*************************************************** NOTICE *************************************************** This document was converted from Word97 to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, itallic, underlining, etc. from the original document will not show up in this text version. Features of the orginal document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the Word97, or Adobe Acrobat versions, if available. The path and name of the Word97, and Acrobat files will be the same as the ASCII Text file except that they will end with the letters wp, doc, or pdf respectively, instead of the letters txt. **************************************************** Federal Communications Commission Biennial Regulatory Review 2000 Staff Report September 18, 2000 TABLE OF CONTENTS I. OVERVIEW 1 II. BACKGROUND 1 A. LEGAL AUTHORITY 1 B. SUMMARY OF 1998 BIENNIAL REGULATORY REVIEW 2 III. THE 2000 BIENNIAL REGULATORY REVIEW 3 A. METHOD AND SCOPE OF REVIEW 4 B. ANALYTICAL FRAMEWORK 5 C. STRUCTURE OF THE STAFF REPORT 6 D. FURTHER ACTION TO COMPLETE 2000 BIENNIAL REGULATORY REVIEW 6 IV. SUMMARY OF REVIEWS BY COMMON CARRIER, INTERNATIONAL, AND WIRELESS TELECOMMUNICATIONS BUREAUS 8 A. COMMON CARRIER BUREAU 8 1. Scope of Review 9 2. Recent and Ongoing Activities 10 3. New Initiatives 14 4. Other Issues 16 B. INTERNATIONAL BUREAU 17 1. Scope of Review 18 2. Recent and Ongoing Activities 18 3. New Initiatives 22 C. WIRELESS TELECOMMUNICATIONS BUREAU 27 1. Scope of Review 28 2. Recent and Ongoing Activities 29 3. New Initiatives 31 4. Other Issues 33 V. SUMMARY OF REVIEW BY MASS MEDIA BUREAU 34 1. Recent and Ongoing Activities 37 2. New Initiatives 46 VI. SUMMARY OF REVIEWS BY OTHER BUREAUS AND OFFICES 46 A. CABLE SERVICES BUREAU 46 1. Recent and Ongoing Activities 46 2. New Initiatives 49 B. CONSUMER INFORMATION BUREAU 50 1. Recent and Ongoing Activities 50 2. New Initiatives 51 C. ENFORCEMENT BUREAU 52 1. Recent and Ongoing Activities 53 D. OFFICE OF COMMUNICATIONS BUSINESS OPPORTUNITIES 53 1. Recent and Ongoing Activities 54 E. OFFICE OF ENGINEERING AND TECHNOLOGY 56 1. Recent and Ongoing Activities 56 2. New Initiatives 59 3. Other Issues 60 F. OFFICE OF GENERAL COUNSEL 60 1. Recent and Ongoing Activities 61 G. OFFICE OF THE MANAGING DIRECTOR 61 1. Recent and Ongoing Activities 62 2. New Initiatives 63 APPENDIX I: STAFF ACKNOWLEDGEMENTS 1 APPENDIX II: 1998 BIENNIAL REGULATORY REVIEW PROCEEDINGS 1 A. PROCEEDINGS INITIATED - COMPLETED/SIGNIFICANT ORDERS ISSUED 1 1. Telecommunications Providers (Common Carriers) 1 2. Other 2 B. PROCEEDINGS INITIATED - PENDING 4 1. Telecommunications Providers (Common Carriers) 4 2. Other 4 APPENDIX III: INDUSTRY GROUPS INTERVIEWED 1 APPENDIX IV: RULE PART ANALYSIS 1 PART 1 - PRACTICE AND PROCEDURE 1 DESCRIPTION 1 PURPOSE 2 ANALYSIS 3 Advantages 3 Disadvantages 3 Recent Efforts 3 RECOMMENDATION 3 PART 1, SUBPART E - COMPLAINTS, APPLICATIONS, TARIFFS, AND REPORTS INVOLVING COMMON CARRIERS - FORMAL COMPLAINTS 4 DESCRIPTION 4 PURPOSE. 4 ANALYSIS. 4 Status of Competition 4 Advantages 4 Disadvantages. 5 Recent Efforts. 5 RECOMMENDATION. 5 PART 1, SUBPART F - WIRELESS TELECOMMUNICATIONS SERVICES APPLICATIONS AND PROCEDURES 6 DESCRIPTION 6 PURPOSE 6 ANALYSIS 6 Advantages 6 Disadvantages 6 Recent Efforts 7 RECOMMENDATION 7 PART 1, SUBPART I - PROCEDURES IMPLEMENTING THE NATIONAL ENVIRONMENTAL POLICY ACT OF 1969 8 DESCRIPTION 8 PURPOSE 8 ANALYSIS 9 Advantages 9 Disadvantages 9 Recent Efforts 9 RECOMMENDATION 10 PART 1, SUBPART J - POLE ATTACHMENT COMPLAINT PROCEDURES 11 DESCRIPTION 11 PURPOSE 11 ANALYSIS 11 Status of Competition 11 Advantages 11 Disadvantages 12 Recent Efforts 12 RECOMMENDATION 12 PART 1, SUBPART Q - COMPETITIVE BIDDING PROCEEDINGS 13 DESCRIPTION 13 PURPOSE 13 ANALYSIS 13 Advantages 13 Disadvantages 14 Recent Efforts 14 RECOMMENDATION 14 PART 1, SUBPART T - EXEMPT TELECOMMUNICATIONS COMPANIES 15 DESCRIPTION 15 PURPOSE 15 ANALYSIS 15 RECOMMENDATION 15 PART 2, SUBPART B - ALLOCATION, ASSIGNMENT, AND USE OF RADIO FREQUENCIES 16 DESCRIPTION 16 PURPOSE 16 ANALYSIS 16 Status of Competition 16 Advantages 16 Disadvantages 16 Recent Efforts 16 RECOMMENDATION 16 PART 3 - AUTHORIZATION AND ADMINISTRATION OF ACCOUNTING AUTHORITIES IN MARITIME AND MARITIME MOBILE-SATELLITE RADIO SERVICES. 17 DESCRIPTION 17 PURPOSE 17 ANALYSIS 17 Advantages 17 Disadvantages 17 Recent Efforts 17 RECOMMENDATION 18 PART 15 RADIO FREQUENCY DEVICES 19 DESCRIPTION 19 PURPOSE 19 ANALYSIS 19 Status of Competition 19 Advantages 19 Disadvantages 19 Recent Efforts 19 RECOMMENDATION 19 PART 17 - CONSTRUCTION, MARKING, AND LIGHTING OF ANTENNA STRUCTURES 20 DESCRIPTION 20 PURPOSE 20 ANALYSIS 20 Advantages 20 Disadvantages 20 Recent Efforts 21 RECOMMENDATION 21 PART 20 - COMMERCIAL MOBILE RADIO SERVICES, SECTION 20.6 ? CMRS SPECTRUM AGGREGATION LIMIT 22 DESCRIPTION 22 PURPOSE 22 ANALYSIS 22 Advantages 22 Disadvantages 22 Recent Efforts 23 RECOMMENDATION 23 PART 20, SECTION 20.11 ? INTERCONNECTION TO FACILITIES OF LOCAL EXCHANGE CARRIERS 24 DESCRIPTION 24 PURPOSE 25 ANALYSIS 25 Advantages 25 Disadvantages 25 Recent Efforts 25 RECOMMENDATION 26 PART 20, SECTION 20.12 ? RESALE AND ROAMING 27 RESALE 27 DESCRIPTION 27 PURPOSE 27 ANALYSIS 27 Status of Competition 27 Advantages 28 Disadvantages 28 Recent Efforts 28 RECOMMENDATION 28 ROAMING 28 DESCRIPTION 28 PURPOSE 29 ANALYSIS 29 Status of Competition 29 Advantages 29 Disadvantages 29 Recent Efforts 29 RECOMMENDATION 30 PART 20, SECTION 20.18 - 911 SERVICE 31 DESCRIPTION 31 PURPOSE 31 ANALYSIS 31 Advantages 31 Disadvantages 32 Recent Efforts 32 RECOMMENDATION 32 PART 20, SECTION 20.20 ? CONDITIONS APPLICABLE TO PROVISION OF CMRS SERVICE BY LOCAL EXCHANGE CARRIERS 33 DESCRIPTION 33 PURPOSE 33 ANALYSIS 33 Advantages 33 Disadvantages 34 Recent Efforts 34 RECOMMENDATION 34 PART 21-DOMESTIC PUBLIC FIXED RADIO SERVICES 35 DESCRIPTION 35 PURPOSE 35 ANALYSIS 35 Status of Competition 35 Advantages 36 Disadvantages 36 Recent Efforts 36 RECOMMENDATION 36 PART 22 - PUBLIC MOBILE SERVICES 37 DESCRIPTION 37 PURPOSE 37 ANALYSIS 38 Status of Competition 38 Advantages 38 Disadvantages 38 Recent Efforts 38 RECOMMENDATION 39 PART 22, SUBPART E - PAGING AND RADIOTELEPHONE SERVICE 40 DESCRIPTION 40 PURPOSE 41 ANALYSIS 41 Status of Competition 41 Advantages 41 Disadvantages 41 Recent Efforts 41 RECOMMENDATION 42 PART 22, SUBPART F - RURAL RADIOTELEPHONE SERVICE 43 DESCRIPTION 43 PURPOSE 44 ANALYSIS 44 Status of Competition 44 Advantages 44 Disadvantages 44 Recent Efforts 44 RECOMMENDATION 44 PART 22, SUBPAR T G - AIR-GROUND RADIOTELEPHONE SERVICE 46 DESCRIPTION 46 PURPOSE 46 ANALYSIS 46 Status of Competition 46 Advantages 47 Disadvantages 47 RECOMMENDATION 47 PART 22, SUBPART H- CELLULAR RADIOTELEPHONE SERVICE 48 DESCRIPTION 48 PURPOSE 48 ANALYSIS 48 Status of Competition 48 Advantages 49 Disadvantages 49 Recent Efforts 49 RECOMMENDATION 50 PART 22, SUBPART I - OFFSHORE RADIOTELEPHONE SERVICE 51 DESCRIPTION 51 PURPOSE 51 ANALYSIS 51 Status of Competition 51 Advantages 51 Disadvantages 51 Recent Efforts 51 RECOMMENDATION 52 PART 22, SUBPART J - REQUIRED NEW CAPABILITIES PURSUANT TO THE COMMUNICATIONS ASSISTANCE FOR LAW ENFORCEMENT ACT (CALEA) 53 DESCRIPTION 53 PURPOSE 53 ANALYSIS 53 Advantages 53 Disadvantages 53 Recent Efforts 54 RECOMMENDATION 54 PART 23 - INTERNATIONAL FIXED PUBLIC RADIOCOMMUNICATION SERVICES 55 DESCRIPTION 55 PURPOSE 55 ANALYSIS 55 Status of Competition 55 Advantages 56 Disadvantages 56 Recent Efforts 56 RECOMMENDATION 56 PART 24 - PERSONAL COMMUNICATIONS SERVICES 57 DESCRIPTION 57 PURPOSE 58 ANALYSIS 58 Status of Competition 58 Advantages 59 Disadvantages 59 Recent Efforts 59 RECOMMENDATION 59 PART 25 - SATELLITE COMMUNICATIONS 61 DESCRIPTION 61 PURPOSE 61 ANALYSIS 61 Status of Competition 61 Advantages 62 Disadvantages 63 Recent Efforts 63 RECOMMENDATION 64 PART 26 - GENERAL WIRELESS COMMUNICATIONS SERVICES 65 DESCRIPTION 65 PURPOSE 65 ANALYSIS 65 Status of Competition 65 Advantages 65 Disadvantages 65 Recent Efforts 66 RECOMMENDATION 66 PART 27 - MISCELLANEOUS WIRELESS COMMUNICATIONS SERVICES 67 DESCRIPTION 67 PURPOSE 68 ANALYSIS 68 Advantages 68 Disadvantages 68 Recent Efforts 68 RECOMMENDATION 69 PART 32 - UNIFORM SYSTEM OF ACCOUNTS 70 DESCRIPTION 70 PURPOSE 70 ANALYSIS 71 Status of Competition 71 Advantages 71 Disadvantages 71 Recent Efforts 72 RECOMMENDATION 72 PART 36 - JURISDICTIONAL SEPARATIONS PROCEDURES 74 DESCRIPTION 74 PURPOSE 74 ANALYSIS 74 Status of Competition 74 Advantages 74 Disadvantages 75 Recent Efforts 75 RECOMMENDATION 75 PART 42 - PRESERVATION OF RECORDS OF COMMON CARRIERS 76 DESCRIPTION 76 PURPOSE 76 ANALYSIS 76 Status of Competition 76 Advantages 76 Disadvantages 76 Recent Efforts 77 RECOMMENDATION 77 PART 43 - REPORTS OF COMMUNICATIONS COMMON CARRIERS AND CERTAIN AFFILIATES 78 DESCRIPTION 78 PURPOSE 78 ANALYSIS 79 Status of Competition 79 Advantages 79 Disadvantages 79 Recent Efforts 79 RECOMMENDATION 80 PART 51 - INTERCONNECTION 81 DESCRIPTION 81 PURPOSE 81 ANALYSIS 82 Status of Competition 82 Advantages 82 Disadvantages 82 Recent Efforts 82 RECOMMENDATION 82 PART 52 - NUMBERING 83 DESCRIPTION 83 PURPOSE 83 ANALYSIS 83 Status of Competition 83 Advantages 83 Disadvantages 84 Recent Efforts 84 RECOMMENDATION 84 PART 53 - SPECIAL PROVISIONS CONCERNING BELL OPERATING COMPANIES 85 DESCRIPTION 85 PURPOSE 85 ANALYSIS 85 Status of Competition 85 Advantages 85 Disadvantages 86 Recent Efforts 86 RECOMMENDATION 86 PART 54 - UNIVERSAL SERVICE 87 DESCRIPTION 87 PURPOSE 87 ANALYSIS 88 Status of Competition 88 Advantages 88 Disadvantages 88 Recent Efforts 88 RECOMMENDATION 88 PART 59 - INFRASTRUCTURE SHARING 90 DESCRIPTION 90 PURPOSE 90 ANALYSIS 90 Status of Competition 90 Advantages 90 Disadvantages 90 Recent Efforts 90 RECOMMENDATION 91 PART 61 - TARIFFS 92 DESCRIPTION 92 PURPOSE 92 ANALYSIS 92 Status of Competition 92 Advantages 93 Disadvantages 93 Recent Efforts 93 RECOMMENDATION 93 PART 63 - EXTENSION OF LINES, NEW LINES, AND DISCONTINUANCE, REDUCTION, OUTAGE AND IMPAIRMENT OF SERVICE BY COMMON CARRIERS; AND GRANTS OF RECOGNIZED PRIVATE OPERATING AGENCY STATUS 95 DESCRIPTION 95 PURPOSE 95 ANALYSIS 96 Status of Competition 96 Advantages 96 Disadvantages 96 Recent Efforts 96 RECOMMENDATION 97 PART 64 - MISCELLANEOUS RULES RELATING TO COMMON CARRIERS, SUBPART A - TRAFFIC DAMAGE CLAIMS 98 DESCRIPTION 98 PURPOSE 98 ANALYSIS 98 Status of Competition 98 Advantages 98 Disadvantages 98 Recent Efforts 98 RECOMMENDATION 98 PART 64, SUBPART B - RESTRICTIONS ON INDECENT TELEPHONE MESSAGE SERVICES 99 DESCRIPTION 99 PURPOSE 99 ANALYSIS 99 Status of Competition 99 Advantages 99 Disadvantages 99 Recent Efforts 100 RECOMMENDATION 100 PART 64, SUBPART C - FURNISHING OF FACILITIES TO FOREIGN GOVERNMENTS FOR INTERNATIONAL COMMUNICATIONS 101 DESCRIPTION 101 PURPOSE 101 ANALYSIS 101 Status of Competition 101 Advantages 101 Disadvantages 101 Recent Efforts 101 RECOMMENDATION 101 PART 64, SUBPART D - PROCEDURES FOR HANDLING PRIORITY SERVICES IN EMERGENCIES 102 DESCRIPTION 102 PURPOSE 102 ANALYSIS 102 Status of Competition 102 Advantages 102 Disadvantages 102 Recent Effort 102 RECOMMENDATION 102 PART 64, SUBPART E - USE OF RECORDING DEVICES BY TELEPHONE COMPANIES 103 DESCRIPTION 103 PURPOSE 103 ANALYSIS 103 Status of Competition 103 Advantages 103 Disadvantages 103 Recent Effort 103 RECOMMENDATION 103 PART 64, SUBPART F - TELECOMMUNICATIONS RELAY SERVICES AND RELATED CUSTOMER PREMISES EQUIPMENT FOR PERSONS WITH DISABILITIES 104 DESCRIPTION 104 PURPOSE 104 ANALYSIS 104 Status of Competition 104 Advantages 104 Disadvantages 105 Recent Efforts 105 RECOMMENDATION 105 PART 64, SUBPART G - FURNISHING OF ENHANCED SERVICES AND CUSTOMER PREMISES EQUIPMENT BY BELL OPERATING COMPANIES; TELEPHONE OPERATOR SERVICES 106 DESCRIPTION 106 PURPOSE 107 ANALYSIS 107 Status of Competition 107 Advantages 107 Disadvantages 107 Recent Efforts 107 RECOMMENDATION 108 PART 64, SUBPART H - EXTENSION OF UNSECURED CREDIT FOR INTERSTATE AND FOREIGN COMMUNICATIONS SERVICES TO CANDIDATES FOR FEDERAL OFFICE 109 DESCRIPTION 109 PURPOSE 109 ANALYSIS 109 Status of Competition 109 Advantages 109 Disadvantages 109 Recent Efforts 110 RECOMMENDATION 110 PART 64, SUBPART I - ALLOCATION OF COSTS 111 DESCRIPTION 111 PURPOSE 111 ANALYSIS 111 Status of Competition 111 Advantages 111 Disadvantages 111 Recent Efforts 112 RECOMMENDATION 112 PART 64, SUBPART J - INTERNATIONAL SETTLEMENTS POLICY AND MODIFICATION REQUESTS 113 DESCRIPTION 113 PURPOSE 113 ANALYSIS 113 Status of Competition 113 Advantages 114 Disadvantages 114 Recent Efforts 114 RECOMMENDATION 114 PART 64, SUBPART K - CHANGING LONG DISTANCE SERVICE 115 DESCRIPTION 115 PURPOSE 115 ANALYSIS 115 Status of Competition 115 Advantages 115 Disadvantages 115 Recent Efforts 115 RECOMMENDATION 116 PART 64, SUBPART L - RESTRICTIONS ON TELEPHONE SOLICITATION 117 DESCRIPTION 117 PURPOSE 117 ANALYSIS 117 Status of Competition 117 Advantages 117 Disadvantages 117 Recent Efforts 117 RECOMMENDATION 117 PART 64, SUBPART M - PROVISION OF PAYPHONE SERVICE 118 DESCRIPTION 118 PURPOSE 118 ANALYSIS 118 Status of Competition 118 Advantages 118 Disadvantages 118 Recent Efforts 118 RECOMMENDATION 119 PART 64, SUBPART N - EXPANDED INTERCONNECTION 120 DESCRIPTION 120 PURPOSE 120 ANALYSIS 120 Status of Competition 120 Advantages 120 Disadvantages 120 Recent Efforts 120 RECOMMENDATION 121 PART 64, SUBPART O - INTERSTATE PAY-PER-CALL AND OTHER INFORMATION SERVICES 122 DESCRIPTION 122 PURPOSE 122 ANALYSIS 122 Status of Competition 122 Advantages 122 Disadvantages 122 Recent Efforts 122 RECOMMENDATION 123 PART 64, SUBPART P - CALLING PARTY TELEPHONE NUMBER; PRIVACY (ALSO KNOWN AS "CALLER ID") 124 DESCRIPTION 124 PURPOSE 124 ANALYSIS 124 Status of Competition 124 Advantages 124 Disadvantages 124 Recent Efforts 124 RECOMMENDATION 125 PART 64, SUBPART Q - IMPLEMENTATION OF SECTION 273(D)(5) OF THE COMMUNICATIONS ACT: DISPUTE RESOLUTION REGARDING EQUIPMENT STANDARDS 126 DESCRIPTION 126 PURPOSE 126 ANALYSIS 126 Status of Competition 126 Advantages 126 Disadvantages 126 Recent Efforts 126 RECOMMENDATION 126 PART 64, SUBPART R - GEOGRAPHIC RATE AVERAGING AND RATE INTEGRATION 127 DESCRIPTION 127 PURPOSE 127 ANALYSIS 127 Status of Competition 127 Advantages 127 Disadvantages 127 Recent Efforts 127 RECOMMENDATION 128 PART 64, SUBPART S - NONDOMINANT INTEREXCHANGE CARRIER CERTIFICATIONS REGARDING GEOGRAPHIC RATE AVERAGING AND RATE INTEGRATION REQUIREMENTS 129 DESCRIPTION 129 PURPOSE 129 ANALYSIS 129 Status of Competition 129 Advantages 129 Disadvantages 129 Recent Efforts 129 RECOMMENDATION 129 PART 64, SUBPART T - SEPARATE AFFILIATE REQUIREMENTS FOR INCUMBENT INDEPENDENT LOCAL EXCHANGE CARRIERS THAT PROVIDE IN-REGION, INTERSTATE DOMESTIC INTEREXCHANGE SERVICES OR IN-REGION INTERNATIONAL INTEREXCHANGE SERVICES 130 DESCRIPTION 130 PURPOSE 130 ANALYSIS 130 Status of Competition 130 Advantages 130 Disadvantages 130 Recent Efforts 131 RECOMMENDATION 131 PART 64, SUBPART U - CUSTOMER PROPRIETARY NETWORK INFORMATION 132 DESCRIPTION 132 PURPOSE 132 ANALYSIS 132 Status of Competition 132 Advantages 132 Disadvantages 132 Recent Efforts 132 RECOMMENDATION 133 PART 64, SUBPART V - TELECOMMUNICATIONS CARRIER SYSTEMS SECURITY AND INTEGRITY PURSUANT TO THE COMMUNICATIONS ASSISTANCE FOR LAW ENFORCEMENT ACT (CALEA) 134 DESCRIPTION 134 PURPOSE 134 ANALYSIS 134 Status of Competition 134 Advantages 134 Disadvantages 134 Recent Efforts 134 RECOMMENDATION 134 PART 64, SUBPART W - REQUIRED NEW CAPABILITIES PURSUANT TO THE COMMUNICATIONS ASSISTANCE FOR LAW ENFORCEMENT ACT (CALEA) 135 DESCRIPTION 135 PURPOSE 135 ANALYSIS 135 Status of Competition 135 Advantages 135 Disadvantages 135 Recent Efforts 135 RECOMMENDATION 135 PART 64, SUBPART X - SUBSCRIBER LIST INFORMATION 136 DESCRIPTION 136 PURPOSE 136 ANALYSIS 136 Status of Competition 136 Advantages 136 Disadvantages 136 Recent Efforts 136 RECOMMENDATION 136 PART 64, SUBPART Y - TRUTH-IN-BILLING REQUIREMENTS FOR COMMON CARRIERS 137 DESCRIPTION 137 PURPOSE 137 ANALYSIS 137 Status of Competition 137 Advantages 137 Disadvantages 137 Recent Efforts 138 RECOMMENDATION 138 PART 65 - INTERSTATE RATE OF RETURN PRESCRIPTION PROCEDURES AND METHODOLOGIES 139 DESCRIPTION 139 PURPOSE 139 ANALYSIS 139 Status of Competition 139 Advantages 139 Disadvantages 140 Recent Efforts 140 RECOMMENDATION 140 PART 68 - CONNECTION OF TERMINAL EQUIPMENT TO THE TELEPHONE NETWORK 141 DESCRIPTION 141 PURPOSE 141 ANALYSIS 142 Status of Competition 142 Advantages 142 Disadvantages 142 Recent Efforts 142 RECOMMENDATION 142 PART 69 - ACCESS CHARGES 143 DESCRIPTION 143 PURPOSE 143 ANALYSIS 143 Status of Competition 143 Advantages 144 Disadvantages 144 Recent Efforts 144 RECOMMENDATION 144 PART 73, -RADIO BROADCAST SERVICES, SECTION 73.3555 - THE BROADCAST OWNERSHIP RULES 145 DESCRIPTION 145 PURPOSE 145 ANALYSIS 145 Status of Competition 145 Advantages 145 Disadvantages 145 Recent Efforts 145 RECOMMENDATION 145 PART 80 - STATIONS IN THE MARITIME SERVICES, SUBPARTS J (PUBLIC COAST STATIONS) AND Y (COMPETITIVE BIDDING PROCEDURES) 146 DESCRIPTION 146 PURPOSE 146 ANALYSIS 147 Status of Competition 147 Advantages 147 Disadvantages 147 Recent Efforts 148 RECOMMENDATION 148 PART 90 - PRIVATE LAND MOBILE RADIO SERVICES. 