[Federal Register Volume 65, Number 219 (Monday, November 13, 2000)]
[Proposed Rules]
[Pages 67675-67688]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28886]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 32, 43 and 64

[CC Docket No. 00-199; FCC 00-364]


2000 Biennial Regulatory Review--Comprehensive Review of the 
Accounting Requirements and ARMIS Reporting Requirements for Incumbent 
Local Exchange Carriers: Phase 2 and Phase 3

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this document the Commission is initiating Phase 2 and 
Phase 3 of the 2000 Biennial Regulatory Review--Comprehensive 
Accounting and ARMIS review. This Notice of Proposed Rulemaking (NPRM), 
will examine long-term changes need as new technologies impact the 
provision of telecommunications services and as local exchange markets 
become competitive.

DATES: Interested parties may file comments on the Phase 2 section of 
the NPRM on or before December 21, 2000, and reply comments on or 
before January 30, 2001; Phase 3 comments may be filed on or before 
January 30, 2001 and reply comments on or before February 28, 2001. 
Written comments must be submitted by the Office of Management and 
Budget (OMB) on the proposed and/or modified information collections on 
or before January 12, 2001.

ADDRESSES: Federal Communications Commission, 445 12th Street, SW, TW-
A325, Washington, DC 20554. In addition to filing comments with the 
Office of the Secretary, a copy of any comments on the information 
collections contained herein should be submitted to Judy Boley, Federal 
Communications Commission, Room 1-C804, 445 12th Street, SW, 
Washington, DC 20554, or via the Internet to <a href="/cdn-cgi/l/email-protection#aec4ccc1c2cbd7eec8cdcd80c9c1d8"><span class="__cf_email__" data-cfemail="8ae0e8e5e6eff3caece9e9a4ede5fc">[email protected]</span></a>; and to 
Edward C. Springer, OMB Desk Officer, 10236 NEOB, 725 17th Street, NW., 
Washington, DC 20503 or via the Internet to 
<a href="/cdn-cgi/l/email-protection#ffba9b889e8d9bd1ac8f8d9691989a8dbf90929dd19a908fd1989089"><span class="__cf_email__" data-cfemail="37725340564553196447455e5950524577585a551952584719505841">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT:  Mika Savir, Accounting Safeguards

[[Page 67676]]

Division, Common Carrier Bureau, at (202) 418-0384 or JoAnn Lucanik, 
Accounting Safeguards Division, Common Carrier Bureau, at (202) 418-
0873.
    For additional information concerning the information collections 
contained in this document, contact Judy Boley at 202-418-0214, or via 
the Internet at <a href="/cdn-cgi/l/email-protection#f19b939e9d9488b1979292df969e87"><span class="__cf_email__" data-cfemail="f59f979a99908cb5939696db929a83">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Proposed Rulemaking, CC Docket No. 00-199, FCC 00-364, 
adopted October 12, 2000 and released October 18, 2000. The full text 
of this Commission NPRM is available for inspection and copying during 
normal business hours in the FCC Reference Center (CY-A257), 445 12th 
Street, SW, Washington, DC. The complete text of this NRPM may also be 
purchased from the Commission's copy contractor, International 
Transcription Service, Inc., 1231 20th Street, NW., Washington, DC 
20036.
    This NPRM contains proposed information collections subject to the 
Paperwork Reduction Act of 1995 (PRA). It has been submitted to the 
Office of Management and Budget (OMB) for review under the PRA. OMB, 
the general public, and other Federal agencies are invited to comment 
on the proposed information collections contained in this proceeding.

Paperwork Reduction Act

    This NPRM contains a proposed 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 January 
12, 2001.
    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 Control Number: None.
    Title: 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.
    Form No.: FCC Reports 43-01, 43-02, 43-03, 43-04, 43-05, 43-07, 43-
08, 495A and 495B.
    Type of Review: New collection.
    Respondents: Business or other for-profit.

------------------------------------------------------------------------
                                                    Estimated    Total
                Title                     No. of    hours per    annual
                                       respondents  response*    burden
------------------------------------------------------------------------
Part 32--Uniform Systems of Accounts           30      33,383  1,001,490
 (Class A recordkeepers only)........
Implementation of the                          20          24        480
 Telecommunications Act of 1996
 Accounting Safeguards Under The
 Telecommunications Act of 1996
 (Affiliate Transaction Only)........
Sections 64.901-64.903, Allocation of           5         600      3,000
 Cost, Cost Allocations Manual.......
Section 64.904, Independent Audits...           5         250      1,250
ARMIS Annual Summary Report: FCC               29         115      3,335
 Report 43-01........................
ARMIS Uniform System of Accounts: FCC          30         430     12,900
 Report 43-02........................
ARMIS Service Quality Report: FCC              12       **855     10,264
 Report 43-05........................
ARMIS Infrastructure Report: FCC                7         370      2,590
 Report 43-07........................
ARMIS Joint Cost Report: FCC Report            93          83      7,719
 43-03...............................
ARMIS Access Report: FCC Report 43-04          93         601     55,893
ARMIS Operating Data Report: FCC               53         129      6,837
 Report 43-08........................
Forecast of Investment & Actual Usage         186          40     7,440
 Reports: FCC Reports 495A & B.......
------------------------------------------------------------------------
* These are the estimated hours if all the proposals are adopted in a
  Report and Order.
** Includes recordkeeping requirement.

    Total Annual Burden: 1,113,198 hours.
    Cost to Respondents: $65,000-$1,200,000.
    Needs and Uses: In CC Docket No. 00-199, the Commission seeks 
comment on streamlining its part 32 chart of accounts, modifying its 
affiliate transactions rules, and revising its expense limits rules. In 
addition, the NPRM seeks comment on streamlining the accounting and 
reporting requirements specifically for mid-sized carriers by 
eliminating mandatory CAM filing and CAM audits for these carriers. The 
NPRM seeks comment on the modification of all ARMIS reports, except FCC 
Report 43-06. The information is needed so that the Commission can 
fulfill its statutory responsibilities and obligations.

Synopsis of Notice of Proposed Rulemaking

    In this item, we commence Phase 2, to seek comment on further 
accounting and reporting reform measures that may be implemented in the 
near term; and Phase 3, to consider the appropriate indicia for more 
significant deregulation in this area.
    Commencement of Phase 2, that is also part of our biennial 
regulatory review process, is particularly appropriate at this time 
given the recent changes in the telecommunications industry and recent 
changes in regulatory requirements for the largest incumbent LECs.
    In 1999, we initiated this comprehensive review proceeding to 
examine further reform measures and announced a two-phased approach 
that would address immediate and long-term reform. We adopted a number 
of immediate reform measures in our Phase 1 Report and Order, 65 FR 
16328 (March 28, 2000). We realize now that further immediate reform 
measures may be warranted at this time, as we consider long-range 
reform. Thus, in Phase 2, we seek comment on immediate accounting and 
reporting reform measures that are appropriate now, and in Phase 3, we 
seek comment on appropriate indicia for more significant deregulation 
in this area. Our actions to implement immediate reforms will not slow 
down our long-range plans for accounting and reporting deregulation. We 
envision that Phase 2 and Phase 3 will proceed concurrently. 
Accordingly, we seek comment on both

[[Page 67677]]

immediate and long-term reform measures.
    During this comprehensive review, we have worked closely with the 
National Association of Regulatory Utility Commissioners (NARUC), state 
commissions, and the industry. We are also working with the states to 
eliminate overlap of federal and state reporting requirements, as well 
as eliminating unnecessary reporting requirements. Under section 220(i) 
of the Communications Act, the Commission must notify the state 
commissions before modifying the chart of accounts and must allow the 
states a reasonable opportunity to present their views. Even without 
this statutory requirement, we recognize the state commissions' 
significant expertise with accounting and cost allocation issues and 
would invite their recommendations.
    In the following sections, we set forth proposals for the second 
phase of our comprehensive review and seek comment on streamlining 
accounting rules and ARMIS reporting requirements for Class A carriers. 
We also set forth a separate proposal for streamlining our accounting 
and reporting requirements specifically for mid-size carriers. In 
addition to commenting on these proposals, commenters are encouraged to 
propose any additional recommendations for action. In the third phase 
of our comprehensive review, we seek comment on specific issues and 
long-term proposals as we continue to move to a more deregulatory 
environment.

