[Federal Register Volume 70, Number 197 (Thursday, October 13, 2005)]
[Proposed Rules]
[Pages 59704-59710]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-20607]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[ET Docket No. 04-295; RM-10865; FCC 05-153]


Communications Assistance for Law Enforcement Act and Broadband 
Access and Services

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Communications Commission (Commission) initiates 
this rulemaking to explore whether the Communications Assistance for 
Law Enforcement Act (CALEA) should apply to providers of voice over 
Internet Protocol (VoIP) services that are not interconnected, meaning 
VoIP services that do not allow users generally to receive calls 
originating from and to terminate calls to the public switched 
telephone network (PSTN). This rulemaking will also explore the 
appropriateness of requiring something less than full CALEA compliance 
for certain classes or categories of providers of facilities-based 
broadband Internet access services. This rulemaking will enhance public 
safety and ensure that the surveillance needs of law enforcement 
agencies continue to be met as Internet-based communications 
technologies proliferate.

DATES: Comments are due on or before November 14, 2005, and reply 
comments are due on or before December 12, 2005.

ADDRESSES: You may submit comments, identified by ET Docket No. 04-295, 
by any of the following methods:

[[Page 59705]]

    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Agency Web Site: http://www.fcc.gov. Follow the 
instructions for submitting comments on http://www.fcc.gov/cgb/ecfs/.
    <bullet> E-mail: <a href="/cdn-cgi/l/email-protection#b5d0d6d3c6f5d3d6d69bd2dac3"><span class="__cf_email__" data-cfemail="c9acaaafba89afaaaae7aea6bf">[email protected]</span></a>, and include the following words in 
the body of the message, ``get form.'' A sample form and directions 
will be sent in response.
    <bullet> Mail: Federal Communications Commission, 445 12th Street, 
SW., Washington, DC 20554.
    <bullet> Hand Delivery/Courier: 236 Massachusetts Avenue, NE., 
Suite 110, Washington, DC 20002.
    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking. All comments received will be 
posted without change to http://www.fcc.gov/cgb/ecfs/, including any 
personal information provided. For detailed instructions on submitting 
comments and additional information on the rulemaking process, see the 
``Public Participation'' heading of the SUPPLEMENTARY INFORMATION 
section of this document.
    Docket: For access to the docket to read background documents or 
comments received, go http://www.fcc.gov/cgb/ecfs/.

FOR FURTHER INFORMATION CONTACT: Carol Simpson, Attorney-Advisor, 
Competition Policy Division, Wireline Competition Bureau, at (202) 418-
2391.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Further Notice of Proposed Rulemaking in ET Docket No. 04-295, FCC 05-
153, adopted August 5, 2005, and released September 23, 2005. The 
complete text of this FNPRM is available for inspection and copying 
during normal business hours in the FCC Reference Information Center, 
Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC, 20554. 
This document may also be purchased from the Commission's duplicating 
contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room 
CY-B402, Washington, DC 20554, telephone (800) 378-3160 or (202) 863-
2893, facsimile (202) 863-2898, or via e-mail at http://www.bcpiweb.com. It is also available on the Commission's Web site at 
http://www.fcc.gov.

