35150 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 /Rules and Regulations

5Except for Metals (EP or TCLP) and Cyanides (Total and Amenable) the nonwastewater treatment standards expressed as a concentration

were established, in part, based upon incineration in units operated in accordance with the technical requirements of 40 CFR Part 264 Subpart O

or Part 265 Subpart O, or based upon combustion in fuel substitution units operating in accordance with applicable technical requirements. A facility may comply with these treatment standards according to provisions in 40 CFR 268.40(d). All concentration standards for nonwastewaters

are based on analysis of grab samples. 6Where an alternate treatment standard or set of alternate standards has been indicated, a facility may comply with this alternate standard, but

only for the Treatment/Regulatory Subcategory or physical form (i.e., wastewater and/or nonwastewater) specified for that alternate standard. 7Both Cyanides (Total) and Cyanides (Amenable) for nonwastewaters are to be analyzed using Method 9010 or 9012, found in ‘‘Test Methods

for Evaluating Solid Waste, Physical/Chemical Methods,’’ EPA Publication SW–846, as incorporated by reference in 40 CFR 260.11, with a sample size of 10 grams and a distillation time of one hour and 15 minutes. 8These wastes, when rendered nonhazardous and then subsequently managed in CWA, or CWA-equivalent systems, are not subject to treatment standards. (See § 268.1(c)(3)and (4)). 9These wastes, when rendered nonhazardous and then subsequently injected in a Class I SDWA well, are not subject to treatment standards.

(See § 148.1(d)). 10Between August 26, 1996, and August 26, 1997, the treatment standard for this waste may be satisfied by either meeting the constituent

concentrations in this table or by treating the waste by the specified technologies: combustion, as defined by the technology code CMBST at

§ 268.42 Table 1 of this Part, for nonwastewaters; and, biodegradation as defined by the technolgy code BIODG, carbon adsorption as defined

by the technology code CARBN, chemical oxidation as defined by the technology code CHOXD, or combustion as defined as technology code

CMBST at § 268.42 Table 1 of this Part, for wastewaters. 11For these wastes, the definition of CMBST is limited to: (1) combustion units operating under 40 CFR 266, (2) combustion units permitted

under 40 CFR Part 264, Subpart O, or (3) combustion units operating under 40 CFR 265, Subpart O, which have obtained a determination of

equivalent treatment under 268.42 (b).

PART 271—REQUIREMENTS FOR

AUTHORIZATION OF STATE

HAZARDOUS WASTE PROGRAMS

6. The authority citation for Part 271

continues to read as follows:

Authority: 42 U.S.C. 6905, 6912(a) and

6926.

Subpart A—Requirements for Final

Authorization

7. Section 271.1(j) is amended by

revising the entries in Table 2 for

August 3, 1998 and for May 4, 2000 to

read as follows:

§ 271.1 Purpose and scope.

* * * * *

(j) * * *

TABLE 2.—SELF-IMPLEMENTING PROVISIONS OF THE SOLID WASTE AMENDMENTS OF 1984

Effective date Self-implementing provision RCRA citation Federal Register reference

* * * * * * *

November 4, 1998 ...... Prohibition on land disposal of newly listed

and identified wastes..

3004(g)(4)(C) and 3004(m) ............................. May 4, 1998; 63 FR

24596

November 4, 1998 ...... Prohibition on land disposal of radioactive

waste mixed with the newly listed and identified wastes, including soil and debris..

3004(m) 3004(g)(4)(C) and 3004(m) .............. Do.

* * * * * * *

* * * * *

[FR Doc. 98–17264 Filed 6–26–98; 8:45 am]

BILLING CODE 6560–50–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 52

[CC Docket No. 95–116; FCC 98–82]

Telephone Number Portability

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: On May 12, 1998, the

Commission released a Third Report

and Order in CC Docket No. 95–115,

adopting measures to distribute the

costs of long-term number portability

among telecommunications carriers. In

this order, the Commission decides that

telecommunications carriers shall pay

for the shared costs of the number

portability regional databases based on

each telecommunications carrier’s enduser telecommunications revenues in

each region, telecommunications

carriers shall bear their own carrierspecific costs directly related to

providing number portability,

incumbent LECs have the option to

recover their carrier-specific costs

directly related to providing number

portability through a five-year end user

charge, as well as through number

portability query charges to other

carriers, and unregulated carriers may

recover their carrier-specific costs

directly related to providing number

portability in any lawful manner. This

Third Report and Order ensures that all

telecommunications carriers bear the

costs of number portability in a

competitively neutral manner.

EFFECTIVE DATE: July 29, 1998, except for

§§ 52.32(b) and 52.33(a)(1), which

contain information collection

requirements that are not effective until

approved by the Office of Management

and Budget. The Commission will

publish a document in the Federal

Register announcing the effective date

for those sections.

FOR FURTHER INFORMATION CONTACT:

Lloyd Collier at (202) 418–2712, or Neil

Fried at (202) 418–1865, Competitive

Pricing Division, Common Carrier

Bureau.

SUPPLEMENTARY INFORMATION: This

summarizes the Commission’s Third

Report and Order in CC Docket No. 95–

116, In the Matter of Telephone Number

Portability, FCC 98–82, RM 8535,

adopted May 5, 1998, and released May

12, 1998. The file in its entirety is

available for inspection and copying

during the weekday hours of 9 a.m. to

4:30 p.m. in the Commission’s

Reference Center, room 239, 1919 M St.,

N.W., Washington D.C., or copies may

be purchased from the Commission’s

duplicating contractor, ITS, Inc. 1231

20th St., N.W., Washington, D.C. 20036,

phone (202) 857–3800.
Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 /Rules and Regulations 35151

ANALYSIS OF PROCEEDING

I. Background

A. The Provision of Long-Term Number

Portability

The Telecommunications Act of 1996

amends the 1934 Act to provide for a

pro-competitive, de-regulatory national

policy framework designed to accelerate

rapidly private sector deployment of

advanced telecommunications and

information technologies and services to

all Americans by opening all

telecommunications markets to

competition. Congress added section

251(b)(2) to the 1934 Act, which

requires all LECs, both incumbents and

new entrants, ‘‘to provide, to the extent

technically feasible, number portability

in accordance with requirements

prescribed by the Commission.’’ In light

of Congress’ number portability

mandate, the Commission released a

combined First Report and Order

(Order) & Further Notice of Proposed

Rulemaking (Further Notice) (61 FR

38605, July 25, 1996) in July 1996 to

begin implementing number portability.

Without number portability, customers

ordinarily cannot change their local

telephone companies unless they

change telephone numbers. Under the

existing network architecture and the

North American Numbering Plan

(NANP), a telephone number functions

like an address: every number is

associated with an individual switch

operated by a particular local telephone

company in a specific geographic area.

The area code, also called the

Numbering Plan Area (the NPA),

identifies the general geographic area

within which the switch provides

service. The next three digits of the

telephone number (the NXX) identify

the switch that serves the customer. The

last four digits identify the specific

telephone line serving the customer’s

location. Carriers use this ten-digit

number to connect a telephone call to

the called party. Thus, if a customer

changes local telephone companies and

receives service at the same location

from a different telephone company

providing service from a different

switch, the customer’s new local

telephone company typically must

assign the customer a new seven-digit

number (NXX code plus line number)

associated with the new switch and new

telephone line.

2. Number portability technology

allows customers to retain their

telephone numbers when changing local

service providers. Although the

Commission did not mandate a specific

long-term number portability method,

most carriers intend to provide longterm number portability through a

location routing number (LRN)

architecture. Under an LRN

architecture, each switch is assigned a

unique ten-digit LRN, the first six digits

of which identify the location of that

switch. Each customer’s telephone

number is matched in a regional

database with the LRN for the switch

that currently serves that telephone

number. Each database serves an area

that corresponds to one of the original

regional Bell Operating Company

(RBOC) service territories. Neutral third

parties, called local number portability

administrators (LNPAs), will administer

these regional databases.

3. When a customer changes from one

LEC to another, the carrier that wins the

customer will ‘‘port’’ the customer’s

number from the former carrier by

electronically transmitting (uploading)

the new LRN to the administrator of the

relevant regional database. This will

pair the customer’s original telephone

number with the LRN for the switch of

the new carrier, allowing the customer

to retain the original telephone number.

The regional database administrators

will then electronically transmit

(download) LRN updates to carrieroperated local service management

systems (LSMSs). Each carrier will

distribute this information to service

control points (SCPs) or signal transfer

points (STPs) that the carrier will use to

store and process data for providing

number portability.

