[Federal Register Volume 62, Number 72 (Tuesday, April 15, 1997)]
[Rules and Regulations]
[Pages 18280-18299]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8483]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 52

[CC Docket No. 95-116; FCC 97-74]


Telephone Number Portability

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The First Memorandum Opinion and Order on Reconsideration, 
(Order) released March 11, 1997, affirms and clarifies the Commission's 
rules implementing section 251(b)(2) of the Communications Act of 1934, 
as amended, which requires all LECs to offer long-term number 
portability in accordance with requirements prescribed by the 
Commission in the First Report and Order, 61 FR 38605 (July 25, 1996). 
The First Report & Order also requires all LECs to implement long-term 
number portability in the 100 largest Metropolitan Statistical Areas 
(MSAs) according to a five-phase deployment schedule that commences 
October 1, 1997, and concludes December 31, 1998. The Commission herein 
concludes, first, that Query on Release (QOR) is not an acceptable 
long-term number portability method. Second, the Commission extends the 
completion deadlines in the implementation schedule for wireline 
carriers by three months for Phase I and by 45 days for Phase II, 
clarifies the requirements imposed thereunder, concludes that LECs need 
only provide number portability within the 100 largest MSAs in switches 
for which another carrier has made a specific request for portability, 
and addresses issues raised by rural LECs and certain other parties. 
Finally, the Commission affirms and clarifies its implementation 
schedule for wireless carriers.

DATES: Effective May 15, 1997. Information collections, however, which 
are subject to approval by the Office of Mangement and Budget (OMB), 
shall become effective upon approval by OMB, but no sooner than 
September 12, 1997. A document announcing the information collections 
approval by OMB will be published in the Federal Register at a later 
date.

FOR FURTHER INFORMATION CONTACT: Jeannie Su, Attorney, Common Carrier 
Bureau, Policy and Program Planning Division, (202) 418-1580.

SUPPLEMENTARY INFORMATION:

Regulatory Flexibility Analysis

    This is a summary of the Commission's Order on Reconsideration

[[Page 18281]]

adopted March 6, 1997, and released March 11, 1997.

Synopsis of First Memorandum Opinion and Order on Reconsideration

Introduction

    1. On June 27, 1996, the Commission adopted the First Report and 
Order and Further Notice of Proposed Rulemaking (First Report & Order), 
61 FR 38605 (July 25, 1996), in this docket implementing the 
requirement under Section 251(b) of the Communications Act of 1934, as 
amended (the Act), that all local exchange carriers (LECs) offer, ``to 
the extent technically feasible, number portability in accordance with 
requirements prescribed by the Commission.'' 47 U.S.C. 251(b). By this 
action, the Commission resolves certain petitions for reconsideration 
or clarification of the Commission's number portability rules adopted 
in the First Report & Order. First, the Commission concludes that Query 
on Release (QOR) is not an acceptable long-term number portability 
method. Second, the Commission extends the completion deadlines in the 
implementation schedule for wireline carriers by three months for Phase 
I and by 45 days for Phase II, clarifies the requirements imposed 
thereunder, concludes that LECs need only provide number portability 
within the 100 largest MSAs in switches for which another carrier has 
made a specific request for portability, and addresses issues raised by 
rural LECs and certain other parties. Finally, the Commission affirms 
and clarifies its implementation schedule for wireless carriers.

Background

    2. Pursuant to the statutory requirement of section 251(b), the 
First Report & Order requires all LECs to implement a long-term number 
portability method in the 100 largest Metropolitan Statistical Areas 
(MSAs) according to a phased deployment schedule that commences October 
1, 1997, and concludes December 31, 1998. Thereafter, in areas outside 
the 100 largest MSAs, each LEC must make long-term number portability 
available within six months after a specific request by another 
telecommunications carrier. The First Report & Order also requires all 
cellular, broadband personal communications services (PCS), and covered 
Specialized Mobile Radio (SMR) providers to be able to deliver calls 
from their networks to ported numbers by December 31, 1998, and 
requires cellular, broadband PCS, and covered SMR providers to offer 
number portability throughout their networks and have the capability to 
support roaming nationwide by June 30, 1999.
    3. Rather than choosing a particular technology for the provision 
of number portability, the Commission established performance criteria 
that any long-term number portability method selected by a LEC must 
meet. The Commission noted, however, that one of the criteria it 
adopted effectively precludes carriers from implementing QOR. The First 
Report & Order further concludes that long-term number portability 
should be provided through a system of regional databases that will be 
managed by one or more independent administrators selected by the North 
American Numbering Council (NANC).
    4. The First Report & Order also requires wireline LECs, pending 
their deployment of a long-term number portability method, to provide 
currently available number portability measures upon request by another 
telecommunications carrier. Consistent with Section 251(e)(2) of the 
Communications Act, the First Report & Order sets forth principles that 
ensure that the costs of currently available measures are borne by all 
telecommunications carriers on a competitively neutral basis, and 
permits states to utilize various cost recovery mechanisms, so long as 
they are consistent with these statutory requirements and the 
Commission's principles. The Commission also concurrently adopted a 
Further Notice of Proposed Rulemaking (Further NPRM), 61 FR 38687 (July 
25, 1996), seeking comment on cost recovery for long-term number 
portability.

Discussion

Issues Relating to Long-Term Number Portability Methods

Performance Criteria
    5. Criterion Four. The Commission concludes that criterion four 
should be removed from the list of minimum performance criteria 
required for number portability, because all interconnected carriers 
are likely to rely upon each other's networks to some extent to process 
and route calls in a market in which a long-term number portability 
method has been deployed. For example, under both Location Routing 
Number (LRN) and Query on Release (QOR), the competitive LEC may be 
dependent upon facilities provided by the original service provider for 
the proper routing of all ported calls, because the original service 
provider is the entity that launches a query to the number portability 
database to obtain the location routing number for the dialed number. 
Furthermore, the Commission finds no basis in the record for drawing a 
principled distinction between permissible and impermissible levels of 
reliance on the original service provider's network. For these reasons, 
the Commission finds that criterion four--which requires that any 
number portability method may not ``require telecommunications carriers 
to rely on databases, other network facilities, or services provided by 
other telecommunications carriers in order to route calls to the proper 
termination point''--is, from a practical perspective, unworkable. 
Moreover, many of the Commission's concerns about reliance on a 
competitor's network (e.g., the possibility of service degradation and 
call blocking) are addressed by criterion six. Thus, criterion four 
does not appear to be necessary in order to implement the statutory 
definition of number portability. In light of the Commission's decision 
to eliminate criterion four, the Commission concludes that AirTouch's 
requested clarification of criterion four is moot.
    6. Criterion Six. With respect to criterion six, the Commission 
affirms its conclusion in the First Report & Order that any long-term 
number portability method must not result in any degradation of service 
quality or network reliability when customers switch carriers. The 
Commission further concludes, based on the record in this proceeding, 
that criterion six prohibits the use of QOR as a long-term number 
portability method. The Commission agrees with the commenters, 
primarily potential new providers of local exchange services (also 
referred to as ``competitive LECs''), that: (1) QOR results in 
degradation of service by imposing post-dial delay only on calls ported 
to new carriers; (2) if network reliability problems were to arise as a 
result of QOR, those problems would disproportionately affect customers 
who port their numbers; and (3) QOR should not be permitted on an 
intranetwork basis, because it is not ``competitively neutral.'' The 
Commission discusses each of these conclusions in more detail below.
Service Degradation
    7. After considering petitioners' arguments and concerns, the 
Commission affirms its conclusion in the First Report & Order that, in 
accordance with criterion six, a long-term number portability method 
may not cause customers to experience ``a greater dialing delay or call 
set up time'' as compared to when the customer was with the original 
carrier. Criterion six implements the statutory requirement that 
consumers be able to retain their

[[Page 18282]]

numbers ``without impairment of quality, reliability, or convenience 
when switching from one telecommunications carrier to another.''
    8. At the outset, the Commission agrees with AT&T and Time Warner 
that the time it takes to receive a call is an important factor for 
many subscribers, particularly businesses that receive and respond to a 
large number of calls on a daily basis. If the party making a call to a 
business experiences additional delay because that business has 
switched carriers, that delay may negatively impact how the business is 
perceived, which, in turn, could dissuade the business from switching 
carriers in the first place. Therefore, the Commission clarifies that 
performance criterion six requires that calls to customers who change 
carriers (not just calls from customers who change carriers) must not 
take longer to complete merely because the customer has switched local 
service providers. In order to implement the statutory requirement that 
consumers should be able to change carriers and retain their original 
phone number without impairment of quality, reliability, or 
convenience, the Commission concludes that any post-dial delay imposed 
by a number portability method should be roughly equivalent for all 
consumers, whether they are calling to or from a ported or a non-ported 
number.
    9. The Commission further concludes that consumers that switch 
telecommunications carriers and retain their numbers would experience 
``impairment of quality'' if QOR were used, because the post-dial delay 
imposed by QOR is not equivalent for all consumers. Under QOR, calls 
that are placed to ported numbers must undergo a series of signalling 
and routing steps that result in longer post-dial delay than occurs for 
calls that are placed to non-ported numbers. No party disputes that QOR 
causes additional post-dial delay. There is disagreement, however, over 
the appropriate baseline for comparison. Proponents of QOR erroneously 
focus on the post-dial delay of alternative number portability 
technologies, comparing the incremental post-dial delay associated with 
a call to a ported number using LRN with that of a call to a ported 
number using QOR. That is not the statutory standard. The Commission 
agrees with AT&T and MCI that the proper comparison for incremental 
post-dial delay is the difference in delay between calls placed to 
ported numbers and calls placed to non-ported numbers, because that is 
the delay that occurs ``when switching from one telecommunications 
carrier to another.'' According to the most conservative estimates, 
calls to ported numbers from a network that uses QOR would experience 
an additional post-dial delay of approximately 1.3 seconds as compared 
to calls placed to non-ported numbers. Because the Commission finds 
that post-dial delay of 1.3 seconds is significant, it concludes that 
QOR violates the statutory definition of number portability and 
criterion six. By contrast, under LRN, there is no differential between 
ported and non-ported calls; for all calls, it takes the same amount of 
time to query the database for appropriate routing instructions. LRN 
therefore does not impair service quality when a customer changes 
carriers. Accordingly, the Commission concludes that LRN is consistent 
with the statutory definition of number portability and performance 
criterion six.
    10. The Commission also rejects petitioners' argument that some 
degree of added post-dial delay should be acceptable, provided that it 
is not ``perceptible'' to the public. First, the Commission agrees with 
AT&T that the studies submitted by petitioners fail to demonstrate that 
1.3 seconds of post-dial delay is imperceptible to the public. Second, 
the Commission agrees with those parties that contend that, even if the 
additional post-dial delay were imperceptible to the caller, QOR could 
adversely affect competitors, because the incumbent LEC could 
truthfully advertise the fact that calls to customers that remain on 
the incumbent LEC's network are completed more quickly than calls to 
customers that switch to a competitor's network. MCI points out that 
this could create a marketplace perception that competitive LECs are 
operating inferior networks, which could harm competition. In response, 
six incumbent LECs have voluntarily committed not to mention the call 
set-up time differences between LRN and QOR in their advertising 
materials. As AT&T and MCI point out, however, the incumbent LECs' 
voluntary commitment is limited to ``advertising materials,'' and 
therefore does not preclude them from mentioning call set up in all 
other aspects of their marketing, such as direct sales and 
telemarketing, news releases, studies commenced to compare competitors' 
service performance, and editorials. Furthermore, because only six 
incumbent LECs signed the letter, the Commission has no basis on which 
to conclude that all incumbent LECs will refrain from using the 
differences in call set-up time to influence marketplace perceptions 
and inhibit competition. Thus, the Commission declines to designate a 
threshold below which added post-dial delay is permissible. Moreover, 
given the Commission's concerns about these marketplace perceptions, 
the Commission finds U S West's suggestion that the Commission survey 
consumers to ascertain whether they can perceive the post-dial delay 
associated with QOR to be unnecessary.
Network Reliability
    11. QOR. As discussed above, criterion six requires that no long-
term number portability method may result in ``any degradation of 
service quality or network reliability when customers switch 
carriers.'' The Commission agrees with the opponents of QOR that 
technical concerns raised by QOR are more likely to impact ported 
numbers adversely than non-ported numbers. For example, QOR requires 
fewer SS7 links to the number portability database than LRN because of 
the lower number of queries to support. There is a risk, therefore, 
that an SS7 network engineered to accommodate a lower traffic level 
would not be able to handle an unexpected sharp increase in the number 
of calls to ported numbers. Such increases could occur in response to 
advertising or promotions by competitive LECs with ported numbers. 
Difficulties in querying the database may result in call blockage 
(i.e., lost or incomplete calls) and increased post-dial delay, but 
only on calls to ported numbers. The Commission also notes that the 
apparent advantage of QOR in requiring fewer queries to the database is 
offset by the fact that it will require at least two additional 
signalling messages for each call to a ported number before routing 
instructions are obtained. This additional load on the signalling 
network creates the potential for reliability problems for ported 
calls. The Commission concludes that network reliability concerns posed 
by QOR violate criterion six and the statutory definition of number 
portability because, if any network problems arise as a result of QOR, 
they would disproportionately affect consumers who port their numbers.
    12. LRN. As a related matter, proponents of QOR assert that 
deployment of LRN is more likely to result in network failure than if 
carriers are permitted to use the QOR enhancement to LRN. Although the 
proponents of QOR do not frame their arguments in terms of the 
performance criteria the Commission adopted in the First Report & 
Order, the thrust of their argument appears to fall within the scope of 
criterion five, which requires that no number portability method

[[Page 18283]]

should result in ``unreasonable degradation in service quality or 
network reliability when implemented.''
    13. The Commission also concludes that petitioners have not 
demonstrated that LRN fails to meet criterion five. Although the 
initial deployment of any new technology may pose some risk to the 
network, the Commission is not persuaded that deployment of LRN will 
result in unreasonable degradation of network reliability when deployed 
under the revised schedule adopted in this First Reconsideration Order. 
Indeed, petitioners' concerns about LRN's impact on network reliability 
are mitigated by a number of factors. First, as the Commission noted 
previously, LRN has been examined extensively by a number of state 
commissions and industry workshops, and had been selected for 
deployment by at least six states prior to the adoption of the First 
Report & Order. Second, the Commission provided in the First Report & 
Order for a field test of LRN in the Chicago MSA (Chicago trial), which 
should help to protect against network reliability problems. If 
technical problems with LRN arise with respect to the Chicago trial, 
the Commission can take appropriate action at that time. Third, as 
discussed in more detail below, the Commission is extending the 
implementation schedule for Phase I to allow carriers additional time 
to test number portability in a live environment, and to take 
appropriate steps to safeguard network reliability. Indeed, the 
Bellcore study submitted by SBC supports the Commission's conclusion 
that additional time for testing, integration, and soaking (limited use 
of the software in a live environment for a length of time sufficient 
to find initial defects) will help to reduce the probability of network 
failure. Fourth, as the Commission clarifies below, its implementation 
schedule does not require a flashcut implementation on October 1, 1997, 
for those MSAs in the first phase of the deployment schedule. Rather, 
number portability may be implemented gradually throughout the initial 
phase, provided that implementation in the designated markets is 
completed by the end of that phase.
Intranetwork Use of QOR
    14. Incumbent LECs ask the Commission to permit them to use QOR on 
all calls that originate on their network and are placed to numbers 
that originally were assigned to one of their end offices (i.e., calls 
``within their own network'' or ``intranetwork calls''). The Commission 
concludes that their request is misleading insofar as it implies that 
only calls to and from their own customers would be affected. In fact, 
calls that are placed to numbers that have been ported would require a 
query to the number portability database after the originating switch 
is notified by the terminating switch in the incumbent LEC's service 
area that the called number has been ported. The Commission agrees with 
MCI that, as customers subscribe to alternative carriers, the only 
calls that will remain ``within'' the incumbent LEC's network will be 
calls from one of the incumbent LEC's customers to another. As 
discussed above, however, the call to the ported number would 
experience increased post-dial delay because of the additional 
signalling and routing preparations required by QOR. Such disparity in 
treatment between ported and non-ported numbers violates criterion six 
and the statutory definition of number portability.

