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FCC Initiates Comprehensive Special Access Data Collection

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Released: December 18, 2012

Federal Communications Commission

FCC 12-153

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Special Access for Price Cap Local Exchange
)
WC Docket No. 05-25
Carriers;
)
)

AT&T Corporation Petition for Rulemaking to
)
RM-10593
Reform Regulation of Incumbent Local Exchange
)
Carrier Rates for Interstate Special Access
)
Services
)

REPORT AND ORDER AND FURTHER NOTICE OF PROPOSED RULEMAKING

Adopted: December 11, 2012

Released: December 18, 2012

Comment Date on Sections IV.A and C:

(30 days after date of publication in the Federal
Register)

Reply Comment Date on Sections IV.A and C:

(60 days after date of publication in the Federal
Register)

Comment Date on Section IV.B:

August 19, 2013

Reply Comment Date on Section IV.B:

September 30, 2013

By the Commission: Chairman Genachowski and Commissioners Clyburn and Rosenworcel issuing
separate statements; Commissioners McDowell and Pai approving in part, dissenting in part, and issuing
separate statements.

TABLE OF CONTENTS

Heading
Paragraph #
I.
INTRODUCTION .................................................................................................................................. 1
II. BACKGROUND .................................................................................................................................... 2
A. Price Cap Regulation........................................................................................................................ 2
B. Pricing Flexibility ............................................................................................................................. 4
C. The CALLS Order ............................................................................................................................ 6
D. AT&T’s Petition for Rulemaking and 2005 Special Access NPRM................................................ 7
E. Recent Actions in the Proceeding ..................................................................................................... 9
1. Competitive and Regulatory Developments.............................................................................. 9
2. Analytical Framework ............................................................................................................. 10
3. Voluntary Data Requests......................................................................................................... 11
4. Pricing Flexibility Suspension Order ...................................................................................... 12
III. REPORT AND ORDER....................................................................................................................... 13
A. Scope .............................................................................................................................................. 14
B. Nature of Data to be Collected ....................................................................................................... 30
C. Statutory Authority ......................................................................................................................... 49
D. Role of the Wireline Competition Bureau...................................................................................... 52

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FCC 12-153

E. Data Retention ................................................................................................................................ 54
F. Penalties for False Statements and Non-Response.......................................................................... 55
IV. FURTHER NOTICE OF PROPOSED RULEMAKING ..................................................................... 56
A. Approach To Analyzing Special Access ........................................................................................ 58
1. Background.............................................................................................................................. 58
2. Proposals in the Record ........................................................................................................... 60
3. A One-Time, Multi-Faceted Market Analysis......................................................................... 66
4. Request for Comment on One-Time, Multi-Faceted Market Proposed Analysis.................... 72
B. Possible Changes to Pricing Flexibility Rules after Proposed One-Time, Multi-Faceted
Market Analysis ............................................................................................................................. 80
C. Terms and Conditions .................................................................................................................... 91
V. PROCEDURAL MATTERS................................................................................................................ 94
A. Paperwork Reduction Act Analysis ............................................................................................... 94
B. Congressional Review Act............................................................................................................. 95
C. Initial Regulatory Flexibility Analysis........................................................................................... 96
D. Final Regulatory Flexibility Analysis ............................................................................................ 97
E. Ex Parte Presentations ................................................................................................................... 98
F. Comment Filing Procedures........................................................................................................... 99
VI. ORDERING CLAUSES..................................................................................................................... 102
APPENDIX A – Data Collection
APPENDIX B – Final Regulatory Flexibility Analysis
APPENDIX C – Initial Regulatory Flexibility Analysis

I.

INTRODUCTION

1.
In this Report and Order and Further Notice of Proposed Rulemaking, we continue the
process of reviewing our special access rules to ensure that they reflect the state of competition today and
promote competition, investment, and access to dedicated communications services businesses across the
country rely on every day to deliver their products and services to American consumers. Specifically, we
initiate a comprehensive data collection and seek comment on a proposal to use the data to evaluate
competition in the market for special access services.1

II.

BACKGROUND

A.

Price Cap Regulation

2.
In 1991, the Commission implemented a system of price cap regulation by which the
largest incumbent LECs (often referred to today as price cap LECs) establish their interstate access
charges.2 Price cap regulation is a form of incentive regulation that seeks to “harness the profit-making


1 Special access services encompass all services that do not use local switches; these include services that employ
dedicated facilities that run directly between the end user and an interexchange carrier’s (IXC) point of presence,
where an IXC connects its network with the local exchange carrier’s (LEC) network, or between two discrete end
user locations. Special Access Rates for Price Cap Local Exchange Carriers, WC Docket No. 05-25; AT&T Corp.
Petition for Rulemaking to Reform Regulation of Incumbent Local Exchange Carrier Rates for Interstate Special
Access Services
, RM-10593, Order and Notice of Proposed Rulemaking, 20 FCC Rcd 1994, 1997, para. 7 (2005)
(Special Access NPRM); see also AT&T Inc. and BellSouth Corporation Application for Transfer of Control, WC
Docket No. 06-74, Memorandum Opinion and Order, 22 FCC Rcd 5662, 5677, para. 28 (2007) (AT&T/BellSouth
Order
) (“[S]pecial access is a dedicated transmission link between two locations, most often provisioned via high-
capacity circuits.”). Special access is offered both at retail and at wholesale.
2 The Commission required price cap regulation for the BOCs and GTE, and permitted other LECs to elect price cap
regulation voluntarily, provided that all their affiliates also convert to price cap regulation and that they withdraw
(continued….)
2

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FCC 12-153

incentives common to all businesses to produce a set of outcomes that advance the public interest goals of
just, reasonable, and nondiscriminatory rates, as well as a communications system that offers innovative,
high quality services.”3 In contrast to rate-of-return regulation, which preceded price cap regulation and
focuses on an incumbent LEC’s costs and fixes the profits an incumbent LEC may earn based on those
costs, price cap regulation focuses primarily on the prices that an incumbent LEC may charge. The
access charges of price cap LECs originally were set at levels based on the rates that existed at the time
the LECs entered the price cap regime. Increases in their rates have, however, been limited over the
course of price cap regulation by the Price Cap Index (PCI) that is adjusted annually pursuant to formulae
set forth in Part 61 of our rules.4
3.
The PCI is designed to limit the prices LECs charge for service.5 The PCI has three basic
components: (1) a measure of inflation, i.e., the Gross Domestic Product (chain weighted) Price Index
(GDP-PI);6 (2) a productivity factor or “X-Factor,” which represents the amount by which LECs can be
expected to outperform economy-wide productivity gains;7 and (3) adjustments to account for
“exogenous” cost changes that are outside the LEC’s control and not otherwise reflected in the PCI.8 The
Commission’s price cap formula permitted special access PCIs to increase by a measure of inflation,
minus a productivity offset (the X-factor). The X-factor represented the amount by which LECs were
expected to outperform economy-wide productivity gains.9
(Continued from previous page)


from the pools administered by the National Exchange Carrier Association (NECA). Policy and Rules Concerning
Rates for Dominant Carriers
, CC Docket No. 87-313, Second Report and Order, 5 FCC Rcd 6786, 6818, paras. 257-
59 (1990) (LEC Price Cap Order), aff’d, Nat’l Rural Telecom Ass’n v. FCC, 988 F.2d 174 (D.C. Cir. 1993). Most
small LECs elected to remain subject to rate-of-return regulation.
3 LEC Price Cap Order, 5 FCC Rcd at 6787, para. 2.
4 See 47 C.F.R. § 61.45. But see infra para. 5 (describing how certain levels of pricing flexibility relief eliminate
this ceiling on rate levels).
5 LEC Price Cap Order, 5 FCC Rcd at 6792, para. 47. A price cap basket is a broad grouping of services, such as
special access services. Prices for services within a basket are limited by the PCI for the basket, which limits the
LEC’s pricing flexibility and its incentives to shift costs. See id. at 6810-11, paras. 198-203. To ascertain
compliance with the PCI, LEC rate levels within each basket are measured through the use of an Annual Price Index
(API). The API is the weighted sum of the percentage change in LEC prices. The API weights the rate for each rate
element in the basket based on the quantity of each element sold in a historical base year. The historical base year is
the calendar year that immediately precedes the annual tariff filing on July 1. A price cap LEC’s rates are in
compliance with the cap for a basket if the API is less than or equal to the PCI. See 47 C.F.R. § 61.46.
6 See Access Charge Reform, CC Docket No. 96-262; Price Cap Performance Review for Local Exchange Carriers,
CC Docket No. 94-1; Low-Volume Long-Distance Users, CC Docket No. 99-249; Federal-State Joint Board on
Universal Service
, CC Docket No. 96-45, Sixth Report and Order in CC Docket Nos. 96-262 and 94-1, Report and
Order in CC Docket No. 99-249, Eleventh Report and Order in CC Docket No. 96-45, 15 FCC Rcd 12962, 13038-
39, paras. 183-84 (2000) (CALLS Order), aff’d in part, rev’d in part, and remanded in part, Tex. Office of Pub. Util.
Counsel v. FCC
, 265 F.3d 313 (5th Cir. 2001), cert. denied, Nat’l Ass’n of State Util. Consumer Advocates v. FCC,
535 U.S. 986 (2002), on remand, Access Charge Reform, CC Docket Nos. 96-262, 94-1, 99-249, 96-45, Order on
Remand, 18 FCC Rcd 14976 (2003).
7 LEC Price Cap Order, 5 FCC Rcd at 6795-801, paras. 74-119.
8 Id. at 6792, 6807-10, paras. 48, 166-90. Exogenous costs are incurred due to administrative, legislative, or judicial
action beyond the LEC’s control. See id. at 6807, para. 166.
9 CALLS Order, 15 FCC Rcd at 13018, para. 135.
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B.

Pricing Flexibility

4.
Pursuant to the pro-competitive, deregulatory mandates of the 1996 Act, the Commission
adopted the Pricing Flexibility Order in 1999 to ensure that the Commission’s regulations did not unduly
interfere with the operation of interstate access markets as competition developed.10 In that Order, the
Commission developed competitive showing rules (also referred to as “triggers”) intended to measure
whether market conditions in a given Metropolitan Statistical Area would warrant various levels of
regulatory relief.11 To make a competitive showing, the Commission held that price cap LECs would
need to demonstrate
either that (1) competitors unaffiliated with the incumbent LEC have established
operational collocation arrangements in a certain percentage of the incumbent LEC’s
wire centers in an MSA, or (2) unaffiliated competitors have established operational
collocation arrangements in wire centers accounting for a certain percentage of the
incumbent LEC’s revenues from the services in question in that MSA. In both cases, the
incumbent also must show, with respect to each wire center, that at least one collocator is
relying on transport facilities provided by a transport provider other than the incumbent
LEC.12
5.
Under the rules, the Commission granted relief in two phases. Phase I relief, which
required lower levels of collocation, gave price cap LECs the ability to lower their rates through contract
tariffs and volume and term discounts, but required that they maintain their generally available price cap-
constrained tariff rates to “protect[ ] those customers that lack competitive alternatives.”13 Phase II relief,
which required higher levels of collocation, permitted price cap LECs to raise or lower their rates
throughout an area, unconstrained by price cap regulations included in the Commission’s part 61 and part
69 rules.14

C.

The CALLS Order

6.
In 2000, the Commission adopted the CALLS plan, a five-year interim, industry-proposed
regime designed to move towards a more market-based approach to rate setting.15 The CALLS plan
separated special access services into their own basket and applied a separate X-factor to that basket.16


10 Access Charge Reform, CC Docket No. 96-262; Price Cap Performance Review for Local Exchange Carriers, CC
Docket No. 94-1; Interexchange Carrier Purchases of Switched Access Services Offered by Competitive Local
Exchange Carriers
, CCB/CPD File No. 98-63; Petition of U.S. West Communications, Inc. for Forbearance from
Regulation as a Dominant Carrier in the Phoenix, Arizona MSA
, CC Docket No. 98-157, Fifth Report and Order
and Further Notice of Proposed Rulemaking, 14 FCC Rcd 14221, 14224, para. 1 (1999) (Pricing Flexibility Order).
11 Id. at 14261-67, paras. 77-83.
12 Id. at 14261-62, 14296, para. 77 (footnote omitted); see also id. at 14296, para. 141.
13 Id. at 14258, para. 69.
14 Id. at 14301, para. 153. Price cap LECs granted Phase II relief must continue to maintain generally available
tariffs, but may file such tariffs on one day’s notice. See id.
15 See CALLS Order, 15 FCC Rcd at 12965, 12977-79, paras. 4, 36-42.
16 Id. at 12974-75, 13033-34, paras. 30, 172. The CALLS plan also retained the low-end adjustment for price cap
LECs. Id. at 13038, para. 182. The low-end adjustment mechanism permits incumbent LECs earning rates of return
less than 10.25 percent in a given year to increase their PCIs to a level that would allow them to earn 10.25 percent.
Id. at 13018, para. 136 n.282. The Commission subsequently eliminated the low-end adjustment mechanism for
price cap LECs that qualified for and elected to exercise Phase I or Phase II pricing flexibility. Id. (citing Pricing
Flexibility Order
, 14 FCC Rcd at 14304, para. 162).
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FCC 12-153

The X-factor under the CALLS plan, unlike under prior price cap regimes, is not a productivity factor but
“a transitional mechanism . . . to lower rates for a specified time period for special access.”17 The CALLS
X-factor for special access was 3.0 percent in 2000, and increased to 6.5 percent for 2001, 2002, and
2003. For the final year of the CALLS plan (July 1, 2004 – June 30, 2005), the special access X-factor
was set equal to inflation.18 As the Commission has yet to replace the interim CALLS plan X-factor,
price cap LECs’ special access rates have remained frozen at 2003 levels19 (excluding any necessary
exogenous cost adjustments).20

D.

AT&T’s Petition for Rulemaking and 2005 Special Access NPRM

7.
On October 15, 2002, AT&T Corp. filed a petition for rulemaking requesting that the
Commission revoke the pricing flexibility rules and revisit the CALLS plan as it applies to special access
services.21 AT&T contended both that the predictive judgment at the core of the Pricing Flexibility Order
had not been confirmed by marketplace developments, and that BOC special access rates exceeded
competitive levels and hence were unjust and unreasonable in violation of section 201 of the
Communications Act.22 Because the predictive judgment had proven wrong, AT&T asserted, the
Commission was compelled to revisit its pricing flexibility rules in a rulemaking proceeding.23 Price cap
LECs countered that, among other things, their special access rates were reasonable and therefore lawful,
that there was robust competition for special access services, that the collocation-based competitive
showings were an accurate metric for competition, and that data relied upon by AT&T were unreliable in
the context used by AT&T.24



17 CALLS Order, 15 FCC Rcd at 13028, para. 160.
18 Id. at 13025, para. 149. Because rates are both reduced by and increased by the inflation rate, they are effectively
frozen. See supra para. 2.
19 Because the special access rates were reduced by a universally applied productivity factor, all LECs achieved the
2003 special access rate target at the same time.
20 47 C.F.R. § 61.45(b)(1)(iv) (“Starting in the 2004 annual filing, X shall be equal to GDP-PI for the special access
basket.”). The Commission hoped that, by the end of the five-year CALLS plan, competition would exist to such a
degree that deregulation of access charges (switched and special) for price cap LECs would be the next logical step.
CALLS Order, 15 FCC Rcd at 12977, para. 35.
21 AT&T Corp. Petition for Rulemaking to Reform Regulation of Incumbent Local Exchange Carrier Rates for
Interstate Special Access Services, RM-10593 at 1, 6, 39-40 (filed Oct. 15, 2002) (2002 Special Access Rulemaking
Petition). Competitive LECs and telecommunications users generally supported the 2002 Special Access
Rulemaking Petition. See, e.g., Ad Hoc 2002 Special Access Rulemaking Petition Comments at 1-7 (filed Dec. 2,
2002); API 2002 Special Access Rulemaking Petition at 1-5 (filed Dec. 2, 2002); AT&T 2002 Special Access
Rulemaking Petition Comments at 1-7 (filed Dec. 2, 2002); PAETEC 2002 Special Access Rulemaking Petition
Comments at 1-6 (filed Dec. 2, 2002); WorldCom 2002 Special Access Rulemaking Petition Comments at 1-14
(filed Dec. 2, 2002). The 2002 Special Access Rulemaking Petition was filed prior to AT&T’s merger with SBC.
See SBC Communications, Inc. and AT&T Corp. Application for Approval of Transfer of Control, WC Docket No.
06-65, Memorandum Opinion and Order, 20 FCC Rcd 18290 (2005) (SBC/AT&T Merger Order).
22 2002 Special Access Rulemaking Petition at 1-6, 20, 34-35.
23 Id. at 6-7, 35-36.
24 See, e.g., SBC 2002 Special Access Rulemaking Petition Opposition at 10-13, 19, 22-24 (filed Dec. 2, 2002);
Verizon 2002 Special Access Rulemaking Petition Opposition at 9-10, 13-14, 17, 21 (filed Dec. 2, 2002). SBC
noted that AT&T only provided (and could only provide) data from a single year (2001) that post-dated the initial
implementation of Phase II pricing flexibility in 2001. SBC 2002 Special Access Rulemaking Petition Opposition at
(continued….)
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8.
On January 31, 2005, the Commission released the Special Access NPRM, which initiated a
broad examination of what regulatory framework to apply to price cap LECs’ interstate special access
services following the expiration of the CALLS plan, including whether to maintain or modify the
Commission’s pricing flexibility rules.25 Moreover, the NPRM sought to examine whether the available
marketplace data supported maintaining, modifying, or repealing these rules.26 It also responded to
AT&T’s request for interim relief.27

E.

Recent Actions in the Proceeding

1.

Competitive and Regulatory Developments

9.
Numerous regulatory and competitive developments affected the special access market in
the years following the release of the Special Access NPRM. In July 2007, the Commission sought
comment in the record in light of subsequent industry consolidation, a Government Accountability Office
(GAO) report on special access competition, and other competitive developments.28 Moreover, as a result
of a series of forbearance proceedings, the scope of services affected by the Special Access NPRM
narrowed considerably.29
(Continued from previous page)


16. SBC and Verizon claimed that ARMIS data were not designed to evaluate the reasonableness of rates. Id. at 22;
Verizon 2002 Special Access Rulemaking Petition Opposition at 21.
25 Special Access NPRM, 20 FCC Rcd at 1995, para. 1.
26 Id. at 1996-97, para. 5. The Commission noted its commitment to re-examine periodically rules that were adopted
on the basis of predictive judgments to evaluate whether those judgments are, in fact, corroborated by marketplace
developments. Accordingly, the Commission sought data and comments on whether actual marketplace
developments supported the predictive judgments used to support the special access pricing flexibility rules. Id.
27 AT&T asked, in addition to initiating a rulemaking, that the Commission reinitialize Phase II pricing flexibility
special access rates at an 11.25 percent rate of return, and impose a temporary moratorium on further pricing
flexibility applications. These requests were denied; however, the Commission sought comment on whether to
adopt any interim requirements in the event that the Commission was unable to conclude the NPRM in time for any
adopted rule changes to be implemented in the 2005 annual tariff filings. Id. at 1997, para. 6.
28 Parties Asked to Refresh Record in the Special Access Notice of Proposed Rulemaking, WC Docket No. 05-25,
RM-10593, Public Notice, 22 FCC Rcd 13352, 13352-53 (2007) (Refresh the Record Public Notice).
29 A petition for forbearance from dominant carrier regulation of enterprise broadband special access services (i.e.,
packet-based switched, high-speed telecommunications services for businesses) filed by Verizon was deemed
granted in 2006. See Verizon Telephone Companies’ Petition for Forbearance from Title II and Computer Inquiry
Rules with Respect to their Broadband Services Is Granted by Operation of Law, WC Docket No. 04-440, News
Release (rel. Mar. 20, 2006) (March 20 News Release); Petition of the Verizon Telephone Companies for
Forbearance under 47 U.S.C. § 160(c) from Title II and Computer Inquiry Rules with Respect to Their Broadband
Services
, WC Docket No. 04-440, Order, 20 FCC Rcd 20037 (2004). In orders issued in October 2007 and August
2008, the agency granted petitions filed by AT&T, Embarq, Frontier and Qwest under 47 U.S.C. § 160 seeking
similar forbearance relief, and, in August 2008, the Commission granted Qwest’s petition for similar relief from
regulation of enterprise broadband special access. Petition of the Embarq Local Operating Companies for
Forbearance under 47 U.S.C. § 160(c) from Application of Computer Inquiry and Certain Title II Common
Carriage Requirements, Petition of the Frontier and Citizens ILECs for Forbearance under Section 47 U.S.C. §
160(c) from Title II and Computer Inquiry Rules with Respect to Their Broadband Services
, FCC 07-184, WC
Docket No. 06-147, Memorandum Opinion and Order, 22 FCC Rcd 19478 (2007); Petition of AT&T Inc. for
Forbearance under 47 U.S.C. § 160(c) from Title II and Computer Inquiry Rules with Respect to its Broadband
Services, Petition of BellSouth Corporation for Forbearance Under Section 47 U.S.C. § 160(c) from Title II and
Computer Inquiry Rules with Respect to its Broadband Services,
FCC 07-180, WC 06-125, Memorandum Opinion
and Order, 22 FCC Rcd 18705 (2007); Qwest Petition for Forbearance Under 47 U.S.C. § 160(c) from Title II and
Computer Inquiry Rules with Respect to Broadband Services
, WC Docket No. 06-125, Memorandum Opinion and
(continued….)
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2.

Analytical Framework

10.
In November 2009, the Commission’s Wireline Competition Bureau (Bureau) sought
comment on the appropriate analytical framework for examining the issues that the Special Access NPRM
raised.30 In July 2010, the Bureau held a staff workshop on the economics of special access to gather
further input on the analytical framework issue.31
3.

Voluntary Data Requests

11.
In October 2010, the Bureau issued a public notice inviting the public to submit data on the
presence of competitive special access facilities to assist the Commission in evaluating the issues that the
Special Access NPRM raised.32 In September 2011, the Bureau issued a second public notice requesting
the submission of competition and pricing data.33
4.

Pricing Flexibility Suspension Order

12.
On August 22, 2012, the Commission adopted an order that concluded that the special
access pricing flexibility rules discussed above were not working as predicted and suspended the 90-day
deadline for granting a petition for pricing flexibility based on those flawed rules.34

III.

REPORT AND ORDER

13.
In this Report and Order, we require providers and purchasers of special access service and
certain other services to submit data, information and documents to allow the Commission to conduct a
comprehensive evaluation of competition in the special access market.35
(Continued from previous page)


Order, 23 FCC Rcd 12260 (2008). We note that a similar petition filed by CenturyLink is pending before the
Commission. See Petition of CenturyLink for Forbearance Pursuant to 47 U.S.C § 160(c) from Dominant Carrier
and Certain Computer Inquiry Requirements on Enterprise Broadband Services
, WC Docket No. 12-60 (filed Feb.
23, 2012), amended by Letter from Craig J. Brown, Associate General Counsel, CenturyLink, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Docket No. 12-60 (filed Mar. 21, 2012).
30 Parties Asked to Comment on Analytical Framework Necessary to Resolve Issues in the Special Access NPRM,
WC Docket No. 05-25, RM-10593, Public Notice, 24 FCC Rcd 13638 (2009) (Analytical Framework Public
Notice
). Among other things, the Analytical Framework Public Notice also sought comment on additional data not
in the record that the Commission should collect. Id. at 13640.
31 Wireline Competition Bureau Announces July 19, 2010 Staff Workshop to Discuss the Analytical Framework for
Assessing the Effectiveness of the Existing Special Access Rules
, WC Docket No. 05-25, Public Notice, 25 FCC Rcd
8458 (2010) (Staff Workshop Public Notice).
32 Data Requested in Special Access NPRM, WC Docket No. 05-25, RM-10593, Public Notice, 25 FCC Rcd 15146
(2010) (Special Access Facilities Data Public Notice); see also Clarification of Data Requested in Special Access
NPRM,
WC Docket No. 05-25, RM-10593, Public Notice, 25 FCC Rcd 17693 (2010) (Special Access Facilities
Data Request Clarification
).
33 Competition Data Requested in Special Access NPRM, WC Docket No. 05-25, RM-10593, Public Notice, 26 FCC
Rcd 14000 (2011) (Special Access Competition Data Public Notice). In the Special Access Competition Data Public
Notice,
at footnote 8 (citing 5 C.F.R. § 1320.3(h)(4)), the Bureau explained that the data solicited from the public
were not subject to the Paperwork Reduction Act. See id. at 14001 n.8.
34 Special Access for Price Cap Local Exchange Carriers; AT&T Corporation Petition for Rulemaking to Reform
Regulation of Incumbent Local Exchange Carrier Rates for Interstate Special Access Services
, WC Docket No. 05-
25, RM-10593, Report and Order, 27 FCC Rcd 10557 (2012) (Special Access Pricing Flexibility Suspension Order).
We note that the decision in the Special Access Pricing Flexibility Suspension Order was based on information
available at that time. The data collection adopted in this Report and Order will provide more comprehensive
information to the Commission than was previously available.
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A.

Scope

14.
In this section, we identify the scope of the data collection, the entities that must respond to
the data collection, and the geographic areas and time periods for which they must respond.
15.
A preliminary note on terminology: For purposes of this Report and Order and consistent
with Commission precedent, we do not include mass market Internet access services (e.g., DSL or cable
modem service) in our definition of special access.36 We use the term “location” to mean a building,
other man-made structure, a cell site on a building, a free-standing cell site, or a cell site on some other
man-made structure where the end user is connected, but is not a “node.” We use the term “node” to
mean an aggregation point, a branch point, or a point of interconnection on a provider’s network,
including a point of interconnection to other provider networks. “End user” means a business,
institutional, or government entity that purchases dedicated service for its own purposes and does not
resell such service.37 We use the term “connection” to mean a wired “line” or wireless “channel” that
provides a dedicated communication path between an end user’s location and the first node on a
provider’s network.38 Examples include LEC central offices, remote terminal locations, splice points
(Continued from previous page)


35 See supra note 1. The terms “provider(s)” and “purchaser(s),” for purposes of this Order, are defined below in
para. 20.
36 See, e.g., SBC Commc'ns Inc. and AT&T Corp. Applications for Approval of Transfer of Control, Memorandum
Opinion and Order, 20 FCC Rcd 18290, 18335, para. 82 n.243 (2005) (“The Commission has defined mass market
customers as residential and small business customers that purchase standardized offerings of communications
services.”); Applications of NYNEX Corp. Transferor, and Bell Atlantic Corp., Transferee, Memorandum Opinion
and Order, 12 FCC Rcd 19985, 20016, para. 53 (1997) (“Residential and small business customers are served
primarily through mass marketing techniques including regional advertising and telemarketing.”); AT&T and
BellSouth Corp.
, Memorandum Opinion and Order, 22 FCC Rcd 5662, 5709-10, para. 85 (2007) (“[E]nterprise
customers tend to be sophisticated and knowledgeable (often with the assistance of consultants), . . . contracts are
typically the result of RFPs and are individually-negotiated (and frequently subject to non-disclosure clauses), . . .
contracts are generally for customized service packages, and that the contracts usually remain in effect for a number
of years.”); Petition of Qwest Corporation for Forbearance Pursuant to 47 U.S.C. § 160(c) in the Phoenix, Arizona
Metropolitan Statistical Area
, WC Docket No. 09-135, Memorandum Opinion and Order, 25 FCC Rcd 8622, 8649,
para. 51 (2010) (“Retail mass market services generally are purchased by residential customers and some very small
business customers.”) (Qwest Phoenix Forbearance Order), aff’d, Qwest Corp. v. FCC, 689 F.3d 1214 (10th Cir.
2012); Petitions of Qwest Corp. for Forbearance Pursuant to 47 U.S.C. § 160(c) in the Denver, Minneapolis-St.
Paul, Phoenix, and Seattle Metropolitan Statistical Areas
, Memorandum Opinion and Order, 23 FCC Rcd 11729,
11738 n.54 (2008) (noting that Commission precedent exists for dividing the analysis of switched access services
into the mass market (residential and small business customers) and the enterprise market (mid-sized and large
business customers)). We define the term “special access” above. See supra note 1. We note that we require
responses from providers, as that term is defined infra para. 20, that either provide special access services or provide
connections that are capable of providing special access services. As a result, there may be instances in which an
entity that provides mass market Internet services via connections that are capable of providing special access
services is required to respond to certain questions in this data collection.
37 A mobile wireless service provider is considered an end user when it purchases dedicated service to make
connections within its own network, e.g., backhaul to a cell site.
38 A connection may be an unbundled network element (UNE), including an unbundled copper loop. A connection
must have the capability of being used to provide one or more “dedicated services.” For these purposes, a
“dedicated service” transports data between two or more designated points (e.g., between an end user’s premises and
a point-of-presence, between the central office of a local exchange carrier (LEC) and a point-of presence, or between
two end user premises) at a rate of at least 1.5 megabytes per second (Mbps) with prescribed performance
requirements that include bandwidth-, latency-, or error-rate guarantees or other parameters that define delivery
under a tariff or in a service-level agreement. A communication path that is currently being used to provide a non-
dedicated service to an end user, but has the capability to provide a dedicated service is considered a connection for
(continued….)
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(including, for example, at manholes), controlled environmental vaults, cable system headends, cable
modem termination system (CMTS) locations, and facility hubs. We use the terms “bandwidth” and
“capacity” interchangeably.
16.
Services Covered. Traditionally, federal antitrust agencies have begun competitive
analyses in a variety of contexts by defining relevant product and geographic markets. As noted in the
Further Notice, however, these agencies have more recently noted that “analysis need not start with
market definition… although evaluation of competitive alternatives available to customers is always
necessary at some point in the analysis.”39 In particular, “[e]vidence of competitive effects can inform
market definition, just as market definition can be informative regarding competitive effects.”40
17.
Taking these considerations into account, we collect information on the full array of
traditional special access services, including DS1s and DS3s, and packet-based dedicated services such as
Ethernet. Further, although there is little disagreement in the record as to the definition of special access
services, and that as traditionally defined they do not include mass market Internet access services,41 there
is some question as to whether the relevant product market should encompass not only special access
services but other high-capacity data services targeted at enterprise customers. Some commenters have
argued that best efforts broadband Internet access services—even when marketed to small- to medium-
sized business customers—are not part of the relevant product market.42 These commenters note, among
other things, that prices for best efforts services differ substantially from special access services for
comparable bandwidth.43 Others have argued that best efforts services are often marketed with express
comparisons to special access services, and therefore the Commission should collect data on both.44
(Continued from previous page)


the purpose of this data collection. We note that this definition does not depend on the medium used (e.g., whether
it is fiber, copper, or coaxial cable), but instead on the capability of the facility. See Letter from Glenn T. Reynolds,
USTA, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25, at 1 (filed
Dec. 3, 2012) (explaining that “special access and similar services can be provided over hybrid fiber coaxial
(“HFC”) lines”).
39 U.S. Department of Justice & Federal. Trade Commission, Horizontal Merger Guidelines § 4 (2010) (2010
DOJ/FTC Horizontal Merger Guidelines
), available at http://www.justice.gov/atr/public/guidelines/hmg-2010.pdf.
40 Id.
41 See supra para. 15.
42 See, e.g., Verizon 2009 PN Reply Comments at 11-14; AT&T 2009 PN Reply Comments, Appendix A at 6-7;
Letter from Ross J. Lieberman, Vice President of Government Affairs, American Cable Association, to Marlene H.
Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25, RM-10593 (filed Nov. 16, 2012).
43 See, e.g., Letter from Thomas Jones and Nirali Patel, Counsel for Cbeyond, Inc., Earthlink, Inc. and Integra
Telecom, Inc., to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25 at 2
(filed Nov. 21, 2012) (citing “record evidence demonstrating that ‘best efforts’ broadband services are not a
substitute for the dedicated broadband services at issue in the special access rulemaking proceeding . . . .”); Petition
of Ad Hoc Telecommunications Users Committee, BT Americas, Cbeyond, Computer & Communications Industry
Association, EarthLink, MegaPath, Sprint Nextel, and tw telecom to Reverse Forbearance from Dominant Carrier
Regulation of Incumbent LECs’ Non-TDM-Based Special Access Services, WC Docket No. 05-25, at 39-40 &
nn.125-126 (filed Nov. 2, 2012).
44 See, e.g., Letter from Glenn T. Reynolds, USTelecom, to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Docket No. 05-25 (filed Nov. 29, 2012); Letter from Frank S. Simone, Assistant Vice President,
Federal Regulatory, AT&T Services, Inc., to Marlene H. Dortch, Secretary, Federal Communications Commission,
WC Docket No. 05-25 at 4, Attach. (filed Sept. 28, 2012) (citing best efforts Internet access services for “home,
home office, or small business.”).
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18.
We need not resolve the market-definition issue here—for purposes of this data collection,
we conclude it is best to simply take a broad approach. To ensure that we collect data on services that
enterprise customers may view as substitutable, we define the scope of our data collection to include best
efforts business broadband Internet access services, which we define as best efforts Internet access data
services with a capacity equal to or greater than a DS1 connection that are marketed to enterprise
customers (including small, medium, and large businesses, as well as existing special access customers).45
As described below, we structure the collection somewhat differently for best efforts and special access
services to minimize the burden on submitters consistent with our data requirements and taking into
consideration data that the Commission already has available to it.
19.
We also note that we intend to collect data on intrastate special access services and special
access services offered via a state-level tariff or state-approved contract.46 Doing so is necessary to ensure
that we have a clear picture of all competition in the marketplace.
20.
Providers and purchasers that must respond. In order to conduct a comprehensive analysis
of the special access market, we will collect data from all providers and purchasers of special access
services as well as some entities that provide best efforts business broadband Internet access services. By
“providers,” we mean any entity subject to the Commission’s jurisdiction under the Communications Act,
as amended, that provides special access services or provides a connection that is capable of providing
special access services.47 By “purchasers,” we mean any entity subject to the Commission’s jurisdiction
under the Communications Act, as amended, that purchases special access services.48
21.
To clarify our terminology, we note that some providers are “competitive providers,” by
which we mean a competitive local exchange carrier (CLEC), interexchange carrier, cable operator,
wireless provider or any other provider that is not an incumbent LEC operating within its incumbent
service territory. We also note that a rate-of-return carrier, which is not subject to our pricing flexibility
rules, shall not be considered a “provider” to the extent it provides special access within its rate-of-return
service area. This exemption does not apply to services not regulated on a rate-of-return basis or provided
outside a rate-of-return carrier’s service area by itself or an affiliate.
22.
We note concerns regarding the burden that this data collection will impose on small
companies,49 and are mindful of the importance of seeking to reduce information collection burdens for
small business concerns, and in particular those “with fewer than 25 employees.”50 Any effort to lessen


45 For purposes of this Report and Order, best efforts business broadband Internet access services do not include
mobile wireless services, as that term is used in the 15th Annual Mobile Wireless Competition Report. See 15th
Annual Mobile Wireless Competition Report
, 26 FCC Rcd at 9687-88, paras. 3-5.
46 Because special access lines usually carry both interstate and intrastate traffic, the Commission has drawn a
bright-line rule for jurisdictional purposes: Special access lines carrying both intrastate and interstate traffic are
classified as interstate for rate regulation and other purposes “if the interstate traffic on the line involved constitutes
more than ten percent of the total traffic on the line.” 47 C.F.R. § 36.154(a). Interstate traffic that “amounts to ten
percent or less of the total traffic on a special access line” is deemed de minimis, and that line is classified as
intrastate for jurisdictional purposes. MTS and WATS Market Structure Amendment of Part 36 of the Commission’s
Rules and Establishment of a Joint Board
, 4 FCC Rcd 5660, 5660, para. 2 (1989).
47 Section 1 of the Communications Act of 1934, as amended, confers on the Commission jurisdiction over
“interstate and foreign commerce in communication by wire and radio.” See 47 U.S.C. § 151.
48 See id.
49 See, e.g., Letter from Tamar E. Finn, Counsel for TDS Metrocom, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Docket No. 05-25 (filed Aug. 27, 2012).
50 Small Business Paperwork Relief Act of 2002 § 2(c)(3), Pub. L. No. 107-198; see 44 U.S.C. § 3506(c)(4).
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the burdens of this information collection on small companies must be balanced against our goal of
obtaining the most accurate and useful data possible. Competition in the provision of special access
appears to occur at a very granular level—perhaps as low as the building/tower. A provider that owns 50
of its own channel terminations to end users may not be competitively significant within an area as large
as an MSA, but could be a significant competitor within smaller areas, such as zip code areas. Therefore,
we believe it necessary to obtain data from special access providers and purchasers of all sizes,51 but we
shall not require entities with fewer than 15,000 customers and fewer than 1,500 business broadband
customers to provide data regarding their best efforts business broadband Internet access services.52 As
some commenters have urged us to do, this approach will incorporate data and information from nascent
technologies, such as WISPs.53
23.
Geographic scope. With some exceptions,54 we will collect data on a nationwide basis to
ensure the most comprehensive and accurate assessment of competition in markets for special access
services subject to our pricing flexibility rules. Because the focus of this proceeding is on the regulation
of special access services in price-cap territories, we will not require data from any provider with regard
to its operations in any geographic area in which a rate-of-return carrier is the incumbent, as such carriers
are not subject to the pricing flexibility rules. Moreover, we will not require a purchaser to produce data
based on purchases it makes in those areas in which a rate-of-return carrier is the incumbent. If, however,
a provider or purchaser prefers to provide data for all areas without distinguishing between areas served
by price cap LECs and rate-of-return LECs, it may do so.
24.
We considered whether we could reduce the burden of this data collection by collecting all
of our data from a sample of locations (e.g., business locations and wireless towers) and/or larger


51 See, e.g., Letter from Frank S. Simone, Assistant Vice President, Federal Regulatory, AT&T, to Marlene H.
Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25 (filed Sept. 7, 2012); see also
Letter from Letter from Frank Simone, Assistant Vice President, Federal Regulatory, AT&T, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Docket No. 05-25 (filed Sept. 28, 2012); Frank S. Simone,
Assistant Vice President, Federal Regulatory, AT&T, to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Docket No. 05-25 (filed Sept. 25, 2012); Letter from Donna Epps, Vice President, Federal
Regulatory Affairs, Verizon, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket
05-25 (filed Sept. 18, 2012).
52 As described by the American Cable Association (ACA), the burden of participating in the State Broadband
Initiative broadband mapping effort has been greatest for its members with fewer than 15,000 video subscribers. See
Letter from Thomas Cohen, Counsel to American Cable Association, to Michael Steffen, Legal Advisor to
Chairman Genachowski, Federal Communications Commission, WC Docket No. 05-25 (filed Nov. 27, 2012). Thus
requiring entities with at least 15,000 customers to participate should help mitigate the burden of this collection.
Also, ACA reports that operators with that level of video subscribership generally have about 1,500 business
broadband customers. Id. To ensure that entities that provide best efforts services with a focus on business
customers also submit information, we require entities with at least 1,500 business broadband customers to
participate as well. For purposes of this exemption, the number of customers and business broadband customers
shall be determined as of the date of release of this Report and Order.
53 See, e.g., Letter from Melissa E. Newman, Vice President – Federal Relations, Qwest, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Docket No. 05-25, Attach. at 16 (filed June 23, 2010)
(arguing for a particular analytic framework that would assess data from “all potential alternatives to DS1s and DS3s
(e.g., cable, Ethernet, fixed wireless, mobile wireless, satellite, alternative fiber), including those that do not
collocate”); USTA 2009 PN Reply; Letter from Frank S. Simone, Executive Director – Federal Regulatory, AT&T,
to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25, Attach. at 4 (filed
Sept. 10, 2007).
54 See, e.g., infra paras. 26, 34.
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geographic areas.55 However, we decline to adopt a sampling approach because we believe that the
process of identifying and collecting a representative sample would be unlikely to substantially reduce
provider burdens, and could significantly lengthen the data collection process. With respect to a sample
of geographic regions, it is very difficult to design a representative sample without coming close to
covering the entire country—a fact that minimizes the likelihood that a geographic sample would actually
reduce the burden on respondents. Further, respondents likely would be required to search multiple
databases and compare the results of those searches to determine which of their customer locations were
in the selected geographies, resulting in substantial setup costs. Finally, even where a respondent need
only consult a single database, it typically would have to engage in essentially the same, or greater (to
account for the geographic sample), amount of coding to “pull” a sample of records as it would if it pulled
all records.
25.
A methodology based on sampling specific locations suffers from the same database and
coding issues as geographic sampling, and further would likely lengthen the data collection process by a
significant margin.56 Although the most recent data we have are several years old, they suggest that
competitive providers may serve a relatively small proportion of all locations that have special access. 57
As a result, a random sample from all locations would need to be very large—perhaps approaching a
census—to obtain sufficient data on competitive providers. Alternatively, we could require all
respondents to identify all the relevant locations so that a smaller sample could be drawn from that census
in a scientific way. That approach likely would lengthen the data collection process because it would
require two collections to be conducted sequentially: first a census of served locations from which a
sample could be drawn, and then a subsequent issuing of questions about locations in the sample. It
would also fail to significantly reduce the overall burden for several reasons. First, the burden of
producing the census would be similar to, though perhaps lower than, the burden of producing the
information identified above. Second, because of the need to tie sampled locations to the relevant


55 See, e.g., Letter from Paul Margie, Counsel, Sprint, to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Docket No. 05-25, at 9-10 (filed Aug. 14, 2012) (“A building-by-building analysis of a smaller
sample of areas . . . would provide useful data about competition and would not be onerous.”); CenturyLink
Response to Special Access Facilities Data Public Notice, Question III.E (filed Dec. 5, 2011) (stating that the
Commission must collect data from a statistically significant cross-section of MSAs, to the extent it wishes to apply
its results to other markets); Qwest 2009 PN Reply at 21-22 (stating that “rather than conducting a market-power
analysis for every market in the United States, or even every Phase II market, the Commission should select a
statistically valid, stratified cross-section of Phase I and Phase II markets and collect the relevant data from various
stakeholders in the markets in that sample”). For example, cleaning (i.e., identifying and correcting errors) a smaller
data set should be easier than cleaning a large one, and a smaller data set has lower storage requirements.
56 A sample of locations would consist of a sample taken from the universe of “building[s], other free-standing
site[s], cell site[s] on a building, or free-standing cell site[s]” in price cap areas. See supra para. 15.
57 See, e.g., Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, et. al., CC
Docket No. 01-338, Report and Order and Order on Remand and Further Notice of Proposed Rulemaking, 18 FCC
Rcd 16978, 17155, para. 298 n.856 (2003) (“Both competitive LECs and incumbent LECs report that approximately
30,000, i.e., between 3% to 5%, of the nation’s commercial office buildings are served by competitor-owned fiber
loops.”) (subsequent history omitted); see also Letter from Anna Gomez, VP-Government Affairs, Sprint, to
Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25, Attach. at 2 n.4 (filed
Mar. 27, 2007) (asserting that, out of three million large office buildings and campuses nationwide that purchased
special access, only 22,000 purchased those services from a competitive provider); tw telecom 2005 NPRM Reply at
4-5 (noting Verizon’s observation that between 1996 and 2005, competitors increased deployment from 24,000
buildings to 31,467 buildings, which tw telecom states is in contrast to the millions of buildings served by
incumbents); WilTel 2005 NPRM Reply at 6 (estimating that competitors deployed special access facilities to
25,000 buildings as of 2005). We expect that our data collection will provide more recent data about the number of
locations nationwide served by competitive providers.
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databases, the effort to respond to questions about a sample of locations would, for many respondents,
raise, or at least not reduce, their burden. Third, while the costs in burden saved through sampling are
likely to be relatively small, the statistical error of any conclusions based on a sample could be
significantly higher than conclusions based on a census.
26.
We do choose to sample for the narrower purpose of seeking to understand the evolution of
competitive provider buildout of a connection to a specific end user's location.58 Such an analysis
requires facilities deployment data over a long period of time, which would be burdensome for many
providers to produce for their entire networks. By collecting this data in a representative sample of
geographic areas, it is possible to minimize the burden on providers while providing accurate and useful
data on this narrow aspect of providers’ behavior. The decision to sample for this narrow purpose does
not suffer from the same issues discussed above.59 First, the sample can be significantly smaller than
would be necessary for a more general analysis. Second, the sample will be drawn from the universe of
locations identified in the course of the larger data collection; this sequential collection is unlikely to
materially impact our ability to undertake the proposed analysis. Finally, the information to be produced
from the sample is limited to facilities deployment data.
27.
Temporal scope. We will collect the majority of the data for calendar years 2010 and
2012.60 We find that collecting data on these issues for two calendar years appropriately balances the
need for time series data with the burden of producing data for multiple years. We choose calendar year
2012 because it is the most recent calendar year for which data will be available once Paperwork
Reduction Act approval is obtained for the information collection adopted in this order. And by
collecting 2012 data, the Commission will obtain the most up-to-date data available while still providing
respondents a reasonable time to gather and submit their data.61 We choose calendar year 2010 because,
while we recognize that it likely is more burdensome to produce 2010 data than 2011 data, a two year
period between observations is more likely to include changes in the relevant variables than a one year
period. We also recognize that our second voluntary data request sought data for 2010, which will mean
those providers who responded to that request will be able to rely on their past efforts in responding to
some elements of this collection.
28.
We will collect two years’ worth of data for market structure, price, and demand (i.e.,
observed sales and purchases). This allows for an analysis that controls for factors that may vary widely
across geographic areas, but not within a given geographic area (e.g., entry factors such as building codes
or soil quality). For example, if we observe differences in deployment between different geographies,
these may be due to differences in factors such as building codes, climate, or soil quality. Controlling for
these can be challenging. However, these kinds of variables do not typically change significantly over a
few years. In contrast, observing differences in deployment that emerge over a few years within the same


58 See infra para. 34.
59 See supra paras. 24-25.
60 We will collect 2010 and 2012 pricing data on a monthly basis. We note that there are some questions for which
we ask for additional historical data, such as questions about non-price factors. Questions related to terms and
conditions, competition, and pricing decisions span a variety of timeframes specific to the issue addressed.
61 Incumbent LECs argue that data collected for a specific timeframe will be stale by the time we analyze it. Letter
from Donna Epps, Vice President, Federal Regulatory Affairs, Verizon, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Docket No. 05-25, at 3 (filed Apr. 26, 2012); Qwest Response to Special Access
Facilities Data Request
, Question III.F at 7 (filed Jan. 27, 2011); Letter from Glenn Reynolds, Vice President for
Policy, USTA, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25, at 3
(filed Dec. 1, 2010). However, these parties have not proposed a method of instantaneous data submission, and
proper analysis naturally takes some time to perform.
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geographic region permits an analysis that controls for such factors. Conversely, if we have only one
year’s worth of data, we will be less able to associate particular factors with levels of deployment.62
29.
Most importantly, collecting a time series of data will help us assess potential competition.
One way to assess potential competition is by obtaining structural, pricing, and demand data over a two-
year period to observe and better understand how and why competition has evolved over time and,
therefore, where potential competition exists.63 Our proposal to collect historical data, which could be
used to predict potential competition, is consistent with Commission precedent, as well as that of the U.S.
antitrust agencies.64

B.