4. For a carrier to route an interswitch

telephone call to a location where

number portability is available, the

carrier must determine the LRN for the

switch that serves the terminating

telephone number of the call. Once

number portability is available for an

NXX, carriers must ‘‘query’’ all

interswitch calls to that NXX to

determine whether the terminating

customer has ported the telephone

number. Carriers will accomplish this

by sending a signal over the SS7

network to retrieve from an SCP or STP

the LRN associated with the called

telephone number. The industry has

proposed, and the Commission has

endorsed, an ‘‘N minus one’’ (N–1)

querying protocol. Under this protocol,

the N–1 carrier will be responsible for

the query, where ‘‘N’’ is the entity

terminating the call to the end user, or

a network provider contracted by the

entity to provide tandem access. Thus

the N–1 carrier (i.e. the last carrier

before the terminating carrier) for a local

call will usually be the calling

customer’s local service provider; the

N–1 carrier for an interexchange call

will usually be the calling customer’s

interexchange carrier (IXC). An N–1

carrier may perform its own querying, or

it may arrange for other carriers or third

parties to provide querying services on

its behalf.

5. To route a local call under this

system, the originating local service

provider will examine the seven-digit

number that its customer dialed, for

example ‘‘456–7890.’’ If the called

telephone number is on the originating

switch (i.e. an intraswitch call), the

originating local service provider will

simply complete the call. If the call is

interswitch, the originating local service

provider will compare the NXX, ‘‘456,’’

with its table of NXXs for which number

portability is available. If ‘‘456’’ is not

such an NXX, the originating local

service provider will treat the call the

same as it did before the existence of

long-term number portability. If it is an

NXX for which portability is available,

the originating local service provider

will add the NPA, for instance ‘‘123,’’ to

the dialed number and query ‘‘(123)

456–7890’’ to an SCP containing the

LRNs downloaded from the relevant

regional database. The SCP will return

the LRN for ‘‘(123) 456–7890’’ (which

would be ‘‘(123) 456 XXXX’’ if the

customer has not changed carriers, or

something like ‘‘(123) 789-XXXX’’ if the

customer has changed carriers), and use

the LRN to route the call to the

appropriate switch with an SS7 message

indicating that it has performed the

query. The terminating carrier will then

complete the call. To route an

interexchange call, the originating local

service provider will hand the call off to

the IXC and the IXC will undertake the

same procedure.

B. Prior Commission Decisions

6. The Order, as modified by the First

Memorandum Opinion and Order on

Reconsideration (First Reconsideration

Order) ( 62 FR 18280, April 15, 1997),

requires LECs to implement long-term

number portability: (1) in Chicago,

Philadelphia, Atlanta, New York, Los

Angeles, Houston, and Minneapolis—

the largest metropolitan statistical area

(MSA) in each of the seven RBOC

regions’between October 1, 1997, and

March 31, 1998; (2) in the rest of the 100

largest MSAs in quarterly stages

between January 1, 1998, and December

31, 1998; and (3) thereafter in switches

outside the 100 largest MSAs, within six

months of a request by a

telecommunications carrier. A number

of carriers have received extensions of

the March 31, 1998, implementation

deadline for certain areas ranging from

two to five months.

7. The Commission explained that the

statutory definition of number

portability requires LECs to implement
35152 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 /Rules and Regulations

1Under the N–1 protocol recommended by the

industry under the auspices of the NANC, and the

number portability in such a way that

LEC customers can keep their telephone

numbers when they switch to any other

telecommunications carrier, including,

therefore, when they switch to a

commercial mobile radio services

(CMRS) provider. The Commission also

required in the Order that certain types

of CMRS providers be able by December

31, 1998, to route calls to any ported

numbers and be able by June 30, 1999,

to allow their own customers to take

their telephone numbers to other

carriers. By its language, section

251(b)(2) requires only that LECs

provide number portability, and the

1934 Act, as amended, excludes from

the definition of ‘‘local exchange

carrier’’ those entities engaged in the

provision of a commercial mobile

service under section 332(c), except to

the extent that the Commission finds

that such service should be included in

the definition of such term. Although

the Commission declined in the Order

to address whether CMRS providers are

LECs, the Commission exercised

authority under sections 1, 2, 4(i), and

332 to require three categories of CMRS

providers’cellular providers, broadband

personal communications service (PCS)

providers, and covered specialized

mobile radio (SMR) providers’to provide

number portability. The Commission

concluded that requiring these CMRS

providers to provide number portability

would serve the public interest by

promoting competition between and

among local wireless and wireline

carriers, as well as among providers of

interstate access service.

8. In the Order, the Commission

exempted some CMRS providers from

the obligation to provide number

portability: paging and other messaging

service providers, private paging service

providers, business radio service

providers, providers of land mobile

service on 220–222 MHz, public coast

stations, public land mobile service

providers, 800 MHz air-ground radiotelephone service providers, offshore

radio service providers, mobile satellite

service providers, narrowband PCS

service providers, local SMR licensees,

and local multipoint distribution service

(LMDS) providers. The Commission

reasoned that such carriers currently

have little impact on competition for

local service.

9. In the First Reconsideration Order,

the Commission concluded that within

the 100 largest MSAs, LECs must

provide number portability only in

switches for which another carrier has

specifically and reasonably requested

the provision of number portability. The

Commission reasoned that such an

approach allows carriers to focus their

resources where competitors plan to

enter, which is where number

portability is likely to have the most

impact in the short run on the

development of competition for local

services. Structuring implementation in

this fashion reduces costs, eases the

demands on software vendors, and

encourages efficient deployment,

network planning, and testing. The

Commission emphasized, however, that

all carriers, even those operating

portability-incapable switches, are still

responsible for properly routing calls to

telephone numbers in locations where

number portability is available. Carriers

can meet that responsibility either by

routing the call to one of their switches

that is capable of performing the

necessary database query, or by

arranging for another carrier or a third

party to query the database or route the

call.

10. In the Second Report and Order

(62 FR 48774, September 17, 1997), the

Commission determined that if an N–1

carrier arranges with another entity to

perform queries on the carrier’s behalf,

that other entity may charge the N–1

carrier in accordance with requirements

to be established in this Third Report

and Order. The Commission also noted

that when an N–1 carrier fails to ensure

that a call is queried, the call might

inadvertently be routed by default to the

LEC that originally served the telephone

number. If the number was ported, the

LEC incurs costs in redirecting the call.

This could happen, for example, if there

is a technical failure in the N–1 carrier’s

ability to query, or if the N–1 carrier

fails to ensure that its calls are queried,

either through its own query capability

or through an arrangement with another

carrier or third-party. The Commission

determined in the Second Report and

Order that if a LEC performs queries on

default-routed calls, the LEC may charge

the N–1 carrier in accordance with

requirements to be established in this

Third Report and Order. The

Commission determined further that it

would allow LECs to block defaultrouted calls, but only in specific

circumstances when failure to do so is

likely to impair network reliability. The

Commission also said that it would

require LECs to apply this blocking

standard to calls from all carriers on a

nondiscriminatory basis.

II. The Statutory Framework

A. Federal/State Jurisdiction

11. We conclude that section 251(e)(2)

requires the Commission to ensure that

carriers bear the costs of providing longterm number portability on a

competitively neutral basis for both

interstate and intrastate calls. In

reaching this conclusion, we note that

section 251(e)(2) expressly and

unconditionally grants the Commission

authority to ensure that carriers bear the

costs of providing number portability on

a competitively neutral basis.

12. Consequently, we find that section

251(e)(2) authorizes the Commission to

provide the distribution and recovery

mechanism for all the costs of providing

long-term number portability. We

conclude that an exclusively federal

recovery mechanism for long-term

number portability will enable the

Commission to satisfy most directly its

competitive neutrality mandate, and

will minimize the administrative and

enforcement difficulties that might arise

were jurisdiction over long-term number

portability divided. Further, such an

approach obviates the need for state

allocation of the shared costs of the

regional databases, a task that would

likely be complicated by the databases’

multistate nature. Under the exclusively

federal number portability cost recovery

mechanism, incumbent LECs’ number

portability costs will not be subject to

jurisdictional separations. Instead, we

will allow incumbent LECs to recover

their costs pursuant to requirements we

establish in this Third Report and

Order.

B. Scope of Section 251(e)(2)

13. We interpret the terms of section

251(e)(2) in ways that will best

implement its goals. The 1996 Act

amended the 1934 Act to provide for a

pro-competitive, de-regulatory national

policy framework and to open all

telecommunications markets to

competition. Section 251(b)(2) furthers

those congressional goals by requiring

all LECs to provide number portability

so that subscribers of local telephone

service can retain their telephone

numbers when changing carriers. At the

same time, by requiring the Commission

to ensure that all telecommunications

carriers bear on a competitively neutral

basis the costs of providing number

portability, section 251(e)(2) seeks to

prevent those costs from themselves

undermining competition.

