Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of
Deployment of Wireline Services Offering
Advanced Telecommunications Services
CC Docket No. 98-147
COMMENTS ON THE INITIAL REGULATORY FLEXIBILITY ANALYSIS,
NOTICE OF PROPOSED RULEMAKING, AND
REQUEST FOR CLARIFICATION OF THE MEMORANDUM OPINION AND ORDER
OF THE OFFICE OF ADVOCACY
UNITED STATES SMALL BUSINESS ADMINISTRATION
Jere W. Glover, Esq.,
Chief Counsel for Advocacy
S. Jenell Trigg, Esq.,
Assistant Chief Counsel for Telecommunications
Eric E. Menge, Esq.,
Assistant Chief Counsel for Telecommunications
Office of Advocacy
U. S. Small Business Administration
409 Third Street, S.W. Suite 7800
Washington, D.C. 20416
September 25, 1998
EXECUTIVE SUMMARY
The Office of Advocacy of the United States Small Business Administration ("Advocacy") submits these Comments on the Federal Communications Commission’s ("FCC" or "Commission") Memorandum Opinion and Order and Notice of Proposed Rulemaking, CC Docket No. 98-147, FCC 98-188, (rel. Aug. 7, 1998) ("NPRM"), in the Advanced Telecommunications Services proceeding. Congress established the Office of Advocacy in 1976 by Pub. L. No. 94-305 (codified as amended at 15 U.S.C. §§ 634 a-g, 637) to represent the views and interests of small business within the Federal government. Its statutory duties include serving as a focal point for concerns regarding the government’s policies as they affect small business, developing proposals for changes in Federal agencies’ policies, and communicating these proposals to the agencies. 15 U.S.C. § 634c(1)-(4). Advocacy also has a statutory duty to monitor and report on the FCC’s compliance with the Regulatory Flexibility Act of 1980 ("RFA"), Pub. L. No. 96-354, 94 Stat. 1164 (1980) (codified at 5 U.S.C. § 601 et seq.), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 ("SBREFA"), Subtitle II of the Contract with America Advancement Act, Pub. L. No. 104-121, 110 Stat. 857 (1996). 5 U.S.C. § 612(a).
The FCC is required to prepare a regulatory flexibility analysis as a matter of law pursuant to the RFA when there is a "significant economic impact on a substantial number of small entities." See U.S.C. § 605. Advocacy asserts that the FCC has not complied with the following statutory requirements of the RFA.
1. Equipment Approval for Collocation in Central Offices.
a) The FCC did not discuss in its regulatory flexibility analysis that ILECs are required to produce a list of all the equipment it uses.
b) This requirement would create a compliance burden for both small competitive local exchange carriers ("CLECs") and small ILECs. Small ILECs must review and approve every type of equipment while CLECs must only use approved equipment.
2. Removal of Obsolete Equipment from the Central Office.
a) The FCC did not discuss this compliance burden in its regulatory flexibility analysis. Advocacy believes that if language presented in the NPRM could lead to a final rule, the FCC must disclose the requirement, regardless of whether it is a tentative conclusion or not.
b) This requirement would create a compliance burden for small ILECs, who often use older but functional equipment. This equipment could be deemed obsolete, and the ILEC would be required to remove it.
3. Uniform National Standards.
a) The FCC did not discuss this compliance burden in its regulatory flexibility analysis. The RFA applies to any regulation that places a burden on small entities and is not limited to reporting and recordkeeping requirements.
b) The requirement would create a compliance burden for small ILECs who would be required to review its equipment and ensure it complies with the national standards.
4. Tours of the Central Office.
a. The FCC did not discuss this compliance burden in its regulatory flexibility analysis.
b. The requirement would create a compliance burden by requiring small ILECs to give tours of its central offices. Advocacy does not believe the benefit to CLECs outweighs the burden to small ILECs.
5. Report on Available Collocation Space.
a. The FCC’s regulatory flexibility analysis did not address key time-frame issues. The FCC did not discuss how long after the passage of the final order before the CLEC could request these reports, and how long the ILEC had to provide the report to a requesting CLEC.
b. The requirement imposes a compliance burden on small ILECs that is disproportionate to the benefit to CLECs. In light of other steps taken by the FCC in the NPRM, such as presumptions of feasibility of interconnection arrangements and the ILEC’s duty to provide unbundled access, Advocacy does not believe this requirement is necessary to the deployment of advanced telecommunications services.
6. Detailed Loop Information.
a) The FCC’s regulatory flexibility analysis did not fully discuss the elements of this compliance requirement which the FCC detailed in the NPRM. Advocacy believes that the FCC must describe in detail proposed compliance requirements so that small entities have legitimate notice of the proposal and opportunity to comment.
b) The requirement imposes a substantial compliance requirement on small ILECs. Advocacy does not believe the benefit to CLECs justifies the extent of the burden placed on small ILECs.
1. Differing compliance or reporting requirements or timetables that take into account the resources available to small entities.
2. Clarification, consolidation, or simplification of compliance requirements.
3. Exemption from coverage of the rule or any part of thereof.
Advocacy concludes that the FCC’s regulatory flexibility analysis is insufficient and does not meet statutory requirements. Advocacy strongly recommends that the FCC revise and re-submit for public notice and comment the initial regulatory flexibility analysis as the only means to cure the severe deficiencies of the current analysis.
Advocacy has additional comments on several specific provisions of the FCC’s proposals in the NPRM, and Advocacy supports two of the Commission’s proposals because the FCC uses regulatory flexibility in its decision-making process. Advocacy’s concerns are as follows:
a) The ILEC and the separate affiliate may not jointly own switching facilities, land, or buildings, nor may they jointly perform operating, installation, or maintenance.
b) The separate affiliate must provide a detailed written description of any asset or service transferred and the terms and conditions of the description on the company’s Internet homepage, within ten days of the transaction.
c) The ILEC and separate affiliate must have separate officers, directors, and employees.
Additionally, Advocacy recommends that the FCC allow small ILECs to transfer equipment from itself to its separate affiliate.
1. Collocators must only pay for cost of conditioning space used.
2. Small collocators may pay on an installment basis. However, Advocacy recommends limiting installment payments whenever the CLEC is interconnecting with a small ILEC.
Finally, Advocacy requests that the FCC issue a clarification of its MO&O. A clarification is necessary to make explicit that Section 251(f) exemptions, suspensions, and modifications apply to advanced telecommunications services.
Advocacy believes that the NPRM was written with large ILECs in mind. The regulations proposed and the benefits derived are only appropriate if the regulated entity is a large ILEC. The insufficient regulatory flexibility analysis seems to have been put together after the regulations proposed in the NPRM were decided, and its only purpose is to substantiate the conclusions of the NPRM. Advocacy contends that this is not sufficient treatment of regulatory flexibility. The Commission should recognize, as intended by the RFA, that a reasoned analysis in the IRFA will allow the FCC to reach the desired effect with the large ILECs, while not overburdening the small ILECs and CLECs. Regulatory flexibility analyses are a powerful tool. Advocacy encourages the FCC to utilize it in this proceeding for the benefit of the public interest, convenience, and necessity.
