911  calls  directly  to  a  Public  Safety  Answering  Point  (PSAP).
 Purpose
 The  purpose  of  section  20.18  is  to  enhance  public  safety  and  facilitate  effective  and  efficient  law
 enforcement.  Unlike  a  wireline  911  call,  a  dispatcher  receiving  a  wireless  911  call  can  only
 obtain  information  regarding  the  callers  location  and  callback  number  if  the  caller  can  provide  it.
 Section  20.18  rule  attempts  to  provide  the  same  reliable  and  ubiquitous  aid  to  wireless  911  callers
 that  is  available  to  wireline  callers.
 Analysis
 Status  of  Competition
 Not  relevant.
 Advantages
 The  E911  rule  sets  national  standards  and  deadlines  to  ensure  that  all  CMRS  carriers  throughout
 the  U.  S.  will  provide  E911  services  in  a  timely  manner.  At  the  same  time,  the  rule  is
 technologically  and  competitively  neutral  because  it  allows  carriers  and  equipment  manufacturers
 to  determine  the  best  method  to  implement  E911  capability.  Allowing  manufacturers  and  carriers
 123  47  C.  F.  R.    20.  18.
 124  Revision  of  the  Commissions  Rules  to  Ensure  Compatibility  with  Enhanced  911  Emergency  Calling
 Systems,  Third  Report  and  Order,  14  FCC  Rcd  17388,  17436  (1999)  (Third  Report  and  Order).
138
 42
 to  adopt  the  technology  of  their  choice  encourages  the  parties  to  arrive  at  a  solution  that  is  both
 effective  and  cost-  efficient.  Finally,  Section  20.18  allows  the  Commission  to  easily  determine
 which  carriers  have  failed  to  comply  with  the  mandate  and  are  providing  insufficient  E911
 services.
 Disadvantages
 The  E911  rule  imposes  administrative,  technical,  and  economic  costs  on  carriers  who  must
 reconfigure  their  networks  to  comply  with  the  rule.
 Recent  Efforts
 The  Commission  has  been  considering  waiver  requests  from  CMRS  providers  to  extend  the
 deadlines  for  implementation  in  order  to  reflect  and  recognize  new  technologies  whose
 implementations  cannot  be  completed  in  the  allotted  timeframe.  On  September  8,  2000,  the
 Commission  issued  a  Fourth  Memorandum  Opinion  and  Order  in  the  E911  proceeding,  in  which
 it  (1)  extended  from  October  1,  2000  to  November  9,  2000,  the  date  for  carriers  to  file  E911
 Phase  II  implementation  reports;  (2)  extended  the  deadline  for  carriers  to  begin  selling  and
 activating  ALI-  capable  handsets  from  March  1,  2001  to  October  1,  2001;  (3)  adopted  a  revised
 phase-  in  schedule  for  deployment  of  ALI-  capable  handsets;  and  (4)  extended  from  December  31,
 2004,  to  December  31,  2005,  the  date  for  carriers  to  reach  full  penetration  of  ALI-  capable
 handsets  in  their  total  subscriber  bases.  125  The  Commission  also  granted  a  limited  waiver  of  the
 accuracy  standards  to  VoiceStream  Wireless  to  permit  it  to  deploy  a  hybrid  location  solution,
 subject  to  a  timetable  that  will  require  it  to  deploy  ALI-  capable  handsets  faster  than  the  timetable
 originally  set  forth  in  the  Third  Report  and  Order,  and  substantially  faster  than  the  revised
 timetable  adopted  in  the  current  Order.
 Initial  Recommendation
 Staff  recommends  that  this  rule  be  retained.  While  E911  requirements  impose  a  burden  on
 CMRS  providers,  the  necessity  of  providing  sufficient  E911  services  for  callers  in  need
 outweighs  this  burden.  The  staff  recommends  that  Commission  continue  to  review  the  rule  as
 implementation  of  E911  progresses.
 Comments
 None.
 Recommendation
 See  initial  recommendation.
 125  Revision  of  the  Commissions  Rules  To  Ensure  Compatibility  with  Enhanced  911  Emergency  Calling
 Systems,  Fourth  Memorandum  Opinion  and  Order,  FCC  00-  326  (adopted  August  24,  2000;  released
 September  8,  2000).
139
 43
 PART  20,  SECTION  20.20      CONDITIONS  APPLICABLE  TO  PROVISION  OF
 CMRS  SERVICE  BY  LOCAL  EXCHANGE  CARRIERS
 Description
 Section  20.20  126  requires  incumbent  LECs  (ILECs)  providing  in-  region  broadband  CMRS  to
 provide  such  services  through  a  separate  affiliate.  The  rule  further  imposes  restrictions  on  the
 separate  affiliate,  including:  (1)  maintaining  separate  books  of  account;  (2)  not  jointly  owning
 transmission  or  switching  facilities  with  the  affiliated  ILEC  that  the  ILEC  uses  for  the  provision
 of  local  exchange  services  in  the  same  market;  and  (3)  acquiring  any  services  from  the  affiliated
 ILEC  on  a  compensatory  arms  length  basis  pursuant  to  our  affiliate  transaction  rules.  127
 Additionally,  Title  II  common  carrier  services,  or  services,  facilities  or  network  elements
 provided  pursuant  to  sections  251  and  252,  that  are  acquired  from  the  affiliated  ILEC  must  be
 available  to  all  other  carriers,  including  CMRS  providers,  on  the  same  terms  and  conditions.
 Furthermore,  all  transactions  between  the  ILEC  and  the  cellular  affiliate  must  be  written,  and  a
 copy  of  all  such  agreements  (other  than  interconnection  agreements)  must  be  available  for
 inspection  upon  reasonable  request  by  the  Commission.
 Rural  ILECs  are  exempt  from  the  separate  affiliate  requirement.  A  competing  CMRS  carrier
 interconnected  with  the  rural  telephone  carrier  may  petition  the  Commission  to  remove  the
 exemption  where  the  rural  telephone  company  has  engaged  in  anti-  competitive  conduct.  Small-and
 mid-  sized  ILECs  serving  fewer  than  two  percent  of  the  nations  subscriber  lines  are  entitled
 to  petition  the  Commission  for  suspension  or  modification  of  the  separate  affiliate  requirement.
 The  rule  became  effective  on  February  11,  1998,  and  will  sunset  on  January  1,  2002.  128
 Purpose
 The  purpose  of  the  ILEC/  CMRS  separate  affiliate  requirement  is  to  prevent  ILECs  from  using
 their  market  power  in  the  local  exchange  market  to  engage  in  anti-  competitive  practices  in  the
 CMRS  market.
 Analysis
 Advantages
 The  separate  affiliate  rule  promotes  competition  by  requiring  transparency  and  arms  length
 transactions  between  ILECs  and  their  CMRS  affiliates,  and  by  ensuring  that  ILECs  cannot  offer
 their  CMRS  affiliates  more  favorable  terms  and  conditions  than  they  offer  to  unaffiliated
 competing  CMRS  providers.  The  rule  also  provides  greater  flexibility  for  rural,  small,  and  mid-sized
 ILECs,  where  there  is  less  risk  of  the  ILEC  having  sufficient  market  power  to  restrain
 CMRS  competition.
 126  47  C.  F.  R.  20.  20.
 127  47  C.  F.  R.  20.  20(  a).
 128  47  C.  F.  R.  20.  20(  f).
140
 44
 Disadvantages
 By  requiring  use  of  a  separate  affiliate  for  CMRS  operations,  separate  ownership  of  certain
 facilities,  and  written,  arms-  length  transactions  between  ILECs  and  their  CMRS  affiliates,  section
 20.20  increases  transaction  costs  for  carriers  subject  to  the  rule.
 Recent  Efforts
 The  Commission  has  recently  denied  petitions  for  reconsideration  of  the  separate  affiliate
 requirements  in  section  20.  20.  129
 Initial  Recommendation
 In  light  of  the  Commissions  recent  orders  on  reconsideration  of  the  separate  affiliate  rule,  and  the
 fact  that  the  rule  is  scheduled  to  sunset  on  January  1,  2002,  the  staff  does  not  recommend  any
 changes  to  section  20.20  at  this  time.  The  staff  will  continue  to  evaluate  whether  the  competitive
 conditions  in  the  local  exchange  market  merit  continued  application  of  the  rule.
 Comments
 USTA  and  ITTA  recommend  the  Commission  eliminate  the  requirements  of  Section  20.  20  130  as
 they  are  unnecessary  in  a  competitive  marketplace.  131  ITTA  suggests  the  requirements  were  not
 based  on  any  indication  of  discrimination  or  anti-  competitive  behavior  by  midsize  LECs.  132  ITTA
 asserts  midsize  LECs  can  easily  become  a  vital  new  source  of  competition  in  rural  and  smaller
 urban  areas  of  the  country.  133  USTA  claims  that  the  rapid  growth  of  the  CMRS  marketplace
 prevents  incumbent  LECs  from  affecting  CMRS  competition.  134
 Reply  Comments
 WorldCom  disagrees  with  ITTA  and  USTA.  WorldCom  believes  that  structural  separations
 requirements  for  ILECs  are  necessary  because  ILECs  still  retain  the  market  power  to  leverage
 their  advantage  in  the  local  exchange  market  into  the  CMRS  market.  135
 129  Amendment  of  the  Commissions  Rules  to  Establish  Competitive  Service  Safeguards  for  Local
 Exchange  Carrier  Provision  of  Commercial  Mobile  Radio  Services,  First  Order  on  Reconsideration,  14
 FCC  Rcd  11343  (1999)  (denying  petition  Independent  Telephone  and  Telecommunications  Alliance
 (ITTA);  Amendment  of  the  Commissions  Rules  to  Establish  Competitive  Service  Safeguards  for  Local
 Exchange  Carrier  Provision  of  Commercial  Mobile  Radio  Services,  Second  Order  on  Reconsideration,  15
 FCC  Rcd  414  (1999)  (denying  petitions  of  Aliant  Communications  Co.  and  Guam  Cellular  and  Paging,
 Inc.).
 130  47  CFR  20.  20.
 131  Comments  of  ITTA  at  p.  8;  USTA  at  11.
 132  Comments  of  ITTA  at  p.  7.
 133  Comments  of  ITTA  at  p.  8.
 134  Comments  of  USTA  at  p.  11.
 135  WorldCom  Reply  Comments  at  5.
141
 45
 Recommendation
 Unchanged.
142
 46
 PART  21  DOMESTIC  PUBLIC  FIXED  RADIO  SERVICES
 Description
 Statutory  authority  for  Part  21  of  the  Commissions  rules  is  found  in  Titles  I  through  III  of  the
 Communications  Act  of  1934,  as  amended.  The  purpose  of  the  rules  and  regulations  in  Part  21  is
 to  prescribe  the  manner  in  which  portions  of  the  radio  spectrum  may  be  made  available  for
 domestic  communication  common  carrier  and  multipoint  distribution  service  non-  common  carrier
 operations  which  require  transmitting  facilities  on  land  or  in  specified  offshore  coastal  areas
 within  the  continental  shelf.
 Part  21  is  organized  into  seven  lettered  sub-  parts:
 A    General
 B    Applications  and  Licenses
 C    Technical  Standards
 D    Technical  Operation
 E    Miscellaneous
 F    Developmental  Authorizations
 K    Multipoint  Distribution  Service
 Purpose
 Part  21  is  intended  to  ensure  that  licensees  are  financially  and  technically  qualified  to  provide
 service  in  a  manner  that  will  not  create  interference  with  authorized  transmissions.  The
 procedures  prescribed  in  Part  21  are  designed  to  provide  the  Commission  and  the  public  with
 adequate  information  regarding  licensees,  prospective  licensees,  facilities,  and  proposed  changes
 in  facilities  or  in  the  ownership  or  control  of  licensees.  Finally,  the  rules  are  intended  to  promote
 efficient  use  of  the  radio  spectrum  and  to  encourage  innovation  in  communication  services,
 equipment,  and  techniques.
 Analysis
 Status  of  Competition
 Part  21  licensees  provide  video  programming  in  competition  with  cable  television  systems,
 broadcast  television  stations,  direct  broadcast  satellite  systems,  and  other  multichannel  video
 programming  distributors.  See  Annual  Assessment  of  the  Status  of  Competition  in  Markets  for  the
 Delivery  of  Video  Programming,  15  FCC  Rcd  978  (2000).  In  addition,  as  a  result  of  the
 Commissions  decisions  in  its  Two-  Way  Rulemaking,  136  Part  21  licensees  now  may  offer  two-  way
 broadband  transmission  services  in  competition  with  numerous  wireline  and  wireless  service
 providers.  See  Inquiry  Concerning  the  Deployment  of  Advanced  Telecommunications  Capability,
 FCC  00-  290  (released  August  21,  2000).
 136  Amendment  of  Parts  21  and  74  to  Enable  Multipoint  Distribution  Service  and  Instructional  Television
 Fixed  Service  Licensees  to  Engage  in  Fixed  Two-  Way  Transmissions,  13  FCC  Rcd  19112  (1998),  recon.,
 14  FCC  Rcd  12764  (1999),  further  recon.,  FCC  No.  00-  244  (released  July  21,  2000).
143
 47
 Advantages
 Part  21  licenses  are  awarded  through  a  competitive  bidding  process,  which  creates  an  incentive
 for  rapid  deployment  of  services  and,  thus,  promotes  efficient  use  of  the  radio  spectrum.  The
 technical  standards  in  Part  21  ensure  interference  protection  and  promote  effective  use  of
 proposed  and  authorized  facilities.  The  Part  21  rules  further  benefit  the  public  by  affording
 access  to  information  regarding  licensees,  prospective  licensees,  facilities,  and  proposed  changes
 in  facilities  or  in  the  ownership  or  control  of  licensees.  Such  access  also  reduces  the  cost  of
 enforcing  Commission  rules  by  facilitating  analysis  by  interested  parties,  thereby  supplementing
 Commission  review  and  enforcement  efforts.  Finally,  Part  21  promotes  innovation  through  the
 availability  of  developmental  authorizations  for  technical  experimentation.
 Disadvantages
 Part  21  contains  language  and  requirements  that  have  been  superseded  by  recent  Commission
 rulemakings.
 Recent  Efforts
 The  Commissions  decisions  in  its  Two-  Way  Rulemaking,  cited  supra,  allow  Part  21  licensees  to
 use  their  assigned  frequencies  to  provide  two-  way  communication  services  and  to  alternate
 between  providing  service  on  a  common  carrier  and  non-  common  carrier  basis.  Recent  changes
 in  the  Part  21  attribution  rules  encourage  investment  in  Part  21  services  by  relaxing  ownership
 restrictions.  Attribution  of  Broadcast  and  Cable/  MDS  Interests,  14  FCC  Rcd  12559  (1999).
 Initial  Recommendation
 The  Staff  recommended  that  Part  21  be  reviewed  to  ensure  consistency  with  recent  Commission
 rulemakings.
 Comments
 The  Wireless  Communications  Association  International,  Inc.  (  WCAI)  filed  comments  in
 response  to  the  report  of  the  Commission  staff  in  the  Biennial  Regulatory  Review  2000.  WCAI
 advocates  modification  or  elimination  of  numerous  Part  21  rules.  Several  of  WCAIs  suggestions
 relate  to  current  filing  and  service  requirements  for  applications,  licensee  qualification  reports,
 annual  reports,  and  articles  of  incorporation  and  partnership  agreements.  137  Other  WCAI
 proposals  seek  elimination  or  modification  of  rules  that  it  maintains  are  obsolete  in  light  of
 changes  in  the  nature  of  Part  21  service  or  regulation.  138  Finally,  WCAI  advocates  additional  Part
 21  changes  on  the  grounds  that  specific  rules  are  unduly  burdensome.  139
 137  See  WCAI  Comments  at  5-  7,  10,  11,  14-  15,  and  18-  19,  advocating  the  elimination  or  modification  of
 various  requirements  for  filing  and/  or  serving  applications  or  annual  reports.
 138  Id.  at  9,  13-  14,  and  19-  20.
 139  Id.  at  7-  9  (lengthen  deadline  for  consummating  transfers  of  control  and  assignments  following  grant  of
 application,  eliminate  prior  approval  requirement  for  pro  forma  transfers  and  assignments),  10-  11
 (eliminate  21.  43  restriction  on  pre-  grant  construction),  and  11-  14  (abolish  requirement  of  demonstration
 that  proposed  booster  station  can  be  served  without  receiving  interference).  In  its  discussion  of  the  current
 Part  21  rule  requiring  applicants  to  demonstrate  that  proposed  booster  stations  can  be  served  without
 receiving  interference,  47  C.  F.  R.  21.  913(  b)(  6),  WCAI  also  advocates  elimination  of  the  corresponding
144
 48
 Sprint  Corporation  (  Sprint)  concurs  with  several  of  WCAIs  suggestions.  Sprint  agrees  with
 WCAI  that  the  Section  21.911  annual  report  should  be  eliminated,  that  licensees  should  not  be
 required  to  report  no  change  in  the  information  contained  in  their  licensee  qualification  reports,
 that  the  Section  21.43  restriction  on  pre-  grant  construction  should  be  eliminated,  and  that
 applicants  should  not  be  required  to  file  interference  consent  agreements.  140  Sprint  argues  that
 these  changes  are  necessary  in  order  to  allow  MDS  and  ITFS  licensees  to  compete  with  similar
 services  currently  subject  to  less  oversight  (e.  g.,  local  multipoint  distribution  service  and  fixed
 wireless  services  in  the  24  GHz  and  39  GHz  bands).  Sprint  further  maintains  that  regulation  of
 MDS  and  ITFS  should  evolve  to  a  system  under  which  regulation  is  required  only  in  instances  of
 market  failure  or  interference  complaints  from  other  licensees.  Accordingly,  Sprint  encourages
 the  Commission  to  minimize  engineering  oversight  of  MDS  and  ITFS  licensees.  141
 Recommendation
 The  Part  21  rules  should  be  reviewed  to  consider  revisions  that  would  reflect  changes  in  the
 nature  of  Part  21  services,  remove  unnecessary  requirements,  and  conform  Part  21  rules  with
 recent  Commission  decisions.
 Part  74  rule  for  ITFS  licensees,  47  C.  F.  R.  74.  985(  b)(  3).  WCAI  argues  that  decisions  in  the  Two-  Way
 Rulemaking  render  the  requirement  in  those  rule  sections  unnecessary,  noting  that  the  requirement  was
 waived  during  the  initial  MDS/  ITFS  two-  way  filing  window.
 140  See  Sprint  Corporation  Comments  at  6-  7.
 141  Id.  at  7-  8.
145
 49
 PART  22    PUBLIC  MOBILE  SERVICES
 Description
 Part  22  142  contains  licensing,  technical,  and  operational  rules  for  five  CMRS  services  historically
 described  as  Domestic  Public  Land  Mobile  Radio  Services  or  DPLMRS.  These  services  are
 the  Paging  and  Radiotelephone  Service,  the  Cellular  Radiotelephone  Service,  the  Rural
 Radiotelephone  Service,  the  Air-  Ground  Radiotelephone  Service,  and  the  Offshore
 Radiotelephone  Service.  In  general,  the  rules  in  this  part:  (1)  specify  the  frequency  bands
 allocated  to  each  service;  (2)  provide  methods  for  determining  the  protected  service  area  of
 stations  in  each  service;  (3)  establish  minimum  construction  or  coverage  requirements  for
 licensees;  and  (4)  define  technical  limits  on  operation  (e.  g.,  transmitter  power)  to  reduce  the
 likelihood  of  interference.
 Part  22  comprises  10  subparts:
 Subpart  A  -  Scope  and  Authority
 Subpart  B  -  Licensing  Requirements  and  Procedures
 Subpart  C  -  Operational  and  Technical  Requirements
 Subpart  D  -  Developmental  Authorizations
 Subpart  E  -  Paging  and  Radiotelephone  Service
 Subpart  F  -  Rural  Radiotelephone  Service
 Subpart  G  -  Air-  Ground  Radiotelephone  Service
 Subpart  H  -  Cellular  Radiotelephone  Service
 Subpart  I  -  Offshore  Radiotelephone  Service
 Subpart  J  -  Required  New  Capabilities  Pursuant  to  the  Communications  Assistance  for
 Law  Enforcement  Act  (CALEA)
 Subparts  A,  B,  and  C  apply  generally  to  all  Part  22  licensees.  Subpart  D  provides  for  the
 licensing  on  a  developmental  basis  of  stations  that  are  to  be  used  for  testing  new  technologies  or
 services.  Each  of  the  next  five  subparts  (subparts  E  through  I)  contains  rules  applicable  to  one  of
 the  five  specific  Part  22  services.  Finally,  subpart  J  implements  the  provisions  of  the
 Communications  Assistance  for  Law  Enforcement  Act  (CALEA)  as  they  apply  to  Part  22
 services.
 Purpose
 Part  22  of  the  Commissions  rules  comprises  a  minimal  regulatory  framework  that  facilitates  the
 rapid,  efficient  provision  of  commercial  wireless  telecommunications  services  to  the  general
 public  at  reasonable  rates,  by:  (1)  utilizing  a  competitive  bidding  process  to  issue  exclusive
 licenses  to  the  service  provider  applicants  who  value  them  most;  (2)  preserving  and  enhancing
 competition  between  these  service  providers  once  licensed;  (3)  ensuring  that  available  spectrum
 allocations  are  used  efficiently;  and  (4)  reducing  the  likelihood  of  harmful  interference  between
 licensed  stations.
 142  47  C.  F.  R.  Part  22.
146
 50
 Analysis
 Status  of  Competition
 As  detailed  in  the  Fifth  Competition  Report,  CMRS  providers,  including  those  licensed  under  Part
 22,  operate  in  an  environment  that  is  marked  by  significant  and  increasing  competition  in  mobile
 telephony,  paging/  messaging,  and  mobile  data.  143  The  only  Part  22  radio  service  that  is  not
 experiencing  an  increase  in  competition  at  this  time  is  the  Air-  Ground  Radiotelephone  Service,
 where  only  two  of  the  original  six  licenses  remain  (GTE  Airfone  and  AT&  T  Claircom).
 Advantages
 Overall,  the  Part  22  rules  provide  a  clear,  predictable  structure  for  the  assignment  and  use  of
 spectrum.  In  Part  22,  provision  for  accepting  competing  mutually  exclusive  applications  and
 selecting  the  licensee  by  means  of  competitive  bidding  results  in  licenses  being  issued  to  the
 entities  that  value  them  the  most.  Geographic  area  licensing  minimizes  the  amount  of  paperwork
 involved  in  obtaining  a  license  and  thus  speeds  the  authorization  of  new  competitive  services  to
 the  public.  Minimal  and  flexible  technical  standards  facilitate  the  introduction  of  new
 technologies.
 Disadvantages
 The  Part  22  rules  impose  administrative  burdens  inherent  to  the  licensing  process  and  are
 necessary  for  compliance  with  technical  and  operational  rules.  The  technical  standards  in  most
 Part  22  services  place  the  burden  of  coordination  on  the  licensees  themselves,  which  may
 increase  transaction  costs.  Finally,  while  certain  portions  of  the  Part  22  rules  have  been  recently
 revamped,  other  portions,  most  notably  the  cellular  rules  in  subpart  H,  are  now  more  than  a
 decade  old,  and  therefore  may  not  reflect  significant  technological  and  competitive  changes  that
 have  occurred  in  wireless  services  in  recent  years.
 Recent  Efforts
 The  Commission  has  made  significant  changes  to  its  Part  22  rules  in  recent  years.  For  example,
 in  the  Universal  Licensing  proceeding,  the  Commission  eliminated  many  of  the  service-  specific
 licensing  rules  in  Part  22  as  part  of  its  consolidation  of  all  wireless  licensing  rules  into  Part  1.  144
 The  Commission  also  recently  completed  a  comprehensive  overhaul  of  its  paging  rules,  in  which
 it  finalized  the  rules  for  the  transition  from  site-  by-  site  to  geographic  licensing  and  award  of
 geographic  paging  licenses  by  auction.  145
 143  Fifth  Competition  Report,  supra  at  9-  27,  36-  63.
 144  Biennial  Regulatory  Review    Amendment  of  Parts  0,  1,  13,  22,  24,  26,  27,  80,  87,  90,  95,  97  and  101
 of  the  Commissions  Rules  to  Facilitate  the  Development  and  Use  of  the  Universal  Licensing  System  in  the
 Wireless  Telecommunications  Services,  Report  and  Order,  13  FCC  Rcd  21027  (1998);  Memorandum
 Opinion  and  Order  on  Reconsideration,  14  FCC  Rcd  11145  (1998).
 145  In  the  Matter  of  Revision  of  Part  22  and  Part  90  of  the  Commission's  Rules  to  Facilitate  Future
 Development  of  Paging  Systems  and  Implementation  of  Section  309(  j)  of  the  Communications  Act  -Competitive
 Bidding,  Memorandum  Opinion  and  Order  on  Reconsideration  and  Third  Report  and  Order,
 14  FCC  Rcd  10030  (1999)  (Paging  Systems  Reconsideration  Order).
147
 51
 Initial  Recommendation
 Part  22  contains  a  number  of  relatively  old  rules  that  were  adopted  when  wireless  technology  and
 competitive  conditions  were  very  different  from  the  present  day.  For  example,  section  22.937,  146
 which  requires  demonstration  of  a  cellular  applicants  financial  qualifications,  was  adopted  in
 connection  with  the  use  of  lotteries  to  award  licenses,  which  has  been  superseded  in  most
 instances  by  the  use  of  competitive  bidding.  Similarly,  section  22.323  147  allows  Part  22  licensees
 to  provide  incidental  fixed  services,  but  prohibits  cross-  subsidization  of  such  services  by
 subscribers  to  CMRS  services    a  rule  that  appears  anachronistic  given  that  CMRS  rates  are  fully
 deregulated.  Therefore,  the  staff  recommends  that  the  Commission  undertake  a  comprehensive
 review  of  the  Part  22  cellular  rules.
 Comments
 Various  commenters  suggested  that  a  number  of  Part  22  rules  could  be  revised  or  deleted.  Alloy
 recommended  that  the  Commission  should  initiate  a  rulemaking  to  address  technical  requirements
 for  the  provision  of  cellular  service,  including  the  elimination  of  the  requirement  that  cellular
 providers  must  offer  analog  service.  148  Alloy  believes  that  elimination  of  this  rule  will  enable
 cellular  carriers  to  convert  quickly  from  analog  to  digital  technology  and  provide  more  advanced
 services  to  subscribers.  CTIA  proposes  that  CIBERNET,  its  wholly-  owned  subsidiary,  assume
 responsibility  for  assignment  of  cellular  SID  (System  Identification)  numbers.  149  Verizon  also
 comments  that  the  Commission  should  revise  47  C.  F.  R.    22.367(  a)  of  the  Commissions  rules,
 which  requires  transmitting  antennas  for  cellular  systems  to  be  vertically  polarized.  In  addition,
 Verizon  indicates  that  Parts  24  and  27  do  not  contain  requirements  that  providers  must  mark
 every  transmitting  facility  with  the  station  call  sign  as  required  by  the  cellular  service  rules.  150
 Verizon  indicates  that  the  Commission  should  revise  47  C.  F.  R.    22.  953(  c),  which  requires
 cellular  carriers  to  submit  maps  with  minor  modification  applications.  151  In  general,  the  Part  22
 commenters  ask  the  Commission  to  harmonize  these  rules  with  its  other  CMRS  rule  sections.
 Recommendation
 See  initial  recommendation.  The  comments,  just  described,  will  be  included  in  our  future
 deliberations  to  modernize  and  streamline  these  rules.
 146  47  C.  F.  R.    22.  937.
 147  47  C.  F.  R.    22.  323.
 148  Alloy  Comments  at  4.
 149  CTIA  Comments  at  5.
 150  Verizon  Comments  at  8.
 151  Verizon  Comments  at  8.
148
 52
 PART  22,  SUBPART  E    PAGING  AND  RADIOTELEPHONE  SERVICE
 Description
 Part  22,  subpart  E  152  contains  licensing,  technical,  and  operational  rules  for  the  Paging  and
 Radiotelephone  Service  (  PARS).  This  service  was  originally  titled  the  Domestic  Public  Land
 Mobile  Radio  Service  or  DPLMRS.  The  allocations  covered  by  Subpart  E  are  primarily  used
 for  tone,  voice,  numeric  and  alphanumeric  paging  services.  In  general,  the  rules  in  this  subpart:
 (1)  specify  the  frequency  bands  allocated  to  PARS;  (2)  provide  methods  for  determining  the
 reliable  service  area  and  interfering  contour  of  individual  stations;  (3)  establish  construction  and
 commencement  of  operation  requirements  for  licensees;  and  (4)  define  technical  limits  on
 operation  (e.  g.,  transmitter  power)  to  reduce  the  likelihood  of  interference.
 The  PARS  rules  have  evolved  over  the  years.  The  PARS  rules  currently  focus  primarily  upon
 paging.  There  are  also  rules  pertaining  to  the  operation  of  internal  point-  to-  point  and  point-  to-multipoint
 fixed  links  that  are  essential  for  local  and  regional  paging  systems.
 Part  22  subpart  E  is  organized  into  six  groups  of  rules.  The  first  group  of  rules  applies  to  all
 PARS  stations.  153  Each  of  the  subsequent  five  groups  contains  technical  and  operational  rules
 pertaining  only  to  a  particular  type  of  operation  on  specified  channels.  The  types  of  operation  are
 paging,  one-  and  two-  way  mobile,  point-  to-  point,  point-  to-  multipoint,  and  trunked  mobile
 operation.  Some  of  the  PARS  454-  459  MHz  channels  are  shared  with  basic  exchange  telephone
 radio  systems  (providing  Rural  Radiotelephone  Service)  and  potentially  with  non-  geostationary
 low  earth  orbit  (  Little  LEO)  satellite  downlinks.
 Purpose
 The  purpose  of  subpart  E  is  to  facilitate  the  provision  of  commercial  one-  way  and  two-  way
 wireless  telecommunications  services,  in  particular,  one-  way  paging,  to  the  general  public  at
 reasonable  rates  by:  (1)  utilizing  a  competitive  bidding  process  to  issue  exclusive  licenses  to  the
 service  provider  applicants  who  value  them  most;  (2)  preserving  and  enhancing  competition
 between  these  service  providers  once  licensed;  (3)  ensuring  that  available  spectrum  allocations
 are  used  efficiently;  and  (4)  reducing  the  likelihood  of  harmful  interference  among  licensed
 stations.
 Analysis
 Status  of  Competition
 PARS  stations  governed  by  subpart  E  compete  directly  with  Part  90  commercial  paging  services
 and  with  Part  24  narrowband  PCS,  and  they  compete  indirectly  with  other  CMRS.  The  Fifth
 Competition  Report  notes  that  one-  way  paging  service  subscribership  appears  to  have  peaked  in
 1999,  and  is  now  declining.  154  Analysts  believe  that  this  trend  is  the  result  of  declining  prices  for
 alternative  options,  such  as  cellular  and  broadband  PCS  services,  which  include  paging,  voice
 152  47  C.  F.  R  Part  22,  subpart  E.
 153  47  C.  F.  R.    22.501-  22.  529.
 154  Fifth  Competition  Report,  supra,  at  57-  58.
149
 53
 mail  and  text  messaging  capabilities.  Paging  providers  that  have  sufficient  spectrum  are
 attempting  to  reposition  themselves  in  the  market  as  wireless  data  providers.
 Advantages
 The  PARS  rules  provide  a  clear,  predictable  regulatory  structure  for  the  assignment  and  use  of  the
 spectrum  allocated  to  PARS  service.  Provision  for  accepting  competing  mutually  exclusive
 applications  and  selecting  the  licensee  by  means  of  competitive  bidding  results  in  licenses  being
 issued  to  the  entities  that  value  them  the  most.  Geographic  area  licensing  minimizes  the
 administrative  burden  involved  in  obtaining  a  license.  The  technical  rules  allow  transition  to
 narrowband  technology  capable  of  providing  wireless  data  services.
 Disadvantages
 The  PARS  rules  impose  some  burdens  related  to  compliance  with  technical  and  operational  rules.
 Although  the  Commission  converted  the  authorization  of  the  PARS  from  the  original  site-  by-  site
 procedure  to  a  geographic  area  licensing  process,  several  detailed  technical  rules  related  to  the
 site-  by-  site  procedure  have  been  retained  in  order  to  protect  the  investment  of  grandfathered
 incumbent  licensees  in  areas  where  the  geographic  licensee  is  a  different  entity.
 Recent  Efforts
 Most  of  the  application  filing  rules  were  moved  from  this  subpart  to  Part  1  in  connection  with
 implementation  of  electronic  filing  procedures  and  the  Universal  Licensing  System.  155
 Initial  Recommendation
 The  Commission  has  recently  made  significant  revisions  that  restructured  and  streamlined  the
 Part  22  licensing  rules.  However,  in  view  of  the  trends  in  paging  and  other  CMRS  services,  the
 staff  recommends  that  the  Commission  consider,  inter  alia,  eliminating  the  rules  which  limit  the
 number  of  paging  channels  that  a  licensee  can  obtain  in  the  same  area  at  one  time;  impose
 operational  burdens,  such  as  station  identification  requirements,  where  the  advance  of  technology
 may  have  made  the  cost  of  the  rule  exceed  the  benefit;  and  the  470-  512  MHz  Trunked  Mobile
 Operation  rules  (sections  22.651  through  22.659);  and  rules  related  specifically  to  services  and
 technologies  that  were  never  implemented  or  have  gone  out  of  use  (e.  g.,  sections  22.161,
 22.603)..  The  availability  of  cellular  service  has  made  limited  local  trunked  radiotelephone
 systems  obsolete  and  the  Commission  has  phased  out  this  type  of  operation  on  this  frequency
 band;  and  rules  covering  services  and  technologies  that  were  never  implemented  or  have  gone  out
 of  use  (e.  g.,  sections  22.161,  22.603).
 Comments
 None
 Recommendation
 No  changes.
 155  See  Amendment  of  Parts  0,  1,  13,  22,  24  26,  27,  80,  87,  90,  95,  97,  and  101  of  the  Commission's  Rules
 to  Facilitate  the  Development  and  Use  of  the  Universal  Licensing  System  in  the  Wireless
 Telecommunications  Service,  Report  and  Order,  13  FCC  Rcd  21027  (1998).
150
 54
 PART  22,  SUBPART  F    RURAL  RADIOTELEPHONE  SERVICE
 Description
 Part  22  subpart  F  156  contains  licensing,  technical,  and  operational  rules  for  the  Rural
 Radiotelephone  (Rural  Radio)  Service.  The  rules  contain  provisions  governing  eligibility,
 assignment  of  channels,  and  management  of  interference.
 Rural  Radio  service  is  the  only  service  regulated  under  Part  22  that  is  a  fixed  service.  Rural
 Radio  service  makes  basic  telephone  service  available  to  persons  who  live  in  remote  rural
 locations  where  it  is  not  feasible,  because  of  cost,  environmental  factors,  or  other  practical
 concerns,  to  provide  such  service  by  wire.  The  rules  provide  that  Rural  Radio  interoffice  stations
 can  also  be  used  to  link  central  offices  where  wireline  links  are  similarly  infeasible.
 Two  types  of  facilities  are  authorized  in  the  Rural  Radio  service    conventional  Rural  Radio
 stations  and  basic  exchange  telephone  radio  systems  (BETRS).  Conventional  Rural  Radio
 stations  may  be  licensed  to  any  existing  or  proposed  common  carrier.  These  stations  operate  on
 exclusively  assigned  paired  channels  and  are  considered  for  regulatory  purposes  to  be
 interconnected  to,  but  not  a  part  of,  the  local  loop.  Consequently,  conventional  Rural  Radio
 stations  do  not  have  to  meet  state  requirements  affecting  the  local  loop  (e.  g.,  call  blocking,
 transmission  quality).
 BETRS  facilities  may  only  be  licensed  to  entities  that  have  been  state  certified  to  provide  local
 exchange  service  in  the  geographic  area  in  question  (e.  g.,  LECs  and  CLECs).  BETRS  also
 operate  on  exclusively  assigned  paired  channels,  but  they  are  considered,  for  regulatory  purposes,
 to  be  a  part  of  the  local  loop,  and  therefore  must  meet  state  standards  applicable  to  the  local  loop.
 Purpose
 The  purpose  of  the  Rural  Radio  rules  is  to  facilitate  provision  of  telephone  service  to  persons  who
 live  in  remote  rural  locations  where  it  is  infeasible  to  provide  service  by  wire.
 Analysis
 Status  of  Competition
 The  Rural  Radio  service  is  generally  used  only  as  a  last  resort  in  the  most  remote  rural  areas
 where  wireline  telephone  service  is  infeasible  or  not  cost-  effective.  While  historically,  Rural
 Radio  customers  have  had  few  if  any  competitive  alternatives  for  provision  of  telephony  due  to
 their  geographic  isolation,  other  wireless  services,  such  as  cellular  and  PCS,  have  begun  to
 expand  into  areas  served  by  Rural  Radio,  and  availability  of  competitive  alternatives  is  likely  to
 increase  in  the  future.
 Advantages
 The  rules  in  Part  22,  subpart  F  provide  a  clear,  predictable  structure  for  the  assignment  and  use  of
 the  spectrum  co-  allocated  to  the  Rural  Radio  service  to  provide  basic  telephone  service  to  persons
 who  live  in  remote  rural  locations.
 156  47  C.  F.  R.  Part  22,  subpart  F.
151
 55
 Disadvantages
 As  discussed  below,  some  of  the  rules  concerning  Rural  Radio  appear  to  have  become  outdated  as
 a  result  of  technological  developments  since  the  rules  were  adopted.
 Recent  Efforts
 The  Commission  has  not  recently  revised  the  Rural  Radio  rules  other  than  to  establish  geographic
 licensing  rules,  as  discussed  above.
 Initial  Recommendation
 In  general,  the  staff  recommends  retention  of  the  Rural  Radio  rules.  However,  some  of  these
 rules  appear  to  have  become  outdated.  Sections  22.417,  22.  727,  and  22.729  157  have  not  been  used
 for  many  years.  The  Commission  should  attempt  to  determine  whether  there  are  any  such
 systems  still  in  operation  and,  if  not,  propose  to  remove  the  meteor  burst  provisions.
 Section  22.757  158  provides  a  limited  allocation  of  private  radio  channels  for  BETRS  use  in  certain
 areas.  These  have  never  been  applied  for  or  used  for  BETRS  because  of  their  limited  geographic
 availability,  and  because  there  is  no  equipment  suitable  for  BETRS  in  this  band.  Also,  the  private
 radio  rules  governing  these  channels  have  been  substantially  changed  since  this  allocation  was
 made.  The  Commission  should  consider  removing  this  allocation  from  the  Rural  Radio  service.
 Comments
 None
 Recommendation
 See  initial  recommendation.
 157  47  C.  F.  R.    22.417,  22.  727,  22.  729.
 158  47  C.  F.  R.    22.  757.
152
 56
 PART  22,  SUBPAR  T  G    AIR-  GROUND  RADIOTELEPHONE  SERVICE
 Description
 Part  22,  subpart  G  159  contains  licensing,  technical,  and  operational  rules  for  the  Air-  Ground
 Radiotelephone  Service  (  AGS).  AGS  provides  commercial  telephone  service  to  persons  in
 airborne  aircraft,  using  telephone  instruments  that  are  permanently  mounted  in  the  aircraft.
 AGS  consists  of  two  separate  parts:  General  Aviation  air-  ground  stations  and  Commercial
 Aviation  air-  ground  systems.  General  Aviation  air-  ground  stations  serve  only  general  aviation
 aircraft  (aircraft  owned  by  individuals  or  businesses  for  their  own  use  that  do  not  carry  passengers
 for  hire).  These  stations  operate  independently  rather  than  as  a  system.  Consequently,  when  an
 aircraft  flies  out  of  range  of  a  ground  station,  any  call  in  progress  disconnects,  and  the  user  must
 then  redial  through  another  ground  station.
 Commercial  Aviation  air-  ground  systems  are  permitted  to  serve  any  type  of  aircraft,  but  primarily
 serve  passengers  aboard  commercial  airlines.  Commercial  Aviation  systems  use  seat-  back  and
 bulkhead-  mounted  telephones  commonly  seen  on  commercial  flights.  Commercial  aviation  air-ground
 systems  are  all  nationwide  systems  and  calls  in  progress  hand-  off  from  one  ground  station
 to  another  uninterrupted  as  the  aircraft  flies  across  the  country.
 In  general,  the  subpart  G  rules:  (1)  specify  the  frequency  bands  allocated  to  the  General  Aviation
 and  Commercial  Aviation  air-  ground  services;  (2)  provide  separation  distance  criteria  for
 determining  where  new  ground  stations  may  be  established;  (3)  establish  minimum  construction
 or  coverage  requirements  for  licensees;  and  (4)  set  forth  certain  technical  limits  on  operation
 (e.  g.,  transmitter  power).
 Purpose
 Subpart  G  facilitates  the  provision  of  commercial  telephone  service  to  persons  aboard  airborne
 aircraft.
 Analysis
 Status  of  Competition
 The  number  of  carriers  providing  AGS  is  small  and  most  wireless  carriers  consider  it  to  be  a
 niche  market.  The  principal  operators  of  General  Aviation  stations  are  M-  Tel  and  the  successor
 companies  of  the  Bell  Operating  Companies,  most  notably  Airtouch  (now  Verizon),  though  other,
 smaller  operators  exist  also.  Although  more  than  one  provider  can  share  each  ground  station
 control  channel  pair,  160  few  if  any  locations  appear  to  have  competing  providers.
 159  47  C.  F.  R.  Part  22,  subpart  G.
 160  The  original  General  Aviation  technology  allowed  only  one  operator  in  each  station  location.  In  1994,
 however,  the  Commission  mandated  use  of  a  new  technology,  Air-  Ground  Radiotelephone  Automated
 Service  (  AGRAS),  that,  among  other  improvements,  allowed  two  or  more  competing  ground  stations  in  a
 location  to  share  control  channels.
153
 57
 The  frequencies  used  by  Commercial  Aviation  air-  ground  systems  can  accommodate  up  to  six
 competing  systems,  but  only  three  of  the  six  initial  licensees  constructed  systems.  161  Only  two
 carriers  (GTE  Airfone  and  Claircom,  operated  by  AT&  T  Wireless)  remain  in  operation.
 Another  potential  source  of  competition  in  the  air-  ground  sector  may  be  provided  by  Aircell.
 Aircell  does  not  operate  on  AGS  frequencies,  but  was  granted  a  waiver  in  1998  to  provide  air-ground
 service  using  specialized  equipment  that  operates  on  cellular  frequencies.  162
 Advantages
 The  AGS  rules  provide  a  clear,  predictable  structure  for  the  assignment  and  use  of  the  air-  ground
 spectrum  allocation.
 Disadvantages
 The  AGS  rules  include  highly  specific  requirements  for  the  technical  configuration  of  air-  ground
 systems  and  the  use  of  air-  ground  channels  that  may  inhibit  licensee  flexibility  and  technical
 innovation.
 Initial  Recommendation
 The  subpart  G  rules  have  not  been  significantly  revised  since  the  1980s.  The  staff  recommends
 that  the  Commission  consider  initiating  a  proceeding  to  review  its  air-  ground  rules  in  light  of
 current  technology  and  competitive  conditions.  Potential  goals  of  such  a  proceeding  would
 include:  (1)  adopting  rules  that  foster  competition  by  eliminating  unnecessary  barriers  to  entry;
 (2)  eliminating  rules  that  freeze  technological  advancement;  and  (3)  providing  incentives  for
 existing  terrestrial  CMRS  licensees  to  provide  air-  ground  service.
 Comments
 None
 Recommendation
 See  initial  recommendation.
 161  Two  of  the  three  licensees  who  failed  to  construct  surrendered  their  licenses  voluntarily,  and  the  third
 license  was  ultimately  canceled  by  the  Commission.
 162  In  the  Matter  of  AirCell,  Inc.,  Petition  Pursuant  to  Section  7  of  the  Act,  for  a  Waiver  of  the  Airborne
 Cellular  Rule,  or,  in  the  Alternative  for  a  Declaratory  Ruling,  Order,  14  FCC  Rcd  806  (WTB  1998)
 (AirCell  Order),  affirmed,  Memorandum  Opinion  and  Order,  15  FCC  Rcd  9622  (2000).
154
 58
 PART  22,  SUBPART  H  CELLULAR  RADIOTELEPHONE  SERVICE
 Description
 Part  22,  subpart  H  163  contains  licensing,  technical,  and  operational  rules  for  the  Cellular
 Radiotelephone  Service  (  cellular  service).
 The  spectrum  allocated  to  the  cellular  service  is  divided  into  two  channel  blocks,  A  and  B.  This
 was  done  to  provide  for  two  competing  facilities-  based  providers  in  each  licensing  area.  Initially,
 the  cellular  license  for  the  B  channel  block  in  each  licensing  area  was  issued  to  the  wireline
 telephone  company  in  that  area  and  the  license  for  the  A  channel  block  issued  to  a  company  other
 than  that  wireline  telephone  company.  Because  there  were  multiple  A  block  applicants  in  most
 markets,  the  initial  licensee  was  selected  by  comparative  hearings  for  the  first  (largest)  30
 markets,  and  random  selection  (lotteries)  for  the  remaining  markets.  After  Congress  gave  the
 Commission  authority  to  select  among  mutually  exclusive  applications  using  competitive  bidding
 (auctions),  the  Commission  began  using  auctions  instead  of  lotteries  in  the  cellular  service.
 In  general,  the  rules  in  Part  22,  subpart  H:  (1)  specify  the  frequency  bands  allocated  to  the
 cellular  service;  (2)  provide  methods  for  determining  the  Cellular  Geographic  Service  Area
 (protected  service  area)  of  each  system;  (3)  establish  minimum  construction  and  coverage
 requirements  for  cellular  licensees;  and  (4)  set  forth  certain  technical  limits  on  operation  (e.  g.,
 transmitter  power).
 Purpose
 Subpart  H  facilitates  the  provision  of  commercial  cellular  services  to  the  general  public  at
 reasonable  rates,  by:  (1)  utilizing  a  competitive  bidding  process  to  issue  exclusive  licenses  to  the
 service  provider  applicants  who  value  them  most;  (2)  preserving  and  enhancing  competition
 between  these  service  providers  once  licensed;  (3)  ensuring  that  available  spectrum  allocations
 are  used  efficiently;  and  (4)  requiring  coordination  procedures  to  prevent  harmful  interference
 among  cellular  systems.
 Analysis
 Status  of  Competition
 As  detailed  in  the  Fifth  Competition  Report,  CMRS  providers  operate  in  an  environment  that  is
 marked  by  significant  and  increasing  competition  in  mobile  telephony,  paging/  messaging,  and
 mobile  data.  164  Cellular  is  by  far  the  largest  mobile  radiotelephone  service  in  terms  of
 subscribers,  but  competing  broadband  PCS  and  enhanced  SMR  services  are  rapidly  growing.
 Cellular  systems  compete  with  other  mobile  telephone  services  principally  on  the  basis  of  pricing
 plans,  geographical  coverage,  and  operational  features.
 163  47  C.  F.  R.  Part  22,  subpart  H.
 164  Fifth  Competition  Report,  supra,  at  9-  27,  36-  63.
155
 59
 Advantages
 The  rules  provide  a  clear,  predictable  structure  for  the  assignment  and  use  of  cellular  spectrum.
 The  rules  provide  for  accepting  competing  mutually  exclusive  applications  for  unserved  areas  and
 selecting  the  licensee  by  means  of  competitive  bidding;  thus,  licenses  are  issued  to  the  entities
 that  value  them  the  most.  In  addition,  the  rules  contain  minimal  and  flexible  technical  standards
 for  alternative  cellular  technologies  that  facilitate  the  introduction  of  digital  service  and  new
 features.
 Disadvantages
 The  cellular  rules  impose  some  administrative  burdens  inherent  in  the  licensing  process  and  are
 necessary  for  compliance  with  technical  and  operational  rules.  However,  some  of  the  subpart  H
 rules  appear  to  be  outdated  in  light  of  the  current  state  of  cellular  technology  and  wireless
 competition.  For  example,  subpart  H  contains  regulations  to  prevent  speculation  and  trafficking
 in  cellular  licenses  that  were  adopted  when  cellular  licenses  were  awarded  by  lottery.  In  addition,
 subpart  H  contains  technical  rules  for  the  provision  of  analog  service.