Public Interest Considerations

Overview
    15. Petitioners further assert that, regardless of the Commission's 
performance criteria, incumbent LECs should not be prohibited from 
using QOR as a number portability method, because deployment of QOR 
serves the public interest. First, they claim that QOR will result in 
significant cost savings. Second, they claim that permitting incumbent 
LECs to use QOR will make it easier for them to meet the Commission's 
implementation schedule.
    16. As an initial matter, the Commission disagrees with the 
petitioners' premise that LECs should be permitted to implement QOR 
regardless of the performance criteria, if the Commission determines 
that QOR serves the public interest. As stated above, the Commission 
concludes that QOR violates criterion six, which is required by the 
statute. Thus, the Commission is not at liberty to apply a public 
interest analysis that could result in an abrogation of the statutory 
mandate. Nevertheless, because the parties raised public interest 
concerns, the Commission addresses them in order to establish that its 
decision to prohibit QOR is not contrary to the public interest.
    17. Discussion. As most carriers recognize, LRN is the more 
economical way to provide long term number portability once ported 
numbers for a given switch reach a certain level, although the point at 
which it becomes more cost-effective to use LRN rather than QOR remains 
in dispute. From an economic perspective, the question is whether the 
present discounted value of the cost of initially deploying LRN is less 
than the present discounted value of the cost of deploying QOR 
initially and LRN at some later date. Proponents of QOR contend that 
the use of the QOR enhancement to LRN would result in real cost 
savings, not just a short-term deferral of expenses, because the number 
of ported calls in some areas will never reach the level where it is 
more cost effective to disable QOR and complete the build-out necessary 
to support LRN. The Commission concludes, however, that the statutory 
scheme that Congress has put in place should, over time, result in 
vigorous facilities-based competition in most areas, and therefore LRN 
will be the most economical long-term solution. Thus, deploying QOR 
would most likely result in short-term cost savings, not overall cost 
savings. In fact, at least one incumbent LEC, Ameritech, has already 
decided that it is beneficial to deploy LRN from the outset, rather 
than converting from QOR to LRN at some later date. Even if facilities-
based competition does not develop in the immediate future, however, 
the Commission concludes that the harm that QOR imposes on competitors 
outweighs the benefit of allowing incumbent LECs to defer the cost of 
implementing a superior long-term number portability solution.
    18. Moreover, the Commission is not convinced that the incumbent 
LEC's estimates of the short-term savings associated with QOR are 
reliable. The Commission is particularly concerned by the fact that the 
cost savings estimates submitted by incumbent LECs have varied 
significantly over the course of this proceeding. In some cases, 
estimates from the same carrier have changed by 100 percent or more. 
Further, the changed estimates have not moved in the same direction; 
some carriers' estimates of the cost savings increased drastically and 
other carriers' estimates decreased equally drastically. While the 
Commission recognizes that carriers have worked over time to refine 
their projections, the wide variation in the estimates submitted by 
individual carriers at different points in this proceeding raises 
questions about the reliability of these estimates. Furthermore, the 
fact that some carriers have not explained the basis for the 
assumptions underlying their estimates precludes the Commission from 
conducting an independent evaluation of the reasonableness and 
reliability of their projected cost savings and, consequently, limits 
the weight the

[[Page 18284]]

Commission can reasonably assign to those estimates.
    19. In addition, MCI alleges that the cost savings that would be 
realized by permitting the deployment of QOR are far less than the 
estimated $54 million to $136.3 million in annual savings alleged by 
individual incumbent LECs. The LECs collectively estimate they would 
save between $624 and $649 million if permitted to use QOR. MCI has 
provided figures indicating that the LECs collectively would save only 
$50 million, but that figure only includes estimated savings for four 
out of the seven carriers. MCI was unable to estimate cost savings for 
three carriers due to insufficient information in the record. For three 
of the carriers for which MCI was able to provide estimates, however, 
these estimates ranged from 20% to 23% of the corresponding LEC figure. 
For the fourth carrier, MCI argued that QOR actually would cost more 
than LRN.
    20. MCI's calculation of the asserted cost savings associated with 
QOR challenges a key assumption underlying the incumbent LECs' 
estimates. Specifically, MCI claims that the LECs substantially 
underestimate the number of transactions (i.e., queries) per second 
(tps) that an SCP pair can perform and, consequently, their estimate of 
the number of SCP pairs that must be deployed to provide LRN is 
overstated. AT&T also alleges that the incumbent LECs' savings 
estimates do not take into account offsetting increases in additional 
switching facilities costs that would be required for QOR. MCI and AT&T 
further contend that the incumbent LECs' estimates of the relative 
costs of deploying LRN and QOR must be adjusted downward to account for 
revenues that they will receive to perform database queries at the 
request of rural and other LECs that do not have the capability to 
perform such queries themselves. Although incumbent LECs would obtain 
such revenues with both the LRN and QOR methodologies, the revenue 
stream is likely to be significantly greater with LRN because the 
number of database queries is likely to be much greater. Indeed, 
Pacific, a proponent of QOR, acknowledges that its estimate of the cost 
savings associated with QOR would be reduced by as much as $18 million 
if such revenues were included in the estimate. In view of the 
significant changes in the estimates of the cost savings associated 
with QOR submitted by individual incumbent LECs over the past months, a 
lack of data explaining many of the assumptions underlying their 
estimates, and the questions raised by MCI and AT&T with respect to 
specific aspects of the estimates, the Commission finds, on balance, 
that the incumbent LECs have not substantiated their claim that 
deployment of QOR will produce significant cost savings.
    21. Moreover, a recent submission by Illuminet, a provider of SS7, 
database, and other services to independent LECs and other entities, 
casts doubt on the reasonableness of one of the most basic assumptions 
underlying the incumbent LECs' estimates of the relative costs of QOR 
and LRN. Incumbent LEC estimates assume that the LEC number portability 
architecture will be deployed through a network of SCPs, and that a 
major cost driver of LRN is the number of SCPs needed to handle 
increased traffic volumes. On the other hand, Illuminet advocates using 
an STP-based architecture, in which call routing information from the 
regional database is transferred to a carrier's STP instead of an SCP, 
and the SCP is not involved in processing the number portability query. 
Illuminet asserts that STPs are designed specifically to do ten-digit 
translations such as LRN query processing and can process number 
portability queries at a much faster rate than SCPs. In contrast, SCPs 
are designed to support multiple call processing applications and 
process significantly fewer queries per second. Carriers using an STP-
based architecture, therefore, would need to purchase and install a 
relatively smaller number of STPs instead of the larger number of SCPs 
alleged by the LECs, and would not need to purchase and install 
additional SS7 links between the SCPs and STPs. Thus, according to 
Illuminet, use of an STP-based architecture would reduce dramatically 
the cost of LRN. In response, Pacific acknowledges that a combined STP-
SCP approach may reduce some costs, but that expenses related to 
upgrading switch processors, links, and existing STPs will still be 
substantial. Although the Commission acknowledges that carriers 
deploying LRN will incur costs other than those associated with SCPs, 
the Commission agrees with Illuminet that an STP-based approach should 
reduce the relative cost differential between LRN and QOR.
Conclusion
    22. Congress recognized that there are costs associated with the 
implementation of local number portability. Although carriers may 
realize some short-term cost savings if permitted to use QOR instead of 
LRN, the exact amount of savings from utilizing QOR is unclear. Even if 
the cost savings figures submitted by the LECs were correct, the 
Commission believes that the benefits to consumers of such savings do 
not outweigh the harm that QOR would impose on competitive LECs, the 
cost of disrupting state efforts to implement LRN, or any delay in 
implementation that might result from such disruption. Thus, the 
Commission concludes that permitting carriers to deploy QOR as a long-
term number portability method does not serve the public interest.

Implementation Schedule for Wireline Carriers

Background
    23. In the First Report & Order, the Commission required local 
exchange carriers operating in the 100 largest MSAs to offer long-term 
service provider portability, according to a phased deployment schedule 
commencing on October 1, 1997, and concluding on December 31, 1998. The 
Commission required deployment in one specified MSA in each of the 
seven BOC regions by the end of fourth quarter 1997 (``Phase I''), 16 
additional specified MSAs by the end of first quarter 1998 (``Phase 
II''), 22 additional specified MSAs by the end of second quarter 1998 
(``Phase III''), 25 additional specified MSAs by the end of third 
quarter 1998 (``Phase IV''), and 30 additional specified MSAs by the 
end of fourth quarter 1998 (``Phase V''). The Commission noted that, in 
establishing the deployment schedule, it relied upon representations of 
switch vendors regarding the dates by which the necessary switching 
software will be generally available for deployment. In particular, 
vendors estimated that they could begin to make software for at least 
one long-term number portability method generally available for 
deployment by carriers around mid-1997. In addition, a carrier may file 
a specific request for number portability beginning January 1, 1999, 
for areas outside the 100 largest MSAs, and each LEC must make long-
term number portability available in that MSA within six months after 
the specific request. The Commission also directed the carriers that 
are members of the Illinois Commerce Commission Local Number 
Portability Workshop (ICC Workshop) to conduct in the Chicago MSA, 
concluding no later than August 31, 1997, a field test of LRN or 
another technically feasible long-term number portability method that 
comports with the performance criteria. The Commission noted that 
section 251(f)(2) of the Act permits a LEC with fewer than two percent 
of the country's total installed subscriber lines to petition a state 
commission for suspension or

[[Page 18285]]

modification of the interconnection requirements of sections 251 (b) 
and (c).
    24. The Commission delegated to the Chief, Common Carrier Bureau, 
the authority to monitor the progress of LECs implementing number 
portability, and to direct carriers to take any actions necessary to 
ensure compliance with its deployment schedule. The Commission also 
delegated to the Chief, Common Carrier Bureau, the authority to waive 
or stay any of the dates in the implementation schedule, for a period 
not to exceed nine months (i.e., no later than September 30, 1999, for 
the MSAs in Phase V of the deployment schedule), as is necessary to 
ensure the efficient development of number portability. In the event a 
carrier is unable to meet the Commission's deadlines for implementing a 
long-term number portability method, it may file with the Commission, 
at least 60 days in advance of the implementation deadline, a petition 
to extend the time by which implementation of long-term number 
portability in its network will be completed. The Commission 
emphasized, however, that carriers are expected to meet the prescribed 
deadlines, and a carrier seeking relief must present extraordinary 
circumstances beyond its control in order to obtain an extension of 
time. The Commission required a carrier seeking such relief to 
demonstrate through substantial, credible evidence the basis for its 
contention that it is unable to comply with the deployment schedule.
Deployment Only in Requested Switches
    25. Discussion. The Commission agrees with the majority of the 
parties commenting on this issue that it is reasonable to focus initial 
efforts in implementing number portability in areas where competing 
carriers plan to enter. This approach will permit LECs to target their 
resources where number portability is needed and avoid expenditures in 
areas within an MSA in which competitors are not currently interested. 
The Commission further agrees that such a procedure will foster 
efficient deployment, network planning, and testing, reduce costs, and 
lessen demands on software vendors. Moreover, the Commission believes 
that limiting deployment to switches in which a competitor expresses 
interest in number portability will address the concerns of smaller and 
rural LECs with end offices within the 100 largest MSAs that they may 
have to upgrade their networks at significant expense even if no 
competitors desire portability. Limiting deployment to switches in 
which a competitor expresses interest in deployment will be consistent 
to a large extent with procedures suggested by Ameritech and BellSouth 
and already considered by several state commissions, as well as the 
Commission's past practice in implementing conversion to equal access 
for independent telephone companies.
    26. The Commission therefore concludes that LECs need only provide 
number portability within the 100 largest MSAs in switches for which 
another carrier has made a specific request for the provision of 
portability. The Commission leaves it to the industry and to state 
commissions to determine the most efficient procedure for identifying 
those switches in which carriers have expressed interest and which will 
be deployed with number portability according to the original 
deployment schedule for the 100 largest MSAs. The Commission finds, 
however, that any procedure to identify and request switches for 
deployment of number portability must comply with certain minimum 
criteria to ensure that minimal burden is imposed upon carriers 
requesting deployment in particular switches, and that carriers that 
receive requests for deployment in their switches have adequate time to 
fulfill the requests. As explained below, the Commission requires that: 
(1) Any wireline carrier that is certified, or has applied for 
certification, to provide local exchange service in the relevant state, 
or any licensed CMRS provider, must be allowed to make a request for 
deployment; (2) requests for deployment must be submitted at least nine 
months before the deadline in the Commission's deployment schedule for 
that MSA; (3) carriers must make available lists of their switches for 
which deployment has and has not been requested; and (4) additional 
switches must be deployed upon request within the time frames described 
below.
    27. First, any wireline carrier that is certified (or has applied 
for certification) to provide local exchange service in a state, or any 
licensed CMRS provider, must be given a reasonable opportunity to make 
a specific request for deployment of number portability in any 
particular switch located in the MSAs in that state designated in the 
First Report & Order. According to the Act, any carrier that desires 
number portability from a LEC must be able to obtain portability, in 
accordance with the requirements established by the Commission. 47 
U.S.C. 251(b)(2). A state commission, however, may review whether the 
requests made by a carrier are unreasonable, given the state 
commission's knowledge of that carrier's plans to enter the state. 
Based on the limited information available to the Commission at this 
time, the states that are reviewing seemingly unreasonable requests 
appear to be acting in good faith to accommodate carriers' interests in 
number portability capabilities. If the Commission receives evidence in 
the future that states are unreasonably limiting deployment, then it 
can revisit this issue at that time.
    28. Second, a carrier must make its specific requests for 
deployment of number portability in particular switches at least nine 
months before the deadline for completion of implementation of number 
portability in that MSA. The Commission concludes that this deadline 
will enable a LEC to plan ahead for the deployment of number 
portability in multiple switches in a given MSA. The Commission 
encourages carriers to make such requests earlier than the nine-month 
deadline to give the LEC that operates the switch in which portability 
is requested more time to implement number portability capabilities. In 
addition, carriers may agree among themselves, or state commissions may 
require carriers, to comply with a deadline for submitting requests 
that is more than nine months prior to the implementation deadline.
    29. The Commission encourages carriers, before requests for 
deployment are submitted, to seek to reach a consensus on the 
particular switches that initially will be deployed with number 
portability. The Commission notes, moreover, that the state commission 
may decide, or carriers affected in the state may agree, that it would 
be preferable for the state commission to aggregate the requests to 
produce a master list of requested switches. In addition, the 
Commission concludes that carriers may negotiate private agreements 
specifying that a carrier will not request that certain switches be 
deployed according to the Commission's schedule if the LEC from which 
deployment is requested agrees to deploy other number portability-
capable switches, either inside or outside the 100 largest MSAs, at an 
earlier date than the deadlines in the Commission's schedule. For 
example, NEXTLINK suggests waiving the scheduled deployment deadlines 
for switches in the 100 largest MSAs for which no competitor expresses 
interest in deployment, and allowing carriers instead to deploy 
switches outside the 100 largest MSAs in which a competitor expresses 
interest, according to the deadlines for those unrequested switches 
within the 100 largest MSAs.

