Deployment of Wireline Services Offering Advanced Telecommunications Capability

AGENCY:

Federal Communications Commission.

ACTION:

Final rule.

SUMMARY:

This document finds that federally mandated limits on the time period for which incumbent local exchange carriers (LECs) and competitive LECs may reserve potential collocation space for future use are not warranted. It further concludes that disputes regarding the conversion of virtual collocation arrangements to physical collocation arrangements should be addressed on a case-by-case basis. Finally, it determines that, although point-of-termination bays (POT bays) constitute a technically feasible point of interconnection, an incumbent LEC may not compel collocators to interconnect through them.

DATES:

Effective October 30, 2002.

FOR FURTHER INFORMATION CONTACT:

John Adams, Attorney-Advisor, Competition Policy Division, Wireline Competition Bureau, at (202) 418-1580, or via the Internet at jkadams@fcc.gov.

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Fifth Report and Order in CC Docket No. 98-147, FCC 02-234, adopted August 14, 2002, and released September 4, 2002. The complete text of this Report and Order 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, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com. It is also available on the Commission's Web site at http://www.fcc.gov.

Synopsis of the Fifth Report and Order

1. Background. In the Second Further Notice (65 FR 54527, September 8, 2000), the Commission sought comment on several collocation-related issues that the Commission has not yet addressed. These issues included whether the Commission should adopt a national policy limiting the period for which potential collocation space can be reserved for future use. Parties to this proceeding asked that the Commission clarify its policies regarding the conversion of virtual collocation arrangements to physical arrangements and regarding the use of POT bays with physical collocation arrangements.

2. Space Reservation Policies. In the Second Further Notice, the Commission stated that the primary responsibility for resolving space reservation disputes lay with the states and therefore declined to adopt specific space reservation period at that time. The Commission, however, requested comment as to whether it should adopt a national space reservation policy that would apply where a state does not set its own standard. Based on the record, the Commission is not convinced that national space reservation policy is needed at this time to ensure that requesting carriers obtain reasonable and nondiscriminatory access to potential collocation space. The Commission states that, because a variety of factors can impact the availability of central office space, the states continue to be in the best position to monitor this situation and adopt policies that best address the particular space reservation issues in that state. The Commission also states that to the extent the state commissions have not adopted specific periods for space reservations, space reservation disputes should be resolved on a case-by-case basis.

3. Conversion of Virtual Arrangements to Physical Arrangements. The Commission states that it would not require, as a general matter, that incumbent local exchange carriers (incumbent LECs) permit in-place conversions of virtual collocation arrangements to physical collocation arrangements. The Commission concludes that a blanket rule might result in some physical arrangements occupying space that would otherwise be unsuited for physical collocation. At the same time, the Commission recognizes that, under section 251(c)(6) of the Communications Act, an incumbent LEC must provide for physical collocation on terms and conditions that are just, reasonable, and nondiscriminatory. The Commission determines that any disputes regarding whether an incumbent LEC complies with this standard in evaluating requests to move a virtual arrangement to part of the incumbent LEC's premises where physical collocation is allowed should be addressed on a case-by-case basis.

4. POT Bays. In the Advanced Services First Report and Order (63 FR 4420, August 18, 1998), the Commission adopted §51.323(k)(2) of the Commission's rules, which provides that “[a]n incumbent LEC may not require competitors to use an intermediate interconnection arrangement in lieu of direct connection to the incumbent's network if technically feasible.” In the Fifth Report and Order, the Commission states that, by definition, a POT bay is not an “intermediate interconnection arrangement,” but rather simply a convenient demarcation point between the incumbent LEC's facilities and those of the collocator. The Commission therefore concludes that the prohibition against intermediate interconnection arrangements in § 51.323(k)(2) does not apply to POT bays. The Commission notes, however, that the Communications Act mandates that incumbent LECs allow competitive LECs to interconnect at “any technically feasible point.” The Commission therefore concludes that while incumbent LECs may offer interconnection through POT bays as one technically feasible method of interconnection with a collocated competitive LEC, they may not unilaterally require competitive LECs to interconnect through such an arrangement where other technically feasible points of interconnection are available. The Commission notes, however, that although an incumbent LEC cannot unilaterally dictate the point of interconnection, this does not mean that a competitive LEC can dictate how the interconnection is implemented. The Commission states that these matters are typically subject to negotiations between the parties.