 Recent  Efforts
 The  Commission  has  made  significant  changes  to  its  Part  22  rules  in  recent  years,  mainly  in  the
 areas  of  increasing  spectrum  use  flexibility,  165  streamlining  the  licensing  process  to  incorporate
 electronic  filing  procedures  and  the  Universal  Licensing  System,  166  and  permitting  disaggregation
 of  cellular  spectrum.  167  Currently,  the  staff  is  preparing  for  the  Commissions  consideration
 proposals  to  eliminating  cellular  technical  and  administrative  rules  that  have  become  obsolete
 because  increased  competition  has  caused  technology  to  evolve  at  a  rapid  pace.
 Initial  Recommendation
 As  noted  above,  subpart  H  contains  a  number  of  relatively  old  rules  that  were  adopted  when
 wireless  technology  and  competitive  conditions  were  very  different  from  the  present  day.  In
 addition,  certain  rules  (e.  g.,  rules  requiring  demonstration  of  an  applicants  financial
 qualifications)  have  been  superseded  by  the  use  of  competitive  bidding.
 Therefore,  the  staff  recommends  that  the  Commission  undertake  a  comprehensive  review  of  the
 subpart  H  rules.  In  accordance,  with  this  recommendation,  the  staff  is  preparing  a  Notice  of
 Proposed  Rulemaking  that  would  consider,  inter  alia,  whether  to  modify  or  eliminate  the  rule
 requiring  demonstration  of  financial  qualifications  by  cellular  applicants;  168  whether  to  modify  or
 165  Amendment  of  the  Commission's  Rules  to  Permit  Flexible  Service  Offerings  in  the  Commercial  Mobile
 Radio  Services,  First  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  11  FCC  Rcd  8965
 (1996)  (CMRS  Flex  Order/  FNPRM).
 166  Amendment  of  Parts  0,  1,  13,  22,  24  26,  27,  80,  87,  90,  95,  97,  and  101  of  the  Commission's  Rules  to
 Facilitate  the  Development  and  Use  of  the  Universal  Licensing  System  in  the  Wireless  Telecommunications
 Service,  Report  and  Order,  13  FCC  Rcd  21027  (1998)  (ULS  Report  and  Order),  affirmed  and  modified  in
 part,  ULS  Memorandum  Opinion  and  Order  on  Reconsideration,  14  FCC  Rcd  11476  (1999).
 167  Geographic  Partitioning  and  Spectrum  Disaggregation  by  Commercial  Mobile  Radio  Services
 Licensees,  Second  Report  and  Order,  FCC  00-  141  (rel.  May  19,  2000).
 168  47  C.  F.  R.    22.  937.
156
 60
 eliminate  the  rule  requiring  cellular  systems  to  operate  in  conformance  with  the  1981  AMPS
 compatibility  specification,  169  and  various  other  technical  rules  that  have  become  obsolete  due  to
 the  rapid  evolution  of  technology;  and  whether  to  privatize  the  assignment  of  system
 identification  numbers.
 Comments
 The  Coalition  of  Independent  Cellular  Carriers  believes  that  Section  22.942,  170  the  cellular  cross-ownership
 rule,  should  be  eliminated.  The  Coalition  argues  that  the  variety  of  spectrum  (i.  e.,
 cellular,  800/  900  MHz  and  PCS)  used  to  provide  wireless  service  suggests  that  a  rule  prohibiting
 any  person  from  controlling  both  the  cellular  A  frequency  block  licensee  and  the  B  frequency
 block  licensee  in  overlapping  geographic  areas  makes  no  sense.  171
 The  Coalition  of  Independent  Cellular  Carriers  points  out  that  the  Commission  adopted  Section
 22.942  when  there  was  no  spectrum  allocated  for  broadband  wireless  in  the  1.9  GHz  band,  and
 when  the  notion  of  using  heavily-  encumbered  SMR  spectrum  to  provide  broadband  wireless
 service  was  an  abstract  idea.  172  At  that  time,  only  50  MHz  were  allocated  for  cellular  service.
 Today  there  is  90  MHz  of  broadband  wireless  spectrum  allocated  under  the  Commissions  Part  24
 rules,  and  approximately  20  MHz  more  allocated  under  Part  90  of  the  Commissions  rules.  173  The
 Coalition  argues  that  Section  22.942  is  duplicative  of  the  spectrum  cap  rule  and  unnecessarily
 redundant.  174
 The  Coalition  also  argues  that  Section  22.942  does  not  reflect  any  policy  judgment  that  the
 spectrum  licensed  under  Part  22  is  better  than  other  spectrum  licensed  for  broadband  wireless
 purposes  under  either  Part  24  or  Part  90.
 Recommendation
 Unchanged.  The  Commission  will  also  consider  cellular  cross  ownership  issues  as  part  of  the
 proceeding  reviewing  the  CMRS  spectrum  cap  (47  C.  F.  R.    20.  6),  referenced  above.
 169  47  C.  F.  R.    22.  933.
 170  47  C.  F.  R.    22.  942.
 171  Comments  of  Coalition  of  Independent  Cellular  Carriers  at  pp.  1-  2.
 172  Comments  of  Coalition  of  Independent  Cellular  Carriers  at  pp.  2-  3  citing  Amendment  of  Part  22  of  the
 Commissions  Rules  to  Provide  for  Filing  and  Processing  of  Applications  for  Unserved  Areas  In  the
 Cellular  Service  and  to  Modify  Other  Cellular  Rules;  Amendment  of  the  Commissions  Rules  for  Rural
 Cellular  Service;  In  Re  Cellular  Applications  for  Unserved  Areas  in  MSAa/  NECMAs,  6  FCC  Rcd  6185,
 6227-  28  (1991)  (Unserved  Area  Order).
 173  Comments  of  Coalition  of  Independent  Cellular  Carriers  at  p.  3.
 174  Comments  of  Coalition  of  Independent  Cellular  Carriers  at  p.  3.
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 61
 PART  22,  SUBPART  I    OFFSHORE  RADIOTELEPHONE  SERVICE
 Description
 Part  22,  subpart  I  175  governs  the  licensing  and  operation  of  offshore  radiotelephone  stations.  The
 Offshore  Radiotelephone  Service  allows  CMRS  providers  to  use  conventional  duplex  analog
 technology  to  provide  telephone  service  to  subscribers  located  on  (or  in  helicopters  en  route  to)
 oil  exploration  and  production  platforms  in  the  Gulf  of  Mexico.
 Purpose
 The  purpose  of  the  subpart  I  rules  is  to  establish  basic  rules  and  procedures  for  the  licensing  and
 operation  of  offshore  radiotelephone  stations.
 Analysis
 Status  of  Competition
 There  are  several  competitive  alternatives  to  Offshore  Radiotelephone  service  in  the  Gulf.  Two
 cellular  companies  currently  operate  in  the  Gulf  of  Mexico  Service  Area  (GMSA),  and  some
 SMR  service  providers  also  operate  there  on  a  site-  by-  site  basis.  The  Commission  is  also
 considering  licensing  in  the  Gulf  in  several  other  spectrum  bands,  including  PCS  and  the  700
 MHz  band.  176
 Advantages
 The  subpart  I  rules  provide  a  clear,  predictable  structure  for  the  assignment  and  use  of  Offshore
 Radio  spectrum.
 Disadvantages
 The  subpart  I  rules  impose  limited  administrative  and  technical  burdens  that  are  inherent  in  the
 licensing  process  and  that  are  necessary  for  compliance  with  technical  and  operational  rules.
 Recent  Efforts
 The  rules  in  this  subpart  have  not  been  revised  since  1995.
 Recommendation
 The  staff  concludes  that  significant  modification  or  repeal  of  the  subpart  I  rules  is  not  necessary  at
 this  time.
 175  47  C.  F.  R.  Part  22,  subpart  I.
 176  We  also  note  that  service  is  provided  by  other  services  as  well:  e.  g.,  PCS,  WCS,  satellite,  VHF
 maritime,  private  radio  (formerly  petroleum  radio  service),  private  (offshore),  and  microwave.
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 62
 PART  22,  SUBPART  J    REQUIRED  NEW  CAPABILITIES  PURSUANT  TO  THE
 COMMUNICATIONS  ASSISTANCE  FOR  LAW  ENFORCEMENT  ACT  (CALEA)
 Description
 The  Communications  Assistance  for  Law  Enforcement  Act  (CALEA)  was  enacted  by  Congress
 to  establish  procedures  for  law  enforcement  to  obtain  authorized  access  to  wireless  and  wireline
 communications  or  call-  identifying  information  where  such  information  is  needed  for  law
 enforcement  purposes.  177  Part  22,  subpart  J  178  contains  technical  standards  and  capabilities  for
 cellular  carriers  to  ensure  that  communications  and  call-  identifying  information  will  be  accessible
 to  law  enforcement,  as  required  by  section  103  of  CALEA.  179  These  rules  were  adopted  in
 1999.  180  The  Commission  has  adopted  parallel  requirements  and  standards  for  broadband  PCS
 licensees  in  Part  24,  subpart  J  181  and  for  wireline  telecommunications  carriers  in  Part  64,  subpart
 W.  182
 Purpose
 The  purpose  of  the  CALEA  rules  is  to  ensure  that  law  enforcement,  pursuant  to  court  order  or
 other  lawful  authorization,  will  have  reasonable  access  to  wireless  and  wireline  communications
 or  call-  identifying  information  where  such  information  is  needed  for  law  enforcement  purposes.
 Analysis
 Status  of  Competition
 Not  relevant.
 Advantages
 These  rules  arose  from  the  Commissions  specific  statutory  role  as  arbiter  of  differences  among
 industry,  law  enforcement,  and  other  interested  parties  regarding  standards  for  complying  with
 section  103  of  CALEA.  In  large  part,  they  reflect  the  consensus  reached  during  the  standard-setting
 process,  as  modified  through  application  of  the  Commissions  expertise  in  areas  where
 consensus  was  not  reached.
 Disadvantages
 The  CALEA  rules  impose  technical  burdens  on  carriers  to  comply  with  the  accessibility
 requirements  of  the  statute,  and  may  limit  technical  flexibility  and  innovation.
 177  47  U.  S.  C.    1002.
 178  47  C.  F.  R.  Part  22,  subpart  J.
 179  Id.
 180  See  Communications  Assistance  for  Law  Enforcement  Act,  Third  Report  and  Order,  14  FCC  Rcd
 16794  (1999).
 181  47  C.  F.  R.  Part  24,  subpart  J.
 182  64  C.  F.  R.  Part  64,  subpart  W.
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 63
 Recent  Efforts
 On  August  15,  2000,  the  D.  C.  Circuit  vacated  and  remanded  for  further  explanation  the  CALEA
 rules  insofar  as  they  imposed  certain  capability  requirements  in  excess  of  industry-  adopted
 technical  standards.
 Initial  Recommendation
 The  staff  recommended  that  the  Commission  reassess  its  subpart  J  rules  pursuant  to  the  D.  C.
 Circuits  remand.
 Comments
 USTA  supports  the  staff  recommendation  that  the  rules  in  Part  22  Subpart  J  be  reassessed  given
 the  D.  C.  Circuit  Courts  remand  of  some  of  these  rules,  and  further  recommends  that  the
 Commission  suspend  the  September  30,  2001,  compliance  deadline  for  all  capability
 requirements  beyond  the  core  elements  of  J-  STD-  025  (interim  standard)  pending  further  action
 pursuant  to  the  remand.  183
 Reply  Comments
 CTIA  concurs  with  USTAs  comments.  184
 Recommendation
 On  October  17,  2000,  staff  released  a  public  notice  (DA  00-  2342)  seeking  comment  on  various
 issues  raised  by  the  remand.  Upon  receipt  of  these  comments,  staff  will  recommend  appropriate
 action.
 183  USTA  Comments  at  12.
 184  CTIA  Reply  Comments  at  8.
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 64
 PART  23    INTERNATIONAL  FIXED  PUBLIC  RADIOCOMMUNICATION
 SERVICES
 Description
 Part  23  implements  and  interprets  sections  4,  301,  and  303  of  the  Communications  Act  of  1934,
 as  amended.  185  Part  23  sets  forth  rules  applicable  to  high  frequency  (  HF)  radio  systems  used
 for  international  communications,  including  general  licensing  and  service  rules,  application  filing
 requirements,  and  technical  specifications.  The  rules  classify  these  systems  as  either  fixed
 public  service  (a  radiocommunication  service  carried  on  between  fixed  stations  open  to  public
 correspondence)  or  fixed  public  press  service  (a  radiocommunication  service  carried  on
 between  point-  to-  point  telegraph  stations,  open  to  limited  public  correspondence  of  news  items  or
 other  material  related  to  or  intended  for  publication  by  press  agencies,  newspapers,  or  for  public
 dissemination).
 Although  Part  23  does  not  contain  lettered  sub-  parts,  the  rules  are  organized  as  follows:
 Section  23.  1  Definitions
 Sections  23.11-  23.12  Use  of  frequencies
 Sections  23.13-  23.19  Technical  specifications
 Sections  23.20-  23.27  Use  of  frequencies
 Sections  23.28-  23.55  Licensing  and  service  rules
 Purpose
 The  Commission  has  stated  that  the  original  purpose  of  the  Part  23  rules  is  obscure.  186  Neither
 the  Federal  Communications  Commission  nor  the  Federal  Radio  Commission  has  issued  any
 opinion  explaining  the  rationale  for  the  rules.  187  The  FCC  has  not  opined  on  these  rules
 since1980.
 In  the  Western  Union  MO&  O,  the  Commission  stated  that  the  rules  contained  in  Part  23  derive
 from  those  promulgated  by  the  Federal  Radio  Commission  in  1932.  At  that  time,  fixed  wireless
 links  presumably  provided  an  important  method  of  communications  between:  (1)  the  contiguous
 48  States  (including  D.  C.)  and  Alaska,  Hawaii,  any  U.  S.  possession,  or  any  foreign  point;  (2)
 Alaska  and  any  other  point;  (3)  Hawaii  and  any  other  point;  and  (4)  any  U.  S.  possession  and  any
 other  point.  Part  23  provides  the  regulatory  framework  for  these  services.  In  addition,  Part  23
 governs  radiocommunication  within  the  contiguous  48  States  (including  D.  C.)  in  connection  with
 relaying  the  above-  referenced  international  traffic.
 185  47  U.  S.  C.    154,  301,  303.
 186  Western  Union  Telegraph  Co.,  Memorandum  Opinion  and  Order,  75  F.  C.  C.  2d  461,  472    39  (1980)
 (Western  Union  MO&  O).
 187  See  id.
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 65
 Analysis
 Status  of  Competition
 Use  of  HF  radio  facilities  in  providing  carriers  international  communications  services  in  the  age
 of  submarine  cable  and  satellites  is  virtually  dormant.  There  are  two  active  Part  23  licensees,
 with  a  recently-  filed  Part  23  application    the  first  in  several  years    still  pending.  Competition
 among  services  under  this  rule  Part  is  therefore  not  relevant.
 Advantages
 Part  23  provides  the  requisite  framework  within  which  licensees  can  perform  useful  functions  in
 the  provision  of  international  communications  services.  HF  radio  stations  can  be  a  functionally
 useful  supplement  to  submarine  cable  and  satellite  systems  in  the  provision  of  service  to  overseas
 points  not  easily  or  economically  reached  by  these  facilities,  in  the  provision  of  a  limited  restoral
 capability  during  submarine  cable  or  satellite  outages,  and  in  the  provision  of  certain  specialized
 services  such  as  press  and  weather  map  broadcast  services.
 Disadvantages
 Because  the  type  of  international  traffic  addressed  in  these  rules  now  is  carried  primarily  by
 undersea  cable  and  satellite,  there  is  considerably  less  need  for  regulation  in  this  area.
 Recent  Efforts
 None.
 Initial  Recommendation
 Part  23  is  ripe  for  streamlining  or  elimination.  However,  the  staff  recommended  that  Part  23  be
 retained  in  its  entirety  pending  an  in-  depth  Commission  review  to  determine  how  the  few
 remaining  licensees  are  using  this  service  and  to  project  when  submarine  cable  and  satellite  will
 fully  supplant  this  service.
 Comments
 No  comments  were  received  concerning  Part  23.
 Recommendation
 Same  as  above.  Staff  note  that  if  the  Commission  determines  that  this  service  warrants  continued
 regulation,  the  staff  recommends  the  repeal  of  Part  23,  with  the  necessary  regulatory  mechanisms
 (most  likely,  technical  standards)  incorporated  into  Part  90  or  Part  101,  each  of  which  regulates
 similar  services.
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 66
 PART  24    PERSONAL  COMMUNICATIONS  SERVICES
 Description
 Part  24  188  contains  licensing,  technical,  operational,  and  auction  rules  for  broadband  and
 narrowband  Personal  Communications  Services  (PCS).  189  The  rules  in  this  part:  (1)  define  PCS
 licensing  areas;  (2)  specify  the  frequencies  available  to  PCS  licensees;  (3)  establish  license  terms
 and  operational  parameters;  (4)  set  forth  minimum  coverage  requirements  for  licensees;  (5)
 establish  minimum  technical  standards  and  limits  on  operation  (e.  g.,  antenna  height,  transmitter
 power)  to  prevent  interference;  and  (6)  set  forth  application  procedures  and  competitive  bidding
 rules  for  the  auction  and  award  of  PCS  licenses.
 In  addition,  subpart  J  contains  requirements  applicable  to  PCS  under  the  Communications
 Assistance  for  Law  Enforcement  Act  (CALEA).  190  Specifically,  these  rules  set  forth  certain
 capability  standards  applicable  to  broadband  PCS  telecommunications  carriers  in  order  to  ensure
 that,  when  properly  authorized,  law  enforcement  has  access  to  communications  or  call-  identifying
 information.
 Part  24  is  organized  into  ten  lettered  sub-  parts:
 A    General  Information
 B    Applications  and  Licenses
 C    Technical  Standards
 D    Narrowband  PCS
 E    Broadband  PCS
 F    Competitive  Bidding  Procedures  for  Narrowband  PCS
 G    Interim  Application,  Licensing  and  Processing  Rules  for  Narrowband  PCS
 H    Competitive  Bidding  Procedures  for  Broadband  PCS
 I    Interim  Application,  Licensing  and  Processing  Rules  for  Broadband  PCS
 J    Required  New  Capabilities  Pursuant  to  the  Communications  Assistance  for  Law
 Enforcement  Act  (CALEA)
 188  47  C.  F.  R.  Part  24.
 189  Narrowband  PCS  operates  on  the  901-  902,  930-  931,  and  940-  941  MHz  bands.  Broadband  PCS
 operates  in  the  1850-  1910  and  1930-  1990  MHz  bands.
 190  See  Communications  Assistance  for  Law  Enforcement  Act  (CALEA),  Pub.  Law  No.  103-  414,  108
 Stat.  4279  (1994).
163
 67
 The  Part  24  rules  were  initially  adopted  in  1993,  191  and  were  modified  on  reconsideration  in
 1994.  192  The  Commission  has  recently  issued  an  order  further  revising  certain  aspects  of  the  Part
 24  narrowband  PCS  rules.  193  The  CALEA  rules  were  adopted  in  a  separate  proceeding  in  1999.  194
 Purpose
 The  purposes  of  the  Part  24  rules  are  to  establish  basic  ground  rules  for  assignment  of  PCS
 spectrum,  to  ensure  efficient  spectrum  use  by  PCS  licensees,  and  to  prevent  interference.  In
 addition,  Part  24  contains  rules  that  define  eligibility  for  the  PCS  entrepreneurs  blocks  and  for
 designated  entity  (i.  e.,  small  business)  status  within  these  blocks.  The  purpose  of  these
 provisions  is  to  implement  the  objectives  of  section  309(  j)(  3)  of  the  Communications  Act  195  to
 ensure  that  the  distribution  of  PCS  licenses  is  not  excessively  concentrated,  and  that  small
 businesses,  rural  telephone  companies,  and  businesses  owned  by  women  and  minorities  have
 opportunities  to  become  PCS  licensees.
 Analysis
 Status  of  Competition
 Broadband  PCS  providers  primarily  offer  mobile  telephony  service  in  competition  with  cellular
 and  some  SMR  services.  As  described  in  the  Fifth  Competition  Report,  the  broadband  PCS
 sector  has  contributed  to  a  significant  increase  in  competition  in  the  mobile  telephony  market
 since  the  first  broadband  PCS  providers  were  licensed  five  years  ago.  196  However,  broadband
 PCS  has  not  yet  achieved  the  same  level  of  geographic  coverage  or  subscribership  as  cellular,
 particularly  in  smaller  markets.
 Narrowband  PCS  includes  a  variety  of  services  such  as  advanced  paging  and  messaging.  They
 compete  with  a  rapidly  proliferating  array  of  other  messaging  and  mobile  data  services,  including
 paging  and  wireless  Internet  services.
 191  See  Amendment  of  the  Commissions  Rules  to  Establish  New  Personal  Communications  Services,
 Second  Report  and  Order,  8  FCC  Rcd  7700  (1993);  Amendment  of  the  Commissions  Rules  to  Establish
 New  Personal  Communications  Services,  Third  Report  and  Order,  9  FCC  Rcd  1337  (1994).
 192  See  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding,  Fifth  Report
 and  Order,  9  FCC  Rcd  5532  (1994);  See  Implementation  of  Section  309(  j)  of  the  Communications  Act  
 Competitive  Bidding,  Fourth  Memorandum  Opinion  and  Order,  9  FCC  Rcd  6858  (1994);  See
 Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding,  Fifth  Memorandum
 Opinion  and  Order,  10  FCC  Rcd  403  (1994).
 193  See  Amendment  of  the  Commissions  Rules  to  Establish  New  Personal  Communications  Services,
 Narrowband  PCS,  Second  Report  and  Order,  15  FCC  Rcd  10456  (2000).
 194  See  Communications  Assistance  for  Law  Enforcement  Act,  CC  Docket  No.  97-  213,  Third  Report  and
 Order,  FCC  99-  230  (rel.  Aug.  31,  1999),  affd  in  part,  revd  in  part,  United  States  Telecom  Assn  v.  FCC,
 D.  C.  Circuit  No.  99-  1442  (Aug.  15,  2000).
 195  47  U.  S.  C.    309(  j)(  3).
 196  Fifth  Competition  Report,  supra,  at  28-  29.
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 68
 Advantages
 The  Part  24  rules  provide  the  basic  regulatory  structure  necessary  for  the  orderly  assignment  and
 use  of  PCS  spectrum,  while  otherwise  affording  licensees  substantial  flexibility  to  determine  what
 technology,  type  of  service,  and  business  strategy  they  will  use.  The  Part  24  competitive  bidding
 rules  promote  efficient  licensing  of  PCS  spectrum  to  those  entities  that  value  it  the  most.
 Disadvantages
 The  Part  24  rules  impose  limited  administrative  and  technical  burdens  that  are  inherent  in  the
 licensing  process  and  that  are  necessary  for  compliance  with  technical  and  operational  rules.
 Recent  Efforts
 In  an  order  adopted  May  5,  2000,  the  Commission  revised  its  narrowband  PCS  rules  to  eliminate
 certain  regulatory  burdens  and  afford  narrowband  PCS  licensees  greater  flexibility  than  was
 provided  under  the  original  Part  24  rules.  197  Specifically,  the  Commission:  (1)  provided  for  use
 of  larger  licensing  areas  for  the  remaining  narrowband  PCS  spectrum;  (2)  eliminated  the  limit  on
 aggregation  of  narrowband  PCS  licenses;  (3)  eliminated  technical  restrictions  and  eligibility
 limitations  on  paging  response  channels;  (4)  adopted  a  substantial  service  alternative  to  existing
 construction  and  minimum  coverage  requirements;  and  (5)  adopted  partitioning  and
 disaggregation  rules.
 On  June  7,  2000,  the  Commission  initiated  a  rulemaking  to  consider  possible  modifications  to  its
 entrepreneur  eligibility  rules  for  the  C  and  F  blocks  in  anticipation  of  re-  authorization  of  some  of
 the  C  and  F  block  spectrum  later  this  year.  198  On  August  29,  2000,  the  Commission  released  the
 Sixth  Report  and  Order  and  Order  on  Reconsideration  in  WT  Docket  No.  97-  82,  in  which  it
 reconfigured  the  available  C  block  licenses  into  10  MHz  blocks  and  removed  the  entrepreneur
 eligibility  restrictions  with  respect  to  certain  reconfigured  C  block  licenses  and  all  F  block
 licenses.  199
 Initial  Recommendation
 With  certain  exceptions  noted  below,  the  staff  conclude  that  significant  modification  or  repeal  of
 the  licensing  and  technical  rules  in  Part  24  is  not  necessary  at  this  time.
 Part  24  contains  two  subparts  (subparts  G  and  I)  that  set  forth  interim  application,  licensing,  and
 processing  rules  for  narrowband  and  broadband  PCS,  respectively.  Many  of  these  rules  appear
 to  be  duplicative  of  the  consolidated  Part  1,  subpart  F  rules  that  establish  licensing  procedures  for
 all  wireless  services.  In  addition,  a  number  of  the  competitive  bidding  provisions  in  Part  24  have
 been  superseded  by  recent  amendments  to  the  general  competitive  bidding  rules  of  Part  1,  subpart
 197  See  Narrowband  Second  Report  and  Order,  10  FCC  Rcd  at  403.
 198  See  Amendment  of  the  Commissions  Rules  Regarding  Installment  Payment  Financing  for  Personal
 Communications  Services  (PCS)  Licensees,  WT  Docket  No.  97-  82,  Further  Notice  of  Proposed  Rule
 Making,  FCC  00-  197  (rel.  June  7,  2000).
 199  Amendment  of  the  Commissions  Rules  Regarding  Installment  Payment  Financing  for  Personal
 Communications  Services  (PCS)  Licensees,  Sixth  Report  and  Order  and  Order  on  Reconsideration,  FCC
 00-  313  (adopted  August  23,  2000;  released  August  28,  2000).
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 69
 Q.  For  example,  Part  24  provisions  addressing  (1)  competitive  bidding  design,  (2)  withdrawal,
 default  and  disqualification  penalties,  and  (3)  upfront,  down  and  installment  payments,  have  been
 replaced  by  updated  provisions  in  Part  1,  subpart  Q.  Therefore,  the  continued  presence  of
 service-  specific  auction  rules  in  Part  24  appears  to  be  redundant.  The  staff  recommends  that
 consideration  be  given  to  eliminating  or  phasing  out  these  rules.
 Comments
 A  number  of  comments  note  disparities  in  the  rules  for  Part  22  and  Part  24.  Verizon  contends
 that  a  comparison  of  Part  24  with  the  corresponding  regulations  in  Part  22  and  Part  27  reveals  a
 marked  disparity  in  both  the  number  and  severity  of  the  regulations  imposed.  200  The
 Telecommunications  Industry  Association  (TIA)  recommends  that  the  measurement  of  power
 units  be  adopted  universally  in  all  parts  of  the  Commissions  rules  as  Effective  Isotropic  Radiated
 Power  (EIRP),  as  it  is  now  required  under  in  Part  24.  TIA  believes  it  is  confusing  to  have
 different  measures  of  power  units  in  Part  22  and  Part  24.  201  CTIA  in  its  comments  notes  that
 Section  24.16  which  covers  renewal  procedures  for  PCS  licenses  needs  to  be  harmonized  with  47
 C.  F.  R.    22.  935-  22-  940,  governing  the  content  of  renewal  and  competing  applications  for
 cellular  licenses  as  well  as  a  two-  step  process  for  resolving  renewal  challenges.  202
 Recommendation
 In  addition  to  keeping  the  initial  recommendation,  staff,  in  response  to  comments,  recommend  the
 initiation  of  a  proceeding  to  bring  cellular,  PCS,  and  the  General  Wireless  Communications
 Service  technical  and  operational  rules  under  Parts  22,  24,  and  27  into  conformity  with  each
 other.  Staff  recommend  that  the  Commission  use  the  Effective  Isotropic  Radiated  Power  (EIRP)
 units  of  measurement  in  Parts  22  and  24  of  its  rules  (now  EIRP  units  are  used  in  Part  24  and
 Effective  Radiated  Power  (ERP)  units  are  used  in  Part  22).  Staff  also  recommends  that  the
 Wireless  Bureau  review  its  renewal  procedures  for  wireless  licensees  to  determine  whether  the
 rules  regarding  renewal  expectancy  may  need  modification.
 200  Id.  at  7.
 201  TIA  Comments  at  Section  2.
 202  CTIA  Comments  at  9-  10,  and  Attachment.
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 70
 PART  25    SATELLITE  COMMUNICATIONS
 Description
 Part  25  was  issued  pursuant  to  the  authority  contained  in  section  201(  c)(  11)  of  the
 Communications  Satellite  Act  of  1962,  as  amended,  section  501(  c)(  6)  of  the  International
 Maritime  Satellite  Telecommunications  Act,  and  titles  I  through  III  of  the  Communications  Act
 of  1934,  as  amended.  Part  25  sets  out  the  rules  applicable  to  satellite  communications,  including
 general  licensing  and  application  filing  requirements,  technical  standards,  and  technical
 operations.
 Part  25  is  organized  into  seven  lettered  sub-  parts:
 A    General
 B    Applications  and  Licenses
 C    Technical  Standards
 D    Technical  Operations
 E    Reserved
 F    Competitive  Bidding  Procedures  for  DARS
 G    Reserved
 H    Authorization  to  Own  Stock  in  the  Communications  Satellite  Corporation
 I    Equal  Employment  Opportunities
 Purpose
 Part  25  provides  rules  under  which  the  Bureau  licenses  systems  to  provide  various  satellite
 services.  The  rules  are  designed  to  accommodate  the  maximum  number  of  systems  possible  for
 each  type  of  service,  and  to  enhance  competition  for  satellite  services  and  the  terrestrial  services
 with  which  they  compete.  Sections  of  Part  25  also  have  provisions:  (1)  to  protect  against
 impermissible  levels  of  interference;  (2)  to  assure  compliance  with  international  agreements  and
 treaties;  (3)  to  assure  the  timely  construction  and  operation  of  authorized  earth  stations  and  the
 timely  construction,  launch  and  operation  of  authorized  space  stations;  (4)  to  assure  the  timely
 provision  of  sufficient  information  to  allow  for  processing  of  applications;  and  (5)  to  assure
 compliance  with  license  specifications  and  conditions  as  well  as  with  Commission  rules  and
 regulations.  In  addition,  Part  25  provides  competitive  bidding  procedures  for  the  provision  of
 DARS  services,  and  specifies  the  procedure  by  which  the  Commission  authorizes  the  purchase  of
 stock  in  COMSAT.  Part  25  also  provides  for  preemption  of  local  zoning  of  earth  stations,  if  the
 reasonableness  of  the  regulation  cannot  be  demonstrated.
 Analysis
 Status  of  Competition
 The  satellite  services  regulated  by  Part  25  are  fully  competitive  on  most  routes.  There  are  four
 major  satellite  service  providers  and  several  smaller  providers  that  are  licensed  to  provide  state-of-
 the-  art  satellite  telephony  and  data  services  to  U.  S.  consumers  and  consumers  worldwide.  On
 many  routes,  satellite  telephony  and  data  services  are  offered  by  several  satellite  providers.  In
 addition,  these  satellite  service  providers  face  competition  from  terrestrial  service  providers  for
167
 71
 some  services  on  some  routes.  Part  25  rules  also  provide  licensing  mechanisms  for  future  entry
 and  further  competition  in  these  services.
 Advantages
 General  Applications  Filing  Requirements:  Part  25  provides  clear  procedures  for  filing
 applications,  and  predictable  procedures  for  evaluating  whether  applications  are  complete.
 Section  25.120  also  provides  effective  procedures  for  handling  applications  for  special  temporary
 authorization  when  delay  would  seriously  prejudice  the  public  interest.
 Earth  Stations:  Sections  25.130  through  25.137  include  procedures  that  allow  for  a  frequency
 coordination  analysis  to  reduce  interference  and  the  verification  of  earth  station  antenna
 performance  standards.  These  clear  procedures  minimize  the  cost  associated  with  reducing
 interference.  Part  25  also  assures  compliance  with  international  agreements  and  treaties,  as  it
 ensures  the  timely  construction  and  operation  of  earth  stations.
 Space  Stations:  Sections  25.140  through  25.145  include  conditions  to  facilitate  coordination  to
 avoid  harmful  interference  to  other  systems  and  conditions  for  applicant  qualification.  Section
 25.140  also  limits  the  number  of  orbital  locations  that  can  be  assigned  to  each  applicant,  thereby
 fostering  competition  and  reducing  the  likelihood  of  anti-  competitive  behavior.
 Processing  of  Applications  and  Forfeiture,  Termination,  and  Reinstatement  of  Station
 Authorizations:  Sections  25.150  through  25.163  include  well-  defined  procedures  for  processing
 applications  to  determine  whether  the  applications  are  mutually  exclusive.  These  sections  also
 maximize  compliance  with  Commission  rules  and  minimize  enforcement  costs.
 Subpart  C  Technical  Standards  and  Subpart  D  Technical  Operations:  These  subparts  provide
 clear  and  predictable  technical  standards  and  operating  rules  to  minimize  interference.
 Subpart  F  Competitive  Bidding  Procedures  for  DARS:  This  subpart  describes  a  mechanism  for
 competitive  bidding  for  satellite  DARS  service.  Competitive  bidding  promotes  competition  and
 awards  DARS  licenses  to  those  firms  that  will  most  efficiently  use  those  resources  to  compete  in
 providing  service.  Competitive  bidding  is  more  efficient  than  other  forms  of  assignment.
 Subpart  H  Authorization  to  Own  Stock  in  the  Communications  Satellite  Corporation:  These
 rules  provide  the  procedure  for  the  administration  of  section  304  of  the  Communications  Satellite
 Act  of  1962.  With  the  signing  of  the  ORBIT  Act  Pub.  Law  No.  106-  180,  114  Stat.  4B  (2000),
 earlier  this  year,  section  304  of  the  Communications  Satellite  Act  of  1962  ceases  to  be  effective.
 Subpart  I  Equal  Employment  Opportunities:  This  section  promotes  diversity  in  employment
 and  creates  opportunities.
 Disadvantages
 Earth  Stations:  Some  limitations  included  in  these  rules  might  hamper  the  introduction  of  new
 services.  For  example,  it  may  be  possible  to  relax  the  threshold  technical  rules  that  trigger  inter-system
 coordination  among  satellite  service  providers  and  reduce  the  burden  on  coordinating  new
 and  innovative  satellite  technologies.
 Space  Stations:  The  application  qualification  requirements  laid  out  in  Section  25.140  may  limit
 the  number  of  applicants.  In  addition,  the  limits  on  the  allocation  of  orbital  slots  to  each  applicant
168
 72
 could  restrict  the  introduction  of  new  services.  Section  25.144  includes  licensing  provisions  for
 satellite  digital  audio  radio  service,  and  specifies  the  applicants  eligible  for  the  auction.  This  rule,
 too,  serves  no  purpose  because  the  auction  has  already  been  held  and  the  pool  of  applicants  is
 overtaken  by  events.
 Processing  of  Applications  and  Forfeiture,  Termination,  and  Reinstatement  of  Station
 Authorizations:  The  preparation  of  applications  and  the  delay  associated  with  public  comment
 periods  and  the  examination  of  applications  can  be  costly  to  applicants.
 Subpart  C  Technical  Standards  and  Subpart  D  Technical  Operations:  These  standards  and
 operating  rules,  while  preserving  the  operating  environment  today,  could  hamper  the  introduction
 of  new  services  and  restrict  alternative  uses  of  resources  in  the  future.
 Subpart  F  Competitive  Bidding  Procedures  for  DARS:  Satellite  services  in  unplanned
 frequency  bands  require  international  coordination  prior  to  the  commencement  of  operations.
 The  value  of  the  orbital  location  resource  is  uncertain  if  the  international  coordination  process  has
 not  yet  been  completed.
 Subpart  H  Authorization  to  Own  Stock  in  the  Communications  Satellite  Corporation:  These
 rules  ceased  to  be  effective  with  the  recent  signing  of  the  ORBIT  Act.
 Subpart  I  Equal  Employment  Opportunities:  Rules  in  this  section  may  increase  operating  costs.
 Recent  Efforts
 The  Commission  has  taken  and  continues  to  take  steps  to  streamline  both  the  earth  station  and
 space  station  portions  of  its  satellite  licensing  process  and  to  provide  earth  station  applicants  with
 greater  flexibility.  The  staff  is  reviewing  the  technical  and  operational  standards  contained  in
 Part  25.  In  December,  the  Commission  released  a  Notice  of  Proposed  Rulemaking  to  streamline
 earth  station  and  space  station  licensing.  203  The  NPRM  proposes  technical  changes  that  would
 streamline  the  earth  station  licensing  process.  In  addition,  the  NPRM  proposes  the  electronic
 filing  of  earth  station  applications.
 Initial  Recommendation
 The  staff  recommends  further  streamlining  of  its  earth  station  and  space  station  licensing
 processes.  The  staff  recommended  that  the  Commission  commence  an  NPRM  seeking  comment
 on  industry  proposals  for  comprehensive  changes  in  the  earth  station  licensing  process.  It  also
 recommends  that  the  Commission  seek  comment  on  requiring  electronic  filing,  which  could  save
 substantial  time  in  processing  applications.  In  addition,  the  staff  recommend  that  the  Bureau
 continue  working  with  industry  to  re-  examine  the  entire  satellite  network  licensing  process.
 Furthermore,  the  staff  recommends  repealing  sections  25.141  and  25.144,  and  subpart  H  of  the
 Commissions  rules.  The  staff  recommended  review  of  the  financial  qualification  rules  in  section
 25.  140  to  determine  if  the  financial  qualification  rules  are  necessary,  and  if  a  different  showing  of
 financial  qualification  might  be  appropriate.
 203  2000  Biennial  Regulatory  Review    Streamlining  and  Other  Revisions  of  the  Part  25  of  the
 Commissions  Rules  Governing  the  Licensing  of,  and  Spectrum  Usage  by,  Satellite  Network  Earth  Stations
 and  Space  Stations,  IB  Docket  No  00-  248,  Notice  of  Proposed  Rulemaking,  FCC  00-  435  (rel.  Dec.  14,
 2000)(  Earth  Station  Streamlining  NPRM).
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 73
 Comments
 Comments  were  filed  by  Hughes  Network  Systems  and  WorldCom,  Inc.  204  Both  parties
 supported  the  staff  recommendations  to  issue  an  NPRM  to  further  streamline  the  earth  station
 licensing  process.  Hughes  asked  that  the  following  issues  be  addressed:  blanket  licensing  of
 small  antennas;  increase  in  the  maximum  satellite  EIRP  density;  and  Aloha  access  technology  if
 the  Commission  needs  further  comment  on  this  issue.  205
 Recommendation
 See  initial  recommendation.  Staff  recommends  that  the  Commission  adopt  the  rules  proposed  in
 theEarth  Station  Streamlining  NPRM.  206
 204  Hughes  Network  Systems  comments,  WorldCom,  Inc.  comments  at  3.
 205  Hughes  Network  Systems  comments  at  2-  6.
 206  See  note  192.
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 74
 PART  26    GENERAL  WIRELESS  COMMUNICATIONS  SERVICES
 Description
 Part  26  207  contains  licensing,  technical,  and  operational  rules  for  General  Wireless
 Communications  Services  (GWCS)  in  the  4660-  4685  MHz  band.  The  rules  in  this  part:  (1)
 define  permissible  communications;  (2)  establish  license  terms  and  parameters;  (3)  establish
 minimum  technical  standards  and  limits  on  operation  (e.  g.,  antenna  height,  emission  limits)  to
 prevent  interference;  (4)  define  GWCS  service  areas;  and  (5)  set  forth  application  procedures  and
 competitive  bidding  rules  for  the  auction  and  award  of  GWCS  licenses.
 The  rules  allow  GWCS  licensees  to  provide  any  fixed  or  mobile  communications  service  on  their
 assigned  spectrum.  Broadcasting,  radiolocation,  and  satellite  services  are  prohibited.  However,
 as  discussed  below,  no  licenses  have  been  awarded  in  the  service,  the  4660-  4685  MHz  band  has
 since  been  reclaimed  by  the  federal  government,  and  the  Commission  has  proposed  to  delete  the
 Part  26  rules.
 Purpose
 The  purpose  of  the  Part  26  rules  is  to  establish  basic  ground  rules  for  assignment  of  spectrum  in
 Part  26  services,  to  ensure  efficient  spectrum  use  by  licensees,  and  to  prevent  interference.
 Analysis
 Status  of  Competition
 No  licenses  have  been  awarded  in  the  GWCS  service.
 Advantages
 Not  applicable.
 Disadvantages
 Not  applicable.
 Recent  Efforts
 On  March  30,  1999,  the  Department  of  Commerce  notified  the  Commission  that  the  Federal
 Government  was  reclaiming  the  4635-  4685  MHz  band  and  identified  the  4.9  GHz  band  as
 substitute  spectrum  for  private  sector  use.  208  Accordingly,  on  February  23,  2000,  the  Commission
 adopted  a  Notice  of  Proposed  Rulemaking  in  WT  Docket  No.  00-  32  proposing  to  eliminate  the
 GWCS  rules  and  delete  Part  26.  209  In  the  Notice,  the  Commission  states  that  it  will  allocate  and
 207  47  C.  F.  R.  Part  26.
 208  Letter  to  the  Honorable  William  E.  Kennard,  Chairman,  Federal  Communications  Commission,  from
 Larry  Irving,  Assistant  Secretary  for  Communications,  U.  S.  Department  of  Commerce  (Mar.  30,  1999).
 209  The  4.  9  GHz  Band  Transferred  From  Federal  Government  Use,  Notice  of  Proposed  Rulemaking,  15
 FCC  Rcd  4778  (2000).
171
 75
 establish  licensing  and  service  rules  for  the  4.9  GHz  band  as  substitute  spectrum.  210  In  the
 Notice,  211  the  Commission  also  proposes  to  license  the  4.  9  GHz  band  under  Part  27  of  the
 Commissions  Rules.  212
 Initial  Recommendation
 In  light  of  the  Commissions  pending  proposal  in  WT  Docket  No.  00-  32  to  delete  the  Part  26
 rules,  the  staff  makes  no  recommendations  with  respect  to  these  rules.
 Comments
 None
 Recommendation
 See  initial  recommendation.
 210  Id.,  Appendix  A.
 211  Id.  At  para.  2.
 212  47  C.  F.  R.  Part  27.  Because  Part  26  applies  only  to  the  4660-  4685  MHz  band,  we  propose  to  delete
 Part  26  of  the  Commissions  Rules  containing  General  Wireless  Communications  Services  (GWCS)  rules.
 47  C.  F.  R.  Part  26.
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 76
 PART  27    MISCELLANEOUS  WIRELESS  COMMUNICATIONS  SERVICES
 Description
 Part  27  213  contains  licensing,  technical,  and  operational  rules  for  the  Wireless  Communications
 Services  (WCS)  and  for  other  new  wireless  services.  The  rules  in  this  part:  (1)  define  WCS
 license  areas;  (2)  specify  the  frequencies  available  to  WCS  licensees;  (3)  establish  license  terms
 and  operational  parameters;  (4)  establish  minimum  technical  standards  and  limits  on  operation
 (e.  g.,  antenna  height,  power  limits)  to  prevent  interference;  and  (5)  set  forth  application
 procedures  and  competitive  bidding  rules  for  the  auction  and  award  of  WCS  licenses.
 Part  27  is  divided  into  six  sub-  parts:
 A    General  Information
 B    Applications  and  Licenses
 C    Technical  Standards
 D    Competitive  Bidding  Procedures  for  WCS
 E    Application,  Licensing  and  Processing  Rules  for  WCS
 F    Competitive  Bidding  Procedures  for  the  747-  762  MHz  and  777-  792  MHz
 Bands
 The  Commission  has  amended  Part  27  to  add  new  rules  for  wireless  services  that  will  operate  in
 the  747-  762  MHz  and  777-  792  MHz  bands  (700  MHz  services).  In  the  700  MHz  First  Report
 and  Order,  released  on  January  7,  2000,  the  Commission  adopted  rules  for  the  700  MHz  services
 that  provide  for  the  broadest  possible  use  of  this  spectrum,  consistent  with  principles  of  sound
 spectrum  management.  214  However,  the  Commission  also  noted  that  the  746-  806  MHz  band  has
 historically  been  used  exclusively  by  television  stations  (Channels  60-  69).  These  incumbent
 broadcasters  are  permitted  by  statute  to  continue  operations  in  this  band  until  their  markets  are
 converted  to  digital  television.  215
 Purpose
 The  purposes  of  the  Part  27  rules  are  to  establish  assignment  rules  for  Part  27  services,  to  ensure
 efficient  spectrum  use  by  licensees,  and  to  prevent  interference.  In  addition,  Part  27  contains
 rules  that  define  eligibility  for  small  business  status  within  these  blocks.  These  provisions
 implement  the  objectives  of  section  309(  j)(  3)  of  the  Act  that  the  distribution  of  licenses  not  be
 excessively  concentrated,  and  that  small  businesses,  rural  telephone  companies,  and  businesses
 owned  by  women  and  minorities  have  opportunities  to  participate  in  the  provision  of  WCS  and
 other  wireless  services.
 213  47  C.  F.  R.  Part  27.
 214  Service  Rules  for  the  746-  764  and  776-  794  MHz  Bands,  and  Revisions  to  Part  27  of  the  Commissions
 Rules,  First  Report  and  Order,  15  FCC  Rcd  476  (2000).
 215  See  47  U.  S.  C.    337(  e).  See  Advanced  Television  Systems  and  Their  Impact  Upon  Existing  Television
 Broadcast  Service,  Reconsideration  of  Fifth  Report  and  Order,  13  FCC  Rcd  6860,  6887  (1998).
173
 77
 Analysis
 Status  of  Competition
 Not  relevant.
 Advantages
 The  Part  27  rules  provide  a  clear,  predictable  structure  for  the  assignment  and  use  of  spectrum
 while  allowing  for  maximum  service  flexibility.  The  service  rules  follow  a  market-  based
 approach  that  affords  maximum  flexibility  to  licensees  to  decide  on  development  and  deployment
 of  new  telecommunications  services  and  products  to  consumers.  The  rules  also  ensure  that
 licensees  are  not  constrained  to  a  single  use  of  this  spectrum  and,  therefore,  can  offer  a  mix  of
 services  and  technologies  to  their  customers.  216
 Disadvantages
 The  Part  27  rules  impose  limited  administrative  and  technical  burdens  that  are  inherent  in  the
 licensing  process  and  are  necessary  for  compliance  with  technical  and  operational  rules.
 Recent  Efforts
 In  the  700  MHz  Further  Notice  of  Proposed  Rulemaking,  released  on  June  30,  2000,  the
 Commission  sought  comment  on  specific  issues  relating  to  possible  voluntary  relocation  of
 broadcast  incumbents  out  of  the  700  MHz  band.  217
 On  March  30,  1999,  the  Department  of  Commerce  notified  the  Commission  that  the  Federal
 Government  was  reclaiming  the  4635-  4685  MHz  band  and  identified  the  4.9  GHz  band  as
 substitute  spectrum  for  private  sector  use.  218  Accordingly,  on  February  23,  2000,  the  Commission
 adopted  a  Notice  of  Proposed  Rulemaking  in  WT  Docket  No.  00-  32,  proposing  to  allocate  and
 establish  licensing  and  service  rules  for  the  4.9  GHz  band  as  substitute  spectrum.  219  In  the
 Notice,  the  Commission  proposed  to  license  the  4.  9  GHz  band  under  the  Part  27  rules.