[[Page 18286]]

    30. Third, after carriers have submitted their requests, a carrier 
must make readily available upon request to any interested parties a 
list of its switches for which number portability has been requested 
and a list of its switches for which number portability has not been 
requested. The Commission finds that simplifying the task of 
identifying the switches in each MSA in which number portability is 
initially scheduled to be deployed is consistent with its policy of 
facilitating the deployment of number portability in areas where new 
competitors plan to enter.
    31. Fourth, carriers must be able to request at any time that 
number portability be deployed in additional switches. LECs must 
provide portability in these additional switches upon request, after 
the deployment deadline mandated by the Commission's schedule for that 
MSA, within the time frames that the Commission adopts here, unless 
requesting carriers specify a later date. Although carriers may make 
specific requests for deployment in additional switches in a particular 
MSA at any time, the time frames set forth below will commence after 
the deadline for deployment in that particular MSA in the 
implementation schedule. The Commission agrees with Sprint and Time 
Warner that specific time frames within which number portability must 
be deployed in all switches that were not initially requested are 
necessary to ensure that competitive LECs can be certain that 
portability will be available in areas in which they plan to compete 
and can formulate their business plans accordingly. Absent this 
certainty, competing carriers would have an incentive to request more 
switches during the initial request process, including those serving 
markets which they do not plan to enter in the near future, in order to 
ensure deployment of portability in any switch in which they might ever 
want portability. The Commission finds, therefore, that establishing 
specific time frames for deployment in all additional switches will 
benefit competitive LECs by ensuring that portability will be available 
to them at a designated future time, and will benefit incumbent LECs by 
reducing their initial deployment burdens.
    32. The Commission finds that the time frames developed by the 
carriers participating in the ICC Workshop generally successfully 
balance the needs of competitive LECs for certainty of deployment and 
the burdens faced by incumbent LECs in deploying number portability in 
additional switches that require different levels of upgrades. The 
Commission therefore adopts, with slight modification, the time frames 
developed by the ICC Workshop for the conversion of additional 
exchanges: (1) Equipped Remote Switches within 30 days; (2) Hardware 
Capable Switches within 60 days; (3) Capable Switches Requiring 
Hardware within 180 days; and (4) Non-Capable Switches within 180 days. 
For example, if carriers request deployment in a certain number of 
switches in the Pittsburgh, PA MSA nine months before that MSA's Phase 
III deadline of June 30, 1998 (i.e., they make requests by September 
30, 1998), and a carrier requests on April 1, 1998, deployment in an 
additional Equipped Remote Switch in Pittsburgh, then the additional 
switch must be equipped with number portability capability on or before 
July 30, 1998 (i.e., 30 days after June 30, 1998). The Commission notes 
that the ICC Workshop developed the time frames for the first three 
switch categories, but did not reach agreement on a time frame for 
converting a Non-Capable Switch. Since the Commission finds, as 
discussed above, that specific time frames for deployment of all 
additional switches are necessary, the Commission finds that it is 
reasonable to allow no more time for deployment of any switches within 
the 100 largest MSAs than is allowed for deployment of switches outside 
the 100 largest MSAs. Deployment in additional switches will be less 
burdensome for carriers with networks within the 100 largest MSAs that 
have already made network-wide upgrades, e.g., SCP hardware and OSS 
modifications, to support number portability in the initially requested 
switches.
    33. Carriers seeking relief from these deadlines may file a 
petition for waiver under the procedures set forth in the First Report 
& Order. The Commission notes that the deadlines for switches in 
categories (1) and (2) are shorter than switches in categories (3) and 
(4) because the former require less extensive upgrades. The Commission 
realizes that the shorter deadlines for switches in categories (1) and 
(2) do not allow time for carriers to file a petition for waiver under 
the procedure established in the First Report & Order on the grounds of 
extraordinary circumstances that prevent it from complying with the 
Commission's deployment requirements. The Commission therefore will 
suspend the deadlines for switches in categories (1) and (2) during the 
period that the Commission is considering a carrier's petition for 
waiver. For example, if a LEC receives a request for deployment in an 
additional switch that is an Equipped Remote Switch, and five days 
later the LEC files a petition for waiver, then the LEC need not deploy 
number portability in the switch until 25 days after the Commission 
denies its petition, or until the date specified in the Commission's 
grant of the petition.
    34. The Commission agrees with MCI that, after portability has been 
introduced in an MSA, the incremental cost and resources needed to add 
additional end offices are relatively minor because most costs, e.g., 
SCP hardware and signalling links, OSS modifications, and shared 
regional database costs, will have already been incurred. Number 
portability, consequently, can be deployed more quickly in the switches 
for which number portability is requested after the initial deployment 
of number portability. The Commission therefore declines to adopt 
suggestions by USTA and GTE to allow a longer time after receipt of a 
request for deployment of number portability capability in switches not 
in the initial deployment.
    35. The Commission emphasizes that a carrier operating a non-
portability-capable switch must still properly route calls originated 
by customers served by that switch to ported numbers. When the switch 
operated by the carrier designated to perform the number portability 
database query is non-portability-capable, that carrier could either 
send it to a portability-capable switch operated by that carrier to do 
the database query, or enter into an arrangement with another carrier 
to do the query.
    36. The Commission concludes that permitting carriers to specify 
those switches within the 100 largest MSAs in which they desire 
portability is more workable than the procedures proposed by some 
petitioners that would require incumbent LECs to file waiver requests 
for specific switches for which the incumbent LECs believe that no 
competitor is interested. A waiver procedure would create a period of 
uncertainty for both the incumbent LEC and the competitive LEC as to 
whether portability would actually be deployed in that switch. 
Moreover, a waiver procedure would burden the incumbent LEC with 
preparing and filing the petition for waiver, require that the 
Commission review the petition, and potentially burden the state 
commission with determining whether there is actual competitive 
interest in the switch. In addition, these proposals by petitioners 
appear to assume generally that no competitive LEC would oppose the 
waiver petition; if this is not the case, then a waiver procedure would 
burden competing carriers with

[[Page 18287]]

challenging the waiver. A waiver procedure would also burden both 
competing carriers and consumers by hampering competitive entry into 
the market while waiting for a determination by the Commission or a 
state commission.
    37. The Commission believes that the criteria set forth above 
adequately address MCI's concern that requesting carriers would bear an 
unnecessary burden of justifying deployment in each end office and 
endure uncertainty as to deployment. The only burden on requesting 
carriers is to identify and request their preferred switches. In 
addition, carriers have a time frame for deployment of the initially 
unrequested switches within the 100 largest MSAs. Competitive LECs can 
thus market their services as widely as they desire with assurance that 
number portability will be available in the areas where, and at the 
times when, they desire to compete. As an additional safeguard against 
anticompetitive abuses of the procedures to identify and request those 
switches for which a carrier desires deployment of number portability, 
the Commission delegates authority to the Chief, Common Carrier Bureau, 
to take action to address any problems that arise over any specific 
procedures.
Extension of Implementation Schedule
    38. Discussion. The Commission grants, with some modifications, the 
requests by BellSouth and other parties to extend the deadlines for 
completion of deployment of long-term number portability for Phases I 
and II, as set forth in appendix E of this First Reconsideration Order. 
On reconsideration, the Commission extends the end date for Phase I by 
three months. Thus, deployment in Phase I will now take place from 
October 1, 1997, through March 31, 1998. The Commission takes this 
action because it is now persuaded that initial implementation of this 
new number portability technology is likely to require more time than 
subsequent deployment once the technology has been thoroughly tested 
and used in a live environment. For example, initial implementation of 
this new technology is likely to involve more extensive testing, and 
may require extra time to resolve any problems that may arise during 
the testing. It therefore is appropriate that Phase I be longer than 
subsequent phases in the schedule to allow carriers to take appropriate 
steps to safeguard network reliability.
    39. The Commission also notes that the participants in the Chicago 
trial have recently informed it that the completion date of the Chicago 
trial, previously scheduled for August 31, 1997, has been postponed by 
approximately one month until September 26, 1997. While the Chicago 
trial participants have committed to providing the Commission with 
weekly updates on trial progress, the full report on the Chicago trial 
that participants had planned to file September 30, 1997, is now 
scheduled to be filed October 17, 1997. Consistent with this 
notification by the Chicago trial participants, the Commission hereby 
extends the deadline for carriers that are members of the ICC Workshop 
to conduct a field test of any technically feasible long-term database 
method for number portability in the Chicago, Illinois, MSA and to 
report the results of that trial. While the Commission understands that 
participants in the Chicago trial are prepared to commence 
implementation in Chicago immediately upon conclusion of the trial and 
still expect to meet the original December 31, 1997, deadline, the 
Commission recognizes that carriers operating in other MSAs may require 
additional time to interpret the results of the Chicago trial in light 
of their individual network configurations. Finally, the Commission 
finds some merit in CBT's argument that an extra 90 days for initial 
implementation may permit small and mid-size LECs to reduce their 
testing costs by allowing time for larger LECs to test and resolve the 
problems of new technology. Given all the factors listed above, the 
Commission concludes that a three-month extension of the time period 
for initial deployment in Phase I markets appropriately safeguards 
network reliability, and therefore is warranted.
    40. The Commission also extends the end date for Phase II by 45 
days. Thus, deployment in Phase II will now take place from January 1, 
1998, through May 15, 1998. The Commission extends Phase II to 
alleviate potential problems that may arise if deployment in markets in 
Phase I and II must be completed on the same date. Requiring that 
implementation be completed in a greater number of markets by a 
specific deadline may make that deadline more difficult to meet (e.g., 
by straining vendor resources to perform software upgrades in any given 
period of time). For the same reason, the Commission declines to extend 
Phase II by 90 days as requested by BellSouth, as such an extension 
would establish the same deadline for completion of deployment for 
Phases II and III. The Commission concludes that the modest adjustment 
of the deadline for Phase II adopted in this First Reconsideration 
Order will more effectively stagger the deadlines for deployment in 
different markets than BellSouth's proposal.
    41. The Commission clarifies, per BellSouth's request, that 
implementation of number portability for a phase may begin at any time 
during that phase, provided that implementation in the designated 
markets is completed by the end of that phase. Contrary to the 
allegations of Pacific and other parties, number portability thus need 
not be introduced ``on virtually the same day'' in the seven of the 
largest MSAs, especially because it may now be phased into the first 
markets more gradually over six months, instead of three.
    42. The Commission strongly advises carriers to begin 
implementation early in each phase, however, as they will not be able 
to obtain a waiver of the schedule if they cannot demonstrate, through 
substantial, credible evidence, at least sixty days before the 
completion deadline, the extraordinary circumstances beyond their 
control that leave them unable to comply with the schedule, including 
``a detailed explanation of the activities that the carrier has 
undertaken to meet the implementation schedule prior to requesting an 
extension of time.'' This is especially applicable to Phases I and II, 
given that the Commission now is granting carriers additional time 
during those phases specifically so that they can implement number 
portability more gradually. The Commission will not look favorably upon 
a waiver request if the carrier has not taken significant action to 
implement portability, if the carrier does not place orders with switch 
manufacturers in a timely manner, or, for example, if the carrier 
requests a waiver for a Phase II market because it only began preparing 
for implementation for a Phase I market in the first quarter of 1998, 
and then claims that it has too many software upgrades to perform from 
January through May 15, 1998. Carriers should be able to identify any 
specific technical problems that may necessitate an extension of the 
deployment deadline for Phase I during the four months between the 
scheduled end of the Chicago trial and the deadline for requesting an 
extension for Phase I, especially because carriers will be receiving 
initial feedback from testing in Chicago far in advance of the Chicago 
trial's conclusion. As noted above, the participants in the Chicago 
trial have committed to providing weekly progress reports as the trial 
progresses. Initial tests of LRN hardware and software on a subset of 
switches in the Chicago MSA began in January 1997. Intra-network and 
database testing

[[Page 18288]]