149 DESCRIPTION 149 PURPOSE 150 ANALYSIS 150 Status of Competition 150 Advantages 150 Disadvantages 150 Recent Efforts 150 RECOMMENDATION 150 PART 90, SUBPART L - REGULATIONS FOR AUTHORIZATION AND USE OF FREQUENCIES IN THE 470-512 MHZ BAND 152 DESCRIPTION 152 PURPOSE 153 ANALYSIS 153 Status of Competition 153 Advantages 153 Disadvantages 153 Recent Efforts 153 RECOMMENDATION 153 PART 90, SUBPARTS M (INTELLIGENT TRANSPORTATION SYSTEMS RADIO SERVICE) AND X (COMPETITIVE BIDDING RULES FOR THE LOCATION AND MONITORING SERVICE) 154 DESCRIPTION 154 Location and Monitoring Systems (LMS) 154 Dedicated Short Range Communications Service (DSRCS) 155 PURPOSE 155 ANALYSIS 155 Status of Competition 155 Advantages 155 Disadvantages 155 Recent Efforts 156 RECOMMENDATION 156 PART 90, SUBPART P ? PAGING OPERATIONS IN THE 929 MHZ BAND 157 DESCRIPTION 157 PURPOSE 157 ANALYSIS 157 Status of Competition 157 Advantages 157 Disadvantages 157 Recent Efforts 157 RECOMMENDATION 158 PART 90, SUBPARTS S (REGULATIONS FOR LICENSING AND USE OF FREQUENCIES IN THE 800 AND 900 MHZ BANDS), AND U AND V (COMPETITIVE BIDDING PROCEDURES FOR THE 900 AND 800 MHZ SERVICE) 159 DESCRIPTION 159 PURPOSE 160 ANALYSIS 160 Status of Competition 160 Advantages 160 Disadvantages 161 Recent Efforts 161 RECOMMENDATION 161 PART 90, SUBPARTS T (REGULATIONS FOR LICENSING AND USE OF FREQUENCIES IN THE 220-222 MHZ BAND) AND W (COMPETITIVE BIDDING PROCEDURES FOR THE 220 MHZ SERVICE) 162 DESCRIPTION 162 PURPOSE 163 ANALYSIS 163 Status of Competition 163 Advantages 163 Disadvantages 163 Recent Efforts 164 RECOMMENDATION 164 PART 95 - PERSONAL RADIO SERVICES, SUBPART F - 218-219 MHZ SERVICE 166 DESCRIPTION 166 PURPOSE 166 ANALYSIS 166 Status of Competition 166 Advantages 167 Disadvantages 167 Recent Efforts 167 RECOMMENDATION 167 PART 100 - DIRECT BROADCAST SATELLITE SERVICE 169 DESCRIPTION 169 PURPOSE 169 ANALYSIS 169 Status of Competition 169 Advantages 169 Disadvantages 170 Recent Efforts 170 RECOMMENDATION 171 PART 101 - FIXED MICROWAVE SERVICES 172 DESCRIPTION 172 PURPOSE 172 ANALYSIS 173 Status of Competition 173 Advantages 173 Disadvantages 173 Recent Efforts 174 RECOMMENDATION 174 PART 101, SUBPART G - 24 GHZ SERVICE AND DIGITAL ELECTRONIC MESSAGE SERVICE 176 DESCRIPTION 176 PURPOSE 176 ANALYSIS 176 Status of Competition 176 Advantages 177 Disadvantages 177 Recent Efforts 177 RECOMMENDATION 177 PART 101, SUBPARTS L (LOCAL MULTIPOINT DISTRIBUTION SERVICE (LMDS)) AND M (COMPETITIVE BIDDING PROCEDURES FOR LMDS) 178 DESCRIPTION 178 PURPOSE 178 ANALYSIS 178 Status of Competition 178 Advantages 179 Disadvantages 179 Recent Efforts 179 RECOMMENDATION 180 I. OVERVIEW 1. This Staff Report summarizes the findings of an extensive review of the Federal Communications Commission's rules. Each Bureau and Office reviewed the rules pertinent to its operations to determine whether to recommend that the Commission modify or eliminate any rules. Accompanying this written report is a rule part analysis that identifies the Commission's rule parts, explains the purpose, benefits and disadvantages of the particular rule or rule part, and lists any staff recommendation for modifying or repealing any rules within each part. The report and analysis are steps in the Commission's process of conducting biennial regulatory reviews pursuant to section 11 of the Communications Act of 1934, as amended (Communications Act), and section 202(h) of the Telecommunications Act of 1996 (1996 Act). These documents are staff recommendations, and do not reflect formal Commission opinions or binding determinations. II. BACKGROUND A. Legal Authority 2. The Telecommunications Act of 1996, which was intended "to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies." The 1996 Act significantly amended the Communications Act of 1934 to permit and encourage competition in various communications markets. Congress anticipated that, as competition developed, market forces would reduce the need for regulation. Therefore, in addition to requiring the Commission to take certain actions to open markets to competition, Congress required the Commission to review certain of its regulations every two years and to modify or repeal those regulations that are no longer "necessary in the public interest." 3. Section 11 of the Communications Act, which was added by the 1996 Act, provides: (a) Biennial Review of Regulations. - In every even-numbered year (beginning with 1998), the Commission - (1) shall review all regulations issued under this Act in effect at the time of the review that apply to the operations or activities of any provider of telecommunications service; and (2) shall determine whether any such regulation is no longer necessary in the public interest as the result of meaningful economic competition between providers of such service. (b) Effect of Determination. - The Commission shall repeal or modify any regulation it determines to be no longer necessary in the public interest. 4. Section 202 of the 1996 Act addresses matters regarding broadcast ownership. Section 202(h) provides: The Commission shall review its rules adopted pursuant to this section and all of its ownership rules biennially as part of its regulatory reform review under section 11 of the Communications Act of 1934 and shall determine whether any of such rules are necessary in the public interest as the result of competition. The Commission shall repeal or modify any regulation it determines to be no longer in the public interest. 5. Section 11 and section 202(h), collectively, require the Commission: (1) to review biennially its regulations that pertain to (a) the operations or activities of telecommunications service providers, and (b) broadcast ownership; and (2) to determine whether those regulations are no longer necessary in the public interest as a result of meaningful economic competition. Following such review, the Commission is directed to modify or repeal any such regulations that are no longer necessary in the public interest. 6. In addition to these statutory requirements, the Commission has discretion to suspend, modify, revoke or waive any of its regulations for good cause, pursuant to other applicable requirements, such as the Administrative Procedure Act. Thus, for example, the Commission may consider whether circumstances other than economic competition justify modification or repeal of particular rules. B. Summary of 1998 Biennial Regulatory Review 7. In 1998, the Commission reviewed all of its regulations. The Commission did not attempt to identify or limit its review to rules that "apply to the operations or activities" of telecommunications service providers. For the 1998 review: (1) each of the operating bureaus and the Office of Engineering and Technology conducted a review of the rules under their jurisdiction; and (2) members of the Office of Plans and Policy, the Chief Economist and his staff, and members of the Competition Division in the Office of General Counsel conducted a parallel review of Commission rules. These reviews were not limited to whether "meaningful economic competition" justified changes, but instead considered whether, for any reason, modification or elimination of a rule would serve the public interest. 8. The team from the Office of Plans and Policy/Chief Economist/Competition Division used the following questions in its review: Is the original or present purpose of the regulation still valid? If a valid purpose for the regulation exists, how well does the regulation achieve the purpose? Even if a regulation achieves its purpose, do the burdens it creates outweigh its advantages? Is there a less burdensome alternative that will produce similar benefits? Does the regulation overlap, interfere, or conflict with other regulations such that modification is warranted? 9. The Commission received substantial public input. For example, each of the Bureaus, together with the Office of General Counsel, hosted a series of public fora to solicit ideas regarding rules that might warrant repeal or modification. In addition, staff received input during a series of meetings held by practice groups of the Federal Communications Bar Association. 10. The 1998 Biennial Regulatory Review led to the initiation of a wide range of deregulatory and streamlining proposals. For example, the Commission initiated 32 proceedings and modified or eliminated hundreds of rules, particularly ones that affected the operations and activities of telecommunications service providers. III. THE 2000 BIENNIAL REGULATORY REVIEW 11. This review attempts to build upon the work completed in the 1998 Biennial Regulatory Review, and to establish a foundation for future reviews. In particular, the 2000 Biennial Regulatory Review provides greater documentation of the staff's review. The review process is incremental, however, and staff expects that even greater documentation will occur in future years. In addition, staff recommends that the Commission consider setting forth an analysis similar to the analysis used in this staff report whenever the Commission adopts new rules. Such an analysis may include the reason for the rule, whether the rule effectively accomplishes its intended purpose, and the status of competition at the time the rule is enacted. Conducting such an analysis at the time new rules are adopted might help ensure that new regulatory requirements are carefully tailored to achieve their intended regulatory goals. Such analysis might also significantly reduce the burdens associated with future biennial reviews. 12. In evaluating the rules, staff applied a consistent analysis to determine whether to recommend modification or elimination of Commission rules. Staff's review considered (1) the purpose of the rule; (2) the advantages of the rule; (3) the disadvantages of the rule; (4) what impact competitive developments have had on the rule; and (5) whether to recommend modification or revocation of the rule. This analysis allowed the staff to make reasoned determinations about whether a rule should be changed or eliminated either because of competitive developments, or for other reasons. For example, staff considered whether the underlying purpose of the rule is still relevant, and, if so, whether that purpose could be accomplished more effectively in another manner. 13. Although there may be other ways to determine whether a Commission rule continues to be necessary in the public interest, staff believes that the analysis it used is a reasonable way to carry out the requirements of section 11 and section 202(h). In addition, the analysis staff used is relatively easy to apply, and permits consideration of all relevant factors in determining whether a rule should be modified or revoked. Staff therefore recommends that the Commission adopt this analysis when it makes public interest determinations. A. Method and Scope of Review 14. The Commission has devoted substantial time and resources to the 2000 Biennial Regulatory Review. In the fall of 1999, Commission staff began to create a computer database of Commission rules. In early 2000, a team consisting of representatives from each Bureau and Office began to develop a method for conducting the staff review. The team agreed to a framework and analysis that each Bureau and Office would use in reviewing its rules. This framework was intended to ensure a well-reasoned and consistent review across the agency. That framework included the following: a.) Each Bureau and Office would endeavor to look at all of its rules - not only rules that are specifically implicated by sections 11 and 202(h) - and consider whether repeal or modification might be appropriate. The benefits associated with modifying or eliminating regulations are not limited to the rules implicated in sections 11 and 202(h). The team determined that a broad review of Commission rules, even beyond the scope of statutory requirements, could provide significant benefits. The team reasoned, for example, that eliminating unnecessary regulations would likely reduce compliance costs of service providers, which in turn could reduce charges to consumers. Similarly, the team deemed it reasonable to consider whether any regulations could be modified so that they achieve their intended goals more effectively or in a less burdensome manner. In addition, the team determined that its decision to conduct a broad rule review would reduce the potential for disagreement about what rules are subject to the mandatory review requirements in sections 11 and 202(h). b.) As noted above, the team determined that each Bureau and Office would use a consistent analysis, which would consider the advantages and disadvantages of the existing rules and what impact, if any, competitive developments have had on each rule. Each Bureau and Office would consider whether revocation or modification might be appropriate for any reason. The review would not be limited to whether changes were warranted as a result of economic competition. Although sections 11 and 202(h) require the Commission to determine whether rules remain necessary in the public interest as a result of competition, the team determined that there might be other relevant bases for modifying or revoking a rule. For example, a rule might be obsolete as a result of technological developments. Or modification might be appropriate as a result of changes in industry practices or judicial decisions, or because a rule is duplicative of or contradictory to other rules. Although the Commission has worked hard to keep its rules current with industry, judicial, and other developments, the biennial regulatory review process provides another opportunity to ensure that the Commission's rules are up-to-date. 15. The team also recognized that, even where competition develops, it will not always and immediately eliminate the need for regulation. For example, there may be certain segments of the market that would not receive service of acceptable quality or at affordable rates absent regulation. Thus, even if a regulation generally is no longer necessary in the public interest as a result of competition, there may be reasons to retain it, at least with respect to certain segments of the market. c.) Staff would prepare a report that summarizes the review conducted by each Bureau and Office. In addition, staff would provide a written description of the analysis used in reviewing each rule part implicated by sections 11 or 202(h). The staff report includes highlights of the staff's review, as well as recommendations for Commission action. The staff report is not limited to rules that are subject to the biennial regulatory review requirements of sections 11 and 202(h). 