Public Participation

    Comments may be filed using: (1) The Commission's Electronic 
Comment Filing System (ECFS), (2) the Federal Government's eRulemaking 
Portal, or (3) by filing paper copies. See Electronic Filing of 
Documents in Rulemaking Proceedings, 63 FR 24121, May 1, 1998.
    <bullet> Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ 
or the Federal eRulemaking Portal: http://www.regulations.gov. Filers 
should follow the instructions provided on the Web site for submitting 
comments.
    <bullet> For ECFS filers, if multiple docket or rulemaking numbers 
appear in the caption of this proceeding, filers must transmit one 
electronic copy of the comments for each docket or rulemaking number 
referenced in the caption. In completing the transmittal screen, filers 
should include their full name, U.S. Postal Service mailing address, 
and the applicable docket or rulemaking number. Parties may also submit 
an electronic comment by Internet e-mail. To get filing instructions, 
filers should send an e-mail to <a href="/cdn-cgi/l/email-protection#4124222732012722226f262e37"><span class="__cf_email__" data-cfemail="c4a1a7a2b784a2a7a7eaa3abb2">[email protected]</span></a>, and include the following 
words in the body of the message, ``get form.'' A sample form and 
directions will be sent in response.
    <bullet> Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. If more than one 
docket or rulemaking number appears in the caption of this proceeding, 
filers must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail (although we continue to experience delays in receiving U.S. 
Postal Service mail). All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
    <bullet> The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building.
    <bullet> Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    <bullet> U.S. Postal Service first-class, Express, and Priority 
mail should be addressed to 445 12th Street, SW., Washington, DC 20554.
    All filings must be addressed to the Commission's Secretary, 
Marlene H. Dortch, Office of the Secretary, Federal Communications 
Commission, 445 12th Street, SW., Washington, DC 20554. Parties should 
also send a copy of their filings to Janice Myles, Competition Policy 
Division, Wireline Competition Bureau, Federal Communications 
Commission, Room 5-C140, 445 12th Street, SW., Washington, DC 20554, or 
by e-mail to <a href="/cdn-cgi/l/email-protection#afc5cec1c6ccca81c2d6c3cadcefc9cccc81c8c0d9"><span class="__cf_email__" data-cfemail="c4aea5aaada7a1eaa9bda8a1b784a2a7a7eaa3abb2">[email protected]</span></a>. Parties shall also serve one copy 
with the Commission's copy contractor, Best Copy and Printing, Inc. 
(BCPI), Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 
20554, (202) 488-5300, or via e-mail to <a href="/cdn-cgi/l/email-protection#65030606250706150c1200074b060a08"><span class="__cf_email__" data-cfemail="73151010331110031a0416115d101c1e">[email protected]</span></a>.

Synopsis of the Further Notice of Proposed Rulemaking

    1. In this Further Notice of Proposed Rulemaking (FNPRM), we seek 
comment on two aspects of the conclusions reached in the Order 
accompanying this FNPRM, which is published elsewhere in this issue of 
the Federal Register. In the Order, we conclude that providers of 
facilities-based broadband Internet access services and providers of 
interconnected VoIP services--meaning VoIP service that allows a user 
generally to receive calls originating from and to terminate calls to 
the PSTN--must comply with CALEA. In the FNPRM, we first ask, with 
respect to interconnected VoIP, whether we should extend CALEA 
obligations to providers of other types of VoIP services. Specifically, 
are there any types of ``managed'' VoIP service that are not covered by 
today's Order, but that should be subject to CALEA?
    2. Second, some commenters in this proceeding have argued that 
certain classes or categories of facilities-based broadband Internet 
access providers--notably small and rural providers and providers of 
broadband networks for educational and research institutions--should be 
exempt from CALEA. We reach no conclusions in the Order accompanying 
this FNPRM about the merits of these arguments, as we believe that 
additional information is necessary before reaching a decision. In this 
FNPRM, we seek comment on what procedures, if any, the Commission 
should adopt to implement CALEA's exemption provision. In addition, we 
seek comment on the appropriateness of requiring something less than 
full CALEA compliance for certain classes or categories of providers, 
as well as the best way to impose different compliance standards.
    3. Section 102(8)(C)(ii) of CALEA provides the Commission with 
authority to grant exemptions from CALEA for entities that would 
otherwise fall within the definition of ``telecommunications carrier'' 
under section 102(8)(A) or (B). Specifically, section 102(8)(C)(ii) 
excludes from CALEA's definition of

[[Page 59706]]