in Chicago is scheduled to take place for several months before the 
start of the Chicago trial mandated by the Commission.
    43. The Commission's decision to extend the deadlines for 
completing Phases I and II of its deployment schedule reflects the fact 
that the Commission considers network reliability to be of paramount 
importance. Consistent with that commitment, in the First Report & 
Order the Commission delegated authority to the Chief, Common Carrier 
Bureau, to monitor generally the progress of number portability 
implementation and take appropriate action, as well as establishing a 
procedure for individual LECs to obtain an extension of the deployment 
deadlines as necessary for their specific markets. The Chief, Common 
Carrier Bureau, will monitor the weekly reports from the Chicago trial 
and any other pertinent developments. The Commission finds that further 
adjustment of the deployment schedule in response to these developments 
is more properly a matter for the Chief, Common Carrier Bureau, to 
handle as number portability technology is tested and carriers discover 
any actual, specific difficulties. If significant problems arise during 
the Chicago trial, or other significant implementation problems arise 
during Phase I, the Chief, Common Carrier Bureau, has the authority to 
adjust the schedule for the Chicago trial or the deadline for Phase I 
implementation, as appropriate, to ensure network reliability.
    44. Although the findings of the Bellcore study submitted by SBC 
were vigorously challenged by AT&T and MCI, it bears mention that 
extending the Phase I completion date by three months is responsive to 
the recommendation in the Bellcore study that the Commission should 
allow additional ``time for testing, integration, and soaking (limited 
use of the software in a live environment for a length of time 
sufficient to find initial defects) of the software.'' In fact, the 
Bellcore study specifically recommended that the Commission ``(e)xtend 
the time interval for introduction of (number portability) by 3 
months.'' The Commission's extension of Phase I, in combination with 
its conclusion that carriers need provide portability only in requested 
switches, also allows carriers the flexibility to introduce portability 
more gradually, beginning with a subset of switches within the MSA.
    45. The Commission denies the petitions to extend the deployment 
deadlines for all markets or otherwise provide wireline carriers 
greater flexibility in the schedule to implement long-term number 
portability. Although the Commission concludes that initial 
implementation of this new number portability technology may require 
additional time, the Commission is not persuaded that implementation in 
subsequent phases, after the technology has already been tested and 
installed in the initial markets, need be delayed to the extent 
requested by some petitioners. The Commission finds on the basis of the 
record in this proceeding that the implementation schedule as revised 
in this First Reconsideration Order is reasonable, and that granting 
any further delay of the schedule at this time is premature and 
unnecessary, especially because there is still approximately one year 
before LECs must complete deployment for the earliest phase. 
Petitioners have only speculated that unpredictable events may, at some 
point in the future, generally delay implementation, and have not shown 
that a specific factor will render the later schedule impossible to 
meet for any particular reason, much less for any particular LEC.
    46. Petitioners' arguments are even more speculative given that 
their implementation obligations are likely to be significantly lighter 
than they assume, because, as the Commission discusses above, LECs are 
required to deploy number portability only in switches for which they 
receive requests for number portability capability. Moreover, even if 
the problems identified by petitioners do in fact develop, in the First 
Report & Order the Commission established a procedure for LECs to 
obtain an extension of the deployment deadlines as necessary, and 
delegated authority to the Chief, Common Carrier Bureau, to monitor the 
progress of number portability implementation.
    47. Furthermore, the Commission finds it unnecessary to act on 
GTE's request that it clarify that LECs may obtain a waiver if they 
cannot meet the schedule for reasons beyond their control. The waiver 
procedure established in the First Report & Order for extending 
deployment deadlines as necessary provides an effective vehicle for 
addressing any problems in implementing number portability that LECs 
can document. In particular, if problems necessitating delay do arise, 
the Chief of the Common Carrier Bureau may waive or stay any of the 
dates in the implementation schedule, as the Chief determines is 
necessary to ensure the efficient development of number portability, 
for a period not to exceed nine months. In the event a carrier is 
unable to meet the deadlines for implementing a long-term number 
portability method, it may file with the Commission, at least 60 days 
in advance of the deadline, a petition to extend the time by which 
implementation in its network will be completed. See ALTS Opposition at 
6 n.7 (arguing that incumbent LECs should try to settle their claims 
with carriers and vendors and develop a record before challenging the 
schedule); Sprint Opposition at 13-14. The Commission notes that 
carriers may file petitions for waiver of the deployment schedule more 
than 60 days in advance of an implementation deadline, and thus receive 
relief earlier, if they are able to present substantial, credible 
evidence at that time establishing their inability to comply with the 
deadlines.
    48. The Commission rejects USTA's proposal to give every state 
commission and/or workshop the authority to extend independently the 
deployment deadlines according to their assessments of the level of 
local competition in an area. As set forth above, the Commission 
requires carriers to identify the switches in which they desire number 
portability capability well before the deadline for deployment in a 
particular MSA. The Commission finds that this requirement will enable 
LECs to deploy number portability in areas in which local competition 
is likely to develop at an early stage, while relieving LECs of the 
obligation to install the capability in areas that competitive LECs 
have no initial interest in serving. This requirement, in the 
Commission's view, addresses USTA's concerns by striking a reasonable 
balance between a LEC's interest in avoiding unnecessary switch 
upgrades, and a competitive LEC's interest in having assurances that 
number portability will be available in areas where it plans to compete 
to serve existing LEC customers.
    49. The Commission declines to expedite the Chicago trial, as 
requested by NYNEX. The First Report & Order scheduled the completion 
date for the Chicago trial for as early as appeared reasonably possible 
at that time. Given the record before it now, the Commission concludes 
that it would not be possible to accelerate the commencement of that 
trial. Moreover, the Commission agrees with the Chicago trial 
participants that it would be inappropriate to shorten or delete any of 
the planned testing.
    50. The Commission also declines to order additional field tests, 
as requested by NYNEX. The requirement that there be a field trial in 
Chicago is only intended to ensure that at least one field trial is 
held to identify technical

[[Page 18289]]

problems in advance of widespread deployment, which will provide all 
carriers, as well as the Commission, with information on 
implementation. All carriers will have an opportunity to monitor 
testing in Chicago and evaluate the results of the testing on an 
ongoing basis. The Commission finds, moreover, that LECs currently have 
access to additional information concerning the impact of number 
portability on their systems, because many LECs are, and have been for 
some time, analyzing extensively implementation and inter-carrier OSS 
impact of number portability under the auspices of state and industry 
fora. As the Commission stated in the First Report & Order, it does not 
routinely schedule field trials in rulemaking proceedings; its 
requiring a field trial in the Chicago MSA is an exceptional step that 
the Commission adopted to safeguard against any risk to the public 
switched telephone network. The need for any further trials should be 
determined by the industry.
    51. To the extent that other networks differ in design or switch 
use or other relevant variables, the Commission does not preclude the 
testing of either software or hardware in other areas or by other 
carriers, either contemporaneously with the Chicago trial or even 
before that trial begins. Indeed, the Commission encourages carriers to 
test portability within their own networks as early as possible. For 
example, Bell Atlantic plans to do ``first office application'' testing 
in Gaithersburg, Maryland, from July 15, 1997, to August 30, 1997. The 
Gaithersburg test, therefore, will have been completed seven months 
before Bell Atlantic's March 31, 1998, deadline to complete 
implementation in Philadelphia, the market in which it must deploy 
long-term number portability in Phase I under the revised schedule. In 
any event, carriers should have the opportunity to perform their own 
testing, including on ``live traffic,'' well before the date by which 
they must request any waiver of the Phase I implementation 
requirements.
    52. The Commission also declines to adopt NYNEX's proposal to 
deploy portability in smaller MSAs instead of the largest ones during 
Phase I of the deployment schedule. At this time, there is only 
speculation that starting with the most populous MSAs will result in 
technical problems. Indeed, carriers are further ahead in preparing for 
number portability in many of the larger MSAs than in the smaller ones; 
for example, several state commissions that had addressed the issue of 
number portability before issuance of the First Report & Order had 
ordered that deployment begin in several major cities that are 
currently in Phases I or II of the schedule. Therefore, switching the 
deadlines of those larger MSAs with other, smaller MSAs now would, at a 
minimum, disrupt planning by competitive LECs and state commissions in 
those jurisdictions. Moreover, the three-month extension of the end 
date of Phase I, in combination with the Commission's conclusion that 
carriers need provide portability only in requested switches, will 
serve much the same purpose as NYNEX's request by allowing carriers the 
flexibility to begin deployment in a subset of switches within each of 
the Phase I MSAs and gradually increase coverage over the six-month 
period. In addition, the Commission does not prohibit, but rather 
encourages, carriers to take whatever additional actions they believe 
are necessary to safeguard their networks, including testing deployment 
of portability in one of their smaller MSAs before or during Phase I of 
the deployment schedule. For example, Bell Atlantic is testing number 
portability in the smaller market of Gaithersburg, MD before Phase I.
    53. The Commission also denies NYNEX's request that it explicitly 
encourage states to be flexible in opting out of the regional database 
or choosing to construct joint databases, or to work with less active 
neighboring states to establish regional databases. The Commission 
finds that the First Report & Order allows sufficient flexibility for 
states to opt out of the regional databases. In addition, NYNEX's 
concern that the NANC would not resolve the database issues in time for 
carriers to meet the deployment schedule is now largely moot, given the 
recent activities of the NANC. The NANC has committed to making its 
final recommendations to the Commission on the database system by May 
1, 1997. The NANC's working groups and task forces relating to number 
portability are already organized and holding regular meetings to 
resolve the database issues. The Local Number Portability 
Administration Selection Working Group projects that all seven regional 
databases will be ready for testing on dates ranging from April 18, 
1997, to July 1, 1997, and will be ready to support number portability 
deployment on or before October 1, 1997, in accordance with the 
deployment schedule set forth in the First Report & Order.
    54. Finally, the Commission clarifies that the first performance 
criterion, that any method ``support existing network services, 
features, and capabilities,'' refers only to services existing at the 
time of the First Report & Order. The Commission cautions LECs that 
problems in implementing their chosen number portability method due to 
modifications necessitated by the introduction of a new service or 
technology will not justify a delay of the deployment schedule. The 
Commission declines, however, specifically to prohibit the introduction 
of any new service that is incompatible with LRN, as the First Report & 
Order did not adopt LRN or mandate use of any specific long-term number 
portability method.
Acceleration of Implementation Schedule
    55. Discussion. The Commission denies the petitions for 
reconsideration that advocate: (1) Accelerating deadlines for certain 
MSAs; (2) allowing carriers with operational networks in the 100 
largest MSAs and the authority to provide local exchange service to 
request portability in any MSA in the 100 largest MSAs beginning July 
1, 1997, and requiring LECs to fulfill such requests on a specified 
date six or more months in the future; (3) adding MSAs outside the 
largest 100 MSAs to the initial deployment schedule; or (4) combining 
the deadlines of consolidated MSAs. The current schedule is based on 
the projected availability of switch software, and recognizes the 
burden on carriers serving multiple regions and the fact that more 
significant upgrades may be necessary for carriers operating in smaller 
areas. Petitioners have not made a showing that the necessary software, 
hardware, and other resources will be available earlier in areas 
originally scheduled for later deployment, or will be available in 
quantities sufficient to support deployment in additional areas, 
particularly in areas outside the 100 largest MSAs. If such hardware 
and software is not available for deployment early enough or in 
sufficient quantities to support deployment in additional areas, then 
accelerating deployment deadlines for smaller MSAs may divert these 
limited resources from deployment in other, larger MSAs, and thus delay 
deployment of number portability where a greater population might 
benefit from competition.
    56. For the reasons stated above, the Commission also rejects 
ACSI's request to require deployment in Phase I in certain additional 
markets in which the incumbent LECs are not BOCs. In addition, the 
Commission continues to believe that non-BOC incumbent LECs, most of 
which have more limited resources than the BOCs, should have additional 
time to upgrade and test their networks. Moreover, the Commission

[[Page 18290]]

concludes above that LECs need deploy number portability in the 100 
largest MSAs only in switches for which another carrier has made a 
specific request for the provision of portability. Requiring that 
additional MSAs be deployed in Phase I does not give sufficient notice 
to carriers or states to establish switch-requesting procedures in MSAs 
for which they had no previous notice that deployment was required in 
Phase I. The Commission also declines to adopt USTA's proposal that 
state commissions be free to accelerate the deployment schedule. While 
the Commission is sympathetic to the desires of some states to advance 
deployment where actual competitive interest exists, it concludes that 
the schedule adopted in the First Report & Order, as modified in this 
First Reconsideration Order, represents a reasonable balancing of 
competing interests, and carriers need to have certainty that these are 
the requirements with which they must comply. The Commission's First 
Report & Order was silent on the issue of whether states could 
accelerate the deployment schedule. The Commission therefore 
grandfathers any state decisions to accelerate deployment for a 
particular market from one phase to an earlier phase that were adopted 
prior to release of this First Reconsideration Order.
    57. The Commission does not prohibit LECs from agreeing to 
accelerate implementation, either for specific MSAs or specific 
switches within MSAs. The Commission finds, however, that acceleration 
of the schedule is more properly determined by private agreements among 
carriers. Competitive LECs are free to negotiate with incumbent LECs 
for deployment of number portability ahead of the Commission's 
schedule. Moreover, to the extent that carriers agree to ``swap'' the 
implementation deadlines for specific MSAs or switches within MSAs, 
they can jointly file specific waiver petitions to do so.
    58. The Commission grants in part the petitions of ACSI, KMC, and 
NEXTLINK to allow requests for deployment of number portability in 
areas outside the 100 largest MSAs to be submitted earlier than January 
1, 1999. The Commission therefore modifies its rules to permit carriers 
to submit requests for deployment of number portability in areas 
outside the 100 largest MSAs at any time. The Commission declines, 
however, to require that deployment be completed within six months of 
request for requests filed prior to January 1, 1999. This modification 
to the rules will benefit all parties, because receiving earlier notice 
to upgrade switches will likely ease a LEC's compliance burden and help 
to ensure that competing carriers will receive portability within the 
time requested. Finally, the Commission clarifies that, contrary to KMC 
and ACSI's view, the current schedule does not leave an implementation 
gap between December 31, 1998, and July 1, 1999, since implementation 
of requests for deployment of number portability in areas outside the 
100 largest MSAs filed on or before January 1, 1999, will occur during 
the first six months of 1999. KMC and ACSI's suggestion that the 
Commission permit requests for markets outside the 100 largest MSAs 
beginning July 1, 1998, and require fulfillment of those requests 
within six months, would actually require that those smaller markets be 
completed at the same time as the MSAs in the last phase of the 
deployment schedule, thus sharply increasing the burden on carriers 
during that phase.
Exemptions for Rural and/or Smaller LECs
    59. Discussion. As set forth above, the Commission grants the 
petitions to limit deployment of portability to those switches for 
which a competitor has expressed interest in deployment by concluding 
that LECs need only provide number portability within the 100 largest 
MSAs in switches for which another carrier has made a specific request 
for the provision of portability. The Commission finds that this 
modification to the rules should address the concerns of parties that 
urge it to waive number portability requirements for rural and/or 
smaller LECs serving areas in the largest 100 MSAs until receipt of a 
request.
    60. The Commission denies the petitions that request a blanket 
waiver of the number portability requirements for rural and/or smaller 
LECs that receive a request for deployment in one of their switches. 
The Commission finds that such a blanket waiver is unnecessary and may 
hamper the development of competition in areas served by smaller and 
rural LECs that competing carriers want to enter. If, as petitioners 
allege, competition is not imminent in the areas covered by rural/
smaller LEC switches, then the rural or smaller LEC will not receive 
requests from competing carriers to implement portability, and thus 
will not need to expend its resources, until competition actually 
develops in its service area. In addition, by that time extensive non-
carrier-specific testing will likely have been done, and carriers' 
testing costs will likely be smaller.
    61. Further, to the extent that portability is requested in a rural 
or smaller LEC's switch, and that LEC has difficulty complying with the 
request, it has two avenues for relief. Pursuant to the First Report & 
Order, a LEC may apply for an extension of time on the basis of 
extraordinary circumstances beyond its control that prevent it from 
complying with the Commission's deployment schedule. In addition, under 
section 251(f)(2), a LEC with fewer than two percent of the nation's 
subscriber lines installed in the aggregate nationwide (an ``eligible 
LEC'') may petition the appropriate state commission for suspension or 
modification of the requirements of section 251(b). The state 
commission shall grant such petition to the extent that, and for as 
long as, the state commission determines that such suspension or 
modification: (A) Is necessary to avoid a significant adverse economic 
impact on end users, to avoid imposing an unduly economically 
burdensome requirement, or to avoid imposing a technically infeasible 
requirement; and (B) is consistent with the public interest, 
convenience and necessity. 47 U.S.C. 251(f)(2). The state commission is 
required to act on the petition within 180 days. 47 U.S.C. 251(f)(2). 
The Commission believes eligible LECs will have sufficient time to 
obtain any appropriate section 251(f)(2) relief as provided by the 
statute, especially since the state commission can suspend the 
application of the deployment deadlines to that LEC while it is 
considering the LEC's petition for suspension or modification of the 
requirements. Section 251(f)(2) provides that ``[t]he State commission 
shall act upon any petition filed under (section 251(f)(2)) within 180 
days after receiving such petition. Pending such action, the State 
commission may suspend enforcement of the requirement or requirements 
to which the petition applies with respect to the petitioning carrier 
or carriers.'' 47 U.S.C. 251(f)(2).
    62. If, however, a competitor is interested in number portability 
in a particular switch operated by a rural or smaller LEC, and the LEC 
cannot demonstrate extraordinary circumstances justifying an extension 
of the deployment requirements, and the state commission denies a 
Section 251(f)(2) request for suspension or modification, the 
Commission finds no statutory basis for excusing such a LEC from its 
obligations to provide number portability. In addition, issuance of a 
blanket exemption in this proceeding would be inconsistent with the 
Local Competition Order, 61 FR 45476

[[Page 18291]]

(August 29, 1996), in which the Commission generally declined to adopt 
national rules regarding Section 251(f), or provide for different 
treatment of rural and smaller carriers. Rather, Congress established a 
specific procedure under which state commissions are empowered to make 
case-by-case decisions on the application of number portability 
requirements to eligible LECs pursuant to Section 251(f)(2), based on 
the particular facts and circumstances presented. Eligible LECs that 
have been granted suspension or modification of number portability 
requirements under Section 251(f)(2) are not bound by the 
implementation schedule until the state commission removes the 
suspension.
    63. The comments of some parties in this proceeding appear to 
reflect a misapprehension of the scope of section 251(f). Sections 
251(f)(1) and 251(f)(2) apply to different classes of carriers, and 
provide different types of relief. Section 251(f)(1) applies only to 
rural LECs, and offers an exemption only from the requirements of 
section 251(c). In contrast, section 251(f)(2) applies to all LECs with 
less than two percent of the nation's subscriber lines. In addition, 
section 251(f)(2) establishes a procedure for requesting suspension or 
modification of the requirements of sections 251(b) and 251(c). Number 
portability is an obligation imposed by section 251(b). Because section 
251(f)(1) does not exempt rural LECs from the requirements of section 
251(b), there is no exemption for rural LECs of their number 
portability obligations under section 251(f)(1). The only statutory 
avenue for relief from the section 251(b) requirements specifically for 
eligible LECs is to request suspension or modification of the number 
portability requirements under the procedure established by section 
251(f)(2).
    64. The plain text of the statute refutes JSI's argument that 
section 251(f)(1) exempts rural LECs from number portability 
requirements. JSI states that the section 251(f)(1) exemption from 
interconnection requirements permits the Commission to impose number 
portability requirements upon rural LECs only to the extent it is 
technically feasible for rural LECs to provide portability without 
having to upgrade their networks to utilize databases, install SS7 or 
AIN capabilities, or install and furnish functions requiring new 
switching software. JSI adds that this exemption may be terminated only 
by a state commission.
    65. Because sections 251(b) and 251(c) are separate statutory 
mandates, the requirements of section 251(b) apply to a rural LEC even 
if section 251(f)(1) exempts such LECs from a concurrent section 251(c) 
requirement. To interpret section 251(f)(1) otherwise would undercut 
section 251(b) and, in this case, would effectively preclude any 
provision of long-term number portability by rural LECs until 
termination of the section 251(f)(1) exemption by a state commission. 
The Commission finds such an interpretation to be contrary to 
Congress's mandate that all LECs provide number portability, and 
Congress's exclusion of the section 251(b) obligations, including the 
duty to provide number portability, from the section 251(f)(1) 
exemption for rural LECs.
    66. Moreover, under JSI's interpretation, the only carriers that 
would have to provide number portability would be incumbent LECs that 
are not exempt under section 251(f)(1). Non-incumbent LECs, as well as 
rural incumbent LECs that are exempt under section 251(f)(1), would not 
have to satisfy the requirements of section 251(b) and, consequently, 
would not have to provide number portability. This directly contradicts 
section 251(b)(2), which specifically requires ``all local exchange 
carriers'' to provide number portability. 47 U.S.C. 251(b)(2). Section 
251(c) sets forth ``additional obligations'' that apply only to 
incumbent LECs, whereas section 251(b) sets forth obligations that 
apply to all LECs.
    67. Even if the Commission were to agree with JSI's statutory 
interpretation that rural LECs that are exempt from the section 251(c) 
requirements are also exempt from any requirements of sections 251 (b) 
and (c) that overlap, petitioners have not demonstrated that the 
section 251 (b) and (c) obligations in fact overlap. To provide long-
term number portability under section 251(b)(2), LECs obviously must 
install and use any necessary databases, SS7 or AIN capabilities, or 
switching software. Section 251(c), in contrast, requires incumbent 
LECs to provide unbundled access to network elements, including call-
related databases. See 47 U.S.C. 251(c)(3). Number portability does not 
require any provision of unbundled access to these elements. Moreover, 
to provide number portability, carriers can interconnect either 
directly or indirectly as required under section 251(a)(1). See 47 
U.S.C. 251(a)(1). For example, a smaller rural carrier and a competing 
carrier might interconnect indirectly by both establishing direct 
connections with a third carrier and routing calls to each other 
through that third carrier. The smaller rural carrier could then 
provide portability by performing its own database queries and then 
routing the call to the competing carrier through that third carrier. 
Another option would be for the smaller rural LEC to contract with that 
third carrier to perform its queries and the necessary routing. Section 
251(c), in contrast, imposes an additional requirement on incumbent 
LECs to provide ``equal'' interconnection at ``any technically feasible 
point within the carrier's network,'' which a carrier does not need to 
provide number portability. See 47 U.S.C. 251(c)(2). Thus, sections 
251(a) and (b), not section 251(c), require that carriers interconnect 
and install and use necessary network elements to provide number 
portability. Rural LECs are not exempt from section 251(a) or (b) 
requirements under section 251(f)(1). See 47 U.S.C. 251(f)(1). The 
Commission therefore denies JSI and USTA's request to ``automatically 
exempt'' rural LECs from the number portability requirements to the 
extent that they are exempt from the requirements of section 251(c) 
under the provisions of section 251(f)(1).
    68. The Commission also denies the requests that it clarify that 
smaller and/or rural LECs serving areas that only partially overlap one 
of the 100 largest MSAs need not deploy number portability until 
receipt of a bona fide request. The Commission believes that, when 
determining whether a suspension or modification is necessary to avoid 
imposing an unduly economically burdensome requirement, pursuant to 
section 251(f)(2), state commissions would likely consider whether an 
eligible LEC's presence in the MSA is truly de minimus and whether such 
a LEC is entitled to a suspension or modification of the number 
portability requirements on this basis.
    69. Finally, NTCA/OPASTCO erroneously claims that the First Report 
& Order violates the Regulatory Flexibility Act (RFA) because its Final 
Regulatory Flexibility Analysis (FRFA) does not address the impact of 
the rules on small incumbent LECs, and is, therefore, inconsistent with 
the Local Competition Order. As the Commission stated in the First 
Report & Order's FRFA, small incumbent LECs do not qualify as small 
businesses because they are dominant in their field of operation. The 
Local Competition Order's FRFA likewise set forth the Commission's view 
that small incumbent LECs are not subject to regulatory flexibility 
analyses because they are not small businesses due to their dominance 
in their field of operation. The Commission in that proceeding 
specifically stated that it

[[Page 18292]]

was including small incumbent LECs in its FRFA only because two parties 
had especially questioned that conclusion in that proceeding's Initial 
Regulatory Flexibility Analysis (IRFA), and it wanted to ``remove any 
possible issue of RFA compliance.'' In contrast, no party commented on 
the IRFA in this proceeding. The Commission attaches, nevertheless, a 
Supplemental Final Regulatory Flexibility Analysis that further 
explains its analysis of the rules' impact upon rural and smaller 
carriers and the basis for selecting the particular options that the 
Commission has selected. This analysis takes into account NTCA/
OPASTCO's specific claim raised in its petition for reconsideration, in 
order to ``remove any possible issue of RFA compliance.'' The 
Commission also notes that its establishment of a procedure whereby 
number portability would only be deployed in requested switches 
effectively grants the relief sought by NTCA/OPASTCO, the sole 
petitioner on this issue.

Implementation Requirements for Intermediate (N-1) Carriers

    70. Discussion. The Commission denies Pacific's request that it 
require all N-1 carriers, including interexchange carriers, to meet the 
implementation schedule the Commission established for LECs. Such a 
requirement is not mandated by the 1996 Act, which subjects only LECs, 
not interexchange carriers engaged in the provision of interexchange 
service, to the number portability requirements. 47 U.S.C. 251(b)(2). 
Moreover, petitioners have not demonstrated a need for the Commission 
to impose such requirements under its independent rulemaking authority 
under sections 1, 2, and 4(i) of the Communications Act of 1934, as 
amended. 47 U.S.C. 151, 152, 154(i). In that regard, the Commission is 
not convinced that Pacific's hypothetical situation, whereby the N-1 
carrier would not perform any queries and the original terminating LEC 
would thus have to perform all the queries not performed by the 
originating LEC, will arise often. The industry already appears to 
favor using the N-1 scenario, under which the N-1 carrier performs the 
database query, as indicated in the majority of comments on call 
processing scenario issues received pursuant to the original Notice of 
Proposed Rulemaking. The vast majority of interLATA calls are routed 
through the major interexchange carriers, and the two largest 
interexchange carriers, at least, claim they plan to deploy portability 
as soon as possible. Therefore, most interLATA calls will be queried by 
the major interexchange carriers, not the incumbent LECs. Moreover, as 
the Commission stated in the First Report & Order, it wishes to allow 
carriers the flexibility to choose and negotiate among themselves which 
carrier shall perform the database query, according to what best suits 
their individual networks and business plans. Finally, the Commission 
declines to address Pacific's argument that, if the terminating carrier 
is forced to perform queries, that would violate the fourth performance 
criterion. Since the Commission is eliminating the fourth performance 
criterion, Pacific's argument is moot.
    71. The Commission clarifies, however, per NYNEX's request, that if 
an N-1 carrier is designated to perform the query, and that N-1 carrier 
requires the original terminating LEC to perform the query, then the 
LEC may charge the N-1 carrier for performing the query, pursuant to 
guidelines the Commission will establish in the order addressing long-
term number portability cost allocation and recovery.

Implementation Schedule for Wireless Carriers

    72. Background. In the First Report & Order, the Commission 
required all cellular, broadband PCS, and covered SMR carriers to have 
the capability of querying the appropriate number portability database 
systems in order to deliver calls from their networks to ported numbers 
anywhere in the country by December 31, 1998. The term ``covered SMR'' 
means either 800 MHz or 900 MHz SMR licensees that hold geographic area 
licenses or incumbent wide area SMR licensees that offer real-time, 
two-way switched voice service that is interconnected with the public 
switched network, either on a stand-alone basis or packaged with other 
telecommunications services. This term does not include local SMR 
licensees offering mainly dispatch services to specialized customers in 
a non-cellular system configuration, licensees offering only data, one-
way, or stored voice services on an interconnected basis, or any SMR 
provider that is not interconnected to the public switched network. 47 
CFR 52.1(c). The Commission notes that several parties have petitioned 
for reconsideration of the definition of ``covered SMR.'' The 
Commission will address this issue in a subsequent order. These 
wireless carriers may implement the upgrades necessary to accomplish 
the queries themselves, or they may make arrangements with other 
carriers to provide that capability. In addition, wireless carriers 
subject to these rules are required to offer service provider 
portability throughout their networks, including the ability to support 
roaming, by June 30, 1999. In the First Report & Order, the Commission 
delegated authority to the Chief, Wireless Telecommunications Bureau, 
to waive or stay any of the dates in the implementation schedule for a 
period not to exceed nine months, and to establish reporting 
requirements in order to monitor the progress of wireless carriers. 47 
CFR 52.11 (c), (e). In the event a carrier subject to these 
requirements is unable to meet the Commission's deadlines for 
implementing a long-term number portability method, it must file a 
petition to extend the time by which implementation must be completed 
with the Commission at least 60 days in advance of the deadline, along 
with an explanation of the circumstances and the need for such an 
extension. 47 CFR 52.11(d).
    73. Discussion. The Commission declines at this time to alter the 
implementation schedule imposed by the First Report & Order for 
wireless carriers. The Commission recognizes that the wireless industry 
has lagged behind the wireline industry in developing a method for 
providing number portability, and that the wireless industry faces 
special technical challenges in doing so. Nonetheless, the Commission 
finds that the schedule for implementation of number portability by 
cellular, broadband PCS, and covered SMR providers is reasonable and 
takes into account the current stage of development for wireless number 
portability. The Commission finds that a period of nearly two years is 
sufficient for wireless carriers either to implement the upgrades 
necessary to perform the database queries themselves, or to make 
arrangements with other carriers to provide that capability. The 
Commission also believes it is reasonable to expect wireless carriers 
to implement long-term service provider portability, including roaming, 
in their networks in a period of more than two years. The Commission 
continues to believe the monitoring and reporting mechanism established 
in the First Report & Order will ensure that wireless carriers will 
continue to work together to find solutions to technical problems 
associated with number portability, and to address quickly any 
implementation issues which may arise. As the Commission provided in 
the First Report & Order, in the event a wireless carrier is unable to 
meet the Commission's deadlines for implementing a long-term number

[[Page 18293]]

portability method, it may file a request for extension with the 
Commission. If it becomes apparent that the wireless industry is not 
progressing as quickly as necessary to meet the deadlines for providing 
querying capability and service provider portability, the Wireless 
Telecommunications Bureau Chief may waive or stay the implementation 
dates for a period of up to nine months. The Commission finds that 
enough flexibility has been incorporated into the implementation 
schedule for wireless carriers, and that no modification is needed.
    74. The Commission also declines to establish target dates in lieu 
of actual deadlines or to defer imposing number portability 
requirements on wireless carriers, as some petitioners have suggested. 
As the Commission stated in the First Report & Order, requiring 
cellular, broadband PCS, and covered SMR providers to provide number 
portability is in the public interest because these entities are 
expected to compete in the local exchange market, and number 
portability will enhance competition among wireless service providers, 
as well as between wireless service providers and wireline service 
providers. Service provider portability offered by wireless service 
providers will enable customers to switch carriers more readily and 
encourage the successful entry of new service providers into wireless 
markets. Removing barriers, such as the requirement that customers must 
change phone numbers when changing providers, is likely to foster the 
development of new services and create incentives for carriers to lower 
prices and costs. In light of these positive competitive results that 
are likely to be produced, the Commission continues to believe that 
number portability should be provided by wireless carriers with as 
little delay as possible. Setting specific deadlines, rather than 
amorphous ``target dates,'' is consistent with this goal.
    75. In response to requests by CTIA and BANM, the Commission agrees 
that some clarification of the requirements under the schedule is 
necessary. Contrary to the petitioners' claims, the schedule for CMRS 
providers is not stricter than the schedule for wireline service 
providers. Some carriers apparently misunderstood the First Report & 
Order to require wireless providers to provide number portability in 
areas outside the largest 100 MSAs, even if number portability is not 
requested in those areas. The Commission requires cellular, broadband 
PCS, and covered SMR providers to have the capability to query the 
number portability databases nationwide, or arrange with other carriers 
to perform the queries, by December 31, 1998, in order to route calls 
from wireless customers to customers who have ported their numbers. The 
Commission clarifies that, by June 30, 1999, CMRS providers must (1) 
offer service provider portability in the 100 largest MSAs, and (2) be 
able to support nationwide roaming. Although the Commission has not 
provided a specific phased deployment schedule for CMRS providers as it 
has for wireline carriers, the Commission expects that CMRS providers 
will phase in implementation in selected switches over a number of 
months prior to the June 30, 1999, deadline for deployment.
    76. In addition, consistent with the modification to the wireline 
schedule deployment requirements, CMRS carriers need only deploy local 
number portability by this deadline in the 100 largest MSAs in which 
they have received a specific request at least nine months before the 
deadline (i.e., a request has been received by September 30, 1998). As 
in the wireline context, any wireline carrier that is certified, or has 
applied for certification, to provide local exchange service in the 
relevant state, or any licensed CMRS provider, must be allowed to make 
a request for deployment; and cellular, broadband PCS, and covered SMR 
providers must make available lists of their switches for which 
deployment has and has not been requested. Additional switches within 
the 100 largest MSAs (i.e., those that are not requested initially) 
must be deployed upon request, after the June 30, 1999, deadline for 
wireless carriers, within the same time frames that the Commission 
adopts here for wireline carriers, unless requesting carriers specify a 
later date. The time frames for deployment of additional wireless 
switches are as follows: (1) Equipped Remote Switches within 30 days; 
(2) Hardware Capable Switches within 60 days; (3) Capable Switches 
Requiring Hardware within 180 days; and (4) Non-Capable Switches within 
180 days. As in the wireline context, carriers may submit requests for 
deployment of number portability in areas outside the 100 largest MSAs 
at any time. CMRS providers must provide number portability in those 
smaller areas within six months after receiving a request or within six 
months after June 30, 1999, whichever is later. As a result, the 
schedule for wireless providers is comparable to the one for wireline 
carriers in terms of timing.
    77. The Commission adds one further requirement for any procedures 
that limit deployment in such fashion to requested wireless switches. 
The existing state procedures for limiting deployment of number 
portability capabilities within one of the 100 largest MSAs to 
requested wireline switches generally appear to require carriers to 
specify which switches located within the MSA the carrier wishes to be 
deployed. The Commission does not wish to disturb a number of state 
decisions concluding that it is preferable to limit the selection of 
wireline switches for deployment to switches located within the MSA 
rather than switches serving subscribers within the MSA. The Commission 
recognizes, however, that the wireless switches that provide service to 
areas within a particular MSA are more likely to be located outside the 
perimeter of that MSA than the wireline switches that provide service 
to areas within the MSA. The Commission concludes, therefore, that, 
when limiting deployment within one of the 100 largest MSAs to 
particular requested wireless switches, carriers must be able to 
request deployment in any wireless switch that provides service to any 
area within that MSA, even if the wireless switch is located outside of 
the perimeter of that MSA, or outside any of the 100 largest MSAs.
    78. By June 30, 1999, the Commission expects that regional or 
statewide local number portability databases containing both wireless 
and wireline numbers will be widely available; therefore, the 
Commission does not anticipate a need to condition the requirement that 
number portability be required on request after June 30, 1999, upon the 
existence of regional or statewide databases. If there is a delay in 
the development of the databases, the Wireless Telecommunications 
Bureau Chief has been delegated authority to waive or stay the deadline 
for CMRS providers.
    79. In its petition for reconsideration, BANM questions the 
Commission's authority and its basis in the record for imposing number 
portability obligations upon CMRS providers. Specifically, BANM claims 
that the Commission has previously held that its regulatory authority 
over CMRS providers is limited to instances in which there is a ``clear 
cut need'' for doing so, and that regulation of number portability is 
not clearly necessary in the CMRS market. BANM advanced essentially the 
same argument previously in this proceeding, and its reconsideration 
petition raises no new issues. Accordingly, the Commission affirms its 
prior rejection of this argument. As the Commission stated in the First 
Report & Order, the CT DPUC Petition does not limit its

[[Page 18294]]

authority to require CMRS providers to provide number portability to 
other CMRS or wireline carriers because that proceeding was restricted 
to the question of state authority to regulate rates of CMRS providers. 
The CT DPUC Petition did not reach the question of the Commission's 
authority to impose number portability requirements on CMRS providers. 
The Commission affirms its determination that it has authority to 
impose number portability obligations on CMRS providers based on the 
findings that this requirement will result in pro-competitive effects, 
and furthers its CMRS regulatory policy of establishing moderate, 
symmetrical regulation of all services.
    80. BANM has not introduced any new evidence or arguments that 
cause the Commission to reconsider its conclusion in the First Report & 
Order that provision of number portability by CMRS carriers is 
important to competition. Previously in this proceeding, several PCS 
providers attested to the importance of number portability in fostering 
competition in the CMRS industry. The record in this proceeding 
contains convincing evidence that service provider portability would 
enhance competition between wireless service providers, as well as 
between wireless and wireline service providers, by removing the 
requirement that a customer must change numbers when changing service 
providers. The Commission also rejects BANM's argument that it failed 
to make a determination on the technical feasibility of wireless number 
portability. The record in this proceeding supports the prior 
conclusion that cellular, broadband PCS, and covered SMR providers will 
be able to resolve any technical issues necessary to implement number 
portability.

Deferral of Implementation Until Resolution of Cost Recovery Issues

    81. Background. Section 251(e)(2) of the Act requires that the 
costs of establishing number portability ``be borne by all 
telecommunications carriers on a competitively neutral basis as 
determined by the Commission.'' In conjunction with the First Report & 
Order, the Commission adopted a Further Notice of Proposed Rulemaking 
(Further NPRM) that seeks comment on appropriate cost recovery 
mechanisms for long-term number portability. The Commission has not yet 
issued the Second Report & Order addressing these issues, although it 
intends to do so in the near future.
    82. Discussion. The Commission is not persuaded by the requests of 
U S West and JSI that LECs should be permitted to suspend ongoing 
preparations to meet the deployment schedule until the Commission has 
acted on the issues raised in the Further NPRM in this proceeding that 
involve the LECs' recovery of their costs of providing number 
portability. As stated above, the Commission plans to adopt a Second 
Report & Order in this proceeding in the near future implementing the 
statutory provision that expenses incurred as a result of number 
portability be ``borne by all telecommunications carriers on a 
competitively neutral basis.'' U S West appears to suggest that it 
necessarily will be barred from assessing charges in the future that 
are intended to recover costs that it incurs in connection with the 
implementation of long-term number portability prior to its resolution 
of the cost recovery issues posed in the Further NPRM. That speculative 
assertion is unfounded. The Commission anticipates that the Second 
Report & Order will be adopted well before a LEC is required by the 
deployment schedule to commence the provision of long-term number 
portability to the public in the Phase I markets. Moreover, the 
Commission expects that LECs will maintain records of the costs that 
they incur in implementing the requirements of the First Report & Order 
in this proceeding. Those records will enable the LECs to comply with 
the decisions the Commission reaches in the Second Report & Order with 
respect to their recovery of long-term number portability costs. The 
Act does not mandate that the Commission complete action on cost 
recovery issues prior to the LECs' commencement of the planning and 
other steps required to deploy long-term number portability consistent 
with the schedule adopted in the First Report & Order. Indeed, 
permitting carriers to suspend their ongoing preparations to meet the 
deployment schedule for number portability until the Commission has 
adopted specific cost recovery rules may be inconsistent with the 
statutory mandate that carriers must provide number portability ``to 
the extent technically feasible.''
    83. The Commission also concludes that U S West has not described, 
much less documented, the specific ``distorting effects'' on investment 
decisions, the use of number portability facilities, and the 
relationships among providers and between providers and their customers 
that it claims will ensue from the Commission's brief deferral of long-
term number portability cost recovery issues. The Commission further 
agrees with ALTS that U S West's constitutional claim is premature, 
because it is impossible for any party to establish that a cost 
recovery mechanism that has not yet been adopted is unconstitutional. 
Finally, because the arguments advanced by JSI on behalf of rural 
carriers with respect to these cost recovery issues repeat the points 
asserted by U S West, the Commission reaches the same conclusions.

Ordering Clauses

    84. Accordingly, it is ordered that, pursuant to the authority 
contained in Sections 1, 4(i), 4(j), 201-205, 218, 251, and 332 of the 
Communications Act as amended, 47 U.S.C. 151, 154(i), 154(j), 201-205, 
218, 251, and 332, Part 52 of the Commission's rules, 47 CFR 52, is 
amended as set forth in Appendix B hereto.
    85. It is further ordered that the Petitions for Reconsideration 
and/or Clarification are granted to the extent indicated herein and 
otherwise are denied.
    86. It is further ordered that the policies, rules, and 
requirements set forth herein are adopted, effective May 15, 1997, 
except for collections of information subject to approval by the Office 
of Management and Budget (OMB), which are effective September 12, 1997.
    87. It is further ordered that the Motion to Accept Late-Filed 
Comments of Telecommunications Resellers Association and the Motion to 
Accept Late-Filed Reply Comments of U S West are granted.

Federal Communications Commission
William F. Caton,
Acting Secretary.

Rule Changes

    Part 52 of Title 47 of the Code of Federal Regulations is amended 
as follows:

PART 52--NUMBERING

    1. Section 52.23 is amended by revising paragraphs (a)(4) through 
(a)(8), removing paragraph (a)(9), and revising paragraphs (b) and (g) 
to read as follows:


Sec. 52.23  Deployment of long-term database methods for number 
portability by LECs.

    (a) * * *
    (4) Does not result in unreasonable degradation in service quality 
or network reliability when implemented;
    (5) Does not result in any degradation in service quality or 
network reliability when customers switch carriers;
    (6) Does not result in a carrier having a proprietary interest;

[[Page 18295]]

    (7) Is able to migrate to location and service portability; and
    (8) Has no significant adverse impact outside the areas where 
number portability is deployed.
    (b) (1) All LECs must provide a long-term database method for 
number portability in the 100 largest Metropolitan Statistical Areas 
(MSAs) by December 31, 1998, in accordance with the deployment schedule 
set forth in the Appendix to this part, in switches for which another 
carrier has made a specific request for the provision of number 
portability, subject to paragraph (b)(2) of this section.
    (2) Any procedure to identify and request switches for deployment 
of number portability must comply with the following criteria:
    (i) Any wireline carrier that is certified (or has applied for 
certification) to provide local exchange service in a state, or any 
licensed CMRS provider, must be permitted to make a request for 
deployment of number portability in that state;
    (ii) Carriers must submit requests for deployment at least nine 
months before the deployment deadline for the MSA;
    (iii) A LEC must make available upon request to any interested 
parties a list of its switches for which number portability has been 
requested and a list of its switches for which number portability has 
not been requested; and
    (iv) After the deadline for deployment of number portability in an 
MSA in the 100 largest MSAs, according to the deployment schedule set 
forth in the Appendix to this part, a LEC must deploy number 
portability in that MSA in additional switches upon request within the 
following time frames:
    (A) For remote switches supported by a host switch equipped for 
portability (``Equipped Remote Switches''), within 30 days;
    (B) For switches that require software but not hardware changes to 
provide portability (``Hardware Capable Switches''), within 60 days;
    (C) For switches that require hardware changes to provide 
portability (``Capable Switches Requiring Hardware''), within 180 days; 
and
    (D) For switches not capable of portability that must be replaced 
(``Non-Capable Switches''), within 180 days.
* * * * *
    (g) Carriers that are members of the Illinois Local Number 
Portability Workshop must conduct a field test of any technically 
feasible long-term database method for number portability in the 
Chicago, Illinois, area. The carriers participating in the test must 
jointly file with the Common Carrier Bureau a report of their findings 
within 30 days following completion of the test. The Chief, Common 
Carrier Bureau, shall monitor developments during the field test, and 
may adjust the field test completion deadline as necessary.
    2. Section 52.31 is amended by revising paragraph (a) to read as 
follows:


Sec. 52.31  Deployment of long-term database methods for number 
portability by CMRS Providers.

    (a) By June 30, 1999, all cellular, broadband PCS, and covered SMR 
providers must provide a long-term database method for number 
portability, in the MSAs identified in the Appendix to this part in 
compliance with the performance criteria set forth in Sec. 52.23(a), in 
switches for which another carrier has made a specific request for the 
provision of number portability, subject to paragraph (a)(1) of this 
section.
    (1) Any procedure to identify and request switches for deployment 
of number portability must comply with the following criteria:
    (i) Any wireline carrier that is certified (or has applied for 
certification) to provide local exchange service in a state, or any 
licensed CMRS provider, must be permitted to make a request for 
deployment of number portability in that state;
    (ii) For the MSAs identified in the Appendix to this part, carriers 
must submit requests for deployment by September 30, 1998;
    (iii) A cellular, broadband PCS, or covered SMR provider must make 
available upon request to any interested parties a list of its switches 
for which number portability has been requested and a list of its 
switches for which number portability has not been requested;
    (iv) After June 30, 1999, a cellular, broadband PCS, or covered SMR 
provider must deploy additional switches serving the MSAs identified in 
the Appendix to this part upon request within the following time 
frames:
    (A) For remote switches supported by a host switch equipped for 
portability (``Equipped Remote Switches''), within 30 days;
    (B) For switches that require software but not hardware changes to 
provide portability (``Hardware Capable Switches''), within 60 days;
    (C) For switches that require hardware changes to provide 
portability (``Capable Switches Requiring Hardware''), within 180 days; 
and
    (D) For switches not capable of portability that must be replaced 
(``Non-Capable Switches''), within 180 days.
    (v) Carriers must be able to request deployment in any wireless 
switch that serves any area within that MSA, even if the wireless 
switch is outside that MSA, or outside any of the MSAs identified in 
the Appendix to this part.
    (2) By June 30, 1999, all cellular, broadband PCS, and covered SMR 
providers must be able to support roaming nationwide.
* * * * *
    3. The Appendix to part 52 is revised to read as follows:

Appendix to Part 52--Deployment Schedule for Long-Term Database 
Methods for Local Number Portability

    Implementation must be completed by the carriers in the relevant 
MSAs during the periods specified below:

                                                                        
                        Phase I--10/1/97-3/31/98                        
                                                                        
Chicago, IL...................................................         3
Philadelphia, PA..............................................         4
Atlanta, GA...................................................         8
New York, NY..................................................         2
Los Angeles, CA...............................................         1
Houston, TX...................................................         7
Minneapolis, MN...............................................        12
                                                                        
                        Phase II--1/1/98-5/15/98                        
                                                                        
Detroit, MI...................................................         6
Cleveland, OH.................................................        20
Washington, DC................................................         5
Baltimore, MD.................................................        18
Miami, FL.....................................................        24
Fort Lauderdale, FL...........................................        39
Orlando, FL...................................................        40
Cincinnati, OH................................................        30
Tampa, FL.....................................................        23
Boston, MA....................................................         9
Riverside, CA.................................................        10
San Diego, CA.................................................        14
Dallas, TX....................................................        11
St. Louis, MO.................................................        16
Phoenix, AZ...................................................        17
Seattle, WA...................................................        22
                                                                        
                        Phase III--4/1/98-6/30/98                       
                                                                        
Indianapolis, IN..............................................        34
Milwaukee, WI.................................................        35
Columbus, OH..................................................        38
Pittsburgh, PA................................................        19
Newark, NJ....................................................        25
Norfolk, VA...................................................        32
New Orleans, LA...............................................        41
Charlotte, NC.................................................        43
Greensboro, NC................................................        48
Nashville, TN.................................................        51
Las Vegas, NV.................................................        50
Nassau, NY....................................................        13
Buffalo, NY...................................................        44
Orange Co, CA.................................................        15
Oakland, CA...................................................        21
San Francisco, CA.............................................        29
Rochester, NY.................................................        49
Kansas City, KS...............................................        28
Fort Worth, TX................................................        33
Hartford, CT..................................................        46
Denver, CO....................................................        26
Portland, OR..................................................        27
                                                                        
                        Phase IV--7/1/98-9/30/98                        
                                                                        
Grand Rapids, MI..............................................        56
Dayton, OH....................................................        61
Akron, OH.....................................................        73
Gary, IN......................................................        80
Bergen, NJ....................................................        42

[[Page 18296]]

                                                                        
Middlesex, NJ.................................................        52
Monmouth, NJ..................................................        54
Richmond, VA..................................................        63
Memphis, TN...................................................        53
Louisville, KY................................................        57
Jacksonville, FL..............................................        58
Raleigh, NC...................................................        59
West Palm Beach, FL...........................................        62
Greenville, SC................................................        66
Honolulu, HI..................................................        65
Providence, RI................................................        47
Albany, NY....................................................        64
San Jose, CA..................................................        31
Sacramento, CA................................................        36
Fresno, CA....................................................        68
San Antonio, TX...............................................        37
Oklahoma City, OK.............................................        55
Austin, TX....................................................        60
Salt Lake City, UT............................................        45
Tucson, AZ....................................................        71
                                                                        
                        Phase V--10/1/98-12/31/98                       
                                                                        
Toledo, OH....................................................        81
Youngstown, OH................................................        85
Ann Arbor, MI.................................................        95
Fort Wayne, IN................................................       100
Scranton, PA..................................................        78
Allentown, PA.................................................        82
Harrisburg, PA................................................        83
Jersey City, NJ...............................................        88
Wilmington, DE................................................        89
Birmingham, AL................................................        67
Knoxville, KY.................................................        79
Baton Rouge, LA...............................................        87
Charleston, SC................................................        92
Sarasota, FL..................................................        93
Mobile, AL....................................................        96
Columbia, SC..................................................        98
Tulsa, OK.....................................................        70
Syracuse, NY..................................................        69
Springfield, MA...............................................        86
Ventura, CA...................................................        72
Bakersfield, CA...............................................        84
Stockton, CA..................................................        94
Vallejo, CA...................................................        99
El Paso, TX...................................................        74
Little Rock, AR...............................................        90
Wichita, KS...................................................        97
New Haven, CT.................................................        91
Omaha, NE.....................................................        75
Albuquerque, NM...............................................        76
Tacoma, WA....................................................        77
                                                                        

Supplemental Final Regulatory Flexibility Analysis

    1. As required by section 603 of the Regulatory Flexibility Act 
(RFA), 5 U.S.C. 603, an Initial Regulatory Flexibility Analysis 
(IRFA) was incorporated in the Notice of Proposed Rulemaking (NPRM). 
The Commission sought written public comment on the proposals in the 
NPRM. In addition, pursuant to section 603, a Final Regulatory 
Flexibility Analysis (FRFA) was incorporated in the First Report & 
Order. That FRFA conformed to the RFA, as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) 5 
U.S.C. 601 et seq. The SBREFA is title II of the Contract With 
America Advancement Act of 1996 (CWAAA), Public Law 104-121, 110 
Stat. 847 (1996). The Supplemental Final Regulatory Flexibility 
Analysis in this First Memorandum Opinion and Order on 
Reconsideration (First Reconsideration Order) (Supplemental FRFA) 
also conforms to the RFA.

A. Need for and Objectives of this First Reconsideration Order and 
the Rules Adopted Herein

    2. The need for and objectives of the rules adopted in this 
First Reconsideration Order are the same as those discussed in the 
FRFA in the First Report & Order. In general, the rules implement 
the statutory requirement that all LECs provide telephone number 
portability when technically feasible. In this First Reconsideration 
Order, the Commission grants in part and denies in part several of 
the petitions filed for reconsideration and/or clarification of the 
First Report & Order, in order to further the same needs and 
objectives. First, the Commission concludes that QOR is not an 
acceptable long-term number portability method. Second, the 
Commission extends the implementation schedule for wireline 
carriers, clarifies the requirements imposed thereunder, and 
addresses issues raised by rural LECs and certain other parties. The 
Commission concludes that LECs need only provide number portability 
within the 100 largest MSAs in switches for which another carrier 
has made a specific request for the provision of portability. 
Finally, the Commission affirms and clarifies the implementation 
schedule for wireless carriers.

B. Analysis of Significant Issues Raised in Response to the FRFA

    3. Summary of the FRFA. In the FRFA, the Commission concluded 
that incumbent LECs do not qualify as small businesses because they 
are dominant in their field of operation, and, accordingly, the 
Commission did not address the impact of the rules on incumbent 
LECs. The Commission noted that the RFA generally defines the term 
``small business'' as having the same meaning as the term ``small 
business concern'' under the Small Business Act. 15 U.S.C. 632. A 
small business concern is one that (1) is independently owned and 
operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the Small Business 
Administration (SBA). 15 U.S.C. 632. According to the SBA's 
regulations, entities engaged in the provision of telephone service 
may have a maximum of 1,500 employees in order to qualify as a small 
business concern. 13 CFR 121.201. This standard also applies in 
determining whether an entity is a small business for purposes of 
the Regulatory Flexibility Act.
    4. The Commission did recognize that these rules may have a 
significant economic impact on a substantial number of small 
businesses insofar as they apply to telecommunications carriers 
other than incumbent LECs, including competitive LECs, as well as 
cellular, broadband PCS, and covered SMR providers. Based upon data 
contained in the most recent census and a report by the Commission's 
Common Carrier Bureau, the Commission estimated that 2,100 carriers 
could be affected. The Commission also discussed the reporting 
requirements imposed by the First Report & Order.
    5. Finally, the Commission discussed the steps it had taken to 
minimize the impact on small entities, consistent with stated 
objectives. The Commission concluded that the actions in the First 
Report & Order would benefit small entities by facilitating their 
entry into the local exchange market. The Commission found that the 
record in this proceeding indicated that the lack of number 
portability would deter entry by competitive providers of local 
service because of the value customers place on retaining their 
telephone numbers. These competitive providers, many of which may be 
small entities, may find it easier to enter the market as a result 
of number portability, which will eliminate this barrier to entry. 
The Commission noted that, in general, it attempted to keep burdens 
on local exchange carriers to a minimum. For example, the Commission 
adopted a phased deployment schedule for implementation in the 100 
largest MSAs, and then elsewhere upon a carrier's request; the 
Commission conditioned the provision of currently available measures 
upon request only; the Commission did not require cellular, 
broadband PCS, and covered SMR providers, which may be small 
businesses, to offer currently available number portability 
measures; and it did not require paging and messaging service 
providers, which may be small entities, to provide any number 
portability.

1. Treatment of Small Incumbent LECs

    6. Comments. NTCA/OPASTCO claims that the First Report & Order's 
Final Regulatory Flexibility Analysis does not address the impact of 
the rules on small incumbent LECs, and is thus inconsistent with the 
Local Competition Order. NTCA/OPASTCO suggests that exempting rural 
LECs from number portability requirements absent a bona fide request 
would fulfill the Commission's responsibility under the Regulatory 
Flexibility Act.
    7. Discussion. Because the small incumbent LECs subject to these 
rules are either dominant in their field of operations or are not 
independently owned and operated, consistent with the Commission's 
prior practice, they are excluded from the definition of ``small 
entity'' and ``small business concerns.'' As the Commission stated 
in the Local Competition Order, it has found incumbent LECs to be 
``dominant in their field of operation'' since the early 1980's, and 
that it consistently has certified under the RFA (5 U.S.C. 605(b)) 
that incumbent LECs are not subject to regulatory flexibility 
analyses because they are not small businesses. The Commission has 
made similar determinations in other areas. Accordingly, the use of 
the terms ``small entities'' and ``small businesses'' does not 
encompass small incumbent LECs. Although the Commission is not fully 
persuaded on the basis of this record that the prior practice has 
been incorrect, in light of the special concerns raised by NTCA/
OPASTCO in this proceeding, for regulatory flexibility analysis 
purposes, the Commission will include small incumbent LECs in this 
Supplemental FRFA and use the term ``small incumbent LECs'' to refer 
to any incumbent LECs that arguably might be defined by SBA as 
``small business concerns.'' Out of an abundance of caution, 
therefore, the Commission will include small incumbent LECs in the 
Supplemental FRFA in this First Reconsideration Order to remove any 
possible issue of RFA compliance.

[[Page 18297]]

2. Other Issues

    8. Although not in response to the FRFA, certain parties urge 
the Commission to waive number portability requirements for rural 
and/or smaller LECs serving areas in the largest 100 MSAs until 
receipt of a bona fide request, or to grant an exemption from the 
Commission's rules on the basis of rural and/or smaller LEC status. 
The Commission discusses these issues above in the First 
Reconsideration Order.

C. Description and Estimates of the Number of Small Entities 
Affected by this First Reconsideration Order

    9. For the purposes of this First Reconsideration Order, the RFA 
defines a ``small business'' to be the same as a ``small business 
concern'' under the Small Business Act, 15 U.S.C. 632, unless the 
Commission has developed one or more definitions that are 
appropriate to its activities. See 5 U.S.C. 601(3) (incorporating by 
reference the definition of ``small business concern'' in 15 U.S.C. 
632). 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. 15 U.S.C. 632. 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 with 
fewer than 1,500 employees. The Commission first discusses generally 
the total number of small telephone companies falling within both of 
those SIC categories. Then, the Commission discusses the number of 
small businesses within the two subcategories that may be affected 
by these rules, and attempt to refine further those estimates to 
correspond with the categories of telephone companies that are 
commonly used under the rules.
    10. Consistent with the prior practice, the Commission shall 
continue to exclude small incumbent LECs from the definition of a 
small entity for the purpose of this Supplemental FRFA. 
Nevertheless, as mentioned above, the Commission includes small 
incumbent LECs in this Supplemental FRFA. Accordingly, the use of 
the terms ``small entities'' and ``small businesses'' does not 
encompass ``small incumbent LECs.'' The Commission uses the term 
``small incumbent LECs'' to refer to any incumbent LECs that 
arguably might be defined by SBA as ``small business concerns.'' See 
13 CFR Sec. 121.201 (SIC 4813).
    11. Total Number of Telephone Companies Affected. Many of the 
decisions and rules adopted herein may have a significant effect on 
a substantial number of the small telephone companies identified by 
SBA. The United States Bureau of the Census (``the Census Bureau'') 
reports that, at the end of 1992, there were 3,497 firms engaged in 
providing telephone services, as defined therein, for at least one 
year. This number contains a variety of different categories of 
carriers, including local exchange carriers, interexchange carriers, 
competitive access providers, cellular carriers, mobile service 
carriers, operator service providers, pay telephone operators, PCS 
providers, covered SMR providers, and resellers. It seems certain 
that some of those 3,497 telephone service firms may not qualify as 
small entities or small incumbent LECs because they are not 
``independently owned and operated.'' 15 U.S.C. 632(a)(1). For 
example, a PCS provider that is affiliated with an interexchange 
carrier having more than 1,500 employees would not meet the 
definition of a small business. The Commission believes that these 
rules may affect certain subcategories within that estimate, i.e., 
wireline carriers and service providers, including local exchange 
carriers and competitive access providers; and wireless carriers, 
including cellular service carriers, broadband PCS licensees, and 
SMR licensees. The Commission discusses those subcategories below in 
further detail. The Commission believes, on the other hand, that 
these rules will not affect certain subcategories within that 
estimate, i.e., interexchange carriers, operator service providers, 
pay telephone operators, mobile service carriers, and resellers, 
and, moreover, will not affect small cable system operators.
    12. Wireline Carriers and Service Providers. SBA has developed a 
definition of small entities for telephone communications companies 
other than radiotelephone (wireless) companies. The Census Bureau 
reports that, there were 2,321 such telephone companies in operation 
for at least one year at the end of 1992. According to SBA's 
definition, a small business telephone company other than a 
radiotelephone company is one employing fewer than 1,500 persons. 13 
CFR 121.201. Standard Industrial Classification (SIC) Code 4812. 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. 
Although it seems certain that some of these carriers are not 
independently owned and operated, the Commission is unable at this 
time to estimate with greater precision the number of wireline 
carriers and service providers that would qualify as small business 
concerns under SBA's definition. Consequently, the Commission 
estimates that there are fewer than 2,295 small entity telephone 
communications companies other than radiotelephone companies that 
may be affected by the decisions and rules adopted in this First 
Reconsideration Order.
    13. Local Exchange Carriers. Neither the Commission nor SBA has 
developed a definition of small providers of local exchange services 
(LECs). The closest applicable definition under SBA rules is for 
telephone communications companies other than radiotelephone 
(wireless) companies. The most reliable source of information 
regarding the number of LECs nationwide of which the Commission is 
aware appears to be the data that the Commission collects annually 
in connection with the Telecommunications Relay Service (TRS). 
According to the Commission's most recent data, 1,347 companies 
reported that they were engaged in the provision of local exchange 
services. Although it seems certain that some of these carriers are 
not independently owned and operated, or have more than 1,500 
employees, the Commission is unable at this time to estimate with 
greater precision the number of LECs that would qualify as small 
business concerns under SBA's definition. Consequently, the 
Commission estimates that there are fewer than 1,347 small incumbent 
LECs that may be affected by the decisions and rules adopted in this 
First Reconsideration Order.
    14. Competitive Access Providers. Neither the Commission nor SBA 
has developed a definition of small entities specifically applicable 
to providers of competitive access services (CAPs). The closest 
applicable definition under SBA rules is for telephone 
communications companies other than radiotelephone (wireless) 
companies. The most reliable source of information regarding the 
number of CAPs nationwide of which the Commission is aware appears 
to be the data that the Commission collects annually in connection 
with the TRS. According to the Commission's most recent data, 57 
companies reported that they were engaged in the provision of 
competitive access services. Although it seems certain that some of 
these carriers are not independently owned and operated, or have 
more than 1,500 employees, the Commission is unable at this time to 
estimate with greater precision the number of CAPs that would 
qualify as small business concerns under SBA's definition. 
Consequently, the Commission estimates that there are fewer than 57 
small entity CAPs that may be affected by the decisions and rules 
adopted in this First Reconsideration Order.
    15. Wireless (Radiotelephone) Carriers. SBA has developed a 
definition of small entities for radiotelephone (wireless) 
companies. The Census Bureau reports that there were 1,176 such 
companies in operation for at least one year at the end of 1992. 
According to SBA's definition, a small business radiotelephone 
company is one employing fewer than 1,500 persons. 13 CFR 121.201, 
Standard Industrial Classification (SIC) Code 4812. The Census 
Bureau also reported that 1,164 of those radiotelephone companies 
had fewer than 1,000 employees. Thus, even if all of the remaining 
12 companies had more than 1,500 employees, there would still be 
1,164 radiotelephone companies that might qualify as small entities 
if they are independently owned and operated. Although it seems 
certain that some of these carriers are not independently owned and 
operated, the Commission is unable at this time to estimate with 
greater precision the number of radiotelephone carriers and service 
providers that would qualify as small business concerns under SBA's 
definition. Consequently, the Commission estimates that there are 
fewer than 1,164 small entity radiotelephone companies that may be 
affected by the decisions and rules adopted in this First 
Reconsideration Order.
    16. Cellular Service Carriers. Neither the Commission nor SBA 
has developed a definition of small entities specifically applicable 
to providers of cellular services. The closest applicable definition 
under SBA rules is for telephone communications

[[Page 18298]]

companies other than radiotelephone (wireless) companies. The most 
reliable source of information regarding the number of cellular 
service carriers nationwide of which the Commission is aware appears 
to be the data that the Commission collects annually in connection 
with the TRS. According to the Commission's most recent data, 792 
companies reported that they were engaged in the provision of 
cellular services. Although it seems certain that some of these 
carriers are not independently owned and operated, or have more than 
1,500 employees, the Commission is unable at this time to estimate 
with greater precision the number of cellular service carriers that 
would qualify as small business concerns under SBA's definition. 
Consequently, the Commission estimate that there are fewer than 792 
small entity cellular service carriers that may be affected by the 
decisions and rules adopted in this First Reconsideration Order.
    17. Broadband PCS Licensees. The broadband PCS spectrum is 
divided into six frequency blocks designated A through F, and the 
Commission has held auctions for each block. The Commission defined 
``small entity'' for Blocks C and F as an entity that has average 
gross revenues of less than $40 million in the three previous 
calendar years. For Block F, an additional classification for ``very 
small business'' was added and is defined as an entity that, 
together with their affiliates, has average gross revenues of not 
more than $15 million for the preceding three calendar years. These 
regulations defining ``small entity'' in the context of broadband 
PCS auctions have been approved by the SBA. No small businesses 
within the SBA-approved definition bid successfully for licenses in 
Blocks A and B. There were 90 winning bidders that qualified as 
small entities in the Block C auctions. A total of 93 small and very 
small business bidders won approximately 40 percent of the 1,479 
licenses for Blocks D, E, and F. However, licenses for blocks C 
through F have not been awarded fully; therefore, there are few, if 
any, small businesses currently providing PCS services. Based on 
this information, the Commission concludes that the number of small 
broadband PCS licensees will include the 90 winning C Block bidders 
and the 93 qualifying bidders in the D, E, and F blocks, for a total 
of 183 small PCS providers as defined by the SBA and the 
Commission's auction rules.
    18. SMR Licensees. Pursuant to 47 CFR 90.814(b)(1), the 
Commission has defined ``small entity'' in auctions for geographic 
area 800 MHz and 900 MHz SMR licenses as a firm that had average 
annual gross revenues of less than $15 million in the three previous 
calendar years. This definition of a ``small entity'' in the context 
of 800 MHz and 900 MHz SMR has been approved by the SBA. The rules 
adopted in this First Reconsideration Order may apply to SMR 
providers in the 800 MHz and 900 MHz bands that either hold 
geographic area licenses or have obtained extended implementation 
authorizations. The Commission does not know how many firms provide 
800 MHz or 900 MHz geographic area SMR service pursuant to extended 
implementation authorizations, nor how many of these providers have 
annual revenues of less than $15 million. The Commission assumes, 
for purposes of this Supplemental FRFA, that all of the extended 
implementation authorizations may be held by small entities, which 
may be affected by the decisions and rules adopted in this First 
Reconsideration Order.
    19. The Commission's auctions for geographic area licenses in 
the 900 MHz SMR band concluded in April of 1996. There were 60 
winning bidders who qualified as small entities in the 900 MHz 
auction. Based on this information, the Commission concludes that 
the number of geographic area SMR licensees affected by the rules 
adopted in this First Reconsideration Order includes these 60 small 
entities. No auctions have been held for 800 MHz geographic area SMR 
licenses. Therefore, no small entities currently hold these 
licenses. A total of 525 licenses will be awarded for the upper 200 
channels in the 800 MHz geographic area SMR auction. However, the 
Commission has not yet determined how many licenses will be awarded 
for the lower 230 channels in the 800 MHz geographic area SMR 
auction. There is no basis, moreover, on which to estimate how many 
small entities will win these licenses. Given that nearly all 
radiotelephone companies have fewer than 1,000 employees and that no 
reliable estimate of the number of prospective 800 MHz licensees can 
be made, the Commission assumes, for purposes of this Supplemental 
FRFA, that all of the licenses may be awarded to small entities who, 
thus, may be affected by the decisions in this First Reconsideration 
Order.
    20. Cable System Operators. SBA has developed a definition of 
small entities for cable and other pay television services, which 
includes all such companies generating less than $11 million in 
revenue annually. This definition includes cable systems operators, 
closed circuit television services, direct broadcast satellite 
services, multipoint distribution systems, satellite master antenna 
systems and subscription television services. According to the 
Census Bureau, there were 1,432 such cable and other pay television 
services generating $11 million or less in annual receipts that were 
in operation for at least one year at the end of 1992.
    21. The Commission has developed its own definition of a small 
cable system operator for the purposes of rate regulation. Under the 
Commission's rules, a ``small cable company,'' is one serving fewer 
than 400,000 subscribers nationwide. 47 CFR 76.901(e). Based on the 
Commission's most recent information, the Commission estimates that 
there were 1,439 cable operators that qualified as small cable 
system operators at the end of 1995. Since then, some of those 
companies may have grown to serve over 400,000 subscribers, and 
others may have been involved in transactions that caused them to be 
combined with other cable operators. Consequently, the Commission 
estimates that there are fewer than 1,468 small entity cable system 
operators that may be affected by the decisions and rules adopted in 
this First Reconsideration Order.
    22. The Communications Act also contains a definition of a small 
cable system operator, which is ``a cable operator that, directly or 
through an affiliate, serves in the aggregate fewer than 1 percent 
of all subscribers in the United States and is not affiliated with 
any entity or entities whose gross annual revenues in the aggregate 
exceed $250,000,000.'' 47 U.S.C. 543(m)(2). There were 63,196,310 
basic cable subscribers at the end of 1995, and 1,450 cable system 
operators serving fewer than one percent (631,960) of subscribers. 
Although it seems certain that some of these cable system operators 
are affiliated with entities whose gross annual revenues exceed 
$250,000,000, the Commission is unable at this time to estimate with 
greater precision the number of cable system operators that would 
qualify as small cable operators under the definition in the 
Communications Act.

D. Summary Analysis of the Projected Reporting, Recordkeeping, and 
Other Compliance Requirements and Steps Taken to Minimize the 
Significant Economic Impact of this First Reconsideration Order on 
Small Entities and Small Incumbent LECs, Including the Significant 
Alternatives Considered and Rejected

    23. Structure of the Analysis. In this Section of the 
Supplemental FRFA, the Commission analyzes the projected reporting, 
recordkeeping, and other compliance requirements that may apply to 
small entities and small incumbent LECs as a result of this First 
Reconsideration Order. See 5 U.S.C. 604(a)(4). As a part of this 
discussion, the Commission mentions some of the types of skills that 
will be needed to meet the new requirements. The Commission also 
describes the steps taken to minimize the economic impact of its 
decisions on small entities and small incumbent LECs, including the 
significant alternatives considered and rejected. See 5 U.S.C. 
604(a)(5).
    24. The Commission provides this summary analysis to provide 
context for the analysis in this Supplemental FRFA. To the extent 
that any statement contained in this Supplemental FRFA is perceived 
as creating ambiguity with respect to the rules or statements made 
in the First Report & Order or preceding Sections of this First 
Reconsideration Order, the rules and statements set forth in the 
First Report & Order and those preceding Sections of this First 
Reconsideration Order shall be controlling.

1. Implementation Schedule

    25. Summary of Projected Reporting, Recordkeeping and Other 
Compliance Requirements. In the First Report & Order, the Commission 
required local exchange carriers operating in the 100 largest MSAs 
to offer long-term service provider portability, according to a 
phased deployment schedule commencing on October 1, 1997, and 
concluding by December 31, 1998, set forth in appendix F of the 
First Report & Order. In this First Reconsideration Order, the 
Commission extends the end dates for Phase I of the deployment 
schedule by three months, and for Phase II by 45 days. Thus, 
deployment will now take place in Phase I from October 1, 1997, 
through March 31,

[[Page 18299]]

1998, and in Phase II from January 1, 1998, through May 15, 1998. 
The Commission also clarifies that LECs need only provide number 
portability within the 100 largest MSAs in switches for which 
another carrier has made a specific request for the provision of 
portability. LECs must make available lists of their switches for 
which deployment has and has not been requested. The parties 
involved in such requests identifying preferred switches may need to 
use legal, accounting, economic and/or engineering services.
    26. Steps Taken to Minimize Significant Economic Impact on Small 
Entities and Small Incumbent LECs, and Alternatives Considered. In 
this First Reconsideration Order, the Commission lightens the 
burdens on rural and smaller LECs by establishing a procedure 
whereby, within as well as outside the 100 largest MSAs, portability 
need only be implemented in the switches for which another carrier 
has made a specific request for the provision of portability. If, as 
petitioners allege, competition is not imminent in the areas covered 
by rural/small LEC switches, then the rural or smaller LEC should 
not receive requests from competing carriers to implement 
portability, and thus need not expend its resources until 
competition does develop. By that time, extensive non-carrier-
specific testing will likely have been done, and rural and small 
LECs need not expend their resources on such testing. The Commission 
notes that the majority of parties representing small or rural LECs 
specified as the relief sought that the Commission only impose 
implementation requirements where competing carriers have shown 
interest in portability. Moreover, the Commission's extension of 
Phases I and II of the deployment schedule may permit smaller LECs 
to reduce their testing costs by allowing time for larger LECs to 
test and resolve the problems of this new technology.
    27. Indeed, in this First Reconsideration Order, the Commission 
rejects several alternatives put forth by parties that might impose 
greater burdens on small entities and small incumbent LECs. The 
Commission rejects requests put forth by ACSI, KMC, ICG, NEXTLINK, 
and ALTS to accelerate the deployment schedule for areas both within 
and outside the 100 largest MSAs. The Commission also rejects the 
procedures proposed by some parties that would require LECs to file 
waiver requests for their specific switches if they believe there is 
no competitive interest in those switches, instead of requiring LECs 
to identify in which switches of other LECs they wish portability 
capabilities. The suggested waiver procedures would burden the LEC 
from whom portability is requested with preparing and filing the 
petition for waiver. In addition, a competing carrier that opposes 
the waiver petition would be burdened with challenging the waiver. 
In contrast, under the procedure the Commission establishes, the 
only reporting burden on requesting carriers is to identify and 
request their preferred switches. Carriers from which portability is 
being requested, which may be small incumbent LECs, only incur a 
reporting burden if they wish to lessen their burdens further by 
requesting more time in which to deploy portability. Finally, the 
Commission clarifies that CMRS providers, like wireline providers, 
need only provide portability in requested switches, both within and 
outside the 100 largest MSAs.

2. Exemptions for Rural or Small LECs

    28. Summary of Projected Reporting, Recordkeeping and Other 
Compliance Requirements. Section 251(f)(2) provides that LECs with 
fewer than two percent of the nation's subscriber lines may petition 
a state commission for a suspension or modification of any 
requirements of sections 251(b) and 251(c). Section 251(f)(2) is 
available to all LECs, including competitive LECs, which may be 
small entities. A small incumbent LEC or a competitive LEC, which 
may be a small entity, seeking under 251(f)(2) to modify or suspend 
the number portability requirements imposed by section 251(b)(2), 
bears the burden of proving that the number portability requirements 
would: (1) Create a significant adverse economic impact on 
telecommunications users; (2) be unduly economically burdensome; or 
(3) be technically infeasible. The parties involved in such a 
proceeding may need to use legal, accounting, economic and/or 
engineering services.
    29. Steps Taken to Minimize Significant Economic Impact on Small 
Entities and Small Incumbent LECs, and Alternatives Considered. As 
explained above in the First Reconsideration Order, the Commission 
considers it unnecessary to create a general exemption for all small 
and/or rural LECs, as suggested by some parties. The Commission has 
effectively granted the small and rural LEC petitioners' requests 
that it waive number portability requirements for rural and/or small 
LECs serving areas in the largest 100 MSAs until receipt of a bona 
fide request, since the Commission now requires all competing 
carriers specifically to request, of any LEC, the particular 
switches in which they desire portability. To the extent that 
portability is requested in a rural or small LEC's switch, and that 
LEC has difficulty complying with the request, it may apply for an 
extension of time on the basis of extraordinary circumstances beyond 
its control that prevent it from complying with the Commission's 
deployment schedule or, if eligible, it may petition the appropriate 
state commission for suspension or modification of the requirements 
of section 251(b). 47 U.S.C. 251(f)(2). The Commission's grant of 
petitioners' requests to limit deployment to requested switches, 
however, decreases the likelihood that smaller and rural LECs will 
have to apply for extensions of time or file petitions under section 
251(f)(2).
    30. As the Commission stated in the Local Competition Order, the 
determination whether a section 251(f)(2) suspension or modification 
should be continued or granted lies primarily with the relevant 
state commission. By largely leaving this determination to the 
states, the Local Competition Order stated, the Commission's 
decisions permit this fact-specific inquiry to be administered in a 
manner that minimizes regulatory burdens and the economic impact on 
small entities and small incumbent LECs. However, to minimize 
further regulatory burdens and minimize the economic impact of the 
Commission's decision, in the Local Competition Order the Commission 
adopted several rules that may facilitate the efficient resolution 
of such inquiries, provide guidance, and minimize uncertainty. In 
the Local Competition Order, the Commission found that the rural LEC 
or smaller LEC must prove to the state commission that the financial 
harm shown to justify a suspension or modification would be greater 
than the harm that might typically be expected as a result of 
competition. Finally, the Commission concluded that section 251(f) 
adequately provides for varying treatment for smaller or rural LECs 
where such variances are justified. As a result, the Commission 
stated, it expects that section 251(f) will significantly minimize 
regulatory burdens and economic impacts from the rules adopted in 
the First Report & Order and this First Reconsideration Order.

3. Reporting Requirements by the Chief, Wireless Telecommunications 
Bureau, on Carriers' Progress

    31. Summary of Projected Reporting, Recordkeeping and Other 
Compliance Requirements. In the First Report & Order, the Commission 
delegated authority to the Chief, Wireless Telecommunications 
Bureau, to require reports from cellular, PCS, and covered SMR 
providers in order to monitor the progress of these providers toward 
implementing long-term number portability. These reporting 
requirements were not defined in sufficient detail in the First 
Report & Order to obtain approval from the Office of Management and 
Budget. Separate approval will be requested when the specific 
requirements are imposed by the Wireless Telecommunications Bureau.
    32. Steps Taken to Minimize Significant Economic Impact on Small 
Entities and Small Incumbent LECs, and Alternatives Considered. 
Although no party to this proceeding suggested that changes to these 
reporting requirements would affect small entities or small 
incumbent LECs, several parties requested that the Chief, Wireless 
Telecommunications Bureau, be given greater authority to act to 
increase flexibility in the schedule. As explained above in this 
First Reconsideration Order, the Commission lightens the burden on 
smaller and rural wireless carriers by modifying these rules so that 
CMRS providers, like wireline providers, need only provide 
portability in requested switches, both within and outside the 100 
largest MSAs. The Commission also declines at this time to alter 
further the implementation schedule imposed by the First Report & 
Order for wireless carriers because the Commission finds that enough 
flexibility has been incorporated into the implementation schedule 
for wireless carriers, and that no modification is needed.

E. Report to Congress

    33. The Commission shall send a copy of this Supplemental FRFA, 
along with this First Reconsideration Order, in a report to Congress 
pursuant to the Small Business Regulatory Enforcement Fairness Act 
of 1996, 5 U.S.C. 801(a)(1)(A). A copy of this Supplemental FRFA 
will also be published in the Federal Register.

[FR Doc. 97-8483 Filed 4-14-97; 8:45 am]
BILLING CODE 6712-01-P