 Additionally,  the  Commission  proposed  to  codify  and  conform  certain  rules  for  the  2.  3  GHz  band
 to  provide  for  consistent  regulation  of  Part  27  services.  220
 216  WCS  Report  and  Order,  12  FCC  Rcd  10785  at  para.  26  (1997).
 217  Service  Rules  for  the  746-  764  and  776-  794  MHz  Bands,  and  Revisions  to  Part  27  of  the  Commissions
 Rules,  Carriage  of  the  Transmissions  of  Digital  Television  Broadcast  Stations,  Review  of  the  Commissions
 Rules  and  Policies  Affecting  the  Conversion  to  Digital  Television,  WT  Docket  No.  99-  168,  CS  Docket  No.
 98-  120,  MM  Docket  No.  00-  83,  Memorandum  Opinion  and  Order  and  Further  Notice  of  Proposed
 Rulemaking,  FCC  00-  224,  (June  30,  2000).
 218  Letter  to  the  Honorable  William  E.  Kennard,  Chairman,  Federal  Communications  Commission,  from
 Larry  Irving,  Assistant  Secretary  for  Communications,  U.  S.  Department  of  Commerce  (Mar.  30,  1999).
 219  The  4.  9  GHz  Band  Transferred  From  Federal  Government  Use,  Notice  of  Proposed  Rulemaking,  15
 FCC  Rcd  4778  (2000).
 220  Id.
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 78
 Initial  Recommendation
 The  staff  recommends  retaining  the  Part  27  rules.
 Comments
 None
 Recommendation
 See  initial  recommendation.
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 79
 PART  32    UNIFORM  SYSTEM  OF  ACCOUNTS
 Description
 Part  32  of  the  Commissions  rules  implements  section  220s  mandate  and  contains  the  Uniform
 System  of  Accounts  (  USOA)  for  incumbent  local  exchange  carriers.  221  Section  220  of  the
 Communications  Act  of  1934,  as  amended,  requires  the  Commission  to  prescribe  a  uniform
 system  of  accounts  for  telephone  companies.  222  The  USOA  is  an  historical  financial  accounting
 system  that  discloses  the  results  of  operational  and  financial  events  in  a  manner  that  enables  both
 the  companies  management  and  policy-  making  agencies  to  assess  these  results.  The  Part  32
 USOA  consists  of  a  chart  of  accounts  that  can  be  used  to  prepare  balance  sheets,  income
 statements,  and  other  financial  reports.  Part  32  USOA  uses  standard  accounts  and  methods  for
 preparing  such  accounts  or  to  monitor  developments  in  the  telecommunications  industry.
 Part  32  is  organized  into  seven  lettered  sub-  parts:
 A    Preface
 B    General  Instructions
 C    Instructions  for  Balance  Sheet  Accounts
 D    Instructions  for  Revenue  Accounts
 E    Instructions  for  Expense  Accounts
 F    Instructions  for  Other  Income  Accounts
 G    Glossary
 Part  32  USOA  performs  four  general  functions.  First,  the  Part  32  USOA  sets  forth  a  standardized
 chart  of  accounts  and  thereby  directs  companies  how  to  record  certain  transactions  in  their  books
 of  account.  Second,  the  Part  32  USOA  establishes  rules  for  a  carriers  affiliate  transactions.
 Third,  the  Part  32  USOA  specifies  accounting  treatment  for  depreciation  expenses.  Finally,  the
 Part  32  USOA  requires  carriers  to  maintain  property  records  of  all  telecommunications  plant  in
 service.
 Purpose
 The  Part  32  USOA  is  a  nonstructural  safeguard  to  prevent  an  incumbent  LEC  from  exercising  its
 market  power.  Specifically,  through  standardized  accounting  procedures,  the  Part  32  USOA
 helps  ensure  that  ratepayers  of  regulated  services  do  not  bear  the  costs  and  risks  associated  with
 an  incumbent  LECs  competitive  operations.  In  addition,  the  Part  32  USOA  restrains  an
 incumbent  LECs  ability  to  charge  monopoly  prices  because  it  provides  ratepayers  with
 information  that  can  be  used  to  pursue  a  complaint  against  unjust  and  unreasonable  rates.
 The  USOA  also  provides  the  Commission,  state  commissions,  ratepayers,  consumer  advocates,
 the  financial  community,  and  others  with  large  carriers  financial  performance  results  that  are
 ultimately  reflected  in  their  rates  for  telecommunications  services.  By  providing  a  standardized
 means  for  analyzing  an  incumbent  LECs  performance,  the  Part  32  USOA  is  a  tool  for  the
 Commissions  comparative  analysis  regulatory  technique.  The  Commission  implemented  the
 Part  32  USOA  to  reduce  the  need  for  costly  and  time-  consuming  special  studies  that  carriers
 performed  for  policy-  making  purposes,  while  simultaneously  providing  the  Commission  and
 221  47  C.  F.  R.  Part  32.
 222  47  U.  S.  C.    220.
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 others  with  information  used  to  make  decisions  regarding  telecommunications  competition,
 universal  service,  separations,  access  charges,  and  other  policy  issues.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.
 Advantages
 As  a  nonstructural  safeguard,  the  Part  32  USOA  is  a  lower-  cost  alternative  to  structural  separation
 as  a  means  for  preventing  an  incumbent  LEC  from  exercising  its  market  power.  223  The  Part  32
 USOA  deters  cost  misallocations  by  providing  the  initial  information  needed  to  identify  cross-subsidization,
 and  thus  protects  regulated  services  from  bearing  the  costs  of  an  incumbent  LECs
 competitive  operations.
 The  Part  32  USOA  clearly  specifies  the  incumbent  LECs  chart  of  accounts  and  the  manner  in
 which  the  carrier  prepares  such  accounts.  The  standardized  approach  lowers  the  Commissions
 costs  of  monitoring  the  industry  and  enforcing  its  rules.  Because  the  Part  32  USOA  incorporates
 Generally  Accepted  Accounting  Principles  (  GAAP),  Part  32  reduces  the  carriers  cost  of
 complying  with  the  Commissions  rules.
 Working  in  tandem  with  the  Part  43  reporting  requirements,  the  Part  32  USOA  is  a  low-  cost
 means  to  gather  information  about  the  financial  performance  of  large  incumbent  LECs.  224  Policy-makers,
 ratepayers,  and  others  can  then  use  an  incumbent  LECs  accounting  information  to  make
 more  informed  decisions.  The  information  is  also  used  to  support  a  viable  and  sufficient  system
 of  universal  service  support.  Finally,  disclosure  enables  ratepayers  to  pursue  complaints
 regarding  unjust  and  unreasonable  rates,  and  therefore  lowers  the  Commissions  costs  of
 enforcing  the  Act.
 Disadvantages
 The  Part  32  USOA  may  increase  an  incumbent  LECs  cost  of  performing  internal  accounting
 services  because  it  establishes  record-  keeping  requirements  and  accounting  procedures  (e.  g.,
 depreciation  studies)  that  may  not  be  necessary  in  a  competitive  environment.  Because  the
 Commission  intended  for  Part  32  USOA  to  deter  cross-  subsidization  largely  in  a  rate-  of-  return
 environment,  it  established  a  level  of  accounting  detail  that  serves  as  a  starting  point  in
 identifying  cross-  subsidization.  As  a  result  of  competitive  developments  during  the  1990s,  Part
 32  may  impose  more  burdensome  information  requirements  on  incumbent  LECs  than  needed  in
 the  changing  competitive  landscape.
 223  See  Implementation  of  the  Telecommunications  Act  of  1996:  Accounting  Safeguards  Under  the
 Telecommunications  Act  of  1996,  Report  and  Order,  11  FCC  Rcd  17539  (1996).
 224  The  reporting  threshold  is  modified  annually  to  adjust  for  inflation.  The  current  reporting  threshold  is
 $114  million,  so  that  only  carriers  with  $114  million  or  more  in  annual  operating  revenues  report  their  Part
 32  USOA  results  in  the  Automated  Reporting  Management  Information  System  (  ARMIS)  program.
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 81
 Recent  Efforts
 The  Commission  revised  its  Part  32  rules  during  the  1998  Biennial  Regulatory  Review.  225  In  that
 proceeding,  the  Commission  substantially  streamlined  its  accounting  requirements  for  mid-  sized
 incumbent  LECs.  The  Commission  also  reduced  accounting  requirements  on  all  incumbent  LECs
 by  eliminating  certain  accounts.
 Through  the  on-  going  Comprehensive  Review  proceeding,  the  Commission  is  streamlining  its
 Part  32  accounting  rules  as  the  industry  becomes  increasingly  competitive.  The  Comprehensive
 Review  involves  a  two-  phase  approach  during  which  the  Commission  is  soliciting  the  views  of
 the  states,  the  industry,  and  the  public  in  a  series  of  public  workshops  (as  well  as  through  standard
 notice-  and-  comment  cycles).
 In  Phase  1  of  the  Comprehensive  Review,  the  Commission  addressed  accounting  and  reporting
 reform  issues  that  could  be  implemented  without  delay.  In  the  Phase  1  Order,  which  the
 Commission  released  in  March  2000,  the  Commission  substantially  reduced  the  level  of
 accounting  detail  required  in  certain  reports,  eliminated  pre-  notification  requirements,  relaxed  the
 cost  allocation  manual  audit  requirements,  and  streamlined  a  number  of  ARMIS  reporting
 requirements.  226
 In  Phase  2,  the  Commission  will  look  to  reducing  accounting  and  reporting  requirements  for
 incumbent  LECs  as  the  industry  becomes  more  competitive.  Phase  2  of  the  Comprehensive
 Review  started  in  December  1999.  During  the  first  quarter  of  2000,  Commission  and  state
 participants  met  numerous  times  to  discuss  the  issues  of  most  interest  to  all  parties.  A  series  of
 five  public  workshops  commenced  on  April  5,  2000.  These  workshops  provide  an  opportunity
 for  all  interested  parties,  state  commissions,  incumbent  LECs,  interexchange  carriers,  CLECs,  and
 consumers  to  voice  their  opinions  on  accounting  and  reporting  reform.
 On  October  18,  2000,  the  Commission  released  a  Notice  of  Proposed  Rulemaking  seeking
 comment  on  further  measures  to  streamline  existing  accounting  and  reporting  requirements,  as
 part  of  its  ongoing  efforts  to  reduce  regulatory  burdens  on  the  industry.  227  The  NPRM  sought
 comment  on  various  proposals  to  reduce  accounting  requirements,  including  various  proposals
 raised  by  commenters.
 Initial  Recommendation
 Pursuant  to  the  Commissions  comprehensive  review  of  its  accounting  requirements,  which  it
 initiated  in  1999,  the  staff  recommends  substantial  reductions  in  the  Commissions  accounting
 requirements.  These  regulatory  changes  are  responsive  to  the  competition  that  has  developed  in
 225  See  1998  Biennial  Regulatory  Review    Review  of  Accounting  and  Cost  Allocation  Requirements,
 Report  and  Order  in  CC  Docket  No.  98-  81,  Order  on  Reconsideration  in  CC  Docket  No.  96-  150,  Fourth
 Memorandum  Opinion  and  Order  in  AAD  File  No.  98-  43,  14  FCC  Rcd  11396  (1999).
 226  Phase  I  Order.
 227  See  2000  Biennial  Regulatory  Review    Comprehensive  Review  of  the  Accounting  Requirements  and
 ARMIS  Reporting  Requirements  for  Incumbent  Local  Exchange  Carriers:  Phase  2  and  Phase  3,  Notice  of
 Proposed  Rulemaking,  CC  Docket  00-  199,  FCC  00-  364  (rel.  October  18,  2000)  (Comprehensive  Review  of
 Accounting  Requirements:  Phase  2  and  3).
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 82
 recent  years.  For  example,  the  staff  recommends  reducing  the  chart  of  accounts,  228  modifying
 expense  limits,  229  eliminating  outdated  accounts,  230  and  exempting  certain  transactions  from  the
 affiliate  transactions  rules.  231  As  the  telecommunications  industry  becomes  increasingly
 competitive,  the  Commission  should  consider  further  reducing  accounting  requirements.
 Comments
 Commenters  to  the  staff  report  generally  support  the  staff  recommendations  regarding  the
 streamlining  of  our  Part  32  accounting  rules.  232  Commenters,  disagree,  however,  about  the  degree
 and  pace  of  the  streamlining  process.  GSA  asserts  that  the  Commission  should  maintain
 sufficient  accounting  requirements  to  prevent  ILECs  from  exploiting  their  market  power  where
 competition  has  not  developed.  233  USTA,  on  the  other  hand,  argues  that  the  Part  32  rules  do  not
 reflect  current  market  operations,  and  urges  the  Commission  to  set  a  specific  date  to  convert  from
 the  USOA  accounting  system  to  Generally  Accepted  Accounting  Principles  GAAP.  234  USTA
 also  argues  that  the  Commission  should  forbear  from  regulating  depreciation  and  permit  LECs  to
 use  Class  B  accounts.
 Recommendation
 No  change,  pending  the  completion  of  Comprehensive  Accounting  Review:  Phase  2  and  3
 proceeding.
 228  See,  e.  g.,  47  C.  F.  R.    32.  5110,  5111,  5112,  5120,  5122,  5123,  5124,  5125,  5126,  5129,  5160,  5169,
 5301,  5302,  7600,  7610,  7620,  7630,  7640.
 229  See  47  C.  F.  R.    32.  2000.
 230  See  e.  g.,  47  C.  F.  R.    32.  2211  (analog  switching  account),  2215  (electro-  magnetic  switching  account).
 231  See  47  C.  F.  R.    32.  27.
 232  See  e.  g.  GSA  comments  at  3-  5,  Reply  comments  at  3;  ITTA  comments  at  5-  6,  USTA  comments  at  13.
 233  GSA  comments  at  4.
 234  USTA  comments  at  13.
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 83
 PART  36    JURISDICTIONAL  SEPARATIONS  PROCEDURES
 Description
 In  1930,  the  Supreme  Court,  in  the  case  of  Smith  v.  Illinois,  recognized  the  system  of  state  and
 federal  regulation  of  telecommunications,  concluding  that  because  interstate  calls  originate  and
 terminate  over  local  exchange  plant,  interstate  charges  should  reflect  some  portion  of  the  cost  of
 local  plant.  235  The  Part  36  jurisdictional  separations  rules  are  part  of  the  Commissions  present-day
 implementation  of  that  decision.  The  Part  36  rules  contain  procedures  and  standards  for
 dividing  telephone  company  investment,  expenses,  taxes  and  reserves  between  the  state  and
 federal  jurisdictions.  In  addition  to  allocating  costs  between  the  federal  and  state  jurisdictions,
 Part  36  also  serves  a  universal  service  function.  Specifically,  Part  36  permits  carriers  that  serve
 high-  cost  areas  to  allocate  additional  local  loop  costs  to  the  interstate  jurisdiction  and  to  recover
 those  costs  through  the  high-  cost  universal  service  support  mechanism,  thus  making  intrastate
 telephone  service  in  high-  cost  areas  more  affordable.
 Part  36  is  organized  into  7  lettered  sub-  parts:
 A    General
 B    Telecommunications  Property
 C    Operating  Revenues  and  Certain  Income  Accounts
 D    Operating  Expenses  and  Taxes
 E    Reserves  and  Deferrals
 F    Universal  Service  Fund
 G    Lifeline  Connection  Assistance  Expense  Allocation
 Purpose
 Part  36  is  intended  to  recognize  the  dual  system  of  telecommunications  regulation,  with  interstate
 calling  regulated  at  the  federal  level.  Part  36  is  intended  to  ensure  that  incumbent  LECs  are  able
 to  recover  a  portion  of  local  exchange  costs  through  interstate  rates,  since  interstate  long  distance
 calls  originate  and  terminate  over  these  facilities.  It  is  also  intended  to  prevent  incumbent  LECs
 from  recovering  the  same  costs  through  both  interstate  and  intrastate  rates.  The  additional
 interstate  cost  allocation  for  high-  cost  areas  is  intended  to  foster  universal  service  by  ensuring  that
 local  exchange  rates  in  such  areas  remain  generally  affordable.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.
 235  Smith  v.  Illinois  Bell  Tel.  Co.,  282  U.  S.  133,  148  (1930).
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 84
 Advantages
 The  existing  Part  36  separations  rules  facilitate  state  and  federal  common  carrier  rate  regulation
 by  dividing  incumbent  LEC  costs  between  the  two  jurisdictions.  The  division  of  costs  between
 the  state  and  federal  jurisdictions  is  necessary  for  the  calculation  of  state  and  federal  earned  rates
 of  return.  Such  earned  rates  of  return  are  used  in  rate  base  rate  of  return  regulation  to  determine
 whether  earnings  are  excessive.  In  price  cap  regulation,  an  earned  rate  of  return  is  also  calculated
 for  purposes  of  the  low-  end  adjustment.  The  subpart  F  rules  promote  universal  service  by
 keeping  local  exchange  rates  generally  affordable  in  these  areas.
 Disadvantages
 The  current  jurisdictional  separations  rules  may  be  unnecessarily  complex  and  may  impose  some
 unnecessary  recordkeeping  burdens  on  incumbent  LECs.
 Recent  Efforts
 The  Commission  is  currently  in  the  process  of  considering  separations  reform  in  conjunction  with
 a  Federal-  State  Joint  Board,  made  up  of  federal  and  state  commissioners.  The  Commission
 initiated  this  review  with  an  Notice  of  Proposed  Rulemaking  in  1997,  requesting  comment  on  the
 impact  on  jurisdictional  separations  of  legislative,  technological,  and  market  changes,  as  well  as
 several  industry  proposals  for  separations  reform.  236  Most  of  the  commenting  parties  supported
 continuation  of  some  form  of  separations  until  the  local  exchange  market  is  fully  competitive,
 although  there  was  a  wide  range  of  interim  proposals.  On  July  21,  2000,  the  Federal  State  Joint
 Board  on  jurisdictional  separations  recommended  that  the  Commission  freeze  the  Part  36  plant
 category  relationships  237  and  the  jurisdictional  allocation  factors  on  an  interim  basis  until
 comprehensive  reform  of  jurisdictional  separations  can  be  implemented.  238
 Initial  Recommendation
 The  staff  recommends  continuation  of  the  on-  going  work  on  jurisdictional  separations  reform.
 The  staff,  however,  does  not  recommend  further  review  of  the  universal  service  provisions
 contained  in  Part  36  in  the  context  of  the  current  biennial  regulatory  review.  The  staff
 recommends  elimination  of  the  subpart  G  lifeline  provisions  in  Part  36,  since  they  are  no  longer
 in  effect  and  have  been  replaced  by  rules  in  Part  54.  There  are  also  a  number  of  other  rules  in
 Part  36  that  can  be  eliminated  because  they  are  applicable  to  specific  time  periods  that  have  since
 passed.  239
 236  Jurisdictional  Separations  Reform,  12  FCC  Rcd  22120  (1997).
 237  This  would  freeze  the  relative  proportions  of  plant  allocated  to  the  various  separations  plant  categories.
 Changes  in  the  relative  proportion  of  plant  allocated  to  the  various  plant  categories  can  change  separations
 results  if  the  plant  categories  involved  are  apportioned  between  the  federal  and  state  jurisdictions  on  the
 basis  of  different  factors.
 238  Recommended  Decision,  Jurisdictional  Separations  Reform  and  Referral  to  the  Federal-  State  Joint
 Board  CC  Docket  No.  80-  286  FCC  00J-  2  (rel.  July  21,  2000).
 239  These  provisions  include  47  C.  F.  R.    36.631(  a),  36.  631(  b),  and  36.641(  b).
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 85
 Comments
 Commenters  support  the  recommendation  to  eliminate  jurisdictional  separations  rules  that  have
 been  superseded  or  are  now  out-  of-  date.  240  In  addition,  commenters  express  support  for  the
 Federal-  State  Joint  Boards  recommendation  on  jurisdictional  separations.  241
 Recommendation
 See  initial  recommendation.
 240  GSA  Comments  at  7.
 241  GSA  Comments  at  6;  USTA  Comments  at  15.
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 86
 PART  42    PRESERVATION  OF  RECORDS  OF  COMMON  CARRIERS
 Description
 Part  42  implements  sections  219  and  220  of  the  Communications  Act  of  1934,  as  amended,  which
 authorize  the  Commission  to  require  communications  common  carriers  to  keep  records  and  file
 reports.  Part  42  sets  forth  rules  governing  the  preservation  of  records  of  communications
 common  carriers,  including  all  accounts,  records,  memoranda,  documents,  papers  and
 correspondence  prepared  by  or  on  behalf  of  such  carriers.  It  also  requires  non-  dominant
 interexchange  carriers  to  make  available  information  concerning  the  rates,  terms,  and  conditions
 for  their  services.
 Purpose
 Part  42  facilitates  enforcement  of  the  Communications  Act  by  ensuring  the  availability  of  carrier
 records  needed  by  the  Commission  to  meet  its  regulatory  obligations.  Part  42  is  also  intended  to
 aid  enforcement  of  criminal  statutes  by  requiring  the  retention  of  telephone  toll  records.  Part  42
 serves  the  public  interest  by  giving  consumers  access  to  information  about  the  rates,  terms,  and
 conditions  for  domestic,  interstate,  interexchange  services.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitors
 still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition  for  business  customers  in
 metropolitan  areas  has,  in  general,  developed  more  rapidly  than  competition  for  residential
 customers  or  customers  in  rural  areas.  The  domestic  U.  S.  long  distance  market  is  competitive,
 although  there  is  greater  competition  for  high  volume  customers  than  for  low  volume  customers.
 Competition  in  the  international  services  markets  is  also  increasing.  These  markets  are  rapidly
 changing  from  being  dominated  by  a  small  number  of  national  telecommunications  providers  to
 having  a  large  number  of  competitors.
 Advantages
 By  relying  primarily  on  general  instructions  to  guide  the  preservation  of  records,  Part  42  gives
 regulated  common  carriers  significant  flexibility  in  choosing  how  to  preserve  records.  This
 allows  carriers  to  choose  the  storage  media,  and  thereby  reduce  their  record  storage  and  retrieval
 costs.  Part  42  also  gives  carriers  flexibility  in  determining  the  retention  periods,  although  it
 specifies  the  retention  period  for  toll  records  in  order  to  assist  law  enforcement  activities.  Part  42
 also  benefits  consumers  by  ensuring  that  they  have  access  to  information  on  carrier  rates,  terms,
 and  conditions.
 Disadvantages
 Part  42  may  increase  carriers  recordkeeping  costs  to  some  extent  and  may  increase  the  risk  of
 tacit  price  collusion.
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 87
 Recent  Efforts
 On  March  31,  1999,  the  Commission  reinstated  the  public  disclosure  requirement  for  domestic,
 interstate,  interexchange  long  distance  services  in  light  of  plans  to  implement  detariffing  of  these
 services.  242  On  October  18,  2000,  the  Commission  proposed  detariffing  and  streamlining  of
 international  interexchange  services  with  a  similar  public  disclosure  requirement.  243  In  its  Notice
 of  Proposed  Rulemaking  in  IB  Docket  No.  00-  202,  the  Commission  proposed  that  these  public
 disclosure  requirements  be  added  to  existing  requirements  in  Sections  42.10  and  42.11  of  the
 rules.  244
 Initial  Recommendation
 The  staff  recommends  that  Part  42  be  maintained  without  substantial  change  because  it  provides
 carriers  with  significant  flexibility  while  ensuring  that  necessary  information  will  be  available  to
 the  Commission  and  law  enforcement  officials.  The  staff  also  recommends  that  the  public
 disclosure  rules  in  Part  42  be  maintained  because  they  provide  valuable  information  to
 consumers.
 Comments
 USTA  argues  that  Part  42  is  outdated  and  unnecessary  and  should  be  eliminated.  USTA
 proposes  that  incumbent  LECs  should  be  permitted  to  determine  the  most  efficient  way  to
 conduct  recordkeeping.  USTA  also  proposes  that  the  public  disclosure  requirements  currently  set
 out  in  Sections  42.10  and  42.11  be  maintained,  but  moved  to  Part  61  with  other  tariff
 requirements.
 Recommendation
 The  staff  continues  to  recommend  that  Part  42  be  maintained  without  substantial  change  because
 it  ensures  that  necessary  information  is  made  available  to  the  Commission  and  law  enforcement
 officers,  while  granting  carriers  significant  flexibility  per  actual  record  retention.  The  staff  also
 continues  to  recommend  that  the  public  disclosures  rules  in  Part  42  be  maintained  because  this
 ensures  that  consumers  receive  valuable  information.  Because  staff  recommends  that  Part  42  be
 maintained,  staff  recommends  that  the  Commission  find  that  there  is  no  compelling  reason  to
 adopt  USTAs  suggestion  to  move  Sections  42.10  and  42.11  to  Part  61.
 242  Policy  and  Rules  Concerning  the  Interstate,  Interexchange  Marketplace,  Second  Order  on
 Reconsideration,  14  FCC  Rcd  6004  (1999).  The  U.  S.  Court  of  Appeals  for  the  D.  C.  Circuit  has  upheld  the
 Commissions  decision  to  mandate  detariffing  for  domestic  interstate  long  distance  service.  See  MCI
 WorldCom,  Inc.  v  FCC,  209  F.  3d  132  (D.  C.  Cir.  2000).
 243  2000  Biennial  Regulatory  Review;  Policy  and  Rules  Concerning  the  International  Interexchange
 Marketplace,  IB  Docket  No.  00-  202,  15  FCC  Rcd  18158  (2000).
 244  See  id.
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 88
 PART  43    REPORTS  OF  COMMUNICATIONS  COMMON  CARRIERS  AND
 CERTAIN  AFFILIATES
 Description
 Section  211  of  the  Communications  Act  of  1934,  as  amended,  requires  carriers  to  file  with  the
 Commission  copies  of  all  contracts,  agreements,  or  arrangements  with  other  carriers  that  relate  to
 any  traffic  affected  by  the  Act.  245  Section  219  authorizes  the  Commission  to  require  all  carriers
 that  are  subject  to  the  Act  to  file  annual  reports  with  the  Commission.  246  Section  220  allows  the
 Commission  to  prescribe  the  forms  of  any  and  all  accounts,  records,  and  memoranda  to  be  kept
 by  carriers.  247
 Part  43  of  the  Commissions  rules  implements  these  sections  by  establishing  rules  that  perform
 three  major  functions.  First,  Part  43  prescribes  general  requirements  and  filing  procedures  for
 several  reports  which  various  carriers  are  required  to  file.  These  include  the  annual  Automated
 Reporting  Management  Information  System  (ARMIS)  reports  on  financial  and  operating  data  that
 are  filed  by  common  carriers  with  operating  revenues  exceeding  an  indexed  revenue  threshold,
 reports  on  proposed  depreciation  changes,  reports  on  international  telecommunications  traffic,
 and  international  circuit  status  reports.  Second,  Part  43  requires  that  certain  carriers  file  with  the
 Commission  copies  of  specified  contracts,  agreements  and  arrangements  with  other  carriers.
 Third,  Part  43  sets  forth  the  Commissions  International  Settlements  Policy,  which  is  designed  to
 ensure  that  U.  S.  telecommunications  carriers  pay  nondiscriminatory  rates  for  termination  of
 international  traffic  in  foreign  countries.
 Purpose
 The  reports  required  by  Part  43  assist  the  Commission  in  monitoring  the  industry  to  ensure  that
 carriers  comply  with  the  Commissions  rules,  and  in  tracking  market  and  other  industry
 developments,  which  improves  the  Commissions  ability  to  identify  developing  regulatory  issues
 and  analyze  the  effects  of  alternative  policy  choices.  The  reports  of  proposed  changes  in
 depreciation  rates  allow  the  Commission  to  monitor  the  depreciation  rates  for  dominant  carriers
 capital  assets.  248  The  contract-  filing  requirement  helps  the  Commission  to  identify  potential
 instances  of  anti-  competitive  conduct,  and  to  enforce  its  International  Settlements  Policy.  The
 International  Settlements  Policy  is  designed  to  protect  U.  S.  international  carriers  and  the
 customers  they  serve  from  the  potential  exercise  of  market  power  by  dominant  foreign  carriers,  to
 unilaterally  set  the  prices,  terms  and  conditions  under  which  U.  S.  carriers  are  able  to  exchange
 international  traffic.  249
 245  47  U.  S.  C.    211.  Section  211  also  permits  the  Commission  to  require  the  filing  of  any  other  contracts.
 246  47  U.  S.  C.    219.
 247  47  U.  S.  C.    220.
 248  Only  those  carriers  with  annual  operating  expenses  that  equal  or  exceed  the  indexed  revenue  threshold
 defined  in    32.  9000  and  have  been  found  by  the  Commission  to  be  a  dominant  carrier  with  respect  to
 communications  services  are  required  to  file  depreciation  change  reports.
 249  See  1998  Biennial  Regulatory  Review:  Reform  of  the  International  Settlements  Policy  and  Associated
 Filing  Requirements,  Report  and  Order  and  Order  on  Reconsideration,  14  FCC  Rcd  7963,  7974,  para.  31
 (1999).
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 89
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitors
 still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition  for  business  customers  in
 metropolitan  areas  has,  in  general,  developed  more  rapidly  than  competition  for  residential
 customers  or  customers  in  rural  areas.  The  domestic  U.  S.  long  distance  market  is  competitive,
 although  there  is  greater  competition  for  high  volume  customers  than  for  low  volume  customers.
 Competition  in  the  international  services  markets  is  also  increasing.  These  markets  are  rapidly
 changing  from  being  dominated  by  a  small  number  of  national  telecommunications  providers  to
 having  a  large  number  of  competitors.
 Advantages
 The  reports  required  by  Part  43  increase  the  Commissions  ability  to  ensure  compliance  with  the
 Commissions  rules.  They  also  provide  the  Commission,  other  government  agencies,  state
 regulators,  industry,  and  the  public  with  valuable  information  on  market  and  other  industry  trends
 and  developments.  This  information  is  helpful  to  the  Commission  in  identifying  developing
 regulatory  issues  and  evaluating  the  effects  of  policy  choices.  The  contract  filing  requirements
 also  assist  the  Commission  to  identify  and  remedy  potential  instances  of  anti-  competitive
 conduct.  The  International  Settlements  Policy  and  related  requirements  protect  U.  S.  carriers  and
 their  customers  from  the  potential  exercise  of  market  power  by  dominant  foreign  carriers.
 Disadvantages
 Some  carriers  allege  that  some  of  the  required  filings  are  unduly  burdensome.  Part  43  may  also
 require  the  filing  of  some  information  that  is  unnecessarily  detailed  or  unnecessary  in  light  of
 competitive  developments.
 Recent  Efforts
 As  part  of  the  2000  biennial  review,  the  Commission  has  recently  adopted  four  Notices  of
 Proposed  Rule  Making  regarding  Part  43.  In  October  the  Commission  released  an  NPRM
 proposing  to  extend  mandatory  detariffing  to  the  international  services  of  non-  dominant
 interexchange  carriers,  including  Commercial  Mobile  Radio  Service  providers  and  U.  S.  carriers
 classified  as  dominant  solely  due  to  foreign  affiliations.  250  As  part  of  that  proceeding,  the
 Commission  proposed  to  amend  Section  43.  51  to  clarify  which  carrier  contracts  must  be  filed
 with  the  Commission.  251  In  November  the  Commission  adopted  a  Notice  of  Proposed  Rule
 Making  which,  among  other  things,  proposes  to  eliminate  Section  43.81.  Section  43.81  requires
 certain  foreign-  owned  carriers  to  file  with  the  Commission  annual  revenue  and  traffic  reports  for
 all  common  carrier  telecommunication  services  they  offer  in  the  United  States.  252
 250  2000  Biennial  Regulatory  Review;  Policy  and  Rules  Concerning  the  International  Interexchange
 Marketplace,  IB  Docket  No.  00-  202,  Notice  of  Propose  Rule  Making,  15  FCC  Rcd  20008  (2000).
 251  Id.  at  paras.  32-  40.
 252  2000  Biennial  Regulatory  Review  --  Amendment  of  Parts  43  and  63  of  the  Commission's  Rules,  Notice
 of  Proposed  Rule  Making,  IB  Docket  No.  00-  231,  FCC  00-  407  (rel.  Nov.  30,  2000)(  2000  International
 Biennial  Review  NPRM  ).
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 The  Commission  revised  its  ARMIS  reporting  requirements  as  part  of  its  1998  Biennial
 Regulatory  Review  process.  253  The  Commission  reduced  reporting  requirements  for  mid-  sized
 carriers,  and  improved  the  definitions,  descriptions  and  instructions  used  in  preparing  ARMIS
 reports.  The  Commission  adopted  further  streamlining  measures  in  Phase  1  of  the
 Comprehensive  Review  proceeding.  254  In  October,  the  Commission  released  a  Notice  of  Proposed
 Rulemaking  in  Phase  2  of  the  Comprehensive  Review  proceeding  intended  to  produce  further
 streamlining  of  ARMIS  reports.  255  In  November,  the  Commission  released  a  Notice  of  Proposed
 Rulemaking  seeking  comment  on  Streamlining  service  quality  reporting  in  ARMIS.  256
 In  1999,  the  Commission  adopted  a  sweeping  reform  of  the  longstanding  international  settlements
 policy,  deregulating  inter-  carrier  settlement  arrangements  between  U.  S.  carriers  and  foreign  non-dominant
 carriers  on  competitive  routes.  257  The  Commission,  among  other  things,  eliminated  the
 international  settlements  policy  and  contract  filing  requirements  for  arrangements  with  foreign
 carriers  that  lack  market  power,  and  eliminated  the  international  settlements  policy  for
 arrangements  with  all  carriers  on  routes  with  rates  for  terminating  U.  S.  calls  that  are  at  least  25
 percent  lower  than  the  relevant  settlement  rate  benchmark.
 Initial  Recommendation
 The  staff  recommends  continuation  of  the  ongoing  efforts  to  streamline  further  the  ARMIS
 reporting  requirements.  The  staff  also  recommends  modifying  or  eliminating  some  of  the  rules
 governing  reports  to  be  filed  by  carriers  providing  international  telecommunications  services.  In
 particular,  the  staff  recommends  elimination  of  section  43.53  of  the  rules  because  the  required
 reports  appear  to  be  unnecessary  and  duplicative  of  other  rules.  The  staff  also  recommends  that
 section  43.81  of  the  rules  be  removed  from  Part  43  since  it  is  no  longer  in  effect.
 The  staff  also  recommends  that  the  Commission  amend  section  43.  51  of  the  rules  to  simplify  the
 language  and  to  require  copies  of  contracts  for  international  services  only  if  contracts  concern
 common  carrier  service  between  the  U.  S.  and  foreign  points  and  involve  a  foreign  carrier  that  has
 market  power  in  that  foreign  market,  or  a  U.  S.  carrier  that  has  been  classified  as  dominant  on  any
 routes  included  in  the  contract,  for  reasons  other  than  a  foreign  carrier  affiliation.
 253  See  1998  Biennial  Regulatory  Review    Review  of  ARMIS  Reporting  Requirement,  Report  and  Order,
 14  FCC  Rcd  11443  (1999).
 254  Comprehensive  Review  of  the  Accounting  Requirements  and  ARMIS  Reporting  Requirements  for
 Incumbent  LECs:  Phase  1,  CC  Docket  No.  99-  253,  Report  and  Order,  FCC  00-  78  (rel.  Mar.  8,  2000).
 255  2000  Biennial  Regulatory  Review    Comprehensive  Review  of  the  Accounting  Requirements  and
 ARMIS  Reporting  Requirements  for  Incumbent  Local  Exchange  Carriers:  Phase  2  and  Phase  3,  Notice  of
 Proposed  Rulemaking,  CC  Docket  No.  00-  199,  FCC  00-  364  (rel.  Oct.  18,  2000).
 256  2000  Biennial  Regulatory  Review    Telecommunications  Service  Quality  Reporting,  Notice  of
 Proposed  Rulemaking,  CC  Docket  No.  00-  229,  FCC  00-  399  (rel.  Nov.  9,  2000).
 257  See  1998  Biennial  Regulatory  Review:  Reform  of  the  International  Settlements  Policy  and  Associated
 Filing  Requirements,  Report  and  Order  and  Order  on  Reconsideration,  14  FCC  Rcd  7963  (1999).
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 91
 Comments
 Two  parties  addressed  the  reporting  requirements  in  Part  43.  Alloy  and  Verizon  support  the  staff
 recommendations  to  eliminate  Section  43.81  and  to  revise  the  instruction  manuals.  258  Further,
 they  suggest  that  the  Commission  initiate  a  proceeding  to  eliminate  the  Section  43.61  reporting
 requirements  for  domestic  CMRS  providers  that  offer  international  calling  to  their  customers  by
 reselling  the  international  services  of  switched  resellers.  259
 Recommendation
 The  staff  recommends  that  the  Commission  adopt  the  proposals  in  the  International  Detariffing
 NPRM  to  modify  Section  43.  51,  and  the  proposals  in  the  2000  International  Biennial  Review
 NPRM  to  eliminate  Section  43.81.  The  staff  also  recommends  that  the  Commission  consider  the
 requests  of  commenters  to  modify  Section  43.61.
 258  Alloy  comments  at  3;  Verizon  comments  at  3.
 259  Alloy  comments  at  3;  Verizon  comments  at  3-  6
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 PART  51    INTERCONNECTION
 Description
 Part  51  implements  Sections  251  and  252  of  the  Communications  Act  of  1934,  as  amended,  the
 1996  Telecommunications  Act.  Most  significantly,  these  provisions  require  that  the  incumbent
 local  exchange  carriers  open  their  networks  to  competition,  and  thus  are  critical  to  fostering  local
 exchange  and  exchange  access  competition  as  envisioned  by  Congress.  Section  251  establishes
 distinct  sets  of  pro-  competitive  requirements  for  telecommunications  carriers,  local  exchange
 carriers,  and  incumbent  local  exchange  carriers.  Section  251  provides  that  all
 telecommunications  carriers  have  a  duty  to  interconnect  with  other  telecommunications  carriers.
 Under  section  251,  local  exchange  carriers  are  subject  to  additional  requirements  concerning
 number  portability,  dialing  parity,  right-  of-  way  access,  and  reciprocal  compensation.  In  addition
 to  these  obligations,  incumbent  local  exchange  carriers  are  subject  to  further  requirements
 concerning  negotiation  of  agreements,  interconnection,  access  to  unbundled  network  elements,
 resale,  notification  of  changes,  and  collocation.  260  Section  251  also  provides  for  pricing  standards
 and  standards  for  incumbent  carrier  pricing  of  services  offered  for  resale.  Section  252  establishes
 procedures  for  negotiating,  arbitrating,  and  approving  interconnection  agreements.  261
 Part  51  is  organized  into  nine  lettered  sub-  parts:
 A    General  Information
 B    Telecommunications  Carriers
 C    Obligations  of  All  Local  Exchange  Carriers
 D    Additional  Obligations  of  Incumbent  Local  Exchange  Carriers
 E    Exemptions,  Suspensions,  and  Modifications  of  Requirements  of  Section  251  of
 the  Act
 F    Pricing  of  Elements
 G    Resale
 H    Reciprocal  Compensation  for  Transport  and  Termination  of  Local
 Telecommunications  Traffic
 I    Procedures  for  Implementation  of  Section  252  of  the  Act
 Purpose
 Part  51  is  intended  to  foster  competition  in  the  local  exchange  and  exchange  access  markets  by
 requiring  that  incumbent  local  exchange  carriers  open  their  networks  to  competition,  and  by
 establishing  pricing  standards  applicable  to  the  facilities  and  services  that  the  incumbent  local
 exchange  carriers  provide  to  their  competitors.  Consistent  with  section  251  of  the  Act,  Part  51
 also  contains  certain  pro-  competitive  requirements  that  apply  to  all  telecommunications  carriers
 and  competitive  local  exchange  carriers.
 260  47  U.  S.  C.    251.
 261  47  U.  S.  C.    252.
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 93
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.
 Advantages
 The  Part  51  rules  require  incumbent  local  exchange  carriers  to  open  their  networks  to
 competition,  and  establish  pricing  standards.  This  fosters  competition  in  the  local  exchange  and
 exchange  access  markets.  Competition  in  these  markets  will  increase  the  choices  available  to
 consumers,  as  well  as  create  incentives  for  increased  efficiency  and  the  more  rapid  deployment  of
 new  services  and  technology.
 Disadvantages
 The  Part  51  rules  impose  some  costs  on  incumbent  local  exchange  carriers.
 Recent  Efforts
 The  Eighth  Circuit  Court  of  Appeals  recently  overturned  certain  of  the  pricing  rules  in  Part  51,
 and  remanded  them  to  the  Commission  for  further  consideration.  262
 Initial  Recommendation
 The  staff  recommends  continued  monitoring  of  the  development  of  local  exchange  and  exchange
 access  competition.  The  staff  also  recommends  that  the  Commission  re-  evaluate  the  various
 mechanisms  for  intercarrier  compensation  for  traffic  origination  and  termination.
 Comments
 Several  commenters  concur  with  the  staff  recommendation  that  the  Commission  review
 intercarrier  compensation  arrangements  to  develop  a  comprehensive  system  that  would  be  more
 efficient  and  pro-  competitive  than  the  existing  myriad  of  rules.  263  Sprint  believes  that  an
 intercarrier  compensation  proceeding  should  consider  reciprocal  compensation,  not  just  for
 delivery  of  calls  to  ISPs,  but  for  all  forms  of  local  traffic.  264  USTA,  however,  believes  that
 resolution  of  reciprocal  compensation  issues  for  ISP-  bound  traffic  cannot  await  a  broad
 proceeding,  and  that  the  Commission  must  resolve  these  issues  promptly  with  a  determination
 that  such  traffic  is  interstate  traffic  for  which  reciprocal  compensation  does  not  apply.  265  Some
 262  Iowa  Utilities  Board  v.  FCC,  No.  96-  3321  (8  th  Cir.  rel.  July  18,  2000).
 263  Comments  of  Sprint  at  1;  comments  of  USTA  at  2;  comments  of  GSA  at  1.
 264  Comments  of  Sprint  at  2.
 265  Comments  of  USTA  at  5.
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 94
 commenters  assert  that  a  single  intercarrier  compensation  arrangement  may  not  adequately
 address  differences  among  local  exchange  carriers.  266
 USTA  urges  the  Commission  to  avoid  applying  the  Part  51  rules  to  incumbent  LEC  provision  of
 advanced  services,  and  argued  that  the  Commission  has  no  authority  to  address  the  technology  or
 network  configurations  to  be  used  by  incumbent  LECs.  267  GSA  urges  the  Commission  to  expand
 the  collocation  rights  of  CLECs,  and  argues  that  CLECs  should  be  allowed  to  use  copper  loop
 plant  that  incumbent  LECs  plan  to  retire.  268
 Recommendation
 See  initial  recommendation.  No  points  made  by  commenters  persuade  us  to  alter  our  initial
 recommendation  that  the  Commission  continue  to  monitor  local  competition  and  address  Part  51
 issues  through  a  variety  of  ongoing  proceedings.
 266  Comments  of  USTA  at  5;  comments  of  OPASTCO  at  19.
 267  USTA  comments  at  18-  19.
 268  GSA  comments  at  10-  12;  GSA  Reply  at  9.
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 95
 PART  52    NUMBERING
 Description
 Part  52  implements  the  requirements  of  section  251(  e).  Part  52  contains  rules  governing  the
 administration  of  the  North  American  Numbering  Plan,  which  is  the  basic  numbering  scheme  for
 the  telecommunications  networks  located  in  the  United  States,  its  territories,  and  other  countries
 in  North  America.  Part  52  also  contains  rules  designed  to  ensure  that  users  of
 telecommunications  services  can  retain,  at  their  existing  locations,  their  existing  telephone
 numbers  when  they  switch  from  one  local  exchange  telecommunications  carrier  to  another.  It
 also  contains  rules  governing  the  administration  of  toll  free  telephone  numbers.
 Section  251(  e)  of  the  Communications  Act  of  1934,  as  amended,  adopted  as  part  of  the  1996
 Telecommunications  Act,  governs  the  administration  of  telephone  numbers.  It  gives  the
 Commission  exclusive  jurisdiction  over  those  portions  of  the  North  American  Numbering  Plan
 that  pertain  to  the  United  States.  Section  251(  e)  also  requires  the  Commission  to  create  or
 designate  one  or  more  impartial  entities  to  administer  telecommunications  numbering  and  to
 make  those  numbers  available  on  an  equitable  basis.  It  also  charges  the  Commission  with
 establishing  cost  recovery  mechanisms  for  numbering  administration  arrangements  and  number
 portability.
 Part  52  is  organized  into  four  lettered  sub-  parts:
 A    Scope  and  Authority
 B    Administration
 C    Number  Portability
 D    Toll  Free  Numbers
 Purpose
 Part  52  implements  the  requirements  of  section  251(  e).  The  purpose  of  the  rules  in  Part  52  is  to
 establish  requirements  to  govern  the  administration  and  efficient  use  of  telephone  numbers  within
 the  United  States  for  provision  of  telecommunications  services.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.  The  domestic  U.  S.  long
 distance  market  is  competitive,  although  there  is  greater  competition  for  high  volume  customers
 than  for  low  volume  customers.
 Advantages
 The  Part  52  rules  foster  the  efficient  use  of  telephone  numbers,  and  minimize  the  potential  for
 anti-  competitive  behavior.  They  are  designed  to  provide  clear  and  predictable  guidelines  for  the
 use  of  telephone  numbers  while  minimizing  administrative  costs.  The  number  portability  rules
192
 96
 remove  barriers  to  local  exchange  competition  and  reduce  the  consumers  costs  of  switching  to  an
 alternative  carrier  by  ensuring  that  customers  can  retain  their  local  telephone  number  when  they
 switch  from  one  local  carrier  to  another.
 Disadvantages
 Carriers  are  required  to  fund  the  costs  of  administering  the  North  American  Numbering  Plan.
 Recent  Efforts
 The  Commission  released  a  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking  in
 March  2000  addressing  how  to  meet  the  increased  demand  for  telephone  numbers  in  light  of  the
 declining  quantity  of  available  numbers.  The  Report  and  Order  adopted  measures  that  will
 promote  more  efficient  allocation  and  use  of  telephone  numbers,  and  established  policies  to
 ensure  that  carriers  have  access  to  the  numbering  resources  they  need  to  participate  in  the
 competitive  telecommunications  marketplace.
 The  Commission  also  released  a  Report  and  Order  in  July  2000  addressing  whether  the  current
 method  of  administering  toll  free  numbers  should  be  replaced  by  a  management  system  more
 suitable  to  a  competitive  environment.  The  North  American  Numbering  Council  will  prepare  a
 report  to  the  Commission  on  this  issue  within  the  next  six  months.
 On  July  15,  2000,  the  Common  Carrier  Bureau  (Bureau)  released  a  Public  Notice  in  response  to
 several  questions  the  Bureau  had  received  relating  to  the  First  Report  and  Order.  On  July  20,
 2000,  the  Bureau  also  released  an  order  delegating  to  15  states  the  authority  to  implement  number
 conservation  measures.
 Initial  Recommendation
 The  staff  recommends  the  retention  of  Part  52  and  the  continuation  of  current  efforts  to  optimize
 the  use  of  numbering  resources  in  an  impartial,  economically  efficient  manner.
 Comments
 No  comments.
 Recommendation
 No  changes.
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 97
 PART  53    SPECIAL  PROVISIONS  CONCERNING  BELL  OPERATING  COMPANIES
 Description
 Part  53  generally  implements  the  structural  safeguards  mandated  in  section  272  and  certain
 section  271  requirements.  Section  272  of  the  Communications  Act  of  1934,  as  amended,
 establishes  safeguards  applicable  to  Bell  Operating  Company  (BOC)  equipment  manufacturing,
 provision  of  in-  region  interLATA  telecommunications  service,  and  provision  of  interLATA
 information  services  (other  than  electronic  publishing  and  alarm  monitoring).  269  The
 Commissions  Part  53  rules  implement  these  requirements.  In  particular,  the  Part  53  rules
 provide  that  the  BOCs  must  use  a  separate  affiliate  for  certain  activities,  and  set  out  structural
 separation,  transactional,  non-  discrimination  and  auditing  requirements.  The  Part  53  rules  also
 contain  provisions  adopted  pursuant  to  section  271  of  the  Act  concerning  joint  marketing  of  local
 exchange  and  long  distance  services.