The Office of Advocacy of the United States Small Business Administration ("Advocacy") submits these Comments on the Federal Communications Commission’s ("FCC" or "Commission") Memorandum Opinion and Order and Notice of Proposed Rulemaking(1)in the above-captioned proceeding. Congress established the Office of Advocacy in 1976 by Pub. L. No. 94-305(2)to represent the views and interests of small business within the Federal government. Its statutory duties include serving as a focal point for concerns regarding the government’s policies as they affect small business, developing proposals for changes in Federal agencies’ policies, and communicating these proposals to the agencies(3). Advocacy also has a statutory duty to monitor and report on the Commission’s compliance with the Regulatory Flexibility Act of 1980 ("RFA")(4), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 ("SBREFA"), Subtitle II of the Contract with America Advancement Act.(5)
Advocacy supports the Commission’s efforts to open up the local loop to competition in the field of advanced telecommunications services pursuant to Section 706 of the Telecommunications Act of 1996 ("1996 Act")(6). Many information service providers ("ISPs") and competitive local exchange carriers ("CLECs") are small businesses. Allowing them to compete equally with incumbent local exchange carriers ("ILECs") for the provision of advanced telecommunications services is a worthy goal, one which will encourage the expedient deployment of such services. The NPRM makes several proposals that will benefit these small entities, and Advocacy applauds the FCC in its effort to allow small businesses to compete on a more equal basis.
However, in its implementation of Section 706, the Commission must keep in mind that the proposed rules affect different classes of small entities – ISPs, CLECs, and ILECs – which will differ on the issues and have conflicting interests. It is also necessary to balance these interests, only after a complete detailed analysis of the impact that the proposed rules will have on each class of small entities. The congressional intent of the RFA was for Federal agencies to use regulatory flexibility analyses as a tool, during its rulemaking process, to reach a well-founded decision based on legal, policy, and factual factors, as well as to minimize the economic impact on small entities(7).Advocacy asserts that the Commission has not adequately completed such an analysis, and therefore, is not in compliance with the statutory requirements of the RFA. The Commission (1) failed to identify and undertake a proper reasoned analysis on all classes of small entities; (2) failed to describe adequately the proposed reporting, recordkeeping, and other compliance requirements, including the type of professional skills necessary for the preparation of the reports or records; and (3) failed to consider significant alternatives to the proposed reporting, recordkeeping, and other compliance requirements that can minimize the significant economic impact of the proposed rules.
I.Comments In Response To The Initial Regulatory Flexibility Analysis.
A.Purpose Of The RFA In Agency Decision-Making.
The Regulatory Flexibility Act of 1980 was designed to place the burden on the government to review all regulations to ensure that, while accomplishing their intended purposes, they do not unduly inhibit the ability of small entities to compete, innovate, or to comply with the regulation.(8) The Commission is required to prepare a regulatory flexibility analysis as a matter of law pursuant to the RFA when there is a "significant economic impact on a substantial number of small entities."(9) The major objectives of the RFA are: (1) to increase agency awareness and understanding of the impact of their regulations on small business; (2) to require that agencies communicate and explain their findings to the public; and (3) to encourage agencies to use flexibility and provide regulatory relief to small entities where feasible and appropriate to its public policy objectives(10).
On March 29, 1996, SBREFA was signed into law and, inter alia, amended the RFA to allow judicial review of an agency’s compliance with the RFA(11). Even prior to the SBREFA amendments adding judicial review of final regulatory flexibility analyses, courts have held that failure to undertake a proper regulatory flexibility analysis could result in arbitrary and capricious rulemaking in violation of the Administrative Procedure Act ("APA").(12)
The RFA does not seek preferential treatment for small businesses, nor does it require agencies to adopt regulations that impose the least burden on small entities or mandate exemptions for small entities. Rather, it establishes an analytical process for determining how public issues can best be resolved without erecting barriers to competition. The law seeks a level playing field for small business, not an unfair advantage. To this end, the RFA requires the FCC to analyze the economic impact of proposed regulations on different-sized entities, estimate each rule’s effectiveness in addressing the agency’s purpose for the rule, and consider alternatives that will achieve the rule’s objectives while minimizing the burden on small entities.(13)
Under Section 603 of the RFA, whenever an agency is required to publish a general notice of proposed rulemaking, the agency is required to prepare and make available to the public an initial regulatory flexibility analysis ("IRFA").(14) This analysis must describe the impact of the proposed rule on all small entities. To provide agencies with guidance, Congress listed six specific subjects that must be addressed as part of the IRFA(15). Each IRFA must include: (1) the reasons why the action is being considered; (2) the objectives and legal basis for the proposed rules; (3) a description and estimate (if feasible) of the number of effected small entities; (4) projected reporting, recordkeeping, and other compliance requirements (including professional skills necessary); (5) identification of any Federal rules which duplicate, overlap, or conflict with the proposed rules; and (6) any significant alternatives to the proposed rules which minimize any significant impact of the proposed rule.(16)
B. The Commission Failed To Meet The Requirements Of The RFA.
1. The Commission Failed To Identify Properly And Undertake An Analysis For All Classes Of Small Entities.
The first step in undertaking a proper regulatory flexibility analysis is to identify all of the classes of small entities affected by the proceeding.(17) The Commission has identified properly and included small CLECs and ISPs in its IRFA. However, the Commission is deficient in its recognition and analysis of small ILECs. The Commission’s continued allegation that small ILECs cannot qualify as small businesses is incorrect,(18) and thus contrary to law. The Commission has justified its conclusion that an ILEC cannot be a small entity because it is dominant in its field of operation.(19) A lack of dominance in its field of operation is one of the Small Business Act’s criteria for defining a small business concern, 15 U.S.C. § 632, and the SBA’s implementing regulations for the Small Business Act indicate that dominance in a "field of operation" is determined on a national basis. 13 C.F.R.§ 121.102.(20) Small ILECs, by any measure, are not dominant in the national telecommunications industry. Therefore, small ILECs qualify as small entities under the Small Business Act and the RFA and are subject to a complete regulatory flexibility analysis by the Commission.
To the Commission’s credit, since 1996 it has included small ILECs in its regulatory flexibility analyses consistent with SBREFA requirements, which makes all such analyses judicially reviewable. However, the Commission’s analysis is cursory, and its promise to analyze the burdens on small ILECs is illusory. To wit, in this NPRM, small ILECs are subject to the same requirements as the large ILECs, such as the Regional Bell Operating Companies ("RBOCs") and GTE. Compliance burdens such as additional recordkeeping requirements that are inconsequential to the large ILECs can cripple a smaller ILEC. This was not addressed in the analysis. Moreover, small ILECs are not likely to have the market share or market power of the RBOCs and GTE, therefore regulations that are necessary to prevent a large ILEC from exerting undue influence on the market are not necessary for a small ILEC. Regulatory flexibility was implemented by Congress to combat this sort of uneven regulatory burden and to encourage agencies to implement regulations that address only those entities that are the source of the problem. In Section I.B.2, infra, we detail the deficiencies in the Commission’s analysis of ILECs.
2. The Commission Failed To Describe Adequately The Proposed Reporting, Recordkeeping, And Other Compliance Requirements.
Advocacy contends that the Commission did not discharge its statutory duty to describe adequately the projected reporting, recordkeeping, and other compliance requirements. The Commission introduced six new potential compliance requirements in the NPRM: (1) listing of approved collocated equipment that meets safety requirements; (2) removal of obsolete equipment; (3) uniform national standards for the attachment of electrical equipment; (4) tours of central offices; (5) report on available collocation space in the central office; and (6) detailed loop information.(21) Only three of these proposed compliance requirements were mentioned in the IRFA: (1) listing of approved collocated equipment that meets safety requirements; (2) report on available collocation space in the central office; and (3) detailed loop information. Of these, the Commission failed to disclose fully the proposed requirements of the approved equipment list and detailed loop information report.
The purpose of the IRFA is to solicit public comment on the proposed rules and to give notice to small entities of projected requirements.(22) The Commission cannot receive meaningful comments on the impact of the proposed rules if the Commission fails to mention projected compliance requirements. The absence of public notice to small entities of such requirements not only violates the RFA but weakens the quality of the responses the FCC will receive and limits the possibility of receiving feasible alternatives to the proposed regulations.
Advocacy reminds the Commission that the RFA requirement necessitates a description of projected reporting, recordkeeping, and other compliance requirements.(23) Advocacy notes that the three requirements that are not listed in the IRFA are ones that contain compliance requirements other than reporting or recordkeeping. Any proposed rule which would place a requirement on small entities, whether reporting, recordkeeping, or otherwise, must be listed in the IRFA. Small entities must meet the same burden of compliance when equipment must be purchased or upgraded as when large reports must be produced. Advocacy discusses below the deficiencies in the IRFA regarding the six compliance requirements.
a. Equipment Approval For Collocation In Central Offices.
In the NPRM, the Commission tentatively concluded that ILECs may require CLEC equipment to meet safety requirements before collocation at the central office.(24) Also, the Commission concluded that ILECs are required to list all approved equipment and all equipment the ILEC uses(25). Both of these tentative conclusions place burdens on small entities, while only half of the ILEC burden (creation of the approved equipment report) is mentioned in the IRFA.(26)
To comply with the first conclusion, some CLECs may be required to upgrade their equipment. A small CLEC would have to spend money to procure equipment that is approved by the ILEC. The Commission’s goal of requiring equipment that will not endanger other equipment or the telephone network is a laudable one. However, a laudable goal does not suspend the Commission’s statutory duty to include an analysis of this burden in the IRFA on all small entities affected.
For the second conclusion, the Commission does include a brief reference in the IRFA that ILECs are required to produce a listing of all equipment approved for use at the central office.(27) Unfortunately, the IRFA does not address that the approval is conditioned on safety. Furthermore, the IRFA makes no mention of the requirement for ILECs to produce a report on all equipment they use.(28) Both of these proposals have compliance costs.(29) The Commission has a statutory duty to disclose both of these reporting requirements in the IRFA.
b. Removal Of Obsolete Equipment From Central Offices.
In the NPRM, the Commission sought comment on whether the FCC should require ILECs to remove obsolete equipment and non-critical equipment in central offices and whether the FCC has the authority to do so.(30) It is Advocacy’s position that if a compliance requirement for small entities would result from a general request for comments, the Commission must describe the comment request in the IRFA and allow small entities an opportunity to comment. (31)Therefore, this general request for comment on equipment removal should have been included in the IRFA, as the Commission can use this request for comment in the NPRM as the basis for adopting a final rule in the Report and Order.
Advocacy believes the removal of obsolete equipment can be a burdensome compliance requirement for small entities.(32) Small and rural ILECs often use older equipment because of the lack of demand upon their switches and the lack of financial capability to replace the equipment. Furthermore, since these switches are providing telephone service reliably, small ILECs may have no immediate need to replace a functioning piece of equipment even if it is older. The Commission needs to solicit comments on the costs of its proposal to determine the economic burden this requirement would have on small entities before its imposition on small ILECs.
c.Uniform National Standards For Attachment Of Electronic Equipment.
The Commission tentatively concluded to adopt uniform national standards for attachment of electronic equipment.(33) Advocacy agrees with the Commission’s reasoning. A simple set of national requirements would reduce new entrants’ costs, speed their time to market, and reduce confusion. If a CLEC requesting interconnection knows in advance what equipment can be attached and how, it can plan in accordance. Furthermore, attachment of electronic equipment would no longer vary from central office to central office, which would reduce time and money spent negotiating the attachment.
However, as stated above,(34) excellent reasoning does not excuse a statutory duty to address the economic impact of this proposal on all small entities. The proposed regulation would create a compliance burden on the ILECs and should have been disclosed in the IRFA. To comply with this proposed regulation small ILECs would have to ensure that its equipment meet uniform national standards.(35) Moreover, the Commission must seek public comment on the nature and cost of compliance with uniform national standards on small entities and weigh these comments on burdens against perceived benefits of the requirements.
The Commission should also consider significant alternatives as per Section 603(c) of the RFA.(36) The cost to restructure each central office is prohibitive on small ILECs. An exemption for small ILECs may be necessary if the cost of compliance is too great for an ILEC to reasonably meet.(37) At the least, the Commission should consider a timetable to allow small ILECs to reach compliance with any uniform national standards. As CLECs are concentrating primarily on urban and business corridors, a delay for small ILECS (that are most likely located in rural areas which are historically slow to competitive activity) in meeting the national uniform standards will not adversely affect competition.
d. Tours Of The Central Office.
The NPRM tentatively concluded that if an ILEC denies a request for physical collocation due to space limitations, the ILEC must allow any competing provider that is seeking physical collocation a tour of the central office.(38) Again, the proposed regulation would impose a compliance requirement on ILECs that was not disclosed in the IRFA. If the FCC’s tentative conclusion is adopted as a final rule, small ILECs would be required to allot employees to providing tours of the central office. When the ILEC is large with thousands of employees, this requirement may not be onerous, but when the ILEC is small and has only a limited of employees, the requirement is much steeper.
Advocacy contends that this proposed requirement may not be necessary for small ILECs. The NPRM tentatively concluded that ILECs will continue to provide detailed floor plans to the State Commission. The NPRM is unclear on how the tour will provide any additional information to the CLEC. Other efforts would better serve the CLECs’ need for quick, efficient interconnection than requiring guided tours of central offices.
In the NPRM, the Commission tentatively concluded that ILECs must provide interconnection at remote terminals. Advocacy asks the Commission whether the ILEC must provide detailed floor plans and tours of remote terminals as well as the central office.(39)
e. Report On Available Collocation Space.
The NPRM tentatively concluded that an ILEC must submit a report to a requesting CLEC on the ILEC’s available collocation space.(40) The NPRM indicated that the report should: (1) specify the amount of collocation space available at each requested premises; (2) the number of collocators; (3) any modifications in the use of collocation space since the last report; and (4) include measures that the ILEC is taking to make additional space available for collocation.(41) The IRFA’s disclosure on specific requirements was vague and left important time-frame questions unanswered. The Commission should have detailed how thorough these reports should be, how long after the adoption of the final rules can a CLEC make a collocation space report request, and how long does the ILEC have to respond. In the IRFA, the Commission also failed to discuss the type of professional skills necessary to produce the report.(42) In addition, the Commission did not address any significant alternatives that would minimize the economic impact on small entities for preparation of the reports.
Advocacy believes that this reporting requirement imposes a burden on small ILECs that is disproportionate to the benefit to CLECs. Advocacy interprets the language of the NPRM to mean that an ILEC will have to create a separate report for each central office. Due to the number of central offices that are part of the ILEC’s network, the reporting requirement may be extensive. Furthermore, in light of the FCC’s tentative conclusion later in the NPRM that would require ILECs to allow interconnection at remote terminals,(43) Advocacy asks the Commission to determine whether ILECs are required to produce collocation space reports for remote terminals as well. If so, the burden on ILECs is even greater and should be given careful consideration of whether the cost is worth the benefit.
Advocacy encourages the Commission to consider alternatives to the collocation space reports for small ILECs.(44) The Commission should consider exemptions for small ILECs that do not possess the means to produce the reports. Also, the Commission should consider allowing a small ILEC to make a collocation space report which apply to many central offices at once. The FCC should also consider a longer timetable for small ILECs to produce the reports. Adoption of these alternatives would allow the CLECs to receive collocation information but would ease the reporting burden on small ILECs.
f. Detailed Loop Information.
In the NPRM, the Commission tentatively concluded that ILECs must provide CLECs with detailed loop information.(45) Specifically, the Commission proposed requiring ILECs to provide requesting CLECs with the following information: (1) whether the loops pass through remote concentration devices; (2) what electronics are attached to loops; (3) condition and location of loops; (4) loop length; (5) electrical parameters that determine the suitability of loops of various digital subscriber line ("xDSL") technologies; and (6) other loop quality issues.(46) The Commission briefly mentions the detailed loop information disclosure in the IRFA but does so in a glancing and inconsequential manner. The IRFA’s description in its totality is "the NPRM tentatively concludes that incumbent LECs should be required to share information about loops with new entrants."(47) The description does not specify that the reports must be "detailed" as stated in the main text of the NPRM. Furthermore, the IRFA does not disclose the six specific elements listed above that are contained in the NPRM. Advocacy does not believe that one sentence with a vague reference to a proposed reporting requirement is sufficient to discharge the FCC’s duty to describe projected reporting requirements under the RFA, especially considering the FCC has enumerated specific recommendations in the NPRM.
The proposed detailed loop information reporting will impose a significant economic burden on small ILECs. Although not exactly specified, Advocacy interprets this requirement as necessitating a separate report on each loop, as loops will vary in length, location, quality, and attachment of electronics. Therefore, a small ILEC must produce a separate report for each of its loops. These reports would contain detailed specific information such as equipment attached, location, and length, while included interpreted information, such as the suitability of the loop for xDSL technology. The detailed loop information reports require substantial clerical and technical preparation, which places a disproportionate burden on small ILECs who have fewer resources than larger ILECs.
The Commission should also consider the necessity of the detailed loop information report. In the NPRM, the Commission proposed several regulations that would encourage interconnection and competition, including a provision that ILECs have burden of demonstrating that it is not technically feasible to provide requesting carriers with xDSL-compatible loops,(48) to provide a particular type of interconnection requested by the CLEC,(49) and to provide the CLEC with an equal alternative if interconnection is infeasible.(50) The other proposed requirements render the detailed loop reports of less consequence to ensuring interconnection and competition. Advocacy believes that the burden on small ILECs outweighs the benefit to the CLECs and does not further the deployment of advanced telecommunications services.
The Commission can overcome this imbalance by adopting alternatives that would lessen the economic impact of the detailed loop information reports. Advocacy recommends that the Commission consider either exempting small ILECs or establishing different reporting requirements for them(51) Adopting alternatives that would reduce the compliance burden would overcome the disproportionate impact on small ILECs.
3. The Commission Failed To Consider Alternatives That Minimize Significant Economic Burdens On All Small Entities.
In addition to the deficiencies in providing significant alternatives for the three compliance requirements discussed above, (52)Advocacy has an overriding concern of the Commission’s neglect to address alternatives for small ILECs. We assert that the Commission failed to meet its statutory duty to describe significant alternatives to the proposed rule, which accomplish the stated objectives while minimizing any significant economic impact.(53) The Commission failed to consider the four significant alternatives laid out by Congress in the RFA(54). Congress specifically listed four different alternatives that agencies were to consider during the preparation of the IRFA: (1) differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) clarification, consolidation, or simplification of compliance or reporting requirements for small entities; (3) use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.(55) The Commission did not address any of these alternatives in the text of the IRFA. Instead, the IRFA impermissibly placed the burden on small entities to recommend alternatives.
In the IRFA, the Commission stated that it would separately consider regulatory flexibility analysis for small ILECs.(56) However, the Commission does not carry through with that statement when considering regulatory alternatives. Instead, the Commission stated that CLECs, including small-entity CLECs, would "obtain access to inputs necessary to the provision of advanced services."(57) The Commission stated in the IRFA "we tentatively conclude that our proposals in the NPRM would impose minimum burdens on small entities" without addressing the impact of the three regulatory burdens disclosed in the IRFA on small ILECs. In the absence of such analysis of the burden on small ILECs, this statement is unsubstantiated and possibly false.
C. The Commission Should Revise And Re-Submit For Public Notice and Comment Its Initial Regulatory Flexibility Analysis.
As discussed above, the Commission’s IRFA is fatally flawed on several accounts. Therefore, it is necessary that the Commission revise the IRFA and re-submit it for public notice and comment to meet the statutory requirements of the RFA and the APA. A defective IRFA prevents the opportunity for public notice and comment which is required under the APA, which in turn, undermines the rulemaking record an agency needs to make factual conclusions.(58) Even prior to the SBREFA amendments, courts have held that failure to undertake a proper regulatory flexibility analysis as part of the rulemaking could result in arbitrary and capricious rulemaking.(59) Today, SBREFA allows for judicial review of the Commission’s Final Regulatory Flexibility Analysis ("FRFA")(60), the foundation of which is a sufficient IRFA. For this reason, Advocacy believes that the FRFA cannot be in compliance with the RFA unless the IFRA is cured by revision and re-submission for public comment(61).It is incumbent on the FCC, as the expert agency authorized by Congress, to know what is required by both large and small telecommunications entities to comply with its proposed regulations, and to undertake a threshold analysis of the impact of such compliance on small entities at the NPRM stage. It is this analysis that provides small entities adequate notice of potential regulatory burdens that may be required of them. A re-submission of the IFRA, taking into account Advocacy’s concerns presented in these Comments, should not be an extraordinary burden on the Commission nor hinder this rulemaking proceeding. The Commission does not need to re-release the entire NPRM. A revised IRFA can be released in a Public Notice format, which will lessen the burden on the Commission but still provide ample notice to small entities. Furthermore, Advocacy has conveniently identified all the small entities affected, the compliance regulations that would impact small entities, and some alternatives the FCC should consider in the revised IRFA, enabling the Commission to issue a new IRFA without delay.
When preparing the revised IRFA, Advocacy reminds the Commission that it must include any proposal or general request for comments that can lead to a final rule even if it is not identified by the Commission as a "tentative conclusion" in the NPRM. The Commission has relied in the past on such general language as the basis of final rules.(62) Advocacy asserts that this practice is impermissible under the APA and RFA. Nonetheless, if the Commission continues to rely on general proposals or requests for comment as the basis of a final rule, the Commission must, at minimum, disclose in the IRFA potential regulations and give small entities adequate opportunity for notice and comment.
Keep in mind that the ultimate benefit of a reasoned IRFA is to elicit information for policymakers from those with hands-on experience in an industry that is subject to rapid change due to enhancements in technology. The Commission needs this information known only to practitioners to avoid erecting unreasonable barriers to competition.
D. Paperwork Reduction Act.
Given the Commission’s incomplete regulatory flexibility analysis and its failure to look at all the compliance burdens on small entities, Advocacy has concerns regarding the accuracy of the Commission’s submission for approval of its estimates on reporting and recordkeeping requirements to the Office of Management and Budget ("OMB"). These concerns will be addressed fully in Advocacy’s comments to OMB.
II. Comments In Response To The Notice Of Proposed Rulemaking.
Aside from the proposed reporting, recordkeeping, and other compliance requirements, the NPRM proposed or sought comment on several regulations that affect how small businesses will deploy advanced telecommunications services. The Commission covers a wide variety of topics and proposals in the NPRM. Advocacy submits that some of these proposals encourage the deployment of advanced telecommunications services by small businesses while others would hinder and delay that deployment. Throughout these comments, Advocacy recommends the same course to the Commission – use regulatory flexibility. Rules that are tailored to adjust to the different sizes of entities competing in the advanced telecommunications market will encourage deployment without crippling small providers of the services.
A. Commission Proposals Beneficial To Small Business Deploying Advanced Telecommunications Services.
The Commission used regulatory flexibility principles in two of its proposed regulations in the NPRM. Advocacy applauds this analysis. Each of these proposals takes into account the alternatives proposed by Congress in the RFA.(63)
1.Collocators Must Only Pay For Cost Of Conditioning Space Used.
The Commission sought comment on whether CLECs should be responsible only for its share of the cost of conditioning the collocation space.(64) Advocacy supports this proposal. By limiting CLEC’s cost of reimbursement to only the space used, the Commission will reduce a barrier to entry for small CLECs. This lesser rate is warranted due to the lower volume of traffic and capacity of equipment that are characteristics of small CLECs. This provision will encourage interconnection by small CLECs, which will in turn encourage the deployment of advanced telecommunications services.
2.Small Collocators May Pay On An Installment Basis.
The Commission proposed in the NPRM to allow CLECs to pay the costs of conditioning collocation costs on an installment basis.(65) Advocacy supports this proposal but recommends a minor modification. By allowing small CLECs to pay on an installment basis, the Commission is reducing a barrier to entry for those carriers. The cost of collocation can be staggering, especially considering the number of physical collocation arrangements needed for a CLEC to compete on an effective level. Installment payments will encourage rapid interconnection by small CLECs, as they would be able to afford interconnection at more central offices at one time. This increased ability to enter a larger number of central offices will increase competition and the deployment of advanced telecommunications services.
Advocacy recommends that the Commission limit the use of installment payments when the CLEC is interconnecting with a small ILEC. When interconnecting with an ILEC that qualifies as a small entity, the CLEC should be required to cover the full cost of conditioning the space used by the CLEC. Advocacy believes this exception should be made for two reasons. First, a small ILEC should not be saddled with financing a small CLEC’s interconnection, as the small ILEC is often of limited means itself and does not have the economies of scale to reduce costs as the large ILECs do. Second, small ILECs tend to be in rural and residential areas. Both of these areas are not immediately attractive to CLECs so an exemption here would not adversely affect competition and the deployment of advanced telecommunications services.
A.Commission Proposals Detrimental To Small Business Deployment Of Advanced Telecommunications Services.
In the course of the NPRM, the Commission proposed several regulations that would inhibit the ability of small businesses to deploy advanced telecommunications services. The NPRM suffers from "Big Guy Myopia."(66) The Commission considered the effect the regulations would have on the large companies but failed to consider the effect on small entities, while applying the rules across the industry. When regulations are applied across the industry, the Commission must weigh their effect upon small entities.
1. Separate Affiliate Requirements Are Unrealistic for Small ILECs.
In the NPRM, the Commission tentatively concluded that an ILEC may form a separate affiliate to provide data services. This separate affiliate would be exempt from the Section 251 interconnection obligations, would be presumed to be non-dominant, and would not be required to file tariffs for provision of interstate services that are exchange access.(67) The Commission proposed the separate affiliate option to encourage deployment of advanced telecommunications services. ILECs can avoid Section 251 regulation by separating out advanced services into an affiliate. This affiliate would be treated in the same manner by the ILEC as any other CLEC.(68) The Commission hopes that since the ILEC’s affiliate is harmed if it discriminates against CLECs, it will be in the ILEC’s economic interest to provide efficient and reasonable interconnection.
The Commission proposed a framework that would prevent the separate affiliate from deriving any unfair advantages from the ILEC and to encourage the separate affiliate to function just like an independent CLEC.(69) This framework is composed of two obligations on the part of the ILEC. First, the ILEC must satisfy adequate structural separation requirements.(70) Second, the ILEC is limited on the transfer of facilities to the separate affiliate.(71)
a.Structural Separation Requirements Are Infeasible For Small ILECs.
To meet the first obligation, the Commission proposed seven different structural separation and non-discrimination requirements. (1) The affiliate must operate independently from ILEC. The two may not jointly own switching facilities, land, or buildings, nor may they jointly perform operating, installation, or maintenance. (2) Transactions must be arm’s length, reduced to writing, available to public inspection. Furthermore, all transactions must comply with affiliate transaction rules. (3) Incumbent and affiliate must maintain separate books, records, and accounts. (4) Incumbent and affiliate must have separate officers, directors, and employees. (5) The separate affiliate must not obtain credit using incumbent as a recourse. (6) Incumbent may not discriminate in favor of its affiliate. (7) The separate affiliate must interconnect with the incumbent pursuant to tariff or an interconnection agreement.(72) The Commission requested comment on whether the same separation requirements should apply to all advanced services affiliates regardless of size of the ILEC.(73)
In response to the Commission’s request for comments, Advocacy recommends that the Commission condition the degree of structural separation necessary to the size of the ILEC. As the Commission pointed out in the NPRM, the purpose of the structural separation is to prevent unfair advantages given by the ILEC(74)and to ensure that affiliates lack the market power of the ILEC.(75) Small ILECs lack market power. They control a limited number of access lines, and those are vulnerable to competition by larger, more powerful competitors. A small ILEC cannot leverage its conventional voice service business to give it an advantage in advanced services. If the small ILEC were to do so, a competitor could easily come in and undercut the small ILEC’s prices. A small ILEC’s network is small and can be replicated with a fraction of the cost and effort needed to replicate a RBOC’s network. Advocacy contends that small ILECs lack the market power to abuse a data affiliate to the same extent that the RBOCs and GTE do. Therefore, the need for strict structural separation is less for small ILECs.
The seven proposed structural separation requirements are not feasible for small ILECs. In particular, small ILECs will not be able to comply with the first, second, and fourth requirements.(76) The first requirement is not feasible for small ILECs, as they have limited resources and equipment, and are incapable of creating a data affiliate that must duplicate the switching facilities of the ILEC. Furthermore, small ILECs have a small work force. Forbidding the small ILECs from providing operating, installation, or maintenance functions for the separate affiliate forces the affiliate to hire an entire new staff. Small ILECs do not have the resources to double their staff. Advocacy contends that small ILECs should be given a lower standard of operating independently. The FCC should allow small ILECs to jointly own switching facilities, land, and buildings with the separate affiliate. More importantly, the FCC should allow small ILECs to perform operating, installation, or maintenance functions for the separate affiliate for which the affiliate must reimburse the small ILEC.
Advocacy believes that the second requirement for structural separation should be modified. Although Advocacy agrees that transactions between the ILEC and the separate affiliate should be arm’s length and reduced to writing, Advocacy objects to a mandate to make the agreement available on the Internet. Many small ILECs do not have Internet home pages. A recent study by Yankelovich Partners, Inc. for IBM and the U.S. Chamber of Commerce showed that approximately 25 percent of small businesses have Internet home pages.(77) Advocacy does not have exact statistics on how many small ILECs have home pages, but Advocacy believes that small ILECs most likely mirror the overall statistics for small businesses. Therefore, the Commission is requiring 75 percent of all small ILECs to obtain server space, create a Web page, and post the contracts between small ILECs and their separate affiliate. Advocacy believes this is unnecessary and has Paperwork Reduction Act and Regulatory Flexibility Act implications as well. The Commission should require these contracts to be available for public inspection, but small ILECs may present the contracts to the requesting party in any reasonable medium.
Advocacy recommends that the Commission completely remove the fourth requirement of structural separation for small ILECs. Under this requirement, no employee of the ILEC could work for the separate affiliate. The small ILEC would have to hire a complete second set of employees from the chief executive officer to the lineman. As stated previously, small ILECs do not have the resources to hire a second set of employees to duplicate functions that the current staff handles. In light of the tight fiscal restraints on small ILECs, Advocacy recommends that the Commission exempt small ILECs from meeting the fourth requirement.
b.Limitations On Transfer Of Equipment Are Infeasible For Small ILECs.
The NPRM tentatively concluded that any transfer of local loops from an ILEC to a separate affiliate would make the affiliate an assign and subject to Section 251 interconnection obligations.(78) However, the Commission requested comments on whether there should be a de minimis exception for the transfer of equipment and whether there should be a time limitation for such transfers(79).
Advocacy believes that a de minimis exception for the transfer of equipment is warranted for small ILECs. The assets of a small ILEC are limited and if it decides to create a separate affiliate, the Commission should allow it to transfer equipment to where it will be the most effective. For this reason, Advocacy believes that the de minimis exception should be expanded for small ILECs. Small ILECs should have the ability to transfer equipment that provides advanced telecommunications services. Furthermore, a longer time limitation for small ILECs is recommended, as they have fewer staff to manage the transfer of facilities.
c.Current Separate Affiliate Proposal Runs Counter To Regulatory Flexibility.
The structural separation requirements and limitations on the transfer of equipment as proposed in the NPRM effectively make the separate affiliate an impossibility for small ILECs. Small ILECs do not have the assets, resources, or staff to meet the requirements as they are currently written. Unless the Commission applies regulatory flexibility, small ILECs will only be able to provide advanced telecommunications services subject to Section 251 obligations.(80)
It is Advocacy’s position that these requirements were written for the RBOCs and GTE. They are the only companies large and rich enough to support a separate affiliate. Also, they are the only companies with enough market power to warrant the strict separation requirements the FCC proposes. However, by creating a separate affiliate, large ILECs are exempted from regulations that are still applicable to small ILECs.
Advocacy also notes that the separate affiliate is not constrained to the operating region of the RBOC. The separate affiliate is free to offer service to customers in the regions of small ILECs and to do so on a non-dominant basis without interconnection obligations. Indeed, it is the small ILECs that must provide interconnection to the large ILECs. Such competition may encourage the deployment of advanced services – but the competition is one-sided. Since small ILECs cannot meet the structural separation requirements, they cannot create separate affiliates and are bound by Section 251 obligations. The large ILECs can offer advanced telecommunications services in small ILEC territories without making those services available for interconnection or resale, while small ILECs must do both.
Advocacy asks the Commission to consider the effect of this inverse regulatory flexibility scheme, where small businesses are regulated more stringently than large businesses. If the separate affiliate requirements are left unchanged with no exception for the different capabilities of small ILECs, the Commission will create a patently unfair situation where small businesses are restricted in their operations and growth, while large businesses are allowed to operate without those burdens. This situation, in Advocacy’s opinion, warrants exemptions and reductions in regulations on small ILECs.
2. FCC Presumptions Of Feasibility Hinder Deployment Of Advanced Telecommunications Services.
a. FCC Presumption That A Collocation Arrangement Offered At One Location Is Feasible At The Other Locations Hinders Deployment Of Advanced Telecommunications Services.
In the NPRM, the Commission proposed if an ILEC offers a particular collocation arrangement at one premise, that collocation arrangement is presumed to be technically feasible at all ILEC premises.(81) Advocacy believes that this presumption will hinder deployment of advanced telecommunications services. Conditions differ widely from central office to central office, especially among small ILECs.*2) What is feasible at one location is not at another location, because of space, equipment available, and other factors.
ILECs will be forced only to offer collocation arrangements that they know they can meet at all locations. Collocation arrangements will be reduced to the lowest common denominator among all the central offices. This will greatly inhibit the ability of small CLECs to interconnect, as the ILECs will only offer a limited number of collocation arrangements that are feasible at all its central offices. Advocacy recommends that the Commission allow CLECs and ILECs flexibility in determining collocation arrangements. Flexibility will encourage interconnection and speed deployment of advanced telecommunications services.
b. CLEC Requests For Feasible Method Of Unbundling Should Be Limited By Section 251(f) Exemptions.
The Commission tentatively concluded that CLECs may request any technically feasible method of unbundling and the ILEC is obligated to provide the particular method requested.(83) The ILEC has the burden to show that the requested method of unbundling is infeasible.(84) Should the ILEC demonstrate the request is not feasible, it may offer another unbundling method that provides the CLEC with a loop equal in quality and functionality to the ILEC’s loop.(85) The CLEC may request other unbundling methods if the first is proven infeasible(86)
In Advocacy’s request for clarification of the Memorandum Opinion and Order ("MO&O"),(87) Advocacy stated that Section 251(f) exemptions should also apply to advanced telecommunications services. Advocacy believes that Section 251(f) applies to the unbundled requirement as well. For rural ILECs, the State Commission determines technical feasibility, and the rural ILEC does not have the burden of showing technical infeasibility. ILECs with fewer than 2 percent of the nation’s access lines have the right to petition the State Commission for exemption, suspension, or modification of an unbundling arrangement. Advocacy believes that allowing rural ILECs some relief, if necessary and in the public interest, is consistent with the 1996 Act and will not harm the deployment of advanced telecommunications services.
Advocacy also recommends that the Commission require a CLEC to list all acceptable forms of unbundling at the initial collocation request. The CLEC will present them in order of preference, and the ILEC must consider them in that order (e.g. before the ILEC can agree to the second arrangement, it must show the first arrangement is infeasible.).(88) Advocacy believes that if a CLEC presents all its preferred means of unbundling at once collocation arrangements negotiations will take less time, as proposal, rejection, counter-proposal will be boiled down to one step, benefiting both CLECs and ILECs.
The Commission does not explain how its conclusion that ILECs must provide interconnection at sub-loop level affects its conclusions on unbundling arrangements. In particular, Advocacy requests a clarification whether a CLEC can request any form of unbundling at the remote terminal(89)
3. Sub-Loop Unbundling Could Create Additional Compliance Requirements And Should Be Subject To Section 251(f) Exemptions.
The Commission tentatively concluded in the NPRM that ILECs must provide sub-loop unbundling and permit CLECs to collocate at remote terminals unless the ILEC shows that sub-loop unbundling is not feasible or there is insufficient room at the remote terminal.(90) The Commission has applied Section 251 obligations to the sub-loop with this conclusion. As discussed above, Advocacy contends that if Section 251 obligations apply so too should Section 251(f) for small carriers.
If the reporting, recordkeeping, and compliance requirements discussed in Section I are extended to include sub-loops and remote terminals, Advocacy is concerned that the regulatory burden on small entities would greatly increase. Due to the number of remote terminals used by local exchange carriers, the Commission may increase compliance requirements several fold, which would place an enormous burden on small entities. The Commission should solicit comment in a revised IRFA on the compliance burdens of this proposal and consider alternatives such as exemptions, reduced reporting requirements, and extended implementation periods to come into compliance.
III. Request For Clarification Of The Memorandum Opinion And Order.
In the MO&O portion of the FCC’s decision, the Commission concluded that advanced telecommunications services are telecommunications services.(91) Furthermore, the Commission concluded that advanced services are either telephone exchange services or exchange access services.(92) Building upon these two conclusions, the Commission declared advanced telecommunications services subject to the interconnection obligations set out in Section 251 of the 1996 Act.(93) The Commission relied upon the similarities of advanced services and conventional telephone service when determining that Section 251 applied to both.(94) As the Commission points out, nothing in the statutory language or legislative history limits Section 251 to only conventional circuit-switched service(95).
Advocacy concurs with the Commission’s assessment that advanced telecommunications services are telephone access services or access exchange services and thus, Section 251 obligations should apply. However, Advocacy believes that the entirety of Section 251 should apply to advanced telecommunications services, including the provisions for exemption, suspension, or modification under Section 251(f) for rural carriers. Congress expressly provided an opportunity for certain rural telephone companies to petition a State Commission to grant an exemption,(96) or grant a suspension, or modification for certain interconnection requirements as a means to reduce the significant economic impact on both telecommunications users and small carriers.(97)
However, the MO&O does not discuss Section 251(f) nor its applicability to advanced telecommunications services. Advocacy requests that the FCC address this issue in a clarification of its MO&O and state unambiguously that a State Commission has the authority to grant an exemption, suspension, or modification upon request of a rural ILEC for providing interconnection for advanced telecommunications if such a grant is "consistent with the public interest, convenience, and necessity."(98) Applicability of Section 251(f) is vital for the continued operation of small ILECs.
Since many State Commissions have already granted exemptions to Section 251 obligations for conventional services, it is reasonable to presume that interconnection for advanced telecommunications services are also exempt since the provision of advanced telecommunications services require additional costs and facilities above that of conventional service. Advocacy hopes that State Commissions will consider an automatic extension of its grant for relief of conventional services interconnection obligations under Section 251(f) to advanced telecommunications services. It would be burdensome for a rural carrier to be required to also petition for advanced services interconnection relief when it has already received relief from conventional interconnection.
However, we recognize that this presumption does not work in the other direction. A State Commission deeming that conventional service Section 251 obligations are feasible does not necessarily mean that Section 251 obligations are also feasible for advanced telecommunications services. A special showing for providing advanced services may be warranted.
Advocacy also hopes that State Commissions will consider implementation of a single petition process to address both conventional and advanced interconnection as described in Section 251(f). A single petition process would reduce any administrative burdens for both rural carriers and State Commissions, increase efficiency, minimize economic burdens on small ILECs and CLECs, and encourage deployment of advanced telecommunications services by reducing the amount of time necessary to process interconnection agreements.
IV. Conclusion.
The purpose of the Office of Advocacy’s comments in this proceeding are threefold. Advocacy addresses issues in the Commission’s Initial Regulatory Flexibility Analysis, Notice of Proposed Rulemaking, and Memorandum Opinion and Order.
First, Advocacy believes the Commission failed to meet the statutory requirements of the Regulatory Flexibility Act, as amended, by its (1) failure to identify properly and undertake an analysis of all classes of small entities affected by the proposed regulations; (2) failure to describe adequately the proposed reporting, recordkeeping, and other compliance requirements contained in the NPRM; and (3) failure to consider alternatives to minimize significant economic burdens the proposed regulations would place on all small entities. Therefore, Advocacy strongly recommends that the Commission revise and re-submit the IRFA for public notice and comment as the only means to cure these severe deficiencies.
Second, Advocacy supports the Commission’s proposals that collocators must only pay for cost of conditioning space used and small collocators may pay on an installment basis. However, Advocacy recommends that the Commission use regulatory flexibility to temper the separate affiliate requirements and the limitations on the transfer of equipment. Advocacy is opposed to the proposals that create a presumption that a collocation arrangement offered at one location is feasible at the other collocations. Advocacy also believes that CLEC requests for a feasible method of unbundling at the central office and the remote terminal should be limited by Section 251(f) provisions.
Finally, Advocacy respectfully requests the Commission to issue a clarification of its Memorandum Opinion and Order to make explicit that Section 251(f) exemptions, suspensions, and modifications also apply to advanced telecommunications services.
The Commission should recognize, as intended by the RFA, that a reasoned analysis in the IRFA will allow the FCC to reach the desired effect with the large ILECs, while not overburdening the small ILECs and CLECs. Regulatory flexibility analyses are a powerful tool. Advocacy encourages the FCC to utilize it in this proceeding for the benefit of the public interest, convenience, and necessity.
Respectfully submitted,
Jere W. Glover, Esq
Chief Counsel for Advocacy
S. Jenell Trigg, Esq
Assistant Chief Counsel for
Telecommunications
Eric E. Menge, Esq.
Assistant Chief Counsel for
Telecommunications
September 25, 1998
ENDNOTES
1. In re
Deployment of Wireline Services Offering Advanced Telecommunications Capability, Memorandum Opinion and Order, and Notice of Proposed Rulemaking, CC Docket No. 98-147, FCC 98-188 (rel. Aug. 7, 1998)("NPRM").2. Codified as amended at 15 U.S.C. §§ 634 a-g, 637.
3. 15 U.S.C. § 634c(1)-(4).
4. Pub. L. No. 96-354, 94 Stat. 1164 (1980)(codified at 5 U.S.C. § 601 et seq.).
5. Pub. L. No. 104-121, 110 Stat. 857 (1996)(codified at 5 U.S.C. § 612(a)).
6. 47 U.S.C. § 706.
7. Regulatory Flexibility Act, Pub. L. No. 96-354, § 2(b), see also Advocacy 1998 RFA Implementation Guide.
8. 5 U.S.C. § 601(4)-(5).
9. See 5 U.S.C. § 605.
10. See generally, Office of Advocacy, U. S. Small Business Administration, The Regulatory Flexibility Act: An Implementation Guide for Federal Agencies, 1998 ("Advocacy 1998 RFA Implementation Guide").
11. See 5 U.S.C. § 611; The sections of the RFA that are subject to independent judicial review of final agency action are Sections 601, 604, 605(b), 608(b) and 610. 5 U.S.C. § 611. Sections 607 and 609(a) shall be reviewable in connection with the judicial review of section 604. Id.
12. Thompson v. Clark, 741 F.2d 401, 405 (D.C. Cir. 1984); see also Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 538 (D.C. Cir. 1983).
13. 5 U.S.C. § 604.
14. 5 U.S.C. § 603(a).
15. 5 U.S.C. § 603(b)-(c).
16. Id.
17. 5 U.S.C. §§ 603(b)(3), 603(b)(4).
18. NPRM, para. 222.
19. Regulation of Small Telephone Companies, Notice of Proposed Rulemaking, 51 Fed. Reg. 45912 (proposed Dec. 23, 1986).
20. The SBA is the exclusive arbiter of small business size standards, as authorized by Congress. See Northwest Mining Assoc. v. Babbitt, 5 F. Supp.2d 9, 15 (D.D.C. 1998)(citation omitted)("The RFA requires agencies to use the Small Business Administration’s definition of small entity."). Therefore, the SBA’s regulations are controlling when determining a definition of small business. The SBA defines small ILECs under Standard Industrial Classification Code 4813, Telephone Communications, Except Radiotelephone, as entities with 1500 or fewer employees. 13 C.F.R. § 121.201.
21. See Section I.B.2.a-f, infra.
22. 5 U.S.C. § 603.
23. 5 U. S.C. § 603(b)(4)(emphasis added).
24. NPRM, para. 134.
25. Id.
26. Id. para. 225.
27. Id.
28. Id. para. 135.
29. ILECs must review every type and brand of equipment that could be used in interconnection and determine if it meets safety standards. The ILECs must also compile a list of every piece of equipment it uses in the central office, which may be extensive if the ILEC has many central offices that were designed and equipped in different manners. Both of these requirements place burdens of small ILECs.
30. NPRM, para. 142.
31. Advocacy believes that the term "tentatively concluded" is irrelevant to determining whether or not to include a proposed regulatory requirement in the IRFA. The FCC has used language similar to this general request for comment as the basis for a final rule in the past. See e.g., In re Telecommunications Carriers’ Use of Customer Proprietary Network Information and Other Customer Information, Second Report and Order and Further Notice of Proposed Rulemaking, CC Dkt. 96-115 (rel. Feb. 26, 1998) ("CPNI Second R&O").
32. The physical removal of the equipment involves expenses in labor and transportation. Also, the ILEC may be required to replace the obsolete equipment.
33. NPRM, para. 163.
34. See Section I.B.2.a., supra.
35. Compliance could require the purchase of new equipment or altering existing equipment.
36. See Section I.B.3., infra.
37. 5 U.S.C. § 603(c)(4).
38. NPRM, para. 146.
39. See Section II.B.3, infra.
40. NPRM, para. 147.
41. Id.
42. 5 U.S.C. § 603(b)(4).
43. See Section II.B.3, infra.
44. See Section I.B.3., infra.
45. NPRM, para. 157.
46. Id.
47. Id. para. 225.
48. Id. para. 167.
49. Id. para. 171.
50. Id.
51. 5 U.S.C. § 603(c)(4).
52. Uniform National Standards, Collocation Space Report, Detailed Loop Information Report. See Section I.B.2. (c), (e), and (f)., supra.
53. 5 U.S.C. § 603(c).
54. 5 U.S.C. § 603(c)(1)-(4).
55. 5 U.S.C. § 603(c)(1)-(4).
56. See Section I.B.1., supra.
57. NPRM, para. 226.
58. McGregor Printing Corp. v. Kemp, 20 F.3d 1188, 1194 (D.C. Cir. 1994); see also MCI Telecommunications Corp. v. FCC, 842 F.2d 1296 (D.C. Cir. 1988).
59. Thompson v. Clark, 741 F.2d 401, 405 (D.C. Cir. 1984); see also Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 538 (D.C. Cir. 1983).
60. 5 U.S.C. § 611.
61. See Southern Offshore Fishing Ass’n v. Daley, 995 F. Supp. 1411 (M.D. Fla. 1998), see also Northwest Mining Ass'n v. Babbitt, 5 F. Supp.2d 9 (D.D.C. 1998).
62. See, e.g,. CPNI Second R&O; see also Office of Advocacy Ex parte Petition for Reconsideration, Dec. 12, 1997 (commenting on the imposition of the anti-brokering and hoarding rules after inadequate notice and comment for In re Toll Free Service Access Codes, CC Dkt. No. 95-155, Second Report and Order, FCC 97-123 (rel. Apr. 11, 1997)).
63. 5 U.S.C. § 603(c).
64. NPRM, para. 143.
65. Id.
66. Commissioner Michael J. Powell, Remarks before the Independent Telephone Pioneer Association (May 7, 1998)(transcript available at <http://www.fcc.gov/commissioners/powell>(visited Sept. 22, 1998)).
Those of you who have heard me speak about mid-size and smaller carriers know that I think most policymakers within the Beltway suffer from what I have termed "Big Guy Myopia" -- that is, we often set policies and measure the success or failure of such policies based on the positions of the major local and long distance companies. Faced with the momentous task of setting and removing policies on a national scale, we too often rush to address the concerns of the major players and deal with the smaller players as an afterthought, if at all. We thereby overlook the many mid-size and smaller companies that are active in the marketplace.
Id.
67. NPRM, para. 86.
68. The separate affiliate would be required to request interconnection with the ILEC in the same manner as any other CLEC. Furthermore, any interconnection agreement with the affiliate would be available to independent CLECs.
69. NPRM, para. 87.
70. Id. para. 92.
71. Id.
72. Id. para. 96.
73. Id. para. 98.
74. Id. para. 87.
75. Id. para. 85.
76. Id. para. 96.
77. Leslie Goff, Mom-and-Pop Businesses Go Boom on the Web, CNN Interactive, Aug. 26, 1998 (visited Sept. 22, 1998) <http://www.cnn.com/TECH/computing/9808/26/mompop.idg>.
78. NPRM, para. 107.
79. Id. paras. 108, 109.
80. As discussed above, Advocacy believes that Section 251(f) relief for small ILECs is warranted. Without the exemption, suspension, and modification provisions Congress designated for their use, small and rural ILEC bear the full cost of regulation. See Section II, supra.
81. NPRM, para. 139.
82. Small ILECs’ systems are often developed at different times and use a variety of equipment and designs to accommodate need from the ILECs’ customers.
83. NPRM, para. 171.
84. Id.
85. Id.
86. Id.
87. See Section III, infra.
88. A CLEC should be able to accept at its option a lesser-preferred unbundling arrangement without the ILEC proving infeasibility of the higher ranked arrangements.
89. See Section II.B.3, infra.
90. NPRM, para. 174.
91. NPRM, para. 35.
92. Id. para. 40.
93. Id. para. 46.
94. Id. para. 35.
95. Id. para. 41.
96. 47 U.S.C. § 251(f)(1).
97. 47 U.S.C. § 251(f)(2)(A).
98. 47 U.S.C. § 251(f)(2)(B).