PUBLIC NOTICE FEDERAL COMMUNICATIONS COMMISSION 1919 M STREET N.W. WASHINGTON, D.C. 20554 ______________________________________________________________________________ News media information 202/418-0500 Recorded listing of releases and texts 202/418-2222 THE COMMON CARRIER BUREAU SEEKS COMMENT ON Telecommunications Access Provider Survey CCB-IAD 95-110 Comments Due: December 11, 1995 Reply comments Due: January 16, 1996 1. The Common Carrier Bureau is soliciting comments on proposed reporting requirements that would apply to companies that provide access to interstate telecommunications service. In particular, comment is sought on the proposed form, titled Telecommunications Access Provider Survey, which is attached to this Public Notice. Specific filing instructions will be written after the Bureau reviews comments. 2. Local exchange carriers (LECs) and other local telecommunications service providers offer services that permit access to interstate telecommunications networks. Commission actions to foster competition in local access markets are encouraging efficiency gains, increasing choices available to consumers, and leading to lower rates for interstate services. The Commission has concluded that an information collection program is necessary to monitor the development of access competition. The Commission delegated authority to the Chief, Common Carrier Bureau, to formulate the detailed elements of this reporting program, to decide which service providers must provide information, and to specify the format and timing of these reports. 3. Gathering systematic information on local competition will support Commission decision making generally as well as on a market-by-market basis. The data will be used to review access charge, expanded interconnection, and other policies designed to increase competition in local exchange and interstate access markets. In addition, systematic information will be useful for evaluating the interplay between federal and state actions to foster competition, for evaluating infrastructure deployment, and for evaluating the provision of services to rural areas. 4. The proposed reporting requirement has been developed with the assistance of LECs, competitive access providers (CAPs), and state regulators. The data we propose to collect would highlight areas where pro-competitive policies have been effective and help reform markets where barriers to entry continue to exist. Regulators are faced with many complex policy questions. Uninformed decisions by regulators could harm all parties in the long run. Thus, many in the industry recognize the importance of having available accurate and independent measures of local exchange and access competition. State regulatory commissions also have an interest in our developing reporting requirements. Our efforts reduce their need to collect data and allow state commissions to compare the development of competition in their state with the development of competition in other states. 5. Our intent is to develop a set of reporting requirements that is as narrow as possible within the constraints of our needs. We have already consulted with several parties in developing the proposed requirements and welcome comments that would help us fulfill our mission at the lowest possible cost to all involved. We recognize that small changes in our requirements might allow companies to file data that they already maintain for their internal use, saving the filers the time and expense of gathering new data. We are also mindful that revealing competitively sensitive data could harm some competitors. We urge parties to consult their marketing, accounting, operations, and data systems personnel in order to develop creative ideas to move us toward our goals. Interested parties should file comments on the specific data requirements, definitions of terms, the geographic definition of reporting areas, which local service providers should file data, how frequently data should be filed, whether any data should be held in confidence, the best means for filing data electronically, and the burden associated with filing each of the proposed schedules. A. Which Local Service Providers Would File 6. Our intent is to collect data from all companies that play a role in local exchange and access competition. We intend to collect data from all providers of services that customers to access interstate telecommunications networks or services. Such companies are referred to herein as access providers. In order to evaluate the extent of competition in local exchange and access markets, we propose to collect a small amount of data from all access providers. Access providers would be subject regardless of whether they were deregulated or forborne from certain state or federal regulations. Local exchange and access providers would be subject regardless of the technology used to provide access. Thus, companies that provide interstate access over traditional local exchange, cable television, satellite, wireless, or other facilities would be required to report. Pay telephone providers, call aggregators such as hotels and hospitals, paging service providers, and shared tenant service providers operating as non-common carriers would not be required to report. 7. Local exchange and access providers would file all schedules at the "Reporting Entity" level, which represents a consolidation of all local exchange and access service activities of all commonly owned entities. Two access providers would be considered to be affiliates if a single entity owned or controlled directly or indirectly a majority interest in each at year end. The reporting entity might, for example, be a parent holding company, a management affiliate, or an access provider. 8. All local exchange and access providers -- about 1,600 -- would be required to file Schedule 1 of Telecommunications Access Provider Survey. Schedule 1 requests total revenues for three categories of local exchange and local access service, a small amount of publicly available data, and a list of all access providers covered by the filing. 9. In order to reduce the overall burden on filers, we propose that reporting entities file Schedule 2 only if they and their affiliates collectively bill more than $10 million for commercial mobile radio service (CMRS), wireline services directly provided to end users, and access services provided to carriers. Furthermore, Schedule 3 would be filed only for those reporting areas in which their revenues from the aforementioned services exceeded a threshold based on one percent of the corresponding revenues reported by the largest LEC in the reporting area for the prior year. For example, if Bell Atlantic billed $2.6 billion for service in New Jersey in the prior reporting year, then other reporting entities would report detailed data for New Jersey if their billed revenues exceeded $26 million for the reporting year. Schedule 3 provides detail on the types of revenues that would be used to determine whether local exchange and access providers surpassed the reporting thresholds. 10. About 400 LECs and cellular carriers each reported more than $10 million of revenue on 1994 Telecommunications Relay Service (TRS) Fund Worksheets. However, since some types of revenue would not be counted for meeting thresholds, and since many of these 400 carriers are affiliates, about 100 reporting entities would be required to file nationwide totals on Schedule 2. These reporting entities would file Schedule 3 data for an average of five specific reporting areas. Fewer than 10 CAPs reported more than $10 million of revenue. This suggests that relatively few CAPs would file either Schedule 2 or Schedule 3 for 1995. 11. Pay telephone and paging service providers would be exempt from filing because their sub-markets are relatively competitive and because these services tend to complement rather than compete with voice access services. Shared tenant service providers would be exempt because they do not compete generally in local access markets. Comment is sought on whether these or any other category of access service provider should be exempt from filing or subject to modified requirements. 12. Access providers with less than one percent of revenues in any market and with less than $10 million in revenues overall are not likely to represent significant competition. Comment is sought on whether the $10 million threshold for filing Schedule 2 and the one percent threshold for filing Schedule 3 are the best means of ensuring that reporting requirements are not imposed unnecessarily. Comment also is sought on the types of revenues to be used in measuring thresholds. Comment is sought on whether some types of access providers should be subject to different thresholds or whether different thresholds should apply to different geographic markets. With the above filing thresholds, a single LEC might be the only access provider filing data for some reporting areas. Comment is sought on whether modified filing requirements would be appropriate in such circumstances. B. Definition of Reporting Areas 13. We propose that each state, the District of Columbia, Puerto Rico, and the eighteen largest cities be considered separate reporting areas. This represents a total of seventy reporting areas. The following Primary Metropolitan Statistical Areas (PMSAs or MSAs in some cases) would be reporting areas: Atlanta, Boston, Chicago, Cleveland, Dallas, Detroit, Houston, Los Angeles, Miami, Minneapolis - St. Paul, New York City, Philadelphia, Phoenix, San Antonio, San Diego, San Francisco, San Jose, and Seattle. These metropolitan areas either have populations in the city limits exceeding one million, or are part of consolidated metropolitan statistical areas with populations exceeding 2.5 million. These metropolitan areas would be defined geographically as a list of counties based on Census Bureau PMSA or MSA definitions. Therefore, a reporting entity would file a Schedule 3 for New York City if its total revenues for Bronx, Kings (Brooklyn), New York (Manhattan), Putnam, Queens, Richmond (Staten Island), Rockland, and Westchester counties exceeded the New York City threshold, and a second Schedule 3 for all other counties in New York State if the revenues for those counties exceeded the threshold for the rest of the state. In early 1996, traditional LECs would be required to file 1994 revenues for CMRS, wireline services directly provided to end users, and access services provided to carriers. This data would be used to calculate thresholds for reporting areas. All access providers would then be able to file 1995 data on May 1, 1996. 14. The industry already uses many geographic classification systems for specific purposes. The RBOCs have operating restrictions tied to Local Access and Transport Areas (LATAs). Cellular general service areas (CGSAs) are based on MSAs and rural statistical areas (RSAs). Personal communications service (PCS) service areas are based on basic trading areas (BTAs) and major trading areas (MTAs). No single system, however, is used by all access providers. The tiered proposal, some data nationally, some data by state or MSA, and a minimal amount of data by zip code, is intended to provide the greatest flexibility in analyzing markets while keeping reporting burden to a minimum. All reporting entities should be able to identify data by state, PMSA (defined by counties), and zip code using existing internal records because the classification can be made simply by using customer addresses. 15. Some cities, in addition to states, have been defined as reporting areas because competition has tended to develop first in the largest cities. Comment is sought on the appropriateness of reporting areas as defined above. Comment is sought on whether the seventeen cities identified above should be defined as primary or consolidated metropolitan statistical areas, or whether additional cities should be listed as reporting areas. Parties favoring alternative definitions of reporting areas should explain how the alternative would be practical for all filers and how the alternative would be relevant to the analysis of local competition and to achieving the goals of this data collection effort. C. The Data to be Collected 16. The proposed requirements consist of three schedules. Schedule 1 would collect a small amount of data for all access providers. Schedule 2 and Schedule 3 would be filed only by the largest access providers and would provide data on revenues, number of customers, minutes of service, measures of capacity, expenses, and details on the structure of the market. These are useful measures of market share, service growth, the degree to which particular entrants compete for the same customers, and entry barriers. The schedules do not request pricing data. 17. Schedule 1 requests total local and access revenue for all affiliates of the reporting entity. Local and access revenue is defined as billed revenue from CMRS, from wireline services directly provided to end users, and access services provided to carriers. Billed revenue would include both domestic and international service provided directly to the customer. It would include all revenue billed to the customer if the service provider furnished the first switch to which the customer's access line was connected or through which the customer's wireless communications first passed, regardless of whether the provider owned, leased or resold the switch. 18. Schedule 1 also seeks information on the overall size, including non- communications activities, of the reporting entity. Size is an indicator of a firm's access to capital markets and therefore its capability to expand operations. Because many privately held firms consider data related to non-carrier activities to be highly proprietary, Schedule 1 requests information already filed with the Securities and Exchange Commission (SEC) or other domestic or foreign government bodies. Although such data may be publicly available, many access providers do not file with the FCC the names of publicly traded affiliates. 19. Since foreign-owned firms may not file with the SEC or other government bodies, reporting entities must state whether 25% or more of the reporting entity is owned directly or indirectly by a foreign entity. At one time foreign ownership of common carriers was rare, but this may no longer be the case. Schedule 1 therefore requests this information. 20. Schedule 1 requires the reporting entity to show the legal names of all affiliated access providers and the Telecommunications Relay Service (TRS) Fund identification number associated with each access service affiliate. Each common carrier with interstate revenue is required to file an annual FCC Form 431 TRS Fund Worksheet. Carrier names and TRS identification numbers are published in the Locator. 21. Schedule 1 would collect limited information on all affiliates of the reporting entity for several reasons. Having all access providers file no matter how small they are, and having all affiliates identified, ensures that some information is available on every entrant and allows review of whether access providers meet thresholds for filing other schedules. Total revenue from providing local and access service provides an indicator of the extent to which the reporting entity is competing in local exchange and access markets. Total revenue and assets from all affiliates provides an indicator of the ability of a firm to become a local exchange or access service competitor. Filing a list of all access service affiliates ensures that no parts of the company or affiliates are left out. Having TRS Fund identification numbers would permit the FCC to cross-check data provided with data filed on TRS worksheets. 22. Schedule 2 requests nationwide totals for revenue, expense, facilities, traffic, and service areas. The first block requires the reporting entity to summarize revenue data that is already filed on affiliate company FCC Form 431 TRS Fund worksheets. This cannot be done accurately from the filed TRS worksheets because some carriers do not properly identify their holding company. TRS worksheet data for individual carriers are not available to the public. Filing summarized TRS worksheet revenue data on Schedule 2 ensures that some overall revenue data is available to the public for the reporting entity, including revenues from interexchange affiliates. The data provides an indication of the types of services provided by the reporting entity and affiliates. This data should help evaluate issues regarding the relationship between local exchange and other types of access service activities. 23. Schedule 2 requests nationwide totals for uncollectibles associated with telecommunications revenue. Access providers would report the amount of uncollectibles included in the billed revenue that they report. Since access providers have different policies regarding whether billed revenue reflects all amounts actually billed to customers, the amount of uncollectibles is needed so that revenues of different access providers can be compared. The forms do not seek information on marketing and customer operations expenses, although this data might provide an indication of the extent to which access providers are actively marketing services. A high ratio of marketing expense might signal attempts to expand market share. Comment is sought on whether data should be gathered on marketing and customer operations expense. 24. Schedule 2 also contains a checklist by five-digit zip code. Access providers would identify those areas in which they had a business, a residential, or a wireless end user as of year end. For this purpose, customers would be counted only if the filers provided or resold the first carrier switch to which the customer's line was connected. Thus, interexchange carriers (IXCs) would report only customers that they served directly and not, for example, customers with a non-resold LEC switch interposed between the IXC and the end user. A moderate amount of programming may be needed to generate zip code data from billing records. The zip code data, combined with demographic data from the U.S. Department of Commerce Bureau of the Census and other sources, would be used to allocate data collected on a reporting area basis to smaller geographic areas in order to examine the development of competition in markets defined more narrowly than defined for any other reporting purpose. Being able to combine reported data with Census data is important to evaluating competition in specific geographic areas. Census data allows analysis that controls for demographic differences such as population, income, and level of industry. Data by zip code will also permit analysis of infrastructure diffusion and the extent of competition in rural areas. 25. Reporting the presence of customers by zip code should be easier than reporting for other detailed geographic units. Access provider billing records typically have the customer's zip code as part of the customer's address. Considerable data is available by census tract, for example, but it would take a large effort for some access providers to translate customer addresses to census tracts. LEC wire center boundaries would have an acceptable level of detail, but this scheme would provide problems for other providers of local telecommunications services and Census does not publish demographic data by wire center. Comment is sought on whether access providers should provided data by zip code or by some other geographic unit. 26. Schedule 3 requests data on revenue, expense, facilities, access lines, traffic, and the names of serving affiliates on a reporting area basis. Data for individual reporting areas is necessary because access provider totals may obscure important regional differences. Taken together, these data provide an important resource for analyzing the extent of competition for specific geographic areas. 27. Schedule 3 requests revenues for business and residential customers. However, only two disaggregations are requested: monthly and non-recurring charges versus revenue billed on a per-minute or per-call basis. These represent very aggregated service classifications, which should reduce both the reporting burden and the degree to which access providers are required to report highly sensitive business data. Collecting data for individual services would probably create endless definitional problems because access providers do not offer generic services. Separating revenues by business and residential customers is important to evaluate the extent to which each class of customers benefits from the introduction of competition. 28. Schedule 3 also requests payments to and receipts from other telecommunications service providers for facilities and access. Access expense -- for both intrastate and interstate access -- and the cost of communications services or facilities purchased for resale must be considered in evaluating the overall size of a market, the degree of competition, and the extent to which individual filers are providing services by or for resale. 29. Schedule 3 requests limited information on access provider facilities in each reporting area. Kilometers of fiber, the number of buildings connected to the access provider's fiber network, kilometers of cable, the number of switches, and the number of cell/transmitter sites show the degree to which competitors have facilities, and such information also provides an indicator of the access provider's ability to expand service quickly. Access providers should report all facilities used to provide telecommunications service in the market, including facilities of affiliates, because all such facilities are potentially available to provide local telecommunications service. 30. Schedule 3 requests the number of lines provided to customers in each reporting area. Total lines provides one important definition of the size of each market. Breakdowns are requested for residential, business, high-capacity lines, and mobile units, with further breakdowns by ordinary access versus special, dedicated or private line access. These breakdowns represent important market segments. For example, an access provider that provides only residential lines may not currently compete with an access provider that provides only DS3 lines, but might be more of an entry threat than access providers that did not serve any customers directly. Schedule 3 also requests that access providers show the number of lines provided by resale. Resale has enabled access providers to enter markets inexpensively. The ability to buy services in bulk often translates to lower prices to end users. Thus, tracking the extent to which access providers resell lines helps evaluate the development of competition in a market. 31. Schedule 3 requests local, intrastate toll, and interstate switched minutes originated from business and residential customers. The schedule also requests that access providers disaggregate originating minutes by where the minutes end up -- that is, terminated with an end user, given to an IXC, a CAP, etc. Similarly, Schedule 3 requests that access providers disaggregate minutes that they terminate in the reporting area by the source of those minutes. These profiles would identify situations where access providers originate significantly more or less traffic than they terminate and provide information about the interconnection and termination policies of access providers. This data would also be useful for cross-checking data by classes of access providers. In addition, the minutes data can be combined with revenue data in order to track access and billed revenue per-minute, which can be used to evaluate interconnection and pricing trends. 32. Schedule 3 does not contain a checklist of information on conditions facing potential competitors. Parties have submitted checklists in CC Docket No. 94- 1 and in other contexts. No single checklist can be dispositive for all of the issues that may face regulators. However some information on market structure may be necessary to understand the state of competition in specific markets and to analyze regulatory changes that might best promote competition. Changes in market performance data -- such as minutes and revenues -- can be compared to specific market rules in order to determine empirically the relationship between various market rules and the development of competition. Checklists could cover the presence of dialing parity or number portability, whether new entrants have access to rights of way, and the availability of unbundled local loops. Comment is sought on whether a checklist should be included in Schedule 3 or whether such information should be collected by other means. Comment is sought on the appropriate wording and instructions for possible checklist items. 33. Parties are invited to comment on the proposed data elements. Parties should comment on the types of analyses of local competition that should be supported by data, the adequacy of specific data elements for these purposes, and whether the access providers could actually produce the requested data. In addition, comment is sought on appropriate definitions and other instructions that might ensure that access providers file consistent data that meets regulatory needs. For example, comment is sought on whether access providers or IXCs should report minutes of traffic originating or terminating over dedicated access lines or over LEC special access facilities. D. Frequency of Filings 34. We propose that access providers file local competition data annually. The initial reports, for calendar year 1995, would be filed by May 1, 1996. This would permit access providers to close their books and provide reliable data that is consistent with other financial reports, including TRS worksheets. Semi-annual or quarterly filing would permit closer evaluation of trends and might significantly speed any regulatory action keyed to some threshold showing of the degree of competition in a market. More frequent filing, however, would increase the record keeping and reporting burden. As noted above, our tentative schedule would have the largest LEC in each reporting area file 1994 revenues for CMRS, wireline services directly provided to end users, and access services provided to carriers. This data would be used to calculate thresholds for reporting areas. All carriers would then be able to file 1995 data on May 1, 1996. Comment is sought on whether reports should be filed more frequently than annually -- for example quarterly -- or whether the frequency should decrease or end altogether as competition develops. E. Confidentiality of Data 35. Comment is sought on which, if any, of the data specified in the attached schedules should be accorded proprietary treatment. In particular, the parties should identify which data elements would be competitively sensitive if filed publicly or if published in industry totals, explain how such release might be damaging, and suggest possible innovative collection procedures that might achieve our aims while protecting filers. Comment is sought on which types of data, if any, should be kept confidential. Comment is sought on whether some data might be sensitive when filed, but might be less so as time passes or whether some alternative collection procedures might reduce the need to keep some data confidential. F. Electronic Filing and Records Retention 36. We propose that common carriers file all data electronically in a standardized format and also file paper copies of their reports. Filing electronically allows us to use the data efficiently. We expect to perform complex comparisons on a market-by-market basis, which will require data in machine-readable format. The draft schedules were created in Lotus 123 version 3.1 format. One possibility is for data to be filed on 3 1/2 inch disks in Lotus format. A possible spreadsheet version of the reporting form is included in the LCOM1PN.ZIP file described below. Comment is sought on the best means of data presentation, storage and electronic filing. 37. Part 42 of the Commission's rules governs record keeping by common carriers. We seek comment on whether the filing manual should specify particular information or records that should be retained to support or supplement carrier data submissions. For example, should reporting entities be required to maintain records of revenue for reporting areas in which they have less revenue than the threshold for filing data for a reporting area? G. Estimates of Burden 38. The Bureau estimates that filing a Schedule 1 would create a burden averaging 5 hours per reporting entity each year. The Bureau estimates that filing a Schedule 2 would require approximately 80 additional hours per year. The Bureau estimates that filing a Schedule 3 for one reporting area would require an additional 40 hours per year. These estimates include the burden associated with additional methods and record keeping needed to ensure that data is available, as well as the actual collection, review, and production of reports. The overall average burden is based on the assumption that 1,600 reporting entities would file a Schedule 1 for 1995, 100 carriers would file a Schedule 2, and that the average carrier filing a Schedule 2 would file a Schedule 3 for five reporting areas. Based on these assumptions, the average reporting burden would be 24 hours per reporting entity. 39. Comment is sought on the assumptions that underlie the burden estimate. Comment is sought on whether the proposed collection of information is necessary for the proper performance of the functions of the FCC. Comment is sought on the practical utility of the data to the FCC and to others. H. Procedures 40. Initial comments should be filed on or before December 11, 1995, and reply comments should be filed on or before January 16, 1996. All comments filed in response to this notice will be considered before any final reporting form and reporting manual is adopted. All comments should include the Industry Analysis Division (IAD) file number CCB-IAD 95-110. 41. The draft reporting form is available for reference in the Common Carrier Bureau's Industry Analysis Division at 1919 M Street, N. W., Room 533. Copies may be purchased from International Transcription Services (ITS), 2100 M Street, N.W., Suite 140, Washington, D.C. 20037, (202) 857-3800. The draft reporting form can also be downloaded from the FCC-State Link computer bulletin board system at (202) 418-0241 [BBS file name LCOM1PN.ZIP]. FCC-State Link can also be reached through NTIS's FedWorld gateway BBS system using their telnet internet node fedworld.gov. Alternately, the document can be downloaded from the Industry Analysis Division's World Wide Web home page, which can be reached through the Common Carrier Bureau's home page at http://www.fcc.gov/ccb.html. For further information, contact Jim Lande of the Industry Analysis Division at 202- 418-0948 or at JLANDE@FCC.GOV through the internet. - FCC -