14. We conclude that ‘‘the cost[s] of

establishing ‘‘ number portability’’ to be

borne on a competitively neutral basis

include the costs that LECs incur to

meet the obligations imposed by section

251(b)(2), as well as the costs other

telecommunications carriers’such as

IXCs and CMRS providers’incur for the

industry-wide solution to local number

portability. 1 The Act defines number
Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 /Rules and Regulations 35153

Commission’s requirements for the provision of

long-term number portability, almost all

telecommunications carriers’including LECs, IXCs,

and CMRS providers’will incur costs of number

portability.

portability as the ability of users of

telecommunications services to retain,

at the same location, existing

telecommunications numbers without

impairment of quality, reliability, or

convenience when switching from one

telecommunications carrier to another.

Thus, ‘‘the costs of number portability’’

are the costs of enabling

telecommunications users to keep their

telephone numbers without degradation

of service when they switch carriers.

Such costs include the costs a carrier

incurs to make it possible to transfer a

telephone number to another carrier, as

well as the costs involved in making it

possible to route calls to customers who

have switched carriers (i.e., the costs

involved in making the N–1 querying

protocol possible). IXCs and CMRS

providers, as well as LECs, incur these

costs.

15. We also adopt the tentative

conclusion in the Further Notice that

costs not directly related to providing

number portability, as defined further

below, are not costs of providing

number portability. Consequently, such

costs need not ‘‘be borne by all

telecommunications carriers on a

competitively neutral basis’’ under

section 251(e)(2). Section 251(e)(2)

requires that the costs of providing

number portability be borne on a

competitively neutral basis. Costs not

directly related to providing number

portability encompass a wide range of

costs that carriers incur to provide

telecommunications functions unrelated

to number portability. We find no

indication that Congress intended to

place such costs within the scope of the

competitive neutrality requirement of

section 251(e)(2). Because costs not

directly related to providing number

portability are not subject to 251(e)(2),

the Commission is not obligated under

that section to create special provisions

to ensure that they are borne on a

competitively neutral basis.

16. We also conclude that section

251(e)(2) requires the Commission to

ensure that number portability costs are

distributed among, as well as recovered

by, carriers on a competitively neutral

basis. Despite the Commission’s

tentative conclusion that section

251(e)(2) only applies to the distribution

of number portability costs, we now

find ambiguous the scope of the

language requiring that costs ‘‘be borne

* * * on a competitively neutral basis.’’

We find further that reading section

251(e)(2) as applying to both

distribution and recovery best achieves

the congressional goal of ensuring that

the costs of providing number

portability do not restrict the local

competition that number portability is

intended to encourage. Because the

manner in which carriers recover the

costs of providing number portability

could affect their ability to compete, we

cannot ensure that number portability

costs are ‘‘borne by all

telecommunications carriers on a

competitively neutral basis’’ unless we

address both distribution and recovery.

If the Commission ensured the

competitive neutrality of only the

distribution of costs, carriers could

effectively undo this competitively

neutral distribution by recovering from

other carriers. For example, an

incumbent LEC could redistribute its

number portability costs to other

carriers by seeking to recover them in

increased access charges to IXCs.

Therefore, we find that section 251(e)(2)

requires the Commission to ensure that

both the distribution and recovery of

intrastate and interstate number

portability costs occur on a

competitively neutral basis.

C. Competitive Neutrality

17. We adopt the Commission’s

tentative conclusion to apply to longterm number portability the Order’s

definition of competitive neutrality as

requiring that the cost of number

portability borne by each carrier does

not affect significantly any carrier’s

ability to compete with other carriers for

customers in the marketplace. Applying

this definition will ensure that the cost

of implementing number portability

does not undermine the goal of the 1996

Act to promote a competitive

environment for the provision of local

communications services.

18. We also adopt the Commission’s

tentative conclusion to apply to longterm number portability the two-part

test the Commission developed to

determine whether carriers will bear the

interim costs of number portability on a

competitively neutral basis. Under this

test, the way carriers bear the costs of

number portability: (1) must not give

one service provider an appreciable,

incremental cost advantage over another

service provider when competing for a

specific subscriber, and (2) must not

disparately affect the ability of

competing service providers to earn a

normal return.

19. Accordingly, we adopt for

purposes of long-term number

portability the Order’s definition of

competitive neutrality as requiring that

the cost of number portability borne by

each carrier does not affect significantly

any carrier’s ability to compete with

other carriers for customers in the

marketplace. We also adopt the two-part

test for determining whether this

definition is met. We apply this

interpretation of competitive neutrality

to the shared costs of providing number

portability below. We find it

unnecessary to address whether to

apply our competitive neutrality

principles to states that opt out of the

regional database plan because no state

elected to opt out by the July 1, 1997,

deadline. We apply the interpretation of

competitive neutrality to the carrierspecific costs directly related to

providing number portability below.

III. Categorization of Costs

20. We adopt the Commission’s

tentative conclusion to divide the costs

raised by this proceeding into three

categories: (1) shared costs; (2) carrierspecific costs directly related to

providing number portability; and (3)

carrier-specific costs not directly related

to providing number portability. The

division of costs between shared costs

and carrier-specific costs directly

related to providing number portability

recognizes that some costs of providing

number portability are incurred by

regional database administrators, while

others are incurred by carriers in the

first instance. The division between

carrier-specific costs directly related to

providing number portability and

carrier-specific costs not directly related

to providing number portability

recognizes that some component of the

costs carriers incur will provide carriers

with benefits unrelated to number

portability.

21. We adopt the Commission’s

tentative definition of shared costs as

costs incurred by the industry as a

whole, such as those incurred by the

third-party administrator to build,

operate, and maintain the databases

needed to provide number portability.

We also conclude that once the shared

costs are allocated they are attributable

to specific carriers, at which point we

will treat them as carrier-specific costs

directly related to providing number

portability.

22. We also adopt the Commission’s

tentative subcategorization of the shared

costs into nonrecurring costs, recurring

costs, upload costs, and download costs.

We clarify, however, that the shared

upload and download costs include

only the costs that the database

administrators incur to process uploads

and downloads; the costs that the

carriers incur individually to process

uploads and downloads are carrierspecific costs directly related to

providing number portability.
35154 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 /Rules and Regulations

23. We further conclude that query

costs are not shared costs initially

incurred by the regional database

administrators, but are carrier-specific

costs directly related to providing

number portability. At the time of the

Further Notice, the Commission’s

understanding had been that the

regional administrators might perform

queries for carriers. In that case, query

costs might have constituted shared

costs because the database

administrators would have incurred

costs for the industry as a whole, and

the costs would need to be allocated

among individual carriers. The industry

has chosen, however, not to adopt this

approach to number portability. Instead,

the N–1 carrier will incur all querying

costs individually in the first instance,

either by querying its own copy of data

downloaded from the regional

databases, or by arranging for the

querying of such a database copy

maintained by another carrier or other

third party. Because the regional

database administrators will not

perform queries on behalf of carriers,

query costs are more appropriately

considered carrier-specific costs directly

related to providing number portability.

24. We conclude that carrier-specific

costs directly related to providing

number portability are limited to costs

carriers incur specifically in the

provision of number portability

services, such as for the querying of

calls and the porting of telephone

numbers from one carrier to another.

Costs that carriers incur as an incidental

consequence of number portability,

however, are not costs directly related to

providing number portability.

25. We reject the requests of some

commenters that we classify the entire

cost of an upgrade as a carrier-specific

cost directly related to providing

number portability just because some

aspect of the upgrade relates to the

provision of number portability. Carriers

incur costs for software generics, switch

hardware, and OSS, SS7 or AIN

upgrades to provide a wide range of

services and features. Consequently,

only a portion of such joint costs are

carrier-specific costs directly related to

providing number portability. Thus, we

will consider as subject to the

competitive neutrality mandate of

section 251(e)(2) all of a carrier’s

dedicated number portability costs,

such as for number portability software

and for the SCPs and STPs reserved

exclusively for number portability. We

will also consider as carrier-specific

costs directly related to the provision of

number portability that portion of a

carrier’s joint costs that is demonstrably

an incremental cost carriers incur in the

provision of long-term number

portability. Apportioning costs in this

way will further the goals of section

251(e)(2) by recognizing that providing

number portability will cause some

carriers, including small and rural LECs,

to incur costs that they would not

ordinarily have incurred in providing

telecommunications service. At the

same time, this approach recognizes that

some upgrades will enhance carriers’

services generally, and that at least some

portion of such upgrade costs are not

directly related to providing number

portability.

26. Because carrier-specific costs

directly related to providing number

portability only include costs carriers

incur specifically in the provision of

number portability, carriers may not use

general overhead loading factors in

calculating such costs. Carriers already

allocate general overhead costs to their

rates for other services, and allowing

general overhead loading factors for

long-term number portability might lead

to double recovery. Instead, carriers may

identify as carrier-specific costs directly

related to providing long-term number

portability only those incremental

overheads that they can demonstrate

they incurred specifically in the

provision of long-term number

portability.

