[Federal Register Volume 62, Number 177 (Friday, September 12, 1997)]
[Proposed Rules]
[Pages 48042-48047]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24211]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 54 and 69

[CC Docket No. 97-181; FCC 97-316]


Defining Primary Lines

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: As a result of reforms adopted to implement the 
Telecommunications Act of 1996, our access charge rules require 
incumbent LECs subject to the Commission's price cap rules to charge 
subscriber line charges (SLCs) and presubscribed interexchange carrier 
charges (PICCs) at different levels for secondary residential and 
multi-line business lines. This NPRM considers how Commission should 
define and identify primary lines for the purposes of implementing the 
Commission's access charge rules.

DATES: Pursuant to applicable procedures set forth in Secs. 1.415 and 
1.419 of the Commission's rules, 47 CFR 1.415 and 1.419, interested 
parties may file comments on or before September 25, 1997, and reply 
comments on or before October 9, 1997. Written comments by the public 
on the proposed and/or modified information collections are due 
September 25, 1997. Written comments must be submitted by the Office of 
Management and Budget (OMB) on the proposed and/or modified information 
collections on or before November 12, 1997.

ADDRESSES: Parties should send their comments or reply comments to 
Office of the Secretary, Federal Communications Commission, 1919 M 
Street, N.W., Room 222, Washington, D.C. 20554. Parties filing on paper 
should also send three (3) copies of their comments to Sheryl Todd, 
Federal Communications Commission, Accounting and Audits Division, 
Universal Service Branch, 2100 M Street, N.W., Room 8611, Washington, 
DC 20554. Parties filing in paper form should also file one copy of any 
documents filed in this docket with the Commission's copy contractor, 
International Transcription Services, Inc., 1231 20th Street, NW, 
Washington, D.C. 20036. See Supplementary Information section for 
further information about filing comments and reply comments 
electronically.
    In addition to filing comments with the Secretary, a copy of any 
comments on the information collections contained herein should be 
submitted to Judy Boley, Federal Communications Commission, Room 234, 
1919 M Street, N.W., Washington, DC 20554, or via the Internet to 
<a href="/cdn-cgi/l/email-protection#6e040c01020b172e080d0d40090118"><span class="__cf_email__" data-cfemail="93f9f1fcfff6ead3f5f0f0bdf4fce5">[email protected]</span></a>, and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 
725--17th Street, N.W., Washington, DC 20503 or via the Internet to 
<a href="/cdn-cgi/l/email-protection#2a4c4b434475755e6a4b46044f455a044d455c"><span class="__cf_email__" data-cfemail="2f494e464170705b6f4e43014a405f01484059">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: Valerie Yates, Legal Counsel, Common 
Carrier Bureau, (202) 418-1500, or Sheryl Todd, Common Carrier Bureau, 
(202) 418-7400. For additional information concerning the information 
collections contained in this NPRM contact Judy Boley at 202-418-0214, 
or via the Internet at <a href="/cdn-cgi/l/email-protection#83e9e1ecefe6fac3e5e0e0ade4ecf5"><span class="__cf_email__" data-cfemail="046e666b68617d446267672a636b72">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    1. This NPRM contains either a proposed or modified information 
collection. The Commission, as part of its continuing effort to reduce 
paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collections 
contained in this NPRM, as required by the Paperwork Reduction Act of 
1995, Public Law 104-13. Public and agency comments are due at the same 
time as other comments on this NPRM; OMB notification of action is due 
60 days from date of publication of this NPRM in the Federal Register. 
Comments should address: (a) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology.
    OMB Approval Number: None, new information collection.
    Title: In the Matter of Federal-State Joint Board on Universal 
Service, Defining Primary Lines, Notice of Proposed Rulemaking, CC 
Docket No. 97-181.
    Form No.: None.
    Type of Review: New collection.
    Respondents: Business or other for-profit.
    Frequency of Response: On occasion; one-time requirement.