 Part  53  is  organized  into  six  lettered  subparts  (three  of  which  are  reserved  for  future  use):
 A    General  Information
 B    Bell  Operating  Company  Entry  into  InterLATA  Services
 C    Separate  Affiliate;  Safeguards
 D    Manufacturing  by  Bell  Operating  Companies  [reserved]
 E    Electronic  Publishing  by  Bell  Operating  Companies  [reserved]
 F    Alarm  Monitoring  Services  [reserved]
 Purpose
 These  separate  subsidiary  and  auditing  requirements  are  designed  to  prevent  the  BOCs  from
 using  their  dominance  in  the  market  for  local  exchange  and  exchange  access  services  to  compete
 unfairly  in  the  related  markets.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.  The  market  for  long  distance
 service  is  competitive,  although  there  is  greater  competition  for  high  volume  business  and
 residential  customers  than  for  low  volume  customers.
 269  47  U.  S.  C.    272.  Most  of  the  information  services  safeguards  have  now  sunset.  CITE
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 98
 Advantages
 Part  53  reduces  the  potential  for  the  BOCs  to  engage  in  anticompetitive  behavior  by  leveraging
 their  dominance  in  the  market  for  local  exchange  and  exchange  access  services  to  compete
 unfairly  in  the  markets  for  other  goods  and  services.
 Disadvantages
 Use  of  a  structurally  separate  subsidiary,  for  certain  activities  and  compliance  with  the  auditing
 requirements  in  Part  53  can  increase  the  carrier  costs.
 Recent  Efforts
 In  February  2000,  the  Commission  declined  to  extend  most  of  the  information  services
 safeguards,  which  sunset  pursuant  to  section  272(  f)(  2).  270  Pursuant  to  a  remand  from  the  D.  C.
 Circuit  Court  of  Appeals,  the  Commission  is  re-  examining  whether  interLATA  services  as  used
 in  section  271  of  the  Act  includes  information  services.  271
 Initial  Recommendation
 The  staff  recommends  only  minor  changes  to  Part  53  at  this  time.  In  this  regard,  we  note  that
 much  of  Part  53  is  statutorily  mandated,  including  the  basic  requirement  for  the  use  of  separate
 subsidiaries  for  certain  activities  and  most  of  the  structural  separation  and  auditing  requirements.
 Section  53.101  of  the  rules  concerning  joint  marketing  has  sunset  and  should  be  deleted  from  Part
 53.  The  section  272  provisions  requiring  a  separate  subsidiary  for  the  provision  of  interLATA
 information  services  have  also  sunset,  and  the  rules  related  to  this  requirement  should  be  deleted
 from  Part  53.
 Comments
 Several  commenters  concur  with  the  staff  recommendation  that  the  Commission  review
 intercarrier  compensation  arrangements  to  develop  a  comprehensive  system  that  would  be  more
 efficient  and  pro-  competitive  than  the  existing  myriad  of  rules.  272  One  commenter  believes  that
 an  intercarrier  compensation  proceeding  should  consider  reciprocal  compensation,  not  just  for
 delivery  of  calls  to  ISPs,  but  for  all  forms  of  local  traffic.  273  Another  party,  however,  believes  that
 resolution  of  reciprocal  compensation  issues  for  ISP-  bound  traffic  cannot  await  a  broad
 proceeding,  and  that  the  Commission  must  resolve  these  issues  promptly  with  a  determination
 that  such  traffic  is  interstate  traffic  for  which  reciprocal  compensation  does  not  apply.  274  Some
 270  Request  for  Extension  of  the  Sunset  Date  of  the  Structural  Nondiscrimination  and  Other  Behavior
 Safeguards  Governing  BOC  Provision  of  In-  Region  InterLATA  Information  Services,  Order,  CC  Docket
 No.  96-  0149,  FCC  00-  40  (Feb.  8,  2000).
 271  Comments  Requested  in  Connection  with  Court  Remand  of  Non-  Accounting  Safeguards  Order,  Public
 Notice,  CC  Docket  No.  96-  149,  DA  00-  2530  (Nov.  8,  2000).
 272  Comments  of  Sprint  at  1;  comments  of  USTA  at  2;  comments  of  GSA  at  1.
 273  Comments  of  Sprint  at  2.
 274  Comments  of  USTA  at  5.
195
 99
 commenters  assert  that  a  single  intercarrier  compensation  arrangement  may  not  adequately
 address  differences  among  local  exchange  carriers.  275
 Recommendation
 See  initial  recommendation.  The  recommended  intercarrier  compensation  proceeding  will
 consider  the  various  dimensions  of  the  issues  raised,  including  differences  among  the  various
 participating  carriers.
 275  Comments  of  USTA  at  5;  comments  of  OPASTCO  at  19.
196
 100
 PART  54    UNIVERSAL  SERVICE
 Description
 Part  54  implements  Sections  214(  e)  and  254  of  the  Communications  Act  of  1934  direct  the
 Commission  to  establish  specific,  predictable,  and  sufficient  mechanisms  to  preserve  and  advance
 universal  service.  276  Part  54  contains  rules  governing  the  operation  of  the  Commissions  four
 basic  universal  service  programs:  (1)  the  high-  cost  support  mechanism,  which  provides  support  to
 keep  rates  affordable  in  high-  cost  areas;  (2)  the  low-  income  support  mechanism,  which  provides
 support  to  keep  rates  affordable  for  low-  income  consumers;  (3)  the  schools  and  libraries  support
 mechanism,  which  provides  support  for  telecommunications  and  Internet  access  and  internal
 connections  for  eligible  schools  and  libraries;  and  (4)  the  rural  health  care  support  mechanism,
 which  provides  support  for  telecommunications  services  for  eligible  rural  health  care  providers.
 In  addition,  Part  54  contains  administrative  rules  governing  the  collection  of  universal  service
 contributions  and  the  distribution  of  support,  as  well  as  provisions  for  the  creation  of  the
 Universal  Service  Administrative  Company  (USAC)  to  administer  the  universal  service  support
 mechanisms.
 Part  54  is  organized  into  ten  lettered  sub-  parts:
 A    General  Information
 B    Services  Designated  for  Support
 C    Carriers  Eligible  for  Universal  Service  Support
 D    Universal  Service  Support  for  High  Cost  Areas
 E    Universal  Service  Support  for  Low-  Income  Consumers
 F    Universal  Service  Support  for  Schools  and  Libraries
 G    Universal  Service  Support  for  Health  Care  Providers
 H    Administration
 I    Review  of  Decisions  Issued  by  the  Administrator
 J    Interstate  Access  Universal  Service  Support  Mechanism
 Purpose
 Part  54  is  designed  to  promote  universal  service  by  ensuring  that  all  consumers,  including
 consumers  in  high-  cost  and  rural  areas,  have  access  to  affordable  telecommunications  services.  It
 is  also  designed  to  ensure  that  schools,  libraries,  rural  health  care  providers,  and  the  members  of
 the  public  that  they  serve,  have  access  to  affordable  telecommunications  and  information
 services.  Part  54  is  designed  to  accomplish  these  goals  in  a  competitively  neutral  manner  by
 collecting  support  from  every  telecommunications  carrier  that  provides  interstate
 telecommunications  service,  and  by  making  support  available  on  a  technologically  neutral  basis
 to  any  eligible  service  provider.  It  is  intended  to  encourage  the  provision  of  service  by  wireless
 and  other  emerging  technologies  that  have  been  ineligible  to  receive  universal  service  support  in
 the  past,  but  may  prove  to  be  efficient  alternatives  to  traditional  wireline  service  in  high-  cost  and
 rural  areas.
 276  See  47  U.  S.  C.    214(  e),  254.
197
 101
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.
 Advantages
 Part  54  establishes  explicit  universal  service  mechanisms  to  ensure  that  all  consumers  have  access
 to  affordable  telecommunications  services.  It  also  promotes  competition  by  making  explicit
 universal  service  support  available  to  any  eligible  telecommunications  carrier  in  a  competitively
 and  technologically  neutral  manner  and  thus  encourages  efficient  entry  in  high-  cost  areas.
 Finally,  Part  54  benefits  the  public  by  making  telecommunications  and  information  services
 available  to  qualifying  schools,  libraries,  and  rural  health  care  providers  at  reduced  rates.
 Disadvantages
 The  reporting  requirements  necessary  for  the  collection,  calculation,  and  disbursement  of
 universal  service  support  may  place  administrative  burdens  on  certain  carriers.  The  current
 procedures  for  review  of  USACs  funding  decisions  concerning  schools,  libraries,  and  rural
 health  care  providers  may  also  place  unnecessary  administrative  burdens  on  the  Commission.
 Recent  Efforts
 The  Part  54  rules  have  been  revised  a  number  of  times  since  1997.  277  On  June  30,  2000,  the
 Commission  released  an  order  to  promote  telecommunications  subscribership  to  those  living  on
 tribal  lands.  278  The  Federal-  State  Joint  Board  on  Universal  Service  submitted  to  the  Commission
 a  Recommended  Decision  regarding  the  Rural  Task  Force  plan  for  reforming  the  distribution  of
 universal  service  support  to  rural  carriers  on  December  22,  2000.  279  In  addition,  the  Commission
 recently  issued  a  Notice  of  Proposed  Rulemaking  seeking  comment  on  a  Petition  for  Rulemaking
 submitted  by  the  Multi-  Association  Group  (MAG),  a  coalition  of  incumbent  local  exchange
 carrier  associations.  280  The  Petition  sets  forth  an  interstate  access  reform  and  universal  service
 277  See,  e.  g.,  Federal-  State  Joint  Board  on  Universal  Service,  Fifth  Order  on  Reconsideration  and  Fourth
 Report  and  Order,  13  FCC  Rcd  14915  (1998);  Federal-  State  Joint  Board  on  Universal  Service,  Ninth
 Report  and  Order  and  Eighteenth  Order  on  Reconsideration,  14  FCC  Rcd  20432  (1999).
 278  Federal-  State  Joint  Board  on  Universal  Service;  Promoting  Deployment  and  Subscribership  in
 Unserved  Areas,  Including  Tribal  and  Insular  Areas,  Twelfth  Report  and  Order,  Memorandum  Opinion
 and  Order,  and  Further  Notice  of  Proposed  Rulemaking,  FCC  00-  208  (rel.  June  30,  2000).
 279  Federal-  State  Joint  Board  on  Universal  Service,  CC  Docket  No.  96-  45,  Recommended  Decision,  FCC
 00J-  4  (rel.  December  22,  2000).  The  Joint  Board  concluded  that  the  Rural  Task  Force  plan  is  a  good
 foundation  for  implementing  a  rural  universal  service  plan  that  benefits  consumers  and  provides  a  stable
 environment  for  rural  carriers  to  invest  in  rural  America.  Id.  at  para.  1.
 280  MAG  Plan  for  Regulation  of  Interstate  Services  of  Non-  Price  Cap  Incumbent  Local  Exchange  Carriers
 and  Interexchange  Carriers,  CC  Docket  No.  00-  256,  Federal-  State  Joint  Board  on  Universal  Service,  CC
 Docket  No.  96-  45,  Access  Charge  Reform  for  Incumbent  Local  Exchange  Carriers  Subject  to  Rate-  of-Return
 Regulation,  CC  Docket  No.  98-  77,  Prescribing  the  Authorized  Rate  of  Return  For  Interstate
198
 102
 support  proposal  for  incumbent  local  exchange  carriers  subject  to  rate-  of-  return  regulation
 (typically  small,  rural  carriers).
 Initial  Recommendation
 The  staff  does  not  recommend  any  major  new  initiatives  concerning  the  Commissions  universal
 service  rules  as  part  of  the  2000  Biennial  Regulatory  Review.  The  staff,  however,  recommends
 that  the  Commission  consider  modifying  Part  54  to  streamline  the  process  for  appeals  of  USAC
 funding  decisions  by  requiring  applicants  to  file  appeals  with  USAC  in  the  first  instance  unless
 the  appeals  raise  new  or  novel  questions  of  fact,  law,  or  policy.  281  The  staff  also  recommends
 certain  minor  revisions  to  the  Part  54  rules  to  remove  transitional  provisions  that  are  no  longer
 applicable.  For  example,  section  54.701(  b)-(  e),  concerning  the  now-  completed  merger  of  the
 Schools  &  Libraries  Corporation  and  the  Rural  Health  Care  Corporation  into  the  Universal
 Service  Administrative  Company,  should  be  deleted.
 Comments
 Commenters  encourage  the  Commission  to  act  expeditiously  on  the  recommendations  of  the
 Rural  Task  Force.  282  In  addition,  commenters  suggest  that  the  Commission  clarify  the  services
 eligible  for  support  under  the  schools  and  libraries  program  to  reduce  the  number  of  appeals.  283
 Modifications  are  also  suggested  to  the  universal  service  rules  relating  to  the  high-  cost  and
 schools  and  libraries  programs.  284
 Recommendation
 The  staff  agrees  with  commenters  that  the  Commission  should  expeditiously  review  the  Rural
 Task  Forces  recommendations  relating  to  universal  service  funding  for  areas  served  by  rural
 telephone  companies.  In  addition,  staff  continues  to  recommend  that  the  Commission  streamline
 the  process  for  schools  appeals  by  requiring  applicants  to  file  appeals  with  USAC  in  the  first
 instance  unless  the  appeals  raise  new  or  novel  questions  or  fact,  law,  or  policy.
 Services  of  Local  Exchange  Carriers,  CC  Docket  No.  98-  166,  Notice  of  Proposed  Rulemaking,  FCC  00-
 448  (released  January  5,  2001).
 281  See  47  C.  F.  R.    54.  719.
 282  GSA  Comments  at  14;  Independent  Telephone  and  Telecommunications  Alliance  Comments  at  14.
 283  WorldCom  Comments  at  3-  4.
 284  Independent  Telephone  and  Telecommunications  Alliance  Comments  at  15;  USTA  Comments  at  21.
199
 103
 PART  59    INFRASTRUCTURE  SHARING
 Description
 Part  59  implements  Section  259  of  the  Communications  Act  of  1934,  as  amended,  requires  the
 Commission  to  prescribe  regulations  that  require  incumbent  LECs  to  make  available  to  qualifying
 carriers  certain  public  switched  network  infrastructure,  technology,  information,  and
 telecommunications  facilities  and  functions  used  to  provide  telecommunications  services,  or
 access  to  information  services.  Part  59  specifies  the  general  duty  of  incumbent  LECs  to  share
 such  infrastructure  with  qualifying  carriers  (i.  e.,  carriers  that  fulfill  universal  service  obligations)
 and  setting  out  general  terms  and  conditions  for  such  sharing.  Part  59  applies  only  when  the
 qualifying  carrier  does  not  seek  to  use  the  shared  infrastructure  to  offer  certain  services  within  the
 incumbent  LECs  telephone  exchange  area.
 Purpose
 Part  59  is  intended  to  foster  the  provision  of  advanced  telecommunications  and  information
 services  by  small  carriers.  It  is  intended  to  accomplish  this  by  allowing  qualifying  carriers  to  take
 advantage  of  the  economies  of  scale  and  scope  possessed  by  larger  incumbent  LECs.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.
 Advantages
 Part  59  fosters  the  availability  of  advanced  telecommunications  and  information  services  by
 articulating  general  rules  and  guidelines  to  define  the  obligations  imposed  by  section  259  and  by
 relying  in  large  part  on  negotiations  between  interested  parties.  This  negotiation-  driven  approach
 allows  the  parties  to  craft  section  259  agreements  that  best  meet  their  needs  with  minimal
 regulatory  supervision.
 Disadvantages
 The  rules  implementing  section  259  may  impose  costs  on  incumbent  LECs  that  must  share
 infrastructure  with  qualifying  carriers.  Part  59  minimizes  these  costs  by  relying  on  private
 negotiations  to  establish  the  precise  terms  for  infrastructure  sharing.
 Recent  Efforts
 The  Commission  recently  reaffirmed  its  negotiation-  based  approach  to  implementing  section
 259.  285
 285  Order  on  Reconsideration,  Implementation  of  Infrastructure  Sharing  Provisions  of  the
 Telecommunications  Act  of  1996,  62  FR  9704  (rel.  Apr.  27,  2000).  This  Order  also  addressed  a  number  of
200
 104
 Initial  Recommendation
 The  staff  recommends  that  the  negotiation-  driven,  minimally-  regulatory  approach  adopted  in  Part
 59  be  maintained  and  that  no  substantial  changes  be  made  to  this  Part.  During  the  three  years
 since  Part  59  was  adopted,  no  evidence  has  been  presented  to  the  Commission  indicating  that
 parties  have  been  unable  to  negotiate  section  259  infrastructure  sharing  agreements.
 Comments
 The  Commission  received  no  comment  on  this  issue.
 Recommendation
 See  initial  recommendation.
 issues  concerning  the  use  of  section  259  to  facilitate  resale,  access  to  intellectual  property  rights,  and
 pricing  of  section  259  arrangements.  Id.
201
 105
 PART  61    TARIFFS
 Description
 Part  61  implements  sections  201  -  204.  Sections  201  and  202  require  rates,  terms  and  conditions
 to  be  just  and  reasonable,  286  and  prohibit  unjust  or  unreasonable  discrimination.  287  Sections
 203  and  204  of  the  Communications  Act  of  1934,  as  amended,  establish  tariff  filing  requirements
 applicable  to  common  carriers.  288  Part  61  implements  these  sections  of  the  Act  by  establishing
 rules  that  perform  two  major  functions.  First,  the  Part  61  rules  establish  requirements  governing
 the  filing,  form,  content,  public  notice  periods,  and  accompanying  support  materials  for  tariffs.
 Second,  Part  61  sets  forth  the  pricing  rules  and  related  requirements  that  apply  to  incumbent  local
 exchange  carriers  (LECs)  that  are  subject  to  price  cap  regulation.
 Part  61  is  organized  into  ten  lettered  sub-  parts:
 A    General
 B    Rules  for  Electronic  Filing
 C    General  Rules  for  Nondominant  Carriers
 D    General  Tariff  Rules  for  International  Dominant  Carriers
 E    General  Rules  for  Dominant  Carriers
 F    Specific  Rules  for  Tariff  Publications  of  Dominant  and  Nondominant  Carriers
 G    Concurrences
 H    Applications  for  Special  Permission
 I    Adoption  of  Tariffs  and  Other  Documents  of  Predecessor  Carriers
 J    Suspensions
 Purpose
 The  Part  61  tariffing  rules  provide  consumers  with  information  on  the  rates,  terms  and  conditions
 for  telecommunications  services.  The  rules  are  intended  ensure  that  the  carriers  provide  the
 Commission  and  the  public  with  information  necessary  to  evaluate  the  lawfulness  of  tariff  rates,
 terms  and  conditions.  The  price  cap  rules  in  Part  61  are  designed  to  ensure  that  the  rates  of  price
 cap  carriers  are  just  and  reasonable  and  not  unjustly  or  unreasonably  discriminatory.  At  the
 same  time,  the  price  cap  rules,  in  conjunction  with  the  Part  69  access  charge  rules,  are  designed  to
 create  incentives  for  increased  carrier  efficiency,  to  streamline  the  tariff  review  process,  and  to
 allow  the  carriers  some  degree  of  pricing  flexibility.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitors
 still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition  for  business  customers  in
 metropolitan  areas  has,  in  general,  developed  more  rapidly  than  competition  for  residential
 customers  or  customers  in  rural  areas.  The  domestic  U.  S.  long  distance  market  is  competitive,
 286  47  U.  S.  C.    201.
 287  47  U.  S.  C.    202.
 288  47  U.  S.  C.    203-  04.
202
 106
 although  there  is  greater  competition  for  high  volume  customers  than  for  low  volume  customers.
 Competition  in  the  international  services  markets  is  also  increasing.  These  markets  are  rapidly
 changing  from  being  dominated  by  a  small  number  of  national  telecommunications  providers  to
 having  a  large  number  of  competitors.
 Advantages
 The  Part  61  tariffing  rules  benefit  the  public  by  providing  information  on  the  rates,  terms,  and
 conditions  for  telecommunications  services.  The  requirements  for  support  materials  facilitate
 review  of  the  lawfulness  of  the  tariffs,  reduce  the  cost  of  enforcing  Commission  pricing  rules,  and
 permit  interested  parties  to  more  easily  challenge  tariff  provisions.
 The  price  cap  rules  contained  in  Part  61  protect  customers  by  capping  the  rates  charged  by  the
 LECs  and  by  limiting  the  LECs  ability  to  exercise  market  power.  They  also  streamline  the  tariff
 process,  and  foster  carrier  efficiency  by  permitting  them  some  degree  of  pricing  flexibility.
 Disadvantages
 The  tariff  filing  requirements  may  impede  competition  by  reducing  carriers  ability  to  react  to
 competitive  developments  in  the  market  and  potentially  foster  in  oligopoly  pricing  by  requiring
 the  public  disclosure  of  rates,  terms,  and  conditions.  Furthermore,  the  requirement  for  tariff
 support  materials  imposes  some  preparation  costs  on  the  carriers.  Over  time,  the  price  cap  rules
 may  also  reduce  economic  efficiency  by  limiting  carrier  pricing  flexibility.
 Recent  Efforts
 As  part  of  the  1998  Biennial  Regulatory  Review  process,  the  Commission  conducted  a
 comprehensive  review  of  Part  61,  and  eliminated  a  number  of  rules  that  were  no  longer
 necessary.  289  More  recently,  the  Commission  addressed  the  price  cap  rules  in  a  comprehensive
 manner  in  the  CALLS  proceeding.  290  In  addition,  the  Commission  is  in  the  process  of
 implementing  mandatory  detariffing  for  domestic  interexchange  toll  service,  291  and  is  considering
 doing  the  same  for  competitive  local  exchange  carrier  services.  292
 In  October,  as  part  of  the  2000  Biennial  regulatory  review,  the  Commission  released  an  NPRM
 proposing  to  extend  the  complete  detariffing  regime  adopted  for  domestic,  interexchange  services
 to  the  international  services  of  non-  dominant  interexchange  carriers,  including  Commercial
 Mobile  Radio  Service  providers  and  U.  S.  carriers  classified  as  dominant  solely  due  to  foreign
 affiliations.  293
 289  1998  Biennial  Regulatory  Review    Part  61  of  the  Commissions  Rules  and  Related  Tariff
 Requirements,  Report  and  Order  and  Further  Order  on  Reconsideration,  14  FCC  Rcd  12293  (1999).
 290  CALLS  Order,  15  FCC  Rcd  12962.
 291  Access  Charge  Reform,  DA  00-  1268  (rel.  June  16,  2000).
 292  Access  Charge  Reform,  Fifth  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  14  FCC
 Rcd  14221,  14234  (1999).
 293  2000  Biennial  Regulatory  Review;  Policy  and  Rules  Concerning  the  International  Interexchange
 Marketplace,  Notice  of  Proposed  Rule  Making,  IB  Docket  No.  00-  202,  15  FCC  Rcd  20008  (2000).
203
 107
 Initial  Recommendation
 At  this  time,  the  staff  generally  recommends  retaining  the  existing  Part  61  requirements,  with
 continued  monitoring  of  competitive  developments  to  permit  changes  as  warranted  by  increased
 competition.  The  staff  recommends,  however,  that  the  Commission  extend  mandatory  detariffing
 to  the  international  services  of  non-  dominant  interexchange  carriers,  including  CMRS  providers
 and  U.  S.  carriers  classified  as  dominant  solely  due  to  foreign  affiliations.  We  also  note  that  the
 inter-  carrier  compensation  proceeding  recommended  elsewhere  in  this  report  could  result  in  some
 revisions  to  Part  61.
 Comments
 Several  earlier  proposals  were  reiterated  in  the  comments  on  the  staff  report:  (1)  reorganize  Parts
 61  and  69  so  that  carrier  tariff  requirements  would  be  in  Part  61,  rules  governing  rate-  of-  return
 LEC  access  charges  would  be  in  Part  69,  and  rules  for  price  cap  LECs  would  be  in  a  new  part;  (2)
 all  incumbent  LECs  should  be  permitted  to  file  contract  tariffs;  and  (3)  tariff  filing  procedures
 should  be  amended  to  shorten  the  notice  for  corrections  to  tariffs  from  three  days  to  one  day,  to
 eliminate  the  requirement  that  tariffs  be  in  effect  for  thirty  days  before  any  changes  can  be  made,
 and  to  extend  the  special  permission  period  from  sixty  to  ninety  days.  294  The  comments  also  urge
 the  Commission  to  allow  carriers  greater  pricing  flexibility  in  the  face  of  increased  competitive
 pressures,  to  reduce  burdens  in  filing  tariffs  by  permitting  small  LECs  to  file  tariffs  for  new
 services  on  one  days  notice,  and  to  include  one  or  more  study  areas  in  the  NECA  common  line
 tariff.  295  Several  commenters  concur  with  the  staff  recommendation  that  the  Commission  review
 intercarrier  compensation  arrangements  to  develop  a  comprehensive  system  that  would  be  more
 efficient  and  pro-  competitive  than  the  existing  myriad  of  rules.  296  One  commenter  opposes
 permitting  incumbent  LECs  to  file  contract  tariffs.  297
 Six  parties  filed  comments  on  the  staff  recommendation  regarding  the  detariffing  of  international
 services,  298  and  one  party  filed  reply  comments.  299  All  of  the  parties  support  the  Staff
 recommendation  to  extend  mandatory  detariffing  to  the  international  services  of  non-  dominant
 interexchange  carriers,  including  CMRS  providers  and  U.  S.  carriers  classified  as  dominant  solely
 due  to  foreign  affiliations.
 Recommendation
 The  staff  recommends  that  the  Commission  extend  detariffing  to  the  international  services  of
 non-  dominant  interexchange  carriers,  including  CMRS  providers  and  U.  S.  carriers  classified  as
 dominant  solely  due  to  foreign  affiliations  in  the  International  Detariffing  proceeding.  Otherwise,
 the  staff  continues  to  recommend  retaining  the  existing  Part  61  requirements,  with  continued
 294  USTA  comments  at  22.
 295  OPASTCO  comments  at  11.
 296  Sprint  comments  at  1;  USTA  comments  at  2;  GSA  comments  at  1.
 297  WorldCom  Reply  Comments  at  7.
 298  See  Alloy  comments  at  3;  GSA  comments  at  15-  16;  Sprint  comments  at  5;  comments  of  the  Coalition;
 comments  of  Verizon  at  2;  comments  of  WorldCom  at  4.
 299  Reply  comments  of  GSA  at  12-  13.
204
 108
 monitoring  of  competitive  developments  to  permit  changes  as  warranted  by  increased
 competition.  The  ongoing  proceedings  on  access  charge  reform  for  price  cap  and  rate-  of-  return
 LECs  that  affect  parts  61  and  69  provide  an  appropriate  means  to  address  competitive
 developments  in  the  exchange  access  market  and  other  concerns  raised  by  commenters.
205
 109
 PART  63    EXTENSION  OF  LINES,  NEW  LINES,  AND  DISCONTINUANCE,
 REDUCTION,  OUTAGE  AND  IMPAIRMENT  OF  SERVICE  BY  COMMON  CARRIERS;  AND  GRANTS  OF  RECOGNIZED  PRIVATE  OPERATING  AGENCY
 STATUS
 Description
 Section  214  of  the  Communications  Act  of  1934,  as  amended,  provides  that  no  carrier  shall
 undertake  the  construction  of  a  new  line  or  extension  of  any  line,  or  shall  acquire  or  operate  any
 line,  or  extension  thereof,  without  first  having  obtained  a  certificate  from  the  Commission  that  the
 present  or  future  public  convenience  and  necessity  require  the  construction  and/  or  operation  of
 such  extended  line.  Section  214  also  provides  that  no  carrier  shall  discontinue,  reduce  or  impair
 service  to  a  community  without  first  having  obtained  a  certificate  from  the  Commission  that
 neither  the  present  nor  future  public  convenience  and  necessity  will  be  adversely  affected  by  such
 action.  300  Part  63  of  our  rules  sets  forth  specific  information  that  must  be  included  in  a  section
 214  application  for  market  entry  or  exit  by  a  common  carrier.  301
 Part  63  is  organized  into  five  sub-  designations:
 A    Extensions  and  Supplements  (  63.01-  63.25)
 B    General  Provisions  Relating  to  All  Applications  Under  Section  214  (  63.  50-  63.53)
 C    Discontinuance,  Reduction,  Outage  and  Impairment  (  63.60-  63.  100)
 D    Contents  of  Applications;  Examples  (  63.500-  63.601)
 E    Request  for  Designation  as  a  Recognized  Private  Operating  Agency  (  63.701-
 63.  702)
 Purpose
 Part  63  sets  out  the  requirements  for  a  section  214  authorization  to  provide  or  discontinue  service.
 A  section  214  application  is  a  request  for  authority  to  provide  or  to  discontinue  services  pursuant
 to  section  214  of  the  Communications  Act.  A  carrier  must  receive  a  section  214  authorization
 prior  to  initiating  or  discontinuing  service.
 The  primary  purpose  in  adopting  entry  criteria  under  section  214  is  to  promote  effective
 competition  in  the  U.  S.  telecommunications  services  market.  With  regard  to  the  construction  of
 facilities,  Commission  authorization  is  needed  to  protect  consumers  from  being  charged  by
 carriers  for  unneeded  facilities.  Commission  authorization  for  discontinuance  of  service  protects
 consumers  from  loss  of  service.  The  Commission  has  substantially  deregulated  the  procedures
 for  obtaining  section  214  authorizations.
 As  competition  has  increased  in  domestic  markets  for  international  telecommunications  services,
 the  section  214  authorization  requirement  serves  several  purposes.  It  enables  the  Commission  to
 screen  applications  for  anticompetitive  efforts  and  to  deny  or  condition  authorizations  as
 appropriate.  The  review  process  also  includes  consultation  with  Executive  Branch  agencies  on
 national  security,  law  enforcement,  foreign  policy,  and  trade  concerns  that  may  be  unique  to  the
 provision  of  international  services.  The  section  214  authorization  requirement  also  helps  us
 monitor  competitive  conditions  along  U.  S.  international  routes  as  well  as  each  carriers
 300  47  U.  S.  C.    214(  a).
 301  47  C.  F.  R.  Part  63.
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 110
 compliance  with  our  rules  and  policies  governing  the  provision  of  international  services.  Finally,
 it  also  serves  to  inform  small  carriers  of  their  special  obligations  as  providers  of  international
 service.
 Part  63  also  contains  rules  to  protect  U.  S.  consumers  and  carriers  from  the  exertion  of  market
 power  by  foreign  telecommunications  carriers  in  the  U.  S.  telecommunications  market.  For
 example,  the  No  Special  Concessions  rule  prohibits  U.  S.  international  carriers  from  agreeing  to
 accept  special  concessions  directly  or  indirectly  from  any  foreign  carrier  with  respect  to  any  U.  S.
 international  route  where  the  foreign  carrier  possesses  sufficient  market  power  on  the  foreign  end
 of  the  route  to  affect  competition  in  the  U.  S.  market.  302  Part  63  also  contains  procedures  for  a
 party  to  be  designated  as  a  Recognized  Private  Operating  Agency.  303
 Analysis
 Status  of  Competition
 There  is  a  significant  amount  of  competition  in  the  provision  of  domestic  long  distance  services.
 Competition  for  local  exchange  services  is  increasing.  Competition  in  international  services  is
 also  increasing,  and  the  market  is  rapidly  changing  from  a  system  that  used  to  be  dominated  by  a
 small  number  of  national  telecommunications  providers  (generally  the  incumbent  national
 monopoly  telephone  companies)  to  a  system  with  large  numbers  of  new  entrants  and
 competitors.
 Advantages
 Part  63  provides  carriers  and  the  public  with  procedures  to  be  followed  to  obtain  authorization  to
 construct  facilities,  provide  service,  and  discontinue  service.  The  rules  clarify  what  information
 must  be  filed  with  the  Commission,  how  long  action  on  the  application  will  take,  the  types  of
 services  that  can  be  provided  over  the  facilities,  and  in  what  circumstances  a  carrier  may
 discontinue  service.
 Disadvantages
 The  rules  can  be  administratively  burdensome  on  the  carriers  and  the  Commission.  Some  of  the
 rules  are  duplicative,  or  unclear.  The  rules  may  also  delay  the  introduction  of  new  services  to  the
 public.
 Recent  Efforts
 In  November,  the  Commission  released  an  NPRM  which  proposes  changes  to  several  rules  in
 Part  63.  304  Among  other  things,  the  Commission  proposed  to  amend  Sections  63.18  and  63.24
 concerning  pro  forma  assignments  and  transfers  of  control  of  international  Section  214
 authorizations  to  more  closely  match  those  used  for  the  assignment  and  transfer  of  control  of
 302  47  C.  F.  R.    63.  14.
 303  47  C.  F.  R.    63.701,  63.  702.
 304  2000  Biennial  Regulatory  Review,  Amendment  of  Parts  43  and  63  of  the  Commissions  Rules,  Notice
 Of  Proposed  Rule  Making,  IB  Docket  00-  231,  FCC  00-  407  (rel.  Nov.  30,  2000)  (2000  International
 Biennial  Review  NPRM).
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 111
 CMRS  licenses.  The  Commission  also  proposed  to  modify  Section  63.19  to  relieve  dominant
 international  carriers  of  the  requirement  to  seek  prior  approval  to  discontinue  service,  except
 where  such  carriers  possess  market  power  in  the  provision  of  international  service  on  the  U.  S.  end
 of  the  route.  In  addition,  the  Commission  proposed  to  amend  several  rules  to  clarify  the  intent  of
 those  rules  and  to  eliminate  certain  rules  that  no  longer  have  any  application.  305
 The  increase  in  competition  has  led  to  a  reduction  in  the  administrative  burdens  on  carriers
 regarding  market  entry  and  exit.  In  1999,  the  Commission  amended  the  Part  63  rules  to  de-regulate
 market  entry  and  to  streamline  market  exit  filing  requirements,  under  section  214,  for
 domestic  carriers.  306  An  application  is  not  needed  for  entry  into  domestic  services.  The  new  rules
 confer  "blanket"  section  214  certification  for  new  lines  of  all  domestic  carriers,  exempt  line
 extensions  and  video  programming  services  from  section  214  requirements,  and  permit  the
 automatic  grant  of  all  section  214  applications  to  discontinue  domestic  service  unless  the
 Commission  notifies  the  applicant  otherwise.  The  only  section  214  applications  the  Commission
 receives  for  domestic  service  are  for  market  exit.  A  carrier  must  get  discontinuance  authority  and
 notify  customers  when  it  stops  providing  service  to  a  community.
 In  1999,  the  Commission  further  streamlined  its  procedures  for  granting  international  section  214
 authorizations  so  that  the  vast  majority  of  international  section  214  applications  filed  qualify  for
 streamlined  processing.  Thus,  most  new  carriers  can  provide  international  services  on  most
 international  routes  14  days  after  public  notice  of  an  application.  Carriers  already  providing
 service  can  complete  pro  forma  transactions  and  assignments  of  their  authorizations  without  prior
 Commission  approval  and  provide  service  through  their  wholly  owned  subsidiaries  without
 separate  Commission  approval.  Carriers  under  common  ownership  with  an  already-  authorized
 carrier  can  provide  the  same  authorized  services  after  a  minimal  waiting  period.  307
 Initial  Recommendation
 The  staff  recommends  that  the  sections  which  were  amended  in  1999  to  lower  entry  barriers  for
 domestic  carriers  be  retained  because  they  minimize  transaction  costs,  streamline  the  applications
 process,  promote  competition,  and  increase  consumer  choice.  The  rules  relate  to  the  form  of
 applications  to  be  filed  (i.  e.,  amendments,  additional  information,  copies,  fees,  filing  periods,  and
 form  (such  as  paper  size))  should  be  retained  because  the  rules  are  clear  and  predictable.  The
 staff  recommends  that  the  rules  describing  and  defining  the  types  of  discontinuance  of  services
 for  which  section  214  authorization  must  be  obtained  should  be  modified  and  consolidated
 because  they  are  largely  obsolete,  and  duplicative.  The  staff  has  identified  several  duplicative
 rules  that  should  be  eliminated,  and  a  number  of  rules  that  should  be  clarified  or  corrected.
 305  47  C.  F.  R.    43.  81.
 306  Implementation  of  Section  402(  b)(  2)(  A)  of  the  Telecommunications  Act  of  1996,  14  FCC  Rcd  11364
 (1999).
 307  See  1998  Biennial  Regulatory  Review-  Review  of  International  Common  Carrier  Regulations,  Report
 and  Order,  14  FCC  Rcd  4909  (1999)  (1998  International  Common  Carrier  Biennial  Regulatory  Review
 Order),  recon.  pending.
208
 112
 Comments
 Verizon  suggests  that  the  Commission  should  amend  Section  63.21(  d)  to  require  that  only
 facilities-  based  operators  file  the  reports  required  by  Section  43.  61.  308
 Recommendation
 In  addition  to  the  staffs  initial  recommendations,  the  staff  recommends  that  the  Commission
 adopt  the  proposals  in  2000  International  Biennial  Review  NPRM  to  eliminate  Section  43.81.
 The  staff  does  not  recommend  that  that  the  Commission  review  Section  63.21(  d)  as  requested  by
 Verizon,  but  believes  it  is  more  appropriate  to  address  Verizons  concerns  by  reviewing  Section
 43.61.
 308  Verizon  comments  at  5-  6.
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 113
 PART  64    MISCELLANEOUS  RULES  RELATING  TO  COMMON  CARRIERS,
 SUBPART  A    TRAFFIC  DAMAGE  CLAIMS
 Description
 Subpart  A  requires  carriers  engaged  in  radio-  telegraph,  wire-  telegraph,  or  ocean-  cable  service  to
 maintain  separate  files  for  each  damage  claim  of  a  traffic  nature  filed  with  the  carrier.  Subpart  A
 also  prohibits  such  carriers  from  making  payments  as  a  result  of  any  traffic  damage  claim  in
 excess  of  the  total  amount  collected  for  the  message  or  messages  from  which  the  claim  arose
 unless  the  claim  is  presented  in  writing  and  sets  forth  the  reason  for  the  claim.  These  rules  are
 based  on  the  Commissions  authority  pursuant  to  sections  1,  4,  201-  205,  and  220  of  the
 Communications  Act,  as  amended.  309
 Purpose
 Subpart  A  requires  that  certain  types  of  carriers  maintain  records  concerning  damage  claims,  and
 limits  damage  payments  absent  a  written  claim.
 Analysis
 Status  of  Competition
 Telegraph  service,  which  appears  to  be  the  primary  focus  of  this  subpart,  is  no  longer  a  major
 service  offering.
 Advantages
 Ensures  that  certain  carriers  maintain  records  concerning  damage  claims.
 Disadvantages
 Subpart  A  appears  to  focus  on  the  provision  of  telegraph  service,  which  is  no  longer  a  major
 service  offering.
 Recent  Efforts
 No  recent  action.
 Initial  Recommendation
 The  staff  recommends  the  Commission  consider  removing  subpart  A  since  it  appears  to  be
 outdated.
 Comments
 The  only  party  addressing  this  subpart  supports  the  staff  recommendation.  310
 309  47  U.  S.  C.    151,  154,  201-  205  and  220.
 310  USTA  Comments  at  23.
210
 114
 Recommendation
 See  initial  recommendation.
211
 115
 PART  64,  SUBPART  B    RESTRICTIONS  ON  INDECENT  TELEPHONE
 MESSAGE  SERVICES
 Description
 Subpart  B  implements  the  provisions  of  section  223(  b)  relating  to  defenses  to  prosecution  for
 indecent  commercial  communications.  Section  223(  b)  of  the  Communications  Act  of  1934,  as
 amended,  prohibits  use  of  the  telephone  for  the  purpose  of  obscene  commercial  communications.
 It  also  prohibits  use  of  the  telephone  for  indecent  commercial  communications  without  the
 consent  of  the  other  party  and  prohibits  use  of  the  telephone  for  indecent  commercial
 communications  which  are  available  to  anyone  under  18  years  of  age.  311  Section  223(  b)  also
 provides  for  certain  defenses  to  prosecution  for  making  indecent  commercial  communications.
 Under  section  64.201,  a  provider  of  indecent  commercial  telephone  communications  has  a
 defense  to  prosecution  if  the  provider  has  notified  the  common  carrier  that  the  provider  is
 engaged  in  providing  indecent  commercial  communications,  and  does  one  of  the  following:  (1)
 requires  credit  card  payment  before  transmitting  the  message;  (2)  requires  an  authorized  access  or
 identification  code,  which  has  been  established  by  mail,  before  transmitting  the  message;  or  (3)
 scrambles  the  message  so  that  the  audio  is  unintelligible  and  incomprehensible  without  a
 descrambler.  Subpart  B  also  provides  a  defense  to  prosecution  for  message  sponsor  subscribers
 to  mass  announcement  services  if  they  ask  the  carrier  to  take  certain  precautions.  In  addition,
 subpart  B  bars  common  carriers,  to  the  extent  technically  feasible,  from  providing  access  to
 obscene  or  indecent  communications  from  the  telephone  of  anyone  who  has  not  previously
 requested  access  to  such  services  in  writing  if  the  carrier  provides  billing  and  collection  for  the
 provider  of  the  obscene  or  indecent  communications.
 Purpose
 Subpart  B  is  intended  to  implement  the  statutory  restrictions  on  the  commercial  provision  by
 telephone  of  indecent  communications,  consistent  with  the  First  Amendment.  In  particular,
 subpart  B  is  intended  to  protect  minors  and  non-  consenting  adults  from  indecent  communications.
 Analysis
 Status  of  Competition
 Not  relevant.
 Advantages
 Subpart  B  protects  minors  and  non-  consenting  adults  from  indecent  commercial  telephone
 communications  within  a  framework  designed  to  be  consistent  with  the  First  Amendment.
 Disadvantages
 Restrictions  affecting  speech  are  subject  to  potential  challenge  as  inconsistent  with  the  First
 Amendment.
 311  47  U.  S.  C.    223(  b).
212
 116
 Recent  Efforts
 No  recent  developments.
 Recommendation
 The  staff  does  not  recommend  changes  to  subpart  B.
213
 117
 PART  64,  SUBPART  C    FURNISHING  OF  FACILITIES  TO  FOREIGN
 GOVERNMENTS  FOR  INTERNATIONAL  COMMUNICATIONS
 Description
 Subpart  C,  consisting  of  section  64.301  of  the  Commissions  rules,  requires  U.  S.  common  carriers
 to  provide  services  and  facilities  for  communications  to  any  foreign  government,  upon  reasonable
 request.  If  a  foreign  government  refuses  to  provide  services  or  facilities  for  communications  to
 the  U.  S.  Government,  U.  S.  carriers,  to  the  extent  specifically  ordered  by  the  Commission,  shall
 deny  equivalent  services  or  facilities  to  the  foreign  government.  312  This  rule  was  adopted
 pursuant  to  the  Commissions  authority  under  sections  201,  214,  303,  and  308  of  the
 Communications  Act,  as  amended.  313
 Purpose
 Section  64.301  is  intended  to  ensure  that  the  U.  S.  Government  has  access  to  communications
 services  overseas.  It  permits  the  Commission  to  order  U.  S.  carriers  to  deny  foreign  governments
 access  to  communications  services  in  the  United  States  if  the  foreign  government  has  denied  the
 U.  S.  government  access  to  communications  services  or  facilities  overseas.
 Analysis
 Status  of  Competition
 Competition  in  the  international  services  markets  is  increasing.  These  markets  are  rapidly
 changing  from  being  dominated  by  a  small  number  of  national  telecommunications  providers  to
 having  a  large  number  of  competitors.
 Advantages
 The  rule  helps  to  ensure  that  the  U.  S.  Government  has  access  to  communications  services  and
 facilities  overseas.
 Disadvantages
 None.
 Recent  Efforts
 The  Commission  last  revised  this  rule  in  1963,  and  would  need  to  consult  with  the  State
 Department  before  doing  so  again.
 Initial  Recommendation
 The  staff  recommended  retaining  the  rule  at  this  time.
 312  47  C.  F.  R.    64.  301.
 313  47  U.  S.  C.    201,  214,  303  and  308.
214
 118
 Comments
 The  only  party  addressing  this  subpart  advocates  eliminating  it,  asserting  that  these  issues  can  be
 dealt  with  through  contracts.  314
 Recommendation
 See  initial  recommendation.
 314  USTA  Comments  at  24.
215
 119
 PART  64,  SUBPART  D    PROCEDURES  FOR  HANDLING  PRIORITY
 SERVICES  IN  EMERGENCIES
 Description
 Subpart  D  requires  that  common  carriers  maintain,  provision,  and,  if  disrupted,  restore  facilities
 and  services  in  accordance  with  the  policies  and  procedures  in  Appendix  A  to  Part  64.  Appendix
 A  establishes  policies  and  procedures  and  assigns  responsibilities  for  the  National  Security
 Emergency  Preparedness  (NSEP)  Telecommunications  Service  Priority  (TSP)  System.  These
 requirements  are  based  on  the  Commissions  authority  under  sections  1,  201-  05  of  the
 Communications  Act  as  amended.  315
 Purpose
 Subpart  D  is  designed  to  ensure  that  critical  communications  services  are  available  during  times
 of  national  emergency.
 Analysis
 Status  of  Competition
 Not  Relevant.
 Advantages
 Subpart  D  promotes  public  safety  and  national  security  by  establishing  clear  procedures  and
 criteria  for  ensuring  that  critical  communications  services  are  available  in  times  of  national
 emergency.
 Disadvantages
 Complying  with  these  requirements  may  impose  administrative  costs  on  carriers.
 Recent  Effort
 There  have  not  been  any  recent  actions.
 Initial  Recommendation
 The  staff  does  not  recommend  changes  in  subpart  D.
 Comments
 None.
 Recommendation
 See  initial  recommendation.
 315  47  U.  S.  C.    151,  201-  05.
216
 120
 PART  64,  SUBPART  E    USE  OF  RECORDING  DEVICES  BY  TELEPHONE
 COMPANIES
 Description
 Subpart  E  governs  the  use  of  recording  devices  by  telephone  common  carriers  to  record  interstate
 or  foreign  telephone  conversations  between  members  of  the  public  and  telephone  company  agents
 or  employees.  Subpart  E  requires  that  telephone  companies  wishing  to  record  such  conversations
 must:  (1)  obtain  the  prior  consent  of  all  parties;  (2)  give  a  verbal  notification  prior  to  recording;
 and  (3)  accompany  the  use  of  the  recording  device  with  an  automatic  tone  warning  device  that
 produces  a  distinct  signal  at  regular  intervals.  These  requirements  are  based  on  the  Commissions
 authority  under  sections  1,  2,  4,  201,  and  205  of  the  Communications  Act  as  amended.  316
 Purpose
 Subpart  E  is  intended  to  protect  privacy  interests.
 Analysis
 Status  of  Competition
 Not  relevant.
 Advantages
 Subpart  E  is  designed  to  protect  privacy.
 Disadvantages
 Subpart  E  appears  to  duplicate  federal  and  state  electronic  privacy  statutes,  including  18  U.  S.  C.  
 2510  et  seq.,  and  47  U.  S.  C.  1004.  It  also  references  outdated  technology.
 Recent  Effort
 There  have  not  been  any  recent  changes.
 Initial  Recommendation
 The  staff  recommends  the  removal  of  Part  64,  subpart  E.
 Comments
 The  only  party  addressing  this  issue  supports  elimination  of  this  subpart.  317
 Recommendation
 See  initial  recommendation.
 316  47  U.  S.  C.    151,  152,  154,  201  and  205.
 317  USTA  Comments  at  25.
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 121
 PART  64,  SUBPART  F    TELECOMMUNICATIONS  RELAY  SERVICES  AND
 RELATED  CUSTOMER  PREMISES  EQUIPMENT  FOR  PERSONS  WITH  DISABILITIES
 Description
 Title  IV  of  the  Americans  with  Disabilities  Act  of  1990  (ADA),  codified  as  section  225  of  the
 Communications  Act  of  1934,  as  amended,  requires  the  Commission  to  ensure  that
 telecommunications  relay  service  (TRS)  is  available,  to  the  extent  possible  and  in  the  most
 efficient  manner,  to  individuals  with  hearing  or  speech  disabilities  in  the  United  States.  318
 Section  225  defines  TRS  as  telephone  transmission  service  that  enables  an  individual  with  a
 hearing  or  speech  disability  to  engage  in  communication  by  wire  or  radio  with  a  hearing
 individual  in  a  manner  functionally  equivalent  to  someone  without  such  a  disability.