A. Part 32 Accounting Rules

    In this NPRM, we seek comment on further revising our part 32 chart 
of accounts, our affiliate transactions rules, and our expense limits 
rules.
1. Chart of Accounts
    In this NPRM, we seek comment on modifications to the Uniform 
System of Accounts to reduce burdens on Class A carriers. We propose 
retaining the current Class B account structure for the incumbent LECs 
currently reporting at the Class B level. We seek comment on specific 
proposals from both the industry and the states to streamline and 
modify the USOA. Specifically, USTA has requested that we uniformly 
adopt Class B accounting for all carriers. USTA contends that Class A 
accounting is not needed for jurisdictional separations, price caps, or 
universal service mechanisms. The states, in contrast, have asked us to 
add additional accounts to track information for various purposes. USTA 
also proposes that we eliminate several subaccounts and Jurisdictional 
Difference Accounts that Class B carriers currently must report. USTA 
contends that carriers should not be required to maintain subaccounts 
or subsidiary records that are not necessary to meet business 
requirements. In addition, USTA contends that the Jurisdictional 
Difference Accounts are not needed because they are not used for 
federal regulatory oversight and the information in these accounts is 
also provided to the states. We seek comment on these proposals.
    In considering USTA's request to use Class B accounts for all 
carriers, we have found many instances where Class B accounting would 
appear to meet the Commission's data needs. We agree with USTA that 
fewer prescribed accounts such as we now require for Class B carriers 
would reduce the carriers' regulatory reporting burdens. Therefore, we 
propose to eliminate approximately one-fourth of the current Class A 
accounts. Based on our examination of the various accounts, we believe 
there is no continuing need for carriers to record their costs in these 
accounts. We seek comment on whether eliminating these accounts would 
undermine our ability to meet our statutory mission.
    We also seek comment on the remaining three-fourths of Class A 
accounting. In particular, we seek comment on the impact of eliminating 
the Class A account structure for network plant and related asset and 
expense accounts, and how that would affect our ongoing mission. We 
seek comment on whether using Class B accounting for all carriers would 
provide sufficient information for our purposes. Commenters should 
address the impact this rule modification would have on universal 
service mechanisms and anything else they deem relevant. For example, 
we note that there may be a continuing need for network plant and 
related accounts at the Class A level in order to maintain and use the 
universal service model we utilize in administering the universal 
service high cost fund for non-rural carriers. For instance, Class A 
accounting requires that switching equipment be accounted for by 
technology (i.e., analog electronic switching, digital electronic 
switching, and electro-mechanical switching) whereas Class B combines 
all switching technologies in one account. The universal service high 
cost model currently determines the cost of providing digital switching 
equipment using Class A central office equipment accounts. We seek 
comment on how we could avoid serious distortions in the digital 
switching cost estimates if all types of switching equipment were 
combined as they are in Class B accounts.
    In addition, Class A accounting data may be used by the states on a 
comparative basis in state UNE pricing proceedings. We seek comment on 
the prevalence and frequency of such state use. Commenters should also 
address whether states could find or develop alternative sources of 
data for this purpose. Part 32 organizes telecommunications costs in a 
manner that allows a logical mapping of these costs to 
telecommunications rate structures. Switching costs, for example, 
currently are tracked separately from transport costs under our part 32 
rules. This cost distinction permits the carriers' use of separate rate 
structures for switching and transport UNEs, thus facilitating the 
states' efforts to compare costs and rates for each UNE. Part 32 
creates uniformity among telecommunication carriers, allowing state 
regulators to compare and benchmark the UNE costs and rates of carriers 
operating in various states. Such uniformity also benefits carriers 
operating in more than one jurisdiction. Part 32 provides the level of 
cost detail that is used in forward-looking cost studies. For example, 
estimates of operating costs for digital switches can be derived from 
Class A accounts in part 32, thus enabling the states to evaluate 
forward-looking switching costs without the distortion that could 
result if all types and vintages of switches were combined into one 
account. Consequently, state and federal regulators may use uniform and 
detailed accounting data when setting rates, even when those rates are 
based on forward-looking costs. Commenters should discuss whether 
reporting at the Class B level would provide sufficient detail to 
identify costs for various rate elements and services such as 
collocation, UNEs, interconnection, and long term number portability.
    In contrast to USTA's proposal, in our teleconferences and public 
workshops, state staff advocated adoption of new accounts to meet their 
data needs to implement the 1996 Act and to keep pace with changes in 
technology and the regulatory environment. They reason that new 
accounting information is needed to follow the rate of deployment and 
cost of new technologies, to evaluate prices for UNEs and resold 
services, to determine separated jurisdictional costs, to provide more 
details for state access revenues, and to provide insight into issues 
related to reciprocal compensation, state universal service support, 
and collocation. We seek comment on whether and, if so, specifically 
how we

[[Page 67678]]

should amend part 32 to add these new accounts. Commenters should 
discuss whether specific accounts are needed and provide detailed 
analysis as to what regulatory purpose the new information would serve. 
Commenters should also address and quantify, to the extent possible, 
the regulatory burdens associated with establishing and maintaining 
these new accounts. We also seek comment on whether these new accounts 
should be required for both Class A and Class B carriers.
2. Other Regulatory Relief
    In the USTA petition and during our workshops, the carriers raised 
several other areas that would provide additional regulatory relief by 
generally loosening restrictions in our current rules. We seek comment 
on these areas, which are discussed in the following paragraphs. In 
addition, we seek comment on any other areas that may provide similar 
relief.
a. Inventories
    Section 32.1220(h) of the Commission's rules, provides that 
inventories of material and supplies shall be taken during each 
calendar year and the adjustments to this account shall be charged or 
credited to Account 6512, Provisioning expense. Section 32.2311(f) of 
the Commission's rules requires an annual inventory of all station 
apparatus in stock included in this account. In its petition for 
rulemaking, USTA proposes that GAAP requirements should be the basis 
for performing these inventories instead of the detailed inventory 
requirements in the rules and that companies should be able to perform 
inventories based on risk assessment and on existing controls. We seek 
comment on whether we should adopt USTA's proposal to eliminate these 
inventory requirements.
b. Charges to Plant Accounts
    In its petition for rulemaking, USTA contends that the cost of 
construction should be calculated using GAAP and that management 
judgment and materiality should form the basis of the criteria for 
determining the status of construction. USTA argues that arbitrary 
thresholds, such as the two month/$100,000 thresholds, are not 
appropriate for price cap LECs. We seek comment on whether we should 
eliminate the threshold requirements in Sec. 32.2003(b), modify the 
thresholds, or keep the thresholds. Commenters are invited to propose 
alternative ways of satisfying the underlying goals of these 
requirements.
c. Contributions
    In June 1993, the Financial Accounting Standards Board (FASB) 
adopted Statement of Financial Accounting Standards No. 116 (SFAS-116), 
``Accounting for Contributions Received and Contributions Made.'' SFAS-
116 requires companies to record in the current period a liability and 
related expense for unconditional pledges to make contributions in 
future years. Prior to adoption of SFAS-116, companies would record 
such pledges annually as they were made. The Common Carrier Bureau 
(Bureau) notified carriers, after BellSouth Telecommunications, Inc., 
filed a notice of intent to adopt SFAS-116, that carriers should not 
adopt SFAS-116 for federal accounting purposes. The Bureau was 
concerned that adoption of SFAS-116 for federal accounting purposes 
would allow carriers to increase reported costs and prices based on 
pledges rather than actual contributions.
    We conclude that we should revisit this issue. Adopting SFAS-116 
may make sense for financial accounting purposes because this 
accounting treatment better informs investors about the impact of a 
company's commitments on the financial condition of the company. We are 
concerned, however, that adoption of SFAS-116 could necessitate an 
exogenous price cap adjustment permitting carriers to recover the 
entire amount of pledged contributions as an exogenous cost in the year 
the accounting change is adopted. We seek comment on whether we should 
allow carriers to adopt SFAS-116 for federal accounting purposes.
d. Additional USTA Proposals
    USTA has presented several additional proposals to further 
streamline our accounting and reporting requirements. USTA proposes 
that we eliminate the Sec. 32.5280(c) subsidiary record requirement. 
This rule section requires carriers to maintain separate subsidiary 
categories for nonregulated revenue recorded in Account 5280, 
Nonregulated operating revenue. USTA contends that this subsidiary 
record requirement is unnecessary.
    In addition, USTA requests that we simplify deferred tax accounting 
by allowing carriers to book the Account 1437, Deferred tax regulatory 
asset, net of Account 4361, Deferred tax regulatory liability. USTA 
requests that carriers be permitted to eliminate the requirement to 
calculate the gross up for the tax on tax effect. USTA contends that 
this would bring the regulatory books closer to the financial books. 
USTA proposes that we eliminate detailed requirements for property 
record additions, retirements, and recordkeeping. USTA contends that 
detailed property records do not impact the establishment of access 
rates and only serve to require LECs to maintain an extraordinary array 
of records. USTA also proposes that we eliminate the Sec. 32.16 
requirement for notification and approval to implement new accounting 
standards prescribed by the Financial Accounting Standards Board 
(FASB). USTA claims that the FASB provides a process through which 
proposed changes in GAAP are exposed for debate, discussion, and 
evaluation. Finally, USTA proposes that the Commission clarify that 
section 252(e) agreements are treated the same as tariffed services in 
part 64 cost allocation rules. We seek comment on these proposals.
3. Affiliate Transactions
    In the Accounting Safeguards Order, 62 FR 022918 (January 21, 1997) 
the Commission concluded that its revised affiliate transactions rules 
would promote competition by preventing LECs from using their market 
power in local exchange services to obtain an anti-competitive 
advantage in other markets. The Commission amended the affiliate 
transactions rules for assets and services provided by a carrier to its 
affiliate and services received by a carrier from its affiliate. Under 
these rules, such transactions are to be valued at publicly available 
rates, if possible. The publicly available rates, in order of 
precedence, are: (1) An existing tariff rate; (2) (for services only) a 
publicly-filed agreement or statements of generally available 
agreements; or (3) a qualified prevailing price valuation. To qualify 
for prevailing price treatment, at least 50 percent of sales of the 
subject asset or service must be to third parties. USTA proposes that 
the Commission revise Sec. 32.27(d) to decrease the threshold from 50 
percent to 25 percent for use of prevailing price in valuing affiliate 
transactions. USTA contends that this proposed change in threshold 
would be consistent with a more competitive environment. We seek 
comment on USTA's proposal.
    Under our rules, if a transaction cannot be valued at publicly 
available rates, it must be valued based on a comparison of cost and 
fair market value. If a comparison is used, the carrier must make a 
good faith determination of fair market value. If the regulated company 
receives the asset or service from the nonregulated affiliate, the 
carrier must record the transaction

[[Page 67679]]

at the lower of cost or market value. On the other hand, if the carrier 
sells the asset or service to its nonregulated affiliate, it must 
record the transaction on its books at the higher of cost or market. 
There is an exception to the estimated fair market value rule for 
services received by a carrier from its affiliate that exists solely to 
provide services to members of the carrier's corporate family. These 
services are recorded at fully distributed cost. USTA proposes that we 
expand this exception to the estimated fair market value rule to 
include all centralized services, regardless of whether the services 
are from a separate affiliate. USTA argues that this rule change would 
permit carriers to recognize the benefit of shared administrative 
services. We seek comment on this proposal.
    Commenters should discuss any other proposals to modify our 
affiliate transactions rules. We also seek comment on three 
modifications that would reduce the accounting burdens associated with 
our affiliate transactions rules. Two of these modifications would 
reduce the requirements related to the lower of cost or market value 
analysis for affiliate transactions, and the third would exempt 
transactions between a carrier's nonregulated activity and a 
nonregulated affiliate.
a. Eliminate Requirement for Fair Market Value Comparison for Asset 
Transfers Under $500,000
    In the Phase 1 Report and Order, we eliminated the requirement that 
carriers make a good faith determination of fair market value for 
services where the total annual value of that service is less than 
$500,000. We noted that below that threshold the administrative cost 
and effort of making such a determination would outweigh the regulatory 
benefits of a good faith determination of fair market value. In such 
cases, the service should be recorded at fully distributed cost, and 
carriers should continue to report such transactions in their CAMs and 
ARMIS reports.
    We seek comment on whether such an exemption for assets would be 
appropriate and whether the potentially burdensome cost analyses 
outweighs the benefits to ratepayers. We propose to extend the 
exemption to assets and no longer require carriers to perform the net 
book cost/fair market value comparison for asset transfers totaling 
less than $500,000 per year. We seek comment on our proposal. 
Commenters should discuss specifically the burdens, financial or 
otherwise, of performing the comparison for assets and the potential 
harm, if any, to ratepayers.
b. Establish Ceiling and Floor for Recording Transactions
    As discussed, for certain transactions carriers must compare the 
cost of the service or asset to market value. If the carrier is the 
recipient of the asset or service, it must be recorded on the carrier's 
books at the lower of cost or market. If the carrier is the provider, 
it must be recorded at the higher of cost or market. We seek comment on 
whether ratepayers would be harmed if carriers had flexibility to use 
the higher or lower of cost or market valuation as either a floor or 
ceiling. If ratepayers would be harmed if carriers had this 
flexibility, we seek comment on alternative methods for addressing such 
harm. We propose to give carriers flexibility in valuing these 
transactions by allowing the higher or lower of cost or market 
valuation to operate as either a floor or ceiling, depending on the 
direction of the transaction. If, for example, the transaction were 
from the carrier to the nonregulated affiliate, the higher of cost or 
market valuation would function as the floor amount, i.e., the carrier 
could value the asset or service at that amount or higher. If the 
transaction were from the nonregulated affiliate to the carrier, the 
lower of cost or market valuation would function as the ceiling, i.e., 
the carrier could value the asset or service at that amount or lower. 
Therefore, if a carrier purchased an asset from one of its nonregulated 
affiliates with a net book cost of $750,000 and a fair market value of 
$1,000,000 (and no tariff rate or prevailing price), our current rules 
would require the carrier to book the asset at $750,000, which is the 
lower of cost or market. Our proposed rule, on the other hand, would 
allow the carrier to record the asset at a maximum of $750,000. We seek 
comment on our proposal. Commenters should address any potentially 
anti-competitive effects if we implement ceilings and floors for 
transactional valuations, as well as any benefits that would result 
from this approach.
c. Exempt Nonregulated to Nonregulated Transactions From Affiliate 
Transactions Rules
    Our affiliate transactions rules apply to all transactions between 
carriers and their nonregulated affiliates that affect the carrier's 
regulated books of account. This means that many transactions involving 
nonregulated assets and services are subject to our affiliate 
transactions rules. For example, when a carrier sells an asset used 
exclusively in its nonregulated operations to its nonregulated 
affiliate, the asset must be valued according to our affiliate 
transactions rules. The asset is subject to two separate levels of 
accounting safeguards against subsidization: first, when the carrier 
ensures, pursuant to part 64, that the asset is recorded as a 
nonregulated cost, and second, when the asset is valued according to 
our affiliate transactions rules.
    It is now the time to revisit this issue in light of the changes in 
the CAM audits process. In the Phase 1 Report and Order, we permitted 
the large incumbent LECs to obtain an attest examination every two 
years, covering the prior two-year period, in lieu of an annual 
financial audit. Such attests should be performed by independent 
auditing firms in accordance with the standards of the American 
Institutes of Certified Public Accountants and as further directed by 
the Chief, Common Carrier Bureau. As part of this attest examination, 
we required the independent auditor to provide the Commission with the 
CAM audit program at least 30 days prior to the commencement of the 
audit. We stated that in the event additional steps are necessary, we 
will communicate this to the independent auditor within 30 days and 
attempt to minimize the burden of any necessary changes. This review 
will permit the Commission's auditors to review the audit program and, 
if necessary, work with the independent auditors to eliminate potential 
problems in advance.
    We propose that our affiliate transactions rules should not apply 
to nonregulated activities transferred from the carrier's nonregulated 
operations to its nonregulated affiliate. We seek comment on whether 
the independent CAM attestation process or alternative measures can be 
relied upon to ensure that there is no ratepayer harm. We also seek 
comment on whether it matters how the carrier values its transaction to 
its nonregulated affiliate because our part 64 rules ensure that the 
asset is recorded as nonregulated. We seek comment on our proposal. 
Commenters should discuss whether removing these transactions from our 
affiliate transactions rules could result in potential ratepayer harm.
4. Incidental Activities
    Section 32.4999(l) provides that revenues from minor nontariffed 
activities that are an outgrowth of the carrier's regulated activities 
may be recorded as regulated revenues under certain conditions. This 
provision obviates the need to make the detailed cost allocations that 
would otherwise be

[[Page 67680]]

required to remove the costs of the nonregulated activity from 
regulated costs. Essentially, the revenues from the activity are used 
to reduce the carrier's revenue requirement rather than removing the 
costs to reduce the carrier's revenue requirement.
    These activities, referred to as ``incidental activities,'' must 
satisfy four criteria:
    (1) Be an outgrowth of regulated operations;
    (2) have been treated traditionally as regulated;
    (3) be a non-line-of business activity; and
    (4) result in revenues that, in the aggregate, represent less than 
one percent of total revenues for three consecutive years. Carriers 
must list their incidental activities in their CAM, but may not add new 
incidental activities because of the second criterion. Carriers filed 
their first CAMs over ten years ago. During this decade, the list of 
incidental activities has been static. We seek comment on whether 
eliminating the ``treated traditionally'' requirement would harm 
ratepayers.
    We note that the three remaining criteria provide safeguards that 
the incidental-activities exception will not be abused. We seek comment 
on whether we should modify the three remaining criteria. Commenters 
advocating modifications to these three criteria should address how 
such changes would provide adequate safeguards against abuse. We 
propose to relax the ``treated traditionally'' requirement to allow 
carriers the flexibility to add new incidental activities. Under this 
proposal, the three other criteria would remain unaffected. We seek 
comment on whether relaxing this criterion is appropriate. Commenters 
should describe any additional activities that would qualify as 
incidental under our proposed rule. In addition, commenters should 
address whether, under our proposal, carriers could classify a new 
nonregulated activity as incidental and subsequently reclassify it as 
nonregulated thereby forcing ratepayers to bear the risk of nascent 
nonregulated ventures.
5. Expense Limits
    The purpose of the expense limit is to reduce the cost of 
maintaining property records for the acquisition, depreciation, and 
retirement of a multitude of low-cost, high-volume assets. Increases in 
the expense limit are made periodically to recognize the effects of 
inflation, technological changes, and changes in the telecommunications 
regulatory environment. The expense limit in part 32 has been increased 
several times. In addition, Responsible Accounting Officer Letter No. 
6, increased from $200 to $500 the limit for expensing the tools and 
test equipment included in the central office plant accounts.
    We seek comment on whether the expense limit rules should be 
modified again. Specifically, we seek comment on whether we should 
raise the expense limit from $500 to $2,000 for both Account 2124, 
General support computers, and the tools and test equipment included in 
the central office plant accounts. Alternatively, we could extend the 
expense limit to include all the plant asset accounts, not just 
selected general support assets. We note that the expense limit would 
have to be the same for all carriers to allow the Commission to compare 
costs across companies when determining appropriate levels of Universal 
Service support. Commenters should discuss positive or negative impacts 
on maintaining continuing property records related to central office 
plant accounts if the expense limit were raised. Commenters should also 
address how we should treat the embedded investment in these accounts 
if the expense limit were raised.
6. Additional Modifications to Cost Allocation Manual Requirements
    Section 64.903 of the Commission's rules requires incumbent LECs 
with annual operating revenues from regulated telecommunications 
operations equal to or above a designated indexed revenue threshold, 
currently $114 million, to file CAMs annually setting forth the cost 
allocation procedures that they use to allocate costs between regulated 
and nonregulated services. The companies with operating companies that 
exceed the indexed threshold are SBC Communications, Qwest, Verizon, 
and BellSouth Corporation (all filing based on Class A accounts) and 
Alltel, Cincinnati Bell, Citizens Telecom, Frontier, Sprint, and C-TEC 
(mid-size carriers, filing based on Class B accounts). USTA proposes 
that the Commission allow all carriers the option to allocate part 64 
costs at a Class B level. USTA contends that direct assignment of costs 
would not change if carriers moved from Class A to Class B accounting. 
We seek comment on this proposal and any alternative modifications to 
these requirements. Commenters should discuss any concerns that may 
affect the states due to cost allocations at the Class B level and 
address the potential for cost allocation distortions. Commenters 
should also discuss the benefits of such an approach.
7. Classification of Companies
    Section 32.11 of the Commission's rules divides companies into two 
categories for accounting purposes: Class A and Class B. Carriers with 
annual revenues from regulated telecommunications operations that are 
equal to or above the indexed revenue threshold, currently $114 
million, are classified as Class A; those with annual revenues from 
regulated telecommunications operations that are below the threshold 
are classified as Class B. Currently, we apply these requirements to 
incumbent LECs only. We seek comment on whether Sec. 32.11 should be 
amended so that its requirements explicitly pertain only to incumbent 
LECs, as defined in section 251(h) of the Communications Act, and any 
other companies that the Commission designates by order.
8. Cost Allocation Forecasts
    Section 64.901(b)(4) of the Commission's rules requires that 
carriers allocate the costs of central office equipment and outside 
plant investment between regulated and nonregulated activities based on 
a forecast of the relative regulated and nonregulated usage during a 
three calendar year period beginning with the current calendar year. 
The purpose of this rule is to avoid cost allocation distortions that 
could adversely affect regulated ratepayers. USTA has asserted that 
this rule is burdensome and unnecessary. We seek comment on USTA's 
proposal, whether elimination of the rule would adversely affect 
ratepayers, and whether there are other alternative forecasting 
methodologies.

B. ARMIS Reporting Requirements

    In this NPRM we are proposing revisions to the following ARMIS 
Reports: 43-01 (Annual Summary Report); 43-02 (USOA Report); 43-03 
(Joint Cost Report); 43-04 (Separations and Access Report); 43-07 
(Infrastructure Report); and 43-08 (Operating Data Report). As set 
forth, our proposed recommendations seek to eliminate or substantially 
simplify the reporting requirements for both large incumbent LECs and 
mid-sized incumbent LECs. We seek comment on our proposed 
recommendations. We are also looking for ways to provide easier input 
and access to the ARMIS reports and invite comment on how we can best 
achieve a more user-friendly ARMIS system. In addition, we set forth a 
separate proposal addressing reporting requirements for mid-sized 
carriers. We seek comment on the separate proposal

[[Page 67681]]

for mid-sized carriers and ask commenters to address whether the 
proposed abbreviated filing requirement is sufficient and whether 
different reporting requirements for large incumbent LECs and mid-sized 
incumbent LECs, as proposed, is justified. To the extent ARMIS reports 
are used by states and other parties, we seek comment on whether those 
parties can obtain enough information for their purposes from 
alternative sources. In particular, commenters should address whether 
state-imposed or other non-federal reporting can be used to generate 
sufficient data for these parties' purposes.
    We have attached the proposal presented by the large incumbent LECs 
as Appendix 1 to this document and seek comment on the industry's 
proposal as it relates to the ARMIS 43-01, 43-02, 43-03, 43-04, 43-07, 
and 43-08 Reports. USTA contends that this proposal would be less 
burdensome and addresses some of the concerns expressed by the 
Commission and the state staffs in the public meetings. We specifically 
seek comment from the states on how that industry's proposal, if 
implemented, would affect their ongoing activities.
1. ARMIS Reports 43-01, 43-02, 43-03, and 43-04
    We propose to eliminate the requirement to file ARMIS 43-01, Table 
I for all carriers filing at the Class A level. We propose to generate 
this table from information provided in other financial ARMIS reports 
and to post the report electronically with the carrier's annual ARMIS 
filing. Under this proposal, carriers would be relieved from reporting 
information that can otherwise be derived from other financial ARMIS 
reports. At the same time, useful summary information would be made 
available to policy makers and interested parties. We seek comment on 
this proposal. We are also considering eliminating Table II, from the 
ARMIS 43-01 requirements. We propose to eliminate the reporting of all 
Common Line Demand Minutes of Use (i.e., premium and non-premium). We 
seek comment on retaining the sections for Switched Traffic Sensitive 
Demand Minutes of Use and Common Line Demand Billable Access Lines. 
This information about traffic on the carrier's network may be needed 
for decisions concerning jurisdictional separations, subscriber line 
charges, the deployment and cost of Lifeline service, and other 
universal service issues. The information we propose to retain would be 
added to the ARMIS 43-04 in conjunction with row 9010 (Total Billable 
Access Lines). We seek comment on this proposal and on any alternative 
proposals for achieving these purposes.
    In this NPRM, we seek comment on eliminating the filing of ARMIS 
43-02, Table I-1 (Income Statement Accounts) for all carriers filing at 
the Class A level. Table I-1 collects data on the carrier's revenues, 
expenses, and net income for the reporting period. We propose to 
eliminate the requirement for carriers to file Table I-1 and to 
generate this table from information provided in the other financial 
ARMIS reports. As with our proposal for eliminating Table-I from the 
43-01 Report, this proposal would provide relief to carriers from 
reporting information that can otherwise be derived from other ARMIS 
reports.
    We propose to reduce the number of columns currently reported on 
the 43-03 Report by eliminating the distinction between ``SNFA and 
Intra-co. Adjustments'' and ``Other Adjustments.'' We propose to 
combine these columns into one column entitled ``Adjustments.'' We seek 
comment on this proposal.
    In order to implement our proposal to eliminate the requirement to 
file ARMIS 43-01, Table I and ARMIS 43-02, Table I-1, for the largest 
incumbent LECs, we note that collection of some additional data will be 
needed in the ARMIS 43-03 Reports. Therefore, we are proposing to 
include in ARMIS 43-03, the collection of data for Account 1402 
(Investment in Non-Affiliate Companies); Account 1437 (Deferred Tax 
Regulatory Asset); Account 4341 (Net deferred tax liability 
adjustment); Account 4361 (Deferred tax regulatory liability); and the 
account series (7410 through 7450) for Account 7400 (Non-operating 
Taxes). In addition, we propose the addition of 4 rows for collecting 
information on the number of employees (rows 830, 840, 850, and 860). 
We note that these data are currently required in ARMIS 43-02, Table I-
1, but not in any other ARMIS report. We seek comment on this proposal 
and whether any additional data would be needed to meet our ongoing 
needs.
    The ARMIS 43-04 Separations and Access Report contains data 
regarding the separation of carriers' regulated revenues and costs 
between the state and interstate jurisdictions and allocation of 
interstate amounts among the access charge categories. We note that the 
Federal-State Joint Board has currently recommended an interim five-
year freeze on separations activities as it continues to further 
consider more comprehensive separations reform. Until such time as the 
Commission takes action on the Joint Board's recommendation, we will 
not propose changes that would affect separations data.
    We propose some revisions to the 43-04 Report, however, that we do 
not believe will affect the separations data. We propose to reduce the 
number of columns by eliminating the column for ``BFP'' (i.e., the base 
factor portion) and collecting this data in the existing column 
entitled ``Total Common Line.'' We seek comment on this proposal. As 
noted, our proposal to eliminate Table-II, from the ARMIS 43-01 
requirements entails that we retain data collection of Switched Traffic 
Sensitive Demand Minutes of Use and Common Line Demand Billable Access 
Lines. In the event we decide, after reviewing the comments, to retain 
this data, we propose to add this information to the ARMIS 43-04 Report 
in conjunction with row 9010 (Total Billable Access Lines). We seek 
comment on this proposal. We also propose that the carriers be required 
to identify the cost and revenue associated with their excluded 
services separately from the remainder of their access element data. We 
seek comment on these proposals. Commenters also may propose 
alternative approaches that do not require carriers to identify the 
cost and revenue associated with their excluded services separately 
from the remainder of the access element data.
    Finally, we note that part 32 requires metallic and non-metallic 
subsidiary record categories for each of the cable investment and 
expense accounts. These subsidiary record categories are not reported 
to the Commission, but the data contained therein are used to calculate 
universal service support for non-rural carriers, and also are useful 
in other forward-looking cost studies. We propose to add rows to ARMIS 
43-02 and 43-04 Reports to allow for the reporting of metallic and non-
metallic cable investment and expense information. We seek comment on 
this proposal.
2. ARMIS 43-07 and 43-08 Reports
    The ARMIS 43-07 Infrastructure Report and 43-08 Operating Data 
Report collects data about the physical and operating characteristics 
of the local exchange carriers' telephone network. Together, these 
reports provide information about the make-up and operating capability 
of nearly 95 percent of the country's public local exchange telephone 
network. This information has been useful to policymakers at federal, 
state, and local levels, and provides critical data not available 
through other public sources. We seek

[[Page 67682]]