27. As discussed below, we are

permitting incumbent LECs to recover

their number portability costs in

federally tariffed end-user charges and

query services. To facilitate

determination of the portion of joint

costs carriers shall treat as carrierspecific costs directly related to

providing number portability, and to

facilitate evaluation of the cost support

that carriers will file in their federal

tariffs, we are requesting that carriers

and interested parties file comments by

August 3, 1998 proposing ways to

apportion the different types of joint

costs. Carriers and interested parties

may file reply comments by September

16, 1998. We will delegate authority to

the Chief, Common Carrier Bureau, to

determine appropriate methods for

apportioning joint costs among

portability and nonportability services,

and to issue any orders to provide

guidance to carriers before they file their

tariffs, which are to take effect no earlier

than February 1, 1999.

28. We decline to create special cost

categories for the number portability

costs of small and rural carriers. The

Commission’s definitions of carrierspecific costs directly and not directly

related to providing number portability

will enable all carriers, including small

and rural carriers, as well as carriers

providing Extended Area Service, to

identify the costs subject to section

251(e)(2). The three cost categories the

Commission has created account for all

potential number portability costs and

provide workable distinctions for the

purposes of implementing section

251(e)(2).

29. Creating unique cost categories for

wireless carriers is also unnecessary at

this time. The Commission’s definitions

are not tied to unique technological

constraints of wireline communications,

and nothing in the record leads us to

conclude that the three cost categories

are too narrow to apply to the number

portability costs of wireless carriers.

Wireless carriers, like wireline carriers,

will depend upon the regional

databases, and the record does not

suggest that the costs of the regional

databases are disproportionately

affected by any one industry segment.

IV. Costs of the Regional Databases

A. Distribution of Shared Costs:

Allocation v. Usage-Based Rates

30. We require telecommunications

carriers to pay for the database

administrators’ nonrecurring, recurring,

upload, and download costs pursuant to

an allocator, which we select below,

rather than on a usage-sensitive basis.

We have used the two-prong

competitive neutrality test to ensure that

the allocator we choose distributes these

costs on a competitively neutral basis.

Once these shared costs are distributed

to telecommunications carriers, we treat

each carrier’s portion of the costs as a

carrier-specific cost directly related to

providing number portability. Because

telecommunications carriers will

recover these costs as carrier-specific

costs directly related to providing

number portability, which we discuss

below, we need not address their

recovery here.

31. Distributing the shared costs

among telecommunications carriers in

proportion to database use would shift

these costs to telecommunications

carriers that win more customers

because such carriers will perform more

uploads. At the outset of number

portability, these carriers are more likely

to be competitive LECs. Consequently,

usage-sensitive distribution of the

shared costs could give one service

provider an appreciable, incremental

cost advantage over another service

provider when competing for a specific

subscriber, as well as disparately affect

the ability of competing service

providers to earn a normal return.

Although the record does not show

conclusively that usage-based charges

would hamper materially a carrier’s

ability to compete for subscribers, we
Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 /Rules and Regulations 35155

2The SLC is a flat monthly per-line rate that the

end user pays.

believe it prudent at this early stage in

the deployment of number portability to

minimize such risk.

32. Moreover, assessing shared costs

on a usage-sensitive basis could

discourage carriers from performing

uploads and downloads, or at least

penalize those carriers that do so more

frequently. The entire industry benefits

from the maintenance of reliable

regional databases for providing number

portability: unless carriers download

data, they will be unable to terminate

traffic to the appropriate end-user;

unless carriers upload ported numbers

to the databases, the databases will be

inaccurate, making downloads useless

for current and future database

participants alike. Thus, all carriers that

port telephone numbers and all carriers

that terminate calls to portabilitycapable NXXs depend on the timely

uploading and downloading of

information to and from the regional

databases to ensure an accurate database

and the proper routing of telephone

calls. Furthermore, all

telecommunications carriers that

depend on the availability of telephone

numbers will benefit from number

portability because it allows subscribers

to retain their telephone numbers when

changing local service providers, and

because it facilitates the conservation of

telephone numbers through number

pooling.

33. We will not adopt a separate

distribution methodology for wireless

carriers. The record indicates that

wireless carriers will use the regional

databases in the same manner as

wireline carriers. Consequently, we see

no reason to treat wireless carriers

differently than wireline carriers with

respect to the distribution of the shared

costs.

B. The Allocator

34. As part of its management duties

under § 52.26 of the Commission’s

Rules, the LNPA of each regional

database must collect sufficient

revenues to fund that database. We will

require the LNPA of each regional

database to do this by allocating the

costs of each regional database among

carriers in proportion to each carrier’s

intrastate, interstate, and international

end-user telecommunications revenues

attributable to that region. The

Commission adopted end-user

telecommunications revenues in the

Universal Service Order (62 FR 32862,

June 17, 1997) as the assessment base

for determining contributions to

universal support mechanisms. We will

require carriers to include intrastate,

interstate, and international revenues in

calculating end-user revenues because

number portability will affect all such

services. An end-user

telecommunications revenue allocator is

similar to a retail-revenues allocator in

that both are based on

telecommunications revenues that

carriers collect from end-users. Unlike

retail-revenues, however, end-user

telecommunications revenues includes

revenues derived from subscriber line

charges (SLCs).2 End-user

telecommunications revenues also

include revenues collected from carriers

that purchase telecommunications

services for their own internal use.

35. The end-user telecommunications

revenue allocator meets the two-prong

competitive neutrality test. First, the

allocator will not give one service

provider an appreciable, incremental

cost advantage when competing for a

subscriber. Because the end-user

telecommunications revenue allocator

will distribute the shared costs of the

regional databases to each carrier in

proportion to that carrier’s end-user

revenues, it will cost carriers

approximately the same increase in

shared costs to win a specific

subscriber. For example, if one of two

LECs wins a third LEC’s subscriber,

whichever of the two LECs wins the

subscriber will win the end-user

revenue that subscriber generates,

which will increase its allocated portion

of the shared costs. Because the

subscriber is likely to use approximately

the same amount of local service

regardless which of the two competing

LECs provides service to the subscriber,

the incremental shared cost one of the

two LECs would experience if it had

won the subscriber would be about the

same as the incremental shared cost the

other would experience if it won the

subscriber. This increase would also

approximately equal the decrease in

shared costs the third carrier would

experience, having lost the subscriber.

These amounts may not be exactly the

same because each of the three carriers

may have different rates and may not

collect exactly the same revenue from

that subscriber. The difference,

however, will not be significant enough

to create an appreciable, incremental

cost disadvantage. Furthermore, any

difference will not be caused by

providing number portability, but by

differences in the underlying efficiency,

services, and rates of each of the

carriers. Thus we believe the allocator

will not itself create an appreciable,

incremental cost advantage that was not

already present even absent number

portability.

36. Second, allocating shared costs in

proportion to end-user revenues will

prevent the shared costs from

disparately affecting the ability of

carriers to earn a normal return. Because

carriers’ allocations of the shared costs

will vary directly with their end-user

revenues, their share of the regional

database costs will increase in

proportion to their customer base. Thus,

no carrier’s portion of the shared costs

will be excessive in relation to its

expected revenues, and its allocated

share will only increase as it increases

its revenue stream. Consequently, the

end-user revenues allocator will not

disparately affect competing carriers’

abilities to earn a normal return. An

end-user revenues allocator will also be

easy to administer because carriers

already track their sales to end-users for

billing purposes, and will be familiar

with the end-user revenues allocator

from its use for universal service

support contributions. Although an enduser revenues allocator will relieve pure

wholesalers, which have no end-user

revenue, from directly bearing shared

costs, the end-user method does not

exclude wholesale revenues from the

revenue base that determines carriers’

shared costs. As the Commission

explained in the Universal Service

Order, wholesale charges are built into

retail rates, and thus the allocator still

reflects wholesale revenue. This is

competitively neutral because it avoids

double-counting revenues, and because

wholesale carriers are not competing

with retail carriers for end users in the

marketplace.

C. Carriers Required To Share the Costs

of the Regional Databases

37. We will require allocation of the

shared costs among all

telecommunications carriers because

section 251(e)(2) states that ‘‘[t]he cost

of establishing * * * number portability

shall be borne by all

telecommunications carriers on a

competitively neutral basis.’’ Our enduser revenues allocator, by its nature,

does not reach carriers, such as pure

wholesalers, that do not have end-user

revenues. Because section 251(e)(2)

requires all carriers to bear the costs of

number portability on a competitively

neutral basis, we will require carriers

that do not have end-user revenues to

pay $100 per year per region as their

statutory share of the shared costs. We

believe that $100 represents a fair

contribution for carriers that do not

have end-user revenues, but can revisit

this issue should it become necessary.

This fee will not give any such carriers

an appreciable, incremental cost

advantage when competing for a
35156 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 /Rules and Regulations

3These duties include all management tasks

required to run the regional databases.

4Until now, local service providers had to be

assigned entire NXXs, even if they did not need all

10,000 of the NXX’s telephone numbers. With the

advent of number portability, carriers can share

NXXs and pool unused telephone numbers, which

results in more efficient allocation of telephone

numbers and reduces the need for measures such

as area-code overlays to combat telephone number

exhaust.