 Part  64,  subpart  F  was  adopted  to  implement  section  225  of  the  Act.  The  rules  provide  minimum
 functional,  operational,  and  technical  standards  for  TRS  programs.  The  rules  also  establish  a  cost
 recovery  and  a  carrier  contribution  mechanism  for  the  provision  of  interstate  TRS  and  require
 states  to  establish  cost  recovery  mechanisms  for  the  provision  of  intrastate  TRS.
 The  rules  give  states  a  strong  role  in  ensuring  the  availability  of  TRS  by  treating  carriers  as  in
 compliance  with  their  statutory  obligations  if  they  operate  in  a  state  that  has  a  relay  program
 certified  as  compliant  by  this  Commission  pursuant  to  rules  in  subpart  F.
 Purpose
 Subpart  F  implements  section  225.  Subpart  F  is  intended  to  facilitate  communication  by  persons
 with  a  hearing  or  speech  disability  by  ensuring  that  interstate  and  intrastate  TRS  is  available
 throughout  the  country,  and  by  ensuring  uniform  minimum  quality  standards  for  such  relay
 services.
 Analysis
 Status  of  Competition
 There  is  competition  in  the  interstate  TRS  market,  but  very  little  competition  in  the  intrastate  TRS
 market.
 Advantages
 The  Commissions  TRS  rules  ensure  that  individuals  with  hearing  or  speech  disabilities  receive
 the  same  quality  of  service  when  they  make  relay  calls,  regardless  of  where  their  call  originates  or
 terminates.  The  rules  also  ensure  that  the  telecommunications  service  they  receive  is
 functionally  equivalent  to  that  available  to  persons  who  do  not  have  such  disabilities.  The  rules
 are  particularly  important  to  ensure  service  quality  because  there  is  so  little  intrastate  competition
 among  intrastate  TRS  providers.
 318  Pub.  Law  No.  101-  336,    401,  104  Stat.  327,  366-  69  (1990)  (adding  section  225  to  the
 Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    225).
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 122
 Disadvantages
 The  regulations  require  relatively  frequent  modification  to  ensure  functional  equivalence  to  voice
 telephone  service  because  of  rapid  technological  change.
 Recent  Efforts
 In  March  2000,  the  Commission  revised  subpart  F  to,  among  other  things:  (1)  modify  the
 definition  of  telecommunications  relay  services  to  include  speech-  to-  speech  (STS)  relay  services
 (which  provide  a  telecommunications  link  for  persons  with  speech  disabilities),  video  relay
 interpreting  (VRI),  (which  facilitates  telecommunications  for  individuals  who  use  sign  language),
 and  non-  English  language  relay  services;  (2)  require  that  all  relay  services,  whether  mandatory  or
 voluntary,  funded  by  intrastate  and  interstate  TRS  funds,  comply  with  minimum  service  quality
 standards;  (3)  require  provision  of  STS  relay  services  and  permit  reimbursement  for  the  voluntary
 provision  of  VRI  service;  (4)  modify  the  minimum  service  quality  standards  to  better  ensure
 functional  equivalency;  (5)  clarify  that  the  existing  rules  require  outreach  to  all  callers  and  for  all
 forms  of  TRS;  and  (6)  improve  the  Commissions  process  for  handling  TRS  complaints.  319
 In  August  2000,  the  Commission  revised  subpart  F  to  require  all  carriers  providing  telephone
 voice  transmission  service  to  provide  access  via  the  711  dialing  code  to  all  relay  services  as  a  toll
 free  call.  320
 Initial  Recommendation
 The  staff  did  not  recommend  modification  of  subpart  F  as  part  of  the  2000  Biennial  Review.
 Comments
 None.
 Recommendation
 See  initial  recommendation.
 319  Telecommunications  Relay  Services  and  Speech-  to-  Speech  Services  for  Individuals  with  Hearing  and
 Speech  Disabilities,  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  FCC  00-  56  (rel.  Mar.
 6,  2000)  (Improved  TRS  Order).
 320  The  Use  of  N11  Codes  and  Other  Abbreviated  Dialing  Arrangements,  Second  Report  and  Order,  FCC
 00-  257  (rel.  Aug.  9,  2000)  (N11  Second  Report  and  Order).
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 123
 PART  64,  SUBPART  G    FURNISHING  OF  ENHANCED  SERVICES  AND
 CUSTOMER  PREMISES  EQUIPMENT  BY  BELL  OPERATING  COMPANIES;  TELEPHONE  OPERATOR  SERVICES
 Description
 Subpart  G  addresses  two  issues:  (1)  the  provision  of  enhanced  services  and  customer  premises
 equipment  (CPE)  by  Bell  Operating  Companies  (BOCs);  and  (2)  the  provision  of  operator
 services.  These  rules  were  adopted  pursuant  to  the  Commissions  authority  under  sections  4,
 201-  205,  403,  and  404  of  the  Act,  as  amended.  321
 The  BOCs  may  provide  enhanced  services  and  CPE  pursuant  to  nonstructural  safeguards
 established  in  the  Computer  III  322  (enhanced  services)  and  Furnishing  of  CPE  323  proceedings,  or
 through  a  separate  subsidiary  as  provided  in  section  64.702  of  the  Commissions  rules.  If  a  BOC
 provides  enhanced  services  or  CPE  through  a  separate  subsidiary,  the  separate  subsidiary  must:
 (1)  obtain  all  transmission  facilities  necessary  for  the  provision  of  enhanced  services  pursuant  to
 tariff;  (2)  operate  independently,  with  its  own  books  of  accounts,  separate  officers,  personnel,  and
 computer  facilities;  (3)  deal  with  any  affiliated  manufacturing  entity  on  an  arms  length  basis;  and
 (4)  compensate  the  BOC  for  any  research  or  development  performed  for  the  subsidiary.  Section
 64.  702  requires  that  transactions  between  the  subsidiary  and  the  parent  or  any  other  affiliate  be
 put  in  writing,  and  bars  BOCs  from  engaging  in  marketing  or  sales  on  behalf  of  a  CPE  or
 enhanced  services  subsidiary.  The  BOC  must  also  obtain  Commission  approval  of  the
 capitalization  plans  for  any  such  separate  subsidiary.  In  addition,  section  64.702  bars  all  common
 carriers  from  providing  CPE  in  conjunction  with  common  carrier  communications  services.  In
 addition  to  the  nonstructural  and  structural  separations  requirements  applicable  to  the  BOCs,
 section  64.702(  e)  requires  all  common  carriers  to  sell  or  lease  CPE  separate  and  apart  from  such
 carriers  regulated  communications  services,  and  to  offer  CPE  solely  on  a  deregulated  non-tariffed
 basis.
 The  remainder  of  subpart  G  addresses  the  provision  of  telephone  operator  services,  and  certain
 activities  by  call  aggregators.  324  These  rules  require  that  operator  service  providers  identify
 themselves  at  the  beginning  of  each  call  and  provide  consumers  with  information  concerning
 their  rates.  The  rules  also  prohibit  call  blocking  and  require  that  customers  be  able  to  obtain
 access  to  the  operator  services  provider  of  their  choice.  In  addition,  subpart  G  contains
 restrictions  on  charges  related  to  the  provision  of  operator  services,  minimum  standards  for
 routing  and  handling  of  emergency  telephone  calls,  and  rules  governing  the  filing  of
 321  47  U.  S.  C.    154,  201-  205,  403  and  404.
 322  Amendment  of  Section  64.  702  of  the  Commissions  Rules  and  Regulations  (Computer  III),  Report  and
 Order,  Phase  I,  104  FCC  2d  958  (1986)  (subsequent  citations  omitted).
 323  Furnishing  of  Customer  Premises  Equipment  by  the  Bell  Operating  Companies  and  the  Independent
 Telephone  Companies,  2  FCC  Rcd  143  (1987),  affd  sub  nom.,  Illinois  Bell  Telephone  Co.  v.  FCC,  883
 F.  2d  104  (D.  C.  Cir.  1989).
 324  Operator  services  refer  to  any  interstate  telecommunications  service  initiated  from  an  aggregator
 location  that  includes,  as  a  component,  any  automatic  or  live  assistance  to  a  consumer  to  arrange  for  billing
 or  completion,  or  both,  of  an  interstate  telephone  call,  subject  to  certain  exceptions.  47  C.  F.  R.    64.  708(  i).
 An  aggregator  is  any  person  that,  in  the  ordinary  course  of  its  operations,  makes  telephones  available  to
 the  public  or  to  transient  users  of  its  premises,  for  interstate  telephone  calls,  using  a  provider  of  operator
 services.  47  C.  F.  R.    64.  708(  b).
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 124
 informational  tariffs  and  the  provision  of  operator  services  for  prison  inmates.  The  Commission
 has  forborne  from  applying  some  of  these  to  CMRS  carriers  and  aggregators.  325
 Purpose
 Subpart  G  establishes  safeguards  for  the  provision  of  enhanced  services  and  CPE  by  BOCs.
 These  measures  prevent  the  BOCs  from  exercising  market  power  in  markets  adjacent  to  the  local
 exchange  market.
 The  subpart  G  rules  for  operator  services  protect  consumers  by  ensuring  that  they  have
 information  about  the  rates  charged  by  operator  service  providers,  and  that  they  can  reach  the
 operator  service  provider  of  their  choice.  The  rules  also  promote  public  safety  by  prescribing
 minimum  standards  for  operator  service  provider  and  call  aggregator  handling  of  emergency
 telephone  calls.
 Analysis
 Status  of  Competition
 The  markets  for  both  enhanced  services  and  CPE  are  competitive.  The  operator  services  market
 is  becoming  increasingly  competitive,  although  consumers  may  not  benefit  fully  from  this
 competition  due  to  a  lack  of  consumer  awareness  about  the  choices  available  to  them,  especially
 when  using  payphones.
 Advantages
 Subpart  G  prevents  the  BOCs  from  using  their  market  power  in  the  local  exchange  market  to
 affect  competition  in  the  provision  of  enhanced  services  and  CPE.  The  provisions  of  subpart  G
 concerning  operator  services  protect  consumers  from  excessive  charges  for  these  services  and
 ensures  that  consumers  can  reach  the  interexchange  carrier  of  their  choice.
 Disadvantages
 The  separate  subsidiary  requirements  impose  additional  costs  on  the  BOCs.  The  rules  concerning
 operator  services  impose  some  administrative  costs  on  aggregators  and  operator  service
 providers.
 Recent  Efforts
 As  part  of  its  1998  Biennial  Review,  the  Commission  is  considering  eliminating  section  64.702,
 which  prohibits  common  carriers  from  bundling  CPE  with  regulated  communications  services.
 The  Commission  tentatively  concluded  that  the  CPE  market  is  sufficiently  competitive  to  justify
 eliminating  this  restriction.  326
 325  Personal  Communications  Industry  Associations  Broadband  Personal  Communications  Services
 Alliances  Petition  for  Forbearance  for  Broadband  Personal  Communications  Services,  Memorandum
 Opinion  and  Order  and  Notice  of  Proposed  Rulemaking  (PCIAs  Forbearance  MO&  O)  13  FCC  Rcd  16857
 (1988).
 326  Policy  and  Rules  Concerning  the  Interstate,  Interexchange  Marketplace;  1998  Biennial  Review  
 Review  of  Customer  Premises  Equipment  and  Enhanced  Services  Unbundling  Rules  in  the  Interexchange,
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 125
 The  Commission  adopted  amendments  to  the  subpart  G  rules  governing  operator  service
 providers  on  July  12,  1999.  These  rule  changes  require  that  aggregators  update  the  consumer
 information  they  must  post  on  or  near  public  telephones  as  soon  as  possible,  and  no  later  than  30
 days  after  the  aggregator  changes  the  pre-  subscribed  operator  service  provider.  327  The
 Commission  is  considering  in  a  pending  rulemaking  proceeding  whether  to  forbear  from  applying
 additional  requirements  relating  to  the  provision  of  telephone  operator  services  in  the  context  of
 CMRS.  328
 Initial  Recommendation
 The  staff  does  not  recommend  further  changes  in  subpart  G  as  part  of  the  2000  Biennial  Review.
 Comments
 Two  parties  urge  the  Commission  to  eliminate  the  prohibition  on  the  bundling  of  CPE  and
 telecommunications  services  in  whole  or  in  part.  329
 Recommendation
 The  Commission  is  addressing  this  issue  in  the  aforementioned  proceeding.
 Exchange  Access  and  Local  Exchange  Markets,  Further  Notice  of  Proposed  Rulemaking,  FCC  Rcd  21531
 (1998).
 327  Amendment  of  Policies  and  Rules  Concerning  Operator  Service  Providers  and  Call  Aggregators,  CC
 Docket  No.  94-  58,  Second  Report  and  Order,  14  FCC  Rcd  16569  (1999).
 328  PCIAs  Forbearance  MO&  O,  Supra  n.  325.
 329  USTA  Comments  at  26  (entirely  eliminate  prohibition  on  bundling);  WorldCom  Comments  at  4
 (eliminate  prohibition  for  non-  dominant  carriers).
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 126
 PART  64,  SUBPART  H    EXTENSION  OF  UNSECURED  CREDIT  FOR
 INTERSTATE  AND  FOREIGN  COMMUNICATIONS  SERVICES  TO  CANDIDATES  FOR  FEDERAL  OFFICE
 Description
 Part  64  subpart  H,  implements  section  401  of  the  Federal  Election  Campaign  Act  of  1971  which
 requires  the  Commission  to  promulgate  rules  governing  the  extension  of  unsecured  credit  for
 foreign  or  interstate  communications  services  to  candidates  for  Federal  office.  330  These  rules
 require  certain  carriers  331  to  file  periodic  reports  with  the  Commission  detailing  the  terms  of  any
 unsecured  credit  extended  by  the  carrier  to,  or  on  behalf  of,  a  candidate  for  federal  office.  In
 addition,  subpart  H  requires  carriers  to  extend  unsecured  credit  on  substantially  equal  terms  to  all
 candidates  and  other  persons  on  behalf  of  any  candidate  for  the  same  office.  332
 Purpose
 The  purpose  of  subpart  H  is  to  assist  the  Commission  in  monitoring  unsecured  credit
 arrangements  between  carriers  and  candidates  for  federal  office,  pursuant  to  the  Federal  Election
 Campaign  Act.  It  is  also  ensures  that  such  agreements  are  extended  on  substantially  equal  terms
 to  all  candidates  for  the  same  office.  333
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  access  market  is  growing,  although  competitors  still  serve  only
 a  small  percentage  of  local  exchange  lines.  Competition  for  business  customers  in  metropolitan
 areas  has,  in  general,  developed  much  more  rapidly  than  competition  for  residential  customers  or
 customers  in  rural  areas.  The  U.  S.  market  for  domestic  long  distance  service  is  competitive,
 although  there  is  greater  competition  for  higher  volume  business  and  residential  customers  than
 for  low  volume  customers.
 Advantages
 The  subpart  H  reporting  requirements  and  limited  disclosure  rules  provide  an  efficient  means  of
 monitoring  unsecured  credit  arrangements  between  carriers  and  candidates  for  federal  office.  The
 rules  also  are  designed  to  ensure  that  carriers  do  not  favor  any  one  candidate  with  regard  to
 unsecured  credit  arrangements.
 Disadvantages
 These  rules  involve  some  additional  administrative  burdens  for  carriers.
 330  47  C.  F.  R.    64.  801.
 331  The  report  filing  requirement  is  limited  to  carriers  with  operating  revenues  exceeding  $1  million  for
 the  preceding  year.  47  C.  F.  R.    64.  804  (g).
 332  47  C.  F.  R.    64.  804  (b).
 333  Section  401,  Federal  Election  Campaign  Act  of  1971,  Pub.  Law  No.  92-  225.
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 127
 Recent  Efforts
 There  have  been  no  significant  changes  in  recent  years.
 Initial  Recommendation
 The  staff  recommends  that  the  Commission  retain  subpart  H.
 Comments
 USTA  maintains  that  current  contracts  and  current  state  and  Federal  law  should  provide  sufficient
 oversight  and  recommends  that  the  Commission  eliminate  Subpart  H.  334  No  other  party
 commented  on  this  provision.
 Recommendation
 See  initial  recommendation.
 334  See  USTA  comments  at  28.
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 128
 PART  64,  SUBPART  I    ALLOCATION  OF  COSTS
 Description
 Section  254(  k)  of  the  Communications  Act,  as  amended,  requires  the  Commission,  with  respect
 to  interstate  services,  to  establish  any  necessary  cost  allocation  rules,  accounting  safeguards,  and
 guidelines  to  ensure  that  services  included  within  the  definition  of  universal  service  bear  no  more
 than  a  reasonable  allocation  of  joint  and  common  costs  of  facilities  used  to  provide  these  services.
 The  requirements  in  subpart  I  are  based  on  the  Commissions  authority  under  sections  201  and
 220  of  the  Communications  Act,  as  amended.  335  Subpart  I  of  the  Commissions  rules  prescribes
 procedures  for  the  allocation  of  carriers  costs  between  regulated  and  non-  regulated  services.  It
 provides  that  all  incumbent  LECs  required  to  separate  regulated  and  non-  regulated  costs  336  shall
 use  the  attributable  cost  method  of  cost  allocation  and  lists  a  number  of  cost  allocation  principles
 that  such  carriers  must  follow.  Subpart  I  provides  that  these  carriers  are  also  subject  to  the
 affiliate  transactions  rules,  and  requires  that  all  incumbent  LECs  with  annual  operating  revenues
 at  or  above  a  specified  indexed  level  (currently  $114  million)  file  cost  allocation  manuals
 (CAMs)  with  the  Commission.  Finally,  subpart  I  provides  that  all  carriers  required  to  file  CAMs
 must  also  have  an  independent  auditor  audit  their  compliance  with  the  Commissions  cost
 allocation  requirements.
 Purpose
 The  subpart  I  rules  protect  consumers  by  preventing  cross-  subsidization  between  regulated  and
 non-  regulated  services  provided  by  carriers  subject  to  the  cost  allocation  requirement.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.
 Advantages
 The  subpart  I  rules  ensure  that  carriers  prevent  carriers  from  competing  unfairly  in  other
 markets.
 Disadvantages
 The  cost  allocation  and  affiliate  transaction  rules  impose  administrative  costs  on  carriers  subject
 to  these  requirements.
 335  47  U.  S.  C.    201  and  220.
 336  Average  Schedule  companies  do  not  do  cost  studies  and  do  not  perform  cost  allocations  pursuant  to
 Part  64,  subpart  I.
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 129
 Recent  Efforts
 Subpart  I  has  been  amended  within  the  past  few  years  to  eliminate  pre-  filing  requirements  for
 CAM  cost  apportionment  and  time  reporting  changes,  and  to  reduce  the  auditing  requirements  for
 mid-  sized  incumbent  local  exchange  carriers.  337  The  Common  Carrier  Bureau  has  held
 workshops  to  discuss,  among  other  things,  proposals  for  additional  changes  to  CAM  requirements
 for  mid-  size  carriers.  338
 In  our  ongoing  Comprehensive  Accounting  Review:  Phase  2  and  3  proceeding,  the  Commission
 seeks  comment  on  proposals  related  to  the  Subpart  I,  Allocation  of  Costs,  rules.  In  that
 proceeding,  the  Commission  seeks  comment  on  whether  to  eliminate  the  CAM  filing  requirement
 for  midsize  carriers  and  whether  to  allow  Class  A  carriers  to  allocate  Part  64  costs  based  on  Class
 B  accounts.  The  Commission  also  seeks  comment  on  a  proposal  to  eliminate  Section  64.901  (b)
 (4)  of  our  rules.  339
 Initial  Recommendation
 The  staff  recommends  that  the  Commission  consider  additional  changes  to  CAM  requirements  in
 Phase  II  of  the  Comprehensive  Accounting  Review  proceeding.
 Comments
 Commenters  to  the  staff  report  support  staff  recommendations  relating  to  continued  streamlining
 of  its  cost  allocation  manual  (CAM)  filing  requirements.  340  GSA  maintains  that  the  cost
 allocation  rules  are  necessary  to  prevent  cross-  subsidization  of  competitive  ventures  by  regulated
 services.  341  ITTA  maintains  that  the  CAM  filing  requirement  is  burdensome  for  midsize  carriers,
 and  recommends  that  the  Commission  substantially  raise  the  index  revenue  threshold  to  exclude
 midsize  ILECs.  342  USTA  recommends  that  the  Commission  move  toward  eliminating  Subpart
 H.  343  USTA  also  recommends  that  the  Commission  revise  the  Purpose  section  of  the  staff
 report  to  reflect  the  original  purpose  of  the  rule.  Finally,  USTA  maintains  that  the  Commission
 revise  the  recent  efforts  section  of  the  staff  report.
 337  See  Comprehensive  Review  of  the  Accounting  Requirements  and  ARMIS  Reporting  Requirements  for
 Incumbent  Local  Exchange  Carriers:  Phase  1,  Report  and  Order,  FCC  00-  78  (rel.  Mar.  8,  2000)
 (Comprehensive  Accounting  Review  proceeding).
 338  Common  Carrier  Bureau  Announces  A  Series  of  Workshops  for  Phase  2  of  the  Comprehensive  Review
 of  Accounting  and  Reporting  Requirements,  Public  Notice,  DA  00-  754,  Apr.  5,  2000,  at  1.  See  also
 Common  Carrier  Bureau  Announces  Mid-  Sized  Carrier  Workshop  for  Phase  2  of  the  Comprehensive
 Review  of  Accounting  and  Reporting  Requirements,  Public  Notice,  DA  00-  926,  Apr.  26,  2000.
 339  See  2000  Biennial  Regulatory  Review,  Comprehensive  Accounting  Review:  Phase  2  and  3,  Notice  of
 Proposed  Rulemaking,  CC  Docket  00-  199,  FCC  00-  364  (rel.  October  18,  2000.
 340  ITTA  comments  at  5.  GSA  comments  at  18.
 341  GSA  Comments  at  18.
 342  ITTA  Comments  at  6.
 343  USTA  Comments  at  28.
226
 130
 Recommendation
 No  change,  pending  completion  of  the  ongoing  Comprehensive  Accounting  Review:  Phase  2  and
 3  proceeding.
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 131
 PART  64,  SUBPART  J    INTERNATIONAL  SETTLEMENTS  POLICY  AND
 MODIFICATION  REQUESTS
 Description
 Subpart  J  requires  carriers  to  request  Commission  approval  for  changes  in  the  accounting  rates  for
 international  telecommunications  services  unless  the  route  involved  is  exempt  from  the
 Commissions  International  Settlements  Policy  (ISP).  344  The  ISP  requires  that  U.  S.
 telecommunications  carriers  pay  nondiscriminatory  rates  for  termination  of  international  traffic  in
 foreign  countries.  345  Subpart  J  also  sets  forth  the  information  which  must  be  contained  in  a
 modification  request  and  the  procedures  that  govern  Commission  consideration  of  such
 requests.  346  These  requirements  are  based  on  the  Commissions  authority  pursuant  to  sections  1,
 201,  202,  203,  and  309  of  the  Communications  Act,  as  amended.  347
 Purpose
 The  requirement  for  filing  accounting  rate  modification  requests  set  out  in  Subpart  J  is  intended
 to  prevent  the  exercise  of  market  power  by  foreign  carriers.  In  particular,  it  assists  the
 Commission  in  ensuring  compliance  with  the  ISP  and  the  Commissions  Benchmarks  Policy.  348
 The  ISP  was  adopted  as  a  result  of  the  Commissions  concern  that  a  foreign  carrier  with  market
 power  would  have  the  ability  to  whipsaw  competing  U.  S.  international  carriers  by
 discriminating  among  them,  and  /or  by  unilaterally  setting  the  prices,  terms,  and  conditions  under
 which  U.  S.  carriers  are  able  to  exchange  traffic.  349  Such  actions  by  foreign  carriers  would  prevent
 U.  S.  carriers  from  obtaining  lower  accounting  rates  that  would  benefit  U.  S.  consumers.
 Analysis
 Status  of  Competition
 Competition  in  the  international  services  markets  is  increasing.  These  markets  are  rapidly
 changing  from  being  dominated  by  a  small  number  of  national  telecommunications  providers  to
 having  a  large  number  of  competitors.
 344  An  accounting  rate  is  the  price  a  U.  S.  facilities-  based  carrier  negotiates  with  a  foreign  carrier  for
 handling  one  minute  of  international  traffic.  Each  carriers  portion  of  the  accounting  rate  is  referred  to  as
 the  settlement  rate.
 345  47  C.  F.  R.    43.  51(  e).
 346  47  C.  F.  R.    64.  1001.
 347  47  U.  S.  C.    151,  201,  202,  203  and  309.
 348  The  Commission  has  established  benchmarks  that  govern  the  international  settlement  rates  that  U.  S.
 carriers  may  pay  foreign  carriers  to  terminate  international  traffic  originating  in  the  United  States.  See
 International  Settlement  Rates,  Report  and  Order,  12  FCC  Rcd  19806  (1997),  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).
 349  See  1998  Biennial  Regulatory  Review:  Reform  of  the  International  Settlements  Policy  and  Associated
 Filing  Requirements,  Report  and  Order  and  Order  on  Reconsideration,  14  FCC  Rcd  7963,  7974  para.  31
 (1999).
228
 132
 Advantages
 Subpart  J  is  designed  to  prevent  the  exercise  of  market  power  by  foreign  carriers,  and  to  facilitate
 the  negotiation  of  lower  accounting  rates  by  U.  S.  international  carriers  to  the  benefit  of  American
 consumers.
 Disadvantages
 The  subpart  J  requirements  may  be  too  restrictive  or  over-  broad.
 Recent  Efforts
 The  Commission  reviewed  the  ISP  as  part  of  its  1998  biennial  review.  350  In  that  proceeding,  the
 Commission  made  several  changes  to  the  ISP,  deregulating  inter-  carrier  settlement  arrangements
 between  U.  S.  carriers  and  foreign  non-  dominant  carriers  on  competitive  routes.  The
 Commission,  among  other  things,  eliminated  the  ISP  and  contract  filing  requirements  for
 arrangements  with  foreign  carriers  that  lack  market  power,  and  eliminated  the  ISP  for
 arrangements  with  all  carriers  on  routes  where  rates  to  terminate  U.  S.  calls  are  at  least  25  percent
 lower  than  the  relevant  settlement  rate  benchmark.  The  Commission  also  adopted  procedural
 changes  to  simplify  the  accounting  rate  filing  requirements,  including  the  elimination  of  the
 requirement  that  carriers  making  accounting  rate  filings  with  the  Commission  serve  every  carrier
 that  provides  service  on  the  international  route  with  a  copy  of  the  filing.  Instead,  the  Commission
 encouraged  carriers  to  make  their  accounting  rate  filings  electronically  over  the  International
 Bureau  Electronic  Filing  System.  351
 Initial  Recommendation
 The  staff  recommends  retaining  the  rule.
 Comments
 There  were  no  comments  filed  on  subpart  J.
 Recommendation
 See  initial  recommendation.
 350  1998  Biennial  Regulatory  Review:  Reform  of  the  International  Settlements  Policy  and  Associated
 Filing  Requirements,  Report  and  Order  and  Order  on  Reconsideration,,  14  FCC  Rcd  7963  (1999);  see
 also,  FCC  Announces  Elimination  of  Existing  Service  Requirement  in  64.1001(  k),  Public  Notice,  DA  99-1558
 (rel.  Aug.  6,  1999).
 351  See  FCC  Announces  Elimination  of  Existing  Service  Requirement  in  64.1001(  k),  Public  Notice,  DA
 99-  1558  (rel.  Aug.  6,  1999).
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 133
 PART  64,  SUBPART  K    CHANGING  LONG  DISTANCE  SERVICE
 Description
 Subpart  K  implements  section  258  of  the  Act.  Section  258  of  the  Communications  Act  of  1934,
 as  amended,  352  requires  the  Commission  to  prescribe  verification  procedures  for
 telecommunications  carriers  to  use  in  confirming  subscribers  decisions  to  change  local  exchange
 or  long  distance  telephone  carriers.  A  carrier  that  fails  to  comply  with  the  Commissions
 verification  procedures  is  liable  to  the  subscribers  authorized  carrier  for  all  amounts  paid  by  the
 subscriber  after  the  violation.  The  rules  also  absolve  subscribers  of  liability  for  charges  billed  by
 unauthorized  carriers  in  certain  cases,  impose  liability  on  unauthorized  carriers  for  all  charges
 collected  from  subscribers,  and  establish  procedures  to  govern  preferred  carrier  freezes.
 Purpose
 Subpart  K  attempts  to:  eliminate  the  fraudulent  practice  of  "slamming,"  or  changing  a
 subscribers  authorized  carrier  without  the  subscribers  knowledge  or  explicit  authorization;
 foster  consumer  choice;  and  facilitate  competition  in  the  telecommunications  services  market.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.  The  market  for  long  distance
 service  is  competitive,  although  there  is  greater  competition  for  high  volume  customers  than  for
 low  volume  customers.
 Advantages
 Subpart  K  reduces  fraud,  fosters  consumer  choice,  and  facilitates  competition.
 Disadvantages
 Compliance  with  the  safeguards  in  subpart  K  may  increase  carriers  costs  to  some  degree.
 Recent  Efforts
 In  May  2000,  the  Commission  modified  the  slamming  liability  rules  and  the  procedures  in
 subpart  K.  353  The  Commission  responded  to  industry  concerns  and  also  permitted  state  regulatory
 commissions  to  become  the  primary  forums  for  resolving  slamming  complaints.  In  June  2000,
 the  D.  C.  Circuit  lifted  its  May  1999  stay  of  the  previous  liability  rules.  The  new  rules  became
 effective  on  November  28,  2000.
 352  47  U.  S.  C.    258.
 353  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,  First  Order  on  Reconsideration,  FCC  00-  135  (rel.  May  3,  2000).
230
 134
 In  July  2000,  the  Commission  improved  the  carrier  change  process  for  subscribers  and  carriers
 while  making  it  more  difficult  for  carriers  to  perpetrate  slams.  354  The  Commission  allowed  the
 authorization  and  verification  of  carrier  changes  using  the  Internet,  consistent  with  the  provisions
 of  the  Electronic  Signatures  in  Global  and  National  Commerce  Act.  355  The  revised  rules  will
 become  effective  later  this  year.
 Initial  Recommendation
 The  staff  does  not  recommend  further  changes  to  subpart  K  as  part  of  the  2000  Biennial  Review.
 Comments
 One  commenter  suggests  that  the  Commission  modify  the  application  of  the  slamming  rules  in
 connection  with  the  sale  or  purchase  of  local  exchange  and  interexchange  carriers.  356
 Recommendation
 The  staff  recommends  that  the  Commission  propose  and  seek  comment  on  expedited  procedures
 for  handling  the  sale  or  transfer  of  subscriber  bases  under  the  carrier  change  authorization  and
 verification  rules.
 354  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,  FCC  00-  255  (rel.  Aug.  15,  2000).
 355  S.  761,  106  th  Cong.,  2  nd  Sess.  (signed  into  law  June  30,  2000).
 356  Independent  Telephone  and  Telecommunications  Alliance  Comments  at  12.
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 135
 PART  64,  SUBPART  L    RESTRICTIONS  ON  TELEPHONE  SOLICITATION
 Description
 Subpart  L  is  designed  to  implement  Section  227.  Section  227  of  the  Communications  Act,  as
 amended  restricts  the  use  of  automatic  telephone  dialing  systems  ("  autodialers"),  artificial  or
 prerecorded  messages,  and  telephone  facsimile  machines,  and  requires  the  Commission  to  adopt
 rules  to  implement  these  protections.  357  Section  227  also  directs  the  Commission  to  conduct
 proceedings  to  consider  the  need  to  protect  residential  telephone  subscribers  from  unsolicited
 telephone  calls.  Subpart  L  requires  telephone  solicitors  to  maintain  company-  specific  lists  of
 residential  subscribers  who  do  not  wish  to  receive  further  solicitations.  In  addition,  the  rules
 contain  restrictions  on  the  disclosure  of  subscriber  billing  name  and  address  information.
 Purpose
 Subpart  L  rules  implement  section  227  of  the  Act,  and  protect  subscriber  privacy  and  public
 safety  without  unnecessarily  restricting  legitimate  telephone  marketing  and  sales.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.  The  market  for  long  distance
 service  is  competitive,  although  there  is  greater  competition  for  high  volume  customers  than  for
 low  volume  customers.
 Advantages
 Subpart  L  protects  subscriber  privacy  and  public  safety  without  unnecessarily  interfering  with
 legitimate  telephone  marketing.
 Disadvantages
 Subpart  L  restricts  the  ability  of  telemarketers  to  place  unsolicited  calls  at  will.
 Recent  Efforts
 There  have  not  been  any  significant  recent  actions.
 Initial  Recommendation
 The  staff  does  not  recommend  changes  in  subpart  L  at  this  time.
 Comments
 None.
 357  47  U.  S.  C.    227.  See  also  47  U.  S.  C.    152(  b).
232
 136
 Recommendation
 See  initial  recommendation.
233
 137
 PART  64,  SUBPART  M    PROVISION  OF  PAYPHONE  SERVICE
 Description
 Subpart  M  implements  section  276  of  the  Communications  Act  of  1934,  as  amended,  concerning
 the  provision  of  payphone  service.  358  These  rules  govern  compensation  to  payphone  providers
 by  carriers  that  receive  calls  from  payphones,  requires  states  to  review  and  remove  any  state
 regulations  that  limit  the  entry  and  exit  of  payphone  providers,  and  establishes  regulations  to
 ensure  individuals  with  disabilities  can  use  payphones.  The  subpart  provides  for  contracts
 between  providers,  and  sets  a  default  compensation  rate  if  the  parties  cannot  reach  an  agreement.
 These  rules  also  require  carriers  to  establish  arrangements  and  track  the  data  necessary  for  the
 calculation,  verification,  billing,  and  collection  of  payphone  compensation.
 Purpose
 Subpart  M  helps  to  ensure  that  payphone  providers  receive  fair  compensation  for  completed
 intrastate  and  interstate  calls  that  use  their  payphones,  encourages  competition  among  payphone
 service  providers,  and  promotes  the  deployment  of  payphone  services.
 Analysis
 Status  of  Competition
 Incumbent  local  exchange  carriers  have  significant  market  power  in  the  provision  of  payphone
 service.  Independent  payphone  providers  have  approximately  fifteen  percent  of  the  payphone
 market.
 Advantages
 These  rules  restrain  the  market  power  of  incumbent  LECs  and  ensure  that  payphone  providers  are
 fairly  compensated.
 Disadvantages
 The  rules  may  discourage  negotiated,  market-  based  compensation  arrangements  between
 payphone  providers  and  carriers.
 Recent  Efforts
 The  U.  S.  Court  of  Appeals  for  the  D.  C.  Circuit  issued  a  decision  on  June  16,  2000  upholding  the
 Commissions  decision  to  establish  a  default  compensation  rate  of  $.  24  per  call  for  payphone
 calls.  359
 358  See  47  U.  S.  C.    276.
 359  American  Public  Communications  Council  v.  FCC,  215  F.  3d  51  (D.  C.  Cir.  2000).
234
 138
 Initial  Recommendation
 The  staff  recommends  continued  monitoring  to  assess  future  competitive  developments  in  the
 payphone  market.  The  staff  recommends  deletion  of  section  64.1320,  which  applies  only  to
 activities  prior  to  January  1,  1999.
 Comments
 No  comments  were  received  on  this  subpart  of  the  Commissions  rules.
 Recommendation
 See  initial  recommendation.
235
 139
 PART  64,  SUBPART  N    EXPANDED  INTERCONNECTION
 Description
 Subpart  N  was  adopted  pursuant  to  the  Commissions  authority  under  Sections  1,  4,  and  201
 through  205  of  the  Communications  Act,  as  amended.  360  Subpart  N  provides  that  Class  A  local
 exchange  carriers,  which  do  not  participate  in  the  National  Exchange  Carrier  Association  tariff,
 must  provide  expanded  interconnection.  361  Subpart  N  requires  incumbent  LECs  to  allow
 interconnection  with  their  networks  through  physical  or  virtual  collocation  for  the  provision  of
 interstate  special  access  and  switched  transport  services.  Any  interested  party  may  take  expanded
 interconnection.
 Purpose
 Subpart  N  is  designed  to  increase  competition  in  the  provision  of  interstate  services  by  removing
 barriers  to  the  competitive  provision  of  special  access  and  switched  transport  services.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.  The  market  for  long  distance
 service  is  competitive,  although  there  is  greater  competition  for  high  volume  customers  than  for
 low  volume  customers.
 Advantages
 Subpart  N  fosters  competition  in  the  provision  of  special  access  and  switched  transport  services.
 In  particular,  subpart  N  makes  collocation  and  interconnection  available  to  any  interested  party
 (e.  g.  large  businesses  and  universities),  while  interconnection  and  collocation  under  section  251
 of  the  Communications  Act  and  Part  51  of  the  Commissions  rules  are  limited  to
 telecommunications  carriers.
 Disadvantages
 Subpart  N  imposes  some  costs  on  incumbent  LECs,  which  are  passed  on  to  requesting  parties.
 Recent  Efforts
 No  recent  action.
 360  47  U.  S.  C.    151,  154,  and  201-  05.
 361  Bell  South,  SBC,  USWest  and  Verizon  are  subject  to  this  requirement.
236
 140
 Initial  Recommendation
 The  staff  recommends  no  change  to  Subpart  N  as  part  of  the  Biennial  Review.
 Comments
 None
 Recommendation
 See  initial  recommendation.
237
 141
 PART  64,  SUBPART  O    INTERSTATE  PAY-  PER-  CALL  AND  OTHER
 INFORMATION  SERVICES
 Description
 The  requirements  in  subpart  O  are  based  on  the  Commissions  authority  under  Sections  1,  4,  and
 201through  205  of  the  Communications  Act,  as  amended.  362  Subpart  O  concerns  pay-  per-  call  and
 certain  other  information  services.  Subpart  O  requires  common  carriers  that  assign  telephone
 numbers  to  providers  of  interstate  pay-  per-  call  services  require  the  provider  to  comply  with  these
 rules  as  well  as  certain  other  laws  and  regulations.  Subpart  O  restricts  the  provision  of  pay-  per-call
 services  over  800  and  other  toll  free  numbers,  and  bars  the  provision  of  interstate  pay-  per-call
 services  on  a  collect  basis.  Subpart  O  provides  for  900  service  access  code  assignment  to
 pay-  per-  call  services.  It  requires  local  exchange  carriers  to  offer  subscribers  the  option  of
 blocking  access  to  900  numbers  from  their  telephones.  Subpart  O  establishes  conditions  for
 common  carrier  provision  of  billing  and  collection  for  pay-  per-  call  services,  and  bars  the
 disconnection  or  interruption  of  local  exchange  or  long  distance  service  for  the  non-  payment  of
 charges  for  interstate  pay-  per-  call  and  certain  information  services..
 Purpose
 Subpart  O  is  designed  to  protect  consumers  from  the  fraudulent  or  unscrupulous  provision  of  pay-per-
 call  services.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.  The  market  for  long  distance
 service  is  competitive,  although  there  is  greater  competition  for  high  volume  customers  than  for
 low  volume  customers
 Advantages
 Protects  consumers  from  the  fraudulent  or  unscrupulous  provision  of  pay-  per-  call  services.
 Disadvantages
 The  rules  increase  the  cost  of  providing  pay-  per-  call  services.
 Recent  Efforts
 There  have  not  been  any  recent  actions.
 Initial  Recommendation
 The  staff  does  not  recommend  changes  to  subpart  O  as  part  of  the  current  biennial  review.
 362  47  U.  S.  C.    151,  154,  and  201-  05.
238
 142
 Comments
 None
 Recommendation
 See  initial  recommendation.
239
 143
 PART  64,  SUBPART  P    CALLING  PARTY  TELEPHONE  NUMBER;  PRIVACY  (ALSO  KNOWN  AS  CALLER  ID)
 Description
 The  requirements  in  subpart  P  are  based  on  the  Commissions  authority  under  sections  1,  4,  and
 201  through  205  of  the  Communications  Act,  as  amended.  363  Subpart  P  covers  Calling  Party
 Number  (CPN)  services,  including  Caller  ID,  which  depend  on  capabilities  that  use  out-  of-  band
 signaling  techniques,  such  as  Signaling  System  Seven  (SS7).  Subpart  P  provides  that  common
 carriers  using  SS7  must,  subject  to  certain  exceptions,  transmit  the  CPN  associated  with  interstate
 calls  to  interconnecting  carriers  without  an  additional  charge.  Originating  carriers  using  SS7
 must  recognize  *67  as  a  callers  request  for  privacy  when  dialed  as  the  first  three  digits  of  an
 interstate  call.  Carriers  providing  line  blocking  services  are  required  to  recognize  *82  as  a
 callers  request  that  privacy  not  be  provided  and  that  the  CPN  be  passed  on  an  interstate  call.
 Subpart  P  requires  carriers  to  notify  customers  of  their  *67  and  *82  capabilities  and  restricts  the
 use  of  telephone  subscriber  information.
 Purpose
 The  protection  of  subscriber  privacy  while  fostering  the  development  of  new  and  innovative
 services.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  serve  only  a  small  percentage  of  local  exchange  lines.  Competition  for
 business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.  The  market  for  long  distance
 service  is  competitive,  although  there  is  greater  competition  for  high  volume  customers  than  for
 low  volume  customers.
 Advantages
 Subpart  P  provides  a  clear  and  consistent  regulatory  framework  for  deployment  of  CPN-  based
 services  which  protect  the  privacy  interests  of  telephone  users,  and  provides  for  consumer
 education  concerning  CPN-  based  interstate  services.
 Disadvantages
 Compliance  with  subpart  P  imposes  some  costs  on  carriers.
 Recent  Efforts
 No  recent  actions.
 363  47  U.  S.  C.    151,  154,  and  201-  05.
240
 144
 Initial  Recommendation
 The  staff  does  not  recommend  that  the  Commission  modify  subpart  P  as  part  of  this  biennial
 review.
 Comments
 None
 Recommendation
 See  initial  recommendation.
241
 145
 PART  64,  SUBPART  Q    IMPLEMENTATION  OF  SECTION  273(  D)(  5)  OF  THE  COMMUNICATIONS  ACT:  DISPUTE  RESOLUTION  REGARDING  EQUIPMENT
 STANDARDS
 Description
 Subpart  Q  implements  Section  273(  d)  of  the  Act,  as  amended,  by  establishing  procedures  to  be
 followed  by  non-  accredited  standards  organizations  when  setting  industry-  wide  standards  or
 generic  requirements  for  telecommunications  equipment  or  CPE.  Section  273(  d)(  5)  of  the  Act
 directs  the  Commission  to  prescribe  a  dispute  resolution  process  when  all  parties  involved  in  such
 standards  setting  cannot  agree  on  a  dispute  resolution  process.  It  provides  for  resolution  of
 technical  disputes  by  a  three-  member  panel,  whose  recommendation  can  be  overturned  if  three-fourths
 of  the  funding  parties  vote  to  do  so.
 Purpose
 Subpart  Q  ensures  the  fair,  prompt  and  economical  resolution  of  disputes  that  arise  in  the  context
 of  private  sector  development  of  technical  standards  for  telecommunications  equipment  and  CPE.
 Analysis
 Status  of  Competition
 The  market  for  CPE  is  competitive.
 Advantages
 The  default  dispute  resolution  process  provides  for  the  fair,  prompt  and  economical  resolution  of
 disputes  when  the  parties  cannot  agree  on  a  mutually  satisfactory  process.
 Disadvantages
 Since  this  dispute  resolution  process  is  only  used  when  the  parties  cannot  agree  on  another
 approach,  it  does  not  appear  to  have  any  significant  disadvantages.
 Recent  Efforts
 No  recent  action.
 Initial  Recommendation
 The  staff  recommends  that  the  Commission  retain  subpart  Q.
 Comments
 None
 Recommendation
 See  initial  recommendation
242
 146
 PART  64,  SUBPART  R    GEOGRAPHIC  RATE  AVERAGING  AND  RATE  INTEGRATION
 Description
 Subpart  R  implements  Section  254(  g)  of  the  Communications  Act,  as  amended,  364  which  requires
 interexchange  rate  averaging  and  rate  integration.  The  rate  averaging  provisions  require
 interexchange  carriers  to  charge  customers  in  rural  and  high  cost  areas  no  more  than  they  charge
 urban  customers.  The  rate  integration  provisions  require  carriers  to  charge  customers  in  one  state
 the  same  rates  for  interexchange  service  charged  to  customers  in  any  other  state.
 Purpose
 Subpart  R  ensures  that  all  customers,  regardless  of  where  they  live,  have  access  to  interexchange
 services  at  comparable  rates.
 Analysis
 Status  of  Competition
 The  market  for  long  distance  service  is  competitive,  although  there  is  greater  competition  for  high
 volume  customers  than  for  low  volume  customers.
 Advantages
 These  rules  ensure  that  all  domestic  interexchange  toll  service  customers,  regardless  of  where
 they  live,  share  in  the  benefits  of  rate  reductions  and  new  technologies  that  result  from
 competition  in  the  interexchange  market.
 Disadvantages
 The  rate  averaging  and  rate  integration  provisions  in  the  statute  create  implicit  subsidies  running
 from  low-  cost  areas  to  high-  cost  areas.  This  can  distort  the  market  by  discouraging  carriers  from
 serving  high  cost  areas,  and  make  it  difficult  for  national  interexchange  carriers  serving  both  high
 and  low  cost  areas  to  compete  effectively  with  carriers  that  provide  targeted  interexchange
 services  in  low-  cost  areas.
 Recent  Efforts
 The  U.  S.  Court  of  Appeals  for  the  D.  C.  Circuit  recently  affirmed  the  Commissions  ruling  that  an
 interexchange  carrier  and  all  of  its  affiliates  must  charge  the  same  integrated  long  distance  rates.
 The  court,  however,  vacated  the  Commissions  decision  that  Section  254(  g)  unambiguously
 applies  rate  integration  to  CMRS  carriers  and  remanded  to  the  Commission  the  question  of
 whether  rate  integration  should  apply  to  these  carriers.  365
 364  See  47  U.  S.  C.    254(  g).
 365  GTE  Service  Corp.  v.  FCC,  No.  97-  1538  (D.  C.  Cir.,  July  14,  2000).
243
 147
 Initial  Recommendation
 The  staff  recommends  review  of  the  applicability  of  rate  integration  to  CMRS  carriers  pursuant  to
 the  court  remand,  but  does  not  recommend  that  this  be  treated  as  a  part  of  the  2000  Biennial
 Review.  The  staff  recommends  retention  of  the  other  rate  integration  and  rate  averaging  rules
 that  implement  the  statutory  mandate  of  the  1996  Act.  The  staff  recommends  that  the
 Commission  monitor  the  potential  effect  of  these  provisions  on  the  development  of  competition
 in  the  interexchange  market.
 Comments
 Alloy  asserts  that  there  is  no  need  to  initiate  a  proceeding  to  look  at  whether  rate  integration
 should  be  applied  to  CMRS  providers  in  response  to  the  Courts  remand.  Alloy  submits  that  the
 wireless  market  is  highly  competitive  and  the  application  of  rate  integration  to  CMRS  providers
 would  create  implicit  subsidies  from  low-  cost  to  high-  cost  areas  and  could  lead  to  anticompetitive
 results  if  CMRS  providers  were  required  to  integrate  rates  across  affiliates.  366
 Recommendation
 See  initial  recommendation.