Nature of Data to be Collected

30.
The data, information, and documents required to conduct a robust analysis of special
access competition fall into five general categories: market structure, pricing, demand (i.e., observed
sales and purchases), terms and conditions, and competition and pricing decisions.65 In this section, we
describe the nature of the data to be collected. Further, we include in Appendix C an initial version of the
data collection that incorporates the data, information, and documents we describe below.66 We direct the


62 In addition, the need to include large numbers of controls unnecessarily reduces regression efficiency relative to a
regression that relies on data from more than one time period.
63 See, e.g., AT&T Corp., British Telecommunications, plc, VLT Co. L.L.C., Violet License Co. LLC, and TNV
[Bahamas] Limited Applications for Grant of Section 214 Authority, Modification of Authorizations and Assignment
of Licenses in Connection with the Proposed Joint Venture Between AT&T Corp. and British Telecommunications,
plc
, IB Docket No. 98-212, SES-ASG-19981110-01654 (30), SES-ASG-19981110-01655 (2), Memorandum
Opinion and Order, 14 FCC Rcd 19140, 19149-50, paras. 17-19 (1999) (stating that, when analyzing a merger, the
Commission “seeks to determine if market entry is unconstrained so that an attempted exercise of market power can
be prevented, i.e., if rivals and new entrants have the capabilities and incentives to expand output in response to any
anticompetitive practices by the merging entities”); Implementation of Section 6002(b) of the Omnibus Budget
Reconciliation Act of 1993
, WT Docket No. 10-133, Fifteenth Report, 26 FCC Rcd 9664, 9713, para. 55 (2011)
(“Entry and exit conditions are important in helping to understand the degree to which incumbent firms may or may
not possess market power, i.e. the ability to set prices above marginal cost without attracting entry. Entry and exit
occurs in the context of underlying . . . market conditions that directly influence the total number of firms that can
compete successfully in a market. Such conditions are relevant for determining if actual entry or exit will occur,
and when actual entry or exit will occur—both of which are important for ensuring competition in the
marketplace.”).
64 See, e.g., Applications of Comcast Corp., General Elec. Co., & NBC Universal, Inc.; For Consent to Assign
Licenses and Transfer Control of Licensees
, MB Docket No. 10-56, Memorandum Opinion and Order, 26 FCC Rcd
4238, 4382, App. B (2011); Applications for Consent to the Assignment and/or Transfer of Control of Licenses et
al
., MB Docket No. 05-192, Memorandum Opinion and Order, 21 FCC Rcd 8203, App. D (2006); Gen. Motors
Corp. & Hughes Elecs. Corp., Transferors, and The News Corp. Ltd., Transferee, for Authority to Transfer Control
,
MB Docket 03-124, Memorandum Opinion and Order, 19 FCC Rcd 473, 565-69, paras. 201-11 (2004); see also
2010 DOJ/FTC Horizontal Merger Guidelines
at § 2.1.2 (2010) (“The Agencies look for historical events, or
‘natural experiments,’ that are informative regarding the competitive effects of the merger. For example, the
Agencies may examine the impact of recent mergers, entry, expansion, or exit in the relevant market. Effects of
analogous events in similar markets may also be informative.”).
65 We note that the specific data, information, and documents solicited in this data collection may fall into more than
one category and/or be used to evaluate more than one issue. For example, some of the pricing questions may help
us evaluate terms and conditions issues.
66 See infra Appendix C.
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Bureau to review and modify this collection, consistent with the authority delegated in section III.D
below, to implement the requirements of this Report and Order.67
31.
Market structure data. We intend to assess the market structure for special access
market(s). By this, we mean that we intend to examine comprehensive data on the situs and type of
facilities capable of providing special access, by sold and potential capacity and ownership, and the
proximity of such facilities to sources of demand. Specifically, we require each provider to submit data
and information for connections that are owned by the provider, leased under an indefeasible right of use
(IRU), or, for competitive providers, obtained from an incumbent LEC as an unbundled network element
(UNE) to provide a dedicated service,68 including, but not limited to:
·
Locations to which the provider has sold a connection to an end user or a provider;
·
information on the nature of the location and the nature of the connection serving that
location, including:69
o the situs of the location and whether the location is a building, other free-standing
site, cell site on a building, or free-standing cell site;
o whether the connection is fiber, wireless (and if wireless, the provisioned
bandwidth of the channel), or some other medium; and
o the provisioned bandwidth of each type of connection.
32.
We require incumbent LEC providers to submit data concerning the number, nature, and
situs of UNEs sold.70
33.
We require competitive providers to submit detailed information related to non-price
factors that may impact where special access providers build facilities or expand their network via UNEs.
For example, providers may choose to expand their facilities in areas where they have already made
significant facilities investments, like near their headquarters or a point of interconnection, to take
advantage of cost efficiencies. We therefore require respondents to provide detailed information about
such non-price factors. In addition, we require competitive providers to provide us with any business
rules they use to determine whether to build a connection to a location.71
34.
In addition, we require competitive providers to submit the history of their facilities
deployment in a sample of locations served by a competitive provider. Each competitive provider will
report the date on which it provided a connection to each of its locations within the sample and locations
proximate to the locations in the sample, including when and where it relied upon UNEs to establish a


67 For example, the Bureau may release the data collection, in whole or in part, as part of a Bureau-level order or
Public Notice requiring the production of data, information, and documents. See infra paras. 52-53 (Role of the
Wireline Competition Bureau).
68 Several types of unbundled network elements are available to competitive carriers, as set forth and defined in our
unbundling rules. See 47 C.F.R. § 51.319(a).
69 The terms “connection” and “location,” as used throughout this Order, are defined above. See supra para. 15.
70 Incumbent LECs are best situated to identify where UNEs are sold to competitive providers. Competitive
providers, in turn, are best situated to identify what services are provided over those UNEs, and in particular whether
a given UNE connection is used to provide a dedicated access service to a location. Incumbent LECs are
encouraged to exclude from their response, to the extent possible, UNEs that serve residential locations.
71 Unlike our question geared exclusively to how non-price factors influence decisions to build, our question about
business rules may incorporate price factors.
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connection. The locations selected will include areas in which no pricing flexibility has been granted, as
well as Phase I and/or Phase II pricing flexibility areas.72 These detailed data on the evolution of
competitive provider networks will help us understand how competitive facilities are deployed over time
and whether the presence of competitive facilities in fact provides a threat of competitive entry in nearby
or adjacent areas.
35.
We require competitive providers to provide detailed collocation situs information. We
also require competitive providers to submit maps of the routes followed by fiber that they own or lease
subject to an IRU, of nodes that interconnect with third party networks, and of connections from their
networks to locations. These maps will indicate where competitive providers can provide, or could
potentially provide, special access services. Among other things, such maps will identify points of
interconnection between competitive providers of special access services and incumbent LEC facilities.73
36.
Price data. We require price data to characterize competition in the market for special
access services. Such data will allow comparisons of different providers’ prices, after controlling, where
necessary, for differences in cost-causing factors, and can allow the consideration of the effect of market
structure on price. Price data include, but are not limited to:
·
the quantities sold and prices charged for special access services, by circuit element;
o as reflected in billing data;
o including, where applicable and necessary, but not limited to, identifiers for the
nature of the service, such as:
§
Universal Service Order Code (USOC) or comparable code;
§
circuit and/or mileage end-points;
§
quantities relevant for billing (such as bandwidth and mileage);
§
term, volume, or revenue commitments relevant to billing; and
§
adjustments, rebates, or true-ups provided or received over time.
The Bureau collected similar data on a voluntary basis in the Special Access Facilities Data Public
Notice
.74
37.
To understand this pricing information, we must also take into account the regulatory
environment. For competitive providers, we already know the regulatory environment—they are
unregulated with respect to price at the federal level. In contrast, the Commission regulates the prices
incumbent LECs charge through a variety of methods: rate-of-return regulation, price-cap regulation, and
Phases I and II of pricing flexibility.75 We therefore require incumbent LECs to list the form of price
regulation that applies to their interstate special access services on a wire-center-by-wire-center basis.


72 See 47 C.F.R. § 69.701 et seq.
73 We note that we do not collect the same detailed information about connections to and from and between nodes as
we do about locations. This decision is premised on the fact that nodes typically connect to several additional nodes,
so there may be dozens of direct and indirect paths between two nodes. Running a regression analysis on that
information would be algorithmically difficult, if not impossible.
74 See Special Access Competition Data Public Notice, 26 FCC Rcd at 14000.
75 Although today’s data collection does not extend to rate-of-return incumbent LECs, we note that several
incumbents have converted from rate-of-return regulation to price-cap regulation in the last two years.
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38.
Demand data (i.e., observed sales and purchases). Demand data are a key input into any
statistical analysis of how price varies with competition. Competitors generally are attracted to areas of
high demand density because such areas provide opportunities to enjoy economies of scale and scope.
Consequently, an understanding of the relationship between prices for observed sales and purchases and
competitive entry will facilitate an assessment of market power. In addition, the record indicates that
competition in the provision of special access appears to occur at a very granular level—perhaps as low as
the building/tower or a floor of a building. We therefore need to understand observed sales or purchases
of special access at the most granular level possible, because, among other things, sold or purchased
volumes and volume density are a key driver of special access costs and an important determinant of the
likelihood of potential entry. We therefore will collect, including but not limited to, data that identify:
·
the bandwidth of the special access services sold or purchased;
·
the location(s) being served;
·
the nature of the demand (e.g., provider, end user, other);
·
the locations of mobile wireless providers’ cell sites and connections to those cell sites;
·
total expenditures on special access services by purchasers; and
·
revenues earned from the sales of special access.
39.
Terms and conditions data and information. The record reflects questions about whether
the terms and conditions associated with the sale of special access services may inhibit a buyer’s ability to
switch to other providers, which in turn may inhibit facilities-based entry into special access markets.76
We therefore will collect, from providers and purchasers of special access services, data and information
that includes but is not limited to:
·
generally available plans for tariffed special access services that offer discounts, circuit
portability, or other competitively relevant benefits;
·
the business rationale for those plans;
·
the extent of special access sales and purchases made that are and are not subject to discounts,
circuit portability, or other benefits;
·
how such plans work with each other, and in conjunction with contract-based tariffs and other
forms of contracts that govern the sale and pricing of special access services;
·
customer information associated with such plans and contract-based tariffs (e.g., the number
of customers subscribed to an individual plan or contract-based tariff);


76 See, e.g., Letter from Michael J. Mooney, Senior Vice President and General Counsel, Level 3, to Marlene H.
Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25 (filed Aug. 23, 2012); Letter from
Thomas Jones & Matthew Jones, Counsel, tw telecom, to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Docket No. 05-25 (filed June 5, 2012); Letter from Michael J. Mooney, General Counsel,
Regulatory Policy, Level 3, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket
No. 05-25 (filed Feb. 22, 2012); Letter from Sarah DeYoung, Director, CALTEL, to Marlene H. Dortch, Secretary,
Federal Communications Commission, WC Docket No. 05-25, Attach. (filed Feb. 9, 2012); Sprint Response to
Special Access Competition Data Public Notice, Questions III.D.5-6, III.D.8-9 (filed Dec. 19, 2011); Letter from
Karen Reidy, Vice President, Regulatory Affairs, to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Docket No. 05-25 (filed Aug. 31, 2010).
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·
how discounts, circuit portability, and other competitively relevant benefits for sales of
special access services by competitive providers differ from those of the incumbent LEC
providers;
·
contract-based tariffs;
·
provider policies and internal procedures governing deployment, disconnection, upgrades,
and switching providers;
·
the impact certain terms and conditions may have on a purchaser’s ability to reduce purchases
from its existing provider, switch providers, or purchase unregulated services;
·
generally available tariffs, contract-based tariffs, and other forms of contracts that govern the
sale and pricing of special access services and services that are sold (or priced) in connection
with special access services; and
·
a description of the customers targeted by providers (e.g., size, geographic scope, type) and
the promotional and advertising strategies for winning or retaining such customers.
40.
Competition and pricing decision data, information and documents. We require providers
of special access to submit data, information and/or documents related to competition and pricing
decisions for special access services, including selected competitive provider responses to Requests for
Proposals (RFPs).
41.
Specifically, we require each competitive provider to identify the five most recent RFPs for
which it was selected as the winning bidder to provide each of the following: (i) best effort business
broadband Internet access services, (ii) special access services, and, to the extent different from (i) or (ii),
and (iii) some other form of high-capacity data services to business customers.77 We also require each
competitive provider to identify the five largest (by number of connections) RFPs for which it submitted
an unsuccessful competitive bid between 2010 and 2012 for each of (i) best effort business broadband
Internet access services, (ii) special access services, and, to the extent different from (i) or (ii), and (iii)
some other form of high-capacity data services to business customers.78 For each RFP identified, the
competitive provider shall provide a description of the RFP, the area covered, the price offered, as well as
other competitively relevant information regarding RFPs specified by the Bureau.
42.
Parties contend that advertising and marketing relating to special access, regardless of
whether a competitive provider has actually built out facilities to a particular location, may impact pricing
and deployment decisions. Accordingly, we require competitive providers of special access to submit
data, maps, information, marketing materials, and/or documents identifying those geographic areas where
they advertised or marketed special access services over existing facilities, via leased facilities, or by
building out new facilities as of December 31, 2010 and December 31, 2012, or planned to advertise or
market such services within twenty four months following those dates.
43.
Another useful category of information may be documents showing the internal analyses
undertaken by providers in 2010 or thereafter to evaluate, inter alia, competitive market shares, changes
in competition, changes in the costs of supplying services, whether to respond to RFPs, and identified rate
increases and decreases. We decline at this time to require all providers to submit that information given


77 To be clear, we expect competitive providers that have won RFPs in each service category to identify up to five
RFPs in each category, not a total of five RFPs across the three categories.
78 To be clear, we expect competitive providers that have submitted unsuccessful competitive bids for RFPs in each
service category to identify up to five RFPs in each category, not a total of five RFPs across the three categories.
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the burden of identifying and producing such documents.79 Instead, we shall take a two-stage approach
with these internal documents. Specifically, we delegate authority to the Bureau to require a provider to
submit such documents if the Bureau finds in an order that (a) a provider’s responses to the business-rules
questions are incomplete or insufficient for analysis, (b) a competitive provider’s responses to the history-
of-deployment questions are incomplete or insufficient for analysis, or (c) the data collected for a
particular geographic area are incomplete or insufficient for analysis.
44.
Best Efforts Business Broadband Internet Access Services. As noted above, we define the
scope of our data collection to include best efforts business broadband Internet access services. Because
the record indicates that entities that provide best efforts business broadband Internet access services
generally deliver those services throughout their footprint over the same network facilities they use to
deliver mass market broadband Internet access,80 we need not collect this data at the same level of
granularity as location and facilities data for special access.81 Data showing whether an entity is
providing best efforts business broadband Internet access service at, for example, the census block level
would not diminish the rigor of our analysis, but would significantly reduce the burden of producing the
necessary data.82 Indeed, many entities already submit data in connection with the State Broadband
Initiative (SBI) Grant Program as to where they offer best efforts broadband Internet access services at the
census block level.83


79 See Letter from Steven F. Morris, Vice President and Associate General Counsel, NCTA, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Docket No. 05-25, RM-10593, at 2 (filed Oct. 24, 2012);
Letter from Mary McManus, Comcast, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC
Docket No. 05-25, at 1-2 (filed Nov. 5, 2012); Letter from Mary McManus, Comcast, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Docket No. 05-25, at 2 (filed Oct. 22, 2012).
80 See, e.g., Letter from Glenn T. Reynolds, Vice President, Policy, US Telecom, to Marlene H. Dortch, Secretary,
Federal Communications Commission, WC Docket No. 05-25, GN Docket No. 09-51, Attach. at 5-6 (filed Aug. 31,
2009) (stating that “[c]able companies are increasingly using their near-ubiquitous networks to provide business
customers a range of services that compete with special access” and identifying cable providers, such as Cox and
Comcast, who are targeting the small and enterprise market (SME) in their existing footprints); SBC 2005 NPRM
Reply at 13 (“Using their existing facilities, cable providers have access to an estimated market of over 20 million
[(small and medium sized)] business lines, and they are actively expanding their fiber-to-the-curb infrastructure to
include business customers.” (citing SBC 2005 NPRM Comments at Casto Decl., para. 37)).
81 See supra para. 31.
82 See, e.g., Letter from Jennifer K. McKee, Vice President and Associate General Counsel, NCTA, to Marlene H.
Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25, RM-10593 (filed Nov. 29, 2012).
83 See Letter from Steven F. Morris, Vice President and Associate General Counsel, NCTA, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Docket No. 05-25 (filed Nov. 19, 2012); but see Letter from
Thomas Jones and Nirali Patel, Counsel for Cbeyond, Inc., Earthlink, Inc. and Integra Telecom, Inc., to Marlene H.
Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25 at 2 (filed Nov. 21, 2012) (arguing
“Compliance with a mandatory FCC request to provide the “best efforts” broadband coverage information requested
in connection with the NBM project would be burdensome for many competitive LECs . . . .”). Since July 2009, the
National Telecommunications and Information Administration (NTIA), in coordination with the Commission, has
been collecting data concerning where broadband is deployed across the nation as part of the State Broadband
Initiative (SBI) Grant Program. See Department of Commerce, NTIA, State Broadband Data and Development
Grant Program, Docket No. 0660-ZA29, Notice of Funds Availability, 74 Fed. Reg. 32545 (July 8, 2009) (NTIA
State Mapping NOFA
), available at
http://www.ntia.doc.gov/files/ntia/publications/fr_broadbandmappingnofa_090708.pdf; Department of Commerce,
NTIA, State Broadband Data and Development Grant Program, Docket No. 0660-ZA29, Notice of Funds
Availability; Clarification, 74 Fed. Reg. 40569 (Aug. 12, 2009); see also NTIA, State Broadband Initiative,
http://www2.ntia.doc.gov/SBDD (last visited Dec. 12, 2012). The data collected as part of the SBI Grant Program
(continued….)
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45.
Further, we already have information on enterprise subscriptions to broadband Internet
access services through our Form 477 collection. In their biannual Form 477 filings, facilities-based
providers of fixed-location Internet access connections (which include providers equipping UNEs, special
access lines, or other leased facilities) submit information, by census tract (areas roughly the size of zip
codes), on all Internet access connections (greater than 200 kbps) to end users, including businesses.84
They also identify the percentage of connections within each census tract that is residential.85
46.
We therefore require, subject to the exception set forth in paragraph 22 above, entities that
submitted data in connection with the SBI Grant Program and offer best efforts business broadband
Internet access services to identify, on a granular but not location-by-location basis (ideally, at the census
block level), the geographic areas in which they offer those services.86 The Bureau may accept such
entities’ certification that the data they have submitted in connection with the SBI Grant Program
accurately and completely identify the areas in which they offer best efforts business broadband Internet
access services and exclude those areas where they do not offer such services. We further require such
entities to submit a price list for the best efforts business broadband Internet access services that they
offered within their footprint. Such price list should identify the list prices for the best efforts business
broadband Internet access services they offered, whether there was any price variation within their service
footprint, and, if so, the nature of such variation. This information, taken together with the Form 477 data
and the data we will collect on UNEs that could be used to provide these services, will allow us to analyze
of the availability of, demand for, and pricing of best efforts business broadband Internet access services.
47.
Additional Data Not Collected. We recognize that the collection we adopt today does not
include every type of data that is available. Commenters suggest we ask for a broad array of competition
(Continued from previous page)


helped populate a national broadband inventory map that was first made public in February 2011 and most recently
updated July 2012. National Broadband Map, http://broadbandmap.gov/ (last visited Dec. 12, 2012); Press Release,
Moira Vahey, NTIA Unveils National Broadband Map and New Broadband Adoption Survey Results (Feb. 17,
2011) (NTIA National Broadband Plan Press Release), available at http://www.ntia.doc.gov/press-
releases/2011/commerce%C3%A2%E2%82%AC%E2%84%A2s-ntia-unveils-national-broadband-map-and-new-
broadband-adoption-survey; Lynn Chadwick, The National Broadband Map Is Updated, National Broadband Map
Blog (July 25, 2012), http://www.broadbandmap.gov/blog/2803/the-national-broadband-map-is-updated/.
84 FCC Form 477, Instructions for Local Telephone Competition and Broadband Reporting at 2, 17 (2012)
(regarding filings due Sep. 1, 2012), available at http://www.fcc.gov/Forms/Form477/477inst.pdf (FCC Form 477
Instructions
). Form 477 excludes high-capacity lines between end users and interexchange carriers and point-to-
point connections among end-user locations within a single customer entity. Id. at 6-7. Specifically, the Form 477
instructions direct reporting entities to exclude (among others) the following types of connections:
“Connections between two locations of the same business or other end user entity (such as point-to-point
connections within private or semi-private data networks or corporate telephone systems).”
“High-capacity connections between network components within the public switched telephone network or
the Internet (note that such connections do not terminate at an end user location.)”
“High-capacity dedicated connections (‘special access’ circuits) between end users and interexchange
(telephone) carrier points of presence (‘toll bypass’).”
85 FCC Form 477 Instructions at 9 (specifying that, for all technologies except terrestrial mobile wireless,
connections should be considered residential “when they deliver Internet-access services that are primarily
purchased by, designed for, and/or marketed to residential end users”).
86 As discussed before, because the entities that we require to report have submitted data to the SBI program at the
census block level, we expect the burden on such entities of reporting this information will be small. See, e.g.,
Letter from Steven F. Morris, Vice President and Associate General Counsel, NCTA, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Docket No. 05-25 (filed Nov. 19, 2012).
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data and information.87 Others have recommended obtaining information about providers’ past lateral
construction projects, future upgrade or expansion plans and additional information on competitive
bidding.88 We agree that some such information may be qualitatively useful, and, for example, have
required the production of data on competitive provider RFP responses and future plans to inform our
analysis.89 We must, however, balance the administrative burdens with the potential benefits of a broader
collection, and believe that this Report and Order will allow us to collect data and information sufficient
for our purposes while minimizing, to the extent possible, the burden we impose on industry.
48.
Further, we agree with commenters who argue that to understand the impact of competition
in special access, it is important to grasp the effects of potential, as well as actual, competition. To this
end we are requiring the production of information that will illuminate those factors that affect providers’
decisions to expand existing networks, e.g., the non-price factors that may impact where special access
providers build new facilities,90 business rules for deployment,91 a sample of historical deployment,92
points of collocation,93 fiber network maps,94 availability and use of UNEs,95 internal analysis of pricing
decisions,96 a selected set of responses to RFPs, and internal competitive analysis.97

C.

Statutory Authority

49.
Several provisions of the Communications Act and the Telecommunications Act give the
Commission authority to adopt this data collection. Under section 218 of the Communications Act, we
may “obtain from [common] carriers and from persons directly or indirectly controlling or controlled by,


87 See, e.g., Letter from Paul Margie & Marc Davis, Counsel, Sprint, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Docket No. 05-25, at 10 (filed Aug. 14, 2012) (“At a minimum, some
information about costs will be useful in order to ensure that prices are just and reasonable.”); Letter from Erin
Boone, Senior Corporate Counsel, Federal Regulatory Affairs, Level 3, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Docket No. 05-25, at 2 (filed Mar. 7, 2011) (“In order to determine whether . . .
contract tariffs and tariffs require buyers of a large percentage of special access circuits to purchase all or nearly all
of their special access needs from the ILEC and thus result in anticompetitive market foreclosure, the Commission
must know not only that potentially anticompetitive tariffs and contract tariffs exist, but also measure how they
influence the marketplace.”); COMPTEL 2009 PN Comments at 8 (stating that the Commission should perform a
price/cost ratio analysis to determine if special access rates are reasonable); Level 3 2009 PN Reply at 11 (stating
that “the Commission should . . . consider the extent to which unjust and unreasonable terms and conditions have
arisen due to a lack of competition or have precluded competitive entry in special access markets”); Letter from
Edward J. Black et al., President, CCIA, to Marlene H. Dortch, Secretary, Federal Communications Commission,
WC Docket No. 05-25 (filed June 3, 2009) (setting forth a data request proposal that would include requests for
pricing data, cost data, and information about terms and conditions).
88 See Qwest Response to Special Access Facilities Data Request, Question III.F (filed Jan. 27, 2011).
89 See supra para. 40-42.
90 See supra para. 33.
91 See supra para. 33.
92 See supra para. 34.
93 See supra para. 35.
94 See supra para. 35.
95 See supra paras. 31-34.
96 See supra para. 43.
97 See supra para. 41.
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or under direct or indirect common control with, such carriers full and complete information necessary to
enable the Commission to perform the duties and carry out the objects for which it was created.”98 As
such, section 218 empowers us to collect data from incumbent LECs, competitive LECs, CMRS
providers, and other common carriers whether they provide or purchase special access service or other
relevant services.
50.
Section 201 requires that interstate special access service rates, terms, and conditions be
just and reasonable, section 202 prohibits unjust or unreasonable discrimination in the provision of
interstate special access services, and section 706 of the Telecommunications Act requires that we
“encourage the deployment of advanced telecommunications capability . . . by utilizing, in a manner
consistent with the public interest, convenience, and necessity, price cap regulation, regulatory
forbearance, measures that promote competition in the local telecommunications market, or other
regulating methods that remove barriers to infrastructure investment.”99 The Communications Act in
turn provides us authority to carry out these duties—all of which will be aided by today’s data
collection—in section 4(i), which empowers the Commission to “perform any and all acts . . . and issue
such orders . . . as may be necessary in the execution of [our] functions,”100 and section 201(b), which
authorizes the Commission to “prescribe such rules and regulations as may be necessary in the public
interest to carry out the provisions” of the Communications Act.101 These authorities, along with our
subject matter jurisdiction over “interstate and foreign commerce in communication by wire and radio,”102
allow us to extend the data collection beyond common carriers to include other market participants that
provide interstate communication by wire or radio.103 We note that there is widespread accord in the
record on the Commission’s authority to require the collection of the data and information it needs to
inform our future actions.104
51.
We note that parties have had extensive notice and opportunity to comment on the need for
and scope of this data collection. In the 2005 Special Access NPRM, the Commission sought comment
regarding evidence of marketplace competitiveness and pricing for special access services, including the
data and information to perform those analyses.105 In a subsequent Public Notice, the Commission sought
additional data and to otherwise refresh the record of the Special Access NPRM in light of subsequent
developments, including the release of a GAO report that, among other things, contended that the


98 47 U.S.C. § 218; see also id. § 220(c).
99 47 U.S.C. § 1302(a).
100 Id. § 154(i); see also id. § 303(r) (authorizing the Commission to “[m]ake such rules . . . as may be necessary to
carry out the provisions of this chapter”).
101 47 U.S.C. § 201(b); see also id. § 303(r) (authorizing the Commission to “[m]ake such rules . . . as may be
necessary to carry out the provisions of this chapter”).
102 Id. § 151.
103 Id. § 154(i); see also id. § 303(r); see also American Library Ass’n v. FCC, 406 F.3d 689, 691-93 (D.C. Cir.
2005) (holding that the Commission may exercise ancillary authority when the general grant of subject matter
jurisdiction in section 1 covers the regulated subject and the regulations are reasonably ancillary to the
Commission’s effective performance of its statutory obligations) (citing United States v. Southwestern Cable Co.,
392 U.S. 157, 177-78 (1968)).
104 See, e.g., AT&T 2009 PN Comments at 28, 39; NoChokePoints 2009 PN Comments at 17-18; tw telecom 2009
PN Comments at 15; Level 3 2009 PN Reply at 14-15; Qwest 2009 PN Reply at 22-23, Exh. 39; AT&T 2007 PN
Comments at 6, 25-26, 51-52; Embarq 2007 PN Reply at i, 2; BellSouth 2005 NPRM Reply at 21.
105 See generally Special Access NPRM, 20 FCC Rcd at 2019-30, paras. 73-112.
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Commission needed additional data to evaluate the special access marketplace.106 In the resulting record
of the proceeding, various parties advocated that the Commission undertake a data collection to obtain the
data necessary to appropriately perform these analyses.107 Citing such filings, the Bureau sought
comment on an analytical framework necessary to resolve the issues raised in the Special Access NPRM,
including whether the record contained sufficient information to perform such analyses and, if not, what
additional data the Commission should collect, and from whom.108 Most recently, in the Special Access
Pricing Flexibility Suspension Order
, the Commission stated that a data collection order would be
forthcoming.109 In short, we have provided notice regarding this comprehensive data collection that has
given ample opportunity for public participation and met any requirements of the Administrative
Procedure Act.110

D.

Role of the Wireline Competition Bureau

52.
The data collection we adopt today is set forth in Appendix A. Given the complexities
associated with ensuring that the specific questions asked meet the Commission’s needs as expressed in
this Report and Order, navigating the Paperwork Reduction Act process, and actually collecting, cleaning,
and analyzing the data, we delegate limited authority to the Bureau to: (a) draft instructions to the data
collection and modify the data collection based on public feedback; (b) amend the data collection based
on feedback received through the PRA process; (c) make corrections to the data collection to ensure it
reflects the Commission’s needs as expressed in this Report and Order; and (d) issue Bureau-level orders
and Public Notices specifying the production of specific types of data, specifying a collection mechanism
(including necessary forms or formats), and setting deadlines for response to ensure that data collections
are complied with in a timely manner, and (e) take other such actions as are necessary to implement this
Report and Order.111 All such actions must be consistent with the terms of this Report and Order.112


106 See Refresh the Record Public Notice, 22 FCC Rcd at 13352.
107 See, e.g., Letter from Glenn T. Reynolds, Vice President, USTelecom, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Docket No. 05-25, Attach. at 14 (filed Aug. 31, 2009); Letter from Glenn T.
Reynolds, Vice President, USTelecom, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC
Docket No. 05-25, at 4-5 & Attach. A (filed Apr. 27, 2009); Letter from Donna Epps, Vice President, Verizon, to
Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25, at 1-2 (filed May 22,
2009); Letter from Karen Reidy, COMPTEL, to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Docket No. 05-25, at 6 (filed May 18, 2009).
108 See Analytical Framework Public Notice, 24 FCC Rcd at 13638.
109 See Special Access Pricing Flexibility Suspension Order, 27 FCC Rcd at 10561, para. 7.
110 5 U.S.C. § 553.
111 The delegation includes the authority to require entities subject to the Commission’s jurisdiction to certify
whether or not they are special access providers, entities that provide best efforts business services, or purchasers for
purposes of this data collection. In addition, although the Bureau may employ the existing waiver process under
Commission rule 1.3 to waive some or all of the requirements of this Report and Order for individual respondents
where good cause is shown, see 47 C.F.R. § 1.3, such waivers must be narrowly tailored to the applicable
circumstances. To the extent the Bureau cannot obtain Office of Management and Budget approval for some
portion of the data collection, we direct the Bureau to proceed with the remainder of the collection.
112 For example, if the PRA process revealed that there were substantial special access facilities deployed to places
that are not buildings or cell sites (such as walls or mines), it would be consistent with this Report and Order for the
Bureau to amend the data collection to collect information about facilities deployed to such places as well as to
“locations.” In contrast, even if the PRA process suggested that it would be less burdensome to collect special
access facilities deployment at the census block level, it would not be consistent with this Report and Order for the
(continued….)
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53.
Our goal is to ensure a comprehensive and detailed data collection. Accordingly, we direct
the Bureau to engage in outreach with the provider and purchaser communities to ensure that all providers
and purchasers are aware of this comprehensive data collection and the penalties for non-response. We
encourage the Bureau to reach out to trade associations that represent small providers to inform them of
their obligations to participate in the data collection effort and to ensure that we have maximum
participation. In addition, to reduce the burden of this data collection, we direct the Bureau to facilitate
whenever possible the conversion of street addresses to geocoded coordinates for small providers and
purchasers.

E.

Data Retention

54.
Respondents are required to retain any data, documents, documentation, or other
information prepared for, or in connection with, their responses to these data reporting requirements for a
period of three years or until the Commission issues a notice relieving respondents of this retention
requirement upon the exhaustion of any appeals of a final order adopted in this proceeding.

F.

Penalties for False Statements and Non-Response

55.
Respondents are required to certify that all statements of fact, data and information
submitted to the Commission are true and correct to the best of their knowledge.113 False statements or
misrepresentations to the Commission may be punishable by fine or imprisonment under Title 18 of the
U.S. Code. Respondents are reminded that failure to comply with these data reporting requirements may
subject them to monetary forfeitures of up to $150,000 for each violation or each day of a continuing
violation, up to a maximum of $1,500,000 for any single act or failure to act that is a continuing
violation.114

IV.

FURTHER NOTICE OF PROPOSED RULEMAKING

56.
We now commence a process to more effectively determine where relief from special
access regulation is appropriate and otherwise update our special access rules to ensure that they reflect
the state of competition today and promote competition, investment, and access to services used by
businesses across the country. In Section IV.A, below, we propose and seek comment on a market
analysis that we intend to undertake in the coming months to assist the Commission in evaluating whether
the pricing flexibility rules result in just and reasonable special access rates and what regulatory changes
may be needed.115 We anticipate that the analysis will be a one-time assessment of the competitive
conditions in the special access market; however, we do not foreclose the possibility that further analyses
may be needed in the future.
57.
Our proposed market analysis is only one step in our process. Once the data are collected
and analyzed, we may modify the existing pricing flexibility rules or adopt a new set of rules that will
(Continued from previous page)


Bureau to amend the data collection to require census block information rather than location-by-location information
required by paragraph 31 about such facilities.
113 The Commission typically requires certifications from respondents to ensure the accuracy of reported
information. See 47 C.F.R. § 1.7001(c); Promoting Diversification of Ownership in the Broadcasting Services, MM
Docket 07-294, Report and Order, 24 FCC Rcd 5896, 5909-10, para. 25 (2009); Implementation of the Cable
Television Consumer Protection and Competition Act of 1992: Rate Regulation
, MM Docket No. 92-266, 8 FCC
Rcd 226, 227, App. (1992).
114 47 U.S.C. § 503(b)(2); 47 C.F.R. § 1.80(b); Amendment of Section 1.80(b) of the Commission’s Rules,
Adjustment of Forfeiture Maxima to Reflect Inflation
, Order, 23 FCC Rcd 9845, 9847 (2008).
115 See 47 U.S.C. § 201(b) (“All charges, practices, classifications, and regulations for and in connection with such
communication service, shall be just and reasonable . . . .”).
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apply to requests for special access pricing flexibility. In section IV.B below, we seek comment on how
the special access pricing flexibility rules might change after we conduct our market analysis. We also
seek comment on what steps the Commission should take where relief has been provided under our
existing rules and where the data and our analysis demonstrate that competition is not sufficient to
discipline the marketplace. Finally, we seek in section IV.C data and information on the terms and
conditions offered by incumbent LECs for special access services to facilitate our understanding of
competition in the special access market and our ability to craft rules that properly address the state of the
marketplace.

A.

Approach To Analyzing Special Access

1.

Background

58.
In the Analytical Framework Public Notice, the Bureau sought comment on a methodology
that could be employed to evaluate the efficacy of the special access regulatory regime.116 The Bureau
requested that parties propose an analytic framework capable of assessing whether the Commission’s
price cap and pricing flexibility rules ensure just and reasonable rates, as well as just and reasonable terms
and conditions in special access tariffs and contracts.117 The Bureau noted that once the Commission
adopted
an analytical approach enabling a systematic determination of whether or not the current
regulation of special access services is ensuring rates, terms, and conditions that are just
and reasonable as required by the Act, [the Commission] c[ould] determine what, if any,
specific problems there are with the current regime and formulate specific solutions as
necessary.118
59.
The Bureau subsequently held a staff workshop to gather further input on the analytic
framework proposals raised in the record and any associated data collection that would be required to
implement such proposals.119 In response to the Analytical Framework Public Notice, as well as through
the staff workshop, commenters set forth several proposals for an analytic framework that the
Commission could implement to evaluate the current special access rules.
2.