5Although generally not rate regulated,

competitive LECs, CMRS providers, and IXCs—as

telecommunications carriers—remain subject to the

Communications Act and Commission rules.

subscriber because such carriers do not

compete for end-user customers.

Moreover, this charge will be the same

for all such carriers. Thus, it will not

create any disadvantage to the extent

these carriers are competing with each

other. This fee is also not likely to

disparately affect the ability of

competing carriers to earn a normal

return because such a nominal charge is

unlikely to affect a carrier’s return and,

again, because all such carriers will face

the same charge. Consequently, such a

fee is competitively neutral.

D. Regional v. National Allocation of

Regional Database Costs

38. We will require

telecommunications carriers to bear the

shared costs on a regional basis because

such a plan is most consistent with the

regional nature of the databases, and

because a national approach would

require designation of a national

administrator. As part of its duties

established in § 52.26 of the

Commission’s Rules,3 each local number

portability administrator of a regional

database shall collect sufficient

revenues from all telecommunications

carriers providing telecommunications

service in areas that regional database

serves to fund the operation of that

regional database. Thus, after

subtracting the charges it collects from

telecommunications carriers with no

end-user revenues, each database

administrator shall distribute the

remaining shared costs based upon each

remaining telecommunications carrier’s

proportion of the end-user revenues

collected by all telecommunications

carriers in that region. To apply the enduser revenues allocator, administrators

may request regional end-user revenues

data from telecommunications carriers

once a year. We direct

telecommunications carriers to comply

with such requests. One of the

objectives of the biennial review of our

regulations required under the

Communications Act is to consider

ways to reduce filing burdens on

carriers. The Commission may further

consider in the biennial review or other

proceedings how best to administer the

allocation of the shared costs.

39. We are aware that some carriers

have already begun paying their

regional database administrators based

on temporary agreements negotiated by

the regional LLCs. We will permit, but

not require, each regional administrator

and LLC to adjust prospectively through

a reasonable true-up mechanism the

future bills of those carriers that

participated in such agreements so that

the shared costs each such carrier will

have contributed approaches what those

carriers would have paid had an enduser telecommunications revenue

allocator been in place when carriers

started paying the regional

administrators. Permitting the regional

administrators and LLCs to perform

such true-ups ensures that costs are

recovered from carriers in a manner

consistent with our rules, while

accounting for the period prior to the

effective date of our rules and

recognizing that agreements may have

been reasonable mechanisms to recover

regional database costs on a temporary

basis pending this Third Report and

Order.

V. Carrier-Specific Costs Directly

Related to Providing Number

Portability

40. We will allow but not require

incumbent LECs subject to rate-of-return

or price-cap regulation to recover their

carrier-specific costs directly related to

providing number portability through a

federal charge assessed on end-users. As

noted, we recognize consumers’

sensitivity to end-user charges. Under

the circumstances before us, however,

we conclude that allowing carriers to

recover number portability costs in this

manner will best serve the goals of the

statute. The Commission has only two

sources from which it may allow

carriers to recover costs in the federal

jurisdiction: charges IXCs pay LECs for

exchange access, and end-user charges.

Because number portability is not an

access-related service and IXCs will

incur their own costs for the querying of

long-distance calls, we will not allow

LECs to recover long-term number

portability costs in interstate access

charges. Nor would it likely be

competitively neutral to do so. We note

further that, like long-term number

portability, the advent of equal access

and 800 number portability required

carriers to incur significant costs to

modify their networks, although these

costs were not recovered in federal enduser charges. These improvements led

to increased competition and substantial

long-term benefits to consumers. We

anticipate a similarly positive effect for

consumers with respect to the impact of

number portability, namely the

increased choice and lower prices that

result from the competition that number

portability helps make possible. We also

note that number portability will

facilitate number pooling, which will

help forestall telephone-number

exhaust.4

41. Carriers not subject to rate

regulation—such as competitive LECs,

CMRS providers, and non-dominant

IXCs—may recover their carrier-specific

costs directly related to providing

number portability in any lawful

manner consistent with their obligations

under the Communications Act.5

Requiring incumbent LECs to bear their

own carrier-specific costs of providing

number portability and allowing them

to recover those costs from their own

customers, while leaving other carriers

unregulated, meets our competitive

neutrality standard that number

portability cost distribution and

recovery mechanisms: (1) not give one

service provider an appreciable,

incremental cost advantage over another

service provider when competing for a

specific subscriber, and (2) not

disparately affect the ability of

competing service providers to earn a

normal return.

42. Requiring incumbent LECs to bear

their own carrier-specific costs directly

related to providing number portability

will not disadvantage any

telecommunications carrier because

under an LRN implementation of longterm number portability a carrier’s costs

should vary directly with the number of

customers that carrier serves. Our

examination of the present record and

cost data that some carriers have

provided indicates that incumbent

LECs, competitive LECs, and CMRS

providers competing in the local service

market are likely to have approximately

the same long-run incremental number

portability cost of winning a subscriber.

Incumbent LECs will likely have large

absolute costs because of their large

networks, but they also will have a large

customer base over which to spread

those costs; competitive LECs and

CMRS providers will likely incur fewer

absolute costs because of their smaller

networks, but they will also likely have

smaller customer bases over which to

spread those costs.

43. Some small LECs and CMRS

providers may find that their smaller

customer bases make adding number

portability capability in their own
Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 /Rules and Regulations 35157

6The top 100 MSAs comprise approximately

61.1% of all subscriber lines, a conservative

estimate, based on our calculation that

approximately 61.1% of the United States

population resides in the 100 largest MSAs. We

calculated this percentage from population

estimates of the United States Census Bureau.

7A levelized rate is one that is calculated to

remain constant over a recovery period and is set

at the level at which the discounted present value

of the stream of payments is equal to the discounted

present value of the stream of costs over the period.

networks uneconomical. Such carriers

can benefit from economies of scale

similar to those of incumbent LECs,

however, by arranging for another

carrier or third-party provider to

provide number portability

functionality for them, as it appears that

a market for number portability services

may develop. Similarly, they may enter

into cooperative agreements with other

small carriers. Conversely, such carriers

might install number portability in their

networks and sell any excess number

portability capacity to other carriers.

Because resellers will simply be

reselling the number portability

capability of a facilities-based carrier,

we would expect that resellers will also

have comparable incremental number

portability costs. Similarly, we would

expect that carriers competing for

interexchange customers will bear the

costs of providing number portability

associated with N–1 queries in rough

proportion to the number of

interexchange customers they serve; the

more customers they win, the more

queries they must perform to terminate

those customers’ calls. IXCs and CMRS

providers can either query

interexchange calls themselves or

arrange for other carriers or third-party

providers to provide querying service

for them.

44. Regulating the recovery of number

portability costs by incumbent LECs, but

not by competitive LECs, CMRS

providers, and IXCs, also will not place

any carrier at a competitive

disadvantage. Creating an optional enduser charge for incumbent LECs ensures

that such carriers have a reasonable

opportunity to recover their costs and at

the same time allows carriers to forego

some or all of such charges if they deem

it necessary to compete in the local

service market. Similarly, unregulated

carriers may recover their costs in enduser charges if they choose to do so.

Regulating incumbent LEC recovery

should not disadvantage incumbent

LECs as compared to competitive LECs

because competitive LECs also have

number portability costs under LRN. If

a customer does switch to a competitive

LEC, that customer may have to pay

end-user charges or service rates that

recover the competitive LEC’s

portability costs. Thus, the customer’s

incentive to leave the incumbent LEC is

offset by the fact that the customer

would then have to pay charges that

recover the competitive LEC’s number

portability costs. Therefore, incumbent

LECs are unlikely to have a material

disadvantage in competing for

subscribers under our recovery

mechanism.

45. We also observe that under LRNbased long-term number portability the

LEC serving the customer who places a

local call will generally be responsible

for the query. Thus, winning a customer

shifts responsibility for the queries

needed to complete that customer’s

local calls from the original carrier to

the acquiring carrier. Similarly, the IXC

serving the customer who places an

interexchange call will be responsible

for any query needed. Consequently,

under the LRN approach to number

portability, query costs follow

customers, and requiring each carrier to

bear its own carrier-specific costs

directly related to providing number

portability is competitively neutral.