telecommunications carrier ``any class or category of 
telecommunications carriers that the Commission exempts by rule after 
consultation with the Attorney General.'' The Commission has never 
exempted telecommunications carriers under this provision, nor has it 
adopted specific procedures for doing so. We therefore seek comment on 
what procedures, if any, the Commission should adopt for exempting 
entities under section 102(8)(C)(ii). In particular, we seek comment on 
how the phrase ``by rule'' should be interpreted. In addition, CALEA's 
exemption provision requires ``consultation with the Attorney 
General.'' The Commission has implemented other statutory provisions 
requiring consultation with the Attorney General and we ask commenters 
to consider whether we should interpret ``consultation'' for purposes 
of CALEA in a similar manner considering the unique expertise of the 
Attorney General's office in combating crime, supporting homeland 
security, and conducting electronic surveillance.
    4. To the extent that the Commission determines that a class or 
category of providers is exempt under section 102(8)(C)(ii), does that 
mean the class or category of telecommunications carriers is exempted 
indefinitely from CALEA compliance? Can or should the Commission limit 
the exemption for a certain period of time, requiring exempted entities 
to demonstrate that continued exemption is warranted at some future 
time? Commenters should consider these and any other issues that may be 
relevant to granting an exemption request.
    5. Commenters addressing exemptions from CALEA understandably 
focused on section 102(8) of CALEA, which authorizes the Commission to 
exclude providers from the definition of telecommunications carrier. 
But our examination of the record has made us curious about the 
possibility of taking a different approach to this issue. Specifically, 
we seek comment on whether it might be preferable to define the 
requirements of CALEA differently for certain classes of providers, 
rather than exempting those providers from CALEA entirely. Does the 
Commission have authority to create different compliance requirements 
for different types of providers? Would this approach be consistent 
with the language of the statute? Would it satisfy the needs of law 
enforcement, as well as the classes of providers seeking exemptions? 
What advantages and disadvantages would this approach have compared to 
granting exemptions under section 102(8)(C)?

Initial Paperwork Reduction Act of 1995 Analysis

    6. This document does not contain proposed information 
collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. In addition, therefore, it does not contain any new 
or modified ``information collection burden for small business concerns 
with fewer than 25 employees,'' pursuant to the Small Business 
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 
3506(c)(4).

Initial Regulatory Flexibility Analysis

    7. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared the present Initial 
Regulatory Flexibility Analysis (IRFA) of the possible significant 
economic impact on small entities that might result from today's FNPRM. 
Written public comments are requested on this IRFA. Comments must be 
identified as responses to the IRFA and must be filed by the deadlines 
for comments on the FNPRM provided above. The Commission will send a 
copy of the FNPRM, including this IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration.

1. Need for, and Objectives of, the Proposed Rules

    8. In the FNPRM, we seek comment on two aspects of the conclusions 
reached in the Order accompanying this FNPRM. First, with respect to 
interconnected VoIP, we seek comment on whether we should extend CALEA 
obligations to providers of other types of VoIP services. Specifically, 
we ask whether there any types of ``managed'' VoIP service that are not 
covered by today's Order, but that should be subject to CALEA. Second, 
some commenters in this proceeding have argued that certain classes or 
categories of facilities-based broadband Internet access providers--
notably small and rural providers and providers of broadband networks 
for educational and research institutions--should be exempt from CALEA. 
We reach no conclusions in today's Order about the merits of these 
arguments, as we believe that additional information is necessary 
before reaching a decision. However, the Commission seeks comment on 
what procedures, if any, the Commission should adopt to implement 
CALEA's exemption provision. In addition, the Commission seeks comment 
on the appropriateness of requiring something less than full CALEA 
compliance for certain classes or categories of providers, as well as 
the best way to impose different compliance standards. Our objective is 
to adopt streamlined exemption procedures, which will ultimately 
benefit both large and small entities alike and is also a concerted 
effort by the Commission to adopt any other rules that will reduce 
CALEA burdens on small entities or other categories of 
telecommunications carriers.

2. Legal Basis

    9. The legal basis for any action that may be taken pursuant to the 
FNPRM is contained in sections 1, 4(i), 7(a), 229, 301, 303, 332, and 
410 of the Communications Act of 1934, as amended, and section 102 of 
the Communications Assistance for Law Enforcement Act, 18 U.S.C. 1001.

3. Description and Estimate of the Number of Small Entities To Which 
the Proposed Rules May Apply

    10. The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules. The RFA generally defines the term 
``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. 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). This FNPRM might, in theory, reach a variety of 
industries; out of an abundance of caution, we have attempted to cast a 
wide net in describing categories of potentially affected small 
entities. We would appreciate any comment on the extent to which the 
various entities might be directly affected by our action.
a. Telecommunications Service Entities
    11. Wireline Carriers and Service Providers. We have included small 
incumbent local exchange carriers in this present RFA analysis. As 
noted above, a ``small business'' under the RFA is one that, inter 
alia, meets the pertinent small business size standard (e.g., a 
telephone communications business having 1,500 or fewer employees), and 
``is not dominant in its field of operation.'' The SBA's Office of 
Advocacy contends that, for RFA purposes, small incumbent local 
exchange carriers are not dominant in their field of operation because 
any such dominance is not ``national'' in scope. We have therefore 
included small