Proposals in the Record

60.
Several parties recommend that the Commission adopt a market power analytic framework
in lieu of the Pricing Flexibility Order’s competitive showing rules.120 In the past, the Commission has
defined market power as the power to control price.121 The U.S. antitrust agencies have also expanded
their definition of market power to include the ability to “reduce output, diminish innovation, or otherwise


116 Analytical Framework Public Notice, 24 FCC Rcd at 13638.
117 Id. at 13639.
118 Id.
119 Staff Workshop Public Notice; July 2010 Special Access Workshop Transcript (July 19, 2010), available at
http://reboot.fcc.gov/c/document_library/get_file?uuid=f01ad781-6dd7-4ace-a7fc-bc296dc88315&groupId=19001
(2010 Staff Workshop Transcript).
120 See, e.g., BT Americas 2009 PN Comments at 20-22; Qwest 2009 PN Comments at 25-26; Sprint 2009 PN
Comments at 17; XO 2009 PN Comments at 3-5; MAG-Net 2009 PN Reply at 7-8; NJ Rate Counsel 2009 PN Reply
at 9-11; RCA 2009 PN Reply at 7; tw telecom 2009 PN Reply at 6-8.
121 Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities Authorizations
Therefor
, CC Docket No. 79-252, First Report and Order, 85 FCC 2d 1, 20, para. 54 (1980) (Competitive Carrier
First Report and Order
).
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harm customers as a result of diminished competitive constraints or incentives.”122 A market power
analysis commonly evaluates separately “competition for distinct services, for example differentiating
among the various retail services purchased by residential and small, medium, and large business
customers, and the various wholesale services purchased by other carriers” in a distinct geographic
area.123 A market power analysis also typically involves the consideration of providers’ market shares,
supply and demand elasticity, and carriers’ cost structures, size, and access to resources.124
61.
Commenters voicing support for adoption of a market power framework state that it will
ensure that, going forward, the Commission’s evaluation of competition for special access is a
comprehensive, economically sound, and data-driven means of understanding where and what kinds of
regulatory relief are justified.125 Other commenters raise concerns about a market power framework,
stating, for example, that the questions at the heart of a traditional market power analysis used in
transaction review, such as how to define markets or analyze demand and supply responsiveness, have
been made irrelevant by competition;126 that such an approach is not an administratively workable way to
address individual petitions for pricing flexibility;127 that it is impractical to determine whether a firm has
market power where baseline prices are regulated;128 and that a market power framework is inconsistent
with the Commission’s goals for the deregulation of telecommunications services.129
62.
Another analytic framework proposed in the record involves comparing actual purchase
prices for special access to specific benchmarks, such as rates for reasonably similar services (e.g., rates
for UNEs, retail broadband services such as DSL or cable modem service, or rates in price cap areas as
compared to pricing flexibility areas), the costs associated with providing special access services (e.g.,
forward-looking costs), or rate-of-return estimates (e.g., ARMIS rates-of-return).130 Commenters assert


122 2010 DOJ/FTC Horizontal Merger Guidelines at § 1 (“A merger enhances market power if it is likely to
encourage one or more firms to raise price, reduce output, diminish innovation, or otherwise harm customers as a
result of diminished competitive constraints or incentives.”).
123 Qwest Phoenix Forbearance Order, 25 FCC Rcd at 8623, para. 1.
124 A market power analysis is a fact-specific inquiry. See, e.g., AT&T Corp. v. FCC, 236 F.3d 729, 735-36 (D.C.
Cir. 2001); Motion of AT&T Corp. to be Reclassified as a Non-Dominant Carrier, Order, 11 FCC Rcd 3271, 3293,
para. 38 (1995) (AT&T Non-Dominance Order). See generally 2010 DOJ/FTC Horizontal Merger Guidelines.
125 See, e.g., BT Americas 2009 PN Comments at 20-22; Sprint 2009 PN Comments at 7-8.
126 See, e.g., Letter from Donna Epps, Vice President, Federal Regulatory Affairs, Verizon, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Docket No. 05-25, RM-10593, at 2 (Aug. 1, 2012); AT&T
2009 PN Comments at 21-22; AT&T 2009 PN Reply at 40-41; AT&T 2007 PN Comments at 44-45; Verizon 2009
PN Reply at 24-25; Verizon 2005 NPRM Reply at 37.
127 See, e.g., AT&T 2009 PN Comments at 27; Qwest 2009 PN Comments at 27; BellSouth 2005 NPRM Comments
at 55.
128 See, e.g., Letter from Frank S. Simone, Assistant Vice President, Federal Regulatory, AT&T, to Marlene H.
Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25, at 3 (Oct. 1, 2012).
129 CenturyLink 2009 PN Reply at 3-4; see also AT&T 2009 PN Reply at 17; Verizon 2009 PN Reply at 43-45.
Verizon, for example, asserts that by requiring a more extensive showing prior to granting pricing flexibility, the
Commission would impose costs on carriers, and ultimately on consumers, by encouraging regulatory inefficiencies
in the special access market. Verizon 2005 NPRM Reply at 37-38 (noting that the Commission’s Part 69 rules
impose costs on price cap LECs by limiting their ability to develop rate structures in response to market forces).
130 See, e.g., Ad Hoc 2009 PN Comments at 7-9, 14-15; COMPTEL 2009 PN Comments at 9-15; NoChokePoints
2009 PN Comments at 21-27, 35; PAETEC et al. 2009 PN Comments at 64-71; Sprint 2009 PN Comments at 25-
30; tw telecom 2009 PN Comments at 5.
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that where special access prices are higher than such benchmarks, the Commission should find that the
competitive showings adopted in the Pricing Flexibility Order are insufficient to ensure just and
reasonable rates.131 Incumbent LECs, on the other hand, assert that the proposed benchmarks are neither
necessary—because special access rates have already been “set” by the competitive marketplace—nor do
they provide a reasonable proxy for special access rates.132 Such carriers do, however, state that the
Commission may be better positioned to develop its own cost benchmark after collecting data on special
access prices and the presence of competition in specific geographic markets.133
63.
Some commenters recommend that the Commission adopt a framework that would
facilitate deregulating quickly in anticipation of future competition. For example, AT&T recommends
that, rather than perform a more granular analysis of individual petitions for pricing flexibility, the
Commission extend blanket Phase I relief to all special access services, fully de-regulate OCn and packet-
based services, and extend Phase II relief to areas where the existing competitive showing requirements
do not fully detect the extent of competitive entry.134 Another analytic framework proposed by AT&T
would examine whether the price cap rules are producing the marketplace benefits expected under
incentive regulation.135 In particular, where evidence suggests that “carriers are investing to become more
efficient and innovative, that carriers are working to provide better services at the same or lower prices,
that competitors are responding with increased entry, and that output is increasing,” the Commission
should conclude that pricing flexibility is operating properly in its current form.136 Competitive carriers,
on the other hand, disagree that expectations of future competition warrant quick deregulation. They raise
concerns that, particularly in Phase II markets, incumbent carriers have increased special access rates to
supracompetitive levels.137 They assert that the Commission must adopt a regulatory framework that
curtails this practice.138 Ad Hoc and Sprint, for example, propose a “hybrid approach,” in which carriers
may obtain unlimited “downward pricing flexibility” in combination with price caps in all markets.139
64.
Incumbent carriers also propose that the Commission adopt a framework for analyzing
requests for pricing flexibility that takes into account both actual and potential competition, such as
competition from non-collocating providers or those competitors who could quickly enter the market in


131 See, e.g., Ad Hoc 2009 PN Comments at 7-9; NoChokePoints 2009 PN Comments at 22-24; Sprint 2009 PN
Comments at 25-26.
132 See, e.g., Verizon 2009 PN Reply at 33-34; 2010 Staff Workshop Transcript at 11 (Statement of William E.
Taylor, Senior Vice President, NERA Economic Consulting), 20 (Statement of Dennis Carlton, Senior Managing
Director, Compass Lexecon).
133 Qwest, for example, contends that the Commission could analyze incumbent LEC rates in a sample of Phase II
markets and, once it determines that a rate is competitive, the Commission could use it as a benchmark for assessing
the reasonableness of special access rates in non-Phase II markets. Qwest 2009 PN Comments at 6-7; see also 2010
Staff Workshop Transcript
at 10-11 (Statement of William E. Taylor, Senior Vice President, NERA Economic
Consulting).
134 AT&T 2007 PN Reply at 42, 45-46; SBC 2005 NPRM Comments at 57-62.
135 AT&T 2009 PN Comments at 10.
136 Id.
137 See, e.g., Sprint 2007 PN Comments at 17; T-Mobile 2007 PN Comments at 9.
138 See, e.g., COMPTEL 2009 PN Comments at 8-9; Sprint 2009 PN Reply at 10, 12, 15-16; XO 2009 PN Reply at
1-2.
139 AdHoc 2007 Comments at 23; Ad Hoc 2005 Comments at 50-52; Sprint 2005 Comments at 11.
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the near term.140 For example, AT&T and Verizon propose that the Commission permit pricing flexibility
in areas where the competitive showing requirements are not met but carriers can point to sources of
actual or potential competition, such as the existence of alternative fiber in the area served by specific
wire centers or facilities-based competitors providing service in wire centers where there is no
collocation.141 Verizon also argues that the Commission should modify the criteria for Phase II relief to
allow price cap LECs to make a prima facie case that the competitive showings are satisfied by
introducing evidence of competitive facilities in an MSA where insufficient competitive collocation exists
to meet the competitive showing requirements.142 Some commenters, however, such as Public
Knowledge and Time Warner Telecom, raise questions about the extent to which potential competition is
germane to an analysis of special access market conditions.143
65.
Finally, several commenters, in particular incumbent LECs, recommend that, prior to
implementing a new framework for special access pricing flexibility, the Commission collect additional
data to assess whether the current competitive showing rules are a reasonably accurate proxy for the
presence of competition.144 For example, during the 2010 staff workshop, one economist suggested that
the Commission
[l]ook at areas with different degrees of competition and across such areas compare
prices and measures of competition and other terms and conditions controlling for
relative factors such as density, access lines, customer characteristics, and then use
statistical analysis to see what you can say about the relationship between prices and
measures of competition controlling for other costs or demand-based factors.145
In his view, such findings could potentially be used to evaluate the existing pricing flexibility rules and
craft new or modified rules if the data indicate that the existing rules are deficient.146 Incumbent LECs


140 See, e.g., AT&T 2009 PN Comments at 38, 43-44; Verizon 2009 PN Reply at 9-10, 20; Qwest 2007 PN Reply at
32; Iowa Telecom / Valor 2005 NPRM Comments at 19; Verizon 2005 NPRM Comments at 45-46.
141 Verizon 2005 NPRM Comments at 35 (“LECs should be able to . . . submit[] evidence of alternative fiber in the
area served by specific wire centers – whether that evidence is obtained by competing carriers’ web sites,
independent companies such GeoTel, documented internal surveys, or other sources.”); see also AT&T 2007
Comments at 28 (“The Commission should modify its pricing flexibility rules to allow Phase I and Phase II
flexibility even where the collocation triggers are not met, upon a showing that facilities-based competitors are
providing service in enough wire centers where there is no collocation that the triggers would be met if those wire
centers were counted.”); BellSouth 2005 Comments at 55 (“The better alternative is to assess the degree of
competition in the context of this proceeding by considering data that indicates bypass competition . . . .”).
142 Verizon asserts that competitors objecting to the grant of a pricing flexibility petition should be required to
provide full network maps for the geographic region, showing where the competitor does or does not have fiber,
and, absent that evidence, the incumbent should be entitled to obtain Phase II relief. Verizon 2005 NPRM
Comments at 35.
143 Public Knowledge 2009 PN Reply at 9-10; tw telecom 2009 PN Comments at 15-16, 21.
144 See AT&T 2009 PN Comments at 28; Qwest 2009 PN Comments at 25-26, 39; Verizon 2009 PN Comments at
42; Embarq 2007 PN Reply at 13-15.
145 2010 Staff Workshop Transcript at 9-10 (Statement of William E. Taylor, Senior Vice President, NERA
Economic Consulting); see also id. at 86 (stating that “what we’re trying to do is ascertain whether the pricing
flexibility rules as they sit in the FCC are doing what they’re supposed to do. . . . I would think that the kind of
standard we’d like to apply is to look and see that across the different geographic and product markets that are
affected by those rules, that the prices that come out of it are somehow close to a ‘competitive’ price.”).
146 See id. at 9-10.
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assert that further data collection is necessary because competitive carriers did not provide sufficient data
in response to the two voluntary data requests issued by the Commission in 2010 and 2011.147 Some
competitive carriers, however, argue that it is not necessary for the Commission to collect additional data
prior to adopting a new regulatory scheme for special access pricing flexibility.148
3.

A One-Time, Multi-Faceted Market Analysis

66.
Based on our review of the record, we propose to conduct as one step in our proceeding a
one-time, multi-faceted market analysis to obtain a more accurate picture of competition for special
access. In combination with the comprehensive data collection described in the above Report and
Order,149 we expect that the market analysis we propose will best assist the Commission in evaluating
market conditions for special access services and determining what regulatory changes, if any, are
warranted in light of that analysis.
67.
We propose to perform a one-time, multi-faceted market analysis of the special access
market designed to determine where and when special access prices are just and reasonable, and whether
our current special access regulations help or hinder this desired outcome. We do not propose to conduct
a simple market share or market concentration analysis. Rather, we will use the data we are collecting in
this Report and Order to identify measures of actual and potential competition that are good predictors of
competitive behavior, for example, by demonstrating that prices tend to decline with increases in the
intensity of various competition measures, holding other things constant. In undertaking that analysis we
will consider evidence as to what leads firms, including competitive providers, to undertake infrastructure
investments. In so doing, we will consider whether our current regulatory regime may be hindering, for
example, by keeping prices low, competitive investments that would reduce or obviate the need for
regulation. The analysis will seek to control for factors that could reasonably be expected to affect prices
and competitive investment, such as actual and potential competition from services that are substitutes for
special access (regardless of technology), the nature of the services supplied, demand intensity, historical
proximity and state and federal regulation. The one-time, multi-faceted market analysis will help the
Commission determine whether any market participants have market power and, if so, where such market
power exists. This will better allow us to determine the sources of such market power, the likely extent to
which it is sustainable over time, and how to construct (where required) targeted regulatory remedies. In
addition, the analysis should help the Commission determine what barriers inhibit investment and delay
competition, including regulatory barriers, and any other barriers, and what steps the Commission could
take to remove such barriers to promote a robust competitive market and permit the competitive
determination of price levels.
68.
As part of our one-time, multi-faceted market analysis we propose to conduct panel
regressions designed to determine how the intensity of competition (or lack thereof), whether actual or
potential, affects prices, controlling for all other factors that affect prices. Specifically, we propose to
undertake econometric modeling to estimate the effect of competition from facilities-based providers,
among other things, on the prices of special access services. The modeling would develop panel
regressions of the prices for special access on characteristics such as: 1) the number of facilities-based
competitors (both actual and potential); 2) the availability of, pricing of, and demand for best efforts
business broadband Internet access services; 3) the characteristics of the purchased service; and 4) other


147 See, e.g., Verizon Special Access Facilities Data Public Notice Comments at 3-4 (filed Jan. 27, 2011); Qwest
Response to Special Access Facilities Data Public Notice, Question III.F. (filed Jan. 27, 2011); CenturyLink
Response to Special Access Competition Data Public Notice, Question III.E. (filed Dec. 5, 2011).
148 See, e.g., Sprint 2009 PN Comments at 5-6; RCA 2009 PN Reply at 2.
149 See supra Section III.
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factors that influence the pricing decisions of special access providers, including cost determinants (e.g.,
density of sales) and factors that deliver economies of scale and scope (e.g., level of sales). The panel
regressions (and our analysis more generally) would seek to control for the fact that firms set prices and
make competitive investment decisions taking into account a variety of factors, including existing and
expected prices, investments (including as informed by advertised offerings), and regulatory rules (e.g.,
whether the incumbent has received pricing flexibility and for what services). In particular, we expect to
control for the fact that prices, which regulation impacts, likely play a role in entry decisions. The precise
form of econometric modeling we conduct will be dependent, in large part, on the nature and the quality
of the data produced in response to the Order. We expect that the output of such panel regressions will
assist us in delineating both relevant product and geographic markets.150 In conjunction with data on
providers’ business rules, it will also help us predict where and how potential competition will occur, as
noted above.151
69.
There are three key reasons for our proposal to undertake a one-time, multi-faceted market
analysis. First, a data-intensive market analysis will enable us to determine more precisely where, and to
what extent, actual and potential competition for special access is likely to constrain prices as well as the
factors that drive investment and competition, as described above.152 At this time there is insufficient
evidence in the record upon which to base general or categorical conclusions as to the competitiveness of
the special access market.153 Likewise, the record provides an insufficient basis for us to identify reliable
competitive showing rules for granting pricing flexibility in defined geographic areas going forward.154


150 Traditionally, federal antitrust agencies have begun competitive analyses in a variety of contexts by defining
relevant product and geographic markets. However, these agencies have more recently noted that “analysis need not
start with market definition… although evaluation of competitive alternatives available to customers is always
necessary at some point in the analysis.” In particular, “[e]vidence of competitive effects can inform market
definition, just as market definition can be informative regarding competitive effects.” 2010 DOJ/FTC Horizontal
Merger Guidelines
at § 4.
151 See supra para. 40.
152 See supra para. 67. Special Access Pricing Flexibility Suspension Order, 27 FCC Rcd at 10608-09, 10610-12,
paras. 91, 97-100. We agree with those commenters who state that the Commission’s analysis must take account of
both actual and potential competition, as well as sources of intramodal and intermodal competition. See supra para.
64. An identification of market participants is integral to performing a competitive analysis, see 2010 DOJ/FTC
Horizontal Merger Guidelines
at § 5, and, as described herein, we propose to perform an analysis that considers all
significant sources of facilities-based competition (both actual and potential). But see tw telecom 2009 PN
Comments at 15-16, 21; Public Knowledge 2009 PN Reply at 9-10 (raising questions about the extent to which
potential competition is germane to an analysis of special access market conditions). In doing so, we recognize that
potential entry must be “timely, likely and sufficient in its magnitude, character and scope to deter or counteract the
competitive effects of concern.” 2010 DOJ/FTC Horizontal Merger Guidelines at § 9.
153 For instance, the record contains potentially conflicting evidence about the changes in special access prices in
Phase I and Phase II pricing flexibility areas. While incumbent LECs assert that special access prices have fallen in
pricing flexibility areas, competitors state that prices, particularly in Phase II areas, have increased. See, e.g., Global
Crossing 2009 PN Comments at 4-6; COMPTEL 2009 PN Reply at 9-10; Sprint 2007 Comments at 16-17, 22-23;
T-Mobile 2007 Comments at 7; tw telecom / One Communications 2007 Comments at 31-41. However, the
evidence we do have indicates that granting pricing flexibility throughout an entire MSA based on collocation in
only a small part of that MSA was inappropriate. See Special Access Pricing Flexibility Suspension Order, 27 FCC
Rcd at 10568-99, paras. 22-75.
154 See, e.g., Letter from Donna Epps, Vice President, Federal Regulatory Affairs, Verizon, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Docket No. 05-25 (filed May 2, 2012); Letter from Linda
Vandeloop, Director – Federal Regulatory, AT&T, to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Docket No. 05-25 (filed Apr. 27, 2012). We disagree with commenters who urge the
(continued….)
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As a result, we believe that a one-time, multi-faceted market analysis, performed in conjunction with a
comprehensive data collection, will aid the Commission in developing better tests for regulatory relief to
replace the collocation-based standards.
70.
Second, a one-time, multi-faceted market analysis will benefit special access providers and
purchasers by facilitating a thorough assessment of competitive conditions.155 For example, a wide range
of commenters, including incumbent providers, competitive providers, and other interested parties, state
that the Commission cannot gauge the extent of competition based on a single market characteristic, such
as purchase prices, carrier revenues, or market share.156 We agree, and we believe that the Commission
must conduct a more comprehensive analysis of the state of competition prior to replacing the rules by
which incumbent LECs may obtain regulatory relief in the provision of special access services. We
propose to conduct a nuanced market analysis that incorporates a variety of factors, as detailed above, to
assess the effect of competition on special access prices.157
71.
Third, a one-time, multi-faceted market analysis supplements a structural market analysis
with econometrically sound panel regressions. The Commission has repeatedly undertaken structural
market analyses to assess competition for telecommunications services and determine whether
deregulation is warranted.158 Historically, the Commission’s structural analysis—which focused on
(Continued from previous page)


Commission to adopt a new regulatory regime for special access pricing flexibility without collecting additional
data. To the contrary, we believe that it is necessary to supplement the existing record to ensure that we are able to
adopt rules that are data-driven and reflective of market conditions. See supra para. 65. In light of the current
record, it is premature to adopt blanket deregulation of certain special access services, as recommended by
incumbent LECs, or conversely, to eliminate Phase II pricing flexibility as some competitive carriers request. See
supra
para. 63. Once the data has been collected and analyzed, the Commission may choose to consider a new or
modified regulatory scheme. See infra Section IV.B. Similarly, the Commission may opt to adopt a price
benchmark or other proposals raised by commenters in the record. See supra para. 62.
155 Special Access Pricing Flexibility Suspension Order, 27 FCC Rcd at 10609-10, 10612, paras. 92, 97, 101; see,
e.g.
, AT&T 2009 PN Comments at 18, 42-43; Qwest 2009 PN Comments at 22-25; Verizon 2009 PN Comments at
9-10, 17, 27; AT&T 2009 PN Reply at 34-35; CenturyLink 2009 PN Reply at 3-4; Free State Foundation 2009 PN
Reply at 4; tw telecom 2009 PN Reply at 21-23; Verizon 2009 PN Reply at 7, 30-32; XO 2009 PN Reply at 3.
156 See, e.g., AT&T 2009 PN Comments at 18, 42-43; Qwest 2009 PN Comments at 22-25; Verizon 2009 PN
Comments at 9-10, 17, 27; AT&T 2009 PN Reply at 34-35; CenturyLink 2009 PN Reply at 3-4; Free State
Foundation 2009 PN Reply at 4; tw telecom 2009 PN Reply at 21-23; Verizon 2009 PN Reply at 7, 30-32; XO 2009
PN Reply at 3.
157 This type of structural analysis is generally consistent with the market power framework suggested by several
commenters in the record. See supra para. 61. We agree with those commenters who advocate such an approach.
See, e.g., BT Americas 2009 PN Comments at 20-22; Sprint 2009 PN Comments at 7-8.
158 See, e.g., Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities
Authorizations Therefor
, CC Docket No. 79-252, Notice of Inquiry and Proposed Rulemaking, 77 FCC 2d 308
(1979); Competitive Carrier First Report and Order, 85 FCC 2d at 1; Policy and Rules Concerning Rates for
Competitive Common Carrier Services and Facilities Authorizations Therefor
, CC Docket No. 79-252, Further
Notice of Proposed Rulemaking, 84 FCC 2d 445 (1981) (Competitive Carrier First Further Notice); Policy and
Rules Concerning Rates for Competitive Common Carrier Services and Facilities Authorizations Therefor
, CC
Docket No. 79-252, Further Notice of Proposed Rulemaking, 47 Fed. Reg. 17308 (1982) (Competitive Carrier
Second Further Notice
); Policy and Rules Concerning Rates for Competitive Common Carrier Services and
Facilities Authorizations Therefor
, CC Docket No. 79-252, Second Report and Order, 91 FCC 2d 59 (1982)
(Competitive Carrier Second Report and Order); Policy and Rules Concerning Rates for Competitive Common
Carrier Services and Facilities Authorizations Therefor
, CC Docket No. 79-252, Order on Reconsideration, 93 FCC
2d 54 (1983) (Competitive Carrier Order on Reconsideration); Policy and Rules Concerning Rates for Competitive
Common Carrier Services and Facilities Authorizations Therefor
, CC Docket No. 79-252, Third Further Notice of
(continued….)
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certain “clearly identifiable market features,” including a carrier’s market share, number and size
distribution of competing firms, the nature of competitors’ barriers to entry, the availability of reasonably
substitutable services, the level of demand elasticity, and whether the firm controlled bottleneck
facilities159—was designed to identify where competition is sufficient to constrain carriers from charging
unjust or unreasonable rates, or from acting in an otherwise anticompetitive manner.160 The one-time,
multi-faceted market analysis follows this precedent by incorporating a structural market analysis,161 but
it also goes further by supplementing the analysis with econometrically sound panel regressions to
determine how the intensity of competition (or lack thereof), whether actual or potential, affects prices,
controlling for all other factors that affect prices.162
(Continued from previous page)


Proposed Rulemaking, 48 Fed. Reg. 28292 (1983) (Competitive Carrier Third Further Notice); Policy and Rules
Concerning Rates for Competitive Common Carrier Services and Facilities Authorizations Therefor
, CC Docket
No. 79-252, Third Report and Order, 48 Fed. Reg. 46791 (1983) (Competitive Carrier Third Report and Order);
Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities Authorizations
Therefor
, CC Docket No. 79-252, Fourth Report and Order, 95 FCC 2d 554 (1983) (Competitive Carrier Fourth
Report and Order
), vacated, AT&T v. FCC, 978 F.2d 727 (D.C. Cir. 1992) (AT&T v. FCC), cert. denied, MCI
Telecomms. Corp. v. AT&T
, 509 U.S. 913 (1993); Policy and Rules Concerning Rates for Competitive Common
Carrier Services and Facilities Authorizations Therefor
, CC Docket No. 79-252, Fifth Report and Order, 98 FCC 2d
1191 (1984) (Competitive Carrier Fifth Report and Order); Policy and Rules Concerning Rates for Competitive
Common Carrier Services and Facilities Authorizations Therefor
, CC Docket No. 79-252, Sixth Report and
Order, 99 FCC 2d 1020 (1985) (Competitive Carrier Sixth Report and Order), vacated, MCI Telecomms. Corp. v.
FCC
, 765 F.2d 1186 (D.C. Cir. 1985), aff’d, MCI v. AT&T, 512 U.S. 218 (1994) (MCI v. AT&T) (collectively,
the Competitive Carrier proceedings); see also Regulatory Treatment of LEC Provision of Interexchange Services
Originating in the LEC’s Local Exchange Area
, CC Docket No. 96-149, Second Report and Order in CC Docket
No. 96-149 and Third Report and Order in CC Docket No. 96-61, 12 FCC Rcd 15756 (1997) (LEC Classification
Order
), recon. denied, Second Order on Reconsideration and Memorandum Opinion and Order, 14 FCC Rcd 10771
(1999).
159 AT&T Non-Dominance Order, 11 FCC Rcd at 3274-75, para. 5 (citing Competitive Carrier First Report and
Order
, 85 FCC 2d at 21-22, paras. 56-59).
160 For example, in the Competitive Carrier First Report and Order, the Commission found that “firms lacking
market power simply cannot rationally price their services in a way which, or impose terms and conditions, which
would contravene Sections 201(b) and 202(a) of the Act.” Competitive Carrier First Report and Order, 85 FCC 2d
at 31, para. 88; see also 47 U.S.C. §§ 201(b), 202(a). We disagree that the questions at the heart of a market power
analysis, such as how to define markets or analyze demand and supply responsiveness, have been made irrelevant by
competition. See supra para. 61. Rather, such questions are essential questions asked by both the Commission and
the antitrust agencies when assessing the competitiveness of a market.
161 More recently, the Commission has undertaken market analysis to evaluate competitive conditions in both
merger proceedings and forbearance cases. See, e.g., AT&T/BellSouth Order, 22 FCC Rcd at 5675-76, paras. 23-26;
SBC Communications Inc. and AT&T Corp. Applications for Approval of Transfer of Control, WC Docket No. 05-
65, Memorandum Opinion and Order, 20 FCC Rcd 18290, 18303-04, paras. 20-23 (2005) (SBC/AT&T Merger
Order
); Verizon Communications Inc. and MCI, Inc. Application for Approval of Transfer of Control, WC Docket
No. 05-75, Memorandum Opinion and Order, 20 FCC Rcd 18433, 18446-47, paras. 20-23 (2005) (Verizon/MCI
Merger Order
); Applications of Comcast Corp., General Electric Co., and NBC Universal, Inc. for Consent to
Assign Licenses and Transfer Control of Licensees
, MB Docket No. 10-56, Memorandum Opinion and Order, 26
FCC Rcd 4238, 4248-49, paras. 24, 26 (2011) (Comcast/NBC Merger Order); Qwest Phoenix Forbearance Order,
25 FCC Rcd at 8622; Petitions of the Verizon Telephone Companies for Forbearance Pursuant to 47 U.S.C. §
160(c) in the Boston, New York, Philadelphia, Pittsburgh, Providence, and Virginia Beach Metropolitan Statistical
Areas
, WC Docket No. 06-172, Memorandum Opinion and Order, 22 FCC Rcd 21293 (2007).
162 To illustrate one advantage of the one-time, multi-faceted market analysis: Whereas a traditional market-power
analysis, such as the analysis the Commission historically performed in the non-dominance proceedings, see, e.g.,
(continued….)
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4.

Request for Comment on One-Time, Multi-Faceted Market Proposed
Analysis

72.
We seek comment on this one-time, multi-faceted market analysis.163 In contrast to the
approach of our pricing flexibility rules, which are currently suspended, we anticipate that this analysis is
likely to identify all significant current and potential market participants, and consider their effect when
assessing the level of competition in a market.164 We seek comment on this conclusion. Are there
significant competitors who would not be easily accounted for under the proposed analysis, such as firms
who self-supply their own special access? Is such an approach likely to show whether a specific provider
is a probable source of competition in a given geographic area, i.e., that its presence could reasonably be
found to constrain special access prices?165
73.
Will the proposed one-time, multi-faceted market analysis facilitate a comprehensive,
forward-looking evaluation of competitive conditions? Should certain factors be weighted more or less
heavily in our analysis? How can we balance the need for an analysis that is forward-looking with the
importance of relying on non-speculative data?
74.
Does the one-time, multi-faceted market analysis effectively address concerns regarding
use of a traditional structural analysis in this context? For example, incumbent LECs assert that special
access pricing flexibility should not be treated as akin to the dominance / non-dominance analyses
undertaken by the Commission in the Competitive Carrier proceeding.166 They argue that a dominance /
non-dominance analysis is inappropriate in the special access context because “[t]he pricing flexibility
rules are merely an incremental measure within the context of dominant carrier regulation.”167 Does the
one-time, multi-faceted market analysis with panel regressions address these concerns?
(Continued from previous page)


Motion of AT&T Corp. to be Reclassified as a Non-Dominant Carrier, Order, 11 FCC Rcd 3271, 3285-356, paras.
19-162 (1995), may lead to the conclusion that a particular provider is dominant in a given market, that
determination, standing alone, only justifies the imposition of some regulation. It does not, by itself, dictate its
content or scope. By contrast, the one-time, multi-faceted market analysis we propose here could well provide
additional information such as the efficacy of various forms of regulations, including their effects on both prices and
investment.
163 We note that a peer review of the one-time, multi-faceted market analysis that incorporates the data we will
collect through this Report and Order may be required. If so, the public will have additional opportunities to
comment on that peer review through the ex parte process. See Information Quality Act, Pub. L. No. 106-554 § 515,
114 Stat. 2763, 2763A-153-154 (2000), supplementing the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
164 See Special Access Pricing Flexibility Suspension Order, 27 FCC Rcd at 10608-09, 10610-12, paras. 91-92, 97-
101; see also supra para. 66.
165 For example, as detailed in the Special Access Pricing Flexibility Suspension Order, fiber maps submitted by
SBC depict demand for DS1s and DS3s located more than 1,000 feet away from known alternative fiber providers.
Special Access Pricing Flexibility Suspension Order, 27 FCC Rcd at 10588, para. 55.
166 See, e.g., AT&T 2009 PN Comment at 7, 25-28. Commenters also contend that it is not necessary or
administratively feasible for the Commission to determine whether “actual and potential competition extends to
every nook and cranny of an MSA.” Id. at 23-26; see also Qwest 2009 PN Comment at 29; SBC 2005 NPRM Reply
at 55. Rather, they argue that it is sufficient that significant competition exists in areas of high demand. AT&T
2009 PN Comments at 27; Verizon 2009 PN Comments at 10-12. We note, however, that the one-time, multi-
faceted market analysis could indicate that, in some instances, a finding of non-dominance is appropriate. See infra
Section IV.B.
167 AT&T 2009 PN Comments at 25-26 (italics removed).
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75.
Will the market analysis we propose facilitate a useful examination of potential barriers to
broadband deployment and investment? AT&T recently argued that the Commission’s special access
rules have hindered carriers’ transition to IP-based services, and that they encourage reliance on legacy
services.168 How can we structure our analysis to appropriately take into account the fact that some
carriers may be transitioning away from legacy services toward IP-enabled services? How can we
structure our analysis to account for all services that enterprise customers view as substitutable, including
services used by small- and medium-sized businesses? How should we analyze the markets to determine
the effect that various federal regulations have on the pricing and deployment decisions of providers as
well as the purchasing decisions of customers?
76.
Specifically, how should our analysis account for “best efforts” services? To the extent
best efforts services are potential substitutes for special access services, how should the price of such
services inform our analysis of the justness and reasonableness of special access pricing?
77.
Finally, we seek comment on how best to balance the need for analytic rigor with the
requirement that our analysis be administratively feasible. We note that commenters have raised concerns
about the administrative feasibility of a market analysis, in particular with respect to proposals to require
individual market analyses on an ongoing basis in lieu of the competitive showing rules adopted in the
Pricing Flexibility Order.169 We seek comment on whether, because we will be analyzing many facets of
the market only one time, our analysis will give rise to the administrative burdens raised by some
commenters in the record.170
78.
We note that the analysis we propose conducting here is a one-time analysis. We are
mindful of the importance of balancing the accuracy of our analysis with the need for administrative
efficiency.171 The record makes clear that we are unlikely to be able to conduct a comprehensive market
analysis—and thus are unlikely to be able to evaluate the impact of the suspended rules on the
reasonableness of special access rates, terms and conditions or develop improved ones—without the data
similar to that described above and a more detailed review of competitive conditions in the special access
market than has been possible to date.172 However, we anticipate that the one-time, multi-faceted market


168 Bob Quinn, Repealing De-Regulation: How Not to Build a Roadmap Towards an All-IP World, AT&T Public
Policy Blog (June 5, 2012, 7:55 AM), http://attpublicpolicy.com/broadband-policy/repealing-de-regulation-how-not-
to-build-a-roadmap-towards-an-all-ip-world/; Jess Kamen, Morning Tech, Politico (June 5, 2012, 9:30 AM),
http://www.politico.com/morningtech/0612/morningtech483.html.
169 See, e.g., AT&T 2009 PN Comments at 22, 27; Qwest 2009 PN Comments at 27; AT&T 2009 PN Reply at 40;
Verizon 2007 PN Reply at 30; BellSouth 2005 NPRM Comments at 55.
170 See, e.g., AT&T 2009 PN Comments at 27; BellSouth 2005 NPRM Comments at 55.
171 See, e.g., Pricing Flexibility Order, 14 FCC Rcd at 14271-72, para. 90; Office of Management and Budget,
Office of Information and Regulatory Affairs, 2011 Report to Congress on the Benefits and Costs of Federal
Regulations and Unfunded Mandates on State, Local, and Tribal Entities at 4 (June 2011), available at
http://www.whitehouse.gov/sites/default/files/omb/inforeg/2011_cb/2011_cba_report.pdf (stating that “careful
consideration of costs and benefits is best understood as a way of ensuring that regulations will improve social
welfare, above all by informing design and development of various options so as to identify opportunities for both
minimizing the costs of achieving social goals (cost-effectiveness) and maximizing net social benefits
(efficiency).”); See AT&T 2009 PN Reply at 17-18; HT Telecom 2009 PN Reply at 5; Verizon 2005 NPRM Reply
at 37-38 (noting that the Commission’s Part 69 rules impose costs on price cap LECs by limiting their ability to
develop rate structures in response to market forces).
172 See, e.g., AT&T 2009 PN Comments at 18-19, 42-43; Verizon 2009 PN Comments at 9-10; AT&T 2009 PN
Reply at 34-35; CenturyLink 2009 PN Reply at 3-4; Free State Foundation 2009 PN Reply at 4; Qwest 2009 PN
Reply at 7; Verizon 2009 PN Reply at 24-25, 30-32.
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analysis will allow us to identify reliable new proxies for special access competition, which could be
employed going forward to evaluate petitions for pricing flexibility in a consistent, streamlined manner.173
The goal of the proposed market analysis is to gain a fulsome picture of competition in the special access
market, so that we can develop rules to more precisely provide regulatory relief where it is justified. In
subsection IV.B., below, we seek comment on possible changes to our pricing flexibility rules that we
might adopt after we collect the data specified above and conduct the proposed market analysis.174
79.
To the extent that commenters assert that a one-time, multi-faceted market analysis is not
necessary or appropriate at this time, we urge such commenters to propose alternate actions that the
Commission could take in the near future to obtain a more complete understanding of competitive
conditions for special access services. Commenters are also encouraged to submit data to support their
assertions, particularly those arguments concerning special access market conditions.

B.