46. Under the requirements we adopt

today, an incumbent LEC may recover

its carrier-specific costs directly related

to providing long-term number

portability to end users by establishing

a monthly, number portability charge in

tariffs filed with the Commission. We

determine, however, that recovery from

end users should be designed so that

end users generally receive the charges

only when and where they are

reasonably able to begin receiving the

direct benefits of long-term number

portability. To achieve this, we will

allow the monthly number-portability

charge to begin no earlier than February

1, 1999, on a date the incumbent LEC

carrier selects, and to last no longer than

five years. We choose this start date for

the federal end-user charge because by

the end of 1998, under the

implementation schedule the

Commission has mandated for number

portability, a large proportion of

customers will reside in areas where

number portability is available: the

largest 100 MSAs. 6 In contrast, if the

end-user charge were permitted to start

immediately, substantially fewer

customers would be in areas where

number portability is available. Thus,

the February 1, 1999, start date will

better tailor recovery to areas where

customers can receive number

portability than would an earlier start

date for recovery. We choose February

1, 1999, rather than January 1, 1999, to

provide a brief additional time-period to

ensure that number portability has been

implemented before customers incur

charges, and because carriers will also

be filing tariff revisions to take effect

January 1, 1999, to implement PICC and

SLC adjustments.

47. In addition, we will allow an

incumbent LEC to assess the monthly

charge only on end users it serves in the

100 largest MSAs, and end users it

serves outside the 100 largest

metropolitan statistical areas from a

number-portability-capable switch.

Because carriers may make any switch

number-portability capable, this

approach will encourage carriers to

install number portability and help

ensure that end-users are assessed

number portability charges only where

they are reasonably likely to be

benefitting from number portability. If a

carrier receives an extension past

February 1, 1999, for one of the 100

largest MSAs, the carrier may not assess

the monthly charge in that MSA until it

begins providing long-term number

portability in the MSA. The incumbent

local exchange carrier shall levelize 7 the

monthly number-portability charge over

five years by setting a rate for each

charge at which the present value of the

revenue recovered by the charge equals

the present value of the cost being

recovered. The carriers shall use a

discount rate equal to the rate of return

on investment which the Commission

has authorized for regulated interstate

access services pursuant to Part 65 of

the Commission’s Rules. Currently, this

rate is 11.25 percent. We require

levelization of the monthly charge to

protect consumers from varying rates.

Incumbent LECs may collect less than

the maximum allowable charge, or

decline to collect the charge, from some

or all of their customers so long as they

do so in a reasonable and

nondiscriminatory manner. Thus we

will not, for example, allow incumbent

LECs to offset such lower charges by

collecting higher charges in areas where

no competitive carriers are present.

48. We choose the five-year period for

the end-user charge because it will

enable incumbent LECs to recover their

portability costs in a timely fashion, but

will also help produce reasonable

charges for customers and avoid

imposing those charges for an unduly

long period. A longer period would

increase the total charges consumers

pay because, as discussed, carriers’

unrecovered capital investment will be

subject to an 11.25 percent return, while

a shorter period would increase the

monthly charge to consumers. We find

that a five-year period effectively

balances these concerns. After a carrier
35158 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 /Rules and Regulations

establishes its levelized end-user charge

in the tariff review process we do not

anticipate that it may raise the charge

during the five-year period unless it can

show that the end-user charge was not

reasonable based on the information

available at the time it was initially set.

Furthermore, once incumbent LECs

have recovered their initial

implementation costs, number

portability will be a normal network

feature, and a special end-user charge

will no longer be necessary to ensure

that incumbent LECs recover their

number portability costs on a

competitively neutral basis. Carriers can

recover any remaining costs through

existing mechanisms available for

recovery of general costs of providing

service.

49. We will allow incumbent LECs to

assess one monthly number-portability

charge per line, except that one PBX

trunk shall receive nine monthly

number-portability charges and one

primary rate interface integrated

services digital network line (PRI ISDN

line) shall receive five monthly numberportability charges. As the Commission

observed in the access charge reform

proceeding, a PBX trunk provides on

average the equivalent service capacity

of nine Centrex lines. See In re Access

Charge Reform, Second Order on

Reconsideration and Memorandum

Opinion and Order (62 FR 56120,

October 29, 1997). We set the PBX

charge at nine times the level of the

ordinary charge because Centrex and

PBX arrangements are functionally

equivalent. To do otherwise could

encourage a large customer to choose

one of these arrangements over the other

because of the number portability

charge, and thus would not be

competitively neutral. Similarly, the

access charge reform proceeding set a

five to one equivalency ratio for PRI

ISDN lines, and we apply that

equivalency ratio here. To further our

goals for the Lifeline Assistance

Program, carriers may not impose the

monthly number-portability charge on

customers in that program.

50. The incumbent LEC may assess

the monthly charge on resellers of the

incumbent LEC’s local service, as well

as on purchasers of switching ports as

unbundled network elements under

section 251 of the Communications Act,

because the incumbent LEC will be

providing the underlying number

portability functionality even though

the incumbent LEC will no longer have

a direct relationship with the end user.

Thus, it appears that the reseller and the

purchaser of the unbundled switch port

will receive all their number portability

functionality through these

arrangements. Consequently, allowing

the incumbent LEC to assess the charge

will be competitively neutral because

the reseller and the purchaser of the

switch port will incur the charge in lieu

of costs they would otherwise incur in

obtaining long-term number portability

functionality elsewhere. The

unregulated reseller and purchaser of

the switch port may recover in any

lawful manner the charges the

incumbent LEC assesses on them. The

incumbent local exchange carrier may

not assess the monthly numberportability charge on carriers that

purchase the incumbent local exchange

carrier’s local loops as unbundled

network elements under section 251.

We do not allow the incumbent LEC to

assess such a charge because the

unbundled loop does not contain the

number portability functionality. The

purchaser of the unbundled loop will

still be responsible for providing such

functionality, and thus incurring

elsewhere the corresponding cost.

Congress has directed the Commission

to provide for the recovery of number

portability costs. Because we have so

provided in this proceeding, we

presume that state commissions will not

include the costs of number portability

when pricing unbundled network

elements.

51. Local service providers may query

calls for other carriers by arrangement,

or may receive unqueried, defaultrouted traffic when the N–1 carrier has

not performed the query. Thus we also

will allow incumbent LECs to recover

from N–1 carriers in a federally tariffed

query-service charge their carrierspecific costs directly related to

providing prearranged and default query

services. Other carriers required or

permitted to file federal tariffs may also

tariff query services. Carriers shall

indicate in the cost support section of

their tariffs the portion of their carrierspecific costs directly related to

providing number portability

attributable to the number portability

services they provide end users, and

that portion attributable to the number

portability query services they provide

on behalf of other carriers.

52. All the RBOCs and GTE have

submitted, and periodically revised,

estimates of the costs they will incur in

implementing LRN number portability.

In reviewing the record, we observe a

wide variation among companies’

estimated costs and their categorization

of those costs as directly related or not

directly related to providing number

portability. We remind the incumbent

LECs that only costs directly related to

providing number portability are

recoverable through the long-term

number portability cost recovery

mechanism we establish in this Third

Report and Order. As discussed above,

the Chief, Common Carrier Bureau, will

further consider methods of identifying

the portion of joint costs that incumbent

LECs should treat as carrier-specific

costs directly related to providing

number portability.

VI. Regulatory Flexibility Act Analysis

53. As required by section 603 of the

Regulatory Flexibility Act (RFA), an

Initial Regulatory Flexibility Analysis

(IRFA) was incorporated in the Further

Notice. The Commission sought written

public comments on the proposals in

the Further Notice, including on the

IRFA. The Commission’s Final

Regulatory Flexibility Analysis (FRFA)

in this Third Report and Order is as

follows:

54. Need for and Objectives of Rules:

The Commission, in compliance with

sections 251(b)(2), 251(d)(1), and

251(e)(2) of the Communications Act of

1934, as amended by the

Telecommunications Act of 1996,

adopts rules and procedures intended to

ensure the implementation of telephone

number portability with the minimum

regulatory and administrative burden on

telecommunications carriers. In

implementing the statute, the

Commission has the responsibility to

adopt rules that will implement most

quickly and effectively the national

telecommunications policy embodied in

the Act and to promote the procompetitive, deregulatory markets

envisioned by Congress. Congress has

recognized that number portability will

lower barriers to entry and promote

competition in the local exchange

marketplace. To prevent the cost of

number portability from itself becoming

a barrier to local competition, however,

section 251(e)(2) requires that ‘‘[t]he

cost of establishing telecommunications

numbering administration arrangements

and number portability shall be borne

by all telecommunications carriers on a

competitively neutral basis as

determined by the Commission.’’

55. Summary of Significant Issues

Raised by the Public in Response to the

IRFA: There were no comments

submitted specifically in response to the

IRFA. However, in their general

comments, some commenters assert that

if competition is to emerge in the local

exchange market the regulatory

standards adopted by the Commission

to recover the cost of implementing

long-term number portability should not

disproportionately burden small

entities, especially new entrants. In the

Third Report and Order, we adopt rules

and regulations to ensure that the way
Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 /Rules and Regulations 35159

all telecommunications carriers,

including small entities, bear the costs

of number portability does not

significantly affect any carrier’s ability

to compete with other carriers for

customers in the marketplace.

