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Proposed Rule

2000 Biennial Regulatory Review Separate Affiliate Requirements of Independent Local Exchange Carriers

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Federal Communications Commission.


Proposed rule.


This document institutes a broad-based reexamination of part 64, subpart T of the Commission's rules, which establishes safeguards for the provision of in-region interexchange services by incumbent independent local exchange carriers. In this document the Commission invites comment on whether the benefits of the separate affiliate requirement for facilities-based providers continue to outweigh the costs and whether there are alternative safeguards that are as effective but impose fewer regulatory costs.


Comments due on or before November 1, 2001 and Reply Comments due on or before November 23, 2001.

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Jessica Rosenworcel, Attorney Advisor, Policy and Program Planning Division, Common Carrier Bureau, (202) 418-1580.

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This is a summary of the Commission's Notice of Proposed Rulemaking (NPRM) in CC Docket No. 01-175, FCC 01-261, adopted September 13, 2001, and released September 14, 2001. The complete text of this Notice of Proposed Rulemaking 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 It is also available on the Commission's website at

Synopsis of the Notice of Proposed Rulemaking

1. Under § 64.1903 of the Commission's rules, incumbent independent local exchange carriers (LECs) providing facilities-based, in-region, interexchange service must do so through a separate corporate affiliate. In this document the Commission invites interested parties to comment on whether application of the separate affiliate requirement for incumbent independent LECs continues to serve the public interest. The Commission first asks a series of questions intended to elicit information regarding the number of incumbent independent LECs providing in-region, interexchange service on either a facilities or resale basis. In addition, the Commission asks for comment on whether or not the benefits of this separate affiliate requirement outweigh the regulatory and economic costs involved. Finally, the Commission seeks comment on possible alternative safeguards, including proposals for applying the Start Printed Page 50140separate affiliate requirement to a more limited category of incumbent independent LECs.

Initial Regulatory Flexibility Analysis

2. As required by the Regulatory Flexibility Act (RFA), as amended,[1] the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the expected economic impact on small entities by the policies and rules proposed in this NPRM. 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 NPRM. The Commission will send a copy of the NPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration.

Need for, and Objectives of, the Proposed Rules

3. In this NPRM, the Commission seeks comment on whether or not the benefits of its separate affiliate requirement for in-region interexchange service provided by incumbent independent LECs continues to outweigh the costs and whether or not there are alternative safeguards that are as effective but impose fewer regulatory costs.[2]

Legal Basis

4. The legal basis for any action that may be taken pursuant to the NPRM is contained in sections 4, 201-202, 303 and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 154, 201-202, 303, and 403, and sections 1.1, 1.411, and 1.412 of the Commission's rules, 47 CFR 1.1, 1.411, and 1.412.

Description and Estimate of the Number of Small Entities to Which the Proposed Rules Will Apply

5. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that will be affected by any rules.[3] The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” [4] For the purposes of this order, the RFA defines a “small business” to be the same as a “small business concern” under the Small Business Act, 15 U.S.C. 632, unless the Commission has developed one or more definitions that are appropriate to its activities.[5] 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).[6] Consistent with the SBA's Office of Advocacy's view, the Commission has included small incumbent LECs in this RFA analysis. The Commission emphasizes, however, that this RFA action has no effect on the its analyses and determinations in other, non-RFA contexts.

6. Local Exchange Carriers. The most reliable source of information regarding the number of LECs nationwide appears to be the data that the Commission collects annually in connection with the Telecommunications Relay Service (TRS).[7] According to our most recent data, there are 1,335 incumbent LECs.[8] Although some of these carriers may not be independently owned and operated, or have more than 1,500 employees, we 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, we estimate that there are less than 1,335 small entity incumbent LECs that may be affected by the proposals in the NPRM.

Description of Projected Reporting, Recordkeeping and Other Compliance Requirements

7. The Commission expects that any proposal it may adopt pursuant this NPRM will decrease existing reporting, recordkeeping or other compliance requirements.

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

8. The overall objective of this proceeding is to reduce existing regulatory burdens on small carriers to the extent consistent with the public interest.

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

9. None.

Ordering Paragraphs

10. Pursuant to the authority contained in sections 2, 4(i)-4(j), 201, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 152, 154(i)-4(j), 201, 303(r), this NPRM is adopted.

11. The Commission's Consumer Information Bureau, Reference Information Center, shall send a copy of this NPRM, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

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Federal Communications Commission.

William F. Caton,

Deputy Secretary.

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1.  5 U.S.C. 603. The RFA, see 5 U.S.C. 601 et seq., has been amended by the Contract With America Advancement Act of 1996, Public Law 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).

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3.   5 U.S.C. 603(b)(3), 604(a)(3).

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5.  5 U.S.C. 601(3) (incorporating by reference the definition of “small business concern” in 5 U.S.C. 632).

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7.  47 CFR 64.601 et seq.; Carrier Locator: Interstate Service Providers, FCC Common Carrier Bureau, Industry Analysis Division (rel. Oct. 2000) (Carrier Locator).

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8.  Carrier Locator at Figure 1. The total for competitive LECs includes competitive access providers and competitive LECs.

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[FR Doc. 01-24569 Filed 10-1-01; 8:45 am]