Supplemental Final Regulatory Flexibility Act Analysis

5. As required by the Regulatory Flexibility Act (RFA), a Supplemental Initial Regulatory Flexibility Analysis (Supplemental IRFA) was incorporated in the Order on Reconsideration and Second Further Notice of Proposed Rulemaking (Order on Reconsideration and Second Further Notice) in CC Docket 98-147. The Commission sought written public comment on the proposals in the Second Further Notice, including comment on the Supplemental IRFA. The Commission received comments from The Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO) specifically directed toward the Supplemental IRFA. These comments were previously addressed fully in the Final Regulatory Flexibility Analysis (FRFA) included as part of the Collocation Remand Order (66 FR 43516, August 20, 2001), and are addressed only briefly in The Supplemental Final Regulatory Flexibility Analysis (Supplemental FRFA) conforms to the RFA.

I. Need for, and Objectives of, the Fifth Report and Order

6. This Fifth Report and Order continues the Commission's efforts to facilitate the development of competition in telecommunications services. In the Advanced Services First Report and Order, the Commission strengthened its collocation rules to reduce the costs and delays faced by carriers that seek to collocate equipment at the premises of incumbent LECs. In GTE v. FCC, the D.C. Circuit vacated several of those rules and remanded the case to the Commission. In the Collocation Remand Order, the Commission addressed the remanded issues. Among other actions, the Commission required incumbent local exchange carriers (incumbent LECs) to provide cross-connects between collocated carriers upon reasonable request. In the Fifth Report and Order, the Commission addressed a collocation issues raised as part of the Second Further Notice. The Commission's actions will help incumbent LECs and collocated carriers better understand its collocation requirements and how they will be enforced.

II. Summary of Significant Issues Raised by Public Comments in Response to the Supplemental IRFA

7. In the Supplemental IRFA, the Commission stated that any rule changes would impose minimum burdens on small entities, including both telecommunications carriers that request collocation and the incumbent LECs that, under section 251(c)(6) of the Communications Act, must provide collocation to requesting carriers. The Commission also solicited comments on alternatives to the proposed rules that would minimize the impact that any changes to its rules might have on small entities. In their comments, OPASTCO stated that the Supplemental IRFA did not provide “the flexibility necessary to accommodate the needs of small (incumbent LECs) and their customers.” OPASTCO also stated that the Supplemental IRFA does not specify the specific requirements that might be imposed on small incumbent LECs or the extent to which those requirements might burden small incumbent LECs. Finally, OPASTCO stated that the Supplemental IRFA failed “to describe the “significant alternatives” for small (incumbent LECs) that (were) presumptively under consideration” in this rulemaking. As noted, the Commission responded to OPASTCO's comments in the previous Collocation Remand Order.

III. Description and Estimate of the Number of Small Entities To Which Rules Will Apply

8. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of entities that will be affected by the rules. The RFA defines “small entity” as having the same meaning as the term “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act, unless the Commission has developed one or more definitions that are appropriate to its activities. Under the Small Business Act, a “small business concern” is one that: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) meets any additional criteria established by the Small Business Administration (SBA).

9. The most reliable source of information regarding the total numbers of certain common carrier and related providers nationwide, as well as the number of commercial wireless entities, appears to be data the Commission publishes annually in its Carrier Locator report, which encompasses data compiled from FCC Form 499-A Telecommunications Reporting Worksheets. According to data in the most recent report, there are 5679 service providers. These carriers include, inter alia, providers of telephone exchange service, wireline carriers and service providers, LECs, interexchange carriers, competitive access providers, and resellers.

10. The Commission included small incumbent LECs in this present RFA analysis. A “small business” under the RFA is one that, inter alia, meets the pertinent small business size standard (e.g., a telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of operation.” The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent LECs are not dominant in their field of operation because any such dominance is not “national” in scope. The Commission therefore included small incumbent LECs in this RFA analysis, although the Commission emphasized that this RFA action has no effect on Commission analyses and determinations in other, non-RFA contexts.