56. Description and Estimate of

Number of Small Businesses to Which

Rules Will Apply: The Regulatory

Flexibility Act generally defines the

term ‘‘small business’’ as having the

same meaning as the term ‘‘small

business concern’’ under the Small

Business Act. A small business concern

is one which (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). 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. This standard also applies in

determining whether an entity is a small

business for purposes of the RFA.

57. Our rules governing long-term

number portability cost recovery apply

to all telecommunications carriers,

including incumbent LECs, new LEC

entrants, and IXCs, as well as cellular,

broadband PCS, and covered SMR

providers. Small incumbent LECs

subject to these rules are either

dominant in their field of operations or

are independently owned and operated,

and, consistent with the Commission’s

prior practice, are excluded from the

definition of ‘‘small entities’’ and ‘‘small

business concerns.’’ Accordingly, our

use of the terms ‘‘small entities’’ and

‘‘small businesses’’ does not encompass

small incumbent LECs. Out of an

abundance of caution, however, for

regulatory flexibility analysis purposes,

we will consider small incumbent LECs

within this analysis and use the term

‘‘small incumbent LECs’’ to refer to any

incumbent LECs that arguably might be

defined by the SBA as ‘‘small business

concerns.’’

58. Insofar as our rules apply to all

telecommunications carriers, they may

have an economic impact on a

substantial number of small businesses,

as well as on small incumbent LECs.

The rules may have an impact upon

new entrant LECs and small incumbent

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,

we estimate that 2,100 small entities

could be affected. We have derived this

estimate based on the following

analysis:

59. According to the 1992 Census of

Transportation, Communications, and

Utilities, there were approximately

3,469 firms with under 1,000 employees

operating under the Standard Industrial

Classification (SIC) category 481—

Telephone. See U.S. Dept. of Commerce,

Bureau of the Census, 1992 Census of

Transportation, Communications, and

Utilities (issued May 1995). Many of

these firms are the incumbent LECs and,

as noted above, would not satisfy the

SBA definition of a small business

because of their market dominance.

There were approximately 1,350 LECs

in 1995. Industry Analysis Division,

FCC, Carrier Locator: Interstate Service

Providers at Table 1 (Number of Carriers

Reporting by Type of Carrier and Type

of Revenue) (December 1995).

Subtracting this number from the total

number of firms leaves approximately

2,119 entities which potentially are

small businesses which may be affected.

This number contains various categories

of carriers, including small incumbent

LECs, competitive access providers,

cellular carriers, interexchange carriers,

mobile service carriers, operator service

providers, pay telephone operators, PCS

providers, covered SMR providers, and

resellers. Some of these carriers—

although not dominant—may not meet

the other requirement of the definition

of a small business because they are not

‘‘independently owned and operated.’’

See 15 U.S.C. § 632(a)(1). For example,

a PCS provider which is affiliated with

a long distance company with more

than 1,500 employees would not meet

the definition of a small business.

Another example would be if a cellular

provider is affiliated with a dominant

LEC. Thus, a reasonable estimate of the

number of ‘‘small businesses’’ affected

by this Order would be approximately

2,100.

60. Description of Projected

Reporting, Recordkeeping and Other

Compliance Requirements of the Rules:

The Third Report and Order concludes

that the costs raised in this proceeding

should be divided into three categories:

shared costs, carrier-specific costs

directly related to number portability,

and carrier-specific costs not directly

related to number portability. Shared

costs are those costs incurred on behalf

of the industry as a whole, such as the

costs of the regional database

administrator to build, operate, and

maintain the databases needed to

provide number portability. The Third

Report and Order concludes that all

telecommunications carriers with enduser revenues are required to pay an

allocated portion of the shared costs

incurred by the regional database

administrator in proportion to that

carrier’s international, interstate, and

intrastate end-user telecommunications

revenues for that region. While carriers

already track their sales to end-users for

billing purposes, they will need to

identify their regional end-user

revenues. That information, along with

periodic updates, must be provided to

the regional database administrator for

the appropriate allocation of shared

costs.

61. The Third Report and Order

requires incumbent LECs to maintain

records that detail both the nature and

specific amount of those carrier-specific

costs that are directly related to number

portability, and those carrier-specific

costs that are not directly related to

number portability. The Third Report

and Order directs carriers and interested

parties to file comments by August 3,

1998, and reply comments by

September 16, 1998, proposing ways to

apportion the different types of joint

costs between portability and

nonportability services. The Third

Report and Order requires incumbent

LECs that choose to recover their

carrier-specific costs directly related to

providing number portability to use

federally-tariffed end-user charges.

62. Steps Taken to Minimize Impact

on Small Entities Consistent with Stated

Objectives: The record in this

proceeding indicates that the need for

customers to change their telephone

numbers when changing local service

providers is a barrier to local

competition. Requiring number

portability, and ensuring that all

telecommunications carriers bear the

costs of number portability on a

competitively neutral basis, will make it

easier for competitive providers, many

of which may be small entities, to enter

the market. We have attempted to keep

regulatory burdens on all local exchange

carriers to a minimum to ensure that the

public receives the benefits of the

expeditious provision of service

provider number portability in

accordance with the statutory

requirements. For example, the Third

Report and Order concludes that all

telecommunications carriers with enduser revenues are required to pay an

allocated portion of the shared costs

incurred by the regional database

administrator in proportion to that

carrier’s international, interstate, and

intrastate end-user telecommunications

revenues for the region. Apportioning

shared costs in this way will further the

statutory purpose of ensuring that

carriers bear the costs of number

portability on a competitively neutral

basis. Furthermore, the Third Report

and Order concludes that regulated
35160 Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 /Rules and Regulations

carriers may identify that portion of

their joint costs that is demonstrably an

incremental cost that they incurred in

the provision of long-term number

portability. Allowing such identification

recognizes that number portability will

cause some carriers, including small

entities, to incur costs that they would

not ordinarily have incurred in

providing telecommunications services.

The Third Report and Order also

concludes that non-dominant carriers,

such as competitive LECs, CMRS

providers, and IXCs—some of which

will be small entities—are not subject to

extensive regulation and may recover

their number portability costs in any

manner otherwise consistent with

Commission rules and the

Communications Act.

63. Report to Congress: The

Commission shall send a copy of this

FRFA, along with this Third Report and

Order, in a report to Congress pursuant

to the Small Business Regulatory

Enforcement Fairness Act of 1996. A

copy of the Third Report and Order and

this FRFA (or summaries thereof) will

also be published in the Federal

Register and will be sent to the Chief

Counsel for Advocacy of the Small

Business Administration.

VII. Paperwork Reduction Act

64. This Third Report and Order

concludes that the costs raised in this

proceeding should be divided into three

categories: shared costs, carrier-specific

costs directly related to number

portability, and carrier-specific costs not

directly related to number portability.

Shared costs are those costs incurred on

behalf of the industry as a whole, such

as the costs of the regional database

administrator to build, operate, and

maintain the databases needed to

provide number portability. The Third

Report and Order concludes that all

telecommunications carriers with enduser revenues are required to pay an

allocated portion of the shared costs

incurred by the regional database

administrator in proportion to that

carrier’s international, interstate, and

intrastate end-user telecommunications

revenues for the region. While carriers

already track their sales to end-users for

billing purposes, they will need to

identify their regional end-user

revenues. That information, along with

periodic updates, must be provided to

the regional database administrator for

the appropriate allocation of shared

costs. The Third Report and Order also

requires incumbent LECs to maintain

records that detail both the nature and

specific amount of those carrier-specific

costs that are directly related to number

portability, and those carrier-specific

costs that are not directly related to

number portability. The Third Report

and Order requires incumbent LECs that

choose to recover their carrier-specific

costs directly related to providing

number portability to use federallytariffed end-user charges. These

information collection requirements are

contingent upon approval of the Office

of Management and Budget (OMB).

VIII. Ordering Clauses

65. Accordingly, it is ordered that

pursuant to authority contained in

sections 1, 2, 4(i), 201–205, 215,

251(b)(2), 251(e)(2), and 332 of the

Communications Act of 1934, as

amended, 47 U.S.C. §§ 151, 152, 154(i),

201–205, 215, 251(b)(2), 251(e)(2), and

332, Part 52 of the Commission’s rules

is amended as set forth.

66. It is further ordered that the

policies, rules and requirements set

forth herein are adopted.

67. It is further ordered that the

policies, rules and requirements

adopted herein shall be effective on July

29, 1998, except for §§ 52.32(b) and

52.33(a)(1), which contain information

collection requirements that are not

effective until approved by the Office of

Management and Budget. The

Commission will publish a document in

the Federal Register announcing the

effective date for those sections.

68. It is further ordered that the

Commission’s Office of Public Affairs,

References Operations Division, shall

send a copy of this Third Report and

Order, including the Final Regulatory

Flexibility Analysis, to the Chief

Counsel for Advocacy of the Small

Business Administration.

69. It is further ordered that

incumbent local exchange carriers may

file tariffs to take effect no earlier than

February 1, 1999, setting out the

monthly number portability charge they

intend to collect from their end users, in

accordance with this Order.

70. It is further ordered that pursuant

to authority contained in section 5(c)(1)

of the Communications Act of 1934, as

amended, 47 U.S.C. 155(c)(1), the Chief,

Common Carrier Bureau, is delegated

authority to determine appropriate

methods for apportioning joint costs

among portability and nonportability

services, and to issue any orders to

provide guidance to incumbent LECs

before they file their tariffs, which are

to take effect no earlier than February 1,

1999. To facilitate determination of the

portion of joint costs carriers shall treat

as carrier-specific costs directly related

to providing number portability, and to

facilitate evaluation of the cost support

that carriers will file in their federal

tariffs, carriers and interested parties

may file comments by August 3, 1998

proposing ways to apportion the

different types of joint costs. Carriers

and interested parties may file reply

comments by September 16, 1998.

List of Subjects in 47 CFR Part 52

Carrier-specific costs,

Communications common carriers,

Long-term number portability cost

recovery, Number portability, Regional

databases, Shared costs.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

Rule Changes

Accordingly, part 52 of Title 47 of the

Code of Federal Regulations is amended

to read as follows:

PART 52—NUMBERING

1. The authority for part 52 continues

to read as follows:

Authority: Sec. 1, 2, 4, 5, 48 Stat. 1066, as

amended; 47 U.S.C. § 151, 152, 154, 155, 251

unless otherwise noted. Interpret or apply

secs. 3, 4, 201–05, 207–09, 218, 225–27, 251–

52, 271 and 332, 48 Stat. 1070, as amended,

1077; 47 U.S.C. 153, 154, 201–05, 207–09,

218, 225–27, 251–52, 271 and 332 unless

otherwise noted.

2. Add § 52.32 to read as follows:

§ 52.32 Allocation of the shared costs of

long-term number portability

(a) The local number portability

administrator, as defined in § 52.21(h),

of each regional database, as defined in

§ 52.21(1), shall recover the shared costs

of long-term number portability

attributable to that regional database

from all telecommunications carriers

providing telecommunications service

in areas that regional database serves.

Pursuant to its duties under § 52.26, the

local number portability administrator

shall collect sufficient revenues to fund

the operation of the regional database

by:

(1) Assessing a $100 yearly

contribution on each

telecommunications carrier identified in

paragraph (a) introductory text that has

no intrastate, interstate, or international

end-user telecommunications revenue

derived from providing

telecommunications service in the areas

that regional database serves, and

(2) Assessing on each of the other

telecommunications carriers providing

telecommunications service in areas

that regional database serves, a charge

that recovers the remaining shared costs

of long-term number portability

attributable to that regional database in

proportion to the ratio of:

(i) The sum of the intrastate,

interstate, and international end-user
Federal Register / Vol. 63, No. 124 / Monday, June 29, 1998 /Rules and Regulations 35161

telecommunications revenues that such

telecommunications carrier derives from

providing telecommunications service

in the areas that regional database

serves, ii) to the sum of the intrastate,

interstate, and international end-user

telecommunications revenues that all

telecommunications carriers derive from

providing telecommunications service

in the areas that regional database

serves.

(b) The local number portability

administrator for a particular regional

database may require the

telecommunications carriers providing

telecommunications service in the areas

served by the regional database to

provide once a year that data necessary

to calculate, pursuant to paragraph (a)(1)

or (a)(2) of this section, those carriers’

portions of the shared costs of long-term

number portability attributable to that

regional database. All such

telecommunications carriers shall

comply with any such requests.

(c) Once a telecommunications carrier

has been allocated, pursuant to

paragraph (a)(1) or (a)(2) of this section,

its portion of the shared costs of longterm number portability attributable to a

regional database, the carrier shall treat

that portion as a carrier-specific cost

directly related to providing number

portability.

3. Add § 52.33 to read as follows:

§ 52.33 Recovery of carrier-specific costs

directly related to providing long-term

number portability.

(a) Incumbent local exchange carriers

may recover their carrier-specific costs

directly related to providing long-term

number portability by establishing in

tariffs filed with the Federal

Communications Commission a

monthly number-portability charge, as

specified in paragraph (a)(1), and a

number portability query-service charge,

as specified in paragraph (a)(2).

(1) The monthly number-portability

charge may take effect no earlier than

February 1, 1999, on a date the

incumbent local exchange carrier

selects, and may end no later than five

years after that date.

(i) An incumbent local exchange

carrier may assess each end user it

serves in the 100 largest metropolitan

statistical areas, and each end user it

serves from a number-portabilitycapable switch outside the 100 largest

metropolitan statistical areas, one

monthly number-portability charge per

line except that:

(A) One PBX trunk shall receive nine

monthly number-portability charges.

(B) One PRI ISDN line shall receive

five monthly number-portability

charges.

(C) Lifeline Assistance Program

customers shall not receive the monthly

number-portability charge.

(ii) An incumbent local exchange

carrier may assess on carriers that

purchase the incumbent local exchange

carrier’s switching ports as unbundled

network elements under section 251 of

the Communications Act, and resellers

of the incumbent local exchange

carrier’s local service, the same charges

as described in paragraph (a)(1)(A) of

this section, as if the incumbent local

exchange carrier were serving those

carriers’ end users.

(iii) An incumbent local exchange

carrier may not assess a monthly

number-portability charge for local

loops carriers purchase as unbundled

network elements under section 251.

(iv) The incumbent local exchange

carrier shall levelize the monthly

number-portability charge over five

years by setting a rate for the charge at

which the present value of the revenue

recovered by the charge does not exceed

the present value of the cost being

recovered, using a discount rate equal to

the rate of return on investment which

the Commission has prescribed for

interstate access services pursuant to

Part 65 of the Commission’s Rules.

(2) The number portability queryservice charge may recover only carrierspecific costs directly related to

providing long-term number portability

that the incumbent local exchange

carrier incurs to provide long-term

number portability query service to

carriers on a prearranged and default

basis.

(b) All telecommunications carriers

other than incumbent local exchange

carriers may recover their number

portability costs in any manner

consistent with applicable state and

federal laws and regulations.

[FR Doc. 98–17076 Filed 6–26–98; 8:45 am]

BILLING CODE 6712–01–U

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

50 CFR Part 285

[I.D. 061898D]

Atlantic Tuna Fisheries; Atlantic

Bluefin Tuna

AGENCY: National Marine Fisheries

Service (NMFS), National Oceanic and

Atmospheric Administration (NOAA),

Commerce.

ACTION: Catch limit adjustment.

SUMMARY: NMFS adjusts the daily catch

limit for the Angling category fishery for

Atlantic bluefin tuna (BFT) in the

southern area (Delaware and states

south) to one fish per angler, with a

maximum of three fish per vessel, from

the school size class and one fish per

vessel from the large school or small

medium size class. The duration of the

catch limit adjustment is limited to the

period of June 26 through July 27, 1998,

whereupon the limit will revert to one

BFT from the school, large school, or

small medium size class per vessel per

day. This action is being taken to

provide increased fishing opportunities

in the southern area without risking

overharvest of this category.

DATES: The daily catch limit adjustment

is effective 1:00 a.m., local time, June

26, 1998, until 11:30 p.m., local time,

July 27, 1998.

FOR FURTHER INFORMATION CONTACT: Pat

Scida, 978–281–9260, or Sarah

McLaughlin, 301–713–2347.

SUPPLEMENTARY INFORMATION:

Regulations implemented under the

authority of the Atlantic Tunas

Convention Act (16 U.S.C. 971 et seq.)

governing the harvest of BFT by persons

and vessels subject to U.S. jurisdiction

are found at 50 CFR part 285.

Implementing regulations for the

Atlantic tuna fisheries at § 285.24 allow

for adjustments to the daily catch limits

in order to provide for maximum

utilization of the quota spread over the

longest possible period of time. The

Assistant Administrator for Fisheries,

NOAA, may increase or reduce the per

angler catch limit for any size class BFT

or may change the per angler limit to a

per boat limit or a per boat limit to a per

angler limit.

NMFS is responsible for

implementing the International

Commission for the Conservation of

Atlantic Tunas recommendation to limit

the annual catch of school bluefin to 8

percent by weight of the total annual

domestic quota, i.e., 1,344 metric tons

(mt). In addition, it is NMFS’ goal to

increase the geographical and temporal

distribution of data collection and

fishing opportunities for all fishermen

in the Angling category.

Since January 1, 1998, NMFS has

maintained the daily catch limit at one

BFT per vessel to ensure that the

southern area quota would not be

exceeded and to provide increased

fishing opportunities throughout the

southern area. Preliminary estimates of

southern area landings for January

through May 1998 indicate that no more

than 5 mt of school BFT (subquota of 51

mt), no more than 10 mt of large school/

small medium BFT (subquota of 72 mt),