Possible Changes to Pricing Flexibility Rules after Proposed One-Time, Multi-
Faceted Market Analysis

80.
As discussed above, our market analysis is intended to provide a more complete picture of
special access competition.175 The comprehensive data request described in the Report and Order above
will identify and require submission of the data needed to implement any market analysis we adopt,
including the specific analysis proposed in this Further Notice. Once the data are collected and analyzed,
we may modify the existing pricing flexibility rules or adopt a new set of rules that will apply to requests
for special access pricing flexibility. As a general matter, however, we propose to adopt rules that will
allow for the relaxation or even the elimination of price cap regulation where we find the presence of
actual or potential competition sufficient to ensure that rates, terms and conditions for special access
services remain just and reasonable. To that end, we seek comment on how the special access pricing
flexibility rules might change after we conduct the market analysis proposed above. We also seek
comment below on what steps the Commission should take where relief has been provided under our
existing rules and where the data and our analysis demonstrate that competition is not sufficient to
discipline the marketplace.
81.
Factors Demonstrating Competition. Our proposed analysis may enable us to identify
specific factors that could serve as a proxy for the presence or absence of special access competition in an
identified geographic area. The competitive showing rules adopted in the 1999 Pricing Flexibility Order
were intended to serve such a purpose; however, as the Commission noted in the Special Access Pricing
Flexibility Suspension Order
, those rules were not an effective proxy for special access competition as


173 Nor do we rule out the possibility that the market analysis we propose today could result in our adoption of
existing tools, such as the “screens” developed by the Department of Justice in the context of the AT&T/SBC and
Verizon/MCI mergers. See AT&T/BellSouth Order, 22 FCC Rcd at 5682, para. 42 n.114. Specifically, the DOJ
utilized “demand/distance” screens to identify buildings where the demand was at or above a minimum threshold
and where a competing carrier had fiber facilities within the corresponding distance:
Minimum Demand
Distance
2 DS3s
0.1 mile
1 OC-12
0.25 mile
Over OC-48
1 mile
Id. The data collection set forth in the Report and Order adopted above will allow us to assess the usefulness of
these screens in this context.
174 See infra section IV.B.
175 See Special Access Pricing Flexibility Suspension Order, 27 FCC Rcd at 10599-604, paras. 76-84.
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predicted in the Pricing Flexibility Order.176 We seek comment on the viability of proxies as a means of
measuring special access competition going forward. Should we replace our MSA- and collocation-based
competitive showing rules with proxy rules based on specific factors identified by our analysis? Or is it
preferable to evaluate competition on a case-by-case approach?177 Alternatively, should our rules
incorporate elements of both a proxy-based and a case-by-case approach?
82.
For those commenters who advocate a case-by-case approach as opposed to proxy-based
rules for pricing flexibility, we request input on how such a process could operate. Should the
Commission, for example, perform a market analysis in response to individual petitions for pricing
flexibility? If so, who should be eligible to submit such petitions? How might we reduce the potential
administrative burdens associated with such a process?
83.
For those commenters who advocate a proxy-based approach, we seek comment on what
appropriate proxies for special access competition are. For example, in the Special Access Pricing
Flexibility Suspension Order
, we used business establishment density as one means of measuring
business density within an MSA.178 Could business establishment density be an appropriate proxy for
special access competition? Again, we expect that our data collection and proposed regression analysis
will prove informative on this issue. However, in light of the suspension of the collocation-based triggers
in the Special Access Pricing Flexibility Suspension Order, we welcome feedback on what a more
accurate proxy might be. How could we craft rules to enable us to easily but effectively identify the
existence of competition in a given geographic area?
84.
We also seek particular comment on how to evaluate potential competition. How might the
rules incorporate the factors identified by our analysis in determining where competition is likely to occur
in the future? Conversely, how might the rules be crafted to account for areas where competition may
decline in the future?
85.
Nature of Relief. Our market analysis may indicate that different levels of competition
warrant various levels of relief from regulation. We seek comment on what the appropriate level of relief
is for various types of competition. For example, is it still appropriate to grant Phase I and Phase II
pricing flexibility and, if so, what factors should guide the level of relief granted? Or are there some other
variations of pricing deregulation we should adopt?179 Is it appropriate, as incumbent LECs such as
AT&T assert, to remove all dominant carrier regulations from those areas we deem competitive?180 Are
there other approaches? For example, should Phase I or Phase II relief only be available to those


176 See id. at 10568-99, paras. 22-75.
177 See, e.g., Qwest Corp., 689 F.3d at 1230 (holding that the Commission may adopt, for example, “a market-power
framework [which] necessitate[s] a more rigorous inquiry than . . . undertaken in prior orders,” if it explained the
reasoning for its policy shift).
178 See Special Access Pricing Flexibility Suspension Order, 27 FCC Rcd at 10574-79, 10582-86, paras. 37-41, 48-
52.
179 See, e.g., supra para. 63 (noting that “AT&T recommends that, rather than perform a more granular analysis of
individual petitions for pricing flexibility, the Commission extend blanket Phase I relief to all special access
services, fully de-regulate OCn and packet-based services, and extend Phase II relief to areas where the existing
competitive showing requirements do not fully detect the extent of competitive entry” and that Ad Hoc and Sprint
“propose a ‘hybrid approach,’ in which carriers may obtain unlimited ‘downward pricing flexibility’ in combination
with price caps in all markets”).
180 See Special Access Pricing Flexibility Suspension Order, 27 FCC Rcd at 10613-14, para. 104 (citing AT&T 2009
PN Comments at 7, 25-28; Qwest 2009 PN Comments at 29; Verizon 2009 PN Comments at 10-12; SBC 2005
NPRM Reply at 55).
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providers whose special access prices meet specific cost benchmarks, as proposed by a subset of special
access purchasers?181 What rules should we adopt in those areas which our data, and a sound market
analysis, show are likely to be competitive in the future?
86.
Updating Competition Data. We seek comment on whether and how the competitive
information derived from the regression analysis should be updated. If so, how often should the data be
updated? What process could the Commission employ to provide for recurrent updates of the competition
data?
87.
Geographic Area. In addition to providing information on the issues described above, the
regression analysis proposed in this Further Notice may help identify with geographic precision those
areas that are subject to actual and potential special access competition today. For example, the analysis
may enable the Commission to create a map of the United States that details the extent of competition
with respect to special access services, including potential competition, in different areas of the country.
We seek comment on whether and how the Commission could use a granular geographic analysis of
competition to modify its existing regulatory treatment of special access services. In particular, in
addition to any proxies adopted to grant special access relief on a forward-going basis, should the
Commission relieve incumbent LEC special access providers from price cap regulations in geographic
areas that the analysis identifies as subject to competition? Should the Commission adopt a presumption
that pricing flexibility is warranted in such areas? If so, should the Commission presume that Phase I
relief or Phase II relief, or a combination of both, is appropriate?
88.
Conversely, what should the Commission do if the analysis indicates that areas in which
incumbent LECs have been granted pricing flexibility are not subject to competition? Some parties have
suggested that the Commission should require incumbent LEC special access providers to automatically
revert to price caps in areas without competition, while others have asserted that such a conversion would
be impractical, unlawful, and unsupported by the record.182 We seek comment on these proposals, and
other potential approaches. Should the Commission require parties to prove harm, i.e., that rates, terms
and/or conditions are unjust and unreasonable, before changing the rules applicable to an area that where
Phase I or Phase II relief has previously been granted? The Commission previously has sought comment
on how to validate or rebut assertions that the current price cap rules are ensuring just and reasonable
rates. Parties should include any new information or arguments that may be relevant to the Commission's
consideration of what action, if any, may be appropriate with respect to modifying or updating our price
cap rules.
89.
Should the Commission incorporate a petition process by which a party can rebut a
presumption that competition does or does not exist in a given geographic area? If so, who should be
permitted to file such petitions and what showing should they be required to make? Alternatively, should
the Commission adopt a petition process that requires carriers or others to supplement the results of our
analysis to support specific requests for changes in regulatory treatment? If geographic areas are subject
to regulatory adjustment based on such a petition process, who should be eligible to submit such petitions
and how will they obtain access to the data they need to evaluate the existence of competition? Which
regulatory changes should be covered by the petition process (e.g., removal of price caps, reversion to
price caps, change in status from Phase I to Phase II regulatory relief and vice versa)? If the Commission
were to adopt any of the changes proposed above, what would be an appropriate transition period for such


181 See supra para. 62.
182 Compare, e.g., Sprint 2009 PN Comments at 6; PAETEC et. al 2009 PN Comments at 75-80; Ad Hoc 2005
NPRM Comments at 37, 43-50, with AT&T 2009 PN Reply at 6-16; Letter from Gary L. Phillips, General Attorney
& Associate General Counsel, AT&T, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC
Docket No. 05-25 (Jan. 15, 2008).
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regulatory changes to take effect? What steps should we take to ensure that regulatory changes occur
smoothly and predictably?
90.
Our record contains a great deal of discussion about the appropriate geographic market to
measure special access competition for the purposes of evaluating requests for pricing flexibility.
Commenters have suggested, for example, that the Commission assess special access competition at the
MSA level, at the wire center level, and on a building-by-building or a route-specific basis.183 We seek to
refresh the record on this issue based on the additional data that will be collected. What geographic area
would be the most appropriate for us to employ in new or modified special access rules? How can we
balance the potential administrative costs of a more granular review with the possible concerns associated
with applying our pricing flexibility rules to large geographic areas? How could the results of our
proposed regression analysis be incorporated into new or modified pricing flexibility rules? For instance,
how should the Commission utilize a competition map, as described above, to select an appropriate
geographic area for measuring special access competition? How could our rules account for likely
variance in network footprints among classes of providers (for example, cable companies may have a
nationwide footprint, while incumbent LECs and competitive LECs more often offer service on a regional
basis).

C.

Terms and Conditions

91.
To more fully understand competition in the special access market and appropriately craft
rules for regulatory relief, we will also seek data and information on the terms and conditions offered by
incumbent LECs for special access services. The Special Access NPRM initiated a broad examination of
what regulatory framework to apply to price cap LECs’ interstate special access services following the
expiration of the CALLS plan.184 In addition to asking whether to maintain or modify the Commission’s
pricing flexibility rules, the Commission sought comment on whether any of the terms and conditions
under which incumbent LECs provide special access are exclusionary and unreasonable.185 The Bureau
subsequently sought data and information on this issue in the Special Access Competition Data Public
Notice
.186 The record would benefit from additional, specific, and detailed discussion of terms and
conditions which are alleged to be unjust or unreasonable.
92.
The reasonableness of terms and conditions has triggered a significant amount of debate in
the last two years.187 Purchasers allege that to provide a viable retail service they must enter into volume


183 See, e.g., MA DTC 2009 PN Comments at 2; PAETEC et al. 2009 PN Comments at 32-36; Qwest 2009 PN
Comments at 26-30; Verizon 2009 PN Comments at 32-34; NJ DRC 2009 PN Reply at 11-14; Sprint 2007 PN
Comments at 15-16.
184 Special Access NPRM, 20 FCC Rcd at 1995, para. 1.
185 Id. at 2031-34, paras. 114-25; see also Parties Asked to Comment on Analytical Framework Necessary to Resolve
Issues in the Special Access NPRM
, WC Docket No. 05-25, RM-10593, Public Notice, 24 FCC Rcd 13638, 13642-
43 (2009) (seeking comment on an analytical framework that considers the “[e]ffectiveness of the Commission’s
price cap and pricing flexibility rules in ensuring that terms and conditions in special access tariffs and contracts are
just and reasonable”).
186 Special Access Competition Data Public Notice, 26 FCC Rcd at 14000.
187 See Special Access NPRM, 20 FCC Rcd at 2031-34, paras. 114-25; Letter from Donna Epps, Counsel to Verizon
Communications, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25,
Attach. (filed Sept. 23, 2010); see also Letter from Evan T. Leo, Counsel to Verizon Communications, to Marlene
H. Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25, Attach. (filed July 16, 2012);
Letter from Michael J. Mooney, Level 3 Communications, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Docket No. 05-25, Attach. (filed June 28, 2012); Letter from Thomas Jones,
Counsel for tw telecom, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket No.
(continued….)
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and term commitment plans with incumbent LECs to obtain price discounts and circuit portability
benefits that are critical to their ability to remain competitive.188 Purchasers further allege these plans are
subject to shortfall, overage, and early termination penalties that, combined with the potential loss of a
discount for failing to meet the requisite commitment level, effectively lock-in demand and deter market
entry by preventing purchasers from switching to a competing provider.189 Parties also allege that
incumbent LECs are engaging in anticompetitive tying arrangements that give purchasers benefits for
services purchased in areas where the incumbent has market power in exchange for the purchase of
services in more competitive markets.190 Incumbent LECs vigorously dispute these allegations.191
93.
In light of this record, we seek data and information related to this issue in the
comprehensive data request described above, and seek comment on these allegations.192 What specific
(Continued from previous page)


05-25, Attach. (filed June 5, 2012); Letter from Thomas Jones, Counsel for tw telecom, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Docket No. 05-25, Attach. (filed June 4, 2012); Letter from
Michael J. Mooney, Level 3 Communications, to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Docket No. 05-25 (filed Feb. 22, 2012); Letter from Erin Boone, Sr. Corporate Counsel, Federal
Regulatory Affairs, Level 3 Communications, to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Docket No. 05-25 (filed Mar. 7, 2011); Letter from Christopher M. Heimann, General Attorney,
AT&T, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket No. 05-25 (filed Mar.
7, 2011); Letter from Donna Epps, Counsel to Verizon Communications, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Docket No. 05-25, Attach. (filed Feb. 28, 2011); Letter from Eric Branfman,
Counsel for Level 3 Communications, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC
Docket No. 05-25 (filed Feb. 9, 2011).
188 See Letter from Thomas Jones and Matthew Jones, Counsel for tw telecom, to Marlene H. Dortch, Secretary,
Federal Communications Commission, WC Docket No. 05-25, at 5 (filed Aug. 21, 2012) (“tw telecom . . . would be
unable to serve downstream retail customers on a large scale without sufficiently robust circuit portability
solutions.”); see also Letter from Michael J. Mooney, Level 3 Communications, to Marlene H. Dortch, Secretary,
Federal Communications Commission, WC Docket No. 05-25, at 5 (filed Aug. 23, 2012) (stating that “list prices”
are set at “astronomically high rates” and that “[a] customer needing to buy some connections . . . will see its overall
pricing skyrocket unless it commits to buy nearly all of its connections from [the incumbent LEC] in exchange for
the discount.”) (emphasis in original).
189 See, e.g., Letter from Michael J. Mooney, Level 3 Communications, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Docket No. 05-25, at 5 (filed Aug. 23, 2012) (stating that an incumbent LEC
“makes it both really complicated, and really expensive for its large customers to extricate themselves from the grip
of its lock-up arrangements, all in an effort to keep them in place so as to limit competition.”) (Level 3 Aug. 23 Ex
Parte
Letter); Letter from Thomas Jones and Matthew Jones, Counsel for tw telecom, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Docket No. 05-25, at 5 (filed Aug. 21, 2012) (“[E]ven if an
alternative wholesale provider were available at a given location, the minimum volume commitment provisions of
the ILEC discount plans would often prevent tw telecom from purchasing services that it currently purchases from
the ILEC from that alternative wholesale provider.”). Purchasers have taken particular issue with those volume
discount plans that require the purchaser to maintain a high percentage of volume based on previous purchases. See
Level 3 Aug. 23 Ex Parte Letter.
190 See, e.g., California Association of Competitive Telecommunications Companies (CALTEL), Response to
Special Access Competition Data Public Notice, at 4 (filed Dec. 5, 2011) (stating that at least one ILEC has
forestalled competition by waiving penalties associated with the purchase of DS1 circuits for a CMRS provider in
exchange for the purchase of Ethernet circuits in high-revenue MSAs).
191 See Letter from Christopher M. Heimann, General Attorney, AT&T, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Docket No. 05-25 (filed Mar. 7, 2011); Letter from Evan T. Leo, Counsel to
Verizon Communications, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket No.
05-25, Attach. (filed July 16, 2012).
192 Special Access NPRM, 20 FCC Rcd at 2031-34, paras. 114-25.
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terms and conditions do commenters find unjust or unreasonable, and in what contexts? Are there terms
and conditions that are unjust or unreasonable only when imposed in areas where a provider has market
power? If so, is the analysis we propose above sufficient to allow us to identify areas where market
power exists, and thus to determine whether a particular term or condition is unreasonable in a given area
or that anticompetitive tying between competitive and non-competitive areas is occurring? If so, what
would be the most effective remedy or remedies?

V.

PROCEDURAL MATTERS

A.

Paperwork Reduction Act Analysis

94.
This document contains a new information collection requirement subject to the Paperwork
Reduction Act of 1995 (PRA), Public Law 104-13. It will be submitted to the Office of Management and
Budget (OMB) for review under Section 3507 of the PRA, 44 U.S.C. § 3507. Prior to submission to
OMB, the Commission will publish a notice in the Federal Register seeking public comment on the
information collection requirement. In addition, that notice will also seek comment on how the
Commission might “further reduce the information collection burden for small business concerns with
fewer than 25 employees” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-
198, see 44 U.S.C. § 3506(c)(4). The information collection contained in this Report and Order will not
go into effect until OMB approves the collection and the Commission has published a notice in the
Federal Register announcing the effective date of the information collection.

B.

Congressional Review Act

95.
The Commission will send a copy of this Report and Order and Further Notice of Proposed
Rulemaking to Congress and the Government Accountability Office pursuant to the Congressional
Review Act.193

C.

Initial Regulatory Flexibility Analysis

96.
As required by the Regulatory Flexibility Act of 1980, the Commission has prepared an
Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small
entities of the policies and rules addressed in this document.194 The IRFA is set forth in Appendix C.
Written public comments are requested on this IRFA. Comments must be identified as responses to the
IRFA and must be filed by the deadlines for comments on the Further Notice of Proposed Rulemaking
provided on or before the dates indicated on the first page of this Report and Order and FNPRM. The
Commission will send a copy of the Further Notice, including this IRFA, to the Chief Counsel for
Advocacy of the Small Business Administration.195 In addition, the Report and Order and FNPRM and
IRFA (or summaries thereof) will be published in the Federal Register.196

D.

Final Regulatory Flexibility Analysis

97.
The Regulatory Flexibility Act (RFA)197 requires that an agency prepare a regulatory
flexibility analysis for notice and comment rulemakings, unless the agency certifies that “the rule will not,


193 See 5 U.S.C. 801(a)(1)(A).
194 See id. § 603.
195 See id. § 603(a).
196 Id.
197 See id. § 601–12. The RFA has been amended by the Small Business Regulatory Enforcement Fairness Act of
1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
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if promulgated, have a significant economic impact on a substantial number of small entities.”198
Accordingly, we have prepared a Final Regulatory Flexibility Analysis concerning the possible impact of
the Report and Order on small entities. The Final Regulatory Flexibility Analysis is set forth in
Appendix B.

E.

Ex Parte

Presentations

98.
The proceeding shall be treated as a “permit-but-disclose” proceeding in accordance with
the Commission’s ex parte rules.199 Persons making ex parte presentations must file a copy of any
written presentation or a memorandum summarizing any oral presentation within two business days after
the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making
oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all
persons attending or otherwise participating in the meeting at which the ex parte presentation was made,
and (2) summarize all data presented and arguments made during the presentation. If the presentation
consisted in whole or in part of the presentation of data or arguments already reflected in the presenter’s
written comments, memoranda or other filings in the proceeding, the presenter may provide citations to
such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant
page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them
in the memorandum. Documents shown or given to Commission staff during ex parte meetings are
deemed to be written ex parte presentations and must be filed consistent with rule 1.1206(b). In
proceedings governed by rule 1.49(f) or for which the Commission has made available a method of
electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations,
and all attachments thereto, must be filed through the electronic comment filing system available for that
proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in
this proceeding should familiarize themselves with the Commission’s ex parte rules.

F.

Comment Filing Procedures

99.
Pursuant to sections 1.415 and 1.419 of the Commission’s rules, 47 C.F.R. §§ 1.415, 1.419,
interested parties may file comments and reply comments on or before the dates indicated on the first
page of this document.200 Comments may be filed using the Commission’s Electronic Comment Filing
System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
§
Electronic Filers: Comments may be filed electronically using the Internet by accessing the
ECFS: http://apps.fcc.gov/ecfs/.
§
Paper Filers: Parties who choose to file by paper must file an original and one copy of each
filing. If more than one docket or rulemaking number appears in the caption of this proceeding,
filers must submit two additional copies for each additional docket or rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-
class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission’s
Secretary, Office of the Secretary, Federal Communications Commission.


198 5 U.S.C. § 605(b).
199 47 C.F.R. §§ 1.1200 et seq.
200 If we determine that additional time is needed to provide meaningful comment, the Bureau may extend the
comment and reply comment filing deadlines sua sponte.
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§
All hand-delivered or messenger-delivered paper filings for the Commission’s Secretary
must be delivered to FCC Headquarters at 445 12th St., SW, Room TW-A325,
Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries
must be held together with rubber bands or fasteners. Any envelopes and boxes must be
disposed of before entering the building.
§
Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority
Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
§
U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th
Street, SW, Washington DC 20554.
100. People with Disabilities: To request materials in accessible formats for people with
disabilities (braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call
the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).
101. For further information, contact Jamie Susskind in the Pricing Policy Division, Wireline
Competition Bureau at (202) 418-1520.

VI.

ORDERING CLAUSES

102. Accordingly, IT IS ORDERED that pursuant to sections 1, 4(i), 4(j), 5, 201-205, 211, 215,
218, 219, 303(r), 332, 403, and 503 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151,
154(i), 154(j), 155, 201, 202, 203, 204, 205, 211, 215, 218, 219, 303(r), 332, 403, 503, and section 706 of
the Telecommunications Act of 1996, 47 U.S.C. § 1302, this Report and Order, with all attachments, is
ADOPTED, effective sixty (60) days after publication in the Federal Register, except for those rules and
requirements involving Paperwork Reduction Act burdens, which shall become effective upon
announcement in the Federal Register of OMB approval and an effective date of the rule(s), and except as
specified in paragraph 105.
103. IT IS FURTHER ORDERED that pursuant to sections 1, 4(i), 4(j), 5, 201-205, 211, 215,
218, 219, 303(r), 332, 403, and 503 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151,
154(i), 154(j), 155, 201, 202, 203, 204, 205, 211, 215, 218, 219, 303(r), 332, 403, 503, and section 706 of
the Telecommunications Act of 1996, 47 U.S.C. § 1302, this Further Notice of Proposed Rulemaking,
with all attachments, is ADOPTED.
104. IT IS FURTHER ORDERED that pursuant to applicable procedures set forth in sections
1.415 and 1.419 of the Commission's Rules, 47 C.F.R. §§ 1.415, 1.419, interested parties may file
comments on the Further Notice of Proposed Rulemaking for Sections IV.A and IV.C 30 days after
publication in the Federal Register and for Section IV.B on or before [August 19, 2013], and reply
comments for Sections IV.A and IV.C on or before 60 days after publication in the Federal Register and
for Section IV.B on or before [September 30, 2013].
105. IT IS FURTHER ORDERED that we delegate authority to the Wireline Competition
Bureau to implement a data collection in accordance with the terms of this Report and Order, and that this
delegation of authority is effective upon adoption, see 47 U.S.C. § 155(c).
106. IT IS FURTHER ORDERED that the data collection shall become effective upon
announcement in the Federal Register of Office of Management and Budget approval and an effective
date of the requirements.
107. IT IS FURTHER ORDERED that the Commission SHALL SEND a copy of this Report
and Order and Further Notice of Proposed Rulemaking to Congress and the Government Accountability
Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
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108. IT IS FURTHER ORDERED that the Commission’s Consumer and Governmental Affairs
Bureau, Reference Information Center, SHALL SEND a copy of this Report and Order and Further
Notice of Proposed Rulemaking, including the Final Regulatory Flexibility Analysis and Initial
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
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APPENDIX A

Mandatory Data Collection

I. DEFINITIONS

The following definitions apply for purposes of this collection only. They are not intended to set or
modify precedent outside the context of this collection.
Affiliated Company means a company, partnership, corporation, limited liability company, or other
business entity that is affiliated with a Provider. An entity and a Provider are affiliated if one of them, or
an entity that controls one of them, directly or indirectly holds a greater than 25 percent ownership
interest in, or controls, the other one.
Best Efforts Business Broadband Internet Access Service means a best efforts Internet access data service
with a capacity equal to or greater than a DS1 connection that is marketed to enterprise customers
(including small, medium, and large businesses). For purposes of this data collection, Best Efforts
Business Broadband Internet Access Services
do not include mobile wireless services, as that term is used
in the 15th Annual Mobile Wireless Competition Report.1
Circuit-Based Dedicated Service (CBDS) means a Dedicated Service that is circuit-based. Examples of
CBDS include DS1 and DS3 services and Synchronous Optical Networking (SONET)/Optical Carrier N
(OCN) services, including point-to-point and ring services.
Collocation is an offering by an ILEC whereby a requesting Competitive Provider’s transmission
equipment is located, for a tariffed charge, at the ILEC’s central office.2 It refers to the term as used
pursuant to 47 C.F.R. § 69.701 et seq. of the Commission’s rules for purposes of applying for a grant of
Phase I or Phase II Pricing Flexibility from the Commission. The definition of Collocation excludes
Competitive Providers that collocate in carrier hotels.
Competitive Provider means a competitive local exchange carrier (CLEC), interexchange carrier, cable
operator, wireless provider or any other entity that is subject to the Commission’s jurisdiction under the
Communications Act of 1934, as amended, and either provides a Dedicated Service or provides a
Connection over which a Dedicated Service could be provided. A Competitive Provider does not include
an ILEC operating within its incumbent service territory.
Connection means a wired “line” or wireless “channel” that provides a dedicated communication path
between an End User’s Location and the first Node on a Provider’s network. Multiple dedicated
communication paths serving one or more End Users at the same Location should be counted as a single
Connection. A Connection may be a UNE, including an Unbundled Copper Loop. A Connection must
have the capability of being used to provide one or more Dedicated Services; however, a Connection can
be used to provide other services as well. For example, a dedicated communication path that is currently


1 See Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and
Analysis of Competitive Market Conditions with Respect to Mobile Wireless, Including Commercial Mobile
Services
, WT Docket No. 10-133, Fifteenth Report, 26 FCC Rcd 9664, 9687-88, paras. 3-5 (2011).
2 See Local Exchange Carriers’ Rates, Terms, and Conditions for Expanded Interconnection Through Physical
Collocation for Special Access and Switched Transport
, CC Docket No. 93-162, Second Report and Order, 12 FCC
Rcd 18730, 18736, para. 6 (1997); 47 C.F.R. § 51.5; see also 47 U.S.C. § 251(c)(6).
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being used to provide a mass market broadband service but has the capability to provide a Dedicated
Service
is considered a Connection for the purpose of this data collection.
Contract-Based Tariff means a Tariff, other than a Tariff Plan, that is based on a service contract entered
into between a customer and an ILEC which has obtained permission to offer contract-based tariff
services pursuant to 47 C.F.R. § 69.701 et seq. of the Commission’s pricing flexibility rules or a
comparable tariffed intrastate service contract between a customer and an ILEC.
Dedicated Service transports data between two or more designated points, e.g., between an End User’s
premises and a point-of-presence, between the central office of a local exchange carrier (LEC) and a
point-of-presence, or between two End User premises, at a rate of at least 1.5 megabytes per second
(Mbps) with prescribed performance requirements that include bandwidth-, latency-, or error-rate
guarantees or other parameters that define delivery under a Tariff or in a service-level agreement.
Dedicated Service includes, but is not limited to, CBDS and PBDS. For the purpose of this data
collection, Dedicated Service does not include “best effort” services, e.g., mass market broadband
services such as DSL and cable modem broadband access.
Disconnection means the process by which a Provider, per a customer request, terminates billing on one
or more of a customer’s Dedicated Service circuits.
DS1 and DS3, except where specified, refer to DS1s and DS3s that are not UNEs.3 DS1s and DS3s are
Dedicated Services.
End User means a business, institutional, or government entity that purchases Dedicated Service for its
own purposes and does not resell such service. A mobile wireless service provider is considered an End
User
when it purchases Dedicated Service to make connections within its own network, e.g., backhaul to
a cell site.
End User Channel Termination means, as defined in 47 C.F.R. § 69.703(a)(2), a dedicated channel
connecting a LEC end office and a customer premises, offered for purposes of carrying special access
traffic.
Incumbent Local Exchange Carrier (ILEC) means, for the purpose of this data collection, a LEC that
provides a Dedicated Service in study areas where it is subject to price cap regulation under sections
61.41-61.49 of the Commission’s rules, 47 C.F.R. §§ 64.41-61.49.
Indefeasible Right of Use (IRU) means an indefeasible long-term leasehold interest that gives the grantee
the right to exclusively use specified strands of fiber or allocated bandwidth to provide a service as
determined by the grantee. An IRU confers on the grantee substantially all of the risks and rewards of
ownership for the estimated economic life of the asset. IRUs typically include the following elements: (i)
payment of a substantial fee up front to enter into the IRU contract;4 (ii) a minimum total duration of 10


3 See 47 U.S.C. § 251; see also 47 C.F.R. §§ 51.5 (defining network element), 51.319 (outlining specific unbundling
requirements).
4 To enter into an IRU contract, grantees are usually required to pay the total amount due under the terms of that
contract. However, some IRU contracts require a smaller initial payment, with installment payments throughout the
duration of the contract. At a minimum, a grantee typically pays at least 25 percent of the total amount due under
the IRU contract upfront (excluding operations and maintenance fees), with commitments to make regularly
scheduled installment payments, to qualify as an IRU. See Michael J. Lichtenstein & Charles A. Rohe, The
Treatment of IRUs in Bankruptcy Proceedings
, 11 J. Bankr. L. & Prac. 83, 86 (2001).
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years;5 (iii) conveyance of tax obligations commensurate with the risks and rewards of ownership to the
grantee (e.g. as opposed to the lesser tax burdens associated with other forms of leases); (iv) terms for
payment to the grantor for ancillary services, such as maintenance fees; (v) all additional rights and
interests necessary to enable the IRU to be used by the grantee in the manner agreed to; and (vi) no
unreasonable limit on the right of the grantee to use the asset as it wishes (e.g., the grantee shall be
permitted to splice into the IRU fiber, though such splice points must be mutually agreed upon by grantor
and the grantee of the IRU).
Location means a building, other man-made structure, a cell site on a building, a free-standing cell site, or
a cell site on some other man-made structure where the End User is connected. A Node is not a Location.
For the purposes of this data collection, cell sites are to be treated as Locations and not as Nodes.
Metropolitan Statistical Area (MSA) is a geographic area as defined by 47 C.F.R. §§ 22.909(a),
69.703(b).
Node is an aggregation point, a branch point, or a point of interconnection on a Provider’s network,
including a point of interconnection to other Provider networks. Examples include LEC central offices,
remote terminal locations, splice points (including, for example, at manholes), controlled environmental
vaults, cable system headends, cable modem termination system (CMTS) locations, and facility hubs.
Non-MSA is the portion of an ILEC’s study area that falls outside the boundaries of an MSA.6
Non-Rate Benefit means a benefit to the customer other than a discount on the One Month Term Only
Rate
, e.g., a credit towards penalties or non-recurring charges or the ability to move circuits without
incurring a penalty.
One Month Term Only Rate means, for purposes of this data collection, the non-discounted monthly
recurring tariffed rate for DS1, DS3 and/or PBDS services.
Packet-Based Dedicated Service (PBDS) means a Dedicated Service that is packet-based. Examples of
PBDS include Multi-Protocol Label Switched (MPLS) services; permanent virtual circuits, virtual private
lines and similar services provided using ATM, Frame Relay and other packet technologies; (Gigabit)
Ethernet Services and Metro Ethernet Virtual Connections; and Virtual Private Networks (VPN).
Phase I Pricing Flexibility means regulatory relief for the pricing of End User Channel Terminations
pursuant to 47 C.F.R. §§ 69.711(b), 69.727(a) of the Commission’s rules.
Phase II Pricing Flexibility means regulatory relief for the pricing of End User Channel Terminations
pursuant to 47 C.F.R. §§ 69.711(c), 69.727(b) of the Commission’s rules.


5 This is measured at the time a grantee entered into the IRU agreement.
6 See 47 C.F.R. § 69.707(b).
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Prior Purchase-Based Commitment means a type of Volume Commitment where the commitment is based
on either:
(i)
a certain percentage or number of the customer’s purchased in-service circuits or lines as
measured at the time of making the Volume Commitment or measured during a period of
time prior to making the Volume Commitment, e.g., based on the customer’s billing
records for the current month or prior month(s); or
(ii)
a certain percentage of Revenues generated by the customer’s purchases as measured at
the time of making the Volume Commitment or during a period of time prior to making
the Volume Commitment.
Providers collectively refers to both ILECs and Competitive Providers.
Purchasers means Competitive Providers and End Users that are subject to the Commission’s jurisdiction
under the Communications Act of 1934, as amended, and purchase Dedicated Service.
Revenues means intrastate and interstate billed amounts without any allowance for uncollectibles,
commissions or settlements. Revenues do not include billed amounts that are subsequently discounted by
the Provider, e.g., customer rebates.
Tariff means an intrastate or interstate schedule of rates and regulations filed by common carriers.
Tariff Plan means a Tariff, other than a Contract-Based Tariff, that provides a customer with either a
discount from any One Month Term Only Rate for the purchase of DS1 and/or DS3 services or a Non-Rate
Benefit
that could be applied to these services.
Term Commitment means a commitment to purchase a Dedicated Service for a period of time, greater
than a month, in exchange for a circuit-specific discount and/or a Non-Rate Benefit.
Transport Service means dedicated transport and includes the services set forth in 47 C.F.R. §
69.709(a)(1)-(3).
Transport Provider means a Provider that supplies Transport Service.
Unbundled Copper Loop means a copper wire local loop provided by ILECs to requesting
telecommunications carriers on a non-discriminatory basis pursuant to 47 C.F.R. § 51.319(a)(1) that can
be used by a Competitive Provider to provide a Dedicated Service, e.g., Ethernet over Copper. An
Unbundled Copper Loop is typically a 2- or 4- wire loop that the ILEC has conditioned to remove
intervening equipment such as bridge taps, load coils, repeaters, low pass filters, range extenders, etc.
between the End User’s Location and the serving wire center to allow for the provision of advanced
digital services by a Competitive Provider. These loops are commonly referred to as dry copper, bare
copper, or xDSL-compatible loops. An Unbundled Copper Loop is a type of UNE.
Unbundled Network Element (UNE) means a local loop provided by an ILEC to a requesting
telecommunications carrier on a non-discriminatory basis pursuant to 47 C.F.R. § 51.319(a).
Upgrade means that a customer transitions one or more circuits to a higher capacity circuit.
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Volume Commitment means a commitment to purchase a specified volume, e.g., a certain number of
circuits or Revenues, to receive a discount on Dedicated Services and/or a Non-Rate Benefit.
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II.

MANDATORY DATA COLLECTION QUESTIONS

A. Competitive Providers

must respond to the following questions:
1.
Are you an Affiliated Company?
Yes No
a. If so, identify the Provider(s) with whom you have an affiliation (name/FRN).
2.
Do you (i) own a Connection; (ii) lease a Connection from another entity under an IRU agreement;
or (iii) obtain a Connection as a UNE from an ILEC to provide a Dedicated Service?
Yes No
a. If yes, are any of these Connections to a Location within an area subject to price cap
regulation or within an area where the Commission has granted Phase I or Phase II Pricing
Flexibility
?
Yes No
If you answered “no” to question II.A.2 or II.A.2.a, then you are not required to respond to the remaining
questions in II.A or the questions in II.D.

Facilities Information

3.
Provide the number of Locations to which you provided a Connection as of December 31, 2010
and as of December 31, 2012 where your company:
a. owns the Connection;
b. leases the Connection from another entity under an IRU agreement; or
c. obtains the Connection as a UNE from an ILEC to provide a Dedicated Service:
i.
in total;
ii. in the form of DS1s;
iii. as a DS3; or
iv. as an Unbundled Copper Loop.
4.
Provide the information requested below for each Location as of December 31, 2010 and as of
December 31, 2012 to which your company provided a Connection that you: (i) own; (ii) lease from
another entity under an IRU agreement; or (iii) obtained as a UNE from an ILEC to provide a Dedicated
Service
.
a. A unique ID for the Location;
b. The actual situs address for the Location (i.e., land where the building or cell site is
located);
c. The geocode for the Location (i.e., latitude and longitude);
d. The Location type (e.g., building, other man-made structure, cell site in or on a building,
free-standing cell site, or a cell site on some other man-made structure like a water tower,
billboard, etc.);
e. Whether the Connection provided to the location uses facilities leased from another entity
under an IRU or obtained as a DS1/DS3 UNE or Unbundled Copper Loop, and in each
case, the name of the lessor of the majority of the fiber strands and/or copper loop;
f.
Whether any of the Connections to the location are provided using fiber;
g. The total sold bandwidth of all Connections provided by you to the Location in Mbps;
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h. The total bandwidth to the Location sold directly by you to an End User;
i.
The total sold fixed wireless bandwidth provided by you to the Location; and
j.
The total bandwidth sold by you to any cell sites at the Location.
5.
Provide a map of the routes that constitute your network that are followed by fiber that you (a) own
or (b) lease pursuant to an IRU agreement, excluding routes followed by fiber that you own or lease
pursuant to an IRU agreement connecting your network to End User Locations. The map must include
the locations of all Nodes on your network used to interconnect with third party networks, and the year
that each Node went live. Also, provide a separate map of the routes followed by fiber that you (a) own
or (b) lease pursuant to an IRU agreement that connect your network to End User Locations.
6.
We will provide you with a selected list of the Locations you reported in response to question
II.A.4. For each identified Location, state the month and year that you first provided a Connection to that
Location, whether you originally supplied the Location over a UNE, and if so, when (if at all) you
switched to using a Connection that you own or lease as an IRU. If the Location was first served by your
Connection on or before January 2008, and the date the Location was first served is unknown, then enter
00/0000.
7.
For each ILEC wire center where your company is collocated, provide the actual situs address, the
geocode, and the CLLI code.
8.
Explain your business rule(s) used to determine whether to build a Connection to a particular
Location. Provide underlying assumptions.
a. List those geographic areas in which you have built the most Connections to End Users
and explain why, in your view, your business rule has been most successful in those
areas.
b. Explain how, if at all, business density is incorporated into your business rule, and if so,
how you measure business density.
9.
Provide the following information:
a. The current situs address of your U.S. headquarters (i.e., the address of the land where the
headquarters is located);
b. The year that this site became your headquarters;
c. Year established and situs address for any prior U.S. headquarters’ location for your
company, going as far back as 1995, if different from the headquarters’ location listed in
response to question II.A.9.a;
d. The name of any Affiliated Company that owned, or leased under an IRU agreement,
Connections to five or more Locations in any MSA at the time you became affiliated with
the Affiliated Company, going as far back as 1995.
e. For each Affiliated Company listed in response to question II.A.9.d, provide:
i.
The situs address for each Affiliated Company’s U.S. headquarters at the time of
affiliation;
ii. The year that the Affiliated Company established the situs address listed in response
to question II.A.9.e.i for its U.S. headquarters; and
iii. The year established and situs address for any prior U.S. headquarters’ location
designated by the Affiliated Company, going as far back as 1995, if different from the
headquarters’ location listed in response to question II.A.9.e.i.
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10.
Provide data, maps, information, marketing materials, and/or documents identifying those
geographic areas where you, or an Affiliated Company, advertised or marketed Dedicated Service over
existing facilities, via leased facilities, or by building out new facilities as of December 31, 2010 and as of
December 31, 2012, or planned to advertise or market such services within twenty-four months of those
dates.
11.
Identify the five most recent Requests for Proposals (RFPs) for which you were selected as the
winning bidder to provide each of the following: (a) Dedicated Services; (b) Best Efforts Business
Broadband Internet Access Services
; and, to the extent different from (a) or (b), (c) some other form of
high-capacity data services to business customers.7 In addition, identify the five largest RFPs (by number
of connections) for which you submitted an unsuccessful competitive bid between 2010 and 2012 for
each of (a) Dedicated Services; (b) Best Efforts Business Broadband Internet Access Services; and, to the
extent different from (a) or (b), (c) some other form of high-capacity data services to business customers.8
For each RFP identified, provide a description of the RFP, the area covered, the price offered, and other
competitively relevant information. Lastly, identify the business rules you rely upon to determine
whether to submit a bid in response to an RFP.

Billing Information

12.
For all Dedicated Services provided using transmission paths that you (i) own; (ii) lease from
another entity under an IRU agreement; or (iii) obtain as a UNE from an ILEC to provide a Dedicated
Service
, submit the following information by rate element by circuit billed for each month from January 1
to December 31 for the years 2010 and 2012.
a. The closing date of the monthly billing cycle in dd/mm/yyyy format;
b. The six-digit 499-A Filer ID of the customer, where applicable, or other unique ID if
customer does not have a 499-A Filer ID;
c. The Location ID from question II.A.4.a that can be used to link the circuit rate elements
to the terminating Location of the circuit (where applicable);
d. The circuit ID common to all elements purchased in common for a particular circuit;
e. The type of circuit (PBDS, or DS1 or DS3, etc.) and its bandwidth;
f.
A unique billing code for the rate element (see question II.A.14);
g. The number of units billed for this rate element (note that the bandwidth of the circuit
must not be entered here);
h. The dollar amount of non-recurring charges billed for the first unit of this rate element;
i.
The dollar amount of non-recurring charges billed for additional units of this rate element
(if different from the amount billed for the initial unit);
j.
The monthly recurring dollar charge for the first unit of the rate element billed;
k. The monthly recurring dollar charge for additional units (if different from the amount
billed for the initial unit);
l.
The total monthly dollar amount billed for the rate element billed in the month;
m. The Term Commitment associated with this circuit in months;
n. Indicate whether this rate element is associated with a circuit that contributes to a Volume
Commitment;


7 To be clear, we expect Competitive Providers that have won RFPs in each service category to identify up to five
RFPs in each category, not a total of five RFPs across the three categories.
8 To be clear, we expect Competitive Providers that have submitted unsuccessful competitive bids for RFPs in each
service category to identify up to five RFPs in each category, not a total of five RFPs across the three categories.
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o. Indicate whether the circuit element is owned by you or leased by you as an IRU but not
as a UNE; and
p. The adjustment ID (or multiple adjustment IDs) linking this rate element to the unique
out-of-cycle billing adjustments in question II.A.13.a (below) if applicable.
13.
For each adjustment, rebate, or true-up for billed Dedicated Services, provide the information
requested below.
a. A unique ID number for the billing adjustment, rebate, or true-up (see question II.A.12.p
above);
b. The beginning date of the time period covered by the adjustment or true-up;
c. The ending date of the time period covered by the adjustment or true-up;
d. The scope of the billing adjustment, i.e., whether the adjustment applies to a single rate
element on a single circuit, more than one rate element on a single circuit, more than one
rate element across multiple circuits, or an overall adjustment that applies to every rate
element on every circuit purchased by the customer;
e. The dollar amount of the adjustment or true-up; and
f.
A brief description of the billing adjustment, rebate or true-up, e.g., term discount,
revenue target rebate, etc.
14.
For each unique billing code, please provide the following information below.
a. The billing code for the rate element;
b. Select the phrase that best describes the rate element from the list. Names of some
common rate elements are shown on the generalized circuit diagram below:
Channel mileage
Channel mileage
termination
termination
Customer
Serving
Serving
Customer
Designated
Wire
Wire
Designated
Location
Center
Center
Location
A
B
Local distribution channel;
Channel mileage;
Local distribution channel;
Channel termination;
Channel mileage facility;
Channel termination;
Special access line;
Special transport
Special access line;
Customer port connection
Customer port connection
(Ethernet)
(Ethernet)
i.
Channel mileage facility, channel mileage, interoffice channel mileage, special
transport (a transmission path between two serving wire centers associated with
customer designated locations; a serving wire center and an international or service
area boundary point; a serving wire center and a hub, or similar type of connection);
ii. Channel mileage termination, special transport termination (the termination of
channel mileage facility or similar transmission path);
iii. Channel termination, local distribution channel, special access line, customer port
connection (Ethernet) (a transmission path between a customer designated location
and the associated wire center);
iv. Clear channel capability (not shown) (an arrangement which allows a customer to
transport, for example, 1.536 Mbps of information on a 1.544 Mbps line rate with no
constraint on the quantity or sequence of one and zero bits);
v. Cross-connection (not shown) (semi-permanent switching between facilities,
sometimes combined with multiplexing/demultiplexing);
vi. Multiplexing (not shown) (channelizing a facility into individual services requiring a
Lower capacity or bandwidth); and
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vii. Class of service and/or committed information rate (not shown) (for Ethernet, the
performance characteristics of the network and bandwidth available for a customer
port connection).
c. If none of the possible entries describes the rate element, enter a short description.

Revenues, Terms and Conditions

15.
What were your Revenues from the sale of CBDS in 2010 and 2012? For each year, report
Revenues in total, separately by DS1, DS3, and other CBDS sales, and separately by customer category,
i.e., sales to Providers and End Users.
16.
What were your Revenues from the sale of PBDS in 2010 and 2012? For each year, report
Revenues in total, separately by customer category, i.e., sales to Providers and End Users, and separately
by bandwidth for the following categories:
a. less than or equal to 1.5 Mbps;
b. greater than 1.5, but less than or equal to 50 Mbps;
c. greater than 50, but less than or equal to 100 Mbps;
d. greater than 100, but less than or equal to 1 Gbps; and
e. greater than 1 Gbps.
17.
What percentage of your Revenues from the sale of DS1, DS3, and PBDS services in 2012 were
generated from an agreement or Tariff that contains a Prior Purchase-Based Commitment?
18.
If you offer Dedicated Services pursuant to an agreement or Tariff that contains either a Prior
Purchase-Based Commitment or a Non-Rate Benefit, then explain how, if at all, those sales are
distinguishable from similarly structured ILEC sales of DS1s, DS3s, and/or PBDS.
19.
Provide the business justification for the Term or Volume Commitments associated with any Tariff
or agreement you offer for the sale of Dedicated Services.