11. Total Number of Telephone Companies Affected. The United States Bureau of the Census (Census Bureau) reports that, at the end of 1992, there were 3,497 firms engaged in providing telephone services, as defined therein, for at least one year. This number contains a variety of different categories of carriers, including local exchange carriers, interexchange carriers, competitive access providers, cellular carriers, mobile service carriers, operator service providers, pay telephone operators, covered specialized mobile radio providers, and resellers. It seems certain that some of these 3,497 telephone service firms may not qualify as small entities or small incumbent LECs because they are not “independently owned and operated.” For example, a personal communications service (PCS) provider that is affiliated with an interexchange carrier having more than 1,500 employees would not meet the definition of a small business. It is reasonable to conclude that fewer than 3,497 telephone service firms are small entity telephone service firms or small incumbent LECs that may be affected by the rules adopted herein.

12. Local Exchange Carriers. Neither the Commission nor the SBA has developed a definition for small providers of local exchange service (LECs). The closest applicable definition under the SBA rules is Wired Telecommunications Carriers. According to the most recent data, there are 2,050 incumbent and other LECs. The Commission does not have data specifying the number of these carriers that are either dominant in their field of operations, are not independently owned and operated, or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of LECs that would qualify as small business concerns under the SBA's definition. Consequently, The Commission estimates that fewer than 2,050 providers of local exchange service are small entities or small incumbent LECs that may be affected by the rules adopted herein.

13. Interexchange Carriers. Neither the Commission nor the SBA has developed a definition of small entities specifically applicable to providers of interexchange services (IXCs). The closest applicable definition under the SBA rules is for Wired Telecommunications Carriers. According to the most recent data, there are 229 carriers engaged in the provision of interexchange services. Of these 229 carriers, 181 reported that they have 1,500 or fewer employees and 48 reported that alone, or in combination with affiliates, they have more than 1,500 employees. The Commission does not have data specifying the number of these carriers that are not independently owned and operated, and thus are unable at this time to estimate with greater precision the number of IXCs that would qualify as small business concerns under the SBA's definition. Consequently, the Commission estimates that there are less than 229 small entity IXCs that may be affected by the rules adopted herein.

14. Wireless Service Providers. The SBA has developed a definition for small businesses within the two separate categories of Cellular and Other Wireless Telecommunications or Paging. Under that SBA definition, such a business is small if it has 1,500 or fewer employees. According to the Commission's most recent Telephone Trends Report data, 1,495 companies reported that they were engaged in the provision of wireless service. Of these 1,495 companies, 989 reported that they have 1,500 or fewer employees and 506 reported that, alone or in combination with affiliates, they have more than 1,500 employees. The Commission does not have data specifying the number of these carriers that are not independently owned and operated, and thus are unable at this time to estimate with greater precision the number of wireless service providers that would qualify as small business concerns under the SBA's definition. Consequently, the Commission estimates that there are 989 or fewer small wireless service providers that may be affected by the rules.

IV. Description of Projected Reporting, Record Keeping, and Other Compliance Requirements

15. None.

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

16. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

17. In the Fifth Report and Order, the Commission addresses the need for a national space reservation policy, the conversion of virtual collocation arrangements to physical collocation arrangements, and whether incumbent LECs may require the use of point of termination (POT) bays. It rejects the alternative of adopting more stringent regulations as suggested by some commenters. The Commission concludes that disputes regarding an incumbent LEC's policies on space reservations and the conversion of virtual collocation arrangements should be addressed on a case-by-case basis. It also concludes that while the use of POT bay is permissible, incumbent LECs may not unilaterally compel their use.

Paperwork Reduction Act Analysis

18. The actions contained in the Fifth Report and Order have been analyzed with respect to the Paperwork Reduction Act of 1995 (PRA) and found to impose no new or modified reporting and recordkeeping requirements or burdens on the public.

Ordering Clauses

19. Pursuant to sections 1-4, 201-03, 251-54, 256, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151-54, 201-03, 251-54, 256, and 303(r), the Fifth Report and Order is adopted.

24. Pursuant to sections 1-4, 201-03, 251-54, 256, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201, 202, 251-54, 256, and 303(r), the actions taken in the Fifth Report and Order Shall become effective October 30, 2002.

25. The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, Shall send a copy of this Fifth Report and Order, including the Supplemental Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 51

• Interconnection
• Telecommunications carriers