comment on the continued need to collect this data at the federal 
level, or whether state-level collection or other sources would be 
sufficient. As reported in ARMIS, approximately 480 million telephone 
calls were carried over the public network in 1991. By 1999, calls over 
the public telephone network reached almost 660 million, an increase of 
almost 40 percent in traffic. This growth shows the increasing use of, 
and reliance on, the public network for communications throughout the 
country. We seek comment on whether such reliance should be considered 
when deciding whether to retain these reporting requirements.
    Our monitoring through ARMIS has provided us with information to 
assess the condition of the country's network infrastructure and has 
permitted us to make informed decisions to protect against degradations 
and outmoded network capabilities. While the ARMIS 43-07 and 43-08 
Reports were designed to achieve this purpose, our review reveals that 
many of the reporting requirements may have outlived their usefulness. 
We believe that significant revisions to these reports are in order. We 
seek comment on the elimination of obsolete data and also the 
collection of data related to new technologies.
    We note that the Commission currently has underway an effort to 
collect data concerning broadband deployment. The information collected 
through the Local Competition and Broadband Data Gathering Program, 
however, is not a substitute for the information collected in the ARMIS 
43-07 and 43-08 Reports and was designed to be complementary to other 
Commission data gathering efforts, including ARMIS. The Local 
Competition and Broadband Data Gathering Program will provide the 
Commission with information on local competition and the deployment of 
advanced services in the United States; in contrast, the information 
collected in ARMIS provides the Commission with basic information about 
the infrastructure, capacity, and operating characteristics of the 
nation's network. We seek comment on whether this distinction is 
meaningful and on the extent to which ARMIS data is needed in light of 
our newer broadband data gathering efforts.
    We seek comment on whether gathering information about the 
deployment of newer technologies would assist us in carrying out our 
mission of ensuring a competitive environment, while ensuring universal 
service. We seek comment on whether we should collect data on newer 
technologies to assist us in achieving our stated objectives of 
ensuring that incumbent LECs maintain and upgrade their network 
infrastructure for all consumers. We recognize that additional 
collections must be carefully designed to balance our need for 
information with the need to reduce burdens imposed on carriers. We 
seek comment on how burdensome the requirements we consider would be if 
imposed. Commenters should discuss whether the additional information 
concerning these newer technologies are appropriate indicators of the 
carriers' efforts to upgrade and invest in technologies that provide 
improved service to their customers and promote efficiencies and cost 
savings.
    Finally, we seek comment on ways to improve reporting requirements 
for infrastructure and operating data in ARMIS. We seek comment on 
whether the ARMIS 43-07 and 43-08 Reports could be made more efficient 
in terms of use and reporting by combining some or all requirements. We 
note, however, that although there is a close relationship between 
these reports, there are some notable differences. Generally, the 43-07 
Report collects information on measure of capacity while the 43-08 
Report collects information on what is in-service. Further, the 43-07 
Report is only filed by mandatory price cap incumbent LECs and is 
reported at the study area (jurisdiction) and holding company levels. 
The 43-08 Report is filed by all carriers at or above the revenue 
reporting threshold and is reported at the operating company level. We 
ask commenters to make specific recommendations as to the nature of any 
proposed changes in format and collection of data. We seek comment on 
whether and how ARMIS should be modified to enable us to perform trend 
analysis, provide rate and tariff analysis, make relevant comparisons 
among companies, and monitor the effects of company mergers and 
acquisitions, and whether the purposes of such analyses could be 
achieved through alternative means.
a. ARMIS 43-07--Infrastructure Report
    In ARMIS 43-07 Infrastructure Report we propose to eliminate the 
collection of outdated information and propose to collect information 
on newer technologies. Our intent is to collect basic relevant facts 
about the deployment of new technologies, not to expand significantly 
our monitoring program. In Table I (Switching Equipment), we propose to 
eliminate all reporting requirements for electromechanical switches 
(rows 130-141). We further propose to eliminate reporting requirements 
for analog stored-program-control and digital stored-program-control 
switches except for the total number of switches and lines served 
(retain rows 150, 160, 170 and 180; eliminate rows 151-155, 161, 171-
175, and 181). We also propose to eliminate all reporting requirements 
related to equal access and touch tone capabilities (rows 190-221). We 
seek comment on these proposals. We also propose to eliminate reporting 
of information related to SS7 and ISDN capabilities except to retain 
information concerning total switches, lines, local switches, and 
tandems equipped with SS7 and ISDN capabilities (eliminate rows 231, 
233, 235, 237, 241, 247, 251, 257, 271, 281, 291, and 301). We seek 
comment on this proposal.
    To the extent commenters conclude that our broadband data gathering 
program is inadequate for this purpose, we seek comment on whether our 
monitoring program should include information on new technologies that 
indicate the degree that carriers are upgrading the network. We seek 
comment on including information for switches capable of transmitting 
the ATM protocol in Table I, and on the characteristics of ATM that 
carriers should provide in this report. Switched multi-megabit data 
service (``SMDS''), internet routers, and frame relay service are high-
speed data telecommunications services built upon packet-switching 
technology. These services are widely offered to business customers for 
high-volume usage. We seek comment on whether carriers should report 
data on SMDS, internet routers, and frame relay services in Table I and 
on which characteristics of switches used to provide SMDS, internet 
routers, and frame relay services carriers should report.
    Table II (Transmission Facilities) collects information about 
components of the network that are used to carry voice, video, and data 
traffic. Data reported in Table II provide information about 
transmission facilities for the total operating area of the carrier, 
and does not distinguish between urban and rural areas. The deployment 
of new technologies and new services in rural areas has been a matter 
of particular concern for the Commission. Transmission facilities, are 
perhaps, the most critical component in the provisioning of new 
services to rural areas. However, because the reporting carriers do not 
distinguish between rural and urban transmission facilities, the 
Commission cannot compare rural and urban infrastructure development 
based on the current reported information. Therefore, we seek

[[Page 67683]]

comment on modifying Table II to require carriers to report data by 
Metropolitan Statistical Areas (MSA) and non-MSA. We seek comment on 
whether this distinction will assist the Commission and other 
interested parties in measuring the deployment of advanced 
telecommunications infrastructure in rural areas. We also seek comment 
on whether this or alternative proposals would be best considered in 
the context of the broadband data gathering proceeding.
    In the first section of Table II, ``Sheath Kilometers,'' carriers 
report data on transmission facilities within their operating areas. 
Carriers use either analog or digital technology on copper wire, 
coaxial cable, fiber, radio, and other media. We seek comment on 
changing the title ``Sheath Kilometers'' to ``Loop Sheath Kilometers'' 
and to narrow the collection of data to only local loop facilities 
connecting customers to their serving offices.
    In the second section of Table II, ``Interoffice Working 
Facilities,'' total circuit links are reported for baseband, analog 
carrier, and digital carrier. We seek comment on whether we should 
eliminate the reporting requirements that further distinguish baseband, 
analog, and digital (rows 331, 332, 333, 350, 351, 352, 360, 361, 362, 
363). We believe we can simplify the reporting requirements and obtain 
relevant information by requiring only the total circuit links for 
copper, radio, and fiber. We also note that optical carrier facilities, 
such as synchronous optical networks (SONET) are currently being 
deployed by the incumbent LECs. This technology will increasingly play 
a role in improving the transmission capacity of the network. We seek 
comment on whether we should include categories for optical carrier 
facilities and non-optical carrier facilities. Commenters should 
address definitional and other characteristics that would be useful if 
collection of data on this technology is implemented. We also seek 
comment on whether this or alternative proposals would be best 
considered in the context of the broadband data gathering proceeding.
    In the third section of Table II, ``Loop Plant-Central Office 
Terminations,'' carriers report total working channels and total 
equipped channels. Under each category, there is a requirement for 
reporting six subcategories (copper, baseband, analog carrier, digital 
carrier, fiber digital carrier, and other). We seek comment on whether 
we should eliminate the reporting of six subcategories of equipped 
channels, and retain only the total of equipped channels. We seek 
comment on whether data about new technologies used in the local loop 
that provide high-capacity transmission facilities closer to 
subscribers would assist the Commission and the states in monitoring 
the deployment of new services and how that technology affects the 
development of competition. Commenters should discuss which categories 
of data would provide an accurate picture of deployment without placing 
an undue administrative burden on the reporting incumbent LECs. We also 
seek comment on whether this or alternative proposals would be best 
considered in the context of the broadband data gathering proceeding.
    In the fourth section of Table II, ``Other Transmission Facility 
Data,'' we propose to eliminate reporting of information that is no 
longer useful (fiber strands terminated at the customer premises at the 
DS-0 rate; and fiber strands terminated at the customer premises at the 
DS-2 rate). We seek comment on including information on hybrid fiber-
copper loop interface locations, number of customers served from these 
interface locations, xDSL customer terminations associated with hybrid 
fiber-copper loops, and xDSL customer terminations associated with non-
hybrid loops. Such data could provide a meaningful indication of 
carrier's efforts to upgrade the network. Commenters should discuss any 
other specifics that may provide a better indicator of this aspect of 
the network. We also seek comment on whether this or alternative 
proposals would be best considered in the context of the broadband data 
gathering proceeding.
    In Table III (LEC Set-up Time Reporting), information is provided 
about incumbent LEC call set-up time for calls delivered by the 
incumbent LEC to interexchange carriers. Incumbent LEC call set-up time 
measures the time from when the customer completes dialing until the 
call reaches an interexchange carrier. We note that the need for this 
data was largely driven by problems arising from the change from a 
multi-frequency to the SS7 protocol. Our review of the data shows that 
most of these problems have been solved. Thus, we propose to eliminate 
this table. We seek comment on this proposal.
    In Table IV (Additions and Book Costs), carriers report data 
concerning total access lines in service, access line gain, and total 
gross capital expenditures. This information provides data as it 
relates to carriers' actions to maintain and upgrade the network. We 
seek comment on whether there is continued need to collect this 
information by the federal government, as opposed to states or other 
entities. We seek comment on whether the information collected in this 
table is available from other data reported in ARMIS, and if so, 
whether there is a need for duplication. Specifically, we ask 
commenters to comment on whether the information on number of access 
lines is the same information reported in the 43-08 Report and whether 
the data on gross capital expenditures is the same information reported 
in the 43-02 Report, Table B-1.
b. ARMIS 43-08--Operating Data Report
    The ARMIS 43-08 tables, which collect data on an operating company 
level by state, provide us with the ability to assess trends in 
investment in physical plant and to benchmark among carriers. We seek 
comment on the continued importance of such assessments and on whether 
there are alternative methods for achieving the goals underlying these 
assessments. We believe there are a number of areas in the ARMIS 43-08 
Report where unnecessary data can be eliminated and where necessary 
data can be collected more efficiently. We seek comment on whether we 
can eliminate the reporting requirements in Table 1.A (Outside Plant 
Statistics--Cable and Wire Facilities), that distinguish among aerial, 
underground, buried, submarine, deep sea, and intrabuilding cable plant 
(columns d-o). We note that some carriers have suggested that we use 
information on relative sheath miles in aerial, underground, and buried 
cable as a basis for determining the relative amount of these types of 
facilities used in the forward looking model for calculating universal 
service support for non-rural carriers. In Table 1.B (Outside Plant 
Statistics--Other), we propose to eliminate the reporting of 
information on satellite channels and video circuits for carriers' 
radio relay and microwave systems (columns be, bj, bm). We believe that 
data collected in these areas may no longer provide important 
information relevant to our policy analysis. We seek comment on these 
proposals. We ask commenters proposing to retain this information to 
discuss at what point would collection of data no longer be necessary. 
For instance, radio relay systems, except in 11 states, are 100 percent 
digital. We seek comment on whether some threshold level of deployment 
would provide a basis for eliminating the need for information, and if 
so, what an appropriate threshold level would be.
    In Table II (Switched Access Lines in Service by Technology), we 
propose to eliminate the distinction between

[[Page 67684]]

analog and digital lines, and require carriers to report the total of 
main access lines, PBX and Centrex units, and Centrex extensions 
(retain columns cc, cd, and ce on a total basis; and eliminate columns 
cf, cg, and ch). Our experience reveals that, while the data derived 
from these columns provide us with important information, the 
information may be more useful and collected more efficiently if 
provided on a total basis. We seek comment on these proposals and on 
the continued importance of collecting switched access line data 
generally.
    In Table III (Access Lines in Service by Customer), we propose to 
narrow the information collection to total number of Business Access 
Lines (Single-Line and Multi-Line) and Residential Access Lines 
(Lifeline/Non-Lifeline and Primary/Non-Primary). We believe that the 
level of detail required in this table may not be necessary and that 
collection on a total basis may be sufficient for us to meet our 
responsibilities. We propose to collect data on private lines providing 
intrastate service. We note that this information is used to calculate 
forward-looking costs for universal service purposes. We seek comment 
on whether this information is available from any other public source. 
We also seek comment on whether Special Access Lines (Analog and 
Digital) (columns dk and dl) provide accurate information about the 
carriers' provision of special access lines. Specifically, we seek 
comment on whether there is a need for clarification of this reporting 
requirement. For instance, would redefining this collection as Customer 
Private Line Terminations (Broadband and Narrowband) or some other 
designation result in more accurate reporting by carriers? We note that 
there has been much controversy over the use of the term ``Special 
Access Lines,'' resulting in inconsistent reporting by carriers. We 
seek comment on the use of this term and whether a more meaningful 
definition or term would be appropriate. We also ask commenters to 
discuss whether the use of terms in other ARMIS reports should be 
revised or clarified in order to be consistent with any change made in 
this report.

C. Relief for Mid-Sized Carriers

    In this NPRM, we propose more significant reductions for mid-sized 
carriers than we have proposed for large incumbent LECs. In our public 
meeting with the mid-sized carriers, they suggested that we treat mid-
sized Class A carriers as Class B carriers. This would eliminate all 
CAM requirements and ARMIS filings for such carriers. We seek comment 
on this proposal. As an alternative, we propose to eliminate mandatory 
annual CAM filings and biennial CAM audits for these carriers. Instead, 
the mid-sized carriers would file only an annual certification with the 
Commission. We also propose raising the indexed revenue threshold from 
$114 million to $200 million. The net effect for mid-sized carriers 
would be that several carriers will be classified as Class B carriers, 
and therefore not subject to any reporting requirements, and the 
balance of the mid-sized carriers will be subject only to very minimal 
reporting requirements. We also propose eliminating all financial 
reporting for mid-sized carriers except the 43-01 (Summary Report). We 
seek comment on adoption of these proposals for mid-sized carriers.
1. Reduced Cost Allocation Manual Procedures
    We seek comment on ways to further reduce regulatory burdens on 
mid-sized incumbent LECs. We propose to eliminate the requirement that 
mid-sized incumbent LECs file their CAMs on an annual basis. We seek 
comment on whether these carriers should be required to maintain cost 
allocation manuals in the format set forth in Sec. 64.903 of our rules, 
even if they do not file those CAMs with the Commission. Commenters 
should quantify the costs of maintaining a CAM in accordance with the 
requirements of Sec. 64.903, and suggest any modifications to that rule 
they deem appropriate. As an alternative, the mid-sized carriers could 
file a certification with the Commission stating that they are 
complying with Sec. 64.901 of the Commission's rules. Under this 
proposal, the certification would be signed, under oath, by an officer 
of the incumbent LEC, and filed with the Commission on an annual basis. 
In addition, we propose to eliminate the requirement for an attestation 
engagement every two years. The Common Carrier Bureau would have the 
authority to request further information or order an audit of the 
carrier's books to ensure they are in compliance with our cost 
allocation requirements. We seek comment on these proposals.
    We further seek comment on whether our definition of mid-sized 
incumbent LECs should be re-examined. We note that a few carriers have 
recently crossed the indexed revenue threshold, although they are 
significantly smaller than the majority of mid-sized LECs. We propose 
to increase the indexed revenue threshold from $114 million to $200 
million. Under this proposal, carriers with operating revenues below 
$200 million would not be required to maintain a CAM or file a 
certification. We seek comment on our proposal. Carriers should discuss 
whether, alternatively, the threshold should be based on holding 
company revenues instead of operating company revenues, with a 
corresponding change in threshold.
2. Streamlined ARMIS Requirements
    We propose to eliminate the ARMIS 43-02, 43-03, and 43-04 reporting 
requirements for mid-sized carriers. We recognize that mid-sized 
carriers often have limited resources and have financial transactions 
that are generally smaller and fewer in number than the larger 
incumbent LECs. The cost of regulatory compliance may 
disproportionately impact the mid-sized carriers filing the more 
detailed ARMIS 43-02, 43-03, and 43-03 reports.
    We seek comment on retaining the reporting requirement that mid-
sized carriers report ARMIS 43-01 (Summary Report), which presents 
information in a highly aggregated form. We ask commenters to 
specifically address the costs and benefits of requiring certain mid-
size carriers to file the ARMIS 43-01 Summary Report, particularly in 
light of the previous proposal to eliminate ARMIS 43-02, 43-03, and 43-
04. To the extent we find obvious errors or inconsistencies, we have 
the ability to request further information from the carrier that will 
clarify and address such issues. We also seek comment on the costs and 
benefits of retaining the requirement that carriers at or above the 
threshold continue to file operating data in the ARMIS 43-08 Report.
    We further propose to reduce the requirements in ARMIS 43-01 by 
eliminating the distinction between ``SNFA and Intra-co. Adjustments'' 
and ``Other Adjustments.'' We propose to combine these columns into one 
column entitled ``Adjustments.'' We propose to reduce the number of 
columns by eliminating the column for ``BFP'' and collecting this data 
in the existing column entitled ``Total Common Line.'' Finally, we 
propose to either add a new column for ``excluded services'' or add 
excluded services cost and revenue data to the billing and collection 
data in a renamed column. This would enable us to reconcile their rate 
of return filings with their accounting data. We seek comment on these 
proposals, and on whether it would be appropriate to extend all or part 
of this relief to larger carriers.

I. Phase 3--Long Term Transition to Deregulation

    The 1996 Act directed the Commission to ``provide for a pro-

[[Page 67685]]

competitive, de-regulatory, national policy framework.'' As regulatory, 
technological, and market conditions continue to change, the Commission 
must consider more drastic changes to existing accounting and reporting 
requirements. We thus seek to undertake a broader examination of part 
32 and ARMIS requirements with the goal of determining what additional 
changes can be made as competition develops, and assessing ultimately 
what, if any, specific accounting and reporting requirements are 
necessary when local exchange markets become sufficiently competitive.
    Our accounting and reporting safeguards were largely implemented to 
support Commission policies intended to prevent dominant carriers from 
taking unfair advantage of their monopolistic control over loop 
facilities and access to the local exchange network. As the local 
exchange industry becomes more competitive, we expect that our needs 
for accounting and reporting information will diminish. At the same 
time, we must be careful not to eliminate requirements that are 
necessary to promote universal service, foster efficient competition, 
and protect consumers before significant market changes occur.
    In this section, we seek comment on what roadmap we should follow 
for accounting and reporting deregulation. Specifically, we seek 
comment on whether there are certain triggers that will allow the 
Commission to significantly modify or relieve certain accounting and 
reporting requirements that currently apply to incumbent LECs. Is there 
a point at which the Commission should completely eliminate its 
accounting and reporting requirements? Is that point when all local 
exchange carriers become non-dominant? Alternatively, should individual 
carriers be relieved of accounting and reporting requirements as they 
individually become non-dominant? How would this Commission make such a 
finding of non-dominance? How should the Commission proceed if an 
incumbent remains dominant for certain services, but not others? How 
should deregulation occur if some carriers are deemed non-dominant, but 
other carriers, such as rural carriers, remain dominant? Is there a 
basis for eliminating or modifying our accounting and reporting 
requirements on an industry wide basis, even if some carriers retain 
market power?
    We also ask commenters to address the effect of BOCs receiving 
section 271 authorizations to provide in-region interLATA services. We 
seek comment on whether certain accounting requirements should sunset 
when the section 272 separate affiliate requirements sunset for a given 
carrier in a particular state, and if so, which specific requirements 
should be eliminated. Would it be administratively practical for 
accounting and reporting requirements to be reduced or eliminated on a 
state-by-state basis?
    We seek comment on whether achieving pricing flexibility should be 
a trigger for relaxing accounting and reporting requirements and if it 
would be administratively practical because pricing flexibility is 
granted on a market by market basis. If so, which specific requirements 
should be modified or eliminated?
    We note that other carriers, such as competitive LECs (CLECs), 
interexchange carriers, cable companies providing telephony, and 
wireless carriers, are not subject to our accounting and reporting 
requirements. We seek comment on whether this asymmetric regulation 
makes sense as we move to a more competitive environment. What is the 
policy rationale for subjecting one type of carrier to accounting and 
reporting requirements when other carriers are not subject to such 
requirements? Do the current accounting and reporting requirements 
imposed on incumbent LECs impede their ability to compete with other 
market participants? Commenters should quantify any monetary or other 
impact of our current requirements.
    We note that a number of incumbents, both large and small, have 
begun to compete as CLECs outside of their traditional service areas. 
Moreover, a number of incumbents are offering bundled packages of 
offerings--such as voice, Internet access, wireless, and long 
distance--in competition with other carriers. How should our accounting 
and reporting requirements evolve as carriers no longer remain in their 
historical line of business?
    The requirements under consideration in this proceeding fall into 
two general areas. First, our accounting rules largely prescribe how 
incumbent LECs record and allocate costs. Second, our ARMIS reporting 
rules require that certain carriers report to the Commission on an 
annual basis various information, both financial and nonfinancial. We 
seek comment on whether it makes sense to relieve carriers from 
reporting requirements, while maintaining our existing accounting 
requirements. Compliance with certain requirements may be critical to 
protecting ratepayers from subsidizing nonregulated services, but the 
Commission may not need information on an annual basis on how specific 
carriers are complying with such requirements. How would the 
Commission's mission be affected if it were to gather information on a 
less frequent, or more ad hoc, basis?
    Our accounting and reporting requirements already recognize that 
the burdens of compliance may outweigh the benefits for small and mid-
size incumbent LECs. The vast majority of incumbents with fewer than 
two percent of the nation's access lines are not required to file in 
ARMIS today, even though they have historically been dominant in their 
relevant markets. In the 1996 Act, Congress explicitly recognized that 
smaller and rural carriers might face unique circumstances warranting 
lesser regulatory requirements. Regardless of what actions we take with 
respect to the larger carriers, should deregulation proceed in a 
different fashion, for companies with fewer than two percent of access 
lines? Commenters should address with specificity what deregulatory 
measures are appropriate for smaller carriers and what safeguards are 
necessary to ensure that consumers' interests are protected.
    We note that our accounting and reporting rules were designed to 
provide uniform accounting data to be used to support tariffed prices, 
to provide information concerning the financial condition of incumbent 
local exchange carriers, and to serve as an efficient system for both 
management and federal and state regulators. As carriers were allowed 
to provide nonregulated services without the need for structural 
separations, the accounting and reporting rules served the additional 
public policy goal of ensuring that the ratepayers of regulated 
services did not bear the costs and risks of nonregulated activities. 
As our universal service system developed, the accounting and reporting 
rules also served the policy of ensuring proper cost data on which to 
base a system of sufficient universal service support. Comments 
addressing triggers for accounting and reporting deregulation should 
also discuss these policy underpinnings, how these policies have 
changed over time, and how these policies can be maintained when more 
drastic deregulation of accounting and reporting occur.
    Section 220 of the Communications Act states that the Commission 
shall prescribe a uniform system of accounts for use by telephone 
companies. Sections 260 and 271 through 276 of the Communications Act 
require a certain amount of accounting safeguards in place to either 
ensure that transactions between Bell operating companies

[[Page 67686]]

(BOCs) and their affiliates or nonregulated activities are accomplished 
without cost misallocations and that these transactions are performed 
on an arm's length basis. Section 254(k) specifically states that the 
Commission, with respect to interstate services, and the states, with 
respect to intrastate services, shall establish any necessary cost 
allocation rules, accounting safeguards, and guidelines to ensure that 
services included in the definition of universal service bear no more 
than a reasonable allocation of joint and common costs of facilities 
used to provide these services. These legislative accounting safeguards 
were mandated to ensure that the pro-competitive goals of the 
Communications Act could be realized. Moreover, section 1 of the 
Communications Act established as one purpose to ensure ``a rapid, 
efficient, Nation-wide, and world-wide wire and radio communication 
service with adequate facilities and reasonable charges.'' We seek 
comment on how we can best achieve these mandates keeping in mind the 
ultimate goal of a deregulatory national telecommunications policy 
framework.
    We ask commenters to discuss whether and how the Commission and the 
states can carry out their respective statutory mandates without 
uniform and accurate accounting and reporting information. 
Specifically, commenters should address how jurisdictional separations 
could be implemented without part 32 accounting data. Commenters should 
also discuss how any system of universal service support could be 
implemented without the Commission receiving uniform accounting data. 
Commenters should address how this Commission could assess the state of 
the network without ARMIS information. Finally, we ask commenters to 
discuss how the Commission and states could address cost issues in 
various proceedings such as long-term number portability, 
interconnection, pole attachments, and collocation without uniform and 
accurate accounting data.

II. Procedural Issues

A. Ex Parte Presentations

    This is a permit but disclose rulemaking proceeding. Ex parte 
presentations are permitted, except during the Sunshine Agenda period, 
provided that they are disclosed as provided in the Commission's rules. 
See generally 47 CFR 1.1202, 1.1203, and 1.1206.

B. Initial Regulatory Flexibility Analysis

    As required by the Regulatory Flexibility Act (RFA), the Commission 
has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the 
possible significant economic impact on small entities by the policies 
and rules proposed in this Notice of Proposed Rulemaking. Written 
public comments are requested on this IRFA. Comments must be identified 
as responses to the IRFA and must be filed by the deadlines for 
comments on the Notice of Proposed Rulemaking provided in section V.D. 
The Consumer Information Bureau, Reference Information Center, will 
send a copy of the Notice of Proposed Rulemaking, including this IRFA, 
to the Chief Counsel for Advocacy of the Small Business Administration 
(SBA). In addition, the Notice of Proposed Rulemaking and IRFA (or 
summaries thereof) will be published in the Federal Register.
Need for, and Objectives of, the Proposed Rules
    The Commission has initiated this proceeding to determine whether 
it should streamline or modify the current accounting and reporting 
requirements. This Notice of Proposed Rulemaking consists of Phase 2 
and Phase 3 of the Commission's comprehensive review of the accounting 
and reporting requirements. This Notice of Proposed Rulemaking seeks to 
reduce accounting and reporting requirements, while furthering the 
Commission's goals of promoting universal service, fostering efficient 
competition, and protecting consumers.
Legal Basis
    The legal basis for the action as proposed for this rulemaking is 
contained in sections 4(i), 4(j), 11, 201(b), 303(r), and 403 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 161, 
201(b), 303(r), and 403.
Description and Estimate of the Number of Small Entities to Which the 
Proposed Rules May Apply
    The RFA directs agencies to provide a description of, and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
``small entity'' as having the same meaning as the term ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act, unless the Commission has developed one or more definitions that 
are appropriate to its activities. Under the Small Business Act, a 
``small business concern'' is one that: (1) Is independently owned and 
operated; (2) is not dominant in its field of operation; and (3) meets 
any additional criteria established by the SBA.
    We have included small incumbent local exchange carriers (LECs) in 
this present RFA analysis. As noted, a ``small business'' under the RFA 
is one that, inter alia, meets the pertinent small business size 
standard (e.g., a telephone communications business having 1,500 or 
fewer employees), and ``is not dominant in its field of operation.'' 
The SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent LECs are not dominant in their field of operation because any 
such dominance is not ``national'' in scope. We have therefore included 
small incumbent LECs in this RFA analysis, although we emphasize that 
this RFA action has no effect on the Commission's analyses and 
determinations in other, non-RFA contexts.
    The SBA has developed a definition of small entities for telephone 
communications companies other than radiotelephone companies. The SBA 
has defined a small business for Standard Industrial Classification 
(SIC) categories 4812 (Radiotelephone Communications) and 4813 
(Telephone Communications, Except Radiotelephone) to be small entities 
when they have no more than 1,500 employees. The Census Bureau reports 
that, there were 2,321 such telephone companies in operation for at 
least one year at the end of 1992. All but 26 of the 2,321 non-
radiotelephone companies listed by the Census Bureau were reported to 
have fewer than 1,000 employees. Thus, even if all 26 of those 
companies had more than 1,500 employees, there would still be 2,295 
non-radiotelephone companies that might qualify as small entities or 
small incumbent LECs. It seems certain that some of these carriers are 
not independently owned and operated, but we are unable at this time to 
estimate with greater precision the number of wireline carriers that 
would qualify as small business concerns under SBA's definition. 
Consequently, we estimate that fewer than 2,295 small telephone 
communications companies other than radiotelephone companies are small 
entities or small incumbent LECs that may be affected by the proposed 
rules, if adopted.
    More specifically, the proposed changes to the accounting and 
reporting requirements in sections III.A.1, III.A.6, and III.B would 
only affect Class A companies, i.e., companies with annual

[[Page 67687]]

revenues from regulated telecommunications operations that are equal to 
or above the indexed revenue threshold, currently $144 million. 
Presently, these companies are SBC Communications, Quest, Verizon, 
BellSouth Corporation, Cincinnati Bell, C-TEC, Sprint, Alltel 
Corporation, Frontier Corporation, and Citizens Telecom. These 
companies would not be considered ``small entities'' under the SBA 
definition. Therefore, it is extremely unlikely that any of the 2,295 
small entity telephone companies would be affected by the proposals in 
section III.A.1, III.A.6, and III.B.
    The proposals discussed in section III.A.2, 3, 4, 5, 7, and 8 could 
affect all local exchange carriers. Some of these companies may be 
considered ``small entities'' under the SBA definition. Therefore, it 
is possible that some of the 2,295 small entity telephone companies may 
be affected by the proposals in section III.A.2, 3, 4, 5, 7, and 8.
    The proposals discussed in section III.C would affect only mid-
sized carriers, i.e., Class A carriers with aggregate revenues below $7 
billion but equal to or above the indexed revenue threshold (currently 
$144 million). These companies would not be considered ``small 
entities'' under the SBA definition. Therefore, it is extremely 
unlikely that any of the 2,295 small entity telephone companies would 
be affected by the proposals in section III.C.
    The proposals discussed in section IV could affect all local 
exchange carriers. Some of these companies may be considered ``small 
entities'' under the SBA definition. Therefore, it is possible that 
some of the 2,295 small entity telephone companies may be affected by 
the proposals in section IV.
Description of Proposed Reporting, Recordkeeping, and Other Compliance 
Requirements
    This Notice of Proposed Rulemaking seeks to further reduce 
accounting and reporting requirements for Class A companies. In this 
Notice of Proposed Rulemaking, the Commission seeks comment on 
eliminating one-fourth of the Class A accounts from the Part 32 chart 
of accounts, reducing ARMIS reporting requirements, and streamlining 
other accounting rules. These proposals, if adopted, would result in 
fewer accounting requirements and reduced ARMIS reporting requirements 
for Class A companies. In some instances, the Commission seeks comment 
on whether additional accounts should be added to the Part 32 Chart of 
Accounts, to reflect changes in technology and new requirements under 
the Telecommunications Act of 1996. None of these proposals apply to 
small entities because they are not subject to these reporting 
requirements. As mentioned in section C, Class A companies are not 
small businesses, so these reporting and record-keeping requirements 
will not affect small entities.
    In addition, in section III.A.2, 3, 4, 5, 7, and 8, the Notice of 
Proposed Rulemaking seeks comment on: streamlining inventory 
requirements in Secs. 32.1220(h) and 32.2311(f); changing the threshold 
requirements in Sec. 32.2003(b); adopting SFAS-116 for federal 
accounting purposes; and modifying the affiliate transactions rules, 
the definition of ``incidental activities,'' our expense limit rules, 
and cost allocation manual requirements. These proposals, if adopted, 
could affect both Class A and Class B companies, including small 
entities. If adopted, these proposals could significantly reduce the 
federal regulatory accounting requirements and costs associated with 
these requirements for the affected companies, including the small 
entities.
    In section III.C, the Notice of Proposed Rulemaking also seeks 
comment on simplifying reporting requirements and eliminating cost 
allocation manual filing requirements for mid-sized carriers, including 
any small entities. This proposal, if adopted, would greatly reduce the 
reporting requirements and costs associated with these requirements for 
these companies, including any small entities.
    In section IV, the Notice of Proposed Rulemaking seeks comment on 
triggers for more significant deregulation of accounting and reporting 
requirements for all carriers in a competitive marketplace, including 
small entities. Once the marketplace is competitive, regulatory 
accounting and reporting requirements and costs associated with these 
requirements for all carriers, including small entities may be greatly 
diminished, if not eliminated.
Steps Taken To Minimize Significant Economic Impact on Small Entities, 
and Significant Alternatives Considered
    The RFA requires an agency to describe any significant alternatives 
that it has considered in reaching its proposed approach, which may 
include the following four alternatives (among others): (1) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    The rule changes proposed in this Notice of Proposed Rulemaking are 
reductions in our accounting requirements and ARMIS reporting 
requirements for Class A companies (i.e., carriers with annual revenues 
from regulated telecommunications operations that are equal to or above 
the indexed revenue threshold, currently $144 million). These rule 
changes, as discussed in sections III.A.1, III.A.6, III.B, and III.C, 
only affect Class A companies and would not have a significant economic 
impact on small entities because the Class A companies, as identified 
in section C, are not small entities. The remaining rule changes 
proposed in the Notice of Proposed Rulemaking may affect all LECs. Our 
proposals, if adopted, would streamline the accounting and reporting 
rules and would significantly lessen regulatory requirements for all 
carriers, including small entities. This should produce a significant 
economic benefit to small entities. Alternatives considered for small 
entities subject to our accounting and reporting requirements, were to 
maintain our current rules or to consider changes proposed in this 
Notice of Proposed Rulemaking on a case-by-case basis in ongoing 
proceedings where related accounting changes may properly be considered 
within the scope of such proceedings. We believe that streamlining our 
current rules, however, would reduce regulatory burdens on carriers, 
including small entities. In section IV of the Notice of Proposed 
Rulemaking, we discuss eliminating accounting rules and reporting 
requirements as the local exchange market becomes competitive. This 
would result in a further reduction in the regulatory burden on small 
entities.
Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rule
    None.

C. Paperwork Reduction Act

    As part of our continuing effort to reduce paperwork burdens, we 
invite the general public to take this opportunity to comment on 
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. 
Comments should address: (a) Whether the proposed collection of 
information is necessary for the proper

[[Page 67688]]

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.

D. Comment Filing Procedures

    Pursuant to Secs. 1.415 and 1.419 of the Commission's rules, 47 CFR 
1.415, 1.419, interested parties may file comments on Phase 2 on or 
before December 21, 2000, and reply comments on or before January 30, 
2001. For Phase 3, interested parties may file comments on or before 
January 30, 2001, and reply comments on or before February 28, 2001. 
Comments may be filed using the Commission's Electronic Comment Filing 
System (ECFS) or by filing paper copies.
    Comments filed through the ECFS can be sent as an electronic file 
via the Internet to http://www.fcc.gov/e-file/ecfs.html. Generally, 
only one copy of an electronic submission must be filed. If multiple 
docket or rulemaking numbers appear in the caption of this proceeding, 
however, commenters must transmit one electronic copy of the comments 
to each docket or rulemaking number referenced in the caption. In 
completing the transmittal screen, commenters should include their full 
name, Postal Service mailing address, and the applicable docket or 
rulemaking number. Parties may also submit an electronic comment by 
Internet e-mail. To get filing instructions for e-mail comments, 
commenters should send an e-mail to <a href="/cdn-cgi/l/email-protection#adc8cecbdeedcbcece83cac2db"><span class="__cf_email__" data-cfemail="6306000510230500004d040c15">[email protected]</span></a>, and should include 
the following words in the body of the message, ``get form your e-mail 
address.'' A sample form and directions will be sent in reply.
    Parties who choose to file by paper must file an original and four 
copies of each filing. If more than one docket or rulemaking number 
appear in the caption of this proceeding, commenters must submit two 
additional copies for each additional docket or rulemaking number. All 
filings must be sent to the Commission's Secretary, Magalie Roman 
Salas, Office of the Secretary, Federal Communications Commission, 445 
12th Street, S.W., Washington, D.C. 20554.
    Parties who choose to file by paper should also submit their 
comments on diskette. These diskettes should be submitted to: Ernestine 
Creech, Accounting Safeguards Division, 445 12th Street, S.W., 
Washington, D.C. 20554. Such a submission should be on a 3.5-inch 
diskette formatted in an IBM compatible format using Word or compatible 
software. The diskette should be accompanied by a cover letter and 
should be submitted in ``read only'' mode. The diskette should be 
clearly labeled with the commenter's name, proceeding (including the 
docket number, in this case CC Docket No. 00-199, type of pleading 
(comment or reply comment), date of submission, and the name of the 
electronic file on the diskette. The label should also include the 
following phrase ``Disk Copy--Not an Original.'' Each diskette should 
contain only one party's pleadings, preferably in a single electronic 
file. In addition, commenters must send diskette copies to the 
Commission's copy contractor, International Transcription Service, 
Inc., 1231 20th Street, N.W., Washington, D.C. 20036.
    Written comments by the public on the proposed and/or modified 
information collections are due on or before December 13, 2000. Written 
comments must be submitted by the Office of Management and Budget (OMB) 
on the proposed and/or modified information collections on or before 
January 12, 2001. 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 1-C804, 445 12th Street, S.W., Washington, DC 20554, or via the 
Internet to <a href="/cdn-cgi/l/email-protection#83e9e1ecefe6fac3e5e0e0ade4ecf5"><span class="__cf_email__" data-cfemail="5339313c3f362a133530307d343c25">[email protected]</span></a> and to Edward Springer, OMB Desk Officer, 
10236 NEOB, 725--17th Street, N.W., Washington, D.C. 20503.

III. Ordering Clauses

    Pursuant to the authority contained in sections 4(i), 4(j), 11, 
201(b), 303(r), and 403 of the Communications Act of 1934, as amended, 
47 U.S.C. 154(i), 154(j), 161, 201(b), 303(r), and 403, this NPRM is 
adopted.
    The Commission's Consumer Information Bureau, Reference Information 
Center, shall send a copy of this NPRM, including the Initial 
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of 
the Small Business Administration.


Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Appendix 1--USTA'S ARMIS Reporting Proposals

    USTA proposes streamlining the following items:
    1. Combine ARMIS 43-01, 02 [B1, I1], 03 and 04 (See USTA June 9 
letter); allow reporting at OTC level (Operating Telephone Company) 
for majority of data (Proposed Table III, Separations and Access 
would be by study area).
    2. Eliminate ARMIS 43-02 Schedules B4 and I2. (Note: USTA also 
proposed elimination of B12, which was eliminated in Phase 1.)
    3. Modify required nonregulated adjustment threshold from $1 
million per holding company to $1 million or 2% nonregulated 
expense; require aggregation of only material dollars rather than 
every dollar.
    4. Eliminate ARMIS 43-07, Infrastructure Report.
    5. Streamline ARMIS 43-08, Operating Data Report--Eliminate 
tables of access lines (2) and traffic data (see USTA Letter).
    6. Eliminate ARMIS 495/A and 495/B Reports.
    7. One definition for ``access lines'' should be used. (Billable 
Access lines currently in ARMIS 43-01).

[FR Doc. 00-28886 Filed 11-9-00; 8:45 am]
BILLING CODE 6712-01-U


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