16. The rule part analysis provides additional documentation of the staff's review of each rule part that is implicated by section 11 or section 202(h). It is intended to enable the public to understand the reasoning behind the staff's review and recommendation. The analysis strives to encompass any rule that might affect the operations or activities of telecommunications service providers. 17. The team recognized that completing a comprehensive rule review, as it proposed, would be time-consuming and labor intensive. The team concluded that it should give priority to satisfying statutory requirements, and thus would focus its efforts on completing the rule analysis for rules that are implicated by sections 11 and 202(h). 18. The analysis generally documents review by rule part, but it identifies many of the individual rules that the staff recommends be modified or repealed. Staff determined that in most instances, providing analysis at the rule part level was sufficient to identify the reasoning used and the basis for the recommendations. In some instances, however, staff determined that it should include its analysis of rule subparts. For example, where only portions of the rule part are implicated by section 11, or where more than one Bureau or Office shares responsibility for overseeing a rule part, the analysis may be done by subpart. B. Analytical Framework 19. The analytical framework that staff used for this Biennial Regulatory Review recognizes that significant economic benefits can be achieved by fostering competition. Although regulation may sometimes be necessary to correct market failures or prevent the accrual of excessive market power, in most instances market forces will yield economically efficient results. Staff's review thus sought to maximize the potential for self-correcting market action, and to suggest deregulatory action warranted by economic and technological developments. Staff considered factors such as the effect a rule has on competitive entry into specific services, whether the rule encourages resource-efficient technologies, the effect of the rule on costs for the industry and the agency, and whether developments in the definition and structure of the relevant market would suggest that the elimination or modification of the rule is appropriate. Staff paid particular attention to rules that seek to limit the exercise of market power in markets transitioning to a more competitive structure. 20. The staff also recognized that some of the Commission's goals might require regulatory action even when developments like those mentioned above are taken into consideration. For example, the Commission has sought to ensure that all Americans have access to the widest variety of telecommunications services and that audiences have access to diverse media sources. Staff attempted to consider all of the Commission's stated policy concerns when it reviewed the agency's rules. C. Structure of the Staff Report 21. Staff endeavored to review all of the Commission's rules rather than limit its review to rules covered explicitly by section 11 of the Communications Act and section 202(h) of the 1996 Act. Staff determined that a broad review of the Commission's rules could provide significant benefits, although it gave priority to the rules that are implicated in sections 11 and 202(h). 22. Each Bureau and Office conducted this review by seeking input from staff and industry groups. In conducting this review, staff considered (1) the purpose of the rule; (2) the advantages of the rule; (3) the disadvantages of the rule; and (4) the impact competitive developments may have had on the need for the rule. 23. This Report summarizes staff's review of the Commission's rules, the status of ongoing and recent initiatives, and recommendations on whether specific rules should be kept in place, modified, or repealed. The staff's recommendations are also reported in the attached rule part analysis. The rule part analysis summarizes staff's findings and should be viewed as works in progress. The analysis does not reflect formal Commission opinions or binding determinations. 24. Staff recommends that the Commission seek public comment on the Report and the rule part analysis. D. Further Action to Complete 2000 Biennial Regulatory Review 25. This Staff Report is merely one step in the Commission's 2000 Biennial Regulatory Review. Section 11 and section 202(h) mandate Commission determinations. Staff proposes that the Commission release and seek comment on the Staff Report and rule part analysis. After receiving public comment, staff anticipates that the Commission would issue a report before December 31, 2000. The Commission report would determine what if any regulations are no longer necessary in the public interest, in accordance with section 11 and section 202(h). 26. Pursuant to the Commission's determinations, staff expects that the Commission would initiate proceedings to modify or eliminate selected rules. These proceedings would conform with Commission procedural rules and the Administrative Procedure Act. Although some of these proceedings will be initiated in the year 2000, many will not be. The statute does not require the Commission to repeal or modify its rules by the end of 2000. IV. SUMMARY OF REVIEWS BY COMMON CARRIER, INTERNATIONAL, AND WIRELESS TELECOMMUNICATIONS BUREAUS A. Common Carrier Bureau 27. The Common Carrier Bureau advises the Commission regarding the regulation of telecommunications service providers, including issues related to interstate telecommunications service, interstate access service, and local exchange competition. The Bureau administers rules and policies designed to foster competition in telecommunications markets, promote widespread availability of telecommunications, and protect consumers. 28. The Common Carrier Bureau has focused in recent years on adopting market- opening and universal service rules for the local exchange and long distance markets. The Bureau has also focused on review of applications by Bell Operating Companies to provide long distance service as well as review of telecommunications company mergers. In addition, the Bureau has devoted considerable resources to consideration of the regulatory reforms that should occur as competition in the provision of telecommunications services develops. 29. In evaluating the state of competition, the Bureau has found that the long distance services market is competitive, but competition in the local exchange and exchange access markets is nascent. While incumbent local exchange carriers (LECs) and the new local exchange entrants disagree about the extent to which local competition has developed, competition for local exchange services has taken root and is increasing. 30. Three recent reports concerning competitive developments in the local exchange market conclude that competition is growing, although competitive local exchange carriers still serve only a very small portion of local exchange lines. "Telecommunications @ the Millennium," a report by the FCC Office of Plans and Policy, states that "[o]n the fourth anniversary of the Act, we see competition in the local market beginning to take hold." The report states that, "in 1996, when the Act was passed, competitors had a one percent share of the local market," adding that "[t]heir share of the local market has increased to 4 percent of lines served and over 6 percent of local service revenue." The report states that "[l]ocal competitors have been particularly successful in the business market, where competitors have added 65 percent of all new lines deployed in the third quarter of 1999." The report adds that "more people are beginning to see wireless telephones as substitutes for their wireline services" in light of dramatic price decreases and increases in service quality. These trends are further explored in "Local Telephone Competition at the New Millennium," a report by the FCC Common Carrier Bureau. A report by the United States General Accounting Office, "Development of Competition in Local Telephone Markets," states that, "[t]o date, little competition has emerged in local telephone markets," but concludes that "further competition seems likely to develop in local telephone markets." The report notes that "competing carriers, . . . are using all entry modes envisioned by the act, legal and regulatory issues are . . . becoming clarified, and the packaging of varied telecommunications services may enable firms providing other telecommunications services to effectively compete for local telephone customers." 31. In contrast to the market for local exchange and exchange access service, the markets for long distance and customer premises equipment (CPE) are competitive and have been increasingly deregulated. Long distance prices (international and domestic), as approximated by average revenue per minute, have fallen by 34 percent since 1993. Similarly, a vibrantly competitive market has developed for CPE, and, as a result, basic voice telephones are now available from an array of suppliers with a myriad of options at extremely low prices. 32. It is against this background that we begin our second "Biennial Regulatory Review" of rules for common carriers. 1. Scope of Review 33. As part of the review process, initiated by the Year 2000 Biennial Regulatory Review Working Group, the Common Carrier Bureau has reviewed all of the rules within each of the following parts that affect common carriers. Part 32 - Uniform System of Accounts - Establishes mandatory minimum accounting standards for certain common carriers. Part 36 - Jurisdictional Separations - Contains an outline of the separations procedures designed primarily for the allocation of property costs, revenues, expenses, taxes and reserves between the state and interstate jurisdictions. Part 42 - Record Retention Requirements - Prescribes the regulations governing the preservation of records of communications common carriers. Part 43 - Reporting Requirements - Prescribes specific filing requirements for communications common carriers and certain of their affiliates. Part 51 - Interconnection - Establishes interconnection obligations for LECs. Part 52 - Numbering - Establishes conditions for the administration and use of telecommunications numbers for provision of telecommunications services in the United States. Part 53 - Special Provisions Concerning Bell Operating Companies - Establishes special requirements applicable to the Bell Operating Companies, pursuant to 47 U.S.C.  271 and 272. Part 54 - Universal Service - Establishes the mechanisms to ensure the provision of Universal Service. Part 59 - Infrastructure Sharing - Establishes the general duty of incumbent LECs to make available to certain qualifying carriers network infrastructure, facilities, functions, technology, and information. Part 61 - Tariffs - Prescribes the framework for the initial establishment of and subsequent revisions to tariff publications for certain carriers. Part 63 - Extension of Lines - Prescribes a regulatory framework for construction of wireline common carrier infrastructure. Part 64 - Miscellaneous - Addresses a broad range of common carrier issues. Part 65 - Rate of Return - Establishes procedures and methodologies for Commission prescription of an authorized unitary interstate exchange access rate of return and individual authorized rates of return for the interstate exchange access rates of certain other carriers. Part 68 - Connections of Terminal Equipment - Permits direct connection to the network of registered terminal equipment. Provides uniform technical standards for equipment to prevent network harm and ensure that telephones are compatible with hearing aids. Part 69 - Access Charges - Establishes rules for access charges for interstate or foreign access services for incumbent LECs. 2. Recent and Ongoing Activities 34. Recently, the Commission has begun a number of proceedings designed to reduce or simplify wireline common carrier regulation in light of increasing local exchange competition and other industry developments. Among other things, the Commission is currently conducting rulemaking proceedings to review: (1) Part 32 of the Rules, Uniform System of Accounts for Class A and B Telephone Companies, and the Commission's ARMIS (Automated Reporting Management Information System) information reporting system for incumbent LECs; (2) Part 36 of the Rules, Jurisdictional Separations; and (3) Part 68 of the Rules, Connection of Terminal Equipment to the Telephone Network. In addition, the Commission initiated several common carrier rulemakings as part of the 1998 Biennial Regulatory Review. a) Accounting and ARMIS Requirements 35. The Commission is currently conducting a comprehensive review of its Part 32 accounting and related rules and its ARMIS reporting requirements. This comprehensive review will complement the Biennial Regulatory Review process and ensure that the goal of continued deregulation is vigorously pursued. This review will consider the need for various accounting and reporting requirements and whether they impose unnecessary burdens on incumbent LECs as local exchange competition develops. Resolution of these issues could have a significant effect on State commissions because most of them rely on the FCC accounting and reporting requirements. 36. The review is being conducted in two phases. Phase 1, which was completed in March 2000, was designed to focus on immediate streamlining measures. Phase 2 will "examine broader and more extensive deregulatory measures." The Commission took the following specific steps to streamline its accounting requirements in Phase 1: (1) eliminated the expense matrix filing requirement; (2) allowed carriers to reduce the cost allocation manual (CAM) audit requirement from an annual financial statement audit to a biennial attestation engagement; (3) relaxed the affiliate transactions requirements for services; (4) eliminated the 15- day pre-filing requirement for certain CAM changes; (5) eliminated the 30-day notification requirement for establishment of temporary or experimental accounts; (6) allowed carriers to record contingent liabilities without agency review; (7) eliminated the reclassification requirement for certain property held for future use; and (8) eliminated the reclassification requirement for certain plant under construction. The Phase 1 Order also streamlined the ARMIS reporting requirements by, among other things, eliminating certain Tables, eliminating reporting items from a number of Tables, and establishing new threshold levels for certain reporting items. 37. The Common Carrier Bureau conducted a number of public workshops this spring, including one workshop devoted solely to issues concerning mid-sized incumbent LECs, to solicit ideas on reform initiatives for Phase 2 of this proceeding. These workshops have covered the Part 32 chart of accounts, the affiliate transaction rules and certain Part 64 rules, ARMIS financial reporting requirements, ARMIS non-financial reports, and other rules of concern to mid-sized carriers. Interested parties have made numerous proposals for simplification of the Commission's accounting and reporting requirements in these workshops. The proposals discussed at the workshops include, among other things: (1) use of the simplified Class B accounting rules by all carriers; (2) elimination of various accounts and sub-accounts; (3) elimination of the requirement for agency approval to implement changes in Financial Accounting Standards Board (FASB) Generally Accepted Accounting Principles (GAAP); (4) more flexibility in dealing with construction costs; and (5) streamlining and eventual elimination of the ARMIS reporting requirements. The Bureau recommends that the Commission adopt a Phase 2 Notice of Proposed Rulemaking in this proceeding. b) Jurisdictional Separations 38. The Commission has instituted a review of the Part 36 jurisdictional separations procedures, which govern the division of the carriers' regulated costs between the state and federal jurisdictions. The costs allocated to the interstate jurisdiction by Part 36 are recovered through charges regulated by the FCC, and the costs allocated to the state jurisdiction are recovered through charges regulated by the states. 39. The Commission stated that the purpose of the Separations Reform Notice was to consider what changes to our separations procedures might be appropriate in light of legal, technological and market structure changes affecting telecommunications. The Commission specifically requested comment on: (1) what changes in the law and within the industry may warrant revision of the separations process; (2) the criteria that should be used in evaluating the existing separations procedures and proposals for reform; (3) whether separations rules are needed during the transition to a competitive market; (4) a number of specific industry proposals for replacement of the existing separations procedures; and (5) how various options for separations reform would affect revenue requirements and prices. 40. Pursuant to the requirements of section 410(c) of the 1996 Act, the Commission referred these issues to the Federal-State Joint Board established in the separations reform proceeding for the preparation of a recommended decision. On July 21, 2000, the Joint Board recommended that the Commission freeze certain elements of the separations process, including the jurisdictional allocation factors, for five years while the Joint Board and the Commission continue to review issues regarding comprehensive separations reform. c) Part 68 Equipment Registration 41. Prior to the adoption of the Part 68 rules, in 1975, incumbent LECs generally prohibited direct connection of third party customer premises equipment (CPE) to their networks, thus maintaining an essential monopoly over the provision of CPE. Under Part 68, the incumbent LECs must permit direct connection to the public switched telephone network of CPE that is certified as meeting certain technical standards, which are designed to prevent harm to the public switched network. The Commission develops these technical standards, and plays a major role in ensuring product compliance with these requirements. A vibrantly competitive market for the provision of CPE has developed, resulting in an enormous increase in the variety of CPE available to consumers and major price reductions. 42. The Common Carrier Bureau held a series of public fora on Part 68 to address streamlining issues in July 1999. Representatives of the incumbent LECs, competitive LECs, equipment manufacturers, industry associations, terminal equipment testing laboratories and a state consumer counsel participated. Most of these participants agreed that: (1) the public interest requires that carrier networks be protected from harm; (2) the industry and consumers would benefit from a single uniform set of national technical standards; (3) Part 68 contains few, if any, unnecessary technical requirements; (4) the Commission should retain authority to ensure protection of the public switched network; and (5) the Commission's present functions of developing technical requirements, laboratory qualification, and equipment registration can be privatized in most respects. 43. On May 22, 2000, the Commission released the Part 68 NPRM, which seeks comment on three possible options to streamline most elements of the process by which technical criteria are established for CPE. These options include: (1) choosing a "gatekeeper" Standards Development Organization (SDO); (2) relying on multiple Standards Organizations; and (3) incorporating into the Commission's rules by reference specific standards developed by national standards organizations. 44. In the Part 68 NPRM, the Commission also proposed to streamline the registration process for CPE. Currently, the Commission itself reviews applications and issues grants for such equipment. The Commission proposed to cease this direct registration and asked for comments on one or a combination of the following options to privatize the registration process: (1) use Telecommunications Certification Bodies, which have just begun operations; (2) permit manufacturers to use a self-declaration of conformity process; or (3) permit manufacturers to use a verification process. The last two procedures are in use in Part 15 radio equipment licensing. d) Universal Service Reform for Rural Carriers 45. The Commission has also taken steps to begin consideration of rural carrier universal service issues in consultation with the Federal-State Joint Board on Universal Service (Joint Board). In 1997 the Joint Board created a Rural Task Force to study possible universal service reforms for rural telephone companies. The Rural Task Force is due to submit a report with recommendations to the Joint Board by September 30, 2000. The Joint Board will then make its recommendations to the Commission, on the basis of the Rural Task Force's report. 46. In addition, in 1999 the Common Carrier Bureau granted the request of nine rural companies and removed the individual caps placed on the rural companies' high-cost loop support as a condition for grant of a study area waiver. On August 4, 2000, in response to requests from more than 25 additional rural telephone companies, the Bureau removed these caps for all affected rural telephone companies, effective January 1, 2000. 3. New Initiatives 47. In addition to the recent and ongoing actions discussed above, the staff recommends that the Commission address various other issues. These issues include intercarrier compensation, periodic review of the separate subsidiary requirement for independent telephone company provision of inter-exchange service, and eliminating outdated rules. a) Intercarrier Compensation 48. The staff recommends that the Commission consider whether the various, sometimes conflicting, rules used for calculating intercarrier compensation for the origination and termination of traffic can be streamlined and harmonized. At present, the transport and termination provisions in sections 251 and 252 of the Communications Act and the Commission's implementing regulations in 47 C.F.R.  51.701-717 govern the way the incumbent LECs and competitive LECs (CLECs) compensate one another for call completion. The Part 69 access charge rules generally govern the compensation that incumbent LECs receive for the use of their services in the origination and termination of interstate interexchange traffic. Access charge structures, generally similar to that in Part 69 of the Commission rules and adopted by individual states, govern compensation for the origination and termination of intrastate interexchange traffic. Moreover, Information Service Provider (ISP) traffic is exempt from interstate access charges. Instead, ISPs generally pay incumbent LECs local exchange business rates for their connections to the LEC local network. 49. Since passage of the Telecommunications Act of 1996, the Commission has been adjusting incumbent LECs' access charges to reflect costs, which has resulted in price reductions totaling $6.4 billion. The Commission most recently reduced access charges paid by long distance carriers by $3.2 billion. This action continues to further the Commission's objective of developing a more economically rational approach to access charges while balancing various, and sometimes competing interests - including promotion of competition, deregulation, maintaining affordability for all and avoiding rate-shock for consumers. 50. The staff recommends that the Commission seek comment on a broad range of economic, legal and policy issues raised by the current system of intercarrier compensation for the origination and termination of traffic, and seek to identify alternative approaches that are more consistent with the long term development of competition. One purpose of such a proceeding would be to explore whether a single consistent approach to intercarrier compensation for traffic origination and termination could be developed. Staff believes that an appropriate, consolidated set of rules could reduce opportunities for arbitrage, eliminate incentives for inefficient market entry strategies, and reduce transaction costs. The staff further recommends that the Commission evaluate alternative compensation mechanisms in terms of their effect on local exchange, exchange access, and interstate interexchange competition. This proceeding should also consider the need for transitional mechanisms to ease the implementation of a new approach to intercarrier compensation for traffic origination and termination, and to avoid dislocations. b) Independent Incumbent LEC 51. The staff also recommends that the Commission modify Part 64, subpart T to provide for triennial review of the requirement that independent incumbent LECs provide interexchange service through a separate subsidiary. Staff believes that such a review is necessary to insure that these separate affiliate requirements are eliminated when they no longer serve the public interest. c) Eliminating Outdated Rules 52. The staff recommends that the Commission remove portions of the rules that are outdated. For example, in the Part 69 Access Charge rules, as well as elsewhere, rules establishing a transition period may remain in place even after the transition has been completed. The provisions listed below, are examples of rules that should be eliminated, in whole or in part, for this reason. 36.701 - Lifeline connection assistance expense allocation - general. 51.211 - Toll Dialing Parity Implementation. 51.515(b)-(c) - Application of access charges. 53.101 - Joint marketing of local and long distance services by interLATA carriers. 53.201(a)-(b) - Services for which a separate 272 affiliate is required. 54.701(b)-(e) - Administrator of universal service support mechanisms. 64.1320 - Payphone compensation verification and reports. 64.1903(c) - Obligations of all incumbent independent local exchange carriers. 69.116 - Universal service fund. 69.117 - Lifeline assistance. 69.126 - Nonrecurring charges. 69.127 - Transitional equal charge rule. 69.612 - Long term and transitional support. 4. Other Issues a) The USTA Petition and Industry Comments 53. In preparation for this Report, the staff has met with interested parties to discuss common carrier issues, including the United States Telephone Association (USTA), Competitive Telecommunications Association (CompTel), the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), National Telephone Cooperative Association (NTCA), the National Exchange Carrier Association (NECA), Association for Local Telecommunications Services (ALTS) and Cellular Telecommunications Industry Association (CTIA). We have also considered the Petition for Rulemaking filed by USTA in August 1999 addressing 2000 Biennial Regulatory Review issues, and the comments filed in response to it. The ongoing proceedings and proposed initiatives discussed above address many but not all of the major common carrier concerns expressed by USTA. For example, USTA sought numerous additional changes to Part 36 (concerning jurisdictional separations), to Part 32 (governing the Uniform System of Accounts), and to the ARMIS reporting requirements. As discussed above, these matters are being, or will be, addressed by the Commission. USTA also proposed rule changes to Parts 61 and 69. These proposals generally would reorganize and streamline these parts by creating separate rule parts to govern tariff filings, rate-of-return LEC pricing , and price cap LEC pricing. USTA also proposed substantially greater pricing flexibility for incumbent LEC access charges.. The staff does not recommend that the Commission initiate specific new proceedings at this time to address these Part 61 and 69 concerns raised by USTA in the context of this biennial regulatory review. First, many of these issues have been addressed. For example, issues related to price cap LECs were considered in the Coalition for Affordable Local and Long Distance Services (CALLS) proceeding and other proceedings addressing pricing flexibility. In addition, many of the rate-of-return LEC access reform and pricing flexibility issues raised by USTA are the subject of pending proceedings or are scheduled for consideration. 54. OPASTCO, NTCA and NECA also raised a number of specific issues for consideration in the context of the 2000 Biennial Regulatory Review. These issues include (1) streamlining accounting, jurisdictional separations and other cost allocation requirements; (2) universal service funding caps; (3) compensation for local number portability services and directory listing information; (4) establishment of a small telecom company federal advisory committee; (5) requirements affecting customer data and billing; (6) avoidance of unnecessary data reporting requirements; (7) average cost schedule review and reporting requirements; (8) elimination of the requirement for annual NECA elections; and (9) implementation of government mandates such as CALEA. The staff recognizes the importance of these issues given the unique circumstances of small telephone companies and the customers they serve. Accordingly, we recommend that the Commission redouble its efforts to ensure appropriate accommodations for small telephone companies. Many of the specific issues raised by OPASTCO and NTCA are currently under consideration by the Commission or are scheduled for consideration. We also recommend that the Commission consider simplifying review of the average schedules and changing the schedule for NECA Board elections. In addition, we note that the Commission will have the opportunity to consider lifting the cap on universal service funding for small companies in the context of the ongoing rural carrier universal service proceeding. We do not recommend that the Commission initiate a new broad based proceeding focused on small telephone company concerns as part of this Biennial Regulatory Review since we believe that such issues can be addressed most expeditiously in other contexts. Similarly, we are reluctant to recommend that the Commission establish a small telecom federal advisory committee, as we believe that this would lead to unnecessary complications and delays in addressing small telephone company concerns. These parties are free, however, to petition for specific rulemakings or to file comments in response to this report. B. International Bureau 55. The International Bureau administers policy for the authorization and regulation of international telecommunications facilities and services, as well as policy for licensing and regulating satellite facilities and services. The Bureau represents the Commission in international fora, as well as in bilateral and multilateral meetings. The Bureau directs and coordinates negotiations with Mexico, Canada and other countries regarding spectrum use and interference protection. The Bureau provides assistance in telecommunications trade negotiations, and provides regulatory assistance and training programs to foreign governments. 56. The International Bureau seeks to facilitate the introduction of new services, and to provide customers with more choices, more innovative services, and competitive prices. The 2000 Biennial Regulatory Review complements the Bureau's streamlining efforts. The Bureau has taken a proactive approach in its rulemakings to remove unnecessary regulatory constraints, wherever possible and practicable. It continually reviews its rules and policies to respond to changing conditions and developments in the industry. 1. Scope of Review 57. The International Bureau reviewed all of the rules that it administers. Specifically, the Bureau reviewed: Part 1 - Practice and Procedure - In addition to procedural rules of general applicability to all Commission licensees, certain rules within Part 1 explicitly address international telecommunications service providers. Part 23 - International Fixed Public Radio Communication Services - Contains rules applicable to international terrestrial fixed communications systems, including general licensing and application filing requirements, technical standards, and operations. Part 25 - Satellite Communications - Contains rules applicable to satellite communications, including general licensing and application filing requirements, technical standards, and operations. Part 43 - Reports of Communication Common Carriers and Certain Affiliates - Contains rules requiring certain reports by common carriers, including reports regarding different facets of international telecommunications. Part 63 - Extension of Lines, and Discontinuance, Reduction, Outage and Impairment of Service by Common Carriers; and Grants of Recognized Private Operating Agency Status - Contains rules applicable to common carriers, including application filing requirements for international section 214 authorizations. Part 64 - Miscellaneous Rules Relating to Common Carriers - Subpart J contains rules regarding the Commission's settlements policy. Part 73 - Radio Broadcast Services - Subpart F contains rules applicable to international broadcast stations. Part 100 - Direct Broadcast Satellite Service - Contains rules applicable to direct broadcast satellite service, including technical and operating requirements. 2. Recent and Ongoing Activities a) Satellite Licensing 58. Part 25 and Part 100 of the Commission's rules form the basis for the Commission's "Open Skies" policy under which a wide range of systems has been licensed to provide satellite services. Through this policy, the Bureau attempts to accommodate the maximum number of systems possible to provide a particular service in order to maximize entry and competition in the satellite service market. (1) Space Segment Authorization 59. The Commission has already taken steps to streamline the space segment portion of the satellite licensing process. First, the Commission eliminated section 319(d) waiver procedures to permit companies to begin construction, at their own risk, prior to being licensed. Second, the Commission relaxed the rules governing space station licensee reports. Third, DISCO I eliminated the distinction between U.S.-licensed domestic satellites and international "separate" satellite systems, and the new rules allow satellites to provide both domestic and international services. Fourth, DISCO II adopted a framework to evaluate requests by foreign satellite operators to provide service in the United States. DISCO II also established the "Permitted" List, which provides another option to non-U.S. satellite operators under which, once placed on the "Permitted Space Station" list, the non-U.S. satellites could provide fixed-satellite service in the United States. 60. In the direct broadcast satellite (DBS) context, the Commission issued an NPRM, which proposes to consolidate and harmonize the Commission's Satellite rules and eliminate the Commission's separate Part 100 rules for DBS and incorporate the rules into Part 25. (2) International Satellite Coordination 61. The International Telecommunication Union (ITU) has established a satellite coordination process to facilitate the harmonious use of satellite orbits and spectrum among Administrations. Satellite coordination occurs by negotiating mutually satisfactory solutions among the affected parties. All space segment licenses that the Commission issues must comply with ITU coordination requirements and international agreements. To eliminate delay of pending international coordination, however, the Commission moves forward with space segment applications and typically approves them before coordination is complete. All authorizations are subject to possible changes that may be necessary to conform to final coordination agreements. This approach saves satellite applicants substantial time. In addition, the Commission has developed processes that allow U.S. satellite operators to negotiate directly with satellite operators of other countries. The Commission reviews and finalizes any operator arrangements before agreeing to them. This process saves staff resources and permits the satellite operators to have some decisional role in the authorization process. 62. The staff and the industry also are working together to propose solutions to the backlog of coordination filings at the ITU. There is a need to reduce the time it takes for the ITU to process a coordination request because it has a direct effect on the international coordination process and on our licensing process. (3) Earth Station Licensing 63. Earth stations are licensed generally for 10 years. The Commission also issues a single blanket license for a large number of technically identical earth stations (e.g., very small aperture terminal earth stations (VSATs), and Satellite News Gathering and mobile earth stations). Less than a year ago, the International Bureau streamlined its processing of certain earth station applications. Specifically, the Bureau instituted an "auto-grant" process that automatically grants routine satellite earth station applications proposing to use the Ku-band fixed-satellite service frequencies (14.0-14.5 GHz / 11.7-12.2 GHz) to communicate with all satellites authorized to provide service to the United States (the "Permitted List"). Such routine earth station applications are considered granted 35 days from the date on which the application appears on public notice as "accepted for filing," provided that no objections are filed during the public comment period. These changes were consistent with the increased competition and consumer demand in the satellite marketplace. 64. The Bureau also reduced the number of emission designators required to be identified in applications for digital systems. This modification significantly reduces the time necessary to enter earth station information into the Commission's database, and largely eliminates the need for earth station operators to file modification applications when they wish to add a new emission. 65. The Commission also modified its Part 25 rules to provide earth station applicants greater flexibility. For example, the Commission simplified rules for license renewals for temporary fixed earth stations and very small aperture terminal earth stations (VSATs). The Commission extended the licensing term for VSATs to 10 years. Additionally, the Bureau created new procedures to allow Special Temporary Authority to be granted readily for use by satellite earth stations if the applicant is able to demonstrate extraordinary circumstances, according to Part 25. Furthermore, the Bureau issued a Public Notice that committed to placing routine applications on public notice within 10 business days of receipt by the Bureau, provided the application includes all required information. b) Section 214 Applications 66. The Commission has taken great strides to streamline its international 214 application processes. In 1996, the Commission created an expedited process for global, facilities-based section 214 applications. The Commission created global section 214 authorizations, reduced paperwork obligations, streamlined tariff requirements for non-dominant international carriers, and ensured that essential information is readily available to all carriers and users. The new regulations facilitated entry into the international telecommunications market and the expansion of international services. 67. In March 1999, as part of its 1998 Biennial Regulatory Review process, the Commission took additional steps to reduce regulatory burdens on providers of international telecommunications services, citing rapid changes in the global telecommunications market. The Commission streamlined its procedures for granting international section 214 authorizations to provide international services, and increased the categories of applications eligible for streamlined processing. After adoption of the rules, most new carriers are authorized to provide international services on most international routes 14 days after public notice of an application. Carriers already providing service are able to complete pro forma transactions and assignments of their authorizations without prior Commission approval and to provide service through their wholly owned subsidiaries without separate Commission approval. Carriers under common ownership with an already-authorized carrier are able to provide the same authorized services after only a minimal waiting period. Authorized carriers are able to use any authorized U.S.- licensed or non-U.S.-licensed undersea cable systems in the provision of their authorized services. Approximately 99 percent of international section 214 applications now qualify for streamlined processing. c) Foreign Participation 68. The Commission has sought to foster an increasingly competitive international telecommunications market by adopting policies that promote the shift away from government- owned monopolies and toward private sector competition. For example, the Commission has simplified its own licensing rules in ways that have facilitated entry into the U.S. market by foreign private sector competitors. In the Foreign Participation Order, the Commission broadened the class of foreign-affiliated applicants eligible for streamlined processing. In addition, the competitive conditions created by the World Trade Organization (WTO) basic telecommunications agreement and the rules adopted in the Foreign Participation Order significantly reduced the possibility of market distortion, thereby allowing the Commission to reduce scrutiny of many applications and afford those applications streamlined processing. d) International Settlements Policy 69. The Commission has taken action to remove regulatory impediments and increase competition in the international telecommunications marketplace through reform of the longstanding international settlements policy. In 1999, in the ISP Reform Order, the Commission adopted sweeping deregulatory inter-carrier settlement arrangements between U.S. carriers and foreign non-dominant carriers on competitive routes. Specifically, the Commission: (1) eliminated the international settlements policy and contract filing requirements for arrangements with foreign carriers that lack market power; (2) eliminated the international settlements policy for arrangements with all carriers on routes where rates to terminate U.S. calls are at least 25 percent lower than the relevant settlement rate benchmark previously adopted by the Commission in its Settlement Rate Benchmark Order; (3) adopted changes to contract filing requirements to permit U.S. carriers to file, on a confidential basis, arrangements with foreign carriers with market power on routes where the international settlements policy is removed; (4) adopted procedural changes to simplify accounting rate filing requirements; (5) eliminated the flexibility policy in recognition that the reforms to the international settlements policy render the flexibility policy largely superfluous. The Commission noted that the revisions to its rules will give greater opportunities to smaller carriers and will allow the market, rather than government regulation, to govern settlement arrangements between carriers in competitive markets. These changes promote lower prices and greater innovation in international telecommunications services for U.S. consumers. e) Automation 70. The International Bureau has made substantial progress in its ongoing efforts to automate its processes. For example, the Bureau implemented a computerized notification system, enabling the ITU and other international entities to provide data to the Commission electronically. In January 2000, the International Bureau successfully completed the transition from a paper and diskette distribution format, the ITU Weekly Information Circular (WIC), to a new computer-based CD-ROM system, the Radiocommunication Bureau International Frequency Information Circular (BRIFIC), for terrestrial service notifications. The BRIFIC system completely replaces our reliance on paper notifications for these services and will save time and resources. 3. New Initiatives a) Earth Station Licensing 71. The industry has provided substantial constructive comment on the Bureau's processes regarding satellite earth station licensing. The greatest criticism is that the process to obtain an earth station license takes too long. Industry members have suggested a variety of ways to address this problem. Staff recommends that the Commission seek comment on comprehensive changes to the earth station licensing process in a Notice of Proposed Rulemaking. The NPRM would seek comment on the proposals advanced by industry members. 72. The staff also recommends that the Commission consider requiring electronic filing. Electronic filing eliminates the need for staff to input information into the Bureau's database (which also reduces the chance of typographical errors generated by the staff). The NPRM would also seek comment on various technical changes to Part 25 that could save substantial time in processing applications. b) Space Segment Authorizations 73. Currently it takes the Commission a minimum of just over two years to grant a space station application. The satellite network licensing process takes several years longer when there is no spectrum allocation (International or Domestic), when no service rules exist for the proposed system, or when there are other countries ahead of the United States in the ITU coordination process. 74. The Bureau's current "processing round" approach requires substantial staff time and resources to resolve all of the issues associated with a particular pool of applications. On the other hand, a processing round approach sets parameters for licensing in an orderly fashion, taking into account mutual exclusivity considerations. Through processing rounds, the Commission is able to identify the name, type and number of applications for a particular service and can avoid considering applications subsequently filed that may be mutually exclusive with previously filed applications. 75. The major criticism of the current process is that service rulemakings and international coordination take too long to complete. The International Bureau has made concerted efforts to streamline the satellite licensing process. The staff believes that further improvements are warranted. The Bureau is examining new options to improve and streamline the space segment licensing process as it relates to the development of new service rules and international coordination. The Bureau plans to develop specific procedural and substantive proposals for new licensing approaches and establish goals for implementation. 76. The Bureau also is continuing to work with the industry to re-examine the entire satellite network licensing process. The International Bureau has convened several meetings with representatives of the U.S. and foreign satellite industry, including geostationary (GSO) companies, non-geostationary (NGSO) companies, direct broadcast satellite (DBS) providers, fixed satellite service (FSS) operators and mobile satellite service providers (MSS), to discuss satellite space station licensing. Input from these industry meetings will be useful in the Bureau's new initiatives. c) Parts 23, 25 and 100 77. The staff recommends that the Commission consider repealing section 25.141 and subpart H of its rules. The staff also recommends that the Commission review sections 25.140 and 25.144 of its rules. Section 25.140 requires that each applicant for a fixed satellite service (FSS) authorization demonstrate that it is legally, financially, technically and otherwise qualified to proceed expeditiously with the construction, launch and/or operation of each proposed space station immediately after the grant of the requested authorization. If the Commission determines that financial qualifications are still necessary, we recommend that the Commission review the rules to determine whether a different showing of financial qualifications may be warranted. We recommend, however, that the Commission retain its technical and legal qualifications in their current form. 78. Section 25.144 includes the licensing provisions for the 2.3 GHz satellite digital audio radio service (DARS). The staff recommends that the Commission eliminate the subsection in 25.144 that identifies the specific DARS applicants eligible for the auction. This subsection is no longer necessary because DARS licenses have already been issued. The staff recommends, however, that the Commission retain the actual auction procedures for DARS in Part 25. 