----------------------------------------------------------------------------------------------------------------
                                                      No. of       Est. time per   Total annual   Est. costs per
               Proposed collection                  respondents      response         burden        respondent  
----------------------------------------------------------------------------------------------------------------
(a.) Request by ILEC to consumer................             164             100          16,400       1,6400.00
(b.) Response by consumer to identify primary                                                                   
 line...........................................     149,141,075         \1\.083      12,378,709            0.00
(c.) Disclosure statement.......................             164             100          16,400            0.00
(d.) Recordkeeping..............................             164              50           8,200     286,040.00 
----------------------------------------------------------------------------------------------------------------
\1\ 5 min.                                                                                                      

    Total Annual Burden: 12,419,709 hours.
    Needs and Uses: The information collections proposed in this NPRM 
are necessary to fully implement the rules the Commission adopted in 
its Universal Service Order and Access Charge Reform Order because, 
without a definition and a means of identifying and verifying primary 
residential lines, incumbent LECs subject to Commission price cap 
regulation will not be able to

[[Page 48043]]

assess the appropriate charges for these lines. Requiring incumbent 
LECs to assess different-level charges on primary residential lines is 
necessary to balance between reforming our access charge rules to 
facilitate local competition, and preserving and advancing universal 
service by taking action to maintain low rates for subscribers to local 
telephone service.

Summary of Analysis, Tentative Conclusions, and Issues for Comment

I. Introduction

    2. In the Universal Service Order and the Access Charge Reform 
Order we concluded that the $3.50 cap on the subscriber line charge 
(SLC) for primary residential and single-line businesses should remain 
unchanged. See Federal-State Joint Board on Universal Service, (62 FR 
32862 (June 17, 1997)) (hereinafter Universal Service Order); Access 
Charge Reform, (62 FR 31868, (June 11, 1997)) (hereinafter Access 
Charge Reform Order); see also Federal-State Joint Board on Universal 
Service, (61 FR 63778 (December 2, 1996)) (hereinafter Recommended 
Decision). In the Access Charge Reform Order, however, we adjusted the 
SLC caps for additional residential and business lines. We also created 
a presubscribed interexchange carrier charge (PICC) that will, over 
time, supplant the traffic-sensitive carrier common line charge (CCLC). 
Under our new access charge rules, in 1998 SLC and PICC levels for 
primary residential and single-line business lines will be lower than 
the levels prescribed for secondary residential and multi-line business 
lines. As a result of these changes, we must establish criteria to 
identify primary residential lines for the purpose of determining SLC 
and PICC levels.