[[Page 59707]]

incumbent local exchange carriers in this RFA analysis, although we 
emphasize that this RFA action has no effect on Commission analyses and 
determinations in other, non-RFA contexts.
    12. Incumbent Local Exchange Carriers (LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. According to Commission 
data, 1,303 carriers have reported that they are engaged in the 
provision of incumbent local exchange services. Of these 1,303 
carriers, an estimated 1,020 have 1,500 or fewer employees and 283 have 
more than 1,500 employees. Consequently, the Commission estimates that 
most providers of incumbent local exchange service are small businesses 
that may be affected by our action. In addition, limited preliminary 
census data for 2002 indicate that the total number of wired 
communications carriers increased approximately 34 percent from 1997 to 
2002.
    13. Competitive Local Exchange Carriers, Competitive Access 
Providers (CAPs), ``Shared-Tenant Service Providers,'' and ``Other 
Local Service Providers.'' Neither the Commission nor the SBA has 
developed a small business size standard specifically for these service 
providers. The appropriate size standard under SBA rules is for the 
category Wired Telecommunications Carriers. Under that size standard, 
such a business is small if it has 1,500 or fewer employees. According 
to Commission data, 769 carriers have reported that they are engaged in 
the provision of either competitive access provider services or 
competitive local exchange carrier services. Of these 769 carriers, an 
estimated 676 have 1,500 or fewer employees and 93 have more than 1,500 
employees. In addition, 12 carriers have reported that they are 
``Shared-Tenant Service Providers,'' and all 12 are estimated to have 
1,500 or fewer employees. In addition, 39 carriers have reported that 
they are ``Other Local Service Providers.'' Of the 39, an estimated 38 
have 1,500 or fewer employees and one has more than 1,500 employees. 
Consequently, the Commission estimates that most providers of 
competitive local exchange service, competitive access providers, 
``Shared-Tenant Service Providers,'' and ``Other Local Service 
Providers'' are small entities that may be affected by our action. In 
addition, limited preliminary census data for 2002 indicate that the 
total number of wired communications carriers increased approximately 
34 percent from 1997 to 2002.
    14. Payphone Service Providers (PSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
payphone services providers. The appropriate size standard under SBA 
rules is for the category Wired Telecommunications Carriers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. According to Commission data, 654 carriers have reported 
that they are engaged in the provision of payphone services. Of these, 
an estimated 652 have 1,500 or fewer employees and two have more than 
1,500 employees. Consequently, the Commission estimates that the 
majority of payphone service providers are small entities that may be 
affected by our action. In addition, limited preliminary census data 
for 2002 indicate that the total number of wired communications 
carriers increased approximately 34 percent from 1997 to 2002.
    15. Interexchange Carriers (IXCs). Neither the Commission nor the 
SBA has developed a small business size standard specifically for 
providers of interexchange services. The appropriate size standard 
under SBA rules is for the category Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer employees. According to Commission data, 316 carriers have 
reported that they are engaged in the provision of interexchange 
service. Of these, an estimated 292 have 1,500 or fewer employees and 
24 have more than 1,500 employees. Consequently, the Commission 
estimates that the majority of IXCs are small entities that may be 
affected by our action. In addition, limited preliminary census data 
for 2002 indicate that the total number of wired communications 
carriers increased approximately 34 percent from 1997 to 2002.
    16. Operator Service Providers (OSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
operator service providers. The appropriate size standard under SBA 
rules is for the category Wired Telecommunications Carriers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. According to Commission data, 23 carriers have reported that 
they are engaged in the provision of operator services. Of these, an 
estimated 20 have 1,500 or fewer employees and three have more than 
1,500 employees. Consequently, the Commission estimates that the 
majority of OSPs are small entities that may be affected by our action. 
In addition, limited preliminary census data for 2002 indicate that the 
total number of wired communications carriers increased approximately 
34 percent from 1997 to 2002.
    17. Prepaid Calling Card Providers. Neither the Commission nor the 
SBA has developed a small business size standard specifically for 
prepaid calling card providers. The appropriate size standard under SBA 
rules is for the category Telecommunications Resellers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 89 carriers have reported that they are 
engaged in the provision of prepaid calling cards. Of these, 88 are 
estimated to have 1,500 or fewer employees and one has more than 1,500 
employees. Consequently, the Commission estimates that all or the 
majority of prepaid calling card providers are small entities that may 
be affected by our action.
    18. Wireless Telecommunications Service Providers. Below, for those 
services subject to auctions, we note that, as a general matter, the 
number of winning bidders that qualify as small businesses at the close 
of an auction does not necessarily represent the number of small 
businesses currently in service. Also, the Commission does not 
generally track subsequent business size unless, in the context of 
assignments or transfers, unjust enrichment issues are implicated.
    19. Wireless Service Providers. The SBA has developed a small 
business size standard for wireless firms within the two broad economic 
census categories of ``Paging'' and ``Cellular and Other Wireless 
Telecommunications.'' Under both SBA categories, a wireless business is 
small if it has 1,500 or fewer employees. For the census category of 
Paging, Census Bureau data for 1997 show that there were 1,320 firms in 
this category, total, that operated for the entire year. Of this total, 
1,303 firms had employment of 999 or fewer employees, and an additional 
17 firms had employment of 1,000 employees or more. Thus, under this 
category and associated small business size standard, the majority of 
firms can be considered small. For the census category Cellular and 
Other Wireless Telecommunications, Census Bureau data for 1997 show 
that there were 977 firms in this category, total, that operated for 
the entire year. Of this total, 965 firms had employment of 999 or 
fewer employees, and an additional

[[Page 59708]]

12 firms had employment of 1,000 employees or more. Thus, under this 
second category and size standard, the majority of firms can, again, be 
considered small. In addition, limited preliminary census data for 2002 
indicate that the total number of paging providers decreased 
approximately 51 percent from 1997 to 2002. In addition, limited 
preliminary census data for 2002 indicate that the total number of 
cellular and other wireless telecommunications carriers increased 
approximately 321 percent from 1997 to 2002.
    20. Cellular Licensees. The SBA has developed a small business size 
standard for wireless firms within the broad economic census category 
``Cellular and Other Wireless Telecommunications.'' Under this SBA 
category, a wireless business is small if it has 1,500 or fewer 
employees. For the census category Cellular and Other Wireless 
Telecommunications firms, Census Bureau data for 1997 show that there 
were 977 firms in this category, total, that operated for the entire 
year. Of this total, 965 firms had employment of 999 or fewer 
employees, and an additional 12 firms had employment of 1,000 employees 
or more. Thus, under this category and size standard, the great 
majority of firms can be considered small. Also, according to 
Commission data, 437 carriers reported that they were engaged in the 
provision of cellular service, Personal Communications Service (PCS), 
or Specialized Mobile Radio (SMR) Telephony services, which are placed 
together in the data. We have estimated that 260 of these are small, 
under the SBA small business size standard.
    21. Common Carrier Paging. The SBA has developed a small business 
size standard for wireless firms within the broad economic census 
category, ``Cellular and Other Wireless Telecommunications.'' Under 
this SBA category, a wireless business is small if it has 1,500 or 
fewer employees. For the census category of Paging, Census Bureau data 
for 1997 show that there were 1,320 firms in this category, total, that 
operated for the entire year. Of this total, 1,303 firms had employment 
of 999 or fewer employees, and an additional 17 firms had employment of 
1,000 employees or more. Thus, under this category and associated small 
business size standard, the majority of firms can be considered small. 
In the Paging Third Report and Order, we developed a small business 
size standard for ``small businesses'' and ``very small businesses'' 
for purposes of determining their eligibility for special provisions 
such as bidding credits and installment payments. A ``small business'' 
is an entity that, together with its affiliates and controlling 
principals, has average gross revenues not exceeding $15 million for 
the preceding three years. Additionally, a ``very small business'' is 
an entity that, together with its affiliates and controlling 
principals, has average gross revenues that are not more than $3 
million for the preceding three years. The SBA has approved these small 
business size standards. An auction of Metropolitan Economic Area 
licenses commenced on February 24, 2000, and closed on March 2, 2000. 
Of the 985 licenses auctioned, 440 were sold. Fifty-seven companies 
claiming small business status won. Also, according to Commission data, 
375 carriers reported that they were engaged in the provision of paging 
and messaging services. Of those, we estimate that 370 are small, under 
the SBA-approved small business size standard.
    22. Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation, and digital audio broadcasting satellite 
uses. The Commission established small business size standards for the 
wireless communications services (WCS) auction. A ``small business'' is 
an entity with average gross revenues of $40 million for each of the 
three preceding years, and a ``very small business'' is an entity with 
average gross revenues of $15 million for each of the three preceding 
years. The SBA has approved these small business size standards. The 
Commission auctioned geographic area licenses in the WCS service. In 
the auction, there were seven winning bidders that qualified as ``very 
small business'' entities, and one that qualified as a ``small 
business'' entity.
    23. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services (PCS), and specialized mobile radio 
(SMR) telephony carriers. As noted earlier, the SBA has developed a 
small business size standard for ``Cellular and Other Wireless 
Telecommunications'' services. Under that SBA small business size 
standard, a business is small if it has 1,500 or fewer employees. 
According to Commission data, 437 carriers reported that they were 
engaged in the provision of wireless telephony. We have estimated that 
260 of these are small under the SBA small business size standard.
    24. Broadband Personal Communications Service. The broadband 
Personal Communications Service (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 $40 
million or less 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 its affiliates, has average 
gross revenues of not more than $15 million for the preceding three 
calendar years.'' These standards defining ``small entity'' in the 
context of broadband PCS auctions have been approved by the SBA. No 
small businesses, within the SBA-approved small business size standards 
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. On March 23, 
1999, the Commission re-auctioned 347 C, D, E, and F Block licenses. 
There were 48 small business winning bidders. On January 26, 2001, the 
Commission completed the auction of 422 C and F Broadband PCS licenses 
in Auction No. 35. Of the 35 winning bidders in this auction, 29 
qualified as ``small'' or ``very small'' businesses. Subsequent events, 
concerning Auction 35, including judicial and agency determinations, 
resulted in a total of 163 C and F Block licenses being available for 
grant.
b. Cable Operators
    25. Cable and Other Program Distribution. This category includes 
cable systems operators, closed circuit television services, direct 
broadcast satellite services, multipoint distribution systems, 
satellite master antenna systems, and subscription television services. 
The SBA has developed small business size standard for this census 
category, which includes all such companies generating $12.5 million or 
less in revenue annually. According to Census Bureau data for 1997, 
there were a total of 1,311 firms in this category, total, that had 
operated for the entire year. Of this total, 1,180 firms had annual 
receipts of under $10 million and an additional 52 firms had receipts 
of $10 million or more but less than $25 million. Consequently, the 
Commission estimates that the majority of providers in this service 
category are small businesses that may be affected by the rules and 
policies adopted herein.
    26. Cable System Operators (Rate Regulation Standard). The 
Commission has developed its own small business size standard for cable 
system operators, for purposes of rate regulation. Under

[[Page 59709]]

the Commission's rules, a ``small cable company'' is one serving fewer 
than 400,000 subscribers nationwide. The most recent estimates indicate 
that there were 1,439 cable operators who 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 now fewer than 1,439 small entity cable system operators that 
may be affected by the rules and policies adopted herein.
    27. Cable System Operators (Telecom Act Standard). The 
Communications Act of 1934, as amended, also contains a size standard 
for small cable system operators, 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.'' The Commission has determined that 
there are 67,700,000 subscribers in the United States. Therefore, an 
operator serving fewer than 677,000 subscribers shall be deemed a small 
operator, if its annual revenues, when combined with the total annual 
revenues of all its affiliates, do not exceed $250 million in the 
aggregate. Based on available data, the Commission estimates that the 
number of cable operators serving 677,000 subscribers or fewer, totals 
1,450. The Commission neither requests nor collects information on 
whether cable system operators are affiliated with entities whose gross 
annual revenues exceed $250 million, and therefore are unable, at this 
time, to estimate more accurately the number of cable system operators 
that would qualify as small cable operators under the size standard 
contained in the Communications Act of 1934.
c. Internet Service Providers
    28. Internet Service Providers. The SBA has developed a small 
business size standard for Internet Service Providers (ISPs). ISPs 
``provide clients access to the Internet and generally provide related 
services such as web hosting, web page designing, and hardware or 
software consulting related to Internet connectivity.'' Under the SBA 
size standard, such a business is small if it has average annual 
receipts of $21 million or less. According to Census Bureau data for 
1997, there were 2,751 firms in this category that operated for the 
entire year. Of these, 2,659 firms had annual receipts of under $10 
million, and an additional 67 firms had receipts of between $10 million 
and $24,999,999. Consequently, we estimate that the majority of these 
firms are small entities that may be affected by our action. In 
addition, limited preliminary census data for 2002 indicate that the 
total number of Internet service providers increased approximately five 
percent from 1997 to 2002.

4. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements

    29. In the FNPRM, we seek comment on whether we should extend CALEA 
obligations to providers of other types of VoIP services. We also seek 
comment on what procedures, if any, the Commission should adopt to 
implement CALEA's exemption provision. In addition, we seek comment on 
the appropriateness of requiring something less than full CALEA 
compliance for certain classes or categories of providers, as well as 
the best way to impose different compliance standards. These proposals 
do not impose reporting or recordkeeping requirements that would be 
subject to the Paperwork Reduction Act. Therefore, we have not 
attempted here to provide an estimate in terms of burden hours. Rather, 
we are asking commenters to provide the Commission with reliable 
information and comments on any costs and burdens on small entities.

5. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    30. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include (among others) the following four alternatives: (1) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    31. In the FNPRM, with respect to interconnected VoIP, we seek 
comment on whether we should extend CALEA obligations to providers of 
other types of VoIP services. Specifically, we invite comment as to 
whether there are any types of ``managed'' VoIP service that are not 
covered by today's Order, but that should be subject to CALEA. For 
purposes of this IRFA, we specifically seek comment from small entities 
on these issues, in particular, on the extent to which any ``managed'' 
VoIP service that the Commission may find subject to CALEA could impact 
them economically.
    32. In the FNPRM, the Commission also considers and asks questions 
about two alternative approaches to requiring full CALEA compliance to 
address the impact of CALEA applicability on small entities. First, it 
addresses an exemption process. Next, it addresses the possibility of 
requiring something less than full CALEA compliance for small entities. 
Finally, it asks commenters to propose any other alternatives that have 
not been considered or identified.
    33. The FNPRM seeks comment on what procedures, if any, the 
Commission should adopt to implement CALEA's exemption provision. 
Section 102(8)(C)(ii) excludes from CALEA's definition of 
telecommunications carrier ``any class or category of 
telecommunications carriers that the Commission exempts by rule after 
consultation with the Attorney General.'' In addition, we seek comment 
on the appropriateness of requiring something less than full CALEA 
compliance for certain classes or categories of providers, as well as 
the best way to impose different compliance standards. Our goal is to 
adopt streamlined exemption procedures or any other rules that will 
ultimately assist the Commission in reducing burdens on small entities 
or other categories of telecommunications carriers.
    34. With respect to the exemption provision, the Commission has 
never exempted telecommunications carriers under this provision, nor 
has it adopted specific procedures for doing so. We seek comment on 
what procedures, if any, the Commission should adopt for exempting 
entities under section 102(8)(C)(ii). In the FNPRM, the Commission 
evaluates how to properly interpret the provision. We seek comment, for 
example, on how the phrase ``by rule'' should be interpreted, as we 
recognize that the Commission's interpretation of this phrase could 
create burdens for small entities.
    35. In addition, we seek comment on the appropriateness of 
requiring something less than full CALEA compliance for certain classes 
or categories of providers, as well as the best way to impose different 
compliance standards. The Commission seeks comment on significant 
alternatives and recommends that small entities file comments in 
response to the FNPRM. We anticipate that the record will be developed 
concerning alternative ways

[[Page 59710]]

in which the Commission could lesson the burden on classes of carrier 
or entities and will most likely benefit small entities more, relative 
to large entities.

6. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    36. None.

Ordering Clauses

    37. It is ordered that that pursuant to sections 1, 4(i), 7(a), 
229, 301, 303, 332, and 410 of the Communications Act of 1934, as 
amended, and section 102 of the Communications Assistance for Law 
Enforcement Act, 18 U.S.C. 1001, the Further Notice of Proposed 
Rulemaking in ET Docket No. 04-295 is adopted.
    38. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Further Notice of Proposed Rulemaking, including the 
Initial Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 05-20607 Filed 10-12-05; 8:45 am]
BILLING CODE 6712-01-P


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