 366  Comments  of  Alloy  at  13.
244
 148
 PART  64,  SUBPART  S    NONDOMINANT  INTEREXCHANGE  CARRIER
 CERTIFICATIONS  REGARDING  GEOGRAPHIC  RATE  AVERAGING  AND  RATE  INTEGRATION  REQUIREMENTS
 Description
 Subpart  S  implements  Section  254(  g)  of  the  Communications  Act,  as  amended,  which  requires
 interexchange  carrier  rate  averaging  and  rate  integration.  367  Subpart  S  requires  nondominant
 carriers  that  provide  detariffed  interstate  domestic  interexchange  service  to  file  an  annual
 certification  with  the  Commission  (signed  by  an  officer  under  oath),  stating  that  they  comply  with
 the  rate  averaging  and  rate  integration  requirements  in  section  254(  g).
 Purpose
 Subpart  S  insures  compliance  with  the  statutory  requirement  that  all  customers,  regardless  of
 where  they  live,  have  access  to  interexchange  services  at  comparable  rates.
 Analysis
 Status  of  Competition
 The  market  for  long  distance  service  is  competitive,  although  there  is  greater  competition  for  high
 volume  customers  than  for  low  volume  customers.
 Advantages
 The  certification  requirements  facilitate  enforcement  of  the  statutory  requirement  in  section
 254(  g)  of  the  Act  that  all  domestic  interexchange  toll  service  customers,  regardless  of  where  they
 live,  share  in  the  benefits  of  rate  reductions  and  new  technologies  that  result  from  the  competitive
 nature  of  the  interexchange  market.
 Disadvantages
 Requiring  interexchange  carriers  to  file  annual  certifications  may  impose  some  administrative
 costs  on  the  carriers.
 Recent  Efforts
 There  have  been  no  recent  actions.
 Initial  Recommendation
 The  staff  recommends  retention  of  subpart  S.
 Comments
 None.
 367  47  U.  S.  C.    254(  g).
245
 149
 Recommendation
 See  initial  recommendation.
246
 150
 PART  64,  SUBPART  T    SEPARATE  AFFILIATE  REQUIREMENTS  FOR
 INCUMBENT  INDEPENDENT  LOCAL  EXCHANGE  CARRIERS  THAT  PROVIDE  IN-  REGION,  INTERSTATE  DOMESTIC  INTEREXCHANGE  SERVICES  OR  IN-REGION
 INTERNATIONAL  INTEREXCHANGE  SERVICES
 Description
 Subpart  T  was  adopted  pursuant  to  sections  1,  2,  4,  201,  202,  220,  251,  271,  272  and  303(  r)  of  the
 Communications  Act,  as  amended.  368  Subpart  T  establishes  separate  subsidiary  requirements  for
 the  provision  of  in-  region,  interstate  domestic,  interexchange  services  and  in-  region  international
 interexchange  services  by  incumbent  independent  LECs.  Subpart  T  generally  requires  that  the
 separate  affiliate:  (1)  maintain  separate  books  of  account;  (2)  not  own  transmission  or  switching
 facilities  jointly  with  its  affiliated  exchange  company;  (3)  take,  pursuant  to  tariff,  any  services  for
 which  its  affiliated  exchange  carrier  is  required  to  file  a  tariff;  and  (4)  be  a  separate  legal  entity
 from  the  affiliated  exchange  company.
 Purpose
 Subpart  T  should  prevent  incumbent  independent  LECs  from  exercising  market  power  in  the
 provision  of  in-  region  long  distance  services.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.  The  market  for  long  distance
 service  is  competitive,  although  there  is  greater  competition  for  high  volume  customers  than  for
 low  volume  customers.
 Advantages
 Subpart  T  helps  to  prevent  incumbent  LECs  from  leveraging  their  market  power  in  the  local
 exchange  service  market  to  the  long  distance  market.
 Disadvantages
 Subpart  T  may  increase  independent  incumbent  local  exchange  carriers  costs  of  providing  in-region,
 interstate,  interexchange  services.
 368  47  U.  S.  C.    151,  152,  154,  201,  202,  220,  251,  271,  272,  and  303(  r).
247
 151
 Recent  Efforts
 In  August  1999,  the  Commission  revised  subpart  T  to  allow  independent  LECs  providing  in-region
 long  distance  services  solely  on  a  resale  basis  to  do  so  through  a  separate  corporate
 division  rather  than  through  a  separate  legal  entity.  369
 Initial  Recommendation
 The  staff  recommends  that  the  Commission  modify  subpart  T  to  provide  for  triennial  review  of
 the  requirement  that  independent  incumbent  LECs  provide  interexchange  service  through  a
 separate  affiliate.  The  staff  also  recommends  that  the  Commission  delete  section  64.1903(  c),
 since  it  pertains  exclusively  to  the  time  period  prior  to  August  31,  1999.
 Comments
 Almost  all  of  the  parties  commenting  on  this  subpart  criticized  the  staff  recommendation  for
 regular  substantive  review  of  the  separate  subsidiary  requirement,  although  for  different  reasons.
 A  number  of  parties  argued  that  the  separate  subsidiary  requirement  should  be  eliminated
 immediately  for  small  and  mid-  size  carriers.  370  Another  party  opposed  the  staff  proposal  on  the
 ground  that  the  separate  subsidiary  requirement  is  necessary  to  prevent  independent  incumbent
 LECs  from  leveraging  their  local  exchange  market  power  into  the  long  distance  market.  371
 Recommendation
 The  staff  recommends  the  Commission  institute  proceedings  to  consider  exempting  small  rural
 incumbent  LECs  as  defined  in  section  3(  37)  of  the  Act,  from  this  separate  subsidiary  requirement.
 The  staff  also  encourages  small  and  mid-  sized  carriers  that  wish  to  purchase  combination  local
 exchange/  long  distance  switching  equipment  to  request  waivers  if  the  current  prohibition  on  the
 joint  ownership  of  facilities  results  in  hardship.
 369  Regulatory  Treatment  of  LEC  Provision  of  Interexchange  Services,  Originating  in  the  LECs  Local
 Exchange  Area  and  Policy  and  Rules  Concerning  the  Interstate,  Interexchange  Market  Place,  Second
 Order  on  Reconsideration,  14  FCC  Rcd  10771  (1999).
 370  ITTA  Comments  at  8-  10;  USTA  Comments  at  26;  ITTA  Reply  at  6.  See  also  Sprint  Comments  at  4
 (supporting  elimination  of  separate  subsidiary  requirement  pursuant  to  staff  recommendation.)
 371  WorldCom  Comments  at  4-  5.
248
 152
 PART  64,  SUBPART  U    CUSTOMER  PROPRIETARY  NETWORK
 INFORMATION
 Description
 Subpart  U  implements  Section  222  of  the  Communications  Act,  as  amended,  372  which  restricts  a
 carriers  use  of  customer  proprietary  network  information  (CPNI).  Among  other  things,  CPNI
 identifies  to  whom,  where,  and  when  a  customer  places  a  call,  and  identifies  the  types  of  service
 offerings  to  which  the  customer  subscribes  and  the  extent  to  which  the  service  is  used.
 Purpose
 These  rules  are  designed  to  protect  consumer  privacy  and  foster  competition.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.  The  market  for  long  distance
 service  is  fully  competitive,  although  there  is  greater  competition  for  high  volume  customers  than
 for  low  volume  customers.
 Advantages
 The  CPNI  rules  protect  consumer  privacy  and  foster  competition.
 Disadvantages
 The  CPNI  rules  impose  some  costs  on  carriers.
 Recent  Efforts
 On  August  18,  1999,  the  10  th  Circuit  Court  of  Appeals  found  that  the  Commissions  interpretation
 of  the  customer  approval  requirement  for  the  use  of  CPNI  in  certain  circumstances  violated  the
 First  Amendment.  373  Section  222  of  the  Act  remains  in  effect  and  the  Commission  is  in  the
 process  of  addressing  the  courts  ruling.
 Initial  Recommendation
 The  staff  does  not  recommend  that  the  Commission  take  action  concerning  subpart  U.
 372  47  U.  S.  C.    222.
 373  US  West  v.  FCC,  182  F.  3d  1224  (10  th  Cir.  1999),  cert.  denied,  120  S  Ct.  2215  (June  5,  2000)  (No.  99-1427).
249
 153
 Comments
 The  only  party  addressing  this  subpart  urges  the  Commission  to  ensure  that  new  CPNI  rules  do
 not  adversely  affect  small  carriers.  374
 Recommendation
 See  initial  recommendation.  The  Commission  will  be  sensitive  to  the  circumstances  of  small
 carriers  in  addressing  the  courts  ruling.
 374  OPASTCO  Comments  at  9.
250
 154
 PART  64,  SUBPART  V    TELECOMMUNICATIONS  CARRIER  SYSTEMS
 SECURITY  AND  INTEGRITY  PURSUANT  TO  THE  COMMUNICATIONS  ASSISTANCE  FOR  LAW  ENFORCEMENT  ACT  (CALEA)
 Description
 Subpart  V  implements  Section  105  of  CALEA,  375  which  requires  that  telecommunications  carriers
 establish  safeguards  to  ensure  that  interception  of  communications  or  access  to  call-  identifying
 information  can  be  activated  only  in  accordance  with  a  court  order  or  other  lawful  authorization,
 and  with  the  affirmative  intervention  of  an  officer  or  employee.  Subpart  V  requires  carriers  to
 maintain  secure  records  of  each  interception  of  communications  or  access  to  call-  identifying
 information,  and  to  adopt  policies  and  procedures  for  supervision  and  control  of  their  employees
 in  this  regard.  All  telecommunication  carriers  must  submit  their  policies  and  procedures  to  the
 Commission  for  review.
 Purpose
 Subpart  V  is  intended  to  help  protect  subscribers  privacy  rights  by  ensuring  that  any  interception
 is  in  accordance  with  legal  authorization.
 Analysis
 Status  of  Competition
 Not  relevant.
 Advantages
 Subpart  V  helps  protect  subscriber  privacy.
 Disadvantages
 Compliance  with  these  requirements  increases  carrier  costs.
 Recent  Efforts
 Subpart  V  was  adopted  in  September  1999.  376
 Initial  Recommendation
 The  staff  does  not  recommend  any  modifications  to  Subpart  V.
 Comments
 None.
 375  47  U.  S.  C.    1004.
 376  Communications  Assistance  for  Law  Enforcement  Act,  Report  and  Order,  14  FCC  Rcd  4151  (1999).
251
 155
 Recommendation
 See  initial  recommendation.
252
 156
 PART  64,  SUBPART  W    REQUIRED  NEW  CAPABILITIES  PURSUANT  TO
 THE  COMMUNICATIONS  ASSISTANCE  FOR  LAW  ENFORCEMENT  ACT  (CALEA)
 Description
 Subpart  W  implements  Section  103  of  CALEA.  377  It  establishes  the  technical  requirements  and
 standards  that  telecommunications  carriers  must  satisfy  to  ensure  that,  when  properly  authorized,
 law  enforcement  officials  have  access  to  communications  and  call-  identifying  information.
 Subpart  W  parallels  requirements  and  standards  for  wireless  telecommunications  carriers  set  out
 in  Part  22,  subpart  J  and  Part  24,  subpart  J.
 Purpose
 Subpart  W  assists  the  enforcement  of  criminal  laws,  and  clarifies  telecommunications  carriers
 requirements  under  section  103(  a)  of  CALEA.  378
 Analysis
 Status  of  Competition
 Not  relevant.
 Advantages
 Subpart  W  facilitates  enforcement  of  criminal  law  and  clarifies  carriers  requirements  under
 CALEA.
 Disadvantages
 Compliance  with  these  requirements  increases  carriers  costs.
 Recent  Efforts
 On  August  15,  2000,  the  D.  C.  Circuit  affirmed  in  part  and  vacated  and  remanded  in  part  the
 requirements  contained  in  subpart  W.  379
 Initial  Recommendation
 The  staff  recommends  that  the  Commission  reassess  its  subpart  W  rules  pursuant  to  the  D.  C.
 Circuits  remand.
 377  47  U.  S.  C.    1002.
 378  See  Communications  Assistance  for  Law  Enforcement  Act,  CC  Docket  No.  97-  213,  Third  Report  and
 Order,  14  FCC  Rcd  16794  (1999).
 379  Affd  in  part  and  revd  in  part,  United  States  Telecom  Assn  v.  FCC,  Nos.  99-  1442  et  al.  (D.  C.  Cir.
 Aug.  15,  2000).
253
 157
 Comments
 None
 Recommendation
 See  initial  recommendation.
254
 158
 PART  64,  SUBPART  X    SUBSCRIBER  LIST  INFORMATION
 Description
 Subpart  X  implements  Section  222(  e)  of  the  Communications  Act  380  which  requires  carriers
 providing  telephone  exchange  service  to  provide  subscriber  list  information  to  requesting
 directory  publishers  on  a  timely  and  unbundled  basis,  under  nondiscriminatory  and  reasonable
 rates,  terms,  and  conditions.  Subpart  X  implements  this  statutory  provision,  addressing  third
 party  rights  to  subscriber  list  information,  which  includes  listed  subscribers  names,  addresses  and
 telephone  numbers,  as  well  as  headings  under  which  businesses  are  listed  in  the  yellow  pages.
 Purpose
 Subpart  X  is  intended  to  increase  competition  in  directory  publishing  by  ensuring  that  competing
 directory  publishers  can  obtain  subscriber  list  information  from  LECs.
 Analysis
 Status  of  Competition
 The  market  for  directory  publishing  has  been  dominated  by  incumbent  LEC  publishing
 operations,  but  is  becoming  increasingly  competitive.  Much  of  this  increased  competition  is  due
 to  section  222  and  the  Commissions  implementing  rules  in  subpart  X.
 Advantages
 Subpart  X  fosters  competition  in  directory  publishing,  and  prevents  incumbent  LECs  from  using
 control  of  their  subscriber  information  lists  to  undermine  competition  in  the  directory  publishing
 business.
 Disadvantages
 These  requirements  may  place  some  administrative  burdens  on  local  exchange  carriers.
 Recent  Efforts
 The  Commission  adopted  the  subpart  X  rules  on  August  23,  1999.  381
 Initial  Recommendation
 The  staff  does  not  recommend  that  the  Commission  modify  subpart  X  at  this  time.
 Comments
 None
 380  47  U.  S.  C.    222(  e).
 381  Telecommunications  Carriers  Use  of  Customer  Proprietary  Network  Information  and  Other  Customer
 Information,  CC  Docket  No.  96-  115,  Third  Report  and  Order,  FCC  Rcd  (1999),  pets.  for  recon.  pending.
255
 159
 Recommendation
 See  initial  recommendation.
256
 160
 PART  64,  SUBPART  Y    TRUTH-  IN-  BILLING  REQUIREMENTS  FOR
 COMMON  CARRIERS
 Description
 The  Commission  adopted  the  rules  in  subpart  Y  pursuant  to  its  authority  under  sections  201(  b)
 and  258  of  the  Communications  Act  of  1934,  as  amended.  382  Subpart  Y  contains  binding  truth-  in-billing
 guidelines  that  apply  to  carriers  selling  telecommunications  services.  Subpart  Y  requires
 carriers  to  provide  customers  with  necessary  information  about  the  services  and  charges.
 Specifically,  subpart  Y  requires  carriers  to  separate  charges  on  the  bill  by  provider,  to  describe
 clearly  the  services  involved,  to  display  clearly  the  name  of  the  service  provider  in  association
 with  its  charges,  to  display  a  toll-  free  number  (or,  in  certain  cases,  a  website)  for  consumer
 inquiries,  to  identify  those  charges  for  which  failure  to  pay  will  not  result  in  disconnection  of  the
 customers  basic  local  service,  and  to  highlight  new  service  providers.
 Purpose
 Subpart  Y  is  designed  to  make  telephone  bills  easier  for  consumers  to  understand,  so  that
 customers  can  make  informed  choices  among  carriers  and  services.  Subpart  Y  is  also  intended  to
 make  it  easier  for  consumers  to  identify  and  report  fraud,  such  as  slamming  (unauthorized  change
 of  consumers  telecommunications  carrier)  and  cramming  (placement  of  unauthorized,
 misleading,  or  deceptive  charges  on  a  consumers  telephone  bill).
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.  The  market  for  long  distance
 service  is  competitive,  although  there  is  greater  competition  for  high  volume  customers  than  for
 low  volume  customers.
 Advantages
 Subpart  Y  makes  customers  telephone  bills  easier  understand  and  ensures  that  consumers  have
 the  information  necessary  to  make  informed  choices  among  carriers  and  services.  These  rules
 also  make  it  easier  for  consumers  to  detect  and  report  fraud  in  the  provision  of
 telecommunications  services.
 Disadvantages
 These  requirements  may  increase  carrier  costs  somewhat.
 382  47  U.  S.  C.    201(  b)  and  258.  These  rules  were  inadvertently  placed  in  subpart  U  in  the  1999  Code  of
 Federal  Regulations.  This  error  was  subsequently  corrected  and  the  rules  were  placed  in  subpart  Y.  65
 Fed.  Reg.  36637  (June  9,  2000).
257
 161
 Recent  Efforts
 Some  of  the  truth-  in-  billing  rules  contained  in  subpart  Y  took  effect  in  November  1999,  and
 several  more  took  effect  in  April  2000.
 In  March  2000,  the  Commission  modified  the  truth  in  billing  rules  slightly,  specifying  that  the
 requirement  that  telephone  bills  highlight  new  service  providers  does  not  apply  to  services  billed
 solely  on  a  per-  transaction  basis,  and  making  other  minor  modifications.  383  These  changes
 became  effective  on  August  28,  2000.
 Initial  Recommendation
 The  staff  does  not  recommend  further  changes  to  subpart  Y.
 Comments
 While  one  commenter  indicates  that  the  Commission  did  not  adequately  address  the  needs  of
 small  telecommunications  companies  in  adopting  truth-  in-  billing  rules,  384  this  commenter
 recommends  no  further  changes  to  the  rules.
 Recommendation
 See  initial  recommendation.
 383  Truth-  in-  Billing  and  Billing  Format,  Order  on  Reconsideration,  CC  Docket  No.  98-  170,  FCC  00-  111
 (rel.  Mar.  29,  2000);  Errata,  DA  00-  745  (rel.  Mar.  31,  2000).
 384  Organization  for  the  Promotion  and  Advancement  of  Small  Telecommunications  Companies
 Comments  at  8.
258
 162
 PART  65    INTERSTATE  RATE  OF  RETURN  PRESCRIPTION  PROCEDURES  AND  METHODOLOGIES
 Description
 Section  201  of  the  Communications  Act,  as  amended,  requires  that  rates  for  common  carrier
 communications  services  be  just  and  reasonable.  385  Part  65  sets  forth  procedures  and
 methodologies  used  by  the  Commission  to  prescribe  an  authorized  interstate  rate-  of-  return  for  the
 exchange  access  services  of  incumbent  LECs  subject  to  rate-  of-  return  regulation.  Price  cap
 incumbent  LECs  also  use  the  Commission  prescribed  rate-  of-  return  for  certain  limited  purposes.
 The  Part  65  rules  describe  the  methodologies  to  be  used  in  calculating  the  cost  of  equity,  the  cost
 of  debt,  the  weighted  average  cost  of  capital  (both  equity  and  debt),  the  interstate  ratebase,  and
 the  carriers  interstate  rate-  of-  return.  These  rules  also  require  the  filing  of  certain  rate-  of-  return
 reports.
 Part  65  is  organized  into  seven  lettered  subparts.
 A    General
 B    Procedures
 C    Exchange  Carriers
 D    Interexchange  Carriers
 E    Rate-  of-  Return  Reports
 F    Maximum  Allowable  Rates  of  Return
 G    Rate  Base
 Purpose
 The  Part  65  rules  are  designed  to  protect  consumers  from  excessive  rates  by  prescribing  an
 authorized  interstate  rate  of  return  used  to  set  local  exchange  access  rates  for  incumbent  local
 exchange  carriers  subject  to  rate-  of-  return  regulation.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  in  rural  areas.
 Advantages
 The  Part  65  rules  protect  consumers  from  excessive  interstate  access  charges  by  incumbent  LECs
 subject  to  rate-  of-  return  regulation.  The  authorized  interstate  rate  of  return  is  also  used  by
 incumbent  local  exchange  carriers  for  certain  purposes,  for  example,  calculating  payments  to  and
 disbursements  from  the  universal  service  fund  and  in  the  low  end  adjustment  formula.
 385  47  U.  S.  C.    201  (b).
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 163
 Disadvantages
 The  Part  65  rules  impose  some  paperwork  burdens  on  carriers.
 Recent  Efforts
 In  1995,  the  Commission  substantially  reformed  the  Part  65  rules.  The  major  changes  made  by
 the  1995  order  were  the  elimination  of  the  biennial  represcription  schedule,  and  simplification  of
 the  represcription  process.  The  Commission  replaced  the  existing  rule,  which  called  for  the
 initiation  of  rate  return  represcription  proceedings  every  two  years,  with  a  semiautomatic  trigger
 activated  by  changes  in  capital  costs.  386
 In  October  1998,  the  Common  Carrier  Bureau  initiated  a  proceeding  to  represcribe  the  rate  of
 return.  387  This  proceeding  has  not  yet  been  completed.
 Initial  Recommendation
 The  staff  does  not  recommend  changes  in  the  Part  65  rules  at  this  time.
 Comments
 USTA  maintains  that  Part  65  reporting  requirements  should  be  eliminated,  except  when  a  lower
 formula  adjustment  is  filed.  388  USTA  also  states  that  the  Commission  should  modify  Section
 65.702  to  measure  earnings  on  an  overall  interstate  basis.  389  USTA  further  proposes  that  the
 Commission  modify  section  65.  700  to  calculate  the  maximum  allowable  rate  of  return  on  all
 access  elements  in  the  aggregate  instead  of  for  each  access  category.  390  GSA  notes  that  the
 Common  Carrier  Bureau  initiated  a  proceeding  to  represcribe  the  interstate  rate  of  return  in
 October  1998.  GSA  recommends  that  the  Commission  conclude  that  proceeding  on  an  expedited
 basis.  391  In  its  reply  comments,  GSA  disputes  USTAs  assertion  that  Part  65  reporting
 requirements  should  be  eliminated.  392  GSA  states  that  ILECs,  under  price  cap  regulation,  realize
 supra-  competitive  returns,  which  is  a  reflection  of  their  market  power.  GSA  urges  the
 Commission  not  to  eliminate  the  annual  reporting  requirement  of  the  ILECs  rate  of  return.  393
 386  Amendment  of  Parts  65  and  69  of  the  Commissions  Rules  to  Reform  the  Interstate  Rate  of  Return
 Prescription  and  Enforcement  Process,  Report  and  Order,  10  FCC  Rcd  6788  (1995).
 387  Prescribing  the  Authorized  Unitary  Rate  of  Return  for  Interstate  Services  of  Local  Exchange  Carriers,
 Notice  Initiating  a  Prescription  Proceeding  and  Notice  of  Proposed  Rulemaking,  13  FCC  Rcd  20561
 (1998).
 388  USTA  comments  at  31.
 389  Id.
 390  Id.
 391  GSA  comments  at  28.
 392  GSA  Reply  Comments  at  16-  17.
 393  GSA  Reply  Comments  at  17.
260
 164
 Recommendation
 The  arguments  raised  by  commenters  do  not  persuade  us  to  alter  the  initial  staff  recommendation.
261
 165
 PART  68    CONNECTION  OF  TERMINAL  EQUIPMENT  TO  THE  TELEPHONE
 NETWORK
 Description
 Part  68  was  established  in  1974  as  the  result  of  a  court  decision  ruling  that  the  Bell  Operating
 Companies  could  not  bar  direct  connection  of  customer  premises  equipment  (CPE)  to  the  public
 switched  telephone  network  (PSTN),  so  long  as  the  CPE  would  not  cause  harm  to  the  PSTN.  394
 Part  68  requires  that  CPE  be  tested  to  show  that  it  will  not  harm  the  PSTN  or  carrier  personnel,
 and  then  registered  with  the  Commission.  Carriers  must  permit  the  free  connection  of  registered
 CPE  to  the  PSTN,  but  they  can  require  disconnection  of  unregistered  CPE  or  of  CPE  that  causes
 harm  to  the  PSTN  without  recourse  to  litigation.  Part  68  also  establishes  customers  right  to  use
 competitively  provided  inside  wiring.
 In  addition,  Part  68  implements  a  statutory  requirement  for  telephone  equipment  compatibility
 with  hearing  aids,  395  and  contains  two  consumer  protection  provisions  mandated  by  statute:  a
 requirement  that  all  fax  transmissions  include  source  labeling,  396  and  a  requirement  that  CPE
 support  equal  access  to  providers  of  operator  services.  397
 Part  68  is  organized  into  six  lettered  subparts:
 A    General
 B    Conditions  on  Use  of  Terminal  Equipment
 C    Registration  Procedures
 D    Conditions  for  Registration
 E    Complaint  Procedures
 F    Connectors
 Purpose
 The  Part  68  rules  are  designed  to  foster  competition  in  the  provision  of  CPE  and  inside  wiring,  by
 permitting  the  connection  of  competitively  provided  CPE  and  inside  wiring  to  the  PSTN.  Part  68
 also  ensures  that  the  connection  of  CPE  and  inside  wiring  does  not  harm  the  PSTN  or  injure
 personnel,  and  ensures  the  compatibility  of  hearing  aids  and  telephone  receivers  so  that  persons
 with  hearing  aids  can  use  virtually  all  telephones.
 Analysis
 Status  of  Competition
 The  market  for  CPE  and  the  market  for  the  installation  of  inside  wiring  in  single  family
 residences  are  fully  competitive.
 394  Hush-  A-  Phone  v.  United  States,  238  F.  2d  266  (D.  C.  Cir.  1956).
 395  Hearing  Aid  Compatibility  Act  of  1988,  47  U.  S.  C.    610.
 396  47  U.  S.  C.    227(  d)(  2).
 397  47  U.  S.  C.    227(  d)(  1).
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 166
 Advantages
 Part  68  fosters  competition  in  the  provision  of  CPE  and  inside  wiring,  increased  innovation  in
 CPE,  and  reduced  CPE  prices.  Part  68  prevents  harm  to  the  PSTN  and  carrier  personnel,  and
 requires  telephone  receivers  to  be  compatible  with  hearing  aids.
 Disadvantages
 Part  68  requirements  impose  additional  costs  on  manufacturers  and  may  delay  customer  access  to
 new  CPE.  The  Part  68  registration  program  also  uses  Commission  resources  that  might  otherwise
 be  available  for  other  priorities.
 Recent  Efforts
 The  Commission  is  taking  steps  to  streamline  the  Part  68  CPE  registration  process.  On  June  2,
 2000,  the  Commission  implemented  measures  to  permit  private  entities  to  register  CPE.  398  A
 Notice  of  Proposed  Rulemaking,  released  May  22,  2000  in  CC  Docket  No.  99-  216,  proposed
 entirely  privatize  CPE  registration;  to  consider  only  appeals;  and  to  privatize  the  development  of
 technical  criteria  that  CPE  must  meet  in  order  to  be  registered.  399  On  November  9,  2000,  the
 Commission  adopted  a  Report  and  Order  that  will  privatize  the  development  and  maintenance  of
 the  specific  engineering  criteria  that  ensure  customer  premise  equipment  does  not  cause  harms  to
 the  public  switched  telephone  network.  400  In  addition,  the  Commission  will  transfer  all
 responsibility  for  the  approval  of  terminal  equipment  to  industry.  Approval  shall  be
 accomplished  either  by  certification  bodies  of  by  declaration  of  the  suppliers  themselves.
 Initial  Recommendation
 The  staff  recommends  continuation  of  the  basic  Part  68  requirement  that  LECs  must  allow  the
 connection  of  Part  68-  compliant  CPE  and  inside  wiring  to  the  PSTN.  The  staff  recommends  that,
 in  accordance  with  the  Part  68  Streamlining  Order,  the  Commission  should  shift  its  focus
 towards  enforcing  its  general  requirement  that  terminal  equipment  shall  not  cause  harms  to  the
 network.
 398  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,  DA  00-  1223  (rel.  June  2,  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  24687  (1998).
 399  2000  Biennial  Regulatory  Review  of  Part  68  of  the  Commissions  Rules  and  Regulations,  CC  Docket
 No.  99-  216,  Notice  of  Proposed  Rulemaking,  FCC  00-  171  (rel.  May  22,  2000).
 400  2000  Biennial  Regulatory  Review  of  Part  68  of  the  Commissions  Rules  and  Regulations,  CC  Docket
 No.  99-  216,  Report  and  Order,  (adopted  Nov.  9,  2000)(  Part  68  Streamlining  Order).
263
 167
 Comments
 USTA  supports  staff  recommendations  and  agrees  that  the  private  sector  can  be  responsible  for
 the  development  of  new  technical  requirements,  and  the  maintenance  of  existing  technical
 requirements.
 Recommendation
 See  initial  recommendation.
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 168
 PART  69    ACCESS  CHARGES
 Description
 Part  69  implements  Sections  201  and  202  of  the  Communications  Act  of  1934,  as  amended,
 which  require  that  rates,  terms  and  conditions  for  telecommunications  services  be  just  and
 reasonable,  401  and  prohibit  unjust  or  unreasonable  discrimination.  402  The  Part  69  rules  establish
 the  rate  structure  for  access  charges  to  be  paid  by  interexchange  carriers  for  the  origination  and
 termination  of  long  distance  calls,  as  well  as  the  access  charges  to  be  paid  directly  by  end  users.  403
 These  rate  structure  rules  establish  the  access  charge  rate  elements  as  well  as  the  nature  of  the
 charges,  such  as  whether  they  are  assessed  on  a  per  minute  or  a  flat-  rate  basis.  The  Part  69  rules
 govern  how  rate-  of-  return  LECs  calculate  their  access  charge  rates.  The  Part  69  rules,  in
 conjunction  with  the  Part  61  price  cap  rules,  establish  the  degree  of  pricing  flexibility  available  to
 price-  cap  LECs.  Finally,  Part  69  provides  for  the  establishment  of  the  National  Exchange  Carrier
 Association  (NECA),  which  files  tariffs  on  behalf  of  many  of  the  smaller,  rate-  of-  return  LECs.
 Part  69  is  organized  into  eight  lettered  subparts:
 A    General
 B    Computation  of  Charges
 C    Computation  of  Charges  for  Price  Cap  Local  Exchange  Carriers
 D    Apportionment  of  Net  Investment
 E    Apportionment  of  Expenses
 F    Segregation  of  Common  Line  Element  Revenue  Requirement
 G    Exchange  Carrier  Association
 H    Pricing  Flexibility
 Purpose
 The  Part  69  rules  are  designed  to  protect  consumers  by  preventing  the  exercise  of  market  power
 by  incumbent  LECs  and  to  ensure  that  rates  are  just,  reasonable,  and  not  unjustly  or  unreasonably
 discriminatory.  The  requirement  for  a  certain  minimum  set  of  access  charge  rate  elements  and
 the  rate  calculation  rules  for  rate-  of-  return  carriers  also  greatly  reduce  the  resources  required  in
 the  tariff  review  process.
 Analysis
 Status  of  Competition
 Competition  in  the  local  exchange  and  exchange  access  markets  is  growing,  although  competitive
 local  exchange  carriers  still  serve  only  a  small  percentage  of  local  exchange  lines.  Competition
 for  business  customers  in  metropolitan  areas  has,  in  general,  developed  more  rapidly  than
 competition  for  residential  customers  or  customers  in  rural  areas.
 401  47  U.  S.  C.    201.
 402  47  U.  S.  C.    202.
 403  Local  exchange  carriers  subject  to  price  cap  regulation  must  offer  a  basic  set  of  access  rate  elements,
 but  are  free  to  offer  additional  access  services.
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 169
 Advantages
 The  Part  69  rules  protect  customers  from  the  exercise  of  market  power  by  incumbent  LECs.  The
 rules  reduce  the  Commission  resources  required  to  ensure  carrier  compliance  with  sections  201
 and  202  of  the  Act,  and  facilitate  analysis  of  access  charges  by  other  interested  parties.  The
 creation  of  NECA  facilitates  the  filing  of  access  charge  tariffs  by  smaller  rate-  of-  return  LECs  and
 reduces  the  administrative  costs.
 Disadvantages
 The  requirement  that  the  LECs  offer  a  minimum  set  of  access  charge  rate  elements  limits  their
 flexibility  and  could  over  time  reduce  their  ability  to  respond  to  competition.  The  pricing  rules
 for  both  price-  cap  and  rate-  of-  return  LECs  could  undermine  their  ability  to  respond  to
 competition  if  not  adjusted  over  time.  The  pooling  of  revenues  and  costs  under  the  NECA  tariffs
 reduces  the  incentives  of  individual  carriers  to  improve  efficiency.
 Recent  Efforts
 The  Commission  recently  addressed  the  access  charge  rules  applicable  to  price  cap  LECs  in  the
 CALLS  proceeding.  404  The  Commission  has  also  established  rules  to  permit  price  cap  LECs
 greater  pricing  flexibility  as  specified  competitive  milestones  are  met.  405  In  addition,  the
 Commission  is  seeking  comment  on  issues  relating  to  further  pricing  flexibility.  The
 Commission  has  also  initiated  a  rulemaking  proceeding  addressing  issues  relating  to  access
 charge  reform  for  rate-  of-  return  LECs.  406  The  Commission  is  considering  an  access  charge  and
 universal  service  reform  plan  for  rate-  of-  return  LECs  proposed  by  the  Multi-  Association  Group
 that  is  modeled  after  the  CALLS  plan  adopted  for  price  cap  LECs.  407  The  MAG  plan,  among
 other  things,  would  raise  subscriber  line  caps  for  rate-  of-  return  LECs  to  the  price  cap  LECs  caps,
 reduce  traffic  sensitive  rates,  establish  an  additional  explicit  universal  service  mechanism  for  rate-of-
 return  LECs  and  make  such  support  portable,  provide  some  pricing  flexibility,  and  add  an
 incentive  component  to  the  regulatory  process  for  rate-  of-  return  LECs.
 Initial  Recommendation
 In  the  text  of  the  September  Staff  Report,  the  Staff  recommended  that  the  Commission  consider
 simplifying  review  of  the  average  schedules  and  changing  the  schedule  for  NECA  Board
 elections.  The  staff  does  not  recommend  any  other  new  initiatives  relating  to  Part  69.  The
 ongoing  proceedings  addressing  issues  of  access  charge  reform  provide  an  appropriate  means  to
 address  competitive  developments  in  the  exchange  access  market.  We  also  note  that  the  inter-carrier
 compensation  proceeding  that  the  staff  recommends  in  the  text  of  this  report  could  result
 in  revisions  to  Part  69  that  would  address  anticipated  competitive  developments.  The  staff
 404  Access  Charge  Reform,  CC  Docket  No.  96-  262,  FCC  00-  193,  (rel.  May  31,  2000).
 405  Access  Charge  Reform,  14  FCC  Rcd  14221  (1999).
 406  Access  Charge  Reform  for  Incumbent  LECs  Subject  to  Rate-  of-  Return  Regulation,  13  FCC  Rcd  14236
 (1998).
 407  Improved  Regulation  of  Interstate  Services  of  Non-  Price  Cap  Incumbent  Local  Exchange  Carriers  and
 Interexchange  Carriers,  Notice  of  Proposed  Rulemaking,  CC  Docket  No.  00-  256,  FCC  00-  448  (rel.  Jan.  5,
 2001).
266
 170
 recommends  deleting  a  number  of  provisions  that  apply  only  to  past  time  periods,  or  are
 otherwise  no  longer  in  effect,  including  sections  69.116,  69.117,  69.126,  69.  127,  and  69.612.
 Comments
 As  noted  in  the  Part  61  appendix,  one  commenter  proposes  reorganizing  Parts  61  and  69  so  that,
 among  other  things,  Part  69  would  only  apply  to  access  charges  for  rate-  of-  return  LECs.  408
 WorldCom  opposes  this  recommendation.  409  Small  telephone  associations  support  the  staff
 recommendation  that  the  Commission  redouble  its  efforts  to  ensure  appropriate  accommodations
 for  small  telephone  companies,  but  assert  that  more  must  be  done  given  the  growing  competition
 in  areas  served  by  these  carriers.  410  Some  commenters  support  the  access  reform  plan  for  rate-  of-return
 LECs  developed  by  the  multiassociation  group.  Commenters  suggest  a  variety  of  other
 modifications  to  Part  69:  (1)  reexamine  the  price  cap  and  pooling  all  or  nothing  rules;  411  (2)
 create  transitional  rules  that  facilitate  the  move  from  rate  of  return  to  price  cap  regulation;  412  (3)
 delete  section  69.4,  thereby  eliminating  detailed  rate  element  codification  and  the  need  for  a
 public  interest  showing  to  establish  new  rate  elements;  413  and  (4)  streamline  the  access  structure
 into  four  categories  .  One  commenter  opposes  consolidating  the  access  structure  into  four
 elements.  414
 Several  commenters  concur  with  the  staff  recommendation  that  the  Commission  review
 intercarrier  compensation  arrangements  to  develop  a  comprehensive  system  that  would  be  more
 efficient  and  pro-  competitive  than  the  existing  myriad  of  rules.  415  OPASTCO  urges  the
 Commission  to  bifurcate  any  proceeding  on  intercarrier  compensation  to  ensure  the  revenue  base
 of  small  telephone  companies  and  the  availability  of  affordable  service  in  rural  areas.  416  NECA
 urges  the  Commission  to:  (1)  eliminate  the  requirement  for  annual  elections  for  NECA  board
 members  and  (2)  simplify  review  of  NECAs  average  schedule  formula  modifications  by
 eliminating  the  requirement  that  the  Commission  approve  NECAs  average  schedule  filings
 and  review  NECAs  average  schedule  formulas  in  conjunction  with  NECAs  annual  access  tariff
 filings.  417
 408  Comments  of  USTA  at  22.
 409  Reply  Comments  of  WorldCom  at  8.
 410  Comments  of  ITTA  at  2;  comments  of  OPASTCO  at  4.
 411  Comments  of  ITTA  at  14.
 412  Id.
 413  Comments  of  USTA  at  33.
 414  Reply  Comments  of  WorldCom  at  9.
 415  Comments  of  Sprint  at  1;  comments  of  USTA  at  2;  comments  of  GSA  at  1.
 416  Comments  of  OPASTCO  at  19.
 417  Comments  of  NECA  at  5.
267
 171
 Recommendation
 See  initial  recommendation.  In  addition,  the  staff  recommends  that  the  Commission  initiate
 proceedings  to  examine  rule  changes  relating  to  NECA.
268
 172
 PART  73,    RADIO  BROADCAST  SERVICES    THE  BROADCAST
 OWNERSHIP  RULES
 Description
 Statutory  authority  for  section  73.3555  of  the  Commissions  rules  is  found  in  sections  308,  309
 and  310  of  the  Communications  Act  of  1934,  as  amended.  Section  308  requires  the  filing  of  a
 written  application  for  licenses  and  construction  permits  (except  in  certain  narrow  enumerated
 cases)  and  states  that  such  applications  shall  set  forth  such  facts  as  the  Commission  may
 prescribe,  including  the  ownership  and  location  of  the  proposed  station.  Section  309  requires  the
 Commission,  except  in  the  case  of  certain  designated  applications,  to  determine  whether  the  grant
 of  an  application  would  serve  the  public  interest,  and  to  grant  the  application  upon  such  a  finding.
 Section  310(  d)  specifies  that  no  construction  permit  or  license  shall  be  transferred  without  first
 filing  an  application  with  the  Commission  and  without  the  Commissions  finding  that  the  public
 interest  would  be  served  thereby.  Section  73.3555  contains  the  rules  limiting  the  degree  of
 common  ownership  of  radio  and  television  stations.  It  also  contains  attribution  rules  that  specify
 when  interests  in  mass  media  facilities  will  be  considered  cognizable  for  purposes  of  applying  the
 mass  media  ownership  rules.  Section  73.658(  g)  sets  forth  the  dual  network  rule.  It  directly
 reflects  the  provisions  of  the  Telecommunications  Act  of  1996.
 Purpose
 The  broadcast  ownership  rules  are  intended  to  foster  diversity  and  competition  in  broadcasting.
 Analysis
 Status  of  Competition
 For  an  assessment  of  competition  in  broadcasting,  see  section  V  of  the  Report.
 Advantages
 The  Commission  is  precluded  from  regulating  the  content  of  programming  by  section  326  of  the
 Communications  Act  of  1934,  as  amended,  and  by  the  First  Amendment.  The  ownership  rules
 are  a  structural  method  of  ensuring  diversity  of  viewpoints  in  broadcasting.  The  rules  are  also
 intended  to  foster  competition  in  broadcasting.
 Disadvantages
 Broadcasters  allege  that  the  rules  restrict  mass  media  entities  in  competing  with  other  content
 providers  that  are  not  subject  to  ownership  rules  and  restrict  scale  efficiencies.
 Recent  Efforts
 Section  V  of  the  Report  details  the  Commissions  recent  reviews  of  the  ownership  rules,
 including  that  contained  in  the  recently  released  1998  Biennial  Regulatory  Review  Report.
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 173
 Initial  Recommendation
 Local  Radio  Ownership  Rule
 As  indicated  in  the  1998  Biennial  Regulatory  Review  Report,  the  existing  limitations  remain
 necessary  to  prevent  further  diminution  of  competition  and  diversity  in  the  radio  industry.
 However,  the  Commission  has  issued  a  notice  of  proposed  rulemaking  seeking  comment  on  its
 methodology  for  defining  radio  markets,  counting  the  number  of  stations  within  those  markets,
 and  counting  the  number  of  stations  that  a  party  owns  in  a  radio  market.
 Local  Television  Multiple  Ownership  Rule
 Because  the  local  television  multiple  ownership  rule  was  recently  relaxed  in  the  1999  Local
 Television  Ownership  Report  and  Order,  the  staff  believes  that  no  further  changes  are  warranted
 at  this  time.  Instead,  staff  will  monitor  the  effects  of  deregulatory  actions  on  the  marketplace  to
 determine  whether  further  changes  are  warranted.
 Radio-  Television  Cross-  Ownership  Rule
 Because  the  radio-  television  cross-  ownership  rule  was  recently  relaxed  in  the  1999  Local
 Television  Ownership  Report  and  Order,  the  staff  believes  that  no  further  changes  are  warranted
 at  this  time.  Staff  will  monitor  the  market  effects  of  deregulatory  actions  to  determine  whether
 further  changes  are  warranted.
 Daily  Newspaper/  Broadcast  Cross-  Ownership  Rule
 In  the  1998  Biennial  Regulatory  Review  Report,  the  Commission  stated  that  the  rule  should,  as  a
 general  matter,  be  retained  because  it  furthers  the  important  public  policy  goal  of  viewpoint
 diversity  and  continues  to  serve  the  public  interest.  Nonetheless,  situations  may  arise  where  the
 rule  may  not  be  necessary  in  the  public  interest  to  ensure  diversity  and  competition.  For  example,
 given  the  size  of  the  market  and  the  size  and  type  of  the  newspaper  and  broadcast  station
 involved,  there  may  be  sufficient  diversity  and  competition  even  if  a  newspaper/  broadcast
 combination  were  allowed.  The  Commission  will  therefore  examine  whether  the  rule  needs  to  be
 tailored  to  address  contemporary  market  conditions  and  will  issue  a  notice  of  proposed  rule
 making  seeking  comment  on  these  and  other  potential  modifications  of  the  rule.
 National  Television  Multiple  Ownership  Rule
 As  indicated  in  the  1998  Biennial  Regulatory  Review  Report,  recent  changes  to  the  local
 television  ownership  rule  should  be  observed  and  assessed  before  making  any  further  changes  to
 the  national  limit.  As  the  Commission  also  stated  in  the  1998  Biennial  Regulatory  Review
 Report,  the  signal  disparity  between  UHF  and  VHF  has  not  yet  been  eliminated,  so  the  UHF
 discount  should  be  retained.  The  signal  disparity  should  be  diminished  by  digital  television.
 Accordingly,  the  Commission  will  issue  a  notice  of  proposed  rulemaking  proposing  a  phased-  in
 elimination  of  the  discount  when  the  transition  to  digital  television  is  near  completion.
 Dual  Network  Rule
 As  indicated  in  the  1998  Biennial  Regulatory  Review  Report,  the  rule,  as  it  applies  to  UPN  and
 WB,  may  no  longer  be  necessary  in  the  public  interest.  The  Commission  has  issued  a  notice  of
 proposed  rulemaking  to  consider  eliminating  the  restriction  on  the  ownership  of  UPN  or  WB  by
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 one  of  the  four  established  networks  and  seeking  comment  on  what,  if  any,  safeguards  should  be
 imposed.  However,  significant  concerns  about  competition  and  diversity  remain,  so  that  the
 prohibition  against  any  mergers  of  the  four  major  networks  should  be  retained.  The  Comments  of
 WB  concerning  the  dual  network  rule  will  be  placed  in  the  record  of  that  proceeding.
 Experimental  Broadcast  Station  Multiple  Ownership  Rule  (74.132)
 The  Commission  has  issued  a  Notice  of  Proposed  Rulemaking  proposing  to  eliminate  the  rule.
 Cable/  Television  Cross-  Ownership  Rule  (76.501(  a))
 This  rule  is  not  contained  in  Part  73,  but  is  included  in  the  broadcast  ownership  rules  and  is
 intended  to  foster  competition  and  diversity.  As  indicated  in  the  1998  Biennial  Regulatory
 Review  Report,  the  rule  should  be  retained.
 Comments
 Section  73.3555(  d)-  Daily  Newspaper/  Broadcast  Cross-  Ownership  Rule
 Newspaper  Association  of  America  (NAA)  maintains  that  the  newspaper/  broadcast  cross-ownership
 rule  should  be  repealed.  According  to  NAA,  the  Commissions  1999  decision  to  relax
 broadcast  ownership  restrictions  eliminated  any  basis  for  continuing  to  maintain  an  absolute  ban
 on  newspaper/  broadcast  cross-  ownership,  and  the  policy  threatens  the  ability  of  newspapers  to
 continue  to  compete  effectively  against  other,  more  diversified  information  providers.  NAA  also
 argues  that  the  rule  does  not  serve  the  public  interest  and,  as  a  result,  the  Commission  is  obligated
 under  the  1996  Act  and  the  principles  of  administrative  and  First  Amendment  law  to  eliminate  the
 rule.  418
 Section  73.3555(  e)-  National  Television  Multiple  Ownership  Rule
 Fox  Television  Stations  (Fox)  and  Viacom  Inc  (Viacom),  in  comments  filed  in  MM  Docket  98-
 35,  the  1998  biennial  review  proceeding  and  incorporated  into  the  record  of  this  proceeding,
 argue  for  elimination  of  the  national  television  multiple  ownership  rule.  419  Fox  argues,  citing  a
 study  by  Michael  L.  Katz,  420  that  there  is  no  need  for  regulations  to  protect  viewers  and
 advertisers  from  the  exercise  of  station  or  network  market  power  because  broadcasters  face  much
 greater  competition  than  ever  before,  that  the  national  cap  distorts  investment  decisions  and
 drives  broadcasters  to  direct  more  of  their  resources  away  from  free  TV  and  toward  subscription
 services,  and  that  there  is  no  need  for  regulations  to  protect  stations  from  the  exercise  of  market
 418  Comments  of  NAA  at  pp.  6-  10  (incorporating  by  reference  its  Comments  and  its  Emergency  Petition
 for  Relief  filed  in  the  1998  biennial  review  proceeding).
 419  Emergency  Petition  for  Relief  and  Supplemental  Comments  of  Fox  Television  Stations,  Inc.,  MM
 Docket  No.  98-  35  (1999)  (Petition  of  Fox);  Comments  of  Viacom  Inc,  filed  November  19,  1999,  in  MM
 Docket  No.  98-  35.  Viacom  also  comments  on  the  dual  network  rule  in  its  filing.  These  comments  on  the
 dual  network  rule  will  be  included  in  the  record  of  the  pending  rule  making  proceeding  to  consider  relaxing
 the  dual  network  rule,  Notice  of  Proposed  Rule  Making  in  MM  Docket  No.  00-  108,  FCC  00-  213,  released
 June  20,  2000.
 420  Petition  of  Fox  at  Exhibit  A,  A  Comparative  Analysis  of  the  Broadcast  Television  National  Multiple
 Ownership  Rule  And  Cable  Horizontal  Ownership  Rules,  Michael  L.  Katz  (Nov.  18,  1999).