II. Discussion

    3. Although this NPRM focuses on price cap ILECs, we also solicit 
comment on whether the various proposals set forth in this NPRM for 
defining, identifying, and verifying primary lines for price cap ILECs 
could also be applied for rate-of-return ILECs if, in a future 
proceeding, the Commission concludes that all ILECs should assess SLCs 
and PICCs that are higher for secondary lines.
A. Defining Single-Line Business Lines and Primary Residential Lines
    4. We invite parties to describe the methods carriers use to 
distinguish multiple-line businesses from single-line businesses and to 
distinguish between residential and business customers, and seek 
comment on whether the Commission should revise its rules or policies 
to ensure the correct SLCs and PICCs are assessed on these lines. In 
particular, we note, that Sec. 69.104(h) defines a single-line business 
line. It states: ``A line shall be deemed to be a single line business 
line if the subscriber pays a rate that is not described as a 
residential rate in the local exchange service tariff and does not 
obtain more than one such line from a particular telephone company.'' 
47 CFR 69.104(h). In the Access Charge Reform Order, we defined the 
term ``telephone company'' for the purposes of part 69 of our rules, to 
mean an ``incumbent LEC'' as that term is defined in section 251(h)(1) 
of the Act. 47 CFR 69.2 We seek comment on whether we should alter this 
definition. We seek comment on whether maintaining this definition 
would be favorable because, given that only price cap ILECs will assess 
different SLCs and PICCs on multi-line businesses, maintaining this 
definition would allow incumbent LECs to assess the correct SLCs and 
PICCs without determining whether a customer receives service from 
other carriers. We note however, that if we maintain this definition, a 
business that obtains one line from an ILEC and one line from a 
competitive LEC or a wireless carrier would be treated as a single-line 
business for the purposes of its SLC and PICC. We seek comment on 
whether this outcome would be competitively neutral and whether it 
would be consistent with the Joint Board's recommendations with respect 
to the level of the primary line SLC. We further seek comment on 
whether a business with a single line in each of two locations should 
be considered a single-line business.
    5. Primary residential line. We seek comment on how we should 
define ``primary residential line.'' Specifically, we seek comment on 
whether the primary residential line should be defined as the primary 
line of an individual subscriber, of a residence, of an individual 
household, or on another basis. For example, defining the primary line 
as the primary line to a primary residence would not allow two 
households in a single residence each to subscribe to a line that is 
subject to the primary-line level SLC and PICC (i.e., one of the two 
lines would be subject to the higher SLC and PICC). Conversely, 
defining the primary line in terms of a subscriber's residence may have 
the advantage of being administratively simple and less invasive of 
subscribers' privacy because it does not require the gathering of 
information regarding subscriber living arrangements that would be 
needed to identify households. We seek comment on these issues.
    6. Parties that favor defining the primary residential line in 
terms of ``subscribers,'' ``residences,'' ``households,'' or any other 
term, should propose definitions of such terms, including definitions 
used by other entities. We seek comment on whether we should use, for 
example, the definition of household used by either the U.S. Census 
Bureau, see U.S. Department of Commerce, Bureau of the Census, Census 
of Population and Housing, 1990, Technical Documentation (May 1992) at 
B-14, or the Internal Revenue Service (IRS), see 26 CFR 1.2-2(b)(3) or 
(4); 26 U.S.C. 26 U.S.C. 151. We ask parties to identify other 
definitions that may be easily applied by consumers and carriers alike. 
Additionally, we ask parties to estimate, to the extent possible, the 
number of lines that will be classified as primary residential lines 
under any definition that they support. Parties should also discuss how 
the definition of the primary residential line selected would affect 
the success of the approach, discussed below, they favor to verify the 
number of such lines.
B. Identification of Primary Residential Lines
    7. Information Required To Identify Primary Residential Lines. We 
tentatively conclude that, although an ILEC's business records likely 
distinguish between single-line and multi-line customers, and between 
residential and business customers, those records may be inadequate to 
identify the primary residential line. For these reasons, we 
tentatively conclude that identifying a primary residential line 
requires: (1) Identification of the subscriber, residence, or household 
(depending on the definition adopted); (2) identification of the 
primary residence of the subscriber or household; and (3) 
identification of the primary line, and of the incumbent LEC and 
interexchange carrier serving that line. We seek comment on these 
tentative conclusions.
    8. Using Customer Self-Certification To Collect Information. We 
tentatively conclude that the Commission should permit price cap ILECs 
to use customer self-certification to identify primary lines for access 
charge purposes. We make this tentative conclusion because such an 
approach presumably would minimize the substantial administrative costs 
that would be inherent in any effort to require carriers or the 
Commission to identify primary residential lines without information

[[Page 48044]]