B. ILECs

must respond to the following questions:
1.
Are you an Affiliated Company?
Yes No
a. If so, identify the Provider(s) with whom you have an affiliation (name/FRN).

Facilities Information

2.
Provide the number of Locations to which you provided a Connection in your company study areas
as of December 31, 2010 and as of December 31, 2012 where your company:
a. owns the Connection;
b. leases the Connection from another entity under an IRU agreement; or
c. sells the Connection as a UNE:
i.
in total;
ii. in the form of DS1s;
iii. as a DS3; or
iv. as an Unbundled Copper Loop.
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3.
Provide the information requested below for each Location to which your company provided, as of
December 31, 2010 and as of December 31, 2012, a Connection that you (i) own or (ii) you lease from
another entity under an IRU agreement:
a. A unique ID for the Location;
b. The actual situs address for the Location (i.e., land where the building or cell site is
located);
c. The geocode for the Location (i.e., latitude and longitude);
d. The Location type (e.g., building, other man-made structure, cell site in or on a building,
free-standing cell site, or a cell site on some other man-made structure like a water tower,
billboard, etc.);
e. Whether any of the Connections to the Location are provided using fiber;
f.
The total sold bandwidth of all Connections provided by you to the Location in Mbps
(exclude connections sold without a specified bandwidth, e.g., Unbundled Copper
Loops
);
g. The total number of Unbundled Copper Loops sold by you to the Location;
h. The total bandwidth to the Location sold by you as UNEs in the form of DS1s and/or
DS3s;
i.
The total bandwidth to the Location sold directly by you to an End User;
j.
The total sold fixed wireless bandwidth provided by you to the Location; and
k. The total bandwidth sold by you to any cell sites at the Location.

Billing Information

4.
For all Dedicated Services provided using transmission paths that you (i) own or (ii) lease from
another entity under an IRU agreement and for Unbundled Copper Loops that you own and provision,
submit the following information by rate element by circuit billed for each month from January 1 to
December 31 for the years 2010 and 2012.
a. The closing date of the monthly billing cycle in dd/mm/yyyy format;
b. The six-digit 499A Filer ID of the customer, where applicable, or other unique ID if
customer does not have a 499A Filer ID;
c. The Location ID from question II.B.3.a that can be used to link the circuit rate elements
to the terminating Location of the circuit (where applicable);
d. The circuit ID common to all elements purchased in common for a particular circuit;
e. The type of circuit, (DS1 sold as a UNE, DS3 sold as a UNE, Unbundled Copper Loop,
PBDS, non-UNE DS1s or DS3s, etc.) and the bandwidth of the circuit;
f.
The serving wire center / mileage rating point Common Language Location Identification
(CLLI) of one end of the circuit (MRP1);
g. The serving wire center / mileage rating point CLLI of the other end of the circuit
(MRP2);
h. The latitude of MRP1 to 5 decimal places;
i.
The longitude of MRP1 to 5 decimal places;
j.
The latitude of MRP2 to 5 decimal places;
k. The longitude of MRP2 to 5 decimal places;
l.
End of the circuit (1=MRP1 or 2=MRP2) associated with this rate element;
m. The billing code for the rate element (see question II.B.6);
n. The density pricing zone for the rate element;9


9 See 47 C.F.R. § 69.123 (density pricing zones for special access and switched transport).
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o. The number of units billed for this rate element (note that the bandwidth of the circuit
must not be entered here);
p. The dollar amount of non-recurring charges billed for the first unit of this rate element;
q. The dollar amount of non-recurring charges billed for additional units of this rate element
(if different from the amount billed for the initial unit);
r.
The monthly recurring dollar charge for the first unit of the rate element billed;
s. The monthly recurring dollar charge for additional units (if different from the amount
billed for the initial unit);
t.
The total monthly dollar amount billed for the rate element;
u. The Term Commitment associated with this circuit in months;
v. Indicate whether this rate element is associated with a circuit that contributes to a Volume
Commitment;
w. Indicate whether this rate element is associated with a circuit that contributes to a revenue
commitment in a Tariff Plan;
x. Indicate whether this rate element was purchased pursuant to a Contract-Based Tariff;
y. Indicate whether the circuit element is owned by you or leased by you as an IRU;
z. The adjustment ID (or multiple adjustment IDs) linking this rate element to the unique
out-of-cycle billing adjustments in question II.B.5.a (below) if applicable; and
aa. If the rate element is sold under a Tariff, list the Tariff name.
5.
For each adjustment, rebate, or true-up for billed Dedicated Services, provide the information
requested below.
a. A unique ID for the billing adjustment or true-up (see question II.B.4.z above);
b. A unique ID number for the contract or Tariff from which the adjustment originates;
c. The beginning date of the time period covered by the adjustment or true-up;
d. The ending date of the time period covered by the adjustment or true-up;
e. The scope of the billing adjustment, i.e., whether the adjustment applies to a single rate
element on a single circuit, more than one rate element on a single circuit, more than one
rate element across multiple circuits, or an overall adjustment that applies to every rate
element on every circuit purchased by the customer;
f.
The dollar amount of the adjustment or true-up;
g. Whether the adjustment is associated with a Term Commitment, and if so, the length of
the term specified in the contract necessary to achieve the rebate;
h. Whether the adjustment is associated with a Volume Commitment, and if so, the number
of circuits and/or dollar amount specified in the contract necessary to achieve the rebate;
and
i.
If the adjustment is for some other reason, a brief description of the reason for the
adjustment.
6.
For each unique billing code, please provide the following information below.
a. The billing code for the rate element;
b. The phrase that best describes the rate element from the list. Names of some common
rate elements are shown on the generalized circuit diagram below:
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Channel mileage
Channel mileage
termination
termination
Customer
Serving
Serving
Customer
Designated
Wire
Wire
Designated
Location
Center
Center
Location
A
B
Local distribution channel;
Channel mileage;
Local distribution channel;
Channel termination;
Channel mileage facility;
Channel termination;
Special access line;
Special transport
Special access line;
Customer port connection
Customer port connection
(Ethernet)
(Ethernet)
i.
Channel mileage facility, channel mileage, interoffice channel mileage, special
transport (a transmission path between two serving wire centers associated with
customer designated locations; a serving wire center and an international or service
area boundary point; a serving wire center and a hub, or similar type of connection);
ii. Channel mileage termination, special transport termination (the termination of
channel mileage facility or similar transmission path);
iii. Channel termination, local distribution channel, special access line, customer port
connection (Ethernet) (a transmission path between a customer designated location
and the associated wire center);
iv. Clear channel capability (not shown) (an arrangement which allows a customer to
transport, for example, 1.536 Mbps of information on a 1.544 Mbps line rate with no
constraint on the quantity or sequence of one and zero bits);
v. Cross-connection (not shown) (semi-permanent switching between facilities,
sometimes combined with multiplexing/demultiplexing);
vi. Multiplexing (not shown) (channelizing a facility into individual services requiring a
Lower capacity or bandwidth); and
vii. Class of service and/or committed information rate (not shown) (for Ethernet, the
performance characteristics of the network and bandwidth available for a customer
port connection).
c. If none of the possible entries describes the rate element, enter a short description.
7.
List the CLLI code for each one of your wire centers that was subject to price cap regulation as of
December 31, 2010 and as of December 31, 2012, i.e., those wire centers in your incumbent territory
where the Commission had not granted you pricing flexibility. For those MSAs and Non-MSAs where the
Commission granted you Phase I or Phase II Pricing Flexibility as of December 31, 2010 and as of
December 31, 2012, list the CLLI codes for the wire centers associated with each MSA and Non-MSA for
each year, the name of the relevant MSA and Non-MSA for each year, and the level of pricing flexibility
granted for the MSA and Non-MSA, i.e., Phase I and/or Phase II Pricing Flexibility.

Revenues, Terms and Conditions Information

8.
What were your Revenues from the sale of CBDS services in 2010 and 2012? For each year, report
Revenues in total, separately by DS1, DS3, and other CBDS sales, and separately by customer category,
i.e., sales to Competitive Providers and End Users.
9.
What were your Revenues from the sale of PBDS services in 2010 and 2012? For each year, report
Revenues in total, separately by customer category, i.e., sales to Competitive Providers and End Users,
and separately by bandwidth for the following categories:
a. less than or equal to 1.5 Mbps;
b. greater than 1.5, but less than or equal to 50 Mbps;
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c. greater than 50, but less than or equal to 100 Mbps;
d. greater than 100, but less than or equal to 1 gigabyte per second (Gbps); and
e. greater than 1 Gbps.
10.
What were your Revenues from the One Month Term Only Rate charged for DS1, DS3, and/or
PBDS services in 2010 and 2012? For each year, report Revenues in total, separately by DS1, DS3, and
PBDS sales as applicable, and separately by customer category, i.e., sales to Competitive Providers and
End Users.
11.
How many customers were purchasing DS1, DS3, and/or PBDS services pursuant to your One
Month Term Only Rates as of December 31, 2012? Report customer numbers in total, separately for DS1,
DS3, and PBDS services as applicable, and separately by customer category, i.e., the number of DS1,
DS3, and PBDS service customers that were Competitive Providers and End Users.
12.
Separately list all available Tariff Plans and Contract-Based Tariffs that can be applied to the
purchase of DS1, DS3 and/or PBDS services and provide the information requested below for each plan.
a. This plan is a:
Tariff Plan Contract-Based Tariff (select one)
b. Plan name:
c. Tariff and Section Number(s):
d. This plan contains:

Term Commitment(s) Volume Commitment(s)
Non-Rate Benefit option(s) (select all that apply)
e. If the plan contains options for Non-Rate Benefits, explain of the available Non-Rate Benefits.
f.
This plan can be applied to the purchase of:
DS1 services DS3 services PBDS Other (select all that apply)
g. In what geographic areas is this plan available, e.g., nationwide, a particular region of the
country, certain states, certain MSAs, a particular study area?
h. To receive a discount or Non-Rate Benefit under this plan, must the customer make a Prior
Purchase-Based Commitment?
Yes No
i.
Do purchases of DS1 or DS3 services in areas outside of your price cap study area(s)
(e.g., purchases from an Affiliated Company that is a CLEC) count towards meeting any
Volume Commitment to receive a discount or Non-Rate Benefit under this plan?
Yes No N/A (no Volume Commitment)
j.
Do DS1 or DS3 purchases in areas where you are subject to price cap regulation and
where pricing flexibility has not been granted count towards meeting any Volume
Commitment
to receive a discount or Non-Rate Benefit under this plan?
Yes No N/A (no Volume Commitment)
k. Do non-tariffed PBDS purchases by the customer count towards meeting any Volume
Commitment to receive a discount or Non-Rate Benefit under this plan?
Yes No N/A (no Volume Commitment)
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l.
Do purchases by the customer for services other than DS1s, DS3s, and PBDS count
towards meeting any Volume Commitment to receive a discount or Non-Rate Benefit
under this plan?
Yes No N/A (no Volume Commitment)
m. Is the discount or Non-Rate Benefit available under this plan conditioned on the customer
limiting its purchase of UNEs, e.g., customer must keep its purchase of UNEs below a
certain percentage of the customer’s total spend?
Yes No
n. What were your Revenues from the provision of DS1, DS3, and/or PBDS services under
this plan in 2010 and in 2012? For each year, report Revenues in total, separately by
DS1, DS3, and PBDS sales as applicable, and separately by customer category, i.e., sales
to Competitive Providers and End Users.
o. What percentage of the Revenues reported above in response to question II.B.12.n for
2010 and 2012 were generated and also reported as Revenues under a separately
identified Tariff Plan or Contract-Based Tariff?
p. What percentage of the Revenues generated by this plan in 2012 resulted from a Term
Commitment of five or more years?10
q. What is the business justification for any Term or Volume Commitments associated with
this plan?
r.
How many customers were subscribed to this plan as of December 31, 2012? Report
customer numbers in total, separately for DS1, DS3, and PBDS services as applicable,
and separately by customer category, i.e., the number of DS1, DS3, and/or PBDS
customers that were Competitive Providers and End Users.
s. Of those customers subscribed as of December 31, 2012, how many in 2012 failed to
meet any Volume Commitment or Term Commitment required to retain a discount or Non-
Rate Benefit
they originally agreed to when entering into this plan?
13.
Do you have any non-tariffed agreement with an End User or Competitive Provider that, directly or
indirectly, provides a discount or a Non-Rate Benefit on the purchase of tariffed DS1s, DS3s, and/or
PBDS, restricts the ability of the End User or Competitive Provider to obtain UNEs, or negatively affects
the ability of the End User or Competitive Provider to purchase Dedicated Services?
Yes No
a. If so, identify each agreement below, including the parties to the agreements, the
effective date, and a summary of the relevant provisions.


10 The purpose of this question is to account for the double counting of Revenues.
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C. Entities that provide Best Efforts Business Broadband Internet Access Services

must respond to
the following questions:
1.
Do you have fewer than 15,000 customers and fewer than 1,500 business broadband
customers?
Yes No
2.
If you answered “no” to question II.C.1, then answer the following questions:
a. Did you submit data in connection with the State Broadband Initiative (SBI) Grant
Program for 2010?
Yes No
b. Did you submit data in connection with the SBI Grant Program for 2012?
Yes No
If you answered “no” to questions II.C.1.a and II.C.1.b, then you do not need to
answer any further questions in this section.
c. Did the data you submitted in connection with the SBI Grant Program in 2010
accurately and completely identify the areas in which you offered Best Efforts
Business Broadband Internet Access Services
and exclude those areas where you did
not offer such services as of December 31, 2010?
Yes No
i.
If yes, then provide the list of prices for those Best Efforts Business Broadband
Internet Access Services
that you were marketing in each census block submitted
in connection with the SBI Grant Program as of December 31, 2010. If there is a
price variation within your service footprint, indicate which prices are associated
with which census blocks.
ii. If no, then provide a list of all the census blocks in which you were providing
Best Efforts Business Broadband Internet Access Services as of December 31,
2010, and a list of the prices for those Best Efforts Business Broadband Internet
Access Services
that you were marketing in each census block as of December
31, 2010. If there is a price variation within your service footprint, indicate
which prices are associated with which census blocks.
d. Did the data you submitted in connection with the SBI Grant Program in 2012
accurately and completely identify the areas in which you offered Best Efforts
Business Broadband Internet Access Services
and exclude those areas where you did
not offer such services as of December 31, 2012?
Yes No
i.
If yes, then provide the list of prices for those Best Efforts Business Broadband
Internet Access Services
that you were marketing in each census block submitted
in connection with the SBI Grant Program as of December 31, 2012. If there is a
price variation within your service footprint, indicate which prices are associated
with which census blocks.
ii. If no, then provide a list of all the census blocks in which you were providing
Best Efforts Business Broadband Internet Access Services as of December 31,
2012, and a list of the prices for those Best Efforts Business Broadband Internet
Access Services
that you were marketing in each census block as of December
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31, 2012. If there is a price variation within your service footprint, indicate
which prices are associated with which census blocks.

D.

All Providers

must respond to the following questions:
1.
Describe your company’s short term and long-range promotional and advertising strategies and
objectives for winning new – or retaining current – customers for Dedicated Services. In your
description, please describe the size (e.g., companies with 500 employees or less, etc.), geographic scope
(e.g., national, southeast, Chicago, etc.), and type of customers your company targets or plans to target
through these strategies.
2.
Identify where your company’s policies are recorded on the following Dedicated Service-related
processes: (a) initiation of service; (b) service Upgrades; and (c) service Disconnections. For instance,
identify where your company records recurring and non-recurring charges associated with the processes
listed above. If recorded in a Tariff, provide the specific Tariff section(s). If these policies are recorded
in documents other than Tariffs, list those documents and state whether they are publicly available. If
they are publicly available, explain how to find them. For documents that are not publicly available, state
whether they are conveyed to customers orally or in writing.
3.
Explain the procedures your company follows when a customer continues to purchase End-user
Channel Terminations from your company but requests to change Transport Providers from your
company to another Provider. In addition, answer the following questions regarding your process:
a. Where are your procedures that govern these changes recorded? Provide the relevant
Tariff number and section(s), if applicable, or identify which documents other than
Tariffs contain these procedures. For documents that are not publicly available, state
whether they are conveyed to customers orally or in writing.
b. In 2012, what was the average length of time that it took your company to complete the
process of connecting End User Channel Terminations to a new Transport Provider?
c. Can purchasers negotiate timelines on a case-by-case basis?
d. Do any of your company’s policies, whether contained in Tariffs or other documents,
limit the maximum number of circuits that can be connected to a new Transport Provider
per day, per week, or per month? If yes, what is that number and what is the business
rationale for this requirement?
e. How does connecting to a new Transport Provider impact the rate a customer pays for
the End User Channel Terminations the customer continues to purchase from your
company?
f.
While the change in Transport Providers is pending completion and before there is a
Disconnection in the Transport Service provided by your company, are there instances
where the customer must pay a higher rate for the Transport Service provided by your
company? If so, then detail those circumstances and what rates would apply before and
after the request is made. For example, if the customer’s contract expires or is terminated
while a request to connect to a new Transport Provider is pending, would the customer
pay a One Month Term Only Rate until there is a Disconnection in the Transport Service
provided by your company?
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E. Purchasers

that are mobile wireless service providers must respond to the following
questions:
1.
How many cell sites do you have on your network?
2.
Provide the information requested below for each cell site on your network as of December 31,
2010 and as of December 31, 2012.
a. A unique ID for the cell site;
b. The actual situs address of the cell site (i.e., land where the cell site is located) if the cell
site is located in or on a building;
c. The geocode for the cell site (i.e., latitude and longitude);
d. The CLLI code of the incumbent LEC wire center that serves the cell site, where
applicable;
e. Whether the cell site is in or on a building, is a free-standing cell site, or is on some other
type of man-made structure, e.g., a water tower, billboard, etc.;
f.
If the cell site is served by a CBDS, indicate the equivalent number of DS1s used;
g. If the cell site is served by a PBDS, indicate the bandwidth of the circuit in Mbps;
h. If the cell site is served by a wireless Connection, indicate the bandwidth of the circuit in
Mbps;
i.
The name of the Provider(s) that supplies your Connection to the cell site; and
j.
If you self-provide a Connection to the cell site, the provisioned bandwidth of that self-
provided Connection.

F.

All Purchasers

must respond to the following questions:

Expenditures Information

1.
What is the principal nature of your business, e.g., are you a CLEC, cable system operator, fixed
wireless service provider, wireless Internet service provider, terrestrial or satellite mobile wireless service
provider, interconnected VoIP service provider, etc.?
2.
What were your expenditures, i.e., dollar volume of purchases, on Dedicated Services for 2010 and
2012? For each year, report expenditures in total, separately for CBDS and PBDS purchases, and
separately for purchases from ILECs and Competitive Providers.
3.
Provide your company’s expenditures, i.e., dollar volume of purchases, for DS1s, DS3s, and/or
PBDS purchased from ILECs pursuant to a Tariff in 2010 and in 2012. For each of the following
categories, report expenditures for each year in total and separately for DS1s, DS3s and PBDS:
a. All DS1s, DS3s, and PBDS;
b. DS1s, DS3s, and PBDS purchased at One Month Term Only Rates;
c. DS1s, DS3s, and PBDS purchased under Tariff Plans;
d. DS1s, DS3s, and PBDS purchased under Contract-Based Tariffs;
e. DS1s, DS3s, and PBDS purchased under Tariff Plans that contained a Term Commitment
but not a Volume Commitment;
f.
DS1s, DS3s, and PBDS purchased under Tariff Plans that contained a Prior Purchase-
Based Commitment
;
i.
Of the total (and for the separate DS1, DS3, and PBDS totals where applicable),
indicate the average discount from the One Month Term Only Rate incorporated in
the expenditures.
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For purposes of calculating the percentages described above, an example would be a
Tariff Plan that requires a purchase of 20 DS1s and 10 DS3s and generates expenditures
of $2,000 for calendar-year 2012. If those same circuits were purchased at One Month
Term Only Rates
of $100 per DS1 and $200 per DS3, then total expenditures would
instead be $4,000. Since the Tariff Plan under this scenario generated 50% of the
expenditures that would be generated from One Month Term Only Rates, the discount
would be 50%.
g. DS1s, DS3s, and PBDS purchased under Contract-Based Tariffs that contained a Term
Commitment but not a Volume Commitment; and
h. DS1s, DS3s, and PBDS purchased under Contract-Based Tariffs that contained a Prior
Purchase-Based Commitment;
i.
Of the total (and for the separate DS1 and DS3 totals if available), indicate the
average discount from the One Month Term Only Rate incorporated in the
expenditures.
An example of how to calculate this percentage can be found at question II.F.3.f.i.
4.
What were your expenditures, i.e., dollar volume of purchases, on DS1s, DS3s, and/or PBDS
purchased from Competitive Providers pursuant to a Tariff in 2010 and in 2012? Report expenditures in
total and separately for DS1s, DS3s and PBDS, as applicable, for the following categories for each year:
a. All DS1s, DS3s, and PBDS;
b. DS1s, DS3s, and PBDS purchased at One Month Term Only Rates;
c. DS1s, DS3s, and PBDS purchased under Tariffs that contained a Term Commitment but
not a Volume Commitment;
d. DS1s, DS3s, and PBDS purchased under Tariffs that contained a Prior Purchase-Based
Commitment;
i.
Of the total (and for the separate DS1, DS3, and PBDS totals where applicable),
indicate the average discount from the One Month Term Only Rate incorporated in
the expenditures.
An example of how to calculate this percentage can be found at question II.F.3.f.i
5.
What were your expenditures, i.e., dollar volume of purchases, on DS1s, DS3s, and/or PBDS
purchased from ILECs and Competitive Providers pursuant to an agreement (not a Tariff) in 2010 and in
2012? Report expenditures in total, separately for purchases from ILECs and Competitive Providers, and
separately for DS1s, DS3s and PBDS, as applicable, for the following categories for each year:
a. All DS1s, DS3s, and PBDS;
b. DS1s, DS3s, and PBDS purchased at a non-discounted rate;
c. DS1s, DS3s, and PBDS purchased under a non-tariffed agreement that contained a Term
Commitment but not a Volume Commitment;
d. DS1s, DS3s, and PBDS purchased under a non-tariffed agreement that contained a Prior
Purchase-Based Commitment;
i.
Of the total (and for the separate DS1, DS3, and PBDS totals where applicable),
indicate the average discount from the non-discounted rate incorporated in the
expenditures.
An example of how to calculate this percentage can be found at question II.F.3.f.i
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6.
What were your expenditures, i.e., dollar volume of purchases, on PBDS purchased under a Tariff
in 2010 and in 2012?
a. Separately for purchases from ILECs and Competitive Providers for the following service
bandwidth categories:
i.
less than or equal to 1.5 Mbps;
ii. greater than 1.5, but less than or equal to 50 Mbps;
iii. greater than 50, but less than or equal to 100 Mbps;
iv. greater than 100, but less than or equal to 1 Gbps; or
v. greater than 1 Gbps.
7.
What were your expenditures, i.e., dollar volume of purchases, on non-tariffed PBDS in 2010 and
in 2012?
a. Separately for purchases from ILECs and Competitive Providers for the following service
bandwidth categories:
i.
less than or equal to 1.5 Mbps;
ii. greater than 1.5, but less than or equal to 50 Mbps;
iii. greater than 50, but less than or equal to 100 Mbps;
iv. greater than 100, but less than or equal to 1 Gbps; or
v. greater than 1 Gbps.

Terms and Conditions Information

8.
Explain whether the terms and conditions of any contract to which you are a party for the purchase
of Dedicated Services or the policies of any of your Providers constrain your ability to:
a. Decrease your purchases from your current Provider(s);
b. Purchase services from another Provider currently operating in the geographic areas in
which you purchase services;
c. Purchase non-tariffed services, such as Ethernet services, from your current Provider of
tariffed DS1, DS3, and/or PBDS services or from other Providers operating in the
geographic areas in which you purchase tariffed services;
d. Contract with companies that are considering entering the geographic areas in which you
purchase tariffed services;
e. Move circuits, for example, moving your DS1 and/or DS3 End-User Channel
Terminations to connect to another Transport Provider; or
f.
Obtain Dedicated Services.
Relevant terms and conditions, among others, may include: (a) early termination penalties; (b) shortfall
provisions; (c) overlapping/supplemental discounts plans with different termination dates; (d)
requirements to include all services, including new facilities, under a Tariff Plan or Contract-Based
Tariff
; or (e) requiring purchases in multiple geographic areas to obtain maximum discounts.
In your answer, highlight contracts with particularly onerous constraints by comparison with more typical
contract provisions. Also, at a minimum, list: (a) the Provider and indicate whether the Provider is an
ILEC or a Competitive Provider; (b) a description of the term or condition; (c) the geographic area in
which the tariffed services are provided; (d) the name of the vendor providing the tariffed service; and (e)
the specific Tariff number(s) and section(s), or if the policy at issue is recorded in documents other than
Tariffs, list those documents and how you obtained them.
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If you allege that a term, condition, or Provider’s policy negatively affects your ability to obtain
Dedicated Services, state whether you have brought a complaint to the Commission, a state commission
or court about this issue and the outcome. If you have not brought a complaint, explain why not.
9.
Explain your experience with changing Transport Providers between January 1, 2010 and
December 31, 2012, describing whether and how it has impacted your ability to purchase Dedicated
Services.
Where appropriate, identify the Provider(s) in your responses below.
a. How many times did you change Transport Providers while keeping your End User
Channel Terminations with an ILEC or Competitive Provider? An estimate of the
number of circuits moved to a new Transport Provider, or the number of such changes
requested for each year, is sufficient.
b. What was the length of time, on average, it took for the ILEC or Competitive Provider to
complete the process of connecting your last-mile End-user Channel Terminations to
another Transport Provider? An estimate is sufficient.
c. Were you given the opportunity to negotiate time lines on a case-by-case basis?
d. How did connecting to a new Transport Provider impact the rate you paid for the End
User Channel Terminations you continued to purchase from the ILEC or Competitive
Provider
?
e. Did connecting to a new Transport Provider typically impact the rate you continued to
pay for Transport Service from the incumbent Provider while the change in Transport
Providers
remained pending? If so, what was the average percentage change in rates?
Did you ever pay a One Month Term Only Rate during that time?
10.
Describe any circumstances since January 1, 2010, in which you have purchased circuits pursuant
to a Tariff, solely for the purpose of meeting a Volume Commitment required for a discount or Non-Rate
Benefit
from your Provider (i.e., you did not utilize the circuits). In your description, provide at least one
example, which at a minimum, lists:
a. The geographic area (e.g., MSA or Non-MSA) in which you purchased the unnecessary
circuits;
b. The name of the Provider providing the circuits at issue;
c. A description of the Volume Commitment;
d. The Tariff and section number(s), if applicable, of the specific terms and conditions
described;
e. A comparison of the dollar amount of the unnecessary circuit(s) purchased versus the
dollar amount of penalties your company would have had to pay had it not purchased
and/or maintained the circuit(s), and a description of how that comparison was calculated.
11.
For each year for the past five years, state the number of times and in what geographic area(s) you
have switched from one Provider of Dedicated Services to another.
12.
Explain the circumstances since January 1, 2010 under which you have paid One Month Term Only
Rates for DS1, DS3, and/or PBDS services and the impact, if any, it had on your business and your
customers. In your response, indicate any general rules you follow, if any, concerning the maximum
number of circuits and maximum amount of time you will pay at One Month Term Only Rates, and your
business rationale for any such rules.
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13.
Separately list all available Tariffs under which your company purchases DS1s, DS3s, and/or PBDS
and provide the information requested below for each plan.
a. This plan is a:
Tariff Plan Contract-Based Tariff (select one)
b. Plan name:
c. Provider name:
d. Tariff and Section Number(s):
e. Tariff type:
Interstate Intrastate
f.
This plan contains:

Term Commitment(s) Volume Commitment(s)
Non-Rate Benefit option(s) (select all that apply)
g. If the plan contains Non-Rate Benefits, identify the Non-Rate Benefits that were relevant
to your decision to purchase services under this plan.
h. This plan can be applied to the purchase of:
DS1 services DS3 services PBDS Other (select all that apply)
i.
In what geographic areas do you purchase DS1s, DS3s, and/or PBDS under this plan, e.g.,
nationwide, a particular region of the country, certain states, certain MSAs, a particular
study area?
j.
To receive a discount or Non-Rate Benefit under this plan, does your company make a
Prior Purchase-Based Commitment?
Yes No
k. If this is an ILEC plan, do DS1 or DS3 purchases your company makes outside the study
area(s) of the ILEC (e.g., purchases from an Affiliated Company of the ILEC that is
providing out-of-region service as a CLEC) count towards meeting any Volume
Commitment
to receive a discount or Non-Rate Benefit under this plan?
Yes No N/A (no Volume Commitment, not an ILEC plan)
i.
If you answered yes, in what geographic areas outside the study area(s) of the ILEC,
do you purchase these DS1s and/or DS3s?
ii. Of the geographic areas identified, in which of those areas would your company have
purchased from a different Provider, if at all, had it not been for the discounts or
Non-Rate Benefits received under this plan? In your response, indicate whether the
Provider that you would have purchased from has Connections serving that
geographic area.
l.
If this is an ILEC plan, do DS1 and/or DS3 purchases your company makes from the
ILEC in price cap areas where the Commission has not granted the ILEC pricing
flexibility count towards meeting any Volume Commitment to receive a discount or Non-
Rate Benefit
under this plan?
Yes No N/A (no Volume Commitment, not an ILEC plan)
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i.
If you answered yes, then identify the price cap areas where you purchase DS1s
and/or DS3s that count towards meeting any Volume Commitment to receive a
discount or Non-Rate Benefit under this plan?
m. If this is an ILEC plan, do DS1 and/or DS3 purchases your company makes from the
ILEC in areas where the Commission has granted either Phase I or Phase II Pricing
Flexibility
count towards meeting any Volume Commitment to receive a discount or Non-
Rate Benefit
under this plan?
Yes No N/A (no Volume Commitment, not an ILEC plan)
i.
If you answered yes, in what geographic areas subject to pricing flexibility do you
purchase DS1s and/or DS3s that count towards meeting any Volume Commitment to
receive a discount or Non-Rate Benefit under this plan?
ii. Of the geographic areas identified, in which of those areas would your company have
purchased from a different Provider, if at all, had it not been for the requirements of
the Tariff Plan? In your response, indicate whether the Provider that you would have
purchased from has Connections serving that geographic area.
n. If this is an ILEC plan, do non-tariffed PBDS purchases you make from this ILEC count
towards meeting any Volume Commitment to receive a discount or Non-Rate Benefit
under this plan?
Yes No N/A (no Volume Commitment, not an ILEC plan)
i.
If you answered yes, in what geographic areas do you purchase non-tariffed PBDS
that counts towards meeting any Volume Commitment to receive a discount or Non-
Rate Benefit
under this plan.
ii. Of the geographic areas identified, in which of those areas would your company have
purchased PBDS from a different Provider, if at all, had it not been for the
requirements of the plan? In your response, indicate whether the Provider that you
would have purchased from has Connections serving that geographic area.
o. If this is an ILEC plan, do purchases you make for services other than DS1s, DS3s, and
PBDS from this ILEC count towards meeting any Volume Commitment to receive a
discount or Non-Rate Benefit under this plan?
Yes No N/A (no Volume Commitment, not an ILEC plan)
i.
If you answered yes, identify the other services purchased and the geographic areas
where you purchase these services that count towards meeting any Volume
Commitment
to receive a discount or Non-Rate Benefit under this plan.
ii. Of the geographic areas identified, in which of those areas would your company have
purchased those other services from a different Provider, had it not been for the
requirements of the plan? In your response, indicate whether the Provider that you
would have purchased from has Connections serving that geographic area.
p. Is the discount or Non-Rate Benefit available under this plan conditioned on the customer
limiting its purchase of UNEs, e.g., the customer must keep its purchase of UNEs below a
certain percentage of the customer’s total spend? If yes, then provide additional details
about the condition.
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14.
Do you have any non-tariffed agreement with an ILEC that, directly or indirectly, provides a
discount or a Non-Rate Benefit on the purchase of tariffed DS1, DS3, and/or PBDS services, restricts your
ability to obtain UNEs, or negatively affects your ability to purchase Dedicated Services?
Yes No
a. If so, identify each agreement below, including the parties to the agreement, the effective
date, and a summary of the relevant provisions.

G. Non-Providers

and Non-Purchasers instructed to respond to this data collection must respond to
the following:

1.
If you must respond to this data collection because you filed the FCC Form 477 in 2012 to report
the provision of “broadband connections to end user locations” but are not (a) a Provider or a Purchaser
as defined in this data collection or (b) an entity that provides Best Efforts Business Broadband Internet
Access Services
, then indicate as such below and complete the certification accompanying this data
collection.
I am not a Provider.
I am not a Purchaser.
I do not provide Best Efforts Business Broadband Internet Access Services.
(select all that apply)
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CERTIFICATION
I have examined the response and certify that, to the best of my knowledge, all statements of fact,
data, and information contained therein are true and correct.
Signature: _________________________
Printed Name: ______________________
Title: _____________________________
Date: ____________
* Respondents are reminded that failure to comply with these data reporting requirements may subject
them to monetary forfeitures of up to $150,000 for each violation or each day of a continuing violation,
up to a maximum of $1,500,000 for any single act or failure to act that is a continuing violation.11 False
statements or misrepresentations to the Commission may be punishable by fine or imprisonment under
Title 18 of the U.S. Code.


11 47 U.S.C. § 503(b)(2); 47 C.F.R. § 1.80(b); Amendment of Section 1.80(b) of the Commission’s Rules, Adjustment
of Forfeiture Maxima to Reflect Inflation
, Order, 23 FCC Rcd 9845 (2008).
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APPENDIX B

Final Regulatory Flexibility Analysis

1.
As required by the Regulatory Flexibility Act of 1980 (RFA),1 as amended, Initial
Regulatory Flexibility analyses (IRFAs) were incorporated in the Special Access NPRM for this
proceeding.2 The Commission sought written public comment on the proposals in the Special Access
NPRM
, including comment on the IRFA. Comments received are discussed below. This present Final
Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

A.

Need for, and Objectives of, the Order

2.
In 2005, the Commission initiated this proceeding as a broad examination of what
regulatory framework to apply to price cap local exchange carriers’ (LECs) interstate special access
services following the expiration of the CALLS plan,3 including whether to maintain or modify the
Commission’s pricing flexibility rules.4 Moreover, the NPRM sought to examine whether the available
marketplace data supported maintaining, modifying, or repealing these rules.5 In this Report and Order,
the Commission continues the process of reviewing our special access rules to ensure that they reflect the
state of competition today and promote competition, investment, and access to dedicated communications
services businesses across the country rely on every day to deliver their products and services to
American consumers. Specifically, the Commission initiates a comprehensive data collection and seek
comment on a proposal to use the data to evaluate competition in the market for special access services.
3.
In this Report and Order, we require providers and purchasers of special access service and
certain other services—including best efforts business broadband Internet access services— as well as
entities that provide certain other services, to submit data, information and documents to allow the
Commission to conduct a comprehensive evaluation of competition in the special access market. The


1 5 U.S.C. § 603. The RFA, 5 U.S.C. §§ 601-612, has been amended by the Contract With America Advancement
Act of 1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA).
2 Special Access Rates for Price Cap Local Exchange Carriers, WC Docket No. 05-25, AT&T Corp. Petition for
Rulemaking to Reform Regulation of Incumbent Local Exchange Carrier Rates for Interstate Special Access
Services,
RM-10593, Order and Notice of Proposed Rulemaking, 20 FCC Rcd 1994, 2037-40, paras. 134-146 (2005)
(Special Access NPRM).
3 The CALLS plan was a five-year interim, industry-proposed regime designed to move towards a more market-
based approach to rate setting. See Access Charge Reform, CC Docket No. 96-262; Price Cap Performance Review
for Local Exchange Carriers
, CC Docket No. 94-1; Low-Volume Long-Distance Users, CC Docket No. 99-249;
Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Sixth Report and Order in CC Docket Nos.
96-262 and 94-1, Report and Order in CC Docket No. 99-249, Eleventh Report and Order in CC Docket No. 96-45,
15 FCC Rcd 12962, 12965, 12977-79, paras. 4, 36-42 (2000) (CALLS Order), aff’d in part, rev’d in part, and
remanded in part, Tex. Office of Pub. Util. Counsel v. FCC
, 265 F.3d 313 (5th Cir. 2001), cert. denied, Nat’l Ass’n
of State Util. Consumer Advocates v. FCC
, 535 U.S. 986 (2002), on remand, Access Charge Reform, CC Docket
Nos. 96-262, 94-1, 99-249, 96-45, Order on Remand, 18 FCC Rcd 14976 (2003).
4 Special Access NPRM, 20 FCC Rcd at 1995, para. 1.
5 Id. at 1996-97, para. 5. The Commission noted its commitment to re-examine periodically rules that were adopted
on the basis of predictive judgments to evaluate whether those judgments are, in fact, corroborated by marketplace
developments. Accordingly, the Commission sought data and comments on whether actual marketplace
developments supported the predictive judgments used to support the special access pricing flexibility rules. Id.
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data, information, and documents required fall into five general categories: market structure; pricing;
demand (i.e., observed sales and purchases), terms and conditions; and competition and pricing decisions.
We will collect the majority of the data for calendar years 2010 and 2012.

B.

Summary of Significant Issues Raised by Public Comments in Response to the IRFA

4.
The Office of Advocacy of the U.S. Small Business Administration (SBA) filed reply
comments to the Notice of Proposed Rulemaking and the Initial Regulatory Flexibility Act Analysis
(IRFA).6 The SBA asserts that the Commission’s IRFA did not consider the effect of new special access
rules on small competitive carriers and urged the Commission to do so.7 SBA contended that because the
Commission’s 2005 Triennial Review Remand Order (TRRO) required both large and small competitive
carriers to purchase special access services instead of UNEs in many metropolitan markets, the
Commission should consider the impact that changes in special access prices would have on small
competitive carriers.8 SBA suggested a number of potential alternatives to special access pricing
regulation that it asserted might minimize the impact on small competitive carriers.9 No other comments
were filed in response to the IRFA.

C.

Description and Estimate of the Number of Small Entities to which the Proposed
Rules will Apply.

5.
The RFA directs agencies to provide a description of, and where feasible, an estimate of
the number of small entities that may be affected by the proposed rules, if adopted.10 The RFA generally
defines the term “small entity” as having the same meaning as the terms “small business,” “small
organization,” and “small governmental jurisdiction.”11 In addition, the term “small business” has the
same meaning as the term “small-business concern” under the Small Business Act.12 A “small-business
concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field of
operation; and (3) satisfies any additional criteria established by the SBA.13
6.

Small Businesses

. Nationwide, there are a total of approximately 27.5 million small
businesses, according to the SBA.14


6 SBA 2005 NPRM IRFA Reply.
7 Id. at 4.
8 Id. at 6.
9 Id. at 6-9 (discussing use of a forward-looking cost model to set price caps; allowing downward pricing flexibility;
“revisiting” cost studies to establish a new rate of return; imposing restrictions on bundling; restricting carriers from
making discounts conditional on previous purchase levels; restricting the length of term commitments; and
restricting carriers’ ability to award discounts based on customers’ terminating their services with competing
carriers).
10 See 5 U.S.C. § 603(b)(3).
11 See id. § 601(6).
12 See id. § 601(3) (incorporating by reference the definition of “small-business concern” in the Small Business Act,
15 U.S.C. § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of small business applies “unless an
agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity
for public comment, establishes one or more definitions of such term which are appropriate to the activities of the
agency and publishes such definition(s) in the Federal Register.”
13 See 15 U.S.C. § 632.
14 See SBA, Office of Advocacy, “FAQs,” available at http://www.sba.gov/sites/default/files/sbfaq.pdf (last visited
Dec. 17, 2012).
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7.

Wired Telecommunications Carriers

. The SBA has developed a small business size
standard for Wired Telecommunications Carriers, which consists of all such companies having 1,500 or
fewer employees.15 According to Census Bureau data for 2007, there were 3,188 firms in this category,
total, that operated for the entire year.16 Of this total, 3144 firms had employment of 999 or fewer
employees, and 44 firms had employment of 1000 employees or more.17 Thus, under this size standard,
the majority of firms can be considered small.
8.

Local Exchange Carriers (LECs)

. Neither the Commission nor the SBA has developed a
size standard for small businesses specifically applicable to local exchange services. The closest
applicable size standard under SBA rules is for Wired Telecommunications Carriers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.18 According to Commission data,
1,307 carriers reported that they were incumbent local exchange service providers.19 Of these 1,307
carriers, an estimated 1,006 have 1,500 or fewer employees and 301 have more than 1,500 employees.20
Consequently, the Commission estimates that most providers of local exchange service are small entities
that may be affected by the rules and policies proposed in the Order.
9.