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 power  because  local  stations  have  increased  alternatives  to  affiliating  with  a  given  network.  421
 Further,  according  to  Fox,  the  rule  is  not  necessary  to  foster  diversity,  since  diversity  is
 implicated  only  at  the  local  level.  422  Fox  also  argues  that  the  recent  relaxation  of  the  cable
 horizontal  ownership  rules  reinforces  the  need  for  relaxation  of  the  national  ownership  cap.  423
 Viacom  agrees  with  Fox  and  argues  that  the  rule  raises  First  Amendment  concerns  by  prohibiting
 broadcasters  from  speaking  to  more  than  a  certain  number  of  listeners.  424  Further,  Viacom  argues
 that  the  support  of  a  company  like  Viacom/  CBS  is  necessary  to  help  the  financially  struggling
 UPN  network  to  survive  and  that  the  economic  health  of  numerous  stations  depends  on  affiliation
 with  the  UPN  network  and  would  be  hurt  if  UPN  is  forced  to  close  or  reduce  scale.  425  According
 to  Viacom,  the  35  percent  cap  threatens  UPNs  access  to  its  most  critical  assets,  its  owned  and
 operated  stations,  which  make  the  network  operation  viable  as  part  of  an  integrated  business.  426
 Congressional  representatives  have  forwarded  a  number  of  letters  to  the  Commission  from  local
 officers  of  the  Muscular  Dystrophy  Association  (MDA)  that  oppose  any  increase  in  the  35
 percent  national  cap.  427  The  MDA  officials  argue  that  raising  the  cap  would  be  catastrophic  to
 [their]  Telethon,  the  single  most  important  fund-  raising  vehicle  of  the  Association.  Specifically,
 the  officials  argue  more  network  owned  and  operated  local  stations  in  more  major  markets  will
 result  in  more  of  the  top  stations  in  these  markets  dropping  the  Telethon  so  as  not  to  pre-  empt
 their  owners  network  programming  Labor  Day  weekend.
 Section  76.501(  a)-  Cable/  Television  Cross-  Ownership  Rule
 The  WB  Television  Network  (WB)  asks  the  Commission  to  eliminate  the  cable/  television  cross-ownership
 rule.  428  WB  argues  that  if  the  Commission  affords  Viacom  relief  from  the  dual
 421  Petition  of  Fox  at  pp.  10-  11.
 422  Petition  of  Fox  at  pp.  23-  29.
 423  Petition  of  Fox  at  pp.  29-  34.
 424  Comments  of  Viacom  at  pp.  11-  25.  According  to  Viacom:  the  rule  distorts  the  flow  of  capital  and
 programming  resources  by  penalizing  over-  the-  air  broadcasters  and  artificially  redirecting  capital  to
 subscription  services;  the  fragmentation  of  the  audience  due  to  competition  among  a  wide  variety  of  media
 sources  has  negatively  impacted  ad  revenues,  highlighting  the  importance  of  economies  of  scale;  and  the
 rule  does  not  promote  competition  or  diversity  since  ownership  of  a  station  in  a  local  market  does  not  affect
 viewpoint  diversity  in  any  other  local  market.
 425  Comments  of  Viacom  at  pp.  33-  38.
 426  Comments  of  Viacom  at  p.  42.  The  Commission  has  approved  the  transfer  of  control  of  CBS
 Corporation  to  Viacom  and  given  Viacom  twelve  months  from  consummation  of  the  transaction  to  come
 into  compliance  with  the  national  TV  ownership  cap.  Memorandum  Opinion  and  Order,  File  Nos.
 BTCCT-  19991116ABA,  et  al.,  FCC  00-  155,  released  May  3,  2000.
 427  See  e.  g.,  Letter  to  Senator  John  Warner  from  Jane  Hunnicutt,  Regional  Director,  Muscular  Dystrophy
 Association  (Aug.  1,  2000);  Letter  to  Senator  Bob  Graham  from  Susan  E.  Reitman,  District  Director,
 Muscular  Dystrophy  Association  (July  17,  2000);  Letter  to  Senator  John  Breaux  from  Jeff  Huggins,  District
 Director,  Muscular  Dystrophy  Association  (Aug.  8,  2000).
 428  Supplemental  Comments  of  the  WB  Television  Network  in  MM  Docket  No.  98-  35,  In  the  Matter  of
 1998  Biennial  Regulatory  Review    Review  of  the  Commissions  Broadcast  Ownership  Rules  and  Other
 Rules  Adopted  Pursuant  to  Section  202  of  the  Telecommunications  Act  of  1996  (Jan.  27,  2000)
 (Supplemental  Comments  of  WB).  These  were  incorporated  into  the  record  of  this  proceeding  in  the  Staff
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 network  rule  and/  or  the  national  ownership  cap  to  facilitate  the  proposed  CBS/  UPN  combination,
 it  must  simultaneously  afford  WB  relief  the  cable/  television  cross-  ownership  rule  to  allow  it
 flexibility  to  explore  a  combination  or  strategic  alliance  with  an  established  broadcast  network.  429
 WB  argues  that  the  rule  is  no  longer  necessary  given  competition  in  markets  locally  and
 nationwide  and  that  elimination  of  the  rule  would  create  new  opportunities  for  localism,
 especially  in  smaller  markets,  as  co-  owned  television  stations  and  cable  systems  combine
 resources  to  produce  more  local  programming.  According  to  WB,  while  the  Commission
 considers  eliminating  the  ban,  parties  should  be  able  to  enter  into  cable/  TV  combinations  in  lieu
 of  taking  advantage  of  the  relaxed  duopoly  or  one-  to-  a-  market  rules  in  a  particular  DMA.  430  WB
 also  argues  that  the  cable/  TV  cross-  ownership  rule  violates  the  First  Amendment.  431
 Recommendation
 The  staff  reaffirms  the  initial  recommendations.  With  respect  to  the  newspaper/  broadcast  cross-ownership
 rule,  the  comments  of  NAA  will  be  placed  into  the  rule  making  proceeding  that  will  be
 initiated  to  consider  what  modifications  to  the  rule  are  warranted  to  address  contemporary  market
 conditions.  With  respect  to  the  national  television  ownership  cap,  the  comments  of  Fox  and
 Viacom  do  not  alter  the  staffs  initial  recommendations.  As  noted  by  the  Commission  in  the  1998
 Biennial  Regulatory  Review  Report,  the  effects  of  recent  changes  to  the  local  television
 ownership  rule  should  be  observed  and  assessed  before  altering  the  national  limits,  as  should  the
 trend  towards  increased  group  ownership  of  television  stations  nationwide  since  the  cap  was
 raised  from  25  percent  to  35  percent  in  1996.
 The  staff  does  not  believe  that  First  Amendment  concerns  necessitate  immediate  review  of  the
 national  television  ownership  cap.  Constitutional  arguments  similar  to  those  raised  by
 commenters  were  recently  rejected  by  the  D.  C.  Circuit  in  Time  Warner  Entertainment  Co.  v.
 United  States,  432  which  upheld  an  analogous  statutory  restriction  on  the  number  of  subscribers
 that  a  cable  operator  could  serve  nationwide.  As  the  Commission  stated  in  its  1998  Biennial
 Review  Report,  consolidation  of  ownership  of  television  stations  in  a  few  national  networks
 would  limit  the  diversity  of  voices  by  reducing  the  number  of  outlets  for  non-  network  broadcast
 programming.  433  Further,  the  Commission  stated  that  such  increased  consolidation  could
 diminish  the  valuable  role  played  by  independently  owned  affiliates  in  counter-  balancing  network
 power;  those  affiliates,  it  observed,  decide  whether  to  clear  network  programming  or  to  air
 instead  programming  from  other  sources  that  they  believe  better  serves  the  needs  and  interests  of
 the  local  communities  to  which  they  are  licensed.  434  The  staff  believes  that  the  national  cap
 continues  to  serve  the  important  governmental  interests  identified  by  the  Commission  of
 Report.  They  will  also  be  incorporated  into  the  record  of  the  proceeding  established  to  examine  relaxation
 of  the  dual  network  rule.
 429  Comments  of  WB  at  pp.  4-  6.
 430  Comments  of  WB  at  pp.  19-  23.
 431  Comments  of  WB  at  pp.  23-  26.
 432  Time  Warner  Entertainment  Co.  v.  United  States,  211  F.  3d  1313  (D.  C.  Cir.  2000),  petition  for  cert.
 Pending.
 433  15  FCC  Rcd  11058,  11074-  75.
 434  Id.
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 promoting  diversity  of  programming  and  fostering  programming  responsive  to  local  interests  and
 needs.  The  court  in  Time  Warner  held  these  same  interests  to  be  important,  and  upheld  similar
 limits  in  the  cable  context  as  a  prophylactic  measure  that  avoids  the  burden  of  individual
 proceedings..  435  The  Commission  has  even  broader  discretion  to  impose  limits  to  foster
 diversity  and  local  programming  in  the  broadcast  industry  than  in  the  cable  industry.  436
 With  respect  to  the  dual  network  rule,  the  comments  of  Viacom  will  be  placed  into  the  record  of
 our  rule  making  to  relax  the  rule.  With  respect  to  the  cable/  television  cross-  ownership  rule,  the
 comments  of  WB  do  not  alter  the  staff  recommendations.  As  the  Commission  noted  in  the  1998
 Biennial  Regulatory  Review  Report,  the  television  industry  has  just  begun  adapting  to  the  recent
 relaxation  of  the  local  television  ownership  rule.  Further  consolidation  of  local  television
 broadcast  stations  will  reduce  the  number  of  independent  voices  providing  local  news  and  public
 affairs  programming.  As  the  Commission  further  noted,  prudence  dictates  that  the  Commission
 monitor  and  ascertain  the  impact  of  these  changes  on  diversity  and  competition  before  relaxing
 the  cable/  TV  cross-  ownership  rule.
 The  staff  does  not  believe  that  First  Amendment  concerns  necessitate  immediate  review  of  the
 rule.  The  rule  is  a  content-  neutral  restriction  that  furthers  important  governmental  interests.  As
 noted  above,  the  D.  C.  Circuit  in  Time  Warner  recently  rejected  First  Amendment  challenges  to
 restrictions  on  cable  operators  that  were  designed  to  promote  diversity  and  competition.  The
 cable/  TV  cross-  ownership  rule  is  similarly  designed  to  limit  concentration  of  control  over  local
 media  and  foster  diverse  sources  of  programming.
 435  211  F.  3d  at  1320.
 436  See  Federal  Communications  Commn  v.  National  Citizens  Committee  for  Broadcasting,  436  U.  S.  775,
 799  (1978)  (noting  that  the  physical  limitations  of  broadcast  frequencies  make  government  allocation  and
 regulation  essential).
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 PART  80    STATIONS  IN  THE  MARITIME  SERVICES,  SUBPARTS  J  (PUBLIC
 COAST  STATIONS)  AND  Y  (COMPETITIVE  BIDDING  PROCEDURES)
 Description
 Part  80  437  contains  licensing,  technical,  and  operational  rules  for  radio  stations  in  the  maritime
 services,  which  provide  for  the  distress,  operational,  and  personal  communications  needs  of
 vessels  at  sea  and  on  inland  waterways.  438  Maritime  frequencies  are  allocated  internationally  by
 geographic  region  and  type  of  communication  in  order  to  facilitate  interoperable  radio
 communications  among  vessels  of  all  nations  and  stations  on  land  worldwide.  Land  stations  in
 the  maritime  services  are  the  links  between  vessels  at  sea  and  activities  on  shore.  They  are  spread
 throughout  the  coastal  and  inland  areas  of  the  United  States  to  carry  radio  signals  and  messages  to
 and  from  ships.
 Staffs  review  of  Part  80  in  this  report  focuses  on  the  rules  affecting  public  coast  stations
 (subparts  J  and  Y),  which  are  unique  in  the  Maritime  Services  in  that  they  are  used  for
 commercial  applications,  are  licensed  on  a  geographic  exclusive-  use  basis,  and  are  subject  to
 licensing  by  the  Commissions  competitive  bidding  procedures.  Public  coast  stations  are  CMRS
 providers  that  allow  ships  to  send  and  receive  messages  and  to  interconnect  with  the  public
 switched  telephone  network.  439
 Purpose
 The  purpose  of  the  Part  80  rules  is  to  establish  the  mechanism  for  allocating  licenses,  to  ensure
 spectrum  use  that  provides  public  coast  licensees  with  maximum  flexibility  while  concurrently
 respecting  the  unique  nature  of  maritime  spectrum,  and  to  prevent  interference.
 Analysis
 Status  of  Competition
 While  competition  in  the  CMRS  industry  as  a  whole  has  increased,  competition  is  generally  less
 robust  in  the  public  coast  services.  This  is  due  in  part  to  the  unique  nature  of  maritime
 communications  and  to  the  predominant  safety-  of-  life  communications  responsibilities  required
 of  licensees.  Other  CMRS  services  (e.  g.  cellular  and  PCS)  can  serve  as  substitutes  for
 commercial  ship-  to-  shore  communications,  particularly  for  vessels  operating  near  the  coast  and
 on  inland  waterways.  Large-  scale  public  coast  operators  (MariTel)  are  becoming  predominant  in
 VHF  Band  Public  Coast  Stations  (VPC)  as  many  small  and  independent  licensees  leave  the
 business.  Competition  is  stronger  in  Automated  Maritime  Telecommunications  System  Stations
 (AMTS)  than  on  the  high  seas  band.
 437  47  C.  F.  R.  Part  80.
 438  See  Amendment  of  the  Commissions  Rules  Concerning  Maritime  Communications,  Second  Report  and
 Order  and  Second  Further  Notice  of  Proposed  Rulemaking,  12  FCC  Rcd  16949  (1997)  (Second  Further
 Notice).
 439  Amendment  of  the  Commissions  Rules  Concerning  Maritime  Communications,  Third  Report  and
 Order  and  Memorandum  Opinion  and  Order,  13  FCC  Rcd  19853  (1998)  (Maritime  Third  Report  and
 Order).
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 Advantages
 The  Subpart  J  rules  promote  the  safety  of  life  and  property  at  sea,  while  concurrently  allowing
 licensees  compete  as  CMRS  providers.  The  rules  allow  partitioning  and  disaggregation,  and
 permit  VPC  licensees  to  utilize  capacity  not  needed  for  maritime  service  to  provide  other  types  of
 services.  440
 The  subpart  Y  competitive  bidding  rules  allow  the  efficient  licensing  of  spectrum.  Use  of  auction
 procedures  allows  for  swift  licensing,  and  is  likely  to  result  in  award  of  licenses  to  those  entities
 that  value  the  spectrum  the  most  and  will  use  it  most  efficiently.  Auction  rules  also  enable  the
 Commission  to  recover  a  portion  of  the  value  of  the  spectrum  for  the  benefit  of  the  public.
 Disadvantages
 Because  of  the  unique  characteristics  of  the  maritime  services,  public  coast  station  licensees  are
 subject  to  responsibilities  that  other  CMRS  providers  do  not  face.  The  international  allocation  of
 maritime  frequencies  and  the  associated  statutes,  treaties,  and  agreements  limit  the  flexibility  of
 use  of  maritime  frequencies.  Competition  in  AMTS  is  limited  to  two  competitors  at  any  location
 and  disaggregation  is  not  currently  available  for  these  licensees.  There  are  additional
 administrative  burdens  associated  with  the  competitive  bidding  of  public  coast  station  licenses,
 including  filing  and  reporting  requirements,  as  well  as  the  cost  of  maintaining  staff  and  electronic
 resources  to  participate  in  auctions.  Nevertheless,  the  delays  associated  with  this  process  are
 significantly  fewer  than  those  historically  associated  with  licensing  by  lottery  or  hearing.
 Recent  Efforts
 In  the  1998  Maritime  Third  Report  and  Order,  the  Commission  converted  the  licensing  of  VHF
 public  coast  (VPC)  stations  to  a  geographic  basis,  in  order  to  provide  opportunities  for  the
 development  of  competitive  new  services,  streamline  licensing  procedures,  promote  technological
 innovation,  and  enhance  regulatory  symmetry  between  maritime  CMRS  providers  and  other
 CMRS  providers.  441  An  auction  of  VPC  spectrum  was  conducted  in  December  1998  and  26  VPC
 licenses  were  granted  in  May  1999.  In  the  2000  Maritime  Fourth  report  and  Order  and  Third
 Further  Notice,  the  Commission  revised  its  service  rules  for  AMTS  and  high  seas  public  coast
 stations  to  provide  licensees  greater  construction  and  technical  flexibility,  and  proposed  to
 convert  AMTS  to  geographic  licensing.  442  In  a  separate  proceeding,  the  Commission  granted  a
 request  to  forbear  from  enforcing  station  identification  requirement  with  respect  to  AMTS
 stations,  because  the  requirement  is  unnecessary  and  impeded  AMTS  providers  from  competing
 with  non-  maritime  CMRS  providers.  443  Finally  the  Commission  has  proposed  to  consolidate,
 revise,  and  streamline  the  Part  80  rules  to  address  new  international  maritime  requirements,
 440  See  Second  Further  Notice,  12  FCC  Rcd  at  16965.
 441  Maritime  Third  Report  and  Order,  13  FCC  Rcd  at  19855-  56.
 442  Amendment  of  the  Commissions  Rules  Concerning  Maritime  Communications,  Fourth  Report  and
 Order  and  Third  Further  Notice  of  Proposed  Rule  Making,  PR  Docket  No.  920257,  FCC  00-  370,  paras.  1-  2
 (rel.  Nov.  16,  2000).
 443  RegioNet  Wireless  License,  LLC,  Order,  15  FCC  Rcd  16119,  16121-  22  (2000).
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 180
 improve  the  operational  ability  of  all  users  of  marine  radios,  and  remove  unnecessary  or
 duplicative  requirements.  444
 Initial  Recommendation
 The  staff  recommend  that  only  nonsubstantive  revisions  be  made  to  the  structure  of  the  Part  80
 rules,  to  simplify  and  provide  clarity  to  licensees  and  applicants.
 Comments
 None
 Recommendation
 See  initial  recommendation.
 444  Amendment  of  Parts  13  and  80  of  the  Commissions  Rules  Concerning  Maritime  Communications,
 Notice  of  Proposed  Rulemaking  and  Memorandum  Opinion  and  Order,  WT  Docket  No.  00-  48,  15  FCC
 Rcd  5942,  5943  (2000).
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 PART  90    PRIVATE  LAND  MOBILE  RADIO  SERVICES.
 Description
 Part  90  contains  22  subparts.  Some  of  these  subparts  apply  generally  to  all  Part  90  licensees,
 while  others  establish  licensing,  technical,  and  operational  rules  for  specific  services.  445  Part  90  446
 contains  licensing,  technical,  and  operational  rules  for  the  group  of  mobile  services  historically
 described  as  private  land  mobile  radio  services  (PLMRS).  Services  regulated  under  this  rule
 part  include  commercial  services  such  as  Specialized  Mobile  Radio  (SMR)  and  private  carrier
 paging  (PCP),  non-  commercial  services  such  as  public  safety,  and  services  that  are  used  by
 utilities,  transportation  companies,  and  other  businesses  for  both  commercial  and  private  internal
 purposes.
 With  the  passage  of  the  Omnibus  Budget  Reconciliation  Act  of  1993  (OBRA),  447  Congress
 reclassified  some  PLMRS  (e.  g.,  800  MHz  and  900  MHz  SMR,  PCP,  and  some  220  MHz  and
 Business  Radio  services)  as  CMRS  and  required  providers  in  these  services  to  be  regulated  as
 common  carriers.  448  The  regulatory  status  of  non-  CMRS  Part  90  services  were  unaffected  by
 OBRA,  and  these  services  continue  to  be  classified  as  private  services.
 In  general,  the  rules  in  this  part:  (1)  specify  the  frequency  bands  in  which  each  service  operates;
 (2)  define  the  service  area  of  licenses  in  each  frequency  band;  (3)  establish  minimum  construction
 or  coverage  requirements  for  licensees;  and  (4)  define  technical  limits  on  operation  (e.  g.,  antenna
 height,  transmitter  power)  to  prevent  interference.  For  certain  CMRS  services,  Part  90  also
 contains  subparts  dealing  with  the  auction  and  award  of  licenses,  449  although  many  of  these  rules
 have  since  been  consolidated  in  Part  1.
 The  analysis  of  Part  90  in  this  report  focuses  on  those  subparts  that  affect  CMRS  providers:
 Subpart  I  -  General  Technical  Standards
 Subpart  L  -  Authorizations  in  470-  512  MHz  Band
 Subparts  M,  X  -  Intelligent  Transportation  Systems  Radio  Service/  Auction  Rules
 Subpart  P  -  Paging  Operations
 Subparts  S,  U,  V  -  800/  900  MHz  SMR  Service/  Auction  Rules
 Subparts  T,  W  -  220  MHz  Service/  Auction  Rules
 Purpose
 The  purposes  of  the  Part  90  rules  are  to  establish  basic  ground  rules  for  assignment  of  spectrum  in
 Part  90  services,  to  ensure  efficient  spectrum  use  by  licensees,  and  to  prevent  interference.
 445  See,  e.  g.,  Part  90,  subpart  L  (  Authorization  and  Use  of  Frequencies  in  the  470-  512  MHz  Band).
 446  47  C.  F.  R.  Part  90.
 447  Omnibus  Budget  Reconciliation  Act  of  1993,  Pub.  Law  No.  103-  66.  107  Stat.  312  (largely  codified  at
 47  U.  S.  C.    332  et  seq.)  (1993  Budget  Act  or  OBRA).
 448  Implementation  of  Sections  3(  n)  and  332  of  the  Communications  Act  Regulatory  Treatment  of  Mobile
 Services,  Second  Report  and  Order,  9  FCC  Rcd  1411  (1994)  (CMRS  Second  Report  and  Order).
 449  See,  e.  g.,  Part  90,  subpart  U  (  Competitive  Bidding  Procedures  for  the  900  MHz  Specialized  Mobile
 Radio  Service).
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 182
 Analysis
 Status  of  Competition
 As  detailed  in  the  Fifth  Competition  Report,  Part  90  CMRS  providers  operate  in  an  environment
 that  is  marked  by  significant  and  increasing  competition  in  mobile  telephony,  paging/  messaging,
 and  mobile  data.  450
 Advantages
 The  Part  90  rules  provide  a  clear,  predictable  structure  for  the  assignment  and  use  of  spectrum.  In
 the  Part  90  frequency  bands  that  are  licensed  exclusively  to  CMRS  providers  (e.  g.,  SMR),  auction
 rules  promote  efficient  licensing  of  spectrum  to  those  entities  that  value  it  the  most.  In  other
 bands,  site-  specific  licensing  and  frequency  coordination  are  used  to  promote  efficient  spectrum
 use.
 Disadvantages
 The  Part  90  rules  impose  limited  administrative  and  technical  burdens  that  are  inherent  to  the
 licensing  process  and  that  are  necessary  for  compliance  with  technical  and  operational  rules.
 Recent  Efforts
 The  Commission  has  recently  made  changes  to  Part  90  in  several  rulemaking  proceedings,  as
 described  in  greater  detail  within  this  Staff  Report.  In  the  Universal  Licensing  proceeding,  the
 Commission  eliminated  many  of  the  service-  specific  licensing  rules  in  Part  90  as  part  of  its
 consolidation  of  all  wireless  licensing  rules  into  Part  1.  451  The  Commission  also  made  numerous
 changes  to  Part  90  rules  in  the  recently  adopted  Report  and  Order  in  the  Part  90  Biennial
 Regulatory  Review  proceeding.  452
 Initial  Recommendation
 The  staff  concludes  that  significant  modification  or  repeal  of  the  Part  90  rules  is  not  necessary  at
 this  time.  However,  where  modifications  could  be  made  to  streamline  the  rules  in  specific
 subparts,  the  staff  has  so  noted  in  the  detailed  analysis  of  those  Part  90  subparts.
 450  Fifth  Competition  Report,  supra,  at  9-  27,  36-  63.
 451  Biennial  Regulatory  Review    Amendment  of  Parts  0,  1,  13,  22,  24,  26,  27,  80,  87,  90,  95,  97  and  101
 of  the  Commissions  Rules  to  Facilitate  the  Development  and  Use  of  the  Universal  Licensing  System  in  the
 Wireless  Telecommunications  Services,  Report  and  Order,  13  FCC  Rcd  21027  (1998);  Memorandum
 Opinion  and  Order  on  Reconsideration,  14  FCC  Rcd  11145  (1998).
 452  In  the  Matter  of  1998  Biennial  Regulatory  Review    47  C.  F.  R.  Part  90  -  Private  Land  Mobile  Radio
 Services,  WT  Docket  No.  98-  182,  RM-  9222,  Report  and  Order  and  Further  Notice  of  Proposed  Rule
 Making,  FCC  00-  235  (rel.  July  12,  2000).
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 183
 Comments
 TIA  states  that  the  Commission  should  amend  Sections  90.207  (  Types  of  Emissions)  and
 90.210  (  Emission  Masks)  for  the  purpose  of  harmonizing  them  with  the  International
 Telecommunications  Union  (ITU)  Radio  Regulations.  453
 Recommendation
 No  changes.  The  staff  agrees  that  an  internal  review  should  be  undertaken  to  consider  how  the
 Commissions  rules  should  be  amended  to  harmonize  them  with  those  of  the  ITU  and  to  set  out  a
 schedule  for  making  the  necessary  changes.
 453  See  47  C.  F.  R.  90.  210.
280
 184
 PART  90,  SUBPART  L    REGULATIONS  FOR  AUTHORIZATION  AND  USE  OF
 FREQUENCIES  IN  THE  470-  512  MHZ  BAND
 Description
 Part  90,  subpart  L  454  governs  the  authorization  and  use  of  the  470-  512  MHz  band  by  both
 commercial  and  private  land  mobile  stations.  In  1997,  the  Commission  created  a  General  Access
 Pool  to  permit  greater  flexibility  and  foster  more  effective  and  efficient  use  of  the  470-  512  MHz
 band.  Under  current  rules,  all  unassigned  channels,  including  those  that  subsequently  become
 unassigned,  are  considered  to  be  in  the  General  Access  Pool  and  are  available  to  all  eligible
 licensees  on  a  first-  come,  first-  served  basis.  If  a  channel  is  assigned  in  an  urbanized  area,
 however,  subsequent  authorizations  on  that  channel  will  only  be  granted  to  users  from  the  same
 category.  455
 In  general,  the  rules  in  subpart  L:  (1)  specify  the  frequencies  available  for  assignment  in  the  470-
 512  MHz  band;  (2)  define  the  location  of  stations  and  service  area  of  licenses  in  each  frequency
 block;  (3)  establish  minimum  loading  requirements  for  licensees;  and  (4)  define  technical  limits
 on  operation  (e.  g.,  antenna  height,  transmitter  power)  to  prevent  interference.  In  accordance  with
 these  rules,  new  applicants  may  apply  for  only  one  channel  at  a  time.  456  Licensees  are  required  to
 show  that  any  assigned  channels  in  this  band  in  a  particular  urbanized  area  are  at  full  capacity
 before  they  can  be  assigned  additional  470-  512  MHz  channels  in  that  area.  457  The  rules  in  this
 subpart  also  specify  the  minimum  allowable  distance  between  co-  channel  stations.  458  For
 purposes  of  loading  requirements,  licensees  in  the  470-  512  MHz  band  are  divided  into  two
 groups:  the  Public  Safety  Pool  and  the  Industrial/  Business  Pool.  459  After  loading  a  channel  to  full
 capacity,  a  licensee  may  apply  for  another  channel.  460  Current  licensees  may  use  existing  loading
 to  satisfy  this  requirement  and  apply  for  more  than  one  channel  at  one  time.  Licensees  that  are
 operating  above  full  capacity  may  use  those  units  to  qualify  for  additional  channels.
 Purpose
 The  purposes  of  the  subpart  L  rules  are  to  establish  basic  ground  rules  for  assignment  of  spectrum
 in  the  470-  512  MHz  service,  to  ensure  efficient  spectrum  use  by  licensees,  and  to  prevent
 interference  with  UHF  television  stations  operating  on  the  shared  frequencies.
 454  47  C.  F.  R.  Part  90,  subpart  L.
 455  The  seven  categories  of  eligible  users  are:  (1)  Public  safety;  (2)  Power  and  telephone  maintenance
 licensees;  (3)  Special  industrial  licensees;  (4)  Business  licensees;  (5)  Petroleum,  forest  products,  and
 manufacturers  licensees;  (6)  Railroad,  motor  carrier,  and  automobile  emergency  licensees;  and  (7)  Taxicab
 licensees.  47  C.  F.  R.    90.  311.
 456  47  C.  F.  R.    90.  311.
 457  Id.
 458  47  C.  F.  R.    90.  307.
 459  47  C.  F.  R.    90.  313(  a).
 460  47  C.  F.  R.    90.  313(  c).
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 185
 Analysis
 Status  of  Competition
 Because  land  mobile  use  of  the  470-  512  MHz  band  is  limited  by  the  sharing  of  the  band  with
 broadcast  channels  14-  20,  service  in  the  band  has  been  narrowly  geared  to  industrial  and  public
 safety  use  in  a  limited  number  of  urban  locations.  Demand  for  these  channels  to  provide
 commercial  services  to  consumers  has  been  largely  absent.
 Advantages
 The  subpart  L  rules  provide  a  clear,  predictable  structure  for  the  assignment  and  use  of  spectrum.
 Site-  specific  licensing  and  frequency  coordination  are  used  to  promote  efficient  spectrum  use.
 Disadvantages
 The  subpart  L  rules  impose  limited  administrative  and  technical  burdens  that  are  inherent  to  the
 licensing  process  and  are  necessary  for  compliance  with  technical  and  operational  rules.  Because
 the  band  is  shared  with  television  broadcast  stations,  the  technical  burden  imposed  on  licensees  to
 prevent  interference  with  co-  channel  operations  is  somewhat  greater  than  in  other  bands  allocated
 exclusively  to  wireless  services.
 Recent  Efforts
 In  the  Second  Report  and  Order  in  the  Refarming  proceeding,  the  Commission  authorized
 centralized  trunking  in  the  470-  512  MHz  band  if  a  licensee  has  an  exclusive  service  area  or
 obtains  consent  from  all  co-  channel  and  adjacent  channel  licensees  and  frequency  coordination  is
 obtained.  461
 Initial  Recommendation
 The  staff  concludes  that  significant  modification  or  repeal  of  the  subpart  L  rules  is  unnecessary  at
 this  time.
 Comments
 None
 Recommendation
 See  initial  recommendation.
 461  See  Replacement  of  Part  90  by  Part  88  to  Revise  the  Private  Land  Mobile  Radio  Services  and  Modify
 the  Policies  Governing  Them,  Report  and  Order,  10  FCC  Rcd  10076  (1995);  Memorandum  Opinion  and
 Order,  11  FCC  Rcd  17676  (1996);  Second  Report  and  Order,  FCC  97-  61  (rel.  Mar.  12,  1997).  See  47
 C.  F.  R.    90.187(  b).  The  FCC  has  recognized  two  types  of  trunking:  centralized  and  decentralized.  A
 centralized  trunked  system  uses  one  or  more  control  channels  to  transmit  channel  assignment  information
 to  the  mobile  radios.  In  a  decentralized  trunked  system,  the  mobile  radios  scan  the  available  channels  and
 find  one  that  is  clear.
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 186
 PART  90,  SUBPARTS  M  (INTELLIGENT  TRANSPORTATION  SYSTEMS  RADIO  SERVICE)  AND  X  (COMPETITIVE  BIDDING  RULES  FOR  THE  LOCATION
 AND  MONITORING  SERVICE)
 Description
 Part  90,  subpart  M  462  contains  licensing,  technical,  and  operational  rules  for  the  Intelligent
 Transportation  Systems  (ITS)  radio  service.  ITS  radio  service  consists  of  two  sub-  categories:  the
 Location  and  Monitoring  Service  (LMS)  and  the  Dedicated  Short  Range  Communications
 Service  (DSRCS).
 Location  and  Monitoring  Systems  (LMS)
 LMS  systems  are  used  for  such  functions  as  vehicle  tracking  and  location,  automated  toll
 collection,  and  other  communications  functions  related  to  vehicles.  In  general,  the  subpart  M
 rules:  (1)  specify  the  frequency  bands  in  which  LMS  licensees  operate;  (2)  define  the  service  area
 of  LMS  licenses  in  each  frequency  band;  (3)  establish  minimum  construction  or  coverage
 requirements  for  LMS  licensees;  and  (4)  define  technical  limits  on  operation  (e.  g.,  antenna  height,
 transmitter  power)  to  prevent  interference.  463  The  rules  also  establish  limitations  on  LMS
 systems  interconnection  with  the  public  switched  network  and  set  forth  a  number  of  technical
 requirements  intended  to  ensure  successful  coexistence  of  all  the  services  authorized  to  operate  in
 the  band.
 The  LMS  competitive  bidding  rules,  set  forth  in  Part  90,  subpart  X,  464  states  that  the  auction  of
 LMS  licenses  is  generally  subject  to  the  competitive  bidding  procedures  set  forth  in  Part  1,
 subpart  Q.  There  are  service-  specific  rules  defining  designated  entities  in  LMS.  LMS  licenses
 were  auctioned  by  the  Commission  in  1999.
 Dedicated  Short  Range  Communications  Service  (DSRCS)
 In  October  1999,  the  Commission  allocated  75  MHz  of  spectrum  for  use  by  DSRCS  systems
 operating  in  the  Intelligent  Transportation  System  radio  service.  465  The  Commission  amended
 subpart  M  by  adding  technical  rules  establishing  power,  emission,  and  frequency  stability  limits
 for  DSRCS  operations.  The  Commission  has  deferred  consideration  of  DSRCS  licensing  and
 service  rules  and  spectrum  channelization  plans  to  a  later  proceeding,  pending  promulgation  of
 standards  by  the  Department  of  Transportation.
 462  47  C.  F.  R.  Part  90,  subpart  M.
 463  The  definition  of  LMS  also  includes  existing  Automatic  Vehicle  Monitoring  operations  below  512
 MHz.  Unlike  other  LMS  operations,  LMS  systems  below  512  MHz  may  neither  offer  service  to  the  public
 nor  provide  service  on  a  commercial  basis.  See  LMS  Report  and  Order,  10  FCC  Rcd  at  4738,    86.
 464  47  C.  F.  R.  Part  90,  subpart  X.
 465  Amendment  of  Parts  2  and  90  of  the  Commissions  Rules  to  Allocate  the  5.  850-  5.925  GHz  Band  to  the
 Mobile  Service  for  Dedicated  Short  Range  Communications  of  Intelligent  Transportation  Services,  Report
 and  Order,  13  FCC  Rcd  14321  (1999).
283
 187
 Purpose
 The  purpose  of  Part  90,  subpart  M  is  to  provide  a  regulatory  framework  that  allows  entities  to
 effectively  deploy  radio-  based  devices  and  systems  to  enhance  safety  of  life  and  protection  of
 property  on  the  nations  highways,  railways  and  other  transportation  corridors,  without  causing
 harmful  interference  to  other  radio  services.
 Analysis
 Status  of  Competition
 The  services  provided  by  LMS  operators,  such  as  vehicular  tracking,  tend  to  be  niche  services,
 and  competition  in  these  sectors  appears  to  be  more  limited  than  in  other  types  of  wireless
 services.  In  addition,  many  LMS  licensees  are  state  and  local  government  entities  rather  than
 commercial  enterprises.  The  number  of  LMS  licensees  has  increased,  however,  since  the
 Commission  completed  its  auction  of  multilateration  LMS  licenses  in  March  1999.  As  these
 licensees  begin  to  deploy  services,  the  level  of  competition  in  LMS  could  increase.
 Advantages
 The  Part  90,  subpart  M  rules  provide  a  clear,  predictable  structure  for  the  assignment  and  use  of
 spectrum.  Geographic  area  licensing  of  multilateration  systems  minimizes  the  administrative
 burden  involved  in  obtaining  a  license  and  thus  avoids  undue  delay  in  the  authorization  of  new
 services  to  the  public.  Minimal  technical  standards  facilitate  the  introduction  of  new
 technologies.
 Disadvantages
 The  Part  90,  subpart  M  rules  impose  some  administrative  burdens  inherent  to  the  licensing
 process  and  that  are  necessary  for  compliance  with  technical  and  operational  rules.  The
 provisions  relating  to  secondary  use  of  the  LMS  band  by  Part  15  users  and  amateur  licensees
 impose  some  additional  technical  burdens  on  LMS  licensees  to  avoid  and  resolve  interference
 between  their  systems  and  these  other  uses.
 Recent  Efforts
 Aside  from  the  DSRCS  proceeding  discussed  above,  the  Commission  has  not  significantly
 revised  the  Part  90,  subpart  M  rules  since  the  LMS  auction.
 Initial  Recommendation
 The  staff  does  not  recommend  any  modification  or  repeal  of  the  rules  at  this  time.  The  staff
 recommends  continuing  to  monitor  developments  in  order  to  determine  whether  any  additional
 rule  modifications  are  necessary  to  foster  competition.
 Comments
 None
284
 188
 Recommendation
 See  initial  recommendation.
285
 189
 PART  90,  SUBPART  P      PAGING  OPERATIONS  IN  THE  929  MHZ  BAND
 Description
 Part  90,  subpart  P  contains  licensing,  technical,  and  operational  rules  for  paging  operations  in  the
 929  MHz  Band.  This  rule  part  includes  services  such  as  commercial  paging  and  private  carrier
 paging  (PCP).  Licensees  may  operate  on  exclusive  channels  or  designated  shared  channels  on  a
 CMRS  or  PMRS  basis.
 In  general,  the  rules  in  this  subpart  (1)  specify  the  exclusive  channels  and  shared  channels;  and
 (2)  define  technical  limits  on  operation  (e.  g.,  antenna  height,  transmitter  power)  to  prevent
 interference.  For  paging  operations  on  exclusive  channels,  the  licensees  are  subject  to  Part  22  of
 the  Commissions  rules  regarding  the  Paging  and  Radiotelephone  Service.
 Purpose
 The  purposes  of  the  Part  90,  subpart  P  rules  are  to  establish  basic  ground  rules  for  assignment  and
 use  of  exclusive  or  shared  channels  in  the  929  MHz  Band  and  to  prevent  interference.
 Analysis
 Status  of  Competition
 As  detailed  in  the  Fifth  Competition  Report,  Part  90  paging  providers  operate  in  an  environment
 that  is  marked  by  significant  and  increasing  competition  in  mobile  telephony,  paging/  messaging,
 and  mobile  data.  466
 Advantages
 The  Part  90,  subpart  P  rules  provide  a  clear,  predictable  structure  for  the  assignment  and  use  of
 spectrum.  In  Part  90,  Subpart  P,  frequency  bands  that  are  licensed  on  an  exclusive  basis  are
 subject  to  competitive  bidding.  The  shared  channels  are  available  to  all  eligible  entities.
 Disadvantages
 The  Part  90,  subpart  P  rules  impose  limited  administrative  and  technical  burdens  that  are  inherent
 to  the  licensing  process  and  that  are  necessary  for  compliance  with  technical  and  operational
 rules.
 Recent  Efforts
 The  Commission  has  made  significant  changes  to  its  Part  90,  subpart  P  rules  in  recent  years.  In
 the  mid-  1990s,  the  Commission  converted  the  authorization  of  stations  in  the  929  MHz  Band
 from  the  original  site-  by-  site  procedure  to  a  geographic  area  licensing  process.  The  Second
 Report  and  Order  established  geographic  area  licensing  for  929  MHz  paging  and  adopted
 competitive  bidding  procedures.  467  The  Third  Report  and  Order  changed  the  geographic  area
 466  Fifth  Competition  Report,  supra,  at  9-  27,  36-  63.
 467  See  Revision  of  Part  22  and  Part  90  of  the  Commissions  Rules  to  Facilitate  Future  Development  of
 Paging  Systems,  Second  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  12  FCC  Rcd  2732
 (1997)  (Second  Report  and  Order).
286
 190
 licensing  of  929  MHz  paging  from  MTAs  to  MEAs,  clarified  that  spectrum  will  automatically
 revert  to  the  geographic  area  licensee  in  all  instances  where  a  non-  geographic  area  incumbent
 licensee  permanently  discontinues  service,  and  allowed  geographic  area  licensees  to  partition
 their  licenses  and  disaggregate  the  spectrum.  468  The  Commission  auctioned  geographic  licenses
 for  the  exclusive  channels  in  the  929  MHz  band.  469  Furthermore,  the  Part  22  Rules  regarding
 paging  now  apply  to  all  929  MHz  licensees  on  exclusive  channels.  More  recently,  most  of  the
 application  filing  rules  were  moved  from  this  subpart  to  Part  1  in  connection  with  implementation
 of  electronic  filing  procedures  and  the  Universal  Licensing  System.
 Initial  Recommendation
 The  staff  does  not  recommend  significant  modification  or  repeal  of  the  Part  90,  subpart  P  at  this
 time.
 Comments
 None
 Recommendation
 See  initial  recommendation.
 468  See  Revision  of  Part  22  and  Part  90  of  the  Commissions  Rules  to  Facilitate  Future  Development  of
 Paging  Systems,  Memorandum  Opinion  and  Order  on  Reconsideration  and  Third  Report  and  Order,  14
 FCC  Rcd  10030  (1999)  (Third  Report  and  Order).
 469  See  929  and  931  MHz  Paging  Auction  Closes,  Public  Notice,  DA  00-  508  (rel.  Mar.  6,  2000).
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 191
 PART  90,  SUBPARTS  S  (REGULATIONS  FOR  LICENSING  AND  USE  OF
 FREQUENCIES  IN  THE  800  AND  900  MHZ  BANDS),  AND  U  AND  V  (COMPETITIVE  BIDDING  PROCEDURES  FOR  THE  900  AND  800  MHZ
 SERVICE)
 Description
 Subpart  S  470  contains  licensing,  technical,  and  operational  rules  for  the  800  MHz  and  900  MHz
 Specialized  Mobile  Radio  (SMR)  services,  as  well  as  non-  commercial  services  above  800  MHz,
 i.  e.,  public  safety  services  and  services  that  are  used  by  utilities,  transportation  companies,  and
 other  businesses  for  internal  purposes.  With  the  passage  of  OBRA,  Congress  reclassified  800
 MHz  and  900  MHz  SMR  services  as  CMRS,  and  required  all  CMRS  providers  to  be  regulated  as
 common  carriers.  471
 In  general,  the  rules  in  Subpart  S:  (1)  specify  the  frequency  bands  in  which  each  service  operates;
 (2)  define  the  service  area  of  licenses  in  each  frequency  band;  (3)  establish  minimum  construction
 or  coverage  requirements  for  licensees;  and  (4)  define  technical  limits  on  operation  (e.  g.,  antenna
 height,  transmitter  power)  to  prevent  interference.  This  subpart  provides  for  geographic  licensing
 of  these  bands.
 Subparts  U  and  V  472  contain  competitive  bidding  rules  and  procedures  for  900  MHz  SMR  and
 800  MHz  SMR  services,  respectively.  The  rules  in  these  subparts:  (1)  identify  the  licenses  to  be
 sold  by  competitive  bidding;  (2)  establish  the  competitive  bidding  mechanisms  to  be  used  in  900
 and  800  MHz  SMR  auctions;  (3)  establish  application,  disclosure  and  certification  procedures  for
 short-  and  long-  form  applications;  (4)  specify  down  payment,  withdrawal,  and  default
 mechanisms;  (5)  provide  definitions  of  gross  revenues  for  designated  entities  and  specify  the
 bidding  credits  for  which  designated  entities  qualify;  and  (6)  provide  eligibility  and  technical
 requirements  for  partitioning  and  disaggregation.
 Purpose
 The  purposes  of  the  Subpart  S  rules  are  to  establish  basic  ground  rules  for  the  assignment  of
 spectrum  to  the  affected  SMR  licensees,  to  ensure  efficient  spectrum  use  by  licensees,  and  to
 prevent  interference.  The  competitive  bidding  rules  of  Subparts  U  and  V  ensure  access  to  new
 telecommunications  offerings  by  ensuring  that  market  forces  guide  the  allocation  of  licenses  so
 that  all  customer  segments  are  served  with  the  greatest  economic  efficiency.  Additionally,  the
 designated  entity  provisions  of  the  competitive  bidding  rules  are  intended  to  provide  opportunities
 for  small  businesses  to  participate  in  the  provision  of  telecommunications  services.
 470  47  C.  F.  R.  Part  90,  subpart  S.
 471  Implementation  of  Sections  3(  n)  and  332  of  the  Communications  Act  Regulatory  Treatment  of  Mobile
 Services,  Second  Report  and  Order,  9  FCC  Rcd  1411  (1994).
 472  47  C.  F.  R.  Part  90,  subparts  U  and  V.
288
 192
 Analysis
 Status  of  Competition
 As  detailed  in  the  Fifth  Competition  Report,  Part  90  SMR  providers  operate  in  an  environment
 that  is  marked  by  significant  and  increasing  competition  in  mobile  telephony,  paging/  messaging,
 and  mobile  data.  Some  of  the  larger  SMR  carriers,  particularly  Nextel  and  Southern,  provide
 digital  wide-  area  voice  services  that  compete  with  cellular  and  broadband  PCS.  Other  SMR
 carriers  provide  more  traditional  dispatch  service  on  a  local  or  regional  basis.  Although  SMR
 channels  have  been  used  primarily  for  voice  communications,  systems  are  also  being  developed
 to  carry  data  and  facsimile  services.  Additionally,  new  digital  SMR  technology  is  leading  to  the
 development  of  new  features  and  services,  such  as  two-  way  acknowledgment  paging,
 teleconferencing,  and  voicemail.
 Advantages
 The  Subpart  S  rules  provide  a  clear  and  predictable  structure  for  the  assignment  and  use  of  SMR
 spectrum,  and  afford  substantial  flexibility  to  licensees  to  choose  the  type  of  service  they  will
 provide  based  on  market  demand.  The  Subparts  U  and  V  auction  rules  promote  efficient
 licensing  of  SMR  spectrum  to  those  entities  that  value  it  the  most.
 Disadvantages
 There  continue  to  be  differences  between  the  licensing,  technical,  and  operational  rules  that  apply
 to  grandfathered  site-  based  SMR  licenses  and  those  that  apply  to  geographic  area  licenses.  This
 multiplicity  of  rules  is  potentially  burdensome  to  SMR  licensees  who  have  both  geographic  and
 site-  based  systems,  which  may  result  in  inconsistent  regulatory  obligations  (e.  g.,  buildout
 requirements)  for  different  portions  of  their  systems.
 Recent  Efforts
 In  the  past  year,  the  Commission  has  reconsidered  and  revised  some  of  its  800  MHz  SMR  rules  in
 anticipation  of  the  SMR  lower  band  and  General  Category  auctions.  473  The  Commission  has  also
 given  incumbent  SMR  licensees  with  wide-  area  systems  the  option  of  applying  the  same  buildout
 and  coverage  requirements  as  geographic  licensees,  thus  giving  these  incumbents  greater
 flexibility  and  parity  with  geographic  licensees.  474  It  should  also  be  noted  that  two  800  MHz
 SMR  auctions,  just  mentioned,  were  concluded  this  year:  Auction  No.  34  concluded  on
 September  1,  2000,  after  14  winning  bidders  purchased  1030  800  MHz  General  Category
 473  Amendment  of  Part  90  of  the  Commissions  Rules  to  Facilitate  Future  Development  of  SMR  Systems  in
 the  800  MHz  Frequency  Band,  Second  Report  and  Order,  12  FCC  Rcd  19079  (1997)  (Second  Report  and
 Order).
 474  Amendment  of  Part  90  of  the  Commissions  Rules  to  Facilitate  Future  Development  of  SMR  Systems
 in  the  800  MHz  Frequency  Band,  Memorandum  Opinion  and  Order  on  Remand,  14  FCC  Rcd  21679
 (Fresno  Remand  Order).
289
 193
 licenses;  475  Auction  No.  36  ended  December  5,  2000,  with  22  winning  bidders  obtaining  2800
 licenses  (Lower  80  Channels).  476
 Initial  Recommendation
 There  are  several  rule  sections  that  contain  outdated  or  burdensome  requirements.  For  example,
 the  staff  recommends  that  the  Commission  consider  eliminating  section  90.655,  477  which  requires
 individual  end  user  licensing  of  SMR  facilities  that  require  Federal  Aviation  Administration
 clearance,  have  a  significant  environmental  effect,  or  are  located  in  a  radio  frequency  quiet
 zone.  The  staff  recommends  that  similar  consideration  be  given  to  removing  the  requirement
 that  site-  based  SMR  licensees  provide  loading  data  in  order  to  renew  their  licenses.  478  We  also
 recommend  removal  of  section  90.607(  a),  479  which  requires  SMR  applicants  to  provide  a
 statement  describing  the  applicants  planned  mode  of  operation.  Such  a  requirement  appears  to
 serve  no  regulatory  purpose,  and  is  inconsistent  with  the  Commissions  policies  regarding
 flexible  use  of  spectrum.
 Comments
 None
 Recommendation
 See  initial  recommendation.
 475  800  MHz  Specialized  Mobile  Radio  (SMR)  Service  General  Category  (851-  854  MHz)  and  Upper
 Band  (861-  865  MHz)  Auction  Closes;  Winning  Bidders  Announced,  Public  Notice,  DA  00-  2037  (rel.  Sept.
 6,  2000).
 476  800  MHz  SMR  Service  Lower  80  Channels  Auction  Closes;  Winning  Bidders  Announced,  Public
 Notice,  DA  00-  2752  (rel.  Dec.  7,  2000).
 477  47  C.  F.  R.    90.  655.
 478  47  C.  F.  R.    90.  658.
 479  47  C.  F.  R.    90.  607(  a).
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 194
 PART  90,  SUBPARTS  T  (REGULATIONS  FOR  LICENSING  AND  USE  OF
 FREQUENCIES  IN  THE  220-  222  MHZ  BAND)  AND  W  (COMPETITIVE  BIDDING  PROCEDURES  FOR  THE  220  MHZ  SERVICE)
 Description
 Part  90,  subpart  T  480  contains  licensing,  technical,  and  operational  rules  for  the  220-  222  MHz
 (220  MHz)  service.  In  general,  the  rules  in  this  part:  (1)  define  the  service  area  of  220  MHz
 licenses;  (2)  specify  the  permissible  operations  for  authorized  systems;  (3)  specify  the  frequencies
 available  to  220  MHz  licensees;  (4)  establish  license  terms;  (5)  establish  the  minimum
 construction  or  coverage  requirements  for  220  MHz  licensees;  and  (6)  define  technical  limits  on
 operation  (e.  g.,  antenna  height,  field  strength)  to  prevent  interference.
 Part  90,  subpart  W  481  contains  competitive  bidding  rules  and  procedures  for  commercial  licenses
 in  the  220  MHz  service.  The  rules  in  this  subpart:  (1)  specify  which  220  MHz  licenses  are
 eligible  for  competitive  bidding;  (2)  establish  the  competitive  bidding  mechanisms  to  be  used  in
 220  MHz  auctions;  (3)  establish  application,  disclosure  and  certification  procedures  for  short-  and
 long-  form  applications;  and  (4)  specify  down  payment,  withdrawal,  and  default  mechanisms.
 Purpose
 The  purposes  of  the  Subparts  T  and  W  rules  are  to  facilitate  the  assignment  of  spectrum  in  the
 220-  222  MHz  service,  to  ensure  efficient  spectrum  use  by  licensees,  and  to  prevent  interference
 through  establishment  of  technical  limits  on  operation  (e.  g.,  siting  requirements  and  limits  on
 transmitter  power).
 Analysis
 Status  of  Competition
 Licensees  in  the  220  MHz  service  are  permitted  to  provide  voice,  data,  paging,  and  fixed
 communications.  Many  220  MHz  licensees  have  begun  to  deploy  their  networks,  and  dispatch
 subscribership  in  this  band  grew  35  percent  in  1999.  482  Suppliers  of  220  MHz  equipment
 anticipate  that  there  will  be  increased  buildout  and  demand  for  service  in  the  next  several  years.  483
 Thus,  there  is  potential  for  the  220  MHz  service  to  be  increasingly  competitive  and  to  contribute
 to  inter-  service  CMRS  competition.
 Advantages
 The  Subpart  T  rules  provide  a  clear  and  predictable  structure  for  the  assignment  and  use  of  220-
 222  MHz  band  spectrum,  and  afford  substantial  flexibility  to  licensees  to  choose  the  type  of
 service  they  will  provide  based  on  market  demand.  The  Subpart  W  auction  rules  promote
 efficient  licensing  of  220  MHz  spectrum  to  those  entities  that  value  it  the  most.
 480  47  C.  F.  R.  Part  90,  subpart  T.
 481  47  C.  F.  R.  Part  90,  subpart  W.
 482  Fifth  Competition  Report.
 483  Id.
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 195
 Disadvantages
 Although  the  Commission  has  recently  simplified  and  streamlined  the  220  MHz  rules  in  many
 respects  (see  below),  there  continue  to  be  differences  among  the  licensing,  technical,  and
 operational  rules  that  apply  to  grandfathered  site-  based  licenses  and  those  that  apply  to
 geographic  area  licenses.  This  multiplicity  of  rules  is  potentially  burdensome  to  220  MHz
 licensees  who  have  systems  comprised  of  both  types  of  licenses,  which  may  result  in  inconsistent
 regulatory  obligations  (e.  g.,  buildout  requirements)  for  different  portions  of  their  systems.
 Recent  Efforts
 In  several  recent  orders,  the  Commission  has  taken  steps  to  reduce  regulatory  burdens  and  afford
 greater  flexibility  to  220  MHz  licensees.  For  example,  the  original  220  MHz  rules  required
 licensees  to  provide  two-  way  land  mobile  service  on  a  primary  basis,  and  allowed  use  of  the  band
 for  fixed  services  or  for  paging  only  on  an  ancillary  basis.  In  the  220  MHz  Third  Report  and
 Order,  the  Commission  eliminated  the  ancillary  use  limitation,  thus  allowing  licensees  to  provide
 any  or  all  of  these  services  on  a  co-  primary  basis.  484  The  Commission  has  also  adopted  rules
 permitting  partitioning  and  disaggregation  of  220  MHz  licenses,  and  has  eliminated  the  40-  mile
 rule  that  previously  limited  the  number  of  site-  based  licenses  that  an  individual  licensee  could
 hold  in  a  given  geographic  area.  485  Finally,  the  Commission  recently  eliminated  mandatory
 spectrum  efficiency  standards  that  had  previously  been  adopted  for  provision  of  voice  and  data
 over  220  MHz  systems  that  combined  contiguous  5  kHz  channels.  486  The  Commission  concluded
 that  mandating  technical  standards  was  unnecessary  because  market  forces  would  spur  efficient
 spectrum  use,  and  that  retaining  mandatory  standards  could  impair  rather  than  encourage
 technical  innovation.  487
 Initial  Recommendation
 The  staff  does  not  recommend  substantial  modification  or  repeal  of  the  220  MHz  rules  at  this
 time.  However,  the  staff  recommends  that  consideration  be  given  to  whether  certain  rules
 applicable  to  site-  based  licensees  continue  to  be  necessary.  For  example,  section  90.737  imposes
 certain  reporting  requirements  and  restrictions  on  assignments  of  unconstructed  site-  based
 licenses  that  were  intended  to  prevent  speculation  and  trafficking  in  licenses  awarded  by
 lottery.  488  Now  that  licensing  by  lottery  has  been  discontinued,  however,  these  rules  may  actually
 impede  the  transferability  of  220  MHz  spectrum.  The  staff  therefore  recommends  that
 consideration  be  given  to  eliminating  these  rules.
 Similarly,  as  noted  elsewhere  in  this  Staff  Report,  the  Commission  has  consolidated  its
 competitive  bidding  rules  in  Part  1,  with  the  goal  of  having  future  auctions  be  conducted  in
 484  See  220  MHz  Third  Report  and  Order,  12  FCC  Rcd  10943  (1997).
 485  See  Amendment  of  Part  90  of  the  Commissions  Rules  to  Provide  for  the  Use  of  the  220-  222  MHz  Band
 by  the  Private  Land  Mobile  Radio  Services,  Fourth  Report  and  Order,  12  FCC  Rcd  13453  (1997).
 486  See  Amendment  of  Part  90  of  the  Commissions  Rules  to  Provide  for  the  Use  of  the  220-  222  MHz  Band
 by  the  Private  Land  Mobile  Radio  Services,  Memorandum  Opinion  Order  on  Reconsideration,  13  FCC  Rcd
 14569  (1998).
 487  Id.
 488  47  C.  F.  R.    90.  737.
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 196
 accordance  with  Part  1  rules.  Therefore,  to  the  extent  that  future  auctions  are  necessary  in  the
 220  MHz  service,  they  will  be  governed  by  Part  1,  and  the  continued  presence  of  separate  220
 MHz  auction  rules  in  Subpart  W  appears  to  be  redundant.  The  staff  recommends  that
 consideration  be  given  to  eliminating  these  rules.
 Comments
 None
 Recommendation
 See  initial  recommendation.
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 197
 PART  95    PERSONAL  RADIO  SERVICES,  SUBPART  F    218-  219  MHZ
 SERVICE
 Description
 For  purposes  of  the  Biennial  Regulatory  Review,  the  analysis  of  Part  95  in  this  report  focuses  on
 the  218-  219  MHz  Service  (Subpart  F),  which  is  unique  among  the  Personal  Radio  Services  in  that
 it  may  be  used  for  commercial  applications,  it  is  licensed  on  a  geographic  exclusive-  use  basis,
 and  its  licensure  is  subject  to  the  Commissions  competitive  bidding  procedures.  Part  95  489
 contains  licensing,  technical,  and  operational  rules  for  the  Personal  Radio  Services,  a  collection  of
 wireless  services  that  are  generally  used  by  individuals  for  personal  communications  and  to
 support  the  radio  needs  of  their  activities  and  interests.
 Subpart  F  was  originally  created  to  support  the  Interactive  Video  and  Data  Service  (IVDS),  a
 short-  distance  communications  service  by  which  licensees  could  provide  information,  products,
 or  services  to,  and  allow  interactive  responses  from,  subscribers  within  the  licensees  service  area.
 In  1998,  the  Commission  renamed  IVDS  the  218-  219  MHz  Service  and  revised  Subpart  F  to
 allow  218-  219  MHz  licensees  greater  flexibility  to  identify  and  structure  services  in  response  to
 market  demand.  490  Under  the  current  service  rules,  both  common  carrier  and  private  operations
 are  permitted,  and  both  one-  and  two-  way  communications  are  allowed.
 The  licensing  and  technical  rules  for  the  218-  219  MHz  Service  are  contained  in  Subpart  F,
 although  certain  rules  that  are  broadly  applicable  to  all  wireless  telecommunications  services
 (including  the  218-  219  MHz  Service)  have  been  consolidated  in  Part  1.  491
 Purpose
 The  rules  are  intended  to  provide  licensees  with  the  maximum  flexibility  to  structure  their
 services  while  protecting  over-  the-  air  television  reception  of  TV  Channel  13.
 Analysis
 Status  of  Competition
 The  original  IVDS  service  was  generally  not  commercially  successful,  and  little  or  no
 competition  emerged  to  use  the  218-  219  MHz  band  to  provide  interactive  television  applications.
 Under  the  revised  service  rules,  218-  219  MHz  Service  licensees  have  proposed  wireless  data
 applications  such  as  meter  reading  and  vehicle  tracking  services.  Accordingly,  the  expectation  is
 that  the  218-  219  MHz  Service  could  soon  provide  sources  of  competition  for  other  wireless
 services.  However,  competition  is  developing  slowly,  due  in  part  to  (1)  the  limited  permissible
 use  of  the  service  before  its  recent  restructuring;  (2)  the  fact  that  many  218-  219  MHz  Service
 markets  are  not  currently  licensed  due  to  payment  defaults;  and  (3)  the  on-  going  implementation
 of  the  service  restructuring.
 489  47  C.  F.  R.  Part  95.
 490  Amendment  of  Part  95  of  the  Commissions  Rules  to  Provide  Regulatory  Flexibility  in  the  218-  219
 MHz  Service,  Memorandum  Opinion  and  Order  and  Notice  of  Proposed  Rulemaking,  13  FCC  Rcd  19064
 (1988).
 491  47  C.  F.  R.  Part  1.
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 198
 Advantages
 The  Part  95,  subpart  F  rules  provide  licensees  with  the  flexibility  to  identify  and  implement
 services  in  response  to  market  demand.  For  example,  the  technical  rules  have  general
 interference  protection  requirements  and  there  is  a  substantial  service  requirement.
 Disadvantages
 There  are  no  significant  disadvantages  to  the  Subpart  F  rules  at  this  time,  although  the  rules  do
 impose  limited  administrative  and  technical  burdens  that  are  inherent  to  the  licensing  process  and
 that  are  necessary  for  compliance  with  technical  and  operational  rules.  As  more  licensees  begin
 providing  service  and  we  gain  more  experience  in  the  administration  of  the  218-  219  MHz
 Service,  we  will  continue  to  examine  whether  any  of  these  rules  impose  unnecessary  burdens  and
 costs  and  could  therefore  be  candidates  for  additional  streamlining.
 Recent  Efforts
 The  Commission  has  made  significant  changes  to  its  Part  95,  subpart  F  rules  in  recent  years.  As
 noted  above,  the  Commission  renamed  the  service  and  revised  the  rules  in  1998  to  afford  more
 flexibility  to  licensees  over  use  of  the  spectrum.  The  Commission  adopted  additional  sweeping
 changes  to  the  218-  219  MHz  service  in  September  1999.  492  The  Wireless  Telecommunications
 Bureau  is  still  implementing  these  changes,  and  several  petitions  for  reconsideration  remain
 pending  in  the  docket.  In  addition,  the  218-  219  MHz  Service  has  been  affected  by  a  number  of
 broadly  applicable  rulemaking  actions,  such  as  the  Universal  Licensing  System  (ULS)  proceeding
 that  was  initiated  in  conjunction  with  the  1998  Biennial  Regulatory  Review.
 Initial  Recommendation
 Due  to  the  recent  comprehensive  evaluation  and  restructuring  of  the  218-  219  MHz  Service,  no
 changes  are  recommended  to  this  subpart  at  this  time.  The  rules  that  were  retained  in  the  1999
 restructuring  are  an  integral  part  of  the  basic  licensing  and  spectrum  management  functions
 performed  by  the  Commission  and  should  be  retained.  Although  there  is  presently  only  limited
 competition  within  the  218-  219  MHz  Service,  this  fact  is  primarily  attributable  to  the  narrow
 focus  of  the  former  rules  that  supported  interactive  television  applications  and  the  uncertainty
 surrounding  the  restructuring  of  the  service.  The  staff  anticipates  the  provision  of  competitive
 services  within  the  218-  219  MHz  Service,  and  will  continue  to  monitor  developments  in  order  to
 determine  whether  any  additional  rule  modifications  are  necessary  to  foster  competition.
 Comments
 None
 Recommendation
 See  initial  recommendation.
 492  Amendment  of  Part  95  of  the  Commissions  Rules  to  Provide  Regulatory  Flexibility  in  the  218-  219
 MHz  Service,  Report  and  Order  and  Memorandum  Opinion  and  Order,  15  FCC  Rcd  1497  (1999).
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 PART  100    DIRECT  BROADCAST  SATELLITE  SERVICE
 Description
 Part  100  was  issued  pursuant  to  the  provisions  of  Title  III  of  the  Communications  Act  of  1934,  as
 amended,  which  gives  the  Federal  Communications  Commission  authority  to  regulate  radio
 transmissions  and  to  issue  licenses  for  radio  stations.  Part  100  sets  forth  rules  applicable  to  the
 Direct  Broadcast  Satellite  Service  (DBS),  including  public  interest  obligations,  general  licensing
 and  application  filing  requirements,  technical  and  operating  requirements,  and  competitive
 bidding  procedures.
 Part  100  is  organized  into  five  sub-  parts:
 A-  General  Information
 B-  Administrative  Procedures
 C-  Technical  Requirements
 D-  Operating  Requirements
 E-  Competitive  Bidding  Procedures  for  DBS
 Purpose
 The  rules  are  designed  to  promote  fair  competition  in  the  multi-  channel  video  programming
 distribution  market.  Sections  of  Part  100  also  have  provisions:  (1)  to  assure  protection  from
 impermissible  levels  of  interference;  (2)  to  assure  compliance  with  international  regulations;  (3)
 to  assure  the  timely  construction  and  operation  of  authorized  space  stations;  (4)  to  assure  the
 timely  provision  of  sufficient  information  to  allow  for  processing  of  applications;  (5)  to  assure
 compliance  with  license  specifications  and  conditions,  as  well  as  with  Commission  rules  and
 regulations;  and  (6)  to  provide  competitive  bidding  procedures  for  the  provision  of  DBS  services.
 Analysis
 Status  of  Competition
 The  DBS  service  competes  with  other  multi-  channel  video  program  distribution  services  (e.  g.,
 cable).  Today  there  are  two  major  providers  of  DBS.  The  service  as  a  whole,  and  the  individual
 companies  are  growing  rapidly  in  subscribership  and  have  the  capital  to  offer  new  digital
 technologies  to  consumers.  Additionally,  the  Commission  has  permitted  mergers  in  the  DBS
 industry  that  have  placed  the  two  DBS  licensees  in  a  stronger  position  to  compete  with  other
 suppliers  of  multi-  channel  video  program  distribution  services  (e.  g.,  cable  TV  systems,  which  are
 still  today  the  dominant  suppliers  of  multi-  channel  video  program  distribution  services).
 Furthermore,  the  U.  S.  has  entered  into  agreements  with  Mexico  and  Argentina,  which  allow  those
 countries  to  provide  Direct-  to-  Home  services  (similar  to  DBS)  into  the  U.  S.  Finally,  we
 anticipate  auctioning  additional  DBS  orbital  slots  that  are  allotted  to  the  U.  S.  which  will  provide
 existing  or  new  DBS  providers  the  opportunity  to  further  expand  the  service  to  U.  S.  consumers.
 Advantages
 Subpart  A-  General  Information:  This  subpart  includes  the  basis  and  purpose  of  this  rule  subpart.
 Specifically,  it  sets  forth  the  Commissions  statutory  authority  to  regulate  DBS,  which  fosters
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 200
 efficient  spectrum  use.  This  subpart  increases  consumer  choice  and  diversity  in  programming,  as
 well  as  imposes  political  advertising  rules  on  DBS  providers.
 Subpart  B-  Administrative  Procedures:  This  subpart  describes  the  eligibility  criterion  for  DBS
 authorizations,  including  foreign  ownership  restrictions.  It  provides  clear  procedures  for  filing
 applications  and  procedures  for  evaluating  whether  applications  are  complete.  This  allows  for
 efficient  use  of  resources  and  ensures  compliance  with  the  Commissions  rules.
 Subpart  C  Technical  Requirements:  This  subpart  provides  technical  standards  and  operating
 rules  to  minimize  interference  among  DBS  licensees.
 Subpart  D-  Operating  Requirements:  Section  100.51  describes  the  Equal  Employment
 Opportunities  policy  for  DBS.  This  section  promotes  diversity  in  employment  and  creates
 expanded  opportunities  to  provide  service.  Section  100.53  sets  out  geographic  service  rules  for
 DBS  providers.  This  ensures  delivery  of  service  to  the  public.
 Subpart  E-  Competitive  Bidding  Procedures  for  DBS:  This  subpart  describes  the  mechanism  for
 competitive  bidding  for  satellite  DBS  service.  Competitive  bidding  awards  DBS  licenses  to  those
 firms  that  will  most  efficiently  use  orbital  resources  to  compete  in  providing  service.  Further,  it
 fosters  efficient  use  of  spectrum  and  the  development  of  a  competitive  DBS  market.
 Disadvantages
 Subpart  A-  General  Information:  Section  100.5  (DBS  public  interest  obligations)  may  increase  a
 licensees  operating  administrative  and  compliance  costs.  Further,  this  section  may  restrict  the
 alternative  uses  of  the  resources  that  must  now  be  set  aside  for  public  interest  programming.
 Subpart  B-  Administrative  Procedures:  This  subpart  could  increase  a  licensees  administrative
 costs  and  hamper  the  introduction  of  new  services.  For  example,  if  the  milestone  for  construction
 and  operation  of  DBS  systems  is  too  long,  it  may  result  in  the  deployment  of  insufficient
 technologies  or  a  delay  in  the  reassignment  of  the  license  to  another  provider  who  will  construct
 and  operate  a  DBS  system.  In  the  alternative,  if  the  schedule  is  too  short,  it  may  result  in  a  loss  of
 a  license  if  build  out  is  delayed  because  of  unforeseen  technical  problems.
 Subpart  C-  Technical  Requirements:  These  standards  and  operating  rules,  while  preserving  the
 operating  environment  today,  could  hamper  the  introduction  of  new  services  and  restrict
 alternative  uses  of  resources  in  the  future.
 Subpart  D-  Operating  Requirements:  Rules  in  this  section  might  increase  operating  costs  and  limit
 potential  use  of  resources.
 Subpart  E-  Competitive  Bidding  Procedures  for  DBS:  Satellite  services  in  the  planned  frequency
 bands  require  international  coordination  prior  to  the  commencement  of  operations  (e.  g.,  when  the
 plans  are  modified  to  accommodate  new  services).  The  value  of  the  orbital  location  resource  is
 uncertain  if  the  international  coordination  process  has  not  yet  been  completed.
 Recent  Efforts
 As  described  in  the  staff  report,  the  Commission  has  taken  steps  to  streamline  the  regulation  of
 DBS.  The  Commission  issued  an  Notice  of  Proposed  Rulemaking,  which  seeks  comment  on  its
 proposals  to  streamline  the  DBS  rules  by  integrating  the  Part  100  DBS  service  rules  into  Part  25
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 (Satellite  Communications),  by  eliminating  duplicative  rule  sections,  and  by  consolidating
 existing  rule  sections  as  appropriate.  493
 Initial  Recommendation
 Consistent  with  the  outstanding  Notice  of  Proposed  Rulemaking,  the  staff  recommended  that  all
 of  the  DBS  rules  contained  in  Part  100  be  retained,  but  that  Part  100  be  eliminated  and  the  rules
 incorporated  into  Part  25.
 Comments
 None.
 Recommendation
 See  initial  recommendation.
 493  Policies  and  Rules  for  the  Direct  Broadcast  Satellite  Service,  IB  Docket  No.  98-  21,  Notice  of  Proposed
 Rulemaking,  13  FCC  Rcd  6907  (1998).
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 PART  101    FIXED  MICROWAVE  SERVICES
 Description
 Part  101  494  contains  licensing,  technical,  and  operational  rules  for  the  microwave  services.  Fixed
 microwave  spectrum  is  primarily  used  to  deliver  video,  audio,  data,  and  control  functions  for
 other  specific  communications  services  from  one  point  and/  or  hub  to  other  points  and/  or
 subscribers  for  distribution.  Most  Part  101  application  processing  rules,  technical  standards,  and
 operational  requirements  apply  to  all  Part  101  services,  but  others  apply  only  to  specific
 services,  495  or  to  common  carrier  services  but  not  private  services  (or  vice  versa).  496
 Part  101  was  created  in  1996  through  consolidation  of  the  rules  for  the  common  carrier  and
 private  operational  fixed  (POFS)  microwave  services  contained  in  Parts  21  and  94.  497
 Part  101  contains  14  lettered  subparts:
 A    General
 B    Applications  and  Licenses
 C    Technical  Standards
 D    Operational  Requirements
 E    Miscellaneous  Common  Carrier  Provisions
 F    Developmental  Authorizations
 G    24  GHz  Services  and  Digital  Electronic  Message  Service
 H    Private  Operational  Fixed  Point-  to-  Point  Microwave  Service
 I    Common  Carrier  Fixed  Point-  to-  Point  Microwave  Service
 J    Local  Television  Transmission  Service
 K    [Reserved]
 L    Local  Multipoint  Distribution  Service
 M    Competitive  Bidding  Procedures  for  LMDS
 N    Competitive  Bidding  Procedures  for  the  38.6-  40.0  GHz  Band
 Purpose
 Part  101  rules  are  intended  to  reduce  or  eliminate  the  differences  in  processing  applications
 between  common  carriers  and  private  operational  fixed  microwave  service  licensees,  and  to
 further  the  regulatory  parity  among  these  microwave  services.  498
 494  47  C.  F.  R.  Part  101.
 495  See,  e.  g.,  47  C.  F.  R.    101.  21(  e),  101.61(  c).
 496  See,  e.  g.,  47  C.  F.  R.    101.  13,  101.  15.
 497  Reorganization  and  Revision  of  Parts  1,  2,  21,  and  94  of  the  Rules  to  Establish  a  New  Part  101
 Governing  Terrestrial  Microwave  Fixed  Radio  Services,  Report  and  Order,  11  FCC  Rcd  13449  (1996)
 (Part  101  Order).
 498  Id.,  11  FCC  Rcd  at  13452-  53.
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 Analysis
 Status  of  Competition
 Because  the  Part  101  microwave  services  encompass  a  variety  of  private  and  common  carrier
 applications,  and  because  some  services  are  licensed  on  a  point-  to-  point  basis  while  others  are
 licensed  geographically,  the  level  of  competition  varies  greatly  among  individual  microwave
 services.
 The  largest  commercial  deployment  of  Part101  microwave  services  has  occurred  in  the  24  GHz
 (DEMS),  28  GHz  (LMDS),  and  39  GHz  bands.  The  licensees  in  these  bands  have  the  potential  to
 create  facilities-  based  competition  in  numerous  industries,  including  high-  speed  broadband
 services.  In  other  Part  101  services,  licensees  continue  to  rely  on  traditional  point-  to-  point
 microwave  systems  to  meet  their  operational  support  and  critical  infrastructure  needs  as  opposed
 to  using  microwave  technologies  to  directly  access  customers.
 Advantages
 The  Part  101  rules  provide  for  a  unified  regulatory  approach  for  the  microwave  services,  and
 eliminate  the  differences  in  processing  applications  between  common  carriers  and  POFS
 licensees  that  existed  in  the  former  rules.  Because  each  of  the  microwave  services  share  at  least
 some  frequencies  with  other  microwave  services,  and  because  some  frequencies  are  shared  with
 government  users,  the  rules  minimize  repetition,  reduce  the  potential  for  interference,  and  aid
 different  microwave  users  in  efficient  use  of  the  microwave  spectrum.
 Part  101  also  contains  competitive  bidding  rules  (Subparts  M  and  N)  that,  in  conjunction  with  our
 spectrum  allocation  rules,  promote  economic  growth  and  enhance  access  to  telecommunications
 service  offerings  for  consumers,  producers,  and  new  entrants.  The  competitive  bidding  rules  are
 structured  to  promote  opportunity  and  competition.  In  contrast  to  lotteries  and  comparative
 hearings,  auctions  are  faster,  more  efficient,  and  more  likely  to  get  spectrum  to  entities  that  value
 it  the  most.  Through  these  rules,  the  Commission  has  recovered  a  portion  of  the  value  of  the
 public  spectrum.
 Disadvantages
 Licensees  and  applicants  have  identified  certain  rules  that  are  ambiguous  or  confusing,  and
 certain  technical  characteristics    including  those  relating  to  frequency  tolerance,  spectrum
 efficiency,  and  antenna  standards    that  could  be  modified.  499  In  addition,  some  rules  could  be
 candidates  for  further  consolidation  or  streamlining.  500  For  example,  the  current  rules  do  not
 allow  shared  use  among  providers  and  between  POFS  and  common  carrier  licensees.
 Recent  Efforts
 The  Commission  is  in  the  midst  of  a  comprehensive  re-  evaluation  of  the  Part  101  rules.  501  The
 Part  101  NPRM,  which  was  released  on  February  14,  2000,  proposes  to  eliminate  rules  that  are
 499  Id.  at  para.  1.
 500  Id.
 501  See  id.
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 duplicative,  outmoded,  or  otherwise  unnecessary;  it  also  seeks  comment  on  specific  proposals  to
 examine  the[]  rules  and  procedures  and  offer  their  view  and  explanations  of  ways  to  streamline
 them  and  to  make  sure  that  the  regulations  conform  with  the  Communications  Act  of  1934,  as
 amended.  502  The  pleading  cycle  for  the  Part  101  NPRM  closed  August  4,  2000.  503
 The  Commission  has  made  significant  changes  to  the  competitive  bidding  rules  of  Part  1,  subpart
 Q.  In  the  Part  1  Third  Report  and  Order,  504  the  Commission  made  substantive  amendments  and
 modifications  to  the  competitive  bidding  rules  for  all  auctionable  services.  These  changes  to  the
 competitive  bidding  rules  are  intended  to  streamline  regulations  and  eliminate  unnecessary  rules
 wherever  possible,  increase  the  efficiency  of  the  competitive  bidding  process,  and  provide  more
 specific  guidance  to  auction  participants.  The  changes  also  advance  our  auction  program  by
 reducing  the  burden  on  the  Commission  and  the  public  of  conducting  service-  by-  service  auction
 rule  makings,  such  as  those  rule  makings  that  created  the  competitive  bidding  rules  of  Subparts  M
 and  N.
 Initial  Recommendation
 Because  of  the  ongoing  rulemaking  embodied  in  the  Part  101  NPRM,  staff  does  not  recommend
 that  any  additional  changes  be  made  to  the  rules  within  the  context  of  the  biennial  regulatory
 review.  The  staff  conclude  that  significant  modification  or  repeal  of  the  Part  101  competitive
 bidding  rules  is  not  necessary  at  this  time.  However,  to  the  extent  that  service-  specific  auction
 rules  are  duplicative  of  the  consolidated  auction  rules  in  Part  1,  the  staff  recommends  that  they  be
 modified  or  eliminated.
 Comments
 TIA  proposes  a  channel  plan  for  the  23  GHz  band,  technical  modifications  to  the  23  GHz  band,
 and  modifications  to  antenna  standards  for  the  10  GHz  and  23  GHz  bands.  505  Winstar  asks  that
 the  Commission  review  the  renewal  requirements    in  particular  the  concept  of  substantial
 service    as  they  apply  to  certain  Part  101  licenses.  506
 Recommendation
 See  initial  recommendation.  TIAs  proposals  mirror  those  it  raised  in  a  petition  for  rulemaking
 that  has  been  incorporated  into  the  Part  101  NPRM,  507  and  staff  believes  that  these  concerns  are
 best  addressed  within  that  pending  rulemaking  proceeding.  Although  Winstar  focused  its
 comments  on  renewal  rules  contained  in  Part  101,  the  staff  continues  to  believe  that  Winstars
 502  Id.  at  para.  2.
 503  See  65  Fed  Reg  38333-  01  (June  20,  2000).
 504  See  Amendment  of  Part  1  of  the  Commissions  Rules    Competitive  Bidding  Procedures,  WT  Docket
 No.  97-  82,  Allocation  of  Spectrum  Below  5  GHz  Transferred  from  Federal  Government  Use,  ET  Docket
 No.  94-  32,  Third  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  13  FCC  Rcd  374
 (1997)  (modified  by  Erratum,  DA  98-  419  (rel.  Mar.  2,  1998)  (Part  1  Third  Report  and  Order).
 505  Comments  of  TIA  at  pp.  10-  14.
 506  Comments  of  Winstar  at  p.  3.
 507  WT  Docket  No.  00-  19,  RM-  9418.
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 205
 comments  are  best  addressed  within  the  larger  issue  of  renewal  procedures,  508  and  does  not
 recommend  any  changes  to  our  Part  101  rules  that  fall  outside  such  a  comprehensive  review.
 508  See  Biennial  Review  Staff  Report,  104.
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 PART  101,  SUBPART  G    24  GHZ  SERVICE  AND  DIGITAL  ELECTRONIC
 MESSAGE  SERVICE
 Description
 Part  101  contains  licensing,  technical,  and  operational  rules  for  fixed  operational  microwave
 services  that  require  operating  facilities  on  land  or  in  certain  offshore  coastal  areas.  This  report
 focuses  on  subpart  G,  which  contains  rules  for  the  24  GHz  Service  and  the  Digital  Electronic
 Message  Service  (DEMS).  DEMS  systems  are  common  carrier  point-  to-  multipoint  microwave
 networks  designed  to  communicate  information  between  a  fixed  (nodal)  station  and  a  multiple
 fixed  user  terminals,  509  and  this  subpart  was  originally  intended  to  accommodate  operation  of
 high-  speed,  two-  way,  point-  to-  multipoint  terrestrial  microwave  transmission  systems.  510
 DEMS  is  licensed  for  use  in  the  24.25-  24.45  GHz  and  25/  05-  25.25  GHz  bands.  511
 Purpose
 The  purpose  of  the  Part  101  subpart  G  rules  is  to  establish  the  rules  for  allocation  and  use  of
 wireless  services  at  24  GHz,  to  ensure  efficient  spectrum  use,  and  to  prevent  interference.
 Analysis
 Status  of  Competition
 The  majority  of  licenses  are  currently  held  by  Teligent.  The  24  GHz  spectrum  used  by  DEMS
 has  been  identified  as  a  potential  competitor  in  the  local  exchange  telephone  market.  512  Teligent,
 which  recently  completed  its  initial  plan  to  roll  out  service  in  40  U.  S.  markets,  provides  a  bundle
 of  broadband  fixed  wireless  telecommunication  services  to  small-  and  medium-  sized  businesses.
 Advantages
 The  current  rules  provide  a  clear  regulatory  framework  for  the  development  of  competitive  fixed
 wireless  services.  The  existing  technical  and  operational  rules  are  necessary  for  administration  of
 a  radio  service  at  24  GHz.
 509  See  Amendment  of  Parts  2,  21,  74  and  94  of  the  Commissions  Rules  to  Allocate  Spectrum  at  18  GHz
 for,  and  to  Establish  other  Rules  and  Policies  Pertaining  to,  the  Use  of  Radio  in  Digital  Termination
 Systems  and  in  Point-  to-  Point  Microwave  Radio  Systems  for  the  Provision  of  Digital  Electronic  Message
 Services,  and  for  other  Common  Carrier,  Private  Radio,  and  Broadcast  Auxiliary  Services;  and  to
 Establish  Rules  and  Policies  for  the  Private  Radio  Use  of  Digital  Termination  Systems  at  10.  6  GHz,  54
 Rad.  Reg.  2d  1091  (1983).
 510  See  id.
 511  See  Amendment  to  Parts  1,  2,  and  101  of  the  Commissions  Rules  to  License  Fixed  Services  at  24  GHz,
 Notice  of  Proposed  Rulemaking,  14  FCC  Rcd  19263,  19267    5  (1999)  (24  GHz  NPRM).
 512  See  24  GHz  NPRM,  14  FCC  Rcd  at  19275    20.
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 207
 Disadvantages
 The  current  subpart  G  rules  were  written  when  the  primary  use  of  DEMS  was  expected  to  be  by
 businesses  requiring  internal  networks  to  distribute  documents,  share  data,  and  hold
 teleconferences.  Accordingly,  some  of  the  terminology  reflects  this  initial  service  concept.
 Mobile  service  is  not  permitted  in  the  24  GHz  band.
 Recent  Efforts
 In  1999,  the  Commission  initiated  a  rulemaking  proceeding  (WT  Docket  No.  99-  327)  to
 undertake  a  comprehensive  review  of  use  of  the  24  GHz  band.  In  a  Report  and  Order  adopted
 July  25,  2000,  the  Commission  revised  Part  101  subpart  G  to  comprehensively  regulate
 operations  within  the  24  GHz  band.  Under  the  newly  adopted  changes,  the  Commission  will
 license  the  24  GHz  band  in  40  MHz  channel  pairs,  provide  24  GHz  band  licensees  more
 flexibility  in  system  design,  implement  a  ten-  year  license  term  and  a  "substantial  service"
 requirement  at  renewal,  allow  24  GHz  band  licensees  to  partition  and/  or  disaggregate  their
 licenses,  and  introduce  flexible  technical  standards.  Existing  DEMS  licensees  are  treated  as
 incumbent  licensees  subject  to  the  new  24  GHz  rules.
 Initial  Recommendation
 In  light  of  the  Commissions  comprehensive  review  of  its  24  GHz  rules  in  WT  Docket  No.  99-
 327,  the  staff  does  not  recommend  modifications  to  Subpart  G.
 Comments
 TIA  proposes  a  modification  of  Section  101.139  of  the  Commissions  Rules,  47  C.  F.  R.  101.  139,
 to  allow  equipment  self-  verification  in  the  DEMS  bands.  513
 Recommendation
 See  initial  recommendation.  TIAs  proposal  is  embodied  in  the  Part  101  NPRM,  514  and  staff
 believes  that  its  proposal  is  best  addressed  within  that  pending  rulemaking  proceeding.
 513  Comments  of  TIA  at  p.  13.
 514  Reorganization  and  Revision  of  Parts  1,  2,  21,  and  94  of  the  Rules  to  Establish  a  New  Part  101
 Governing  Terrestrial  Microwave  Fixed  Radio  Services,  WT  Docket  No.  94-  148,  Memorandum  Opinion
 and  Order  and  Notice  of  Proposed  Rulemaking,  15  FCC  Rcd  3129,  57.
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 PART  101,  SUBPARTS  L  (LOCAL  MULTIPOINT  DISTRIBUTION  SERVICE
 (LMDS))  AND  M  (COMPETITIVE  BIDDING  PROCEDURES  FOR  LMDS)
 Description
 Part  101  515  contains  licensing,  technical,  and  operational  rules  for  the  fixed  microwave  radio
 services.  Local  Multipoint  Distribution  Service  (LMDS)  systems  are  fixed  point-  to-  point  or
 point-  to-  multipoint  radio  systems  that  consist  of  hub  and  subscriber  stations.  LMDS  licensees
 may  provide  a  variety  of  services,  including  high-  speed  data  and  Internet  services  and  multi-channel
 video  programming  distribution.  516
 Subpart  L  contains  licensing,  technical,  and  operational  rules  for  LMDS.  In  general,  the  rules  in
 this  part:  (1)  provide  eligibility  restrictions  in  this  service;  (2)  define  the  service  area  of  LMDS
 licenses;  (3)  specify  the  permissible  operations  for  authorized  systems;  (3)  specify  the  frequencies
 available  to  LMDS  licensees;  (4)  establish  license  terms;  (5)  establish  the  minimum  construction
 or  coverage  requirements  for  LMDS  licensees;  and  (6)  define  system  operations  and  permissible
 communication  services.
 Subpart  M  contains  competitive  bidding  rules  and  procedures  for  commercial  licenses  in  LMDS.
 In  particular,  the  rules,  on  a  service-  specific  basis:  (1)  provide  competitive  bidding  mechanisms
 and  design  options;  (2)  establish  application,  disclosure  and  certification  procedures  for  short-and
 long-  form  applications;  (3)  specify  down  payment,  unjust  enrichment,  withdrawal  and  default
 mechanisms;  (4)  provide  definitions  of  gross  revenues  for  designated  entities  and  specify  the
 bidding  credits  for  which  designated  entities  qualify;  and  (5)  provide  eligibility  and  technical
 requirements  for  partitioning  and  disaggregation.
 Purpose
 The  purpose  of  the  Part  101  rules  is  to  establish  rules  for  assignment  of  spectrum  for  private
 operational,  common  carrier,  and  LMDS  fixed  microwave  operations  that  require  operating
 facilities  on  land  or  in  specified  offshore  coastal  areas.  Subpart  L  contains  the  basic  licensing  and
 operational  rules  for  LMDS.  Subpart  M  helps  to  ensure  access  to  new  telecommunications
 offerings  by  ensuring  that  all  customer  segments  are  served,  that  there  is  not  an  excessive
 concentration  of  licenses,  and  that  small  businesses,  rural  telephone  companies,  and  businesses
 owned  by  women  and  minorities  will  have  genuine  opportunities  to  participate  in  the  provision  of
 service.
 Analysis
 Status  of  Competition
 LMDS  is  a  nascent  market.  517  The  initial  LMDS  operator,  Cellularvision,  no  longer  provides
 multi-  channel  video  programming  distribution  services,  and  has  announced  plans  to  offer  high-
 515  47  C.  F.  R.  Part  101.
 516  Rulemaking  to  Amend  Parts  1,  2,  21,  and  25  of  the  Commissions  Rules  to  Redesignate  the  27.5-  29.  5
 GHz  Frequency  Band,  to  Reallocate  the  29.  5-  30.0  GHz  Frequency  Band,  to  Establish  Rules  and  Policies
 for  Local  Multipoint  Distribution  Service  and  for  Fixed  Satellite  Services,  Sixth  Notice  of  Proposed
 Rulemaking,  14  FCC  Rcd  21520    32  (1999)  (LMDS  6th  NPRM).
 517  Id.
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 speed  data  access  on  a  portion  of  its  original  spectrum.  The  remaining  licenses  were  issued  by
 auctions  held  in  March  1998  and  April  and  May  1999.  Accordingly,  LMDS  equipment  is  still
 subject  to  limited  availability  and  the  majority  of  licensees  are  still  developing  their  systems.  518
 LMDS  will  most  likely  compete  with  wireless  and  wireline  broadband  service  providers  targeting
 small  and  medium  businesses.  519
 Advantages
 The  Subpart  L  rules  provide  licensees  with  broad  flexibility  to  identify  and  implement  services  in
 response  to  market  demand.  The  Commission  recently  allowed  LMDS  eligibility  restrictions  for
 incumbent  local  exchange  carrier  and  cable  companies  to  sunset;  520  this  development  should
 provide  access  to  additional  capital  to  develop  LMDS  fully,  make  administration  of  LMDS
 consistent  with  other  competitive  services,  and  aid  the  development  of  LMDS  in  rural  markets.  521
 The  Subpart  M  competitive  bidding  rules,  in  conjunction  with  our  spectrum  allocation  rules,
 promote  economic  growth  and  enhance  access  to  telecommunications  service  offerings  for
 consumers,  producers,  and  new  entrants.  The  competitive  bidding  rules  of  Subpart  M  were
 structured  to  promote  opportunity  and  competition.  This  has  resulted  in  the  rapid  implementation
 of  new  and  innovative  services  and  the  efficient  use  of  spectrum  use,  thereby  fostering  economic
 growth.  In  contrast  to  lotteries  and  comparative  hearings,  auctions  are  faster,  more  efficient,  and
 more  likely  to  get  spectrum  to  entities  that  value  it  the  most.  Through  these  rules,  the
 Commission  has  recovered  a  portion  of  the  value  of  the  public  spectrum.
 Disadvantages
 There  are  no  discernable  disadvantages  to  the  LMDS  rules.  The  existing  rules  consist  of
 technical  and  operational  rules  that  are  necessary  for  administration  of  the  service.
 The  Subpart  M  competitive  bidding  rules  have  no  significant  disadvantages.  The  auction  rules  in
 this  subpart  impose  certain  transaction  costs  on  auction  participants  (aside  from  the  obligation  on
 the  winning  bidder  to  pay  the  amount  bid).  These  auction-  related  costs  may  be  somewhat  higher
 than  the  cost  of  filing  a  lottery  application.  However,  they  also  tend  to  discourage  frivolous  or
 speculative  applications  and  are  critical  for  ensuring  the  integrity  of  the  auction  process.  In
 addition,  certain  aspects  of  the  auctions  process  (e.  g.,  setting  of  minimum  opening  bid  amounts,
 bid  increments,  and  bidding  credit  levels)  still  require  service-  specific  notice  and  comment  prior
 to  each  individual  auction.  Nonetheless,  the  delays  associated  with  auctions  are  significantly  less
 than  those  associated  with  other  licensing  mechanisms.
 518  See  Rulemaking  to  Amend  Parts  1,  2,  21,  and  25  of  the  Commissions  Rules  to  Redesignate  the  27.  5-29.5
 GHz  Frequency  Band,  to  Reallocate  the  29.  5-  30.  0  GHz  Frequency  Band,  to  Establish  Rules  and
 Policies  for  Local  Multipoint  Distribution  Service  and  for  Fixed  Satellite  Services,  Third  Report  and  Order
 and  Memorandum  Opinion  and  Order,  FCC  00-  223  (June  27,  2000)  at  App.  B  (LMDS  3rd  R&  O)  for  a
 comprehensive  list  of  LMDS  launches  and  the  types  of  service  each  carrier  is  providing.
 519  LMDS  3rd  R&  O.
 520  LMDS  3rd  R&  O.
 521  Id.  at  para.  33.
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 210
 Recent  Efforts
 The  June  23,  2000,  LMDS  Third  R&  O  allowed  the  cross-  ownership  restriction  to  expire  on  June
 30.  The  decision  to  allow  the  cross-  ownership  rule  to  sunset  was  based  on  a  thorough  analysis  of
 competitive  issues  and  the  LMDS  market.
 The  Commission  has  made  significant  changes  to  the  competitive  bidding  rules  of  Part  1  Subpart
 Q.  In  the  Part  1  Third  Report  and  Order,  522  the  Commission  made  substantive  amendments  and
 modifications  to  the  competitive  bidding  rules  for  all  auctionable  services.  These  changes  to  the
 competitive  bidding  rules  are  intended  to  streamline  regulations  and  eliminate  unnecessary  rules
 wherever  possible,  increase  the  efficiency  of  the  competitive  bidding  process,  and  provide  more
 specific  guidance  to  auction  participants.  The  changes  also  advance  our  auction  program  by
 reducing  the  burden  on  the  Commission  and  the  public  of  conducting  service-  by-  service  auction
 rule  makings,  such  as  those  rule  makings  that  created  the  competitive  bidding  rules  of  Subpart  M.
 Initial  Recommendation
 The  staff  recommends  that  no  substantive  changes  be  made  to  this  subpart  at  this  time.  Certain
 nonsubstantive  revisions  could  be  made  to  the  LMDS  rules  for  the  purposes  of  simplification  and
 to  provide  clarity  to  licensees  and  applicants.  523  The  staff  also  concludes  that  substantive
 modification  of  the  Subpart  M  competitive  bidding  rules  is  not  necessary  at  this  time.  To  the
 extent  that  future  auctions  are  necessary  in  LMDS,  the  staff  recommends  that  they  be  governed
 by  Part  1,  and  that  consideration  be  given  to  eliminating  or  phasing  out  the  separate  rules  in  this
 subpart  to  the  extent  they  are  redundant.
 Comments
 TIA  proposes  a  modification  of  Section  101.139  of  the  Commissions  Rules,  47  C.  F.  R.  101.  139,
 to  allow  equipment  self-  verification  in  the  LMDS  bands.  524  TIA  also  proposes  technical
 modifications  to  the  LMDS  rules.  525
 Recommendation
 Unchanged.  The  issues  TIA  raises  are  being  considered  as  part  of  the  Part  101  NPRM,  526  and
 staff  believes  that  TIAs  proposals  are  best  addressed  within  that  pending  rulemaking  proceeding.
 522  See  Amendment  of  Part  1  of  the  Commissions  Rules    Competitive  Bidding  Procedures,  Allocation  of
 Spectrum  Below  5  GHz  Transferred  from  Federal  Government  Use,  Third  Report  and  Order  and  Second
 Further  Notice  of  Proposed  Rule  Making,  13  FCC  Rcd  374  (1997)  (modified  by  Erratum,  DA  98-  419  (rel.
 Mar.  2,  1998))  (Part  1  Third  Report  and  Order).
 523  For  example,  Section  101.1001,  47  C.  F.  R.    101.  1001,  should  be  amended  to  remove  the  cross-reference
 to  now-  deleted  Section  100.1003.
 524  Comments  of  TIA  at  p.  13.
 525  Id.  at  p.  12.
 526  Reorganization  and  Revision  of  Parts  1,  2,  21,  and  94  of  the  Rules  to  Establish  a  New  Part  101
 Governing  Terrestrial  Microwave  Fixed  Radio  Services,  WT  Docket  No.  94-  148,  Memorandum  Opinion
 and  Order  and  Notice  of  Proposed  Rulemaking,  15  FCC  Rcd  3129,  54,  57.
307