79. The staff further recommends that Parts 23 and 100 be retained in their entirety. Part 100 is the subject of a Notice of Proposed Rulemaking, which has already been released by the Commission. Part 23 should be considered by the Commission for further review. d) Section 214 Applications 80. As part of the Telecommunications Division's ongoing efforts to improve service, the Division staff reviewed the rules in Part 63 relating to section 214 authorizations for international communications. In addition, Bureau staff met with industry representatives to solicit suggestions on how to improve the rules. On the basis of this review, and its daily work implementing the rules, the Bureau recommends that the Commission initiate a NPRM to expand the availability of pro forma section 214 transfers of control and assignments, which would reduce processing burdens and provide greater regulatory certainty. The Bureau also has identified several duplicative rules that the Commission should consider eliminating, and a number of rules that are unclear, or ambiguous, or contain errors that the Commission should consider modifying. e) Submarine Cable 81. In recent years, there has been an explosive growth in the number and capacity of submarine cables. In particular, the development of the Internet has dramatically increased demand for submarine cable capacity. To address issues relating to increased demand, the rapid pace of technological development, and the emergence of non-traditional ownership and financing structures in the submarine cable marketplace, the International Bureau held a public forum in November 1999. The Bureau also has held numerous meetings with individual industry participants about ways the Commission might reform its regulation of the submarine cable landing licensing process to further promote competition. 82. On the basis of the public forum and meetings with industry, the Commission recently adopted a Notice of Proposed Rulemaking to continue the Commission's efforts to streamline the submarine cable landing license process. In the Notice, the Commission proposed pro-competitive streamlining that incorporates competitive safeguards to allow for and encourage: (1) more certainty and flexibility for participants in the application process; (2) increased investment and infrastructure development by multiple providers; (3) expansion of available submarine cable capacity; and (4) decreased application processing time. This streamlining effort will benefit U.S. consumers by eliminating regulatory delay and enhancing the competitiveness of U.S. service providers in the world market. f) Reporting Requirements 83. The Bureau staff reviewed the rules in Part 43 relating to reporting requirements of carriers providing international telecommunications services. In addition, Bureau staff met with industry representatives to solicit suggestions on how to improve the reporting requirements. The Bureau recommends that the Commission undertake a proceeding to review the reporting requirements. The staff finds that these reporting requirements can be modified to reflect changes that have occurred in the telecommunications industry. These reports aid the Commission, industry, and international agencies in planning and understanding international telecommunications markets. The staff believes that the reporting burdens can be reduced without eliminating the benefits these reports provide. 84. The staff recommends that some of the rules relating to reports filed by carriers providing international telecommunications services be modified, and that others be eliminated. The staff has determined that reports regarding the division of international toll communications charges are no longer needed. The purpose of those reports is to monitor telegraph communications, which is no longer a major component of telecommunications. In addition, this reporting requirement is duplicative of other rules. The requirement for reports of carriers owned by foreign telecommunications entities, which is designed to monitor foreign ownership of certain carriers, is no longer necessary in light of the development of competition in international telecommunications markets. Although this reporting requirement has a sunset date, it can be eliminated prior to that sunset. The Bureau also recommends that the instruction manual for reports of International Telecommunications Traffic be revised to reflect all the changes that have occurred over the past several years. g) International Broadcasting Stations 85. International broadcasting stations are broadcast stations operating on certain high frequency bands whose transmissions are intended to be received directly by the general public in foreign countries. The staff reviewed the Commission's rules governing international broadcasting stations and determined that five of these rules should be revised to reflect actions taken at recent World Radio Conferences (WRCs). First, the staff recommends that the Commission modify section 73.701(g) - (j) and (l) of the rules, to reflect the Final Acts of WRC `97 (Geneva), which reduced the number of seasonal schedules per year (and thus the number of times per year that licensees have to file for frequency assignments) from four to two. In addition, the staff recommends that the Commission change the starting and ending dates in the rule to the last Sunday in March and the last Sunday in September, and change the reference month in section 73.701(l) to specify either July or December. Second, the staff recommends that the Commission modify section 73.702(f)(1) of the rules, which lists the frequencies that can be assigned by the Commission for international broadcasting, to include additional bands approved for international broadcasting use by the World Radio Assembly Conference (WRAC) `92. Third, the staff recommends that the Commission replace the target zone map in section 73.703 of the rules with the current ITU target zone map, which was used for implementation of the WRC `97 Final Acts. Fourth, the staff recommends that the Commission change the frequency control tolerance of 0.0015 percent of the assigned frequency, which is specified in section 73.756(c) of the rules, to the current ITU regulation standard of 10 Hz. Finally, the staff recommends that the Commission modify the last sentence of section 73.766 of the rules to change the highest modulating frequency from 5 kHz to 4.5 kHz, to reflect a provision in the Final Acts of WARC-87. These changes would bring the Commission's international broadcasting rules into conformance with current international provisions. This will make the rules easier to use and will avoid the confusion that could result from different Commission and international requirements. h) Detariffing International Services 86. The Commission is in the process of detariffing interstate domestic interexchange services offered by non-dominant interexchange carriers (IXCs). Similar to the domestic interexchange market, the international interexchange market has seen a substantial increase in the level of competition that has benefited consumers. In light of this change, the staff recommends that the Commission extend the detariffing regime adopted for domestic interexchange services to the international services of non-dominant interexchange carriers, including Commercial Mobile Radio Service providers and U.S. carriers classified as dominant solely because of foreign affiliations. Detariffing international interexchange services will reduce the burdens placed on carriers and the Commission. The Commission will still be able to ensure that rates are just and reasonable and not unreasonably discriminatory; will be able to protect consumers by requiring carriers to disclose their rates publicly and through use of the section 208 complaint process; and will promote the public interest by furthering competition in the international interexchange marketplace. 87. The staff also recommends that the Commission amend, as part of the detariffing process, the rule relating to the filing of contracts between carriers. Specifically, the staff recommends that the Commission amend section 43.51 to simplify the language and to provide that the only contracts that need to be filed with the Commission are (1) contracts with a foreign carrier that has market power in a foreign market for common carrier service between the U.S. and that foreign location and (2) contracts involving a U.S. carrier that has been classified as dominant on any routes included in the contract, except for carriers classified as dominant on a particular route only because of a foreign carrier affiliation. This will reduce burdens on carriers and the Commission. Given the increasing level of competition in telecommunications markets, the staff does not believe that these contracts need to be filed. The Commission and carriers should be able to ascertain when anti-competitive behavior occurs even if the contracts are not filed, and the Commission has authority to obtain the contracts if it needs to review them. C. Wireless Telecommunications Bureau 88. The Wireless Telecommunications Bureau (Wireless Bureau or WTB) is responsible for licensing and regulating all wireless communications services other than broadcast and satellite services. Wireless communications services include commercially provided services such as cellular, Personal Communications Services (PCS), and paging, as well as public safety and other private radio services. 89. The functions of the Wireless Bureau largely derive from Title III of the Communications Act, which governs licensing of spectrum in general and wireless services in particular. As a result, the vast majority of the Commission's regulations affecting wireless carriers consist of (1) allocation and service rules, (2) procedural rules concerning licensing and auctions, and (3) technical and operational rules. 90. The market for wireless carriers has changed dramatically in recent years as a result of entry by new wireless competitors, substantial growth, and increased competition in the wireless market. In 1993, Congress granted authority to the Commission to award wireless licenses by auction. Since that time, the Commission has conducted 30 spectrum auctions for services such as broadband and narrowband PCS, Specialized Mobile Radio (SMR), Wireless Communications Service (WCS), Local Multipoint Distribution Service (LMDS), and numerous other fixed and mobile wireless services. This unprecedented wave of new licensing has resulted in a dramatic increase in the number of competing wireless service providers. 91. As a result of increased wireless licensing and new competition, the Commission has substantially deregulated many aspects of wireless services. For example, in 1994, pursuant to authority granted under section 332 of the Communications Act, the Commission eliminated all federal rate regulation of commercial mobile radio service (CMRS) providers, and preempted all state rate regulation as well. In 1996, the Commission revised its technical and operational rules to give CMRS carriers flexibility to provide fixed as well as mobile services, so that carriers could better respond to customer demands for new and innovative services. The dynamic and rapidly evolving nature of the wireless industry continues to make it important for the Commission to review its wireless regulations on a regular basis. 1. Scope of Review 92. As part of the review process initiated by the 2000 Biennial Regulatory Review Working Group, WTB has reviewed the following rule parts that affect wireless telecommunications carriers. Part 1 - Practice and Procedure - In addition to procedural rules of general applicability to all Commission licensees, subpart F relates to licensing and application procedures for wireless services, and subpart Q contains auction rules for wireless services. Part 17 - Construction, Marking, and Lighting of Antenna Structures - Establishes construction, marking, and lighting requirements for antenna structures that affect aviation safety, and sets forth procedures for registering such structures with the Commission. Part 20 - Commercial Mobile Radio Services - Contains rules that are generally applicable to all CMRS providers, including the CMRS spectrum cap, resale and roaming rules, and E911 requirements. Part 22 - Public Mobile Services - Contains licensing, technical, and operational rules for cellular, paging, air-to-ground, and other mobile services. Part 24 - Personal Communications Services - Contains auction, licensing, technical, and operational rules for Broadband and Narrowband PCS. Part 26 - General Wireless Communications Service - Contains auction, licensing, technical, and operational rules for the General Wireless Communications Service (GWCS). Part 27 - Wireless Communications Service - Contains auction, licensing, technical, and operational rules for the Wireless Communications Service (WCS). Part 80 - Stations in the Maritime Services - Contains auction, licensing, technical, and operational rules for Public Coast Stations in the marine radio services. Part 90 - Private Land Mobile Radio Services - Contains auction, licensing, technical, and operational rules for 800 and 900 MHz SMR, private carrier paging, 220 MHz Service, Location and Monitoring Service (LMS), and private land mobile services. Part 95 - Personal Radio Services - Contains licensing, technical, and operational rules for the 218-219 MHz Service. Part 101 - Fixed Microwave Services - Contains auction, licensing, technical, and operational rules for private and common carrier fixed microwave services. Includes specific subparts governing LMDS, 24 GHz, and 38-39 GHz services. 2. Recent and Ongoing Activities 93. Prior to and contemporaneously with the 2000 Biennial Regulatory Review, WTB has engaged in a number of major initiatives to streamline and eliminate unnecessary rules. a) Universal Licensing Proceeding 94. In the Universal Licensing proceeding, which was part of the 1998 Biennial Regulatory Review, the Commission furthered the implementation of the Universal Licensing System (ULS) by consolidating and streamlining its licensing rules and procedures for all wireless services. Major accomplishments in this proceeding include: (1) establishing an electronic filing requirement for all wireless services, which significantly reduces filing burdens on wireless applicants and speeds the licensing process; (2) consolidating all wireless licensing rules into Part 1, by which the Commission eliminated more than 200 duplicative and sometimes inconsistent licensing rules that previously governed applications and licensing in individual wireless services; (3) reducing the number of wireless application forms from more than 40 different application forms in use for different purposes in different wireless services to four standardized application forms; and (4) eliminating obsolete or burdensome application filing rules and procedures, such as the requirement that common carrier licensees file microfiche copies of their applications. b) Part 90 Biennial Regulatory Review Proceeding 95. This proceeding, also initiated as part of the 1998 Biennial Regulatory Review, addresses rules applicable to Part 90 private land mobile licensees. In the Report and Order recently adopted in this proceeding, the Commission took the following actions: (1) lengthened license terms for Part 90 licensees from 5 to 10 years, which increases licensee flexibility and reduces filing burdens; (2) extended the construction period for private land mobile licensees from 8 to 12 months; and (3) streamlined, clarified, and eliminated other Part 90 rules. c) Amendment of the Commission's Part 97 Amateur Radio Rules 96. This proceeding simplified licensing classifications in the Amateur Radio Service, streamlined and updated Amateur license examination procedures, and eliminated other outdated rules. d) Pro Forma Assignments and Transfers 97. In 1998, the Commission granted section 10 forbearance of section 310(d), which required prior Commission approval for most pro forma assignments and transfers involving wireless telecommunications carriers. This action enables telecommunications carriers to carry out non-substantial transfers and assignments without regulatory delays, subject only to the requirement that they notify the Commission of the change. e) Local Number Portability 98. In 1999, the Commission granted a petition by the Cellular Telecommunications Industry Association to extend the deadline for CMRS providers to establish a local number portability (LNP) capability in their networks. As a result of the Commission's decision to apply section 10 forbearance in this case, the LNP implementation deadline for CMRS providers has been extended until November 2002. This will give CMRS providers greater flexibility in the near term to build out their systems and increase capacity to meet growing consumer demand for wireless services. f) LMDS Eligibility 99. In June 2000, the Commission adopted the Third Report and Order in CC Docket No. 92-97, in which it allowed the Local Multipoint Distribution Service (LMDS) eligibility restriction to sunset on June 30, 2000. The LMDS eligibility restriction, adopted in 1997, prohibited local exchange carriers and incumbent cable companies from having an attributable interest in any LMDS "A" block license that overlapped with ten percent or more of the population in their service areas. In the Third Report and Order, the Commission concluded that allowing this eligibility restriction to sunset would promote the public interest. After reviewing the restriction, the Commission found that the record did not support a conclusion that open eligibility posed a significant threat of competitive harm in specific markets; indeed, the Commission concluded that open eligibility may improve the availability of services, particularly in rural areas. g) Streamlining Initiatives 100. The Wireless Bureau has engaged in a comprehensive effort to streamline its procedures, to resolve pending applications and requests expeditiously, and to operate more efficiently. Some of the Bureau's more significant accomplishments are: (1) Deploying the ULS and expanding use of electronic filing. This has resulted in electronic filing of more than 60 percent of wireless applications. (2) Expanding and expediting the licensing process via auctions. The Bureau has conducted eight auctions since January 1999, in which more than 5,000 licenses have been awarded. The Bureau plans to conduct an additional four auctions during the remainder of this year. (3) Eliminating the case backlog. Between March 1999 and March 2000, the Bureau reduced by 99 percent a backlog of more than 64,000 applications that had been pending for more than one year, and implemented tracking procedures to prevent future backlogs. (4) Resolving pending matters quickly. In 1999, the Bureau processed more than 400,000 license applications, issued more than 500 decisions on delegated authority, and had 112 orders adopted by the Commission. (5) Processing license transfers and assignments efficiently. From October 1999 to April 2000, the Bureau processed approximately 1900 transfer and assignment applications, including such major transactions as AT&T/Vanguard, Bell Atlantic/Vodafone, Nextel/Geotek, Omnipoint/Voicestream, and Arch/PageNet. Seventy percent of the transfer and assignment applications filed with the Bureau were processed in 90 days or less, and 87 percent were processed in 180 days or less. 3. New Initiatives 101. In general, the Bureau has not recommended repeal or significant modification of allocation and service rules, procedural rules concerning licensing and auctions, and technical and operational rules, which, as noted above, constitute the majority of the rules subject to review that affect wireless carriers. The staff has determined that these types of rules are integral to the basic licensing and spectrum management functions performed by the Bureau and the Commission under Title III of the Communications Act. The continued need for such rules is not diminished by increased competition in the wireless marketplace. Indeed, without basic "rules of the road" for spectrum use, the ability of wireless carriers to compete would be significantly impaired. 102. Nevertheless, the Bureau has determined that there are several areas where competitive conditions, technological changes, or administrative efficiency may warrant changing or eliminating regulations. In addition, the Bureau and the Biennial Regulatory Review Working Group have received numerous suggestions from outside parties, such as the Cellular Telecommunications Industry Association (CTIA), the Personal Communications Industry Association (PCIA), and the Federal Communications Bar Association (FCBA), of possible areas for streamlining or eliminating wireless rules. a) Part 22 Cellular Rules 103. The Commission's rules regulating cellular telephone service, contained in Part 22, were largely adopted in the early 1980s when the service was initiated. At the time these rules were adopted, the two cellular carriers in each market (one of which in each market was affiliated with the incumbent LEC) were the only providers of mobile telephony, thus creating a "duopoly" market for this service. In addition, those cellular licenses not granted to incumbent LECs were awarded primarily by lottery, which caused the Commission to adopt regulations to prevent speculation and trafficking in licenses. Finally, to ensure technical uniformity in the deployment of cellular, the rules included detailed technical requirements for the provision of analog cellular service. Since these rules were adopted, PCS and SMR providers have entered the mobile telephony market, significantly changing the competitive landscape. The Commission has also replaced the lottery process with licensing by auction, and there have been significant advances in wireless technology, including the development of several competing digital interfaces. As a result of these changes, many of the Part 22 cellular rules adopted in the duopoly era appear to be no longer necessary. Therefore, the Bureau staff recommends initiating a rulemaking to review the cellular rules and consider which of these rules are obsolete as a result of competitive or technological developments. The Bureau staff also recommends review of rules regulating other Part 22 services, such as paging and air-to-ground service, on the same basis. b) License Renewal Procedures 104. In most instances, wireless licenses must be renewed every 10 years. As a practical matter, granting renewal of wireless licenses has proved to be virtually automatic except where the licensee has violated Commission rules, which only occurs in a very small percentage of cases. However, the renewal process in some instances places significant burdens on licensees. In a small but significant number of cases, the Bureau has encountered problems with late-filed renewal applications, in many instances involving public safety licensees that provide essential emergency services to their communities. To address these issues, the staff recommends initiating a proceeding that would consider changes to renewal procedures for public safety licenses in particular and that would review renewal procedures for other wireless licenses as well. Among the options that could be considered are: (1) extending license terms beyond 10 years, and (2) implementing automatic or default renewal procedures to avoid late filing problems. Reform of renewal procedures was an issue specifically raised by CTIA and other industry representatives in meetings with Bureau staff. c) Privatization of Microwave Licensing 105. Under its Part 101 rules, the Commission licenses some private and common carrier microwave services on a site-by-site, frequency-by-frequency basis. Although this licensing procedure facilitates efficient use of the spectrum, the licensing process is administratively complex and resource-intensive for applicants and the Commission. The staff recommends initiating a proceeding that would consider the possibility of partially privatizing the licensing process in these services. If implemented, licensing functions within designated spectrum could be performed by private coordinators, who would also be responsible for maintaining the licensee database. d) CMRS Spectrum Cap Review 106. The CMRS spectrum cap, set forth in section 20.6 of the rules, limits the aggregate amount of broadband PCS, cellular, and SMR spectrum that an entity can hold in any market. The rule was adopted in the CMRS Third Report and Order prior to the initiation of broadband PCS licensing. In the September 1999 Spectrum Cap Report and Order, the Commission considered whether to retain, modify, or eliminate the spectrum cap. The Commission concluded that the cap continued to serve the public interest by preventing undue concentration in the CMRS market. The Commission also concluded that the cap should be relaxed in some respects, including liberalizing certain of the attribution rules and allowing aggregation of up to 55 MHz of spectrum in rural areas (as opposed to the 45 MHz limit in major markets). Finally, the Commission stated that it would again review the spectrum cap in the 2000 Biennial Regulatory Review. In accordance with this directive, the Bureau plans to prepare a Notice of Proposed Rulemaking for Commission consideration later this year that will initiate this review, taking into consideration existing competitive conditions and technological developments that could affect the continued need for the cap. 4. Other Issues 107. The Bureau is also considering several other possible areas for new Biennial Regulatory Review initiatives. For example, the Bureau is reviewing its procedures for environmental clearance of tower sites under the National Environmental Policy Act (NEPA) to determine whether it can implement its responsibilities under NEPA more effectively and efficiently. The Bureau has also received Biennial Regulatory Review suggestions from outside parties such as CTIA and PCIA, including: streamlining procedures for submission of confidential information; streamlining and consolidating reporting obligations applicable to wireless carriers (e.g., TRS, Universal Service, broadband competition, regulatory fees); and reviewing our buildout requirements for different wireless services. The Bureau has taken these suggestions under consideration and will announce further initiatives as appropriate. V. SUMMARY OF REVIEW BY MASS MEDIA BUREAU 108. The Mass Media Bureau advises the Commission in matters pertaining to radio stations, television stations, Multipoint Distribution Service (MDS), Multichannel Multipoint Distribution Service (MMDS), and Instructional Television Fixed Service (ITFS) facilities. The Bureau is responsible for licensing these services and administers Commission rules and policies pertaining to these services, including ownership rules. The Bureau has been engaged in a thorough review of its rules and policies to promote competition and diversity, to minimize unwarranted regulatory burdens, and to streamline our licensing processes. These rules are located in Parts 73, 74, and 21 of Title 47 of the Code of Federal Regulations. 109. A variety of video outlets currently serve over 100 million television households in the United States. The average television household in the United States can receive 13 over-the-air television stations, while 36 percent of all homes can receive 15 or more stations and 9 percent can receive 20 or more stations. Over 10,400 cable systems pass by 96 million homes and serve almost 67 million television households. Sixty-four percent of all subscribers have at least 54 channels and over 98 percent have a minimum of 30 channels. Other video providers include Direct Broadcast Satellite, MMDS, satellite master antenna television, home satellite dishes, and open video systems. 110. Over 12,600 radio stations are currently on the air (4,783 AM, 5,766 commercial FM and 2,066 educational FM). Listeners in over half of the Arbitron radio markets are served by more than 20 commercial radio stations, and listeners in over 90 percent of the markets are served by more than 10 commercial radio stations. The 1996 Act eliminated the Commission's national radio ownership limits and relaxed the local radio ownership limits. In response, the radio industry has consolidated ownership during the past four years, with the number of radio owners declining by approximately 1,100. Thus, there are now approximately 4,000 owners of commercial radio stations. The average number of owners of commercial radio stations in Arbitron radio metro markets has declined by 3 (from 14 to 11) since the 1996 Act. Prior to the 1996 Act, the largest radio group owner had fewer than 40 radio stations nationwide. In March 2000, the two largest radio group owners each had over 440 radio stations, and there were several radio owners with more than 100 radio stations. As a result of this consolidation, approximately two-thirds of all commercial radio stations are owned as part of radio groups. 111. Commercial broadcasters fund their activities by selling advertisers access to their audiences (they receive no revenue from listeners or viewers). Broadcast programming is limited to the geographic reach of any given station's signal. This creates an incentive for broadcast networks to forge arrangements with many stations, thereby expanding their geographic reach and attracting a broader range of advertisers. Once broadcast television transitions to a digital service, DTV could provide multiple streams of video programming and allow broadcasters to charge subscriber fees for several program services. 112. Section 202(h) of the 1996 Act requires the Commission to review its ownership rules biennially to "determine whether any of such rules are necessary in the public interest as the result of competition." The Commission has undertaken a number of deregulatory initiatives with respect to the broadcast ownership rules. The Bureau is committed to reevaluating regulatory standards on an ongoing basis to respond to changes in the broadcast industry. 113. One important policy goal for mass media, and one of the most important purposes of the Commission's multiple ownership rules, is to encourage diversity in the ownership of broadcast stations in order to ensure that a diversity of viewpoints is available over the airwaves. As the Supreme Court stated, "it has long been a basic tenet of national communications policy that `the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.'" This diversity policy is consistent with the First Amendment goal of fostering the "marketplace of ideas" and encouraging "uninhibited, robust, and wide-open" debate. For these reasons, the Supreme Court has stated that it has "no difficulty" in concluding that the Commission's interest in "promoting widespread dissemination of information from a multiplicity of sources" is "an important governmental interest;" indeed, the Supreme Court has stated that "assuring that the public has access to a multiplicity of information sources is a governmental purpose of the highest order, for it promotes values central to the First Amendment." 114. Broadcast stations, particularly television stations, reach large audiences and are the primary source of news and entertainment programming for Americans. Broadcasters consequently play a leading role in airing democratic debate and shaping cultural attitudes. For example, the manner and viewpoint a station uses in presenting the news can have a substantial impact on local elections. A television drama that raises controversial or important societal issues can shape cultural attitudes about these issues in significant ways. There is consequently a vital public interest in ensuring that these influential outlets for communication are in the hands of a broad number of different owners. 115. The strong policy of promoting diversity is relevant to determining whether a regulation is necessary in the public interest. Whether or not a particular ownership combination has anticompetitive effects in the sale of advertising time or other markets in which broadcasters compete, that combination may reduce the diversity of voices in a community. Congress implicitly recognized this by maintaining local radio ownership limitations, albeit at relaxed levels. Congress has repeatedly emphasized its concern for promoting diversity in the mass media, notwithstanding the increasingly competitive nature of virtually all communications markets. In attempting to foster diversity through structural regulation, the Commission endorses a content-neutral method that does not evaluate the substance of any station's editorial decisions, but seeks to ensure a sufficient number of independent outlets and program sources to foster a diversity of independent viewpoints in a given local market. 1. Recent and Ongoing Activities 116. On August 6, 1999, the Commission released its Local Television Ownership Report and Order and its National Television Ownership Report and Order. As discussed more fully below, the Commission, in the Local Television Ownership Report and Order, revised its local television ownership rules - the "TV duopoly" rule and the radio-television cross- ownership or "one-to-a-market" rule - to respond to ongoing changes in the broadcast television industry. The new rules reflect a recognition of the growth in the number and variety of media outlets in local markets, as well as significant efficiencies and public service benefits that can be obtained from joint ownership. At the same time, the Commission's amendments reflect its continuing goals of ensuring diversity and localism and guarding against undue concentration of economic power in the marketplace. The newly adopted rules balance these competing concerns and are intended to facilitate further development of competition in the marketplace and to strengthen the potential to serve the public interest. In the National Television Ownership Report and Order, the Commission modified its method of calculating stations' audience reach and made some minor changes in which stations would be counted for purposes of the national TV ownership rule. 117. On June 20, 2000, the Commission released its 1998 Biennial Regulatory Review Report, which discusses all of the Commission's broadcast ownership rules not already considered in the 1999 Local and National Television Ownership Report and Orders. The 1998 Biennial Regulatory Review Report considers (1) the local radio ownership rules, including the radio market definition; (2) the daily newspaper/broadcast cross-ownership rule; (3) the national television ownership rule, including the "UHF discount;" (4) the dual network rule; (5) the experimental broadcast station ownership rule; and (6) the cable/television cross-ownership rule. The Report then states the Commission's conclusions as to whether the rules remain necessary in the public interest in view of competition. a) Broadcast Ownership Rules (1) Local Radio Ownership Rule 118. In 1996, the Commission revised the number of radio stations that an entity may own in a single radio market under section 73.3555(a) of its rules in accordance with section 202(b) of the 1996 Act. The Commission also reviewed the rule in its 1998 Biennial Regulatory Review Report. On the basis of that recently concluded review under the biennial regulatory review requirements of the 1996 Act, the Commission concluded that local radio ownership rules generally continue to serve the pubic interest. Noting that there currently are far fewer licensees competing against each other in many communities than there were prior to the 1996 Act, the 1998 Biennial Regulatory Review Report concluded that the existing limitations remain necessary to prevent further diminution of competition and diversity in the radio industry. 119. The Commission, however, recognized that its methodology for counting the number of stations a party owned in a market may have, under certain circumstances, created results that were inconsistent with congressional intent. For example, the Commission noted that its current methodology may result in a station being counted as part of a market but not counted against a licensee's cap on the number of stations it may own in that market. The Commission therefore stated that it will issue a notice of proposed rulemaking seeking comment on its methodology for defining radio markets, counting the number of stations within those markets, and counting the number of stations that a party owns in a radio market. (2) Local Television Multiple Ownership Rule 120. Section 73.3555(b) of the Commission's rules limits the number of television stations an entity may own in a single market. The 1999 Local Television Ownership Report and Order relaxed this rule by (1) modifying the geographic scope from the Grade B contour overlap approach to a Nielsen Designated Market Area (DMA) test that permits common ownership of two television stations in separate DMAs without regard to contour overlap; (2) allowing common ownership of two television stations within the same DMA if their Grade B contours do not overlap (a continuation of the previous rule), or if eight independently-owned, full power and operational TV stations (commercial and non-commercial) will remain post- merger, and one of the stations to be merged is not among the top four-ranked stations in the market, on the basis of audience share at the time the application is filed; and (3) allowing waiver of the new rules under certain circumstances. As the Commission stated in the 1999 Local Television Ownership Report and Order, the relaxed rules provide measured relaxation of the local television multiple ownership rule, particularly in larger television markets. The rule will allow weaker television stations in a market to combine, either with each other or with a larger station, thereby preserving and strengthening these stations and improving their ability to compete. These station combinations will allow licensees to take advantage of efficiencies and cost savings that can benefit the public. At the same time, the station rank and voice criteria are designed to protect both the Commission's core competition and diversity concerns. Because the local television multiple ownership rule was so recently relaxed, the staff believes that no further changes are warranted at this time. Instead, staff will monitor the effects of deregulatory actions on the marketplace to determine whether further changes are warranted. (3) Radio-Television Cross-Ownership Rule 121. Section 73.3555(c) of the Commission's rules limits the number of radio and television stations that an entity may own in a single market. The 1999 Local Television Ownership Report and Order relaxed the Commission's radio-television cross-ownership rule to allow common ownership of a television station (or two television stations if permitted under our local television ownership rules) and up to six radio stations (any combination of AM or FM stations, to the extent permitted under our local radio ownership rules) in any market where at least 20 independent voices would remain post-merger; a television station and up to four radio stations (any combination of AM or FM stations, to the extent permitted under our local radio ownership rules) in any market where at least 10 independent voices would remain post-merger; and a television station and one radio station (AM or FM) notwithstanding the number of independent voices in the market. The 1999 Local Television Ownership Report and Order also eliminated the previous five-factor case-by-case waiver standard and established a simplified waiver standard. The Commission stated in the 1999 Local Television Ownership Report and Order that it relaxed the radio-television cross-ownership rule to balance its traditional diversity and competition concerns with its desire to permit broadcasters and the public to realize the benefits of radio-television common ownership. The relaxed rule recognizes the growth in the number and types of media outlets, the clustering of cable systems in major population centers, the efficiencies inherent in joint ownership and operation of both television and radio stations in the same market, as well as public service benefits that can be obtained from joint operation. The new rule also ensures the application of a clear, reasonable standard. As a result, the rule will ease administrative burdens and will provide predictability to broadcasters in structuring their business transactions. Because the radio-television cross-ownership rule was so recently relaxed, the staff believes that no further changes are warranted at this time. Staff will monitor the market effects of deregulatory actions to determine whether further changes are warranted. (4) Daily Newspaper/Broadcast Cross-Ownership Rule 122. Section 73.3555(d) of the Commission's rules generally prohibits the common ownership of a broadcast station and a daily newspaper in the same community. The Commission reviewed this rule in its 1998 Biennial Regulatory Review Report. In that review, the Commission recognized that even though media markets have undergone changes since the cross-ownership rule was adopted, many of the new media outlets do not yet appear to be substitutes for newspapers or broadcast stations on the local level, for diversity purposes. The 1998 Biennial Regulatory Review Report therefore concludes that the rule should, as a general matter, be retained because it furthers the important public policy goal of viewpoint diversity and continues to serve the public interest. 123. While electing to retain the rule, the Commission recognized that situations may arise where the rule may not be necessary in the public interest to ensure diversity and competition. For example, given the size of the market and the size and type of the newspaper and broadcast station involved, there may be sufficient diversity and competition even if a newspaper/broadcast combination were allowed. The Commission indicated in the 1998 Biennial Regulatory Review Report that it would examine these types of situations in greater detail. The Commission indicated that it would examine whether the rule needs to be tailored to address contemporary market conditions and would issue a notice of proposed rule making seeking comment on these and other potential modifications of the rule. 124. On October 1, 1996, the Commission released a Notice of Inquiry (NOI) seeking comment on the possible revision of its standards for waiver of the daily newspaper/broadcast cross-ownership rule with respect to newspaper/radio combinations. The Newspaper/Radio Cross-Ownership Waiver Policy NOI sought comment on whether the Commission should adopt objective criteria for evaluating these waiver requests and, if so, what those criteria should be. No action has been taken in this proceeding. (5) National Television Multiple Ownership Rule 125. Section 73.3555(e) of the Commission's rules prohibits an entity from owning television stations that would result in an aggregate national audience reach exceeding 35 percent. The current cap was established in 1996, when Congress directed the Commission to raise the national cap from 25 percent to 35 percent. The 1999 National Television Ownership Report and Order generally clarifies that no market will be counted more than once when calculating the 35 percent cap, and uses DMAs, rather than Arbitron's Areas of Dominant Influence, to define a station's market for the purpose of calculating national audience reach. More recently, the Commission, in its 1998 Biennial Regulatory Review Report, addressed the issue of whether to modify the 35 percent cap. The Commission determined that its recent changes to the local television ownership rule should be observed and assessed before making any further changes to the national limit. The Commission also found that many group owners have acquired large numbers of stations nationwide since the cap was increased to 35 percent in 1996, and that this trend needed further observation. The 1998 Biennial Regulatory Review Report therefore did not alter the 35 percent cap. 126. Section 73.3555(e)(2) provides for a 50 percent "UHF discount" in calculating the national audience reach. Because the UHF discount is intended to recognize the deficiencies in over-the-air UHF reception in comparison to VHF reception, UHF stations are not "credited" with reaching their entire market. The Commission addressed the issue of whether to retain the 50 percent UHF discount in its 1998 Biennial Regulatory Review Report and concluded that the signal disparity between UHF and VHF has not yet been eliminated. The 1998 Biennial Regulatory Review Report therefore retains the 50 percent UHF discount. Because the signal disparity should be diminished by digital television, however, the Report states that when the transition to digital television is near completion, the Commission will issue a notice of proposed rulemaking proposing a phased-in elimination of the discount. (6) Dual Network Rule 127. As mandated by the 1996 Act, section 73.658(g) of the Commission's rules permits a broadcast station to affiliate with a network organization that maintains more than one broadcast network, unless the dual or multiple networks are created by a merger between ABC, CBS, Fox, or NBC, or a merger between one of these four established networks and UPN or WB. The Commission reviewed this rule in its 1998 Biennial Regulatory Review Report. The Commission recognized that the rule, as it applies to UPN and WB, may no longer be necessary in the public interest. The Commission stated that the opportunity for broadcast networks to create and maintain multiple broadcast networks may place networks on more equal footing with cable, satellite, and other multi-channel video programming distributors. The Commission further noted that because the emerging networks (UPN and WB) are nascent subsidiaries of large program producers, their merger with a major network (ABC, CBS, Fox or NBC) may permit realization of substantial economic efficiencies without undue harm to diversity and competition. The Commission has issued a notice of proposed rulemaking to consider eliminating the restriction on the ownership of UPN or WB by one of the four established networks and seeking comment on what, if any, safeguards should be imposed. The Commission, however, declined to eliminate the prohibition against any mergers of the four major networks because of significant concerns about competition and diversity. (7) Experimental Broadcast Station Multiple Ownership Rule 128. Section 74.134 of the Commission's rules prohibits any person from controlling two or more experimental broadcast stations unless it can show that the research program requires the licensing of two or more separate stations. The Commission reviewed this rule in its 1998 Biennial Regulatory Review Report and concluded that elimination of the rule would not adversely a