Incumbent Local Exchange Carriers (incumbent LECs)

. Neither the Commission nor
the SBA has developed a size standard for small businesses specifically applicable to incumbent local
exchange services. The closest applicable size standard under SBA rules is for Wired
Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer
employees.21 According to Commission data, 1,307 carriers reported that they were incumbent local
exchange service providers.22 Of these 1,307 carriers, an estimated 1,006 have 1,500 or fewer employees
and 301 have more than 1,500 employees.23 Consequently, the Commission estimates that most providers
of incumbent local exchange service are small businesses that may be affected by rules adopted pursuant
to the Order
10.
We have included small incumbent LECs in this present RFA analysis. As noted above, a
“small business” under the RFA is one that, inter alia, meets the pertinent small business size standard
(e.g., a telephone communications business having 1,500 or fewer employees), and “is not dominant in its
field of operation.”24 The SBA’s Office of Advocacy contends that, for RFA purposes, small incumbent
LECs are not dominant in their field of operation because any such dominance is not “national” in
scope.25 We have therefore included small incumbent LECs in this RFA analysis, although we emphasize


15 13 C.F.R. § 121.201, NAICS code 517110.
16 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, “Establishment and Firm
Size: Employment Size of Firms for the United States: 2007 NAICS Code 517110” (issued Nov. 2010).
17 See id.
18 13 C.F.R. § 121.201, NAICS code 517110.
19 See Trends in Telephone Service, Federal Communications Commission, Wireline Competition Bureau, Industry
Analysis and Technology Division at Table 5.3 (Sept. 2010) (Trends in Telephone Service).
20 See id.
21 See 13 C.F.R. § 121.201, NAICS code 517110.
22 See Trends in Telephone Service at Table 5.3.
23 See id.
24 5 U.S.C. § 601(3) (RFA); see also 15 U.S.C. § 632 (Small Business Act) .
25 See Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to William E. Kennard, Chairman, FCC (May
27, 1999). The Small Business Act contains a definition of “small business concern,” which the RFA incorporates
into its own definition of “small business.” See 15 U.S.C. § 632(a); see also 5 U.S.C. § 601(3). SBA regulations
(continued….)
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that this RFA action has no effect on Commission analyses and determinations in other, non-RFA
contexts.
11.

Competitive Local Exchange Carriers (competitive LECs), Competitive Access

Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers

. Neither
the Commission nor the SBA has developed a small business size standard specifically for these service
providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications
Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.26
According to Commission data, 1,442 carriers reported that they were engaged in the provision of either
competitive local exchange services or competitive access provider services.27 Of these 1,442 carriers, an
estimated 1,256 have 1,500 or fewer employees and 186 have more than 1,500 employees.28 In addition,
17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have
1,500 or fewer employees.29 In addition, 72 carriers have reported that they are Other Local Service
Providers.30 Of the 72, seventy have 1,500 or fewer employees and two have more than 1,500
employees.31 Consequently, the Commission estimates that most providers of competitive local exchange
service, competitive access providers, Shared-Tenant Service Providers, and Other Local Service
Providers are small entities that may be affected by rules adopted pursuant to the Order.
12.

Interexchange Carriers (IXCs)

. Neither the Commission nor the SBA has developed a
size standard for small businesses specifically applicable to interexchange services. The closest
applicable size standard under SBA rules is for Wired Telecommunications Carriers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.32 According to Commission data,
359 companies reported that their primary telecommunications service activity was the provision of
interexchange services.33 Of these 359 companies, an estimated 317 have 1,500 or fewer employees and
42 have more than 1,500 employees.34 Consequently, the Commission estimates that the majority of
interexchange service providers are small entities that may be affected by rules adopted pursuant to the
Order.
13.

Prepaid Calling Card Providers

. Neither the Commission nor the SBA has developed a
small business size standard specifically for prepaid calling card providers. The appropriate size standard
under SBA rules is for the category Telecommunications Resellers. Under that size standard, such a
business is small if it has 1,500 or fewer employees.35 According to Commission data, 193 carriers have
reported that they are engaged in the provision of prepaid calling cards.36 Of these, an estimated all 193
(Continued from previous page)


interpret “small business concern” to include the concept of dominance on a national basis. See 13 C.F.R. §
121.102(b).
26 See 13 C.F.R. § 121.201, NAICS code 517110.
27 See Trends in Telephone Service at Table 5.3.
28 See id.
29 See id.
30 See id.
31 See id.
32 See 13 C.F.R. § 121.201, NAICS code 517110.
33 See Trends in Telephone Service at Table 5.3.
34 See id.
35 See 13 C.F.R. § 121.201, NAICS code 517911.
36 See Trends in Telephone Service at Table 5.3.
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have 1,500 or fewer employees and none have more than 1,500 employees.37 Consequently, the
Commission estimates that the majority of prepaid calling card providers are small entities that may be
affected by rules adopted pursuant to the Order.
14.

Local Resellers

. The SBA has developed a small business size standard for the category of
Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer
employees.38 According to Commission data, 213 carriers have reported that they are engaged in the
provision of local resale services.39 Of these, an estimated 211 have 1,500 or fewer employees and two
have more than 1,500 employees.40 Consequently, the Commission estimates that the majority of local
resellers are small entities that may be affected by rules adopted pursuant to the Order.
15.

Toll Resellers

. The SBA has developed a small business size standard for the category of
Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer
employees.41 According to Commission data, 881 carriers have reported that they are engaged in the
provision of toll resale services.42 Of these, an estimated 857 have 1,500 or fewer employees and 24 have
more than 1,500 employees.43 Consequently, the Commission estimates that the majority of toll resellers
are small entities that may be affected by rules adopted pursuant to the Order.
16.

Other Toll Carriers

. Neither the Commission nor the SBA has developed a size standard
for small businesses specifically applicable to Other Toll Carriers. This category includes toll carriers
that do not fall within the categories of interexchange carriers, operator service providers, prepaid calling
card providers, satellite service carriers, or toll resellers. The closest applicable size standard under SBA
rules is for Wired Telecommunications Carriers. Under that size standard, such a business is small if it
has 1,500 or fewer employees.44 According to Commission data, 284 companies reported that their
primary telecommunications service activity was the provision of other toll carriage.45 Of these, an
estimated 279 have 1,500 or fewer employees and five have more than 1,500 employees.46 Consequently,
the Commission estimates that most Other Toll Carriers are small entities that may be affected by the
rules and policies adopted pursuant to the Order.
17.
800 and 800-Like Service Subscribers.47 Neither the Commission nor the SBA has
developed a small business size standard specifically for 800 and 800-like service (toll free) subscribers.
The appropriate size standard under SBA rules is for the category Telecommunications Resellers. Under
that size standard, such a business is small if it has 1,500 or fewer employees.48 The most reliable source
of information regarding the number of these service subscribers appears to be data the Commission


37 See id.
38 See 13 C.F.R. § 121.201, NAICS code 517911.
39 See Trends in Telephone Service at Table 5.3.
40 See id.
41 See 13 C.F.R. § 121.201, NAICS code 517911.
42 See Trends in Telephone Service at Table 5.3.
43 See id.
44 See 13 C.F.R. § 121.201, NAICS code 517110.
45 See Trends in Telephone Service at Table 5.3.
46 See id.
47 We include all toll-free number subscribers in this category, including those for 888 numbers.
48 See 13 C.F.R. § 121.201, NAICS code 517911.
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collects on the 800, 888, 877, and 866 numbers in use.49 According to our data, as of September 2009,
the number of 800 numbers assigned was 7,860,000; the number of 888 numbers assigned was 5,588,687;
the number of 877 numbers assigned was 4,721,866; and the number of 866 numbers assigned was
7,867,736.50 We do not have data specifying the number of these subscribers that are not independently
owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with
greater precision the number of toll free subscribers that would qualify as small businesses under the SBA
size standard. Consequently, we estimate that there are 7,860,000 or fewer small entity 800 subscribers;
5,588,687 or fewer small entity 888 subscribers; 4,721,866 or fewer small entity 877 subscribers; and
7,867,736 or fewer small entity 866 subscribers.
18.

Wireless Telecommunications Carriers (except Satellite)

. Since 2007, the SBA has
recognized wireless firms within this new, broad, economic census category.51 Prior to that time, such
firms were within the now-superseded categories of Paging and Cellular and Other Wireless
Telecommunications.52 Under the present and prior categories, the SBA has deemed a wireless business
to be small if it has 1,500 or fewer employees.53 For this category, census data for 2007 show that there
were 1,383 firms that operated for the entire year.54 Of this total, 1,368 firms had employment of 999 or
fewer employees and 15 had employment of 1000 employees or more.55 Similarly, according to
Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony,
including cellular service, Personal Communications Service (PCS), and Specialized Mobile Radio
(SMR) Telephony services.56 Of these, an estimated 261 have 1,500 or fewer employees and 152 have
more than 1,500 employees.57 Consequently, the Commission estimates that approximately half or more
of these firms can be considered small. Thus, using available data, we estimate that the majority of
wireless firms can be considered small.
19.

Broadband Personal Communications Service

. The broadband personal
communications service (PCS) spectrum is divided into six frequency blocks designated A through F, and
the Commission has held auctions for each block. The Commission defined “small entity” for Blocks C
and F as an entity that has average gross revenues of $40 million or less in the three previous calendar
years.58 For Block F, an additional classification for “very small business” was added and is defined as an


49 See Trends in Telephone Service at Tables 18.7-18.10.
50 See id.
51 See 13 C.F.R. § 121.201, NAICS code 517210.
52 U.S. Census Bureau, 2007, 517210 Wireless Telecommunications Carriers (except satellite),
http://www.census.gov/eos/www/naics/ (last visited Dec. 17, 2012).
53 13 C.F.R. § 121.201, NAICS code 517210. The now-superseded, pre-2007 C.F.R. citations were 13 C.F.R. §
121.201, NAICS codes 517211 and 517212 (referring to the 2002 NAICS).
54 U.S. Census Bureau, Subject Series: Information, Table 5, “Establishment and Firm Size: Employment Size of
Firms for the United States: 2007 NAICS Code 517210” (issued Nov. 2010).
55 Id. Available census data do not provide a more precise estimate of the number of firms that have employment of
1,500 or fewer employees; the largest category provided is for firms with “100 employees or more.”
56 See Trends in Telephone Service at Table 5.3.
57 See id.
58 See generally Amendment of Parts 20 and 24 of the Commission’s Rules – Broadband PCS Competitive Bidding
and the Commercial Mobile Radio Service Spectrum Cap
, WT Docket No. 96-59, GN Docket No. 90-314, Report
and Order, 11 FCC Rcd 7824 (1996) (Broadband PCS Competitive Bidding Report and Order); see also 47 C.F.R. §
24.720(b)(1).
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entity that, together with its affiliates, has average gross revenues of not more than $15 million for the
preceding three calendar years.59 These standards defining “small entity” in the context of broadband
PCS auctions have been approved by the SBA.60 No small businesses, within the SBA-approved small
business size standards bid successfully for licenses in Blocks A and B. There were 90 winning bidders
that qualified as small entities in the Block C auctions. A total of 93 small and very small business
bidders won approximately 40 percent of the 1,479 licenses for Blocks D, E, and F.61 In 1999, the
Commission re-auctioned 347 C, E, and F Block licenses.62 There were 48 small business winning
bidders. In 2001, the Commission completed the auction of 422 C and F Broadband PCS licenses in
Auction 35.63 Of the 35 winning bidders in this auction, 29 qualified as “small” or “very small”
businesses. Subsequent events, concerning Auction 35, including judicial and agency determinations,
resulted in a total of 163 C and F Block licenses being available for grant. In 2005, the Commission
completed an auction of 188 C block licenses and 21 F block licenses in Auction 58. There were 24
winning bidders for 217 licenses.64 Of the 24 winning bidders, 16 claimed small business status and won
156 licenses. In 2007, the Commission completed an auction of 33 licenses in the A, C, and F Blocks in
Auction 71.65 Of the 14 winning bidders, six were designated entities.66 In 2008, the Commission
completed an auction of 20 Broadband PCS licenses in the C, D, E and F block licenses in Auction 78.67
20.

Advanced Wireless Services

. In 2008, the Commission conducted the auction of
Advanced Wireless Services (“AWS”) licenses.68 This auction, which as designated as Auction 78,
offered 35 licenses in the AWS 1710-1755 MHz and 2110-2155 MHz bands (“AWS-1”). The AWS-1
licenses were licenses for which there were no winning bids in Auction 66. That same year, the
Commission completed Auction 78. A bidder with attributed average annual gross revenues that
exceeded $15 million and did not exceed $40 million for the preceding three years (“small business”)
received a 15 percent discount on its winning bid. A bidder with attributed average annual gross revenues


59 See generally Broadband PCS Competitive Bidding Report and Order, 11 FCC Rcd 7824; see also 47 C.F.R. §
24.720(b)(2).
60 See, e.g., Implementation of Section 309(j) of the Communications Act – Competitive Bidding, PP Docket No. 93-
253, Fifth Report and Order, 9 FCC Rcd 5532 (1994).
61 See FCC News, Broadband PCS, D, E and F Block Auction Closes, No. 71744 (rel. Jan. 14, 1997);see also
Amendment of the Commission’s Rules Regarding Installment Payment Financing for Personal Communications
Services (PCS) Licensees
, WT Docket No. 97-82, Second Report and Order and Further Notice of Proposed
Rulemaking, 12 FCC Rcd 16436 (1997).
62 See C, D, E, and F Block Broadband PCS Auction Closes, DA 99-757, Public Notice, 14 FCC Rcd 6688 (WTB
1999).
63 See C and F Block Broadband PCS Auction Closes; Winning Bidders Announced, DA 01-211, Public Notice, 16
FCC Rcd 2339 (2001).
64 See Broadband PCS Spectrum Auction Closes; Winning Bidders Announced for Auction No. 58, DA 05-459,
Public Notice, 20 FCC Rcd 3703 (2005).
65 See Auction of Broadband PCS Spectrum Licenses Closes; Winning Bidders Announced for Auction No. 71, DA
07-2142, Public Notice, 22 FCC Rcd 9247 (2007).
66 Id.
67 See Auction of AWS-1 and Broadband PCS Licenses Rescheduled For August 13, 3008, Notice of Filing
Requirements, Minimum Opening Bids, Upfront Payments and Other Procedures For Auction 78
, Public Notice, 23
FCC Rcd 7496 (2008) (AWS-1 and Broadband PCS Procedures Public Notice).
68 See AWS-1 and Broadband PCS Procedures Public Notice, 23 FCC Rcd 7496. Auction 78 also included an
auction of Broadband PCS licenses.
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that did not exceed $15 million for the preceding three years (“very small business”) received a 25
percent discount on its winning bid. A bidder that had combined total assets of less than $500 million and
combined gross revenues of less than $125 million in each of the last two years qualified for entrepreneur
status.69 Four winning bidders that identified themselves as very small businesses won 17 licenses.70
Three of the winning bidders that identified themselves as a small business won five licenses.
Additionally, one other winning bidder that qualified for entrepreneur status won 2 licenses.
21.

Narrowband Personal Communications Services

. In 1994, the Commission conducted
an auction for Narrowband PCS licenses. A second auction was also conducted later in 1994. For
purposes of the first two Narrowband PCS auctions, “small businesses” were entities with average gross
revenues for the prior three calendar years of $40 million or less.71 Through these auctions, the
Commission awarded a total of 41 licenses, 11 of which were obtained by four small businesses.72 To
ensure meaningful participation by small business entities in future auctions, the Commission adopted a
two-tiered small business size standard in the Narrowband PCS Second Report and Order.73 A “small
business” is an entity that, together with affiliates and controlling interests, has average gross revenues for
the three preceding years of not more than $40 million.74 A “very small business” is an entity that,
together with affiliates and controlling interests, has average gross revenues for the three preceding years
of not more than $15 million.75 The SBA has approved these small business size standards.76 A third
auction was conducted in 2001. Here, five bidders won 317 (Metropolitan Trading Areas and
nationwide) licenses.77 Three of these claimed status as a small or very small entity and won 311
licenses.
22.

Paging (Private and Common Carrier)

. In the Paging Third Report and Order, we
developed a small business size standard for “small businesses” and “very small businesses” for purposes


69 Id. at 7521-22.
70 See Auction of AWS-1 and Broadband PCS Licenses Closes, Winning Bidders Announced for Auction 78, Down
Payments Due September 9, 2008, FCC Forms 601 and 602 Due September 9, 2008, Final Payments Due
September 23, 2008, Ten-Day Petition to Deny Period
, Public Notice, 23 FCC Rcd 12749 (2008).
71 Implementation of Section 309(j) of the Communications Act – Competitive Bidding Narrowband PCS, PP Docket
No. 93-253, GEN Docket No. 90-314, ET Docket No. 92-100, Third Memorandum Opinion and Order and Further
Notice of Proposed Rulemaking, 10 FCC Rcd 175, 196, para. 46 (1994).
72 See Announcing the High Bidders in the Auction of Ten Nationwide Narrowband PCS Licenses, Winning Bids
Total $617,006,674
, Public Notice, PNWL 94-004 (rel. Aug. 2, 1994); Announcing the High Bidders in the Auction
of 30 Regional Narrowband PCS Licenses; Winning Bids Total $490,901,787
, Public Notice, PNWL 94-27 (rel.
Nov. 9, 1994).
73 Amendment of the Commission’s Rules to Establish New Personal Communications Services, GEN Docket No.
90-314, ET Docket No. 92-100, PP Docket No. 93-253, Narrowband PCS, Second Report and Order and Second
Further Notice of Proposed Rule Making, 15 FCC Rcd 10456, 10476, para. 40 (2000) (Narrowband PCS Second
Report and Order
).
74 Narrowband PCS Second Report and Order, 15 FCC Rcd at 10476, para. 40.
75 Id.
76 See Letter to Amy Zoslov, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications
Bureau, FCC, from A. Alvarez, Administrator, SBA (Dec. 2, 1998) (Alvarez Letter 1998).
77 See Narrowband PCS Auction Closes, Public Notice, 16 FCC Rcd 18663 (WTB 2001).
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of determining their eligibility for special provisions such as bidding credits and installment payments.78
A “small business” is an entity that, together with its affiliates and controlling principals, has average
gross revenues not exceeding $15 million for the preceding three years. Additionally, a “very small
business” is an entity that, together with its affiliates and controlling principals, has average gross
revenues that are not more than $3 million for the preceding three years. The SBA has approved these
small business size standards.79 According to Commission data, 291 carriers have reported that they are
engaged in Paging or Messaging Service.80 Of these, an estimated 289 have 1,500 or fewer employees,
and two have more than 1,500 employees.81 Consequently, the Commission estimates that the majority of
paging providers are small entities that may be affected by our action. An auction of Metropolitan
Economic Area licenses commenced on February 24, 2000, and closed on March 2, 2000. Of the 2,499
licenses auctioned, 985 were sold. Fifty-seven companies claiming small business status won 440
licenses.82 A subsequent auction of MEA and Economic Area (“EA”) licenses was held in the year 2001.
Of the 15,514 licenses auctioned, 5,323 were sold.83 One hundred thirty-two companies claiming small
business status purchased 3,724 licenses. A third auction, consisting of 8,874 licenses in each of 175 EAs
and 1,328 licenses in all but three of the 51 MEAs, was held in 2003. Seventy-seven bidders claiming
small or very small business status won 2,093 licenses.84 A fourth auction, consisting of 9,603 lower and
upper paging band licenses was held in the year 2010. Twenty-nine bidders claiming small or very small
business status won 3,016 licenses.85.
23.
220 MHz Radio Service – Phase I Licensees. The 220 MHz service has both Phase I and
Phase II licenses. Phase I licensing was conducted by lotteries in 1992 and 1993. There are
approximately 1,515 such non-nationwide licensees and four nationwide licensees currently authorized to
operate in the 220 MHz band. The Commission has not developed a small business size standard for
small entities specifically applicable to such incumbent 220 MHz Phase I licensees. To estimate the
number of such licensees that are small businesses, we apply the small business size standard under the
SBA rules applicable to Wireless Telecommunications Carriers (except Satellite). Under this category,
the SBA deems a wireless business to be small if it has 1,500 or fewer employees.86 The Commission
estimates that nearly all such licensees are small businesses under the SBA’s small business size standard
that may be affected by rules adopted pursuant to the Order.
24.
220 MHz Radio Service – Phase II Licensees. The 220 MHz service has both Phase I
and Phase II licenses. The Phase II 220 MHz service is subject to spectrum auctions. In the 220 MHz


78 See Revision of Part 22 and Part 90 of the Commission’s Rules to Facilitate Future Development of Paging
Systems
, WT Docket No. 96-18, PR Docket No. 93-253, Memorandum Opinion and Order on Reconsideration and
Third Report and Order, 14 FCC Rcd 10030, 10085–88, paras. 98–107 (1999) (Paging Third Report and Order)
79 See Alvarez Letter 1998.
80 See Trends in Telephone Service at Table 5.3.
81 See id.
82 See id.
83 See Lower and Upper Paging Band Auction Closes, Public Notice, 16 FCC Rcd 21821 (WTB 2002).
84 See Lower and Upper Paging Bands Auction Closes, Public Notice, 18 FCC Rcd 11154 (WTB 2003). The current
number of small or very small business entities that hold wireless licenses may differ significantly from the number
of such entities that won in spectrum auctions due to assignments and transfers of licenses in the secondary market
over time. In addition, some of the same small business entities may have won licenses in more than one auction.
85 See Auction of Lower and Upper Paging Bands Licenses Closes, Public Notice, 25 FCC Rcd 18164 (WTB 2010).
86 See 13 C.F.R. § 121.201, NAICS code 517210.
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Third Report and Order, we adopted a small business size standard for “small” and “very small”
businesses for purposes of determining their eligibility for special provisions such as bidding credits and
installment payments.87 This small business size standard indicates that a “small business” is an entity
that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15
million for the preceding three years.88 A “very small business” is an entity that, together with its
affiliates and controlling principals, has average gross revenues that do not exceed $3 million for the
preceding three years.89 The SBA has approved these small business size standards.90 Auctions of Phase
II licenses commenced on September 15, 1998, and closed on October 22, 1998.91 In the first auction,
908 licenses were auctioned in three different-sized geographic areas: three nationwide licenses, 30
Regional Economic Area Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908
licenses auctioned, 693 were sold. Thirty-nine small businesses won licenses in the first 220 MHz
auction. The second auction included 225 licenses: 216 EA licenses and 9 EAG licenses. Fourteen
companies claiming small business status won 158 licenses.92
25.

Specialized Mobile Radio

. The Commission awards small business bidding credits in
auctions for Specialized Mobile Radio (“SMR”) geographic area licenses in the 800 MHz and 900 MHz
bands to entities that had revenues of no more than $15 million in each of the three previous calendar
years.93 The Commission awards very small business bidding credits to entities that had revenues of no
more than $3 million in each of the three previous calendar years.94 The SBA has approved these small
business size standards for the 800 MHz and 900 MHz SMR Services.95 The Commission has held
auctions for geographic area licenses in the 800 MHz and 900 MHz bands. The 900 MHz SMR auction
was completed in 1996.96 Sixty bidders claiming that they qualified as small businesses under the $15
million size standard won 263 geographic area licenses in the 900 MHz SMR band.97 The 800 MHz
SMR auction for the upper 200 channels was conducted in 1997. Ten bidders claiming that they qualified
as small businesses under the $15 million size standard won 38 geographic area licenses for the upper 200
channels in the 800 MHz SMR band.98 A second auction for the 800 MHz band was conducted in 2002


87 See Amendment of Part 90 of the Commission’s Rules to Provide for the Use of the 220-222 MHz Band by the
Private Land Mobile Radio Service
, PR Docket No. 89-552, GN Docket No. 93-252, PP Docket No. 93-253, Third
Report and Order and Fifth Notice of Proposed Rulemaking, 12 FCC Rcd 10943, 11068–70, paras. 291–295 (1997)
(220 MHz Third Report and Order).
88 See id. at 11068–69, para. 291.
89 See id. at 11068–70, paras. 291–95.
90 See Letter to D. Phythyon, Chief, Wireless Telecommunications Bureau, FCC, from Aida Alvarez, Administrator,
SBA (Jan. 6, 1998) (Alvarez to Phythyon Letter 1998).
91 See Phase II 220 MHz Service Auction Closes, Public Notice, 14 FCC Rcd 605 (1998).
92 See Phase II 220 MHz Service Spectrum Auction Closes, Public Notice, 14 FCC Rcd 11218 (1999).
93 47 C.F.R. §§ 90.810, 90.814(b), 90.912.
94 Id..
95 See Letter from Aida Alvarez, Administrator, SBA, to Thomas Sugrue, Chief, Wireless Telecommunications
Bureau, FCC (Aug. 10, 1999) (Alvarez Letter 1999).
96 FCC Announces Winning Bidders in the Auction of 1,020 Licenses to Provide 900 MHz SMR in Major Trading
Areas: Down Payments due April 22, 1996, FCC Form 600s due April 29, 1996
, Public Notice, 11 FCC Rcd 18599
(WTB 1996).
97 Id.
98 See Correction to Public Notice DA 96-586 ‘FCC Announces Winning Bidders in the Auction of 1020 Licenses to
Provide 900 MHz SMR in Major Trading Areas
,’ Public Notice, 11 FCC Rcd 18637 (WTB 1996).
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and included 23 BEA licenses. One bidder claiming small business status won five licenses.99
26.
The auction of the 1,053 800 MHz SMR geographic area licenses for the General Category
channels was conducted in 2000. Eleven bidders won 108 geographic area licenses for the General
Category channels in the 800 MHz SMR band qualified as small businesses under the $15 million size
standard.100 In an auction completed in 2000, a total of 2,800 Economic Area licenses in the lower 80
channels of the 800 MHz SMR service were awarded.101 Of the 22 winning bidders, 19 claimed small
business status and won 129 licenses. Thus, combining all three auctions, 40 winning bidders for
geographic licenses in the 800 MHz SMR band claimed status as small business.
27.
In addition, there are numerous incumbent site-by-site SMR licensees and licensees with
extended implementation authorizations in the 800 and 900 MHz bands. We do not know how many
firms provide 800 MHz or 900 MHz geographic area SMR pursuant to extended implementation
authorizations, nor how many of these providers have annual revenues of no more than $15 million. One
firm has over $15 million in revenues. In addition, we do not know how many of these firms have 1,500
or fewer employees.102 We assume, for purposes of this analysis, that all of the remaining existing
extended implementation authorizations are held by small entities, as that small business size standard is
approved by the SBA.
28.

Broadband Radio Service and Educational Broadband Service

. Broadband Radio
Service systems, previously referred to as Multipoint Distribution Service (“MDS”) and Multichannel
Multipoint Distribution Service (“MMDS”) systems, and “wireless cable,” transmit video programming
to subscribers and provide two-way high speed data operations using the microwave frequencies of the
Broadband Radio Service (“BRS”) and Educational Broadband Service (“EBS”) (previously referred to as
the Instructional Television Fixed Service (“ITFS”)).103 In connection with the 1996 BRS auction, the
Commission established a small business size standard as an entity that had annual average gross
revenues of no more than $40 million in the previous three calendar years.104 The BRS auctions resulted
in 67 successful bidders obtaining licensing opportunities for 493 Basic Trading Areas (“BTAs”). Of the
67 auction winners, 61 met the definition of a small business. BRS also includes licensees of stations
authorized prior to the auction. At this time, we estimate that of the 61 small business BRS auction
winners, 48 remain small business licensees. In addition to the 48 small businesses that hold BTA
authorizations, there are approximately 392 incumbent BRS licensees that are considered small entities.105
After adding the number of small business auction licensees to the number of incumbent licensees not
already counted, we find that there are currently approximately 440 BRS licensees that are defined as


99 See Multi-Radio Service Auction Closes, Public Notice, 17 FCC Rcd 1446 (WTB 2002).
100 See 800 MHz Specialized Mobile Radio (SMR) Service General Category (851-854 MHz) and Upper Band (861-
865 MHz) Auction Closes; Winning Bidders Announced,
Public Notice, 15 FCC Rcd 17162 (WTB 2000).
101 See 800 MHz SMR Service Lower 80 Channels Auction Closes; Winning Bidders Announced, Public Notice, 16
FCC Rcd 1736 (WTB 2000).
102 See generally 13 C.F.R. § 121.201, NAICS code 517210.
103 Amendment of Parts 21 and 74 of the Commission’s Rules with Regard to Filing Procedures in the Multipoint
Distribution Service and in the Instructional Television Fixed Service and Implementation of Section 309(j) of the
Communications Act – Competitive Bidding
, MM Docket No. 94-131 and PP Docket No. 93-253, Report and Order,
10 FCC Rcd 9589, 9593 para. 7 (1995).
104 47 C.F.R. § 21.961(b)(1).
105 47 U.S.C. § 309(j). Hundreds of stations were licensed to incumbent MDS licensees prior to implementation of
Section 309(j) of the Communications Act of 1934, 47 U.S.C. § 309(j). For these pre-auction licenses, the
applicable standard is SBA’s small business size standard.
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small businesses under either the SBA or the Commission’s rules. The Commission has adopted three
levels of bidding credits for BRS: (i) a bidder with attributed average annual gross revenues that exceed
$15 million and do not exceed $40 million for the preceding three years (small business) is eligible to
receive a 15 percent discount on its winning bid; (ii) a bidder with attributed average annual gross
revenues that exceed $3 million and do not exceed $15 million for the preceding three years (very small
business) is eligible to receive a 25 percent discount on its winning bid; and (iii) a bidder with attributed
average annual gross revenues that do not exceed $3 million for the preceding three years (entrepreneur)
is eligible to receive a 35 percent discount on its winning bid.106 In 2009, the Commission conducted
Auction 86, which offered 78 BRS licenses.107 Auction 86 concluded with ten bidders winning 61
licenses.108 Of the ten, two bidders claimed small business status and won 4 licenses; one bidder claimed
very small business status and won three licenses; and two bidders claimed entrepreneur status and won
six licenses.
29.
In addition, the SBA’s Cable Television Distribution Services small business size standard
is applicable to EBS. There are presently 2,032 EBS licensees. All but 100 of these licenses are held by
educational institutions. Educational institutions are included in this analysis as small entities.109 Thus,
we estimate that at least 1,932 licensees are small businesses. Since 2007, Cable Television Distribution
Services have been defined within the broad economic census category of Wired Telecommunications
Carriers; that category is defined as follows: “This industry comprises establishments primarily engaged
in operating and/or providing access to transmission facilities and infrastructure that they own and/or
lease for the transmission of voice, data, text, sound, and video using wired telecommunications
networks. Transmission facilities may be based on a single technology or a combination of
technologies.”110 The SBA defines a small business size standard for this category as any such firms
having 1,500 or fewer employees. The SBA has developed a small business size standard for this
category, which is: all such firms having 1,500 or fewer employees. According to Census Bureau data for
2007, there were a total of 955 firms in this previous category that operated for the entire year.111 Of this
total, 939 firms had employment of 999 or fewer employees, and 16 firms had employment of 1000
employees or more.112 Thus, under this size standard, the majority of firms can be considered small and
may be affected by rules adopted pursuant to the Order.
30.

Lower 700 MHz Band Licenses

. The Commission previously adopted criteria for
defining three groups of small businesses for purposes of determining their eligibility for special


106 47 C.F.R. § 27.1218. See also “Auction of Broadband Radio Service (BRS) Licenses, Scheduled for October 27,
2009, Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for
Auction 86,” Public Notice, 24 FCC Rcd 8277, 8296 (WTB 2009) (Auction 86 Procedures Public Notice).
107 Auction 86 Procedures Public Notice, 24 FCC Rcd at 8280.
108 “Auction of Broadband Radio Service Licenses Closes, Winning Bidders Announced for Auction 86, Down
Payments Due November 23, 2009, Final Payments Due December 8, 2009, Ten-Day Petition to Deny Period,”
Public Notice, 24 FCC Rcd 13572 (WTB 2009).
109 The term “small entity” within SBREFA applies to small organizations (nonprofits) and to small governmental
jurisdictions (cities, counties, towns, townships, villages, school districts, and special districts with populations of
less than 50,000). 5 U.S.C. §§ 601(4)-(6). We do not collect annual revenue data on EBS licensees.
110 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers” (partial
definition), http://www.census.gov/naics/2007/def/ND517110.HTM#N517110 (last visited Nov. 6, 2012).
111 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms
for the United States: 2007, NAICS code 5171102 (issued Nov. 2010).
112 See id.
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provisions such as bidding credits.113 The Commission defined a “small business” as an entity that,
together with its affiliates and controlling principals, has average gross revenues not exceeding $40
million for the preceding three years.114 A “very small business” is defined as an entity that, together with
its affiliates and controlling principals, has average gross revenues that are not more than $15 million for
the preceding three years.115 Additionally, the Lower 700 MHz Band had a third category of small
business status for Metropolitan/Rural Service Area (“MSA/RSA”) licenses, identified as “entrepreneur”
and defined as an entity that, together with its affiliates and controlling principals, has average gross
revenues that are not more than $3 million for the preceding three years.116 The SBA approved these
small size standards.117 The Commission conducted an auction in 2002 of 740 Lower 700 MHz Band
licenses (one license in each of the 734 MSAs/RSAs and one license in each of the six Economic Area
Groupings (EAGs)). Of the 740 licenses available for auction, 484 licenses were sold to 102 winning
bidders.118 Seventy-two of the winning bidders claimed small business, very small business or
entrepreneur status and won a total of 329 licenses.119 The Commission conducted a second Lower 700
MHz Band auction in 2003 that included 256 licenses: 5 EAG licenses and 476 Cellular Market Area
licenses.120 Seventeen winning bidders claimed small or very small business status and won 60 licenses,
and nine winning bidders claimed entrepreneur status and won 154 licenses.121 In 2005, the Commission
completed an auction of 5 licenses in the Lower 700 MHz Band, designated Auction 60. There were
three winning bidders for five licenses. All three winning bidders claimed small business status.122
31.
In 2007, the Commission reexamined its rules governing the 700 MHz band in the 700
MHz Second Report and Order. 123 The 700 MHz Second Report and Order revised the band plan for the
commercial (including Guard Band) and public safety spectrum, adopted services rules, including
stringent build-out requirements, an open platform requirement on the C Block, and a requirement on the


113 See Reallocation and Service Rules for the 698-746 MHz Spectrum Band (Television Channels 52-59), GN
Docket No. 01-74, Report and Order, 17 FCC Rcd 1022 (2002) (Channels 52-59 Report and Order).
114 See Channels 52-59 Report and Order, 17 FCC Rcd at 1087-88, para. 172.
115 See id.
116 See id. at 1088 para. 173.
117 See Alvarez Letter 1999.
118 See “Lower 700 MHz Band Auction Closes,” Public Notice, 17 FCC Rcd 17272 (WTB 2002).
119 Id.
120 See “Lower 700 MHz Band Auction Closes,” Public Notice, 18 FCC Rcd 11873 (WTB 2003).
121 See id.
122 “Auction of Lower 700 MHz Band Licenses Closes, Winning Bidders Announced for Auction No. 60, Down
Payments due August 19, 2005, FCC Forms 601 and 602 due August 19, 2005, Final Payment due September 2,
2005, Ten-Day Petition to Deny Period,” Public Notice, 20 FCC Rcd 13424 (WTB 2005).
123 See Service Rules for the 698-746, 747-762 and 777-792 MHz Band, WT Docket No. 06-150, Revision of the
Commission’s Rules to Ensure Compatibility with Enhanced 911 Emergency Calling Systems, CC Docket No. 94-
102, Section 68.4(a) of the Commission’s Rules Governing Hearing Aid-Compatible Telephone
, Biennial Regulatory
Review – Amendment of Parts 1, 22, 24, 27, and 90 to Streamline and Harmonize Various Rules Affecting Wireless
Radio Services, Former Nextel Communications, Inc. Upper700 MHz Guard Band Licenses and Revisions to Part
27 of the Commission’s Rules
, Implementing a Nationwide, Broadband Interoperable Public Safety Network in the
700 MHz Band, Development of Operational, Technical and Spectrum Requirements for Meeting Federal, State,
and Local Public Safety Communications Requirements Through the Year 2010
, WT Docket Nos. 96-86, 01-309,
03-264, 06-169, PS Docket No. 06-229, Second Report and Order, 22 FCC Rcd 15289 (2007) (700 MHz Second
Report and Order
).
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D Block licensee to construct and operate a nationwide, interoperable wireless broadband network for
public safety users.124 An auction of A, B and E block licenses in the Lower 700 MHz band was held in
2008.125 Twenty winning bidders claimed small business status (those with attributable average annual
gross revenues that exceed $15 million and do not exceed $40 million for the preceding three years).
Thirty three winning bidders claimed very small business status (those with attributable average annual
gross revenues that do not exceed $15 million for the preceding three years). In 2011, the Commission
conducted Auction 92, which offered 16 Lower 700 MHz band licenses that had been made available in
Auction 73 but either remained unsold or were licenses on which a winning bidder defaulted. Two of the
seven winning bidders in Auction 92 claimed very small business status, winning a total of four
licenses.126
32.
Upper 700 MHz Band Licenses. In the 700 MHz Second Report and Order, the
Commission revised its rules regarding Upper 700 MHz band licenses.127 In 2008, the Commission
conducted Auction 73 in which C and D block licenses in the Upper 700 MHz band were available.128
Three winning bidders claimed very small business status (those with attributable average annual gross
revenues that do not exceed $15 million for the preceding three years).
33.
700

MHz Guard Band Licensees

. In the 700 MHz Guard Band Order, we adopted a
small business size standard for “small businesses” and “very small businesses” for purposes of
determining their eligibility for special provisions such as bidding credits and installment payments.129 A
“small business” is an entity that, together with its affiliates and controlling principals, has average gross
revenues not exceeding $40 million for the preceding three years.130 Additionally, a “very small
business” is an entity that, together with its affiliates and controlling principals, has average gross
revenues that are not more than $15 million for the preceding three years.131 An auction of 52 Major
Economic Area (MEA) licenses commenced on September 6, 2000, and closed on September 21, 2000.132
Of the 104 licenses auctioned, 96 licenses were sold to nine bidders. Five of these bidders were small
businesses that won a total of 26 licenses. A second auction of 700 MHz Guard Band licenses
commenced on February 13, 2001 and closed on February 21, 2001. All eight of the licenses auctioned
were sold to three bidders. One of these bidders was a small business that won a total of two licenses.133
34.
Cellular

Radiotelephone Service

. Auction 77 was held to resolve one group of mutually


124 Id.
125 See Auction of 700 MHz Band Licenses Closes, Public Notice, 23 FCC Rcd 4572 (WTB 2008).
126 See “Auction of 700 MHz Band Licenses Closes, Winning Bidders Announced for Auction 92, Down Payments
and FCC Forms 601 and 602 Due August 11, 2011, Final Payments Due August 25, 2011, Ten-Day Petition to Deny
Period,” Public Notice, 26 FCC Rcd 10494 (WTB 2011).
127 700 MHz Second Report and Order, 22 FCC Rcd 15289.
128 See Auction of 700 MHz Band Licenses Closes, Public Notice, 23 FCC Rcd 4572 (2008).
129 See Service Rules for the 746-764 and 776-794 MHz Bands, and Revisions to Part 27 of the Commission’s Rules,
WT Docket No. 99-168, Second Report and Order, 15 FCC Rcd 5299 (2000) (700 MHz Guard Band Order).
130 See id. at 5343–45 paras. 106–10.
131 See id.
132 See “700 MHz Guard Band Auction Closes,” Public Notice, 15 FCC Rcd 18026 (2000).
133 See “700 MHz Guard Band Auction Closes,” Public Notice, 16 FCC Rcd 4590 (2001).
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exclusive applications for Cellular Radiotelephone Service licenses for unserved areas in New Mexico.134
Bidding credits for designated entities were not available in Auction 77.135 In 2008, the Commission
completed the closed auction of one unserved service area in the Cellular Radiotelephone Service,
designated as Auction 77. Auction 77 concluded with one provisionally winning bid for the unserved
area totaling $25,002.136
35.
Private

Land Mobile Radio (“PLMR”)

. PLMR systems serve an essential role in a range
of industrial, business, land transportation, and public safety activities. These radios are used by
companies of all sizes operating in all U.S. business categories, and are often used in support of the
licensee’s primary (non-telecommunications) business operations. For the purpose of determining
whether a licensee of a PLMR system is a small business as defined by the SBA, we use the broad census
category, Wireless Telecommunications Carriers (except Satellite). This definition provides that a small
entity is any such entity employing no more than 1,500 persons.137 The Commission does not require
PLMR licensees to disclose information about number of employees, so the Commission does not have
information that could be used to determine how many PLMR licensees constitute small entities under
this definition. We note that PLMR licensees generally use the licensed facilities in support of other
business activities, and therefore, it would also be helpful to assess PLMR licensees under the standards
applied to the particular industry subsector to which the licensee belongs.138
36.
As of March 2010, there were 424,162 PLMR licensees operating 921,909 transmitters in
the PLMR bands below 512 MHz. We note that any entity engaged in a commercial activity is eligible to
hold a PLMR license, and that any revised rules in this context could therefore potentially impact small
entities covering a great variety of industries.
37.
Rural

Radiotelephone Service

. The Commission has not adopted a size standard for small
businesses specific to the Rural Radiotelephone Service.139 A significant subset of the Rural
Radiotelephone Service is the Basic Exchange Telephone Radio System (“BETRS”).140 In the present
context, we will use the SBA’s small business size standard applicable to Wireless Telecommunications
Carriers (except Satellite), i.e., an entity employing no more than 1,500 persons.141 There are
approximately 1,000 licensees in the Rural Radiotelephone Service, and the Commission estimates that
there are 1,000 or fewer small entity licensees in the Rural Radiotelephone Service that may be affected
by the rules and policies proposed herein.
38.

Air-Ground Radiotelephone Service

. The Commission has not adopted a small business
size standard specific to the Air-Ground Radiotelephone Service.142 We will use SBA’s small business


134 See “Closed Auction of Licenses for Cellular Unserved Service Area Scheduled for June 17, 2008, Notice and
Filing Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 77,” Public
Notice
, 23 FCC Rcd 6670 (WTB 2008).
135 Id. at 6685.
136 See Auction of Cellular Unserved Service Area License Closes, Winning Bidder Announced for Auction 77, Down
Payment due July 2, 2008, Final Payment due July 17, 2008
, Public Notice, 23 FCC Rcd 9501 (WTB 2008).
137 See 13 C.F.R. § 121.201, NAICS code 517210.
138 See generally 13 C.F.R. § 121.201.
139 The service is defined in 47 C.F.R. § 22.99.
140 BETRS is defined in 47 C.F.R. §§ 22.757 and 22.759.
141 13 C.F.R. § 121.201, NAICS code 517210.
142 See 47 C.F.R. § 22.99.
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size standard applicable to Wireless Telecommunications Carriers (except Satellite), i.e., an entity
employing no more than 1,500 persons.143 There are approximately 100 licensees in the Air-Ground
Radiotelephone Service, and we estimate that almost all of them qualify as small under the SBA small
business size standard and may be affected by rules adopted pursuant to the Order.
39.

Aviation and Marine Radio Services

. Small businesses in the aviation and marine radio
services use a very high frequency (VHF) marine or aircraft radio and, as appropriate, an emergency
position-indicating radio beacon (and/or radar) or an emergency locator transmitter. The Commission has
not developed a small business size standard specifically applicable to these small businesses. For
purposes of this analysis, the Commission uses the SBA small business size standard for the category
Wireless Telecommunications Carriers (except Satellite), which is 1,500 or fewer employees.144 Census
data for 2007, which supersede data contained in the 2002 Census, show that there were 1,383 firms that
operated that year.145 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than
100 employees. Most applicants for recreational licenses are individuals. Approximately 581,000 ship
station licensees and 131,000 aircraft station licensees operate domestically and are not subject to the
radio carriage requirements of any statute or treaty. For purposes of our evaluations in this analysis, we
estimate that there are up to approximately 712,000 licensees that are small businesses (or individuals)
under the SBA standard. In addition, between December 3, 1998 and December 14, 1998, the
Commission held an auction of 42 VHF Public Coast licenses in the 157.1875-157.4500 MHz (ship
transmit) and 161.775-162.0125 MHz (coast transmit) bands. For purposes of the auction, the
Commission defined a “small” business as an entity that, together with controlling interests and affiliates,
has average gross revenues for the preceding three years not to exceed $15 million dollars.146 In addition,
a “very small” business is one that, together with controlling interests and affiliates, has average gross
revenues for the preceding three years not to exceed $3 million dollars.147 There are approximately
10,672 licensees in the Marine Coast Service, and the Commission estimates that almost all of them
qualify as “small” businesses under the above special small business size standards and may be affected
by rules adopted pursuant to the Order.
40.

Fixed Microwave Services

. Fixed microwave services include common carrier,148 private
operational-fixed,149 and broadcast auxiliary radio services.150 At present, there are approximately 22,015


143 See 13 C.F.R. § 121.201, NAICS code 517210.
144 See 13 C.F.R. § 121.201, NAICS code 517210.
145 U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 NAICS code 517210 (rel. Oct. 20, 2009),
http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&;-
ds_name=EC0751SSSZ5&-_lang=en.
146 See generally Amendment of the Commission’s Rules Concerning Maritime Communications, PR Docket No. 92-
257, Third Report and Order and Memorandum Opinion and Order, 13 FCC Rcd 19853, 19884–88 paras. 64–73
(1998).
147 See id.
148 See 47 C.F.R. §§ 101 et seq. (formerly, Part 21 of the Commission’s Rules) for common carrier fixed microwave
services (except Multipoint Distribution Service).
149 Persons eligible under parts 80 and 90 of the Commission’s Rules can use Private Operational-Fixed Microwave
services. See 47 C.F.R. Parts 80 and 90. Stations in this service are called operational-fixed to distinguish them
from common carrier and public fixed stations. Only the licensee may use the operational-fixed station, and only for
communications related to the licensee’s commercial, industrial, or safety operations.
150 Auxiliary Microwave Service is governed by Part 74 of Title 47 of the Commission’s Rules. See 47 C.F.R. Part
74. This service is available to licensees of broadcast stations and to broadcast and cable network entities.
Broadcast auxiliary microwave stations are used for relaying broadcast television signals from the studio to the
(continued….)
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common carrier fixed licensees and 61,670 private operational-fixed licensees and broadcast auxiliary
radio licensees in the microwave services. The Commission has not created a size standard for a small
business specifically with respect to fixed microwave services. For purposes of this analysis, the
Commission uses the SBA small business size standard for Wireless Telecommunications Carriers
(except Satellite), which is 1,500 or fewer employees.151 The Commission does not have data specifying
the number of these licensees that have more than 1,500 employees, and thus is unable at this time to
estimate with greater precision the number of fixed microwave service licensees that would qualify as
small business concerns under the SBA’s small business size standard. Consequently, the Commission
estimates that there are up to 22,015 common carrier fixed licensees and up to 61,670 private operational-
fixed licensees and broadcast auxiliary radio licensees in the microwave services that may be small and
may be affected by the rules and policies adopted herein. We note, however, that the common carrier
microwave fixed licensee category includes some large entities.
41.

Offshore Radiotelephone Service

. This service operates on several UHF television
broadcast channels that are not used for television broadcasting in the coastal areas of states bordering the
Gulf of Mexico.152 There are presently approximately 55 licensees in this service. The Commission is
unable to estimate at this time the number of licensees that would qualify as small under the SBA’s small
business size standard for the category of Wireless Telecommunications Carriers (except Satellite).
Under that SBA small business size standard, a business is small if it has 1,500 or fewer employees.153
Census data for 2007, which supersede data contained in the 2002 Census, show that there were 1,383
firms that operated that year.154 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had
more than 100 employees. Thus, under this category and the associated small business size standard, the
majority of firms can be considered small.
42.
39 GHz Service. The Commission created a special small business size standard for 39
GHz licenses – an entity that has average gross revenues of $40 million or less in the three previous
calendar years.155 An additional size standard for “very small business” is: an entity that, together with
affiliates, has average gross revenues of not more than $15 million for the preceding three calendar
years.156 The SBA has approved these small business size standards.157 The auction of the 2,173 39 GHz
licenses began on April 12, 2000 and closed on May 8, 2000. The 18 bidders who claimed small business
status won 849 licenses. Consequently, the Commission estimates that 18 or fewer 39 GHz licensees are
small entities that may be affected by rules adopted pursuant to the Report and Order.
43.

Local Multipoint Distribution Service

. Local Multipoint Distribution Service (“LMDS”)
(Continued from previous page)


transmitter, or between two points such as a main studio and an auxiliary studio. The service also includes mobile
television pickups, which relay signals from a remote location back to the studio.
151 See 13 C.F.R. § 121.201, NAICS code 517210.
152 This service is governed by Subpart I of Part 22 of the Commission’s Rules. See 47 C.F.R. §§ 22.1001-22.1037.
153 Id.
154 U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 NAICS code 517210 (rel. Oct. 20, 2009),
http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&;-
ds_name=EC0751SSSZ5&-_lang=en.
155 See Amendment of the Commission’s Rules Regarding the 37.0-38.6 GHz and 38.6-40.0 GHz Bands, ET Docket
No. 95-183, PP Docket No. 93-253, Report and Order, 12 FCC Rcd 18600, 18661–64, paras. 149–151 (1997).
156 See id.
157 See Letter to Kathleen O’Brien Ham, Chief, Auctions and Industry Analysis Division, Wireless
Telecommunications Bureau, FCC, from Aida Alvarez, Administrator, SBA (Feb. 4, 1998).
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is a fixed broadband point-to-multipoint microwave service that provides for two-way video
telecommunications.158 The auction of the 986 LMDS licenses began and closed in 1998. The
Commission established a small business size standard for LMDS licenses as an entity that has average
gross revenues of less than $40 million in the three previous calendar years.159 An additional small
business size standard for “very small business” was added as an entity that, together with its affiliates,
has average gross revenues of not more than $15 million for the preceding three calendar years.160 The
SBA has approved these small business size standards in the context of LMDS auctions.161 There were
93 winning bidders that qualified as small entities in the LMDS auctions. A total of 93 small and very
small business bidders won approximately 277 A Block licenses and 387 B Block licenses. In 1999, the
Commission re-auctioned 161 licenses; there were 32 small and very small businesses winning that won
119 licenses.
44.
218-219 MHz Service. The first auction of 218-219 MHz spectrum resulted in 170 entities
winning licenses for 594 Metropolitan Statistical Area (MSA) licenses. Of the 594 licenses, 557 were
won by entities qualifying as a small business. For that auction, the small business size standard was an
entity that, together with its affiliates, has no more than a $6 million net worth and, after federal income
taxes (excluding any carry over losses), has no more than $2 million in annual profits each year for the
previous two years.162 In the 218-219 MHz Report and Order and Memorandum Opinion and Order, we
established a small business size standard for a “small business” as an entity that, together with its
affiliates and persons or entities that hold interests in such an entity and their affiliates, has average annual
gross revenues not to exceed $15 million for the preceding three years.163 A “very small business” is
defined as an entity that, together with its affiliates and persons or entities that hold interests in such an
entity and its affiliates, has average annual gross revenues not to exceed $3 million for the preceding three
years.164 These size standards will be used in future auctions of 218-219 MHz spectrum.
45.
2.3 GHz Wireless Communications Services. This service can be used for fixed, mobile,
radiolocation, and digital audio broadcasting satellite uses. The Commission defined “small business” for
the wireless communications services (“WCS”) auction as an entity with average gross revenues of $40
million for each of the three preceding years, and a “very small business” as an entity with average gross
revenues of $15 million for each of the three preceding years.165 The SBA has approved these


158 See Rulemaking to Amend Parts 1, 2, 21, 25, of the Commission’s Rules to Redesignate the 27.5-29.5 GHz
Frequency Band, Reallocate the 29.5-30.5 Frequency Band, to Establish Rules and Policies for Local Multipoint
Distribution Service and for Fixed Satellite Services
, CC Docket No. 92-297, Second Report and Order, Order on
Reconsideration, and Fifth Notice of Proposed Rule Making, 12 FCC Rcd 12545, 12689-90, para. 348 (1997)
(“LMDS Second Report and Order”).
159 See LMDS Second Report and Order, 12 FCC Rcd at 12689-90, para. 348.
160 See id.
161 See Alvarez to Phythyon Letter 1998.
162 See generally Implementation of Section 309(j) of the Communications Act – Competitive Bidding, PP Docket
No. 93-253, Fourth Report and Order, 9 FCC Rcd 2330 (1994).
163 See generally Amendment of Part 95 of the Commission’s Rules to Provide Regulatory Flexibility in the 218-219
MHz Service
, WT Docket No. 98-169, Report and Order and Memorandum Opinion and Order, 15 FCC Rcd 1497
(1999).
164 See id.
165 Amendment of the Commission’s Rules to Establish Part 27, the Wireless Communications Service (WCS), GN
Docket No. 96-228, Report and Order, 12 FCC Rcd 10785, 10879, para. 194 (1997).
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definitions.166 The Commission auctioned geographic area licenses in the WCS service. In the auction,
which was conducted in 1997, there were seven bidders that won 31 licenses that qualified as very small
business entities, and one bidder that won one license that qualified as a small business entity.
46.
1670-1675 MHz Band. An auction for one license in the 1670-1675 MHz band was
conducted in 2003. The Commission defined a “small business” as an entity with attributable average
annual gross revenues of not more than $40 million for the preceding three years and thus would be
eligible for a 15 percent discount on its winning bid for the 1670-1675 MHz band license. Further, the
Commission defined a “very small business” as an entity with attributable average annual gross revenues
of not more than $15 million for the preceding three years and thus would be eligible to receive a 25
percent discount on its winning bid for the 1670-1675 MHz band license. One license was awarded. The
winning bidder was not a small entity.
47.
3650–3700 MHz band. In March 2005, the Commission released a Report and Order and
Memorandum Opinion and Order that provides for nationwide, non-exclusive licensing of terrestrial
operations, utilizing contention-based technologies, in the 3650 MHz band (i.e., 3650–3700 MHz).167 As
of April 2010, more than 1270 licenses have been granted and more than 7433 sites have been registered.
The Commission has not developed a definition of small entities applicable to 3650–3700 MHz band
nationwide, non-exclusive licensees. However, we estimate that the majority of these licensees are
Internet Access Service Providers (ISPs) and that most of those licensees are small businesses.
48.
24 GHz – Incumbent Licensees. This analysis may affect incumbent licensees who were
relocated to the 24 GHz band from the 18 GHz band, and applicants who wish to provide services in the
24 GHz band. For this service, the Commission uses the SBA small business size standard for the
category “Wireless Telecommunications Carriers (except satellite),” which is 1,500 or fewer
employees.168 To gauge small business prevalence for these cable services we must, however, use the
most current census data. Census data for 2007, which supersede data contained in the 2002 Census,
show that there were 1,383 firms that operated that year.169 Of those 1,383, 1,368 had fewer than 100
employees, and 15 firms had more than 100 employees. Thus under this category and the associated
small business size standard, the majority of firms can be considered small. The Commission notes that
the Census’ use of the classifications “firms” does not track the number of “licenses”. The Commission
believes that there are only two licensees in the 24 GHz band that were relocated from the 18 GHz band,
Teligent170 and TRW, Inc. It is our understanding that Teligent and its related companies have less than
1,500 employees, though this may change in the future. TRW is not a small entity. Thus, only one
incumbent licensee in the 24 GHz band is a small business entity.
49.
24 GHz – Future Licensees. With respect to new applicants in the 24 GHz band, the size
standard for “small business” is an entity that, together with controlling interests and affiliates, has


166 See Letter from Aida Alvarez, Administrator, SBA, to Amy Zoslov, Chief, Auctions and Industry Analysis
Division, Wireless Telecommunications Bureau, FCC (Dec. 2, 1998) (Alvarez Letter 1998).
167 The service is defined in section 90.1301 et seq. of the Commission’s Rules, 47 C.F.R. § 90.1301 et seq.
168 13 C.F.R. § 121.201, NAICS code 517210.
169 U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 NAICS code 517210 (rel. Oct. 20, 2009),
http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&;-
ds_name=EC0751SSSZ5&-_lang=en.
170 Teligent acquired the DEMS licenses of FirstMark, the only licensee other than TRW in the 24 GHz band whose
license has been modified to require relocation to the 24 GHz band.
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average annual gross revenues for the three preceding years not in excess of $15 million.171 “Very small
business” in the 24 GHz band is an entity that, together with controlling interests and affiliates, has
average gross revenues not exceeding $3 million for the preceding three years.172 The SBA has approved
these small business size standards.173 These size standards will apply to a future 24 GHz license auction,
if held.
50.

Satellite Telecommunications

. Since 2007, the SBA has recognized satellite firms within
this revised category, with a small business size standard of $15 million.174 The most current Census
Bureau data are from the economic census of 2007, and we will use those figures to gauge the prevalence
of small businesses in this category. Those size standards are for the two census categories of “Satellite
Telecommunications” and “Other Telecommunications.” Under the “Satellite Telecommunications”
category, a business is considered small if it had $15 million or less in average annual receipts.175 Under
the “Other Telecommunications” category, a business is considered small if it had $25 million or less in
average annual receipts.176
51.
The first category of Satellite Telecommunications “comprises establishments primarily
engaged in providing point-to-point telecommunications services to other establishments in the
telecommunications and broadcasting industries by forwarding and receiving communications signals via
a system of satellites or reselling satellite telecommunications.”177 For this category, Census Bureau data
for 2007 show that there were a total of 512 firms that operated for the entire year.178 Of this total, 464
firms had annual receipts of under $10 million, and 18 firms had receipts of $10 million to
$24,999,999.179 Consequently, we estimate that the majority of Satellite Telecommunications firms are
small entities that might be affected by rules adopted pursuant to the Order.
52.
The second category of Other Telecommunications “primarily engaged in providing
specialized telecommunications services, such as satellite tracking, communications telemetry, and radar
station operation. This industry also includes establishments primarily engaged in providing satellite
terminal stations and associated facilities connected with one or more terrestrial systems and capable of
transmitting telecommunications to, and receiving telecommunications from, satellite systems.
Establishments providing Internet services or voice over Internet protocol (VoIP) services via client-
supplied telecommunications connections are also included in this industry.”180 For this category, Census


171 See Amendments to Parts 1, 2, 87 and 101 of the Commission’s Rules to License Fixed Services at 24 GHz, WT
Docket No. 99-327, Report and Order, 15 FCC Rcd 16934, 16967, para. 77 (2000); see also 47 C.F.R. §
101.538(a)(2).
172 See Amendments to Parts 1, 2, 87 and 101 of the Commission’s Rules to License Fixed Services at 24 GHz, WT
Docket No. 99-327, Report and Order, 15 FCC Rcd 16934, 16967, para. 77 (2000); see also 47 C.F.R. §
101.538(a)(1).
173 See Letter to Margaret W. Wiener, Deputy Chief, Auctions and Industry Analysis Division, Wireless
Telecommunications Bureau, FCC, from Gary M. Jackson, Assistant Administrator, SBA (July 28, 2000).
174 See 13 C.F.R. § 121.201, NAICS code 517410.
175 Id.
176 See 13 C.F.R. § 121.201, NAICS code 517919.
177 U.S. Census Bureau, 2007 NAICS Definitions, “517410 Satellite Telecommunications”.
178 See 13 C.F.R. § 121.201, NAICS code 517410.
179 See id. An additional 38 firms had annual receipts of $25 million or more.
180 U.S. Census Bureau, 2007 NAICS Definitions, “517919 Other Telecommunications”,
http://www.census.gov/naics/2007/def/ND517919.HTM.
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Bureau data for 2007 show that there were a total of 2,383 firms that operated for the entire year.181 Of
this total, 2,346 firms had annual receipts of under $25 million.182 Consequently, we estimate that the
majority of Other Telecommunications firms are small entities that might be affected by our action.
53.

Cable and Other Program Distribution.

Since 2007, these services have been defined
within the broad economic census category of Wired Telecommunications Carriers; that category is
defined as follows: “This industry comprises establishments primarily engaged in operating and/or
providing access to transmission facilities and infrastructure that they own and/or lease for the
transmission of voice, data, text, sound, and video using wired telecommunications networks.
Transmission facilities may be based on a single technology or a combination of technologies.”183 The
SBA has developed a small business size standard for this category, which is: all such firms having 1,500
or fewer employees.184 According to Census Bureau data for 2007, there were a total of 955 firms in this
previous category that operated for the entire year.185 Of this total, 939 firms had employment of 999 or
fewer employees, and 16 firms had employment of 1000 employees or more.186 Thus, under this size
standard, the majority of firms can be considered small and may be affected by rules adopted pursuant to
the Order.
54.

Cable Companies and Systems

. The Commission has developed its own small business
size standards, for the purpose of cable rate regulation. Under the Commission’s rules, a “small cable
company” is one serving 400,000 or fewer subscribers, nationwide.187 Industry data indicate that, of
1,076 cable operators nationwide, all but eleven are small under this size standard.188 In addition, under
the Commission’s rules, a “small system” is a cable system serving 15,000 or fewer subscribers.189
Industry data indicate that, of 7,208 systems nationwide, 6,139 systems have fewer than 10,000
subscribers, and an additional 379 systems have 10,000-19,999 subscribers.190 Thus, under this second
size standard, most cable systems are small and may be affected by rules adopted pursuant to the Order.
55.

Cable System Operators

. The Act also contains a size standard for small cable system
operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate less than


181 See 13 C.F.R. § 121.201, NAICS code 517919.
182 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, “Establishment and Firm
Size: Employment Size of Firms for the United States: 2007 NAICS Code 517919” (issued Nov. 2010).
183 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers” (partial
definition), http://www.census.gov/naics/2007/def/ND517110.HTM#N517110 (last visited Nov. 6, 2012).
184 13 C.F.R. § 121.201, NAICS code 517110.
185 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms
for the United States: 2007, NAICS code 5171102 (issued Nov. 2010).
186 See id.
187 See 47 C.F.R. § 76.901(e). The Commission determined that this size standard equates approximately to a size
standard of $100 million or less in annual revenues. See Implementation of Sections of the 1992 Cable Television
Consumer Protection and Competition Act: Rate Regulation
, MM Docket Nos. 92-266, 93-215, Sixth Report and
Order and Eleventh Order on Reconsideration, 10 FCC Rcd 7393, 7408 para. 28 (1995).
188 These data are derived from R.R. BOWKER, BROADCASTING & CABLE YEARBOOK 2006 A-8 & C-2 (2005) (Top 25
Cable/Satellite Operators) (data current as of June 30, 2005); WARREN COMMUNICATIONS NEWS, TELEVISION &
CABLE FACTBOOK 2006 D-1805 to D-1857 (2005) (Ownership of Cable Systems in the United States).
189 See 47 C.F.R. § 76.901(c).
190 TELEVISION & CABLE FACTBOOK 2006, supra note 188, at F-2 (U.S. Cable Systems by Subscriber Size) (data
current as of Oct. 2005). The data do not include 718 systems for which classifying data were not available.
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1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross
annual revenues in the aggregate exceed $250,000,000.”191 The Commission has determined that an
operator serving fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues,
when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the
aggregate.192 Industry data indicate that, of 1,076 cable operators nationwide, all but ten are small under
this size standard.193 We note that the Commission neither requests nor collects information on whether
cable system operators are affiliated with entities whose gross annual revenues exceed $250 million,194
and therefore we are unable to estimate more accurately the number of cable system operators that would
qualify as small under this size standard.
56.

Open Video Services

. The open video system (“OVS”) framework was established in
1996, and is one of four statutorily recognized options for the provision of video programming services
by local exchange carriers.195 The OVS framework provides opportunities for the distribution of video
programming other than through cable systems. Because OVS operators provide subscription services,196
OVS falls within the SBA small business size standard covering cable services, which is “Wired
Telecommunications Carriers.”197 The SBA has developed a small business size standard for this
category, which is: all such firms having 1,500 or fewer employees. According to Census Bureau data for
2007, there were a total of 955 firms in this previous category that operated for the entire year.198 Of this
total, 939 firms had employment of 999 or fewer employees, and 16 firms had employment of 1000
employees or more.199 Thus, under this second size standard, most cable systems are small and may be
affected by rules adopted pursuant to the Order. In addition, we note that the Commission has certified
some OVS operators, with some now providing service.200 Broadband service providers (“BSPs”) are
currently the only significant holders of OVS certifications or local OVS franchises.201 The Commission


191 47 U.S.C. § 543(m)(2); see also 47 C.F.R. § 76.901(f) & nn.1–3.
192 47 C.F.R. § 76.901(f); see FCC Announces New Subscriber Count for the Definition of Small Cable Operator,
Public Notice, 16 FCC Rcd 2225 (Cable Services Bureau 2001).
193 These data are derived from R.R. BOWKER, BROADCASTING & CABLE YEARBOOK 2006 A-8 & C-2 (2005) (Top
25 Cable/Satellite Operators) (data current as of June 30, 2005); WARREN COMMUNICATIONS NEWS, TELEVISION &
CABLE FACTBOOK 2006 D-1805 to D-1857 (2005) (Ownership of Cable Systems in the United States).
194 The Commission does receive such information on a case-by-case basis if a cable operator appeals a local
franchise authority’s finding that the operator does not qualify as a small cable operator pursuant to § 76.901(f) of
the Commission’s rules.
195 47 U.S.C. § 571(a)(3)-(4). See Annual Assessment of the Status of Competition in the Market for the Delivery of
Video Programming
, MB Docket No. 06-189, Thirteenth Annual Report, 24 FCC Rcd 542, 606, para. 135 (2009)
(“Thirteenth Annual Cable Competition Report”).
196 See 47 U.S.C. § 573.
197 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers”;
http://www.census.gov/naics/2007/def/ND517110.HTM#N517110 (last visited Nov. 6, 2012).
198 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms
for the United States: 2007, NAICS code 5171102 (issued Nov. 2010).
199 See id.
200 A list of OVS certifications may be found at http://www.fcc.gov/mb/ovs/csovscer.html (last visited Nov. 6,
2012).
201 See Thirteenth Annual Cable Competition Report, 24 FCC Rcd at 606-07, para. 135. BSPs are newer firms that
are building state-of-the-art, facilities-based networks to provide video, voice, and data services over a single
network.
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does not have financial or employment information regarding the entities authorized to provide OVS,
some of which may not yet be operational. Thus, again, at least some of the OVS operators may qualify
as small entities.
57.

Internet Service Providers

. Since 2007, these services have been defined within the
broad economic census category of Wired Telecommunications Carriers; that category is defined as
follows: “This industry comprises establishments primarily engaged in operating and/or providing access
to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data,
text, sound, and video using wired telecommunications networks. Transmission facilities may be based on
a single technology or a combination of technologies.”202 The SBA has developed a small business size
standard for this category, which is: all such firms having 1,500 or fewer employees.203 According to
Census Bureau data for 2007, there were 3,188 firms in this category, total, that operated for the entire
year.204 Of this total, 3144 firms had employment of 999 or fewer employees, and 44 firms had
employment of 1000 employees or more.205 Thus, under this size standard, the majority of firms can be
considered small. In addition, according to Census Bureau data for 2007, there were a total of 396 firms
in the category Internet Service Providers (broadband) that operated for the entire year.206 Of this total,
394 firms had employment of 999 or fewer employees, and two firms had employment of 1000
employees or more.207 Consequently, we estimate that the majority of these firms are small entities that
may be affected by rules adopted pursuant to the Order.
58.

Internet Publishing and Broadcasting and Web Search Portals

. Our action may pertain
to interconnected VoIP services, which could be provided by entities that provide other services such as
email, online gaming, web browsing, video conferencing, instant messaging, and other, similar IP-enabled
services. The Commission has not adopted a size standard for entities that create or provide these types
of services or applications. However, the Census Bureau has identified firms that “primarily engaged in
1) publishing and/or broadcasting content on the Internet exclusively or 2) operating Web sites that use a
search engine to generate and maintain extensive databases of Internet addresses and content in an easily
searchable format (and known as Web search portals).”208 The SBA has developed a small business size
standard for this category, which is: all such firms having 500 or fewer employees.209 According to
Census Bureau data for 2007, there were 2,705 firms in this category that operated for the entire year.210
Of this total, 2,682 firms had employment of 499 or fewer employees, and 23 firms had employment of
500 employees or more.211 Consequently, we estimate that the majority of these firms are small entities


202 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers” (partial
definition), http://www.census.gov/naics/2007/def/ND517110.HTM#N517110 (last visited Nov. 6, 2012).
203 13 C.F.R. § 121.201, NAICS code 517110.
204 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, “Establishment and Firm
Size: Employment Size of Firms for the United States: 2007 NAICS Code 517110” (issued Nov. 2010).
205 See id.
206 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms
for the United States: 2007, NAICS code 5171103 (issued Nov. 2010).
207 See id.
208 U.S. Census Bureau, “2007 NAICS Definitions: 519130 Internet Publishing and Broadcasting and Web Search
Portals,” http://www.naics.com/censusfiles/ND519130.HTM (last visited Nov. 6, 2012).
209 See 13 C.F.R. § 121.201, NAICS code 519130.
210 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, “Establishment and Firm
Size: Employment Size of Firms for the United States: 2007 NAICS Code 519130” (issued Nov. 2010).
211 Id.
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that may be affected by rules adopted pursuant to the Order.
59.

Data Processing, Hosting, and Related Services

. Entities in this category “primarily …
provid[e] infrastructure for hosting or data processing services.”212 The SBA has developed a small
business size standard for this category; that size standard is $25 million or less in average annual
receipts.213 According to Census Bureau data for 2007, there were 8,060 firms in this category that
operated for the entire year.214 Of these, 7,744 had annual receipts of under $ $24,999,999.215
Consequently, we estimate that the majority of these firms are small entities that may be affected by rules
adopted pursuant to the Order.
60.

All Other Information Services

. The Census Bureau defines this industry as including
“establishments primarily engaged in providing other information services (except news syndicates,
libraries, archives, Internet publishing and broadcasting, and Web search portals).”216 Our action pertains
to interconnected VoIP services, which could be provided by entities that provide other services such as
email, online gaming, web browsing, video conferencing, instant messaging, and other, similar IP-enabled
services. The SBA has developed a small business size standard for this category; that size standard is
$7.0 million or less in average annual receipts.217 According to Census Bureau data for 2007, there were
367 firms in this category that operated for the entire year.218 Of these, 334 had annual receipts of under
$5.0 million, and an additional 11 firms had receipts of between $5 million and $9,999,999.
Consequently, we estimate that the majority of these firms are small entities that may be affected by our
action.

D.

Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements

61.
The data, information and document collection required by this Report and Order falls into
five general categories: market structure, pricing, demand (i.e., observed sales and purchases), terms and
conditions, and competition and pricing decisions.
62.
Market structure data consists of, among other things, the situs and type of facilities owned
by a provider (or leased subject to an indefeasible right of use) capable of providing special access, by
sold and potential capacity and ownership, and the proximity of such facilities to sources of demand. We
also require incumbent LEC providers to submit data concerning the number, nature, and situs of UNEs
sold. In addition, we also require additional market structure data from competitive providers, such as
detailed information related to non-price factors that may impact where special access providers build
facilities or expand their network via UNEs and the history of their facility deployments in a sample of
locations they serve.


212 U.S. Census Bureau, “2007 NAICS Definitions: 518210 Data Processing, Hosting, and Related Services”,
http://www.census.gov/naics/2007/def/NDEF518.HTM (last visited Nov. 6, 2012).
213 See 13 C.F.R. § 121.201, NAICS code 518210.
214 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 4, “Establishment and Firm
Size: Receipts Size of Firms for the United States: 2007 NAICS Code 518210” (issued Nov. 2010).
215 Id.
216 U.S. Census Bureau, “2007 NAICS Definitions: 519190 All Other Information Services”,
http://www.census.gov/naics/2007/def/ND519190.HTM (last visited Nov. 6, 2012).
217 See 13 C.F.R. § 121.201, NAICS code 519190.
218 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 4, “Establishment and Firm
Size: Receipts Size of Firms for the United States: 2007 NAICS Code 519190” (issued Nov. 2010).
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63.
Pricing data includes the quantities sold and prices charged for special access services, by
circuit element, and information regarding the regulatory environment for incumbent LECs.
64.
Demand data includes, among other things, data that identify the bandwidth of the special
access services sold or purchased, the locations being served, and other material facts, such as where
those purchases occur (e.g., buildings, cell towers) and the nature of the purchaser (e.g., provider or end
user).
65.
Terms and conditions data and information include, but are not limited to, information
regarding contracts or generally available plans for special access services that offer discounts, circuit
portability, or other competitively relevant benefits, and whether the terms and conditions associated with
those offerings may inhibit a buyer’s ability to switch to other providers, which in turn may inhibit
facilities-based entry into special access markets.
66.
Competition and pricing data, information and documents include, but are not limited to,
those materials related to requests for proposals, advertising and marketing materials, and in very limited
circumstances, pricing decision documents.
67.
Best efforts business broadband Internet access services include, but are not limited to, data
showing where a provider or entity provides such services, as well as price lists.
68.
Questions related to terms and conditions, competition and pricing decisions will span a
variety of timeframes specific to the issue addressed. The majority of the market structure, pricing and
demand data will be collected for a two-year period. This period of time allows the analysis to control for
factors that may vary substantially across geographic areas, but not within a given geographic area.

E.

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

69.
The RFA requires an agency to describe any significant alternatives that it has considered
in reaching its approach, which may include the following four alternatives, among others: (1) the
establishment of differing compliance or reporting requirements or timetables that take into account the
resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use of performance, rather than design,
standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.219
70.
Entities required to respond to this data request include all providers and purchasers of
special access services as well as some entities that provide best efforts business broadband Internet
access services.220 By “providers,” we mean any entity subject to the Commission’s jurisdiction under the
Communications Act, as amended, that provides special access services or provides a connection that is
capable of providing special access services.221 By “purchasers,” we mean any entity subject to the
Commission’s jurisdiction under the Communications Act, as amended, that purchases special access


219 5 U.S.C. § 603.
220 For purposes of this Report and Order, best efforts business broadband Internet access services do not include
mobile wireless services, as that term is used in the 15th Annual Mobile Wireless Competition Report. See
Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and Analysis
of Competitive Market Conditions with Respect to Mobile Wireless, Including Commercial Mobile Services, WT
Docket No. 10-133, Fifteenth Report, 26 FCC Rcd 9664, 9687-88, paras. 3-5 (2011) (15th Annual Mobile Wireless
Competition Report).
221 Section 1 of the Communications Act of 1934, as amended, confers on the Commission jurisdiction over
“interstate and foreign commerce in communication by wire and radio.” See 47 U.S.C. § 151.
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services.222 Providers and purchasers may include price cap regulated incumbent LECs, competitive
LECs, interexchange carriers, cable operators, and companies that provide fixed wireless communications
services.223 Some entities that fall under the Commission’s jurisdiction and provide best efforts
broadband Internet access services, but fall outside our definitions of “provider” and “purchaser,” are also
required to respond.
71.
Because the focus of this proceeding is on the regulation of special access services in price-
cap territories, a rate-of-return carrier, which is not subject to our pricing flexibility rules, shall not be
considered a “provider” to the extent it provides special access within its rate-of-return service area.
Likewise, we will not require data from any provider with regard to its operations in any geographic area
in which a rate-of-return carrier is the incumbent. Moreover, we will not require a purchaser to produce
data based on purchases it makes in those areas in which a rate-of-return carrier is the incumbent. If,
however, a provider or purchaser prefers to provide data for all areas without distinguishing between
areas served by price cap LECs and rate-of-return LECs, it may do so.
72.
Small business concerns were considered when determining the nature of the data to be
collected, and identified data, information, and document requirements were modified to reduce burdens
on small businesses where possible. The Wireline Competition Bureau previously issued two voluntary
data requests in this proceeding. These voluntary requests allowed each potential respondent to make its
own determination concerning participation. The responses to the voluntary data requests provided the
Commission the means and opportunity to assess which data elements are most important to its ability to
assess the special access market, and to eliminate or revise those questions that otherwise yield less
valuable information. The voluntary data requests also allowed the Commission to carefully assess the
need to obtain data from all providers and purchasers of special access services and certain other
services—including small businesses—to conduct a comprehensive analysis of the special access market.
73.
In order to conduct a comprehensive analysis of the special access market, the Commission
will collect data from all providers and purchasers of special access services as well as some entities that
provide best efforts business broadband Internet access services. The Commission notes concerns
regarding the burden that this data collection will impose on small companies, and is mindful of the
importance of seeking to reduce information collection burdens for small business concerns, and in
particular those “with fewer than 25 employees.”224 Competition in the provision of special access,
however, appears to occur at a very granular level—perhaps as low as the building/tower. Accordingly,
the Commission finds it necessary to obtain data from special access providers and purchasers of all sizes.
74.
We structured the collection somewhat differently for best efforts and special access
services to minimize the burden on submitters consistent with our data requirements and taking into
consideration data that the Commission already has available to it. Because the record indicates that
entities that provide best efforts business broadband Internet access services generally deliver those
services throughout their footprint over the same network facilities they use to deliver mass market
broadband Internet access, we need not collect this data at the same level of granularity as location and
facilities data for special access. We also do not require entities with fewer than 15,000 customers and


222 See id.
223 Section 151 of the Communications Act of 1934, as amended, confers on the Commission the authority to
regulate “interstate and foreign commerce in communication by wire and radio.” See 47 U.S.C. § 151. However,
rate-of-return carriers, which are not subject to our pricing flexibility rules, are not required to respond to questions
asked of providers. To the extent a rate-of-return carrier also owns or is affiliated with a provider of facilities-based
special access services outside of its rate-of-return service area, this exemption only applies to rate-of-return
facilities and services.
224 Small Business Paperwork Relief Act of 2002 § 2(c)(3), Pub. L. No. 107-198, see 44 U.S.C. § 3506(c)(4).
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fewer than 1,500 business broadband customers to provide data regarding their best efforts business
broadband Internet access services. Commenters assert that those entities incur the greatest burden when
producing data for the State Broadband Initiative broadband mapping effort. 225
75.
Other modifications made by the Commission include: allowing a provider or purchaser to
provide data for all areas without distinguishing between areas served by price cap LECs and rate-of-
return LECs; applying sampling methods where possible; limiting the market structure, pricing and
demand data collection to a two-year period; and tailoring the timeframes for the terms and conditions,
competition and pricing questions to the specific issue addressed. In addition, the Commission chose to
limit the production of documents showing the internal analyses undertaken by providers in 2010 or
thereafter to evaluate, inter alia, competitive market shares, changes in competition, changes in the costs
of supplying services, whether to respond to RFPs, and identified rate increases and decreases to
circumstances where the Wireline Competition Bureau determines the initial data collection was
incomplete or insufficient for analysis.
76.
We note that this Report and Order does not change special access pricing regulation. We
therefore do not consider the potential alternatives to special access pricing regulation that SBA asserted
might minimize the impact on small competitive carriers.

F.

Report to Congress

77.
The Commission will send a copy of the Order, including this FRFA, in a report to be sent
to Congress and the Government Accountability Office pursuant to the Small Business Regulatory
Enforcement Fairness Act of 1996.226 In addition, the Commission will send a copy of the Order,
including the FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of
the Order and FRFA (or summaries thereof) will also be published in the Federal Register.227


225 See Letter from Thomas Cohen, Counsel to American Cable Association, to Michael Steffen, Legal Advisor to
Chairman Genachowski, Federal Communications Commission, WC Docket No. 05-25 (filed Nov. 27, 2012).
226 5 U.S.C. § 801(a)(1)(A).
227 See id. § 604(b).
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APPENDIX C

Initial Regulatory Flexibility Analysis

1. As required by the Regulatory Flexibility Act of 1980, as amended (RFA),1 the Commission
has prepared this present Initial Regulatory Flexibility Analysis (IRFA) of the possible significant
economic impact on a substantial number of small entities by the policies and rules proposed in this
FNPRM. Written public comments are requested on this IRFA. Comments must be identified as
responses to the IRFA and must be filed by the deadlines for comments on the FNPRM provided in
section V.C of the item. The Commission will send a copy of the FNPRM, including this IRFA, to the
Chief Counsel for Advocacy of the Small Business Administration (SBA).2 In addition, the FNPRM and
IRFA (or summaries thereof) will be published in the Federal Register.3

A.

Need for, and Objectives of, the Proposed Rules

2. In this FNPRM we commence a process to more effectively determine where relief from
special access regulation is appropriate and otherwise update our special access rules to ensure that they
reflect the state of competition today and promote competition, investment, and access to dedicated
communications services businesses across the country rely on every day to deliver their products and
services to American consumers. In Section IV.A we propose and seek comment on a market analysis
that we intend to undertake in the coming months to assist the Commission in evaluating whether the
pricing flexibility rules result in just and reasonable special access rates and what regulatory changes may
be needed.4 In section IV.B we seek comment on how the special access pricing flexibility rules might
change after we conduct our market analysis. We also seek comment on what steps the Commission
should take where relief has been provided under our existing rules and where the data and our analysis
demonstrate that competition is not sufficient to discipline the marketplace. Finally, we seek in section
IV.C comment on the terms and conditions offered by incumbent LECs for special access services to
facilitate our understanding of competition in the special access market and our ability to craft rules for
regulatory relief that properly address the state of the marketplace.

B.

Legal Basis

3. This rulemaking action is supported by sections 1, 4(i), 4(j), 5, 201-205, 211, 215, 218, 219,
303(r), 332, 403, and 503 of the Communications Act of 1934, as amended.5

C.

Description and Estimate of the Number of Small Entities to Which the Notice will
Apply

4.
The RFA directs agencies to provide a description of, and where feasible, an estimate of the
number of small entities that may be affected by the proposed rules, if adopted.6 The RFA generally
defines the term “small entity” as having the same meaning as the terms “small business,” “small


1 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. §§ 601-12, has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
2 See 5 U.S.C. § 603(a).
3 See id.
4 See 47 U.S.C. § 201(b) (“All charges, practices, classifications, and regulations for and in connection with such
communication service, shall be just and reasonable . . . .”).
5 47 U.S.C. §§ 151, 152, 154(i), 154(j), 201-205, and 303.
6 See 5 U.S.C. § 603(b)(3).
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organization,” and “small governmental jurisdiction.”7 In addition, the term “small business” has the
same meaning as the term “small-business concern” under the Small Business Act.8 A small-business
concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field of
operation; and (3) satisfies any additional criteria established by the SBA.9 SBA restated its concerns in
its comments filed in 2007.10
5.

Small Businesses

. Nationwide, there are a total of approximately 27.5 million small
businesses, according to the SBA.11
6.

Wired Telecommunications Carriers

. The SBA has developed a small business size
standard for Wired Telecommunications Carriers, which consists of all such companies having 1,500 or
fewer employees.12 According to Census Bureau data for 2007, there were 3,188 firms in this category,
total, that operated for the entire year.13 Of this total, 3144 firms had employment of 999 or fewer
employees, and 44 firms had employment of 1000 employees or more.14 Thus, under this size standard,
the majority of firms can be considered small.
7.

Local Exchange Carriers (LECs)

. Neither the Commission nor the SBA has developed a
size standard for small businesses specifically applicable to local exchange services. The closest
applicable size standard under SBA rules is for Wired Telecommunications Carriers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.15 According to Commission data,
1,307 carriers reported that they were incumbent local exchange service providers.16 Of these 1,307
carriers, an estimated 1,006 have 1,500 or fewer employees and 301 have more than 1,500 employees.17
Consequently, the Commission estimates that most providers of local exchange service are small entities
that may be affected by the rules and policies proposed in the Order.
8.

Incumbent Local Exchange Carriers (incumbent LECs)

. Neither the Commission nor the
SBA has developed a size standard for small businesses specifically applicable to incumbent local
exchange services. The closest applicable size standard under SBA rules is for Wired
Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer


7 See id. § 601(6).
8 See id. § 601(3) (incorporating by reference the definition of “small-business concern” in the Small Business Act,
15 U.S.C. § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of small business applies “unless an
agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity
for public comment, establishes one or more definitions of such term which are appropriate to the activities of the
agency and publishes such definition(s) in the Federal Register.”
9 See 15 U.S.C. § 632.
10 Comments of the Office of Advocacy, U.S. Small Business Administration, WC Docket No. 0525, RM-10593,
(Filed Aug. 8, 2007).
11 See SBA, Office of Advocacy, “FAQs,” available at http://www.sba.gov/sites/default/files./sbfaq.pdf.
12 13 C.F.R. § 121.201, NAICS code 517110.
13 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, “Establishment and Firm
Size: Employment Size of Firms for the United States: 2007 NAICS Code 517110” (issued Nov. 2010).
14 See id.
15 13 C.F.R. § 121.201, NAICS code 517110.
16 See Trends in Telephone Service, Federal Communications Commission, Wireline Competition Bureau, Industry
Analysis and Technology Division at Table 5.3 (Sept. 2010) (Trends in Telephone Service).
17 See id.
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employees.18 According to Commission data, 1,307 carriers reported that they were incumbent local
exchange service providers.19 Of these 1,307 carriers, an estimated 1,006 have 1,500 or fewer employees
and 301 have more than 1,500 employees.20 Consequently, the Commission estimates that most providers
of incumbent local exchange service are small businesses that may be affected by rules adopted pursuant
to the Order
9. We have included small incumbent LECs in this present RFA analysis. As noted above, a
“small business” under the RFA is one that, inter alia, meets the pertinent small business size standard
(e.g., a telephone communications business having 1,500 or fewer employees), and “is not dominant in its
field of operation.”21 The SBA’s Office of Advocacy contends that, for RFA purposes, small incumbent
LECs are not dominant in their field of operation because any such dominance is not “national” in
scope.22 We have therefore included small incumbent LECs in this RFA analysis, although we emphasize
that this RFA action has no effect on Commission analyses and determinations in other, non-RFA
contexts.
10. Competitive Local Exchange Carriers (competitive LECs), Competitive Access Providers
(CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission
nor the SBA has developed a small business size standard specifically for these service providers. The
appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under
that size standard, such a business is small if it has 1,500 or fewer employees.23 According to
Commission data, 1,442 carriers reported that they were engaged in the provision of either competitive
local exchange services or competitive access provider services.24 Of these 1,442 carriers, an estimated
1,256 have 1,500 or fewer employees and 186 have more than 1,500 employees.25 In addition, 17 carriers
have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or
fewer employees.26 In addition, 72 carriers have reported that they are Other Local Service Providers.27
Of the 72, seventy have 1,500 or fewer employees and two have more than 1,500 employees.28
Consequently, the Commission estimates that most providers of competitive local exchange service,
competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are
small entities that may be affected by rules adopted pursuant to the Order.
11.

Interexchange Carriers (IXCs)

. Neither the Commission nor the SBA has developed a size


18 See 13 C.F.R. § 121.201, NAICS code 517110.
19 See Trends in Telephone Service at Table 5.3.
20 See id.
21 5 U.S.C. § 601(3).
22 See Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to William E. Kennard, Chairman, FCC (May
27, 1999). The Small Business Act contains a definition of “small business concern,” which the RFA incorporates
into its own definition of “small business.” See 15 U.S.C. § 632(a); see also 5 U.S.C. § 601(3). SBA regulations
interpret “small business concern” to include the concept of dominance on a national basis. See 13 C.F.R. §
121.102(b).
23 See 13 C.F.R. § 121.201, NAICS code 517110.
24 See Trends in Telephone Service at Table 5.3.
25 See id.
26 See id.
27 See id.
28 See id.
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standard for small businesses specifically applicable to interexchange services. The closest applicable
size standard under SBA rules is for Wired Telecommunications Carriers. Under that size standard, such
a business is small if it has 1,500 or fewer employees.29 According to Commission data, 359 companies
reported that their primary telecommunications service activity was the provision of interexchange
services.30 Of these 359 companies, an estimated 317 have 1,500 or fewer employees and 42 have more
than 1,500 employees.31 Consequently, the Commission estimates that the majority of interexchange
service providers are small entities that may be affected by rules adopted pursuant to the Order.
12.

Prepaid Calling Card Providers

. Neither the Commission nor the SBA has developed a
small business size standard specifically for prepaid calling card providers. The appropriate size standard
under SBA rules is for the category Telecommunications Resellers. Under that size standard, such a
business is small if it has 1,500 or fewer employees.32 According to Commission data, 193 carriers have
reported that they are engaged in the provision of prepaid calling cards.33 Of these, an estimated all 193
have 1,500 or fewer employees and none have more than 1,500 employees.34 Consequently, the
Commission estimates that the majority of prepaid calling card providers are small entities that may be
affected by rules adopted pursuant to the Order.
13.

Local Resellers

. The SBA has developed a small business size standard for the category of
Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer
employees.35 According to Commission data, 213 carriers have reported that they are engaged in the
provision of local resale services.36 Of these, an estimated 211 have 1,500 or fewer employees and two
have more than 1,500 employees.37 Consequently, the Commission estimates that the majority of local
resellers are small entities that may be affected by rules adopted pursuant to the Order.
14.

Toll Resellers

. The SBA has developed a small business size standard for the category of
Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer
employees.38 According to Commission data, 881 carriers have reported that they are engaged in the
provision of toll resale services.39 Of these, an estimated 857 have 1,500 or fewer employees and 24 have
more than 1,500 employees.40 Consequently, the Commission estimates that the majority of toll resellers
are small entities that may be affected by rules adopted pursuant to the Order.
15.

Other Toll Carriers

. Neither the Commission nor the SBA has developed a size standard
for small businesses specifically applicable to Other Toll Carriers. This category includes toll carriers
that do not fall within the categories of interexchange carriers, operator service providers, prepaid calling


29 See 13 C.F.R. § 121.201, NAICS code 517110.
30 See Trends in Telephone Service at Table 5.3.
31 See id.
32 See 13 C.F.R. § 121.201, NAICS code 517911.
33 See Trends in Telephone Service at Table 5.3.
34 See id.
35 See 13 C.F.R. § 121.201, NAICS code 517911.
36 See Trends in Telephone Service at Table 5.3.
37 See id.
38 See 13 C.F.R. § 121.201, NAICS code 517911.
39 See Trends in Telephone Service at Table 5.3.
40 See id.
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card providers, satellite service carriers, or toll resellers. The closest applicable size standard under SBA
rules is for Wired Telecommunications Carriers. Under that size standard, such a business is small if it
has 1,500 or fewer employees.41 According to Commission data, 284 companies reported that their
primary telecommunications service activity was the provision of other toll carriage.42 Of these, an
estimated 279 have 1,500 or fewer employees and five have more than 1,500 employees.43 Consequently,
the Commission estimates that most Other Toll Carriers are small entities that may be affected by the
rules and policies adopted pursuant to the Order.
16. 800 and 800-Like Service Subscribers.44 Neither the Commission nor the SBA has
developed a small business size standard specifically for 800 and 800-like service (toll free) subscribers.
The appropriate size standard under SBA rules is for the category Telecommunications Resellers. Under
that size standard, such a business is small if it has 1,500 or fewer employees.45 The most reliable source
of information regarding the number of these service subscribers appears to be data the Commission
collects on the 800, 888, 877, and 866 numbers in use.46 According to our data, as of September 2009,
the number of 800 numbers assigned was 7,860,000; the number of 888 numbers assigned was 5,588,687;
the number of 877 numbers assigned was 4,721,866; and the number of 866 numbers assigned was
7,867,736.47 We do not have data specifying the number of these subscribers that are not independently
owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with
greater precision the number of toll free subscribers that would qualify as small businesses under the SBA
size standard. Consequently, we estimate that there are 7,860,000 or fewer small entity 800 subscribers;
5,588,687 or fewer small entity 888 subscribers; 4,721,866 or fewer small entity 877 subscribers; and
7,867,736 or fewer small entity 866 subscribers.
17.

Wireless Telecommunications Carriers (except Satellite)

. Since 2007, the SBA has
recognized wireless firms within this new, broad, economic census category.48 Prior to that time, such
firms were within the now-superseded categories of Paging and Cellular and Other Wireless
Telecommunications.49 Under the present and prior categories, the SBA has deemed a wireless business
to be small if it has 1,500 or fewer employees.50 For this category, census data for 2007 show that there
were 1,383 firms that operated for the entire year.51 Of this total, 1,368 firms had employment of 999 or


41 See 13 C.F.R. § 121.201, NAICS code 517110.
42 See Trends in Telephone Service at Table 5.3.
43 See id.
44 We include all toll-free number subscribers in this category, including those for 888 numbers.
45 See 13 C.F.R. § 121.201, NAICS code 517911.
46 See Trends in Telephone Service at Tables 18.7-18.10.
47 See id.
48 See 13 C.F.R. § 121.201, NAICS code 517210.
49 U.S. Census Bureau, 2002 NAICS Definitions, “517211 Paging”;
http://www.census.gov/epcd/naics02/def/NDEF517.HTM (last visited Nov. 6, 2012); U.S. Census Bureau, 2002
NAICS Definitions, “517212 Cellular and Other Wireless Telecommunications,”
http://www.census.gov/epcd/naics02/def/NDEF517.HTM (last visited Nov. 6, 2012).
50 13 C.F.R. § 121.201, NAICS code 517210. The now-superseded, pre-2007 C.F.R. citations were 13 C.F.R. §
121.201, NAICS codes 517211 and 517212 (referring to the 2002 NAICS).
51 U.S. Census Bureau, Subject Series: Information, Table 5, “Establishment and Firm Size: Employment Size of
Firms for the United States: 2007 NAICS Code 517210” (issued Nov. 2010).
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fewer employees and 15 had employment of 1000 employees or more.52 Similarly, according to
Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony,
including cellular service, Personal Communications Service (PCS), and Specialized Mobile Radio
(SMR) Telephony services.53 Of these, an estimated 261 have 1,500 or fewer employees and 152 have
more than 1,500 employees.54 Consequently, the Commission estimates that approximately half or more
of these firms can be considered small. Thus, using available data, we estimate that the majority of
wireless firms can be considered small.
18. Broadband Personal Communications Service. The broadband personal communications
service (PCS) spectrum is divided into six frequency blocks designated A through F, and the Commission
has held auctions for each block. The Commission defined “small entity” for Blocks C and F as an entity
that has average gross revenues of $40 million or less in the three previous calendar years.55 For Block F,
an additional classification for “very small business” was added and is defined as an entity that, together
with its affiliates, has average gross revenues of not more than $15 million for the preceding three
calendar years.56 These standards defining “small entity” in the context of broadband PCS auctions have
been approved by the SBA.57 No small businesses, within the SBA-approved small business size
standards bid successfully for licenses in Blocks A and B. There were 90 winning bidders that qualified
as small entities in the Block C auctions. A total of 93 small and very small business bidders won
approximately 40 percent of the 1,479 licenses for Blocks D, E, and F.58 In 1999, the Commission re-
auctioned 347 C, E, and F Block licenses.59 There were 48 small business winning bidders. In 2001, the
Commission completed the auction of 422 C and F Broadband PCS licenses in Auction 35.60 Of the 35
winning bidders in this auction, 29 qualified as “small” or “very small” businesses. Subsequent events,
concerning Auction 35, including judicial and agency determinations, resulted in a total of 163 C and F
Block licenses being available for grant. In 2005, the Commission completed an auction of 188 C block
licenses and 21 F block licenses in Auction 58. There were 24 winning bidders for 217 licenses.61 Of the


52 Id. Available census data do not provide a more precise estimate of the number of firms that have employment of
1,500 or fewer employees; the largest category provided is for firms with “100 employees or more.”
53 See Trends in Telephone Service at Table 5.3.
54 See id.
55 See generally Amendment of Parts 20 and 24 of the Commission’s Rules – Broadband PCS Competitive Bidding
and the Commercial Mobile Radio Service Spectrum Cap
, WT Docket No. 96-59, GN Docket No. 90-314, Report
and Order, 11 FCC Rcd 7824 (1996); see also 47 C.F.R. § 24.720(b)(1).
56 See generally Amendment of Parts 20 and 24 of the Commission’s Rules – Broadband PCS Competitive Bidding
and the Commercial Mobile Radio Service Spectrum Cap
, WT Docket No. 96-59, GN Docket No. 90-314, Report
and Order, 11 FCC Rcd 7824 (1996); see also 47 C.F.R. § 24.720(b)(2).
57 See, e.g., Implementation of Section 309(j) of the Communications Act – Competitive Bidding, PP Docket No. 93-
253, Fifth Report and Order, 9 FCC Rcd 5532 (1994).
58 See FCC News, Broadband PCS, D, E and F Block Auction Closes, No. 71744 (rel. Jan. 14, 1997). See also
Amendment of the Commission’s Rules Regarding Installment Payment Financing for Personal Communications
Services (PCS) Licensees
, WT Docket No. 97-82, Second Report and Order and Further Notice of Proposed
Rulemaking, 12 FCC Rcd 16436 (1997).
59 See “C, D, E, and F Block Broadband PCS Auction Closes” Public Notice, 14 FCC Rcd 6688 (WTB
1999).
60 See “C and F Block Broadband PCS Auction Closes; Winning Bidders Announced,” Public Notice, 16
FCC Rcd 2339 (2001).
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24 winning bidders, 16 claimed small business status and won 156 licenses. In 2007, the Commission
completed an auction of 33 licenses in the A, C, and F Blocks in Auction 71.62 Of the 14 winning
bidders, six were designated entities.63 In 2008, the Commission completed an auction of 20 Broadband
PCS licenses in the C, D, E and F block licenses in Auction 78.64
19.

Advanced Wireless Services

. In 2008, the Commission conducted the auction of Advanced
Wireless Services (“AWS”) licenses.65 This auction, which as designated as Auction 78, offered 35
licenses in the AWS 1710-1755 MHz and 2110-2155 MHz bands (“AWS-1”). The AWS-1 licenses were
licenses for which there were no winning bids in Auction 66. That same year, the Commission completed
Auction 78. A bidder with attributed average annual gross revenues that exceeded $15 million and did
not exceed $40 million for the preceding three years (“small business”) received a 15 percent discount on
its winning bid. A bidder with attributed average annual gross revenues that did not exceed $15 million
for the preceding three years (“very small business”) received a 25 percent discount on its winning bid. A
bidder that had combined total assets of less than $500 million and combined gross revenues of less than
$125 million in each of the last two years qualified for entrepreneur status.66 Four winning bidders that
identified themselves as very small businesses won 17 licenses.67 Three of the winning bidders that
identified themselves as a small business won five licenses. Additionally, one other winning bidder that
qualified for entrepreneur status won 2 licenses.
20.

Narrowband Personal Communications Services

. In 1994, the Commission conducted an
auction for Narrowband PCS licenses. A second auction was also conducted later in 1994. For purposes
of the first two Narrowband PCS auctions, “small businesses” were entities with average gross revenues
for the prior three calendar years of $40 million or less.68 Through these auctions, the Commission
awarded a total of 41 licenses, 11 of which were obtained by four small businesses.69 To ensure
meaningful participation by small business entities in future auctions, the Commission adopted a two-
(Continued from previous page)


61 See “Broadband PCS Spectrum Auction Closes; Winning Bidders Announced for Auction No. 58,” Public Notice,
20 FCC Rcd 3703 (2005).
62 See “Auction of Broadband PCS Spectrum Licenses Closes; Winning Bidders Announced for Auction No. 71,”
Public Notice, 22 FCC Rcd 9247 (2007).
63 Id.
64 See “Auction of AWS-1 and Broadband PCS Licenses Rescheduled For August 13, 3008, Notice of Filing
Requirements, Minimum Opening Bids, Upfront Payments and Other Procedures For Auction 78,” Public Notice,
23 FCC Rcd 7496 (2008) (AWS-1 and Broadband PCS Procedures Public Notice).
65 See AWS-1 and Broadband PCS Procedures Public Notice, 23 FCC Rcd 7496. Auction 78 also included an
auction of Broadband PCS licenses.
66 Id. at 7521-22.
67 See “Auction of AWS-1 and Broadband PCS Licenses Closes, Winning Bidders Announced for Auction 78,
Down Payments Due September 9, 2008, FCC Forms 601 and 602 Due September 9, 2008, Final Payments Due
September 23, 2008, Ten-Day Petition to Deny Period,” Public Notice, 23 FCC Rcd 12749 (2008).
68 Implementation of Section 309(j) of the Communications Act – Competitive Bidding Narrowband PCS, PP Docket
No. 93-253, GEN Docket No. 90-314, ET Docket No. 92-100, Third Memorandum Opinion and Order and Further
Notice of Proposed Rulemaking, 10 FCC Rcd 175, 196, para. 46 (1994).
69 See Announcing the High Bidders in the Auction of Ten Nationwide Narrowband PCS Licenses, Winning Bids
Total $617,006,674
, Public Notice, PNWL 94-004 (rel. Aug. 2, 1994); Announcing the High Bidders in the Auction
of 30 Regional Narrowband PCS Licenses; Winning Bids Total $490,901,787
, Public Notice, PNWL 94-27 (rel.
Nov. 9, 1994).
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tiered small business size standard in the Narrowband PCS Second Report and Order.70 A “small
business” is an entity that, together with affiliates and controlling interests, has average gross revenues for
the three preceding years of not more than $40 million.71 A “very small business” is an entity that,
together with affiliates and controlling interests, has average gross revenues for the three preceding years
of not more than $15 million.72 The SBA has approved these small business size standards.73 A third
auction was conducted in 2001. Here, five bidders won 317 (Metropolitan Trading Areas and
nationwide) licenses.74 Three of these claimed status as a small or very small entity and won 311
licenses.
21.

Paging (Private and Common Carrier)

. In the Paging Third Report and Order, we
developed a small business size standard for “small businesses” and “very small businesses” for purposes
of determining their eligibility for special provisions such as bidding credits and installment payments.75
A “small business” is an entity that, together with its affiliates and controlling principals, has average
gross revenues not exceeding $15 million for the preceding three years. Additionally, a “very small
business” is an entity that, together with its affiliates and controlling principals, has average gross
revenues that are not more than $3 million for the preceding three years. The SBA has approved these
small business size standards.76 According to Commission data, 291 carriers have reported that they are
engaged in Paging or Messaging Service.77 Of these, an estimated 289 have 1,500 or fewer employees,
and two have more than 1,500 employees.78 Consequently, the Commission estimates that the majority of
paging providers are small entities that may be affected by our action. An auction of Metropolitan
Economic Area licenses commenced on February 24, 2000, and closed on March 2, 2000. Of the 2,499
licenses auctioned, 985 were sold. Fifty-seven companies claiming small business status won 440
licenses.79 A subsequent auction of MEA and Economic Area (“EA”) licenses was held in the year 2001.
Of the 15,514 licenses auctioned, 5,323 were sold.80 One hundred thirty-two companies claiming small
business status purchased 3,724 licenses. A third auction, consisting of 8,874 licenses in each of 175 EAs
and 1,328 licenses in all but three of the 51 MEAs, was held in 2003. Seventy-seven bidders claiming


70 Amendment of the Commission’s Rules to Establish New Personal Communications Services, GEN Docket No.
90-314, ET Docket No. 92-100, PP Docket No. 93-253, Narrowband PCS, Second Report and Order and Second
Further Notice of Proposed Rule Making, 15 FCC Rcd 10456, 10476, para. 40 (2000) (Narrowband PCS Second
Report and Order
).
71 Narrowband PCS Second Report and Order, 15 FCC Rcd at 10476, para. 40.
72 Id.
73 See Letter to Amy Zoslov, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications
Bureau, FCC, from A. Alvarez, Administrator, SBA (Dec. 2, 1998) (Alvarez Letter 1998).
74 See “Narrowband PCS Auction Closes,” Public Notice, 16 FCC Rcd 18663 (WTB 2001).
75 See Revision of Part 22 and Part 90 of the Commission’s Rules to Facilitate Future Development of Paging
Systems
, WT Docket No. 96-18, PR Docket No. 93-253, Memorandum Opinion and Order on Reconsideration and
Third Report and Order, 14 FCC Rcd 10030, 10085–88, paras. 98–107 (1999) (Paging Third Report and Order)
76 See Alvarez Letter 1998.
77 See Trends in Telephone Service at Table 5.3.
78 See id.
79 See id.
80 See Lower and Upper Paging Band Auction Closes,” Public Notice, 16 FCC Rcd 21821 (WTB 2002).
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small or very small business status won 2,093 licenses.81 A fourth auction, consisting of 9,603 lower and
upper paging band licenses was held in the year 2010. Twenty-nine bidders claiming small or very small
business status won 3,016 licenses.82.
22. 220 MHz Radio Service – Phase I Licensees. The 220 MHz service has both Phase I and
Phase II licenses. Phase I licensing was conducted by lotteries in 1992 and 1993. There are
approximately 1,515 such non-nationwide licensees and four nationwide licensees currently authorized to
operate in the 220 MHz band. The Commission has not developed a small business size standard for
small entities specifically applicable to such incumbent 220 MHz Phase I licensees. To estimate the
number of such licensees that are small businesses, we apply the small business size standard under the
SBA rules applicable to Wireless Telecommunications Carriers (except Satellite). Under this category,
the SBA deems a wireless business to be small if it has 1,500 or fewer employees.83 The Commission
estimates that nearly all such licensees are small businesses under the SBA’s small business size standard
that may be affected by rules adopted pursuant to the Order.
23. 220 MHz Radio Service – Phase II Licensees. The 220 MHz service has both Phase I and
Phase II licenses. The Phase II 220 MHz service is subject to spectrum auctions. In the 220 MHz Third
Report and Order
, we adopted a small business size standard for “small” and “very small” businesses for
purposes of determining their eligibility for special provisions such as bidding credits and installment
payments.84 This small business size standard indicates that a “small business” is an entity that, together
with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the
preceding three years.85 A “very small business” is an entity that, together with its affiliates and
controlling principals, has average gross revenues that do not exceed $3 million for the preceding three
years.86 The SBA has approved these small business size standards.87 Auctions of Phase II licenses
commenced on September 15, 1998, and closed on October 22, 1998.88 In the first auction, 908 licenses
were auctioned in three different-sized geographic areas: three nationwide licenses, 30 Regional
Economic Area Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908 licenses
auctioned, 693 were sold. Thirty-nine small businesses won licenses in the first 220 MHz auction. The
second auction included 225 licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies


81 See Lower and Upper Paging Bands Auction Closes,” Public Notice, 18 FCC Rcd 11154 (WTB 2003). The
current number of small or very small business entities that hold wireless licenses may differ significantly from the
number of such entities that won in spectrum auctions due to assignments and transfers of licenses in the secondary
market over time. In addition, some of the same small business entities may have won licenses in more than one
auction.
82 See Auction of Lower and Upper Paging Bands Licenses Closes,” Public Notice, 25 FCC Rcd 18,164 (WTB
2010).
83 See 13 C.F.R. § 121.201, NAICS code 517210.
84 See Amendment of Part 90 of the Commission’s Rules to Provide for the Use of the 220-222 MHz Band by the
Private Land Mobile Radio Service
, PR Docket No. 89-552, GN Docket No. 93-252, PP Docket No. 93-253, Third
Report and Order and Fifth Notice of Proposed Rulemaking, 12 FCC Rcd 10943, 11068–70, paras. 291–295 (1997)
(220 MHz Third Report and Order).
85 See id. at 11068–69, para. 291.
86 See id. at 11068–70, paras. 291–95.
87 See Letter to D. Phythyon, Chief, Wireless Telecommunications Bureau, FCC, from Aida Alvarez, Administrator,
SBA (Jan. 6, 1998) (Alvarez to Phythyon Letter 1998).
88 See “Phase II 220 MHz Service Auction Closes,” Public Notice, 14 FCC Rcd 605 (1998).
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claiming small business status won 158 licenses.89
24.

Specialized Mobile Radio

. The Commission awards small business bidding credits in
auctions for Specialized Mobile Radio (“SMR”) geographic area licenses in the 800 MHz and 900 MHz
bands to entities that had revenues of no more than $15 million in each of the three previous calendar
years.90 The Commission awards very small business bidding credits to entities that had revenues of no
more than $3 million in each of the three previous calendar years.91 The SBA has approved these small
business size standards for the 800 MHz and 900 MHz SMR Services.92 The Commission has held
auctions for geographic area licenses in the 800 MHz and 900 MHz bands. The 900 MHz SMR auction
was completed in 1996.93 Sixty bidders claiming that they qualified as small businesses under the $15
million size standard won 263 geographic area licenses in the 900 MHz SMR band.94 The 800 MHz
SMR auction for the upper 200 channels was conducted in 1997. Ten bidders claiming that they qualified
as small businesses under the $15 million size standard won 38 geographic area licenses for the upper 200
channels in the 800 MHz SMR band.95 A second auction for the 800 MHz band was conducted in 2002
and included 23 BEA licenses. One bidder claiming small business status won five licenses.96
25. The auction of the 1,053 800 MHz SMR geographic area licenses for the General Category
channels was conducted in 2000. Eleven bidders won 108 geographic area licenses for the General
Category channels in the 800 MHz SMR band qualified as small businesses under the $15 million size
standard.97 In an auction completed in 2000, a total of 2,800 Economic Area licenses in the lower 80
channels of the 800 MHz SMR service were awarded.98 Of the 22 winning bidders, 19 claimed small
business status and won 129 licenses. Thus, combining all three auctions, 40 winning bidders for
geographic licenses in the 800 MHz SMR band claimed status as small business.
26. In addition, there are numerous incumbent site-by-site SMR licensees and licensees with
extended implementation authorizations in the 800 and 900 MHz bands. We do not know how many
firms provide 800 MHz or 900 MHz geographic area SMR pursuant to extended implementation
authorizations, nor how many of these providers have annual revenues of no more than $15 million. One


89 See “Phase II 220 MHz Service Spectrum Auction Closes,” Public Notice, 14 FCC Rcd 11218 (1999).
90 47 C.F.R. §§ 90.810, 90.814(b), 90.912.
91 47 C.F.R. §§ 90.810, 90.814(b), 90.912.
92 See Letter from Aida Alvarez, Administrator, SBA, to Thomas Sugrue, Chief, Wireless Telecommunications
Bureau, FCC (Aug. 10, 1999) (Alvarez Letter 1999).
93 “FCC Announces Winning Bidders in the Auction of 1,020 Licenses to Provide 900 MHz SMR in Major Trading
Areas: Down Payments due April 22, 1996, FCC Form 600s due April 29, 1996,” Public Notice, 11 FCC Rcd 18599
(WTB 1996).
94 Id.
95 See “Correction to Public Notice DA 96-586 ‘FCC Announces Winning Bidders in the Auction of 1020
Licenses to Provide 900 MHz SMR in Major Trading Areas,’” Public Notice, 11 FCC Rcd 18637 (WTB
1996).
96 See Multi-Radio Service Auction Closes, Public Notice, 17 FCC Rcd 1446 (WTB 2002).
97 See “800 MHz Specialized Mobile Radio (SMR) Service General Category (851-854 MHz) and Upper
Band (861-865 MHz) Auction Closes; Winning Bidders Announced,” Public Notice
, 15 FCC Rcd 17162
(WTB 2000).
98 See “800 MHz SMR Service Lower 80 Channels Auction Closes; Winning Bidders Announced,”
Public Notice, 16 FCC Rcd 1736 (WTB 2000).
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firm has over $15 million in revenues. In addition, we do not know how many of these firms have 1,500
or fewer employees.99 We assume, for purposes of this analysis, that all of the remaining existing
extended implementation authorizations are held by small entities, as that small business size standard is
approved by the SBA.
27.

Broadband Radio Service and Educational Broadband Service

. Broadband Radio
Service systems, previously referred to as Multipoint Distribution Service (“MDS”) and Multichannel
Multipoint Distribution Service (“MMDS”) systems, and “wireless cable,” transmit video programming
to subscribers and provide two-way high speed data operations using the microwave frequencies of the
Broadband Radio Service (“BRS”) and Educational Broadband Service (“EBS”) (previously referred to as
the Instructional Television Fixed Service (“ITFS”)).100 In connection with the 1996 BRS auction, the
Commission established a small business size standard as an entity that had annual average gross
revenues of no more than $40 million in the previous three calendar years.101 The BRS auctions resulted
in 67 successful bidders obtaining licensing opportunities for 493 Basic Trading Areas (“BTAs”). Of the
67 auction winners, 61 met the definition of a small business. BRS also includes licensees of stations
authorized prior to the auction. At this time, we estimate that of the 61 small business BRS auction
winners, 48 remain small business licensees. In addition to the 48 small businesses that hold BTA
authorizations, there are approximately 392 incumbent BRS licensees that are considered small entities.102
After adding the number of small business auction licensees to the number of incumbent licensees not
already counted, we find that there are currently approximately 440 BRS licensees that are defined as
small businesses under either the SBA or the Commission’s rules. The Commission has adopted three
levels of bidding credits for BRS: (i) a bidder with attributed average annual gross revenues that exceed
$15 million and do not exceed $40 million for the preceding three years (small business) is eligible to
receive a 15 percent discount on its winning bid; (ii) a bidder with attributed average annual gross
revenues that exceed $3 million and do not exceed $15 million for the preceding three years (very small
business) is eligible to receive a 25 percent discount on its winning bid; and (iii) a bidder with attributed
average annual gross revenues that do not exceed $3 million for the preceding three years (entrepreneur)
is eligible to receive a 35 percent discount on its winning bid.103 In 2009, the Commission conducted
Auction 86, which offered 78 BRS licenses.104 Auction 86 concluded with ten bidders winning 61
licenses.105 Of the ten, two bidders claimed small business status and won 4 licenses; one bidder claimed
very small business status and won three licenses; and two bidders claimed entrepreneur status and won


99 See generally 13 C.F.R. § 121.201, NAICS code 517210.
100 Amendment of Parts 21 and 74 of the Commission’s Rules with Regard to Filing Procedures in the Multipoint
Distribution Service and in the Instructional Television Fixed Service and Implementation of Section 309(j) of the
Communications Act – Competitive Bidding
, MM Docket No. 94-131 and PP Docket No. 93-253, Report and Order,
10 FCC Rcd 9589, 9593 para. 7 (1995).
101 47 C.F.R. § 21.961(b)(1).
102 47 U.S.C. § 309(j). Hundreds of stations were licensed to incumbent MDS licensees prior to implementation of
Section 309(j) of the Communications Act of 1934, 47 U.S.C. § 309(j). For these pre-auction licenses, the
applicable standard is SBA’s small business size standard.
103 47 C.F.R. § 27.1218. See also “Auction of Broadband Radio Service (BRS) Licenses, Scheduled for October 27,
2009, Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for
Auction 86,” Public Notice, 24 FCC Rcd 8277, 8296 (WTB 2009) (Auction 86 Procedures Public Notice).
104 Auction 86 Procedures Public Notice, 24 FCC Rcd at 8280.
105 “Auction of Broadband Radio Service Licenses Closes, Winning Bidders Announced for Auction 86, Down
Payments Due November 23, 2009, Final Payments Due December 8, 2009, Ten-Day Petition to Deny Period,”
Public Notice, 24 FCC Rcd 13572 (WTB 2009).
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six licenses.
28. In addition, the SBA’s Cable Television Distribution Services small business size standard is
applicable to EBS. There are presently 2,032 EBS licensees. All but 100 of these licenses are held by
educational institutions. Educational institutions are included in this analysis as small entities.106 Thus,
we estimate that at least 1,932 licensees are small businesses. Since 2007, Cable Television Distribution
Services have been defined within the broad economic census category of Wired Telecommunications
Carriers; that category is defined as follows: “This industry comprises establishments primarily engaged
in operating and/or providing access to transmission facilities and infrastructure that they own and/or
lease for the transmission of voice, data, text, sound, and video using wired telecommunications
networks. Transmission facilities may be based on a single technology or a combination of
technologies.”107 The SBA defines a small business size standard for this category as any such firms
having 1,500 or fewer employees. The SBA has developed a small business size standard for this
category, which is: all such firms having 1,500 or fewer employees. According to Census Bureau data for
2007, there were a total of 955 firms in this previous category that operated for the entire year.108 Of this
total, 939 firms had employment of 999 or fewer employees, and 16 firms had employment of 1000
employees or more.109 Thus, under this size standard, the majority of firms can be considered small and
may be affected by rules adopted pursuant to the Order.
29.

Lower 700 MHz Band Licenses

. The Commission previously adopted criteria for defining
three groups of small businesses for purposes of determining their eligibility for special provisions such
as bidding credits.110 The Commission defined a “small business” as an entity that, together with its
affiliates and controlling principals, has average gross revenues not exceeding $40 million for the
preceding three years.111 A “very small business” is defined as an entity that, together with its affiliates
and controlling principals, has average gross revenues that are not more than $15 million for the
preceding three years.112 Additionally, the Lower 700 MHz Band had a third category of small business
status for Metropolitan/Rural Service Area (“MSA/RSA”) licenses, identified as “entrepreneur” and
defined as an entity that, together with its affiliates and controlling principals, has average gross revenues
that are not more than $3 million for the preceding three years.113 The SBA approved these small size
standards.114 The Commission conducted an auction in 2002 of 740 Lower 700 MHz Band licenses (one
license in each of the 734 MSAs/RSAs and one license in each of the six Economic Area Groupings
(EAGs)). Of the 740 licenses available for auction, 484 licenses were sold to 102 winning bidders.115


106 The term “small entity” within SBREFA applies to small organizations (nonprofits) and to small governmental
jurisdictions (cities, counties, towns, townships, villages, school districts, and special districts with populations of
less than 50,000). 5 U.S.C. §§ 601(4)-(6). We do not collect annual revenue data on EBS licensees.
107 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers” (partial
definition), http://www.census.gov/naics/2007/def/ND517110.HTM#N517110 (last visited Nov. 6, 2012).
108 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms
for the United States: 2007, NAICS code 5171102 (issued Nov. 2010).
109 See id.
110 See Reallocation and Service Rules for the 698-746 MHz Spectrum Band (Television Channels 52-59), GN
Docket No. 01-74, Report and Order, 17 FCC Rcd 1022 (2002) (Channels 52-59 Report and Order).
111 See Channels 52-59 Report and Order, 17 FCC Rcd at 1087-88, para. 172.
112 See id.
113 See id. at 1088 para. 173.
114 See Alvarez Letter 1999.
115 See “Lower 700 MHz Band Auction Closes,” Public Notice, 17 FCC Rcd 17272 (WTB 2002).
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Seventy-two of the winning bidders claimed small business, very small business or entrepreneur status
and won a total of 329 licenses.116 The Commission conducted a second Lower 700 MHz Band auction in
2003 that included 256 licenses: 5 EAG licenses and 476 Cellular Market Area licenses.117 Seventeen
winning bidders claimed small or very small business status and won 60 licenses, and nine winning
bidders claimed entrepreneur status and won 154 licenses.118 In 2005, the Commission completed an
auction of 5 licenses in the Lower 700 MHz Band, designated Auction 60. There were three winning
bidders for five licenses. All three winning bidders claimed small business status.119
30. In 2007, the Commission reexamined its rules governing the 700 MHz band in the 700 MHz
Second Report and Order. 120 The 700 MHz Second Report and Order revised the band plan for the
commercial (including Guard Band) and public safety spectrum, adopted services rules, including
stringent build-out requirements, an open platform requirement on the C Block, and a requirement on the
D Block licensee to construct and operate a nationwide, interoperable wireless broadband network for
public safety users.121 An auction of A, B and E block licenses in the Lower 700 MHz band was held in
2008.122 Twenty winning bidders claimed small business status (those with attributable average annual
gross revenues that exceed $15 million and do not exceed $40 million for the preceding three years).
Thirty three winning bidders claimed very small business status (those with attributable average annual
gross revenues that do not exceed $15 million for the preceding three years). In 2011, the Commission
conducted Auction 92, which offered 16 Lower 700 MHz band licenses that had been made available in
Auction 73 but either remained unsold or were licenses on which a winning bidder defaulted. Two of the
seven winning bidders in Auction 92 claimed very small business status, winning a total of four
licenses.123
31.

Upper 700 MHz Band Licenses.

In the 700 MHz Second Report and Order, the
Commission revised its rules regarding Upper 700 MHz band licenses.124 In 2008, the Commission


116 Id.
117 See “Lower 700 MHz Band Auction Closes,” Public Notice, 18 FCC Rcd 11873 (WTB 2003).
118 See id.
119 “Auction of Lower 700 MHz Band Licenses Closes, Winning Bidders Announced for Auction No. 60, Down
Payments due August 19, 2005, FCC Forms 601 and 602 due August 19, 2005, Final Payment due September 2,
2005, Ten-Day Petition to Deny Period,” Public Notice, 20 FCC Rcd 13424 (WTB 2005).
120 See Service Rules for the 698-746, 747-762 and 777-792 MHz Band, WT Docket No. 06-150, Revision of the
Commission’s Rules to Ensure Compatibility with Enhanced 911 Emergency Calling Systems, CC Docket No. 94-
102, Section 68.4(a) of the Commission’s Rules Governing Hearing Aid-Compatible Telephone
, Biennial Regulatory
Review – Amendment of Parts 1, 22, 24, 27, and 90 to Streamline and Harmonize Various Rules Affecting Wireless
Radio Services, Former Nextel Communications, Inc. Upper700 MHz Guard Band Licenses and Revisions to Part
27 of the Commission’s Rules
, Implementing a Nationwide, Broadband Interoperable Public Safety Network in the
700 MHz Band, Development of Operational, Technical and Spectrum Requirements for Meeting Federal, State,
and Local Public Safety Communications Requirements Through the Year 2010
, WT Docket Nos. 96-86, 01-309,
03-264, 06-169, PS Docket No. 06-229, Second Report and Order, 22 FCC Rcd 15289 (2007) (700 MHz Second
Report and Order
).
121 Id.
122 See Auction of 700 MHz Band Licenses Closes, Public Notice, 23 FCC Rcd 4572 (WTB 2008).
123 See “Auction of 700 MHz Band Licenses Closes, Winning Bidders Announced for Auction 92, Down Payments
and FCC Forms 601 and 602 Due August 11, 2011, Final Payments Due August 25, 2011, Ten-Day Petition to Deny
Period,” Public Notice, 26 FCC Rcd 10,494 (WTB 2011).
124 700 MHz Second Report and Order, 22 FCC Rcd 15289.
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conducted Auction 73 in which C and D block licenses in the Upper 700 MHz band were available.125
Three winning bidders claimed very small business status (those with attributable average annual gross
revenues that do not exceed $15 million for the preceding three years).
32. 700 MHz Guard Band Licensees. In the 700 MHz Guard Band Order, we adopted a small
business size standard for “small businesses” and “very small businesses” for purposes of determining
their eligibility for special provisions such as bidding credits and installment payments.126 A “small
business” is an entity that, together with its affiliates and controlling principals, has average gross
revenues not exceeding $40 million for the preceding three years.127 Additionally, a “very small
business” is an entity that, together with its affiliates and controlling principals, has average gross
revenues that are not more than $15 million for the preceding three years.128 An auction of 52 Major
Economic Area (MEA) licenses commenced on September 6, 2000, and closed on September 21, 2000.129
Of the 104 licenses auctioned, 96 licenses were sold to nine bidders. Five of these bidders were small
businesses that won a total of 26 licenses. A second auction of 700 MHz Guard Band licenses
commenced on February 13, 2001 and closed on February 21, 2001. All eight of the licenses auctioned
were sold to three bidders. One of these bidders was a small business that won a total of two licenses.130
33.

Cellular Radiotelephone Service

. Auction 77 was held to resolve one group of mutually
exclusive applications for Cellular Radiotelephone Service licenses for unserved areas in New Mexico.131
Bidding credits for designated entities were not available in Auction 77.132 In 2008, the Commission
completed the closed auction of one unserved service area in the Cellular Radiotelephone Service,
designated as Auction 77. Auction 77 concluded with one provisionally winning bid for the unserved
area totaling $25,002.133
34.

Private Land Mobile Radio (“PLMR”)

. PLMR systems serve an essential role in a range
of industrial, business, land transportation, and public safety activities. These radios are used by
companies of all sizes operating in all U.S. business categories, and are often used in support of the
licensee’s primary (non-telecommunications) business operations. For the purpose of determining
whether a licensee of a PLMR system is a small business as defined by the SBA, we use the broad census
category, Wireless Telecommunications Carriers (except Satellite). This definition provides that a small
entity is any such entity employing no more than 1,500 persons.134 The Commission does not require
PLMR licensees to disclose information about number of employees, so the Commission does not have
information that could be used to determine how many PLMR licensees constitute small entities under


125 See Auction of 700 MHz Band Licenses Closes, Public Notice, 23 FCC Rcd 4572 (2008).
126 See Service Rules for the 746-764 and 776-794 MHz Bands, and Revisions to Part 27 of the Commission’s Rules,
WT Docket No. 99-168, Second Report and Order, 15 FCC Rcd 5299 (2000) (700 MHz Guard Band Order).
127 See id. at 5343–45 paras. 106–10.
128 See id.
129 See “700 MHz Guard Band Auction Closes,” Public Notice, 15 FCC Rcd 18026 (2000).
130 See “700 MHz Guard Band Auction Closes,” Public Notice, 16 FCC Rcd 4590 (2001).
131 See “Closed Auction of Licenses for Cellular Unserved Service Area Scheduled for June 17, 2008, Notice and
Filing Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 77,” Public
Notice
, 23 FCC Rcd 6670 (WTB 2008).
132 Id. