May 26, 1995 COMMISSION SUBMITS DEREGULATORY LEGISLATIVE PACKAGE TO CONGRESS The five commissioners of the Federal Communications Commission have recommended to the Congress a package of 37 deregulatory and streamlining proposals for consideration in the upcoming FCC reauthorization process. In their transmittal letter of May 25, 1995, the five Commissioners noted that nearly all of the proposals "are deregulatory or pro-competitive in nature in that their enactment will eliminate certain Commission functions, privatize other responsibilities, reduce regulatory burdens on industry, increase telecommunications competition, save agency resources, or otherwise streamline agency processes." The FCC proposals, for example, would: Provide blanket licensing for the operation of radio equipment on ships, aircraft, and in the personal radio services, eliminating over 200,000 separate license applications and application fees a year; Authorize the use of non-governmental, independent testing labs to test and/or certify radio and computer equipment, speeding up the equipment authorization process; Streamline the license renewal process for broadcast and all other FCC licensees; Privatize FCC inspection of ship radio stations; Repeal mandatory FCC setting of depreciation rates for common carriers; Expedite the processing of applications for Instructional Television Fixed Service (ITFS); and Eliminate the duplicative filings currently required for both a construction permit and an operating license before a broadcast station can go on the air. In its May 25 letter, the Commission further noted that 32 of its 37 legislative proposals were highlighted in a summary of FCC staff legislative proposals released on February 1, 1995 as part of a "Reinventing Government" report entitled Report to the Commissioners: Creating a Federal Communications Commission for the Information Age. That report also summarized 35 other FCC staff proposals to further streamline and deregulate which can be carried out under existing legislative authority, many of which the FCC has already implemented. Seven of the FCC's legislative proposals, such as codifying the policy of forbearing from regulating "non-dominant" common carriers and authorizing the FCC to require local telephone exchange companies (LECs) to permit competitive telephone providers to connect their facilities to the LEC network to achieve "expanded interconnection," are identical or similar to provisions in the pending telecommunications reform legislation, S. 652 and H.R. 1555. Finally, the Commission has submitted 22 of its 37 proposals to the Congress previously, including 13 which passed the House of Representatives on October 7, 1994 as part of H.R. 4522, the FCC Authorization Act of 1994. The Senate, however, did not act on the legislation before the 103rd Congress adjourned. Attached is an Executive Summary of the FCC's 1995 legislative proposals. Letter Action by the Commission, May 25, 1995. Commissioners Hundt (Chairman), Quello, Barrett, Ness and Chong. - FCC - For more information, please contact Judy Harris, Director, or Steve Klitzman, Associate Director, FCC Office of Legislative and Intergovernmental Affairs, at 202-418-1900. Executive Summary of Federal Communications Commission 1995 Legislative Proposals May 1995 Cable Services Bureau 1. Exclusive Cable Franchising and Competitive Franchise Applications.** (Sec. 621(a)(1)) Clarify that the prohibition against exclusive franchising arrangements applies retroactively so as to prohibit the enforcement of exclusive franchises granted prior to enactment of the Cable Act of 1992. This will clarify conflicting judicial opinions of the United States Circuit Courts of Appeal on the issue of how the prohibition against exclusive franchising is to be applied and thus help maintain the pro-competitive force of the exclusive franchising prohibition. (p. 1) 2. Regulatory Exclusion from the Definition of a "Cable System" and SMATV Systems.** (Sec. 602(7)(B)) Exclude from the definition of a "cable system" not only commonly-owned, but also separately-owned dwellings interconnected by wires which do not cross public rights-of-way. This would promote the growth of wireless cable and SMATV systems as competitors to cable systems by substantially reducing the costs of expanding such systems. (p. 4) 3. Cable "Anti-Trafficking".** (Sec. 617) Delete the "anti-trafficking" provision of the Cable Act of 1992 to allow for the free sale of cable systems. This would delete an unneeded burden to a free-market, competitive environment for the cable television industry. (p. 6) Common Carrier Bureau 4. Forbearance Authority.* (New Sec. 230) Authorize the FCC not to regulate classes of telecommunications carriers or services where unnecessary to protect the public interest. This would enable the FCC to forbear from, and/or streamline, regulation, e.g., by eliminating the tariff filing requirement for non-dominant long distance carriers such as MCI and Sprint. This proposal would save resources, reduce paperwork, increase efficiency, and promote competition. (p. 9) [The pending telecommunications reform legislation, S. 652, Section 303, (p. 118 of bill***), contains similar language on regulatory flexibility and competitive effect as subsections (a) and (b) of the FCC proposal, but no provision on liability such as the proposed subsection (c).] [The comparable telecommunications reform legislation in the House, H.R. 1555, Section 103, (p. 61 of bill****), requires the FCC to forbear from applying various provisions of the legislation with regard to common carriers or services if the FCC determines that enforcement of a provision is not necessary to ensure just and reasonable charges or that forbearance is consistent with the public interest.] 5. Physical Collocation for Expanded Interconnection.* (New Secs. 221(e),(f)) Authorize the FCC to require physical collocation for expanded interconnection. This would permit the FCC to require the local exchange telephone carriers to open their central offices to the equipment of competitors. This authority would enable the FCC to implement competition in a way that best serves the public interest. (p. 11) [S. 652, Section 251(h), (p. 25 of bill***), permits states to require carriers "to provide for actual collocation of equipment necessary for interconnection at the premises of the carrier at reasonable charges, if the State finds actual collocation to be in the public interest."] [H.R. 1555, Section 242(b)(4)(B), (p. 8 of bill****) requires FCC regulations to provide for actual collocation of equipment necessary for interconnection at the premises of a local exchange carrier, (LEC) or virtual collocation if the LEC demonstrates that actual collocation is not practical for technical reasons or if space is limited.] 6. Use of Nongovernment Auditors.** (New Sec. 232) Expressly authorize the FCC to use independent auditors to augment its carrier audit program. Commission hiring of its own independent auditors would enable the FCC more fully to examine carrier audits. This proposal would also save money by reducing the additional staff auditors the FCC would have to hire to scrutinize the audits of the carriers' independent auditors. (p. 13) 7. Depreciation Rates.** (Sec. 220(b)) Repeal mandatory FCC setting of depreciation rates for common carriers. This would give the FCC greater flexibility if it determines that setting depreciation rates for some or all telecommunications carriers no longer serves the public interest. (p. 14) 8. Refund Authority.* (New Sec. 231) (FCC Authorization Act of 1994) Give the FCC explicit authority to order a common carrier to make refunds to other carriers and customers, if statutory and regulatory violations are proved against that carrier. This would encourage compliance with FCC rules governing common carrier charges and reduce the costs of enforcing such compliance. (p. 15) 9. Communications Assistance for Law Enforcement Act Compliance** (Sec. 229(e)(3)) Delete an unexplained technical correction to the Communications Act enacted as part of Public Law 103-414, the Communications Assistance for Law Enforcement Act of 1994. Unless deleted, this provision, which requires the FCC to convene a special Federal-State Joint Board to recommend changes to Part 36 of the FCC's rules, would require extensive proceedings, require additional personnel, and impose large costs on industry. (p. 16) 10. Regulation of Pole Attachments.** (New Sec. 224(e)) Preclude utilities from favoring one competitive entity over another in obtaining pole attachment agreements and in pole attachment rates and practices. This would help assure non-discrimination in the provision of pole attachment space as competing telecommunications services proliferate. (p. 17) [S. 652, Section 205, (p. 71 of bill***), requires the FCC, within one year, to prescribe regulations to ensure that the rates, terms, and conditions for attachments to cable television poles, ducts, conduits, and rights-of-way owned or controlled by utilities, including telephone companies, are just and reasonable; to require that access to utility poles be granted to cable operators, whether the attachment is used to provide cable or telecommunications services; and to ensure that utilities charge just, reasonable, and nondiscriminatory rates for attachments used to provide telecommunications services, including attachments used to provide cable services.] [H.R. 1555, Section 105, (p. 70 of bill****, as amended by Reps. Stearns and Boucher), requires FCC to prescribe regulations to ensure that utilities charge just and reasonable and nondiscriminatory rates for pole attachments. Also apportions the cost of the utility pole space according to the percentage of useable space required for each entity.] Compliance and Information Bureau 11. Privatization of Ship Radio Inspections.* (Secs. 362(b), 385) (FCC Authorization Act of 1994) Authorize the FCC to use private entities to conduct inspections of ship radio stations and broaden the FCC's authority to waive the now required annual ship radio station inspection. This would provide more flexibility in scheduling the required annual inspection for U.S. ships operated domestically. It also would save the Commission staff and travel resources, improve inspection service to the maritime industry, and promote private sector jobs. (p. 18) 12. Acquisition of Technical Equipment by Patent License Agreements.* (New Sec. 4(g)(4)) Authorize the FCC to obtain on favorable terms technical and electronic devices pursuant to negotiated patent license agreements. This proposal would enhance the Commission's ability to acquire state-of-the-art electronic equipment, significantly increase the number of units available to the Commission, and assist budgetary restraint efforts by reducing the funds that would otherwise be expended for such equipment from the FCC's budget. It is estimated that enactment of this proposal could save the Commission approximately $300,000 a year. (p. 20) 13. Deletion of Outdated Bureau Name.** (Sec. 154(f)(3)) Delete the outdated FCC bureau name "Field Engineering and Monitoring Bureau" and substitute the more contemporary and general term "field personnel" for "engineers in charge" and "radio engineers." (p. 22) Mass Media Bureau 14. Extension of TV License Term.** (Sec. 307(c)) Extend the TV license term from 5 to 7 years. This would make the license terms for radio and TV identical and reduce costs both for the television industry and the Commission. In view of the competitiveness of the video marketplace today, it is unlikely that the extension of the license term would be detrimental to the public interest. (p. 23) [S. 652, Section 207, (p. 80 of bill***), extends the license terms of both radio and television stations to 10 years.] [H.R. 1555, Section 302, (p. 120 of bill****), like the FCC proposal, extends the license term of television station licensees to seven years, the same current term as that of radio station licensees.] 15. Expedited Processing of Instructional Television Fixed Service Applications.* (Sec. 5(c)(1)) (FCC Authorization Act of 1994) Expedite processing of ITFS applications by allowing staff (rather than Administrative Law Judges or the full Commission) to issue decisions in routine, paper hearings in comparative ITFS cases. This would streamline agency processes thereby expediting new or improved ITFS service. (p. 25) 16. Modification of Construction Permit Requirement.** (Sec. 319(d)) Modify the prohibition against the Commission waiving the requirement for a broadcast construction permit. This proposal would eliminate the essentially duplicative process of filing separately for both a CP and license in instances where elimination of the CP requirement would create little or no potential for interference. (p. 26) 17. Broadcasting of Casino and Lottery Advertising and Information.* (18 U.S.C. 1304, 1307) Legalize the broadcast or cablecast advertisement anywhere in the United States of any lottery enterprise which is lawful where conducted, subject only to state-imposed restrictions. This would simplify existing law, reduce current governmental responsibilities of interpretation and enforcement, reduce the burden of compliance for broadcasters and cable systems, and permit broadcasters and cable systems to accept casino advertising now widely accepted by the print media. This would increase competition among competing advertising media. (p. 28) [S. 652, Section 224(b), (p. 107 of bill***) would amend Section 1307(a)(2) of title 18 to permit radio and television advertisements by gambling institutions in any state in which such advertisements or activity of gambling are not prohibited.] 18. Administrative Sanction for Broadcast Stations Silent for One Year or Longer.** (New Sec. 312(d)) Provide that a license authorization for a station silent for one year automatically cancels. This would save Commission resources, eliminate undue protection of non-operational stations, and allow operational stations greater flexibility in changing frequencies and upgrading facilities. (p. 30) Office of Engineering and Technology 19. Delegation of Equipment Testing and Certification to Private Labs.* (New Sec. 302(e)) Authorize the use of private, independent testing labs to test and certify radio equipment to ensure compliance with technical standards for radio frequency (RF) emissions. This proposal would permit a reduction in the number of persons engaged in equipment testing with no adverse impact on the Commission's role in ensuring that RF emitting devices are safe. (p. 31) Office of General Counsel 20. Simplification of License Renewal Process.** (New Secs. 309(k), (l)) Simplify the license renewal process by establishing a two-tiered process: first, the incumbent licensee's performance during the preceding license term would be compared only against statutory standards and not against any competing applications, and second, the renewal application would be automatically granted if the statutory standards are met or exceeded, or designated for hearing and possibly opened to competing applications if the standards are not met. This would streamline license renewal procedures, eliminating the costly process for both the agency and licensees of considering competing applications to a renewal application even though the incumbent's performance has been in compliance with Commission standards. (p. 33) [S. 652, Section 207(d), (p. 80 of bill***), contains a similar provision with regard solely to broadcast licensees.] [H.R. 1555, Section 303, (p. 122 of bill****), contains a similar provision to the provision in S. 652.] 21. License Modification.* (Sec. 303(f)) Eliminate the public hearing requirement concerning changes in the frequencies, authorized power, or times of operation of any station so that the written procedure provisions of Section 316 will uniformly apply to any appropriate modifications of broadcast authorizations. This could potentially save money and increase efficiency by eliminating the need for any individual public hearings that would be required by existing Section 303(f) of the Act. (p. 35) Office of Managing Director 22. Regulatory Fees and Categories.*and** (Sec. 9) (FCC Authorization Act of 1994) Authorize the FCC to allocate and recover legal and executive costs it incurs in the discharge of enforcement, policy and rulemaking, user information services and international activities; amend current statute to eliminate the requirement to group fees into activity categories or to conform fees to FCC organizational structures; authorize FCC to continue to collect regulatory fees at prior year's rates until the effective date of a new fee schedule; "combine" as well as "add, delete, or reclassify services in the [fee] Schedule to reflect additions, deletions or changes in the nature of" FCC services; and shorten from 90 to 30 days the advance notice of fee changes given to Congress. These amendments would simplify administration of the current regulatory fee program and bring the FCC closer to full self-funding. (p. 36) 23. Auction Technical Amendments.* (Sec. 309(j)(8)(B) and new Subsec. (C)) (FCC Authorization Act of 1994) Amend the competitive bidding provisions of the Communications Act to provide the FCC with more flexibility in the collection and use of auction funds and to authorize the FCC to establish an interest bearing escrow account and to pay interest to unsuccessful bidders. This would permit the FCC to use funds in any year to reimburse itself for the cost of conducting the auctions. The amendment would also ease the burden on bidders, especially unsuccessful ones, who have money on deposit with the Commission when that money would likely be earning interest if otherwise invested. (p. 38) 24. Schedule of Application Fees for PCS. (New Sec. 8(g)(23)) (FCC Authorization Act of 1994) Establish a fee schedule for Personal Communications Services. This would permit the FCC to charge a processing fee for applications in these services. (p. 40) 25. Use of Experts and Consultants.* (Sec. 4(f)(1)) (FCC Authorization Act of 1994) Authorize the FCC to obtain services of non-agency experts and consultants at higher rates of daily compensation than allowed under the current GS 15- Step 10 limit. This would save the FCC permanent staffing resources, enable the Commission to offer competitive compensation to temporary, outside experts and consultants, and thus augment the FCC's existing staff expertise. (p. 41) 26. Application Fees.* (Sec. 8) (FCC Authorization Act of 1994) Authorize the FCC to retain fees above a certain sum sent to the Treasury; to change or create new Section 8 fees; to allocate costs associated with legal and executive services; and to continue to collect application fees at the prior year's rates until the effective date of a new fee schedule. This proposal would bring the FCC closer to full self-funding. (p. 42) 27. Travel Reimbursement Authority.* (Sec. 4(g)(2)) (FCC Authorization Act of 1994) Delete obsolete FCC-specific travel reimbursement authority since the agency is now covered by government-wide provisions of the "Ethics in Government Act of 1989" and related regulations issued by the General Services Administration. (p. 45) 28. Communications Support from Older Americans.* (6(a) of the FCC Authorization Act of 1988) (FCC Authorization Act of 1994) Extend through FY 1997 the "Older Americans" program which enables the FCC to use volunteer services of older U.S. citizens. This would permit the FCC to augment its staff with specialized skills available in the older American labor pool. (p. 46) 29. Independent Leasing Authority.** (Sec. 4(g)(1)) Grant the FCC independent leasing authority to procure its own office space like the authority already granted the Commodity Futures Trading Commission and the Securities and Exchange Commission. This proposal would streamline the agency's search for adequate office space by permitting it to go directly to the private real estate market rather than using the General Services Administration as an intermediary. The proposal could save the agency and the government money by expanding the range of competitive space solutions for the FCC and would likely result in a lower rental rate than would be available through reliance on GSA. (p. 47) Wireless Telecommunications Bureau 30. Delicensing of Aviation, Maritime, and Personal Radio Services by Rule.* (Sec. 307(e)) (FCC Authorization Act of 1994) Permit the FCC to authorize by rule rather than through individual licensing the operation of radio equipment on domestic ships, aircraft, and in the personal radio services. This would streamline the process for placing radio equipment in operation by eliminating the need to obtain specific licensing authority. It would eliminate over 200,000 applications for radio station licenses each year. (p. 49) 31. Passenger and Cargo Vessel Radios.* (Secs. 351-358) Authorize the FCC to fully implement the Global Maritime Distress and Safety System (GMDSS) by giving the agency authority to relieve cargo vessel owners from the burden of current domestic radio equipment carriage requirements. This would enhance world-wide competition in the shipping industry by eliminating a requirement now generally applicable only to United States ships. Most other countries have already adopted the GMDSS and have eliminated the costly requirement to equip vessels with Morse Code equipment as well as the newer satellite radio technology of the GMDSS. (p. 51) [S. 652, Section 306, (p. 123 of bill***), provides that "any ship documented under the laws of the United States operating in accordance with the Global Maritime Distress and Safety System provisions of the Safety of Life at Sea Convention shall not be required to be equipped with a radio telegraphy station operated by one or more radio officers or operators."] [H.R. 1555, Section 305, (p. 125 of bill****), contains a nearly identical provision.] 32. Cellular Fraud.** (New 18 U.S.C. 514, 554, 2323) Impose criminal penalties for the altering of, or tampering with, electronic serial numbers. This should help reduce the crime of cellular radio fraud and fraud regarding similar services such as Personal Communications Services by reducing losses from serial number alterations, including the importation, exportation, and trafficking in equipment where manipulation of serial numbers has occurred. (p. 55) 33. Amateur Radio Service Examinations.* (Sec. 4(f)(4)) Eliminate unnecessary conflict-of- interest provisions for publishers to broaden the category of those authorized to administer amateur radio service examinations and eliminate burdensome record maintenance and annual financial certification requirements. This amendment would also eliminate numerous filings with the Commission. (p. 57) 34. License Fee for Vanity Call Signs.* (Secs. 8(g), 9(g)) (FCC Authorization Act of 1994) Authorize a one-time application processing fee of $150 for amateur vanity call signs, authorize these fees to be credited to the FCC's appropriation account, and delete existing fee of $7 for such call signs from Section 9(g) of the Act. This would make the vanity call sign program essentially self-funded. (p. 59) 35. Licensing Procedure for Fixed Microwave Services. (Sec. 309(b)(2)(A)) Expedite processing of microwave applications by eliminating requirement that such applications be placed on at least 30 days public notice prior to grant. This would streamline processing by eliminating the delay in granting licenses caused by the mandatory public notice period. (Generally, these applications are not contested or could be petitioned against after the grant, so there is no need for a pre-grant public notice.) (p. 60) 36. Statute of Limitations for Forfeiture Proceedings Against Common Carriers.* (Sec. 503(b)(6)) (FCC Authorization Act of 1994) Change the statute of limitations on forfeitures against common carriers from one to five years. This would permit the Commission to better enforce its common carrier regulations by allowing a longer period of time in which to uncover violations. (p. 61) 37. Government-Owned Stations.* (Secs. 305(b), 382(2)) Eliminate FCC jurisdiction over ship radios belonging to other government agencies such as the Department of Transportation and the Panama Canal Zone Authority. This would eliminate a duplication of effort between the FCC and other Federal Government agencies by eliminating the need for the FCC to review the operations of vessels operated by other agencies. (p. 63)