from the customer. The burden that self-certification will impose on 
individual customers would be significantly less than the burden that 
ILECs would otherwise bear to identify each of their customers' primary 
line independent of the customer.
    9. We seek comment on the language that would have to be posed to 
subscribers to determine which is their primary residential line under 
such a self-certification proposal. We seek comment on whether we 
should adopt uniform language, or whether carriers should devise their 
own method of acquiring this information. We seek comment on whether 
LECs should be required to inform customers of the consequences of 
providing false information or designating more than one line as a 
primary line. We seek comment on how often this information should be 
collected. We tentatively conclude that this information should be 
collected once from all customers currently being served by price cap 
ILECs, and thereafter only at the time a customer orders service from a 
price cap ILEC. We seek comment on procedures that could be used to 
identify when customers switch service to a competing carrier. We also 
tentatively conclude that price cap ILECs should be required to 
maintain documentation of their customers' self-certification that is 
adequate to permit verification of the number of primary lines an ILEC 
reportedly serves. We seek comment on whether documentation could be 
accomplished by permitting customers to provide oral certification that 
is noted in the price cap ILEC's records or whether customers should be 
required to self-certify in writing. We also seek comment on how long 
these ILECs should be required to maintain documentation of customer 
self-certification. In addition, we seek comment on what action the 
price cap ILEC should take if a customer fails to provide a self-
certification. We seek comment on any other administrative procedures 
parties recommend to implement a self-certification method of 
identifying primary residential lines, and are particularly interested 
in proposals that will reduce the administrative burden on carriers and 
customers.
    10. Resellers. We seek comment on how to identify secondary lines 
for resellers that resell wholesale exchange service purchased from 
price cap ILECs. We seek comment on whether the Commission should 
require resellers to identify the primary and secondary lines of their 
customers and relay that information to price cap ILECs, or, whether 
price cap ILECs should identify the primary and secondary lines for 
resellers' customers directly. We seek comment on whether, if, for 
example, a reseller collected customer certifications, the reseller 
should pass along the original copies of its customers' certifications 
to the price cap ILEC from which it is purchasing wholesale service. We 
invite alternative proposals, and encourage parties to suggest 
proposals that will accurately identify the secondary lines served by 
resellers and will be administratively simple to implement.
    11. Although databases maintained by price cap ILECs could be 
useful to those ILECs for retaining customer records, we tentatively 
conclude that we will not use a national database, maintained by the 
Commission or another entity on a nation-wide basis, to track primary 
residential lines or single-line businesses for two reasons. First, 
such a database is not necessary to implement our access charge rules. 
Second, the administrative resources necessary to create such a 
database might outweigh any additional accuracy gained from this 
approach.
    12. Other Proposals. We tentatively conclude that we will not 
pursue several other approaches presented by commenters in the 
Universal Service proceeding. We tentatively conclude that we will not 
adopt Teleport's proposal to use county and municipal records and 
databases to identify addresses of individuals. We also tentatively 
conclude, for the reasons articulated by MFS and to protect the privacy 
of consumers, that social security numbers should not be used to track 
primary residential lines.
    13. Privacy Issues. We encourage parties to comment on any 
potential issues related to subscriber privacy that may be raised by 
the customer self-certification proposal discussed above. Specifically, 
we seek comment on whether requiring consumers to provide information 
to their price cap ILECs regarding the identification of their 
households and primary residences would be consistent with those 
consumers' reasonable expectations of privacy and whether the Privacy 
Act would apply to the collection of self-certifications by ILECs. We 
tentatively conclude that we should require ILECs that collect this 
information to use this information only for the purposes of 
determining the correct SLC and PICC for individual consumers' lines, 
and not disclose it or permit access to it for any other purposes. We 
request comment on whether primary line information would constitute 
customer proprietary network information as defined in section 
222(f)(1) of the Act. 47 U.S.C. 222(f)(1). We seek comment on whether 
sections 222 (c)(1), (d)(1), (d)(2), other parts of section 222, or 
other sections of the Act present exceptions that would allow carriers 
to disclose primary line information to the Commission, or another 
entity selected by the Commission, without customer approval.
C. Verifying Primary Residential Line Information
    14. We tentatively conclude the Commission should implement a 
method to verify the number of primary lines served by a carrier, 
identified through customer self-certification. In light of the 
potential incentives for carriers to misreport the number of lines to 
which the end users subscribe, we tentatively conclude that we should 
adopt a method of verifying the number of primary lines served by price 
cap ILECs.
    15. Audits. Although the Commission has broad authority to audit 
telecommunications carriers' records, 47 U.S.C. 220(c), we seek comment 
on whether audits would be an effective way to examine discrepancies in 
the number of primary lines a carrier serves and the number of primary-
line SLCs and PICCs the carrier charges. Such audits would utilize 
appropriate auditing techniques and procedures to verify the number of 
primary-line SLCs and PICCs assessed by price cap ILECs. We tentatively 
conclude that audits of the ILEC's records could be performed to 
determine whether the ILEC misreported primary lines. We seek comment 
on our tentative conclusion to use audits to verify primary lines and 
on the type of audit that would be most effective and efficient. We 
also seek comment on what controls or procedures should be implemented 
that would protect against the possibility of a price cap ILEC 
misreporting primary lines.
    16. Models. In the context of formulating a forward-looking 
economic cost mechanism to estimate the cost of providing service in 
high cost areas, the proponents of the Hatfield model have developed a 
method for estimating the number of primary lines in a census block. We 
seek comment on whether this method, or another modeling approach, 
could assist the Commission in verifying the number of primary lines 
served by price cap ILECs. Specifically, we seek comment on whether the 
Commission could use the estimates generated by the Hatfield model in 
conjunction with an audit. We also seek comment on whether the Hatfield 
approach would have to be modified to account for second homes. In 
addition,

[[Page 48045]]

we note that the Commission recently collected data on, inter alia, the 
number of loops served by carriers and the number of residential 
customers that subscribe to more than one line. We seek comment on 
whether these data would assist in verifying primary line counts.

D. Enforcement

    17. We seek comment on available methods for the Commission to 
enforce its access charge rules, which impose different maximum SLCs 
and PICCs depending on whether a line is a primary or secondary line. 
We seek comment on whether the Commission's authority under sections 
4(i), 206-209, 312, 403, and 503 of the Communications Act of 1934, and 
the provisions of Title 18 of the United States Code, 18 U.S.C. 
1001(a), is sufficient to deter fraud or misrepresentation by carriers 
or consumers that may arise under the customer self-certification 
approach. We tentatively conclude that we should require carriers to 
notify their customers of the requirement to identify a single primary 
local exchange carrier and a single primary residence. We request 
comment on this tentative conclusion. We also seek comment on whether 
we should adopt measures to deter consumers from identifying more than 
one primary line.
    18. We also seek comment on what types of sanctions would be 
appropriate and consistent with the Commission's statutory authority to 
punish violations of our rules regarding the identification of primary 
lines and request comment on whether section 222(c)(1) or any other 
portion of section 222 provides adequate authority to prevent misuse of 
the information that carriers collect. We tentatively conclude that, if 
the Commission, as a result of an audit or other method of verifying 
primary line counts, discovered that a price cap ILEC had misreported 
the number of primary lines it serves, the Commission could take the 
following actions: (1) Order the price cap ILEC to correct its billing 
practices and assess SLCs and PICCs at the correct level; (2) impose 
forfeitures pursuant to 47 U.S.C. 220(d) or 503(b) for violations of 
the Commission's rules; and (3) require the price cap ILEC to have an 
independent auditor conduct audits of its records at regular intervals 
determined by the Commission. We seek comment on these tentative 
conclusions.

E. Consumer Disclosure

    19. We seek comment on whether the Commission should require 
carriers to provide consumers with a uniform disclosure statement 
describing this distinction. We tentatively conclude that such a 
disclosure requirement would be consistent with applicable First 
Amendment standards and invite comment on that conclusion. We seek 
comment on whether, for example, all local exchange carriers that 
charge a SLC should be required to make the following statement:

    The subscriber line charge is a fee collected by your local 
telephone company to defray part of the costs of providing telephone 
service. The subscriber line charge covers the costs that can be 
attributed to providing customers with the ability to place 
telephone calls across state lines. In order to ensure that all 
customers have affordable access to local telephone service, the 
Federal Communications Commission allows your local telephone 
company to charge no more than $3.50 for the subscriber line charge 
for each primary residential line. For additional lines, the Federal 
Communications Commission allows local telephone companies to charge 
no more than $5.00 per line for the subscriber line charge in 1998.

    We seek comment on whether this statement will be easily understood 
by all consumers. We invite alternate suggestions for a uniform 
consumer disclosure statement. We seek comment on whether this 
statement should be given orally at the time when a subscriber orders 
telephone service. We seek comment on whether this statement should be 
provided in writing to all consumers when the change takes effect. We 
seek comment on how, if we adopt a consumer disclosure statement 
including a reference to the SLC cap on secondary lines, such 
disclosure statement should indicate the annual increases in the SLC 
cap. We seek comment on whether such a statement would be compatible 
with marketing and consumer information campaigns that carriers may 
have instituted or that they may be formulating in preparation for the 
Commission's new access charge rules.

Deadlines and Instructions for Filing Comments

    20. Pursuant to applicable procedures set forth in Secs. 1.415 and 
1.419 of the Commission's rules, 47 CFR 1.415 and 1.419, interested 
parties may file comments on or before September 25, 1997, and reply 
comments on or before October 9, 1997.
    21. We direct all interested parties to include the name of the 
filing party and the date of the filing on each page of their comments 
and reply comments. Comments and reply comments also must clearly 
identify the specific portion of this NPRM to which a particular 
comment or set of comments is responsive. If a portion of a party's 
comments does not fall under a particular topic listed in the outline 
of this NPRM, such comments must be included in a clearly labelled 
section at the beginning or end of the filing. Irrespective of the 
length of their comments or reply comments, parties shall include a 
table of contents in their documents. Cf. 47 CFR 1.49(b).
    22. Parties should send their comments or reply comments to Office 
of the Secretary, Federal Communications Commission, 1919 M Street, 
N.W., Room 222, Washington, D.C. 20554. Parties filing on paper should 
also send three (3) copies of their comments to Sheryl Todd, Federal 
Communications Commission, Accounting and Audits Division, Universal 
Service Branch, 2100 M Street, N.W., Room 8611, Washington, DC 20554. 
Parties filing in paper form should also file one copy of any documents 
filed in this docket with the Commission's copy contractor, 
International Transcription Services, Inc., 1231 20th Street, NW, 
Washington, D.C. 20036. Comments and reply comments will be available 
for public inspection during regular business hours in the FCC 
Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C. 
20554.
    23. Commenters may also file informal comments or an exact copy of 
formal comments electronically via the Internet at: <<a href="http://
gullfoss.fcc.gov/cgi-bin/websql/cgi-bin/comment/comment.hts">http://
gullfoss.fcc.gov/cgi-bin/websql/cgi-bin/comment/comment.hts</a>>. Only one 
copy of electronically filed comments must be submitted. A commenter 
must note whether an electronic submission is an exact copy of formal 
comments on the subject line. A commenter also must include its full 
name and Postal Service mailing address its submission.
    24. Parties not submitting an exact copy of their comments via the 
Internet are also asked to submit their comments and reply comments on 
diskette. Such diskette submissions are in addition to and not a 
substitute for the formal filing requirements addressed above. Parties 
submitting diskettes should submit them to Sheryl Todd of the Common 
Carrier Bureau, 2100 M Street, N.W., Room 8611, Washington, D.C. 20554. 
Such a submission should be on a 3.5 inch diskette formatted in an IBM 
compatible form using WordPerfect 5.1 for Windows or compatible 
software. The diskette should be submitted in ``read only'' mode. The 
diskette should be clearly labelled with the party's name, proceeding, 
type of pleading (comment or reply comments) and date of submission. 
Each diskette should contain only one party's comments in a single 
electronic file. The diskette

[[Page 48046]]

should be accompanied by a cover letter.
    25. Written comments by the public on the proposed information 
collections are due September 25, 1997. Written comments must be 
submitted by OMB on the proposed information collection on or before 60 
days after the date of publication in the Federal Register. In addition 
to filing comments with the Secretary, a copy of any comments on the 
information collections contained herein should be submitted to Judy 
Boley, Federal Communications Commission, Room 234, 1919 M Street, 
N.W., Washington, D.C. 20554, or via the Internet to <a href="/cdn-cgi/l/email-protection#7218101d1e170b321411115c151d04"><span class="__cf_email__" data-cfemail="83e9e1ecefe6fac3e5e0e0ade4ecf5">[email protected]</span></a> and 
to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street, N.W., 
Washington, D.C. 20503 or via the Internet to <a href="/cdn-cgi/l/email-protection#0a6c6b636455557e4a6b66246f657a246d657c"><span class="__cf_email__" data-cfemail="f99f989097a6a68db99895d79c9689d79e968f">[email protected]</span></a>.

Initial Regulatory Flexibility Analysis

    26. Pursuant to the Regulatory Flexibility Act (RFA), the 
Commission has prepared this Initial Regulatory Flexibility Analysis 
(IRFA) of the expected significant economic impact of these proposed 
policies and rules on small entities. Written public comments are 
requested on the IRFA. These comments must be filed in accordance with 
the same filing deadlines as comments on the rest of this NPRM, and 
should have a separate and distinct heading designating them as 
responses to the IRFA. The Commission will send a copy of this NPRM, 
including the IRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration (SBA) in accordance with the RFA. See 5 U.S.C. 
603. The RFA, see 5 U.S.C. 601 et seq., has been amended by the 
Contract With America Advancement Act of 1996, Public Law 104-121, 110 
Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA).
    27. Need for and Objectives of the Proposed Rules. Three principal 
goals of the Telecommunications Act of 1996 are: (1) Opening local 
exchange and exchange access markets to competition; (2) promoting 
increased competition in telecommunications markets that are already 
open to competition, particularly long distance services markets; and 
(3) reforming our system of universal service so that universal service 
is preserved and advanced as local exchange and exchange access markets 
move from monopoly to competition. The Commission's access charge and 
universal service rules were adopted at a time when interstate access 
and local exchange services were offered on a monopoly basis, and in 
many cases are inconsistent with the competitive market envisioned by 
the 1996 Act. This NPRM is necessary to implement the rules the 
Commission adopted in its Universal Service Order and Access Charge 
Reform Order because, without a definition and a means of identifying 
and verifying primary residential lines, price cap ILECs will not be 
able to assess the appropriate charges for these lines. With this NPRM, 
we seek to identify primary residential lines in order to make the 
Commission's access charge and universal service rules consistent with 
Sections 251 and 254 of the Telecommunications Act of 1996.
    28. Legal Basis. The proposed action is supported by Sections 4(i), 
4(j), 201-205, 251, 254, and 403 of the Communications Act of 1934, as 
amended, 47 U.S.C. 154(i), 154(j), 201-205, 251, 254, and 403.
    29. Description and Estimate of the Number of Small Entities That 
May Be Affected by This NPRM. The RFA directs the Commission to provide 
a description of, and where feasible, and estimate of the number of 
small entities that might be affected by proposed rules. The RFA 
defines the term ``small entity'' as having the same meaning as the 
term ``small business,'' ``small organization,'' and ``small business 
concern'' under section 3 of the Small Business Act (SBA). See 5 U.S.C. 
601(3) (incorporating by reference the definition of ``small business 
concern'' in 15 U.S.C. 632). The Commission may also develop additional 
definitions that are appropriate to its activities. To be a small 
business concern, an entity must: (1) Be independently owned and 
operated; (2) be not dominant in its field of operation; and (3) meet 
any additional criteria established by the SBA. See 15 U.S.C. 632.
    30. We believe that small ILECs are not small businesses for IRFA 
purposes because each is either dominant in its field of operation or 
is not independently owned and operated. We have found ILECs to be 
``dominant in their field of operation'' since the early 1980s, and we 
consistently have certified under the Regulatory Flexibility Act, see 5 
U.S.C. 605(b), that ILECs are not subject to regulatory flexibility 
analysis requirements because they are not ``small business concerns.'' 
Out of an abundance of caution, for regulatory flexibility analysis 
purposes we will consider small ILECs within this present analysis and 
use the term ``small ILECs'' to refer to any incumbent LEC that 
arguably might be defined by SBA as a small business concern.
    31. The proposals under consideration in this NPRM, if adopted, 
would affect the fourteen (14) ILECs subject to price cap regulation by 
the Commission. Neither the Commission nor the SBA has developed a 
definition of small providers of local exchange service. The closest 
applicable definition under SBA rules is for telephone 
telecommunications companies other than radiotelephone (wireless) 
companies. The SBA has defined a small business for Standard Industrial 
Classification (SIC) category 4813 (Telephone Communications, Except 
Radiotelephone) to be an entity with no more than 1,500 employees, 15 
U.S.C. 632 (citing 13 CFR 121.201). Of the fourteen ILECs subject to 
price cap regulation, we estimate that, at a maximum, six (6) of them 
have no more than 1,500 employees. Of these six, we estimate that at 
least one is not independently owned and operated. We seek comment on 
these estimates.
    32. In addition, the proposals in this NPRM may also affect 
providers of local exchange service that purchase wholesale services 
from the 14 incumbent price cap LECs and resell that service to 
customers. Neither the Commission nor the SBA has developed a 
definition of small entities specifically applicable to resellers. The 
closest applicable SBA definition for a reseller is a telephone 
communications company except radiotelephone (wireless) companies. 13 
CFR 121.201, SIC 4813. However, the most reliable source of information 
regarding the number of resellers nationwide is the data that the 
Commission collects annually in connection with the TRS Worksheet. 
According to our most recent data, 260 companies reported that they 
were engaged in the resale of telephone service. We estimate that 
between 50 and 150 of these companies offer local exchange service on a 
resale basis, but we do not have data regarding how many of these 
carriers purchase service from price cap ILECs. We also do not have 
information on the number of these carriers that are not independently 
owned and operated or have more than 1,500 employees, and thus we are 
unable at this time to estimate with greater precision the number of 
resellers that would qualify as small entities or small incumbent LEC 
concerns under the SBA's definition. Consequently, we estimate that 
there are fewer than 150 small entity resellers.
    33. Reporting, record keeping, and other compliance requirements. 
The proposals to establish a customer certification system amy require 
price cap ILECs to ask customers to identify their primary lines, 
maintain records verifying a customer's primary line

[[Page 48047]]

designation, submit their records to Commission audits to verify 
accuracy of primary line counts, and publish a consumer disclosure 
statement in their monthly bills.
    34. Steps Taken to Minimize Significant Economic Impact on Small 
Entities and Alternatives Considered. Throughout this NPRM, we seek 
comment on alternatives that will reduce the impact on all entities 
affected by these proposals, including small ILECs. We tentatively 
adopt a definition of single-line business lines that, we believe, will 
result in a smaller administrative burden for ILECs as they identify 
primary and secondary lines in order to charge the correct SLC or PICC. 
In addition, we ask commenters to identify the relative costs and 
benefits, including administrative costs, of adopting a particular 
definition of primary residential line. We ask parties to identify a 
definition of primary residential line that will be easy for carriers 
and customers to apply. We tentatively adopt customer self-
certification as a means to identify primary lines because this method 
of identification is less administratively burdensome for ILECs than a 
method that does not include customer input. We seek comment on 
whether, and if so, the amount of time, ILECs must keep records of 
customer self-certification. We particularly encourage parties to 
submit proposals that will reduce the administrative burden on carriers 
and customers. We seek comment on whether we should include a 
standardized customer disclosure statement, and if so, whether that 
disclosure should be made in writing or may be made orally.
    35. At this time, we tentatively conclude to eliminate several 
options because they would be too administratively burdensome. The 
proposals we tentatively reject include: creating and maintaining a 
national database of primary line designations; using local property 
records to identify and track primary lines; and using social security 
numbers to track primary lines.
    36. Federal rules which overlap, duplicate or conflict with this 
rule. None.

Ordering Clauses

    37. It is ordered, pursuant to Sections 1, 4 (i) and (j), 201-209, 
218-222, 251, 254, and 403 of the Communications Act as amended, 47 
U.S.C. 151, 154(i), 154(j), 201-209, 218-222, 251, 254, and 403 that 
this Notice of Proposed Rulemaking is hereby adopted and comments are 
requested as described above.
    38. It is further ordered that the Commission shall send a copy of 
this Notice of Proposed Rulemaking, including the Initial Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects

47 CFR Part 54

    Communications common carriers, Health facilities, Libraries, 
Reporting and recordkeeping requirements, Schools, Telecommunications, 
Telephone.

47 CFR Part 69

    Communications common carriers, Reporting and recordkeeping 
requirements, Telephone.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-24211 Filed 9-11-97; 8:45 am]
BILLING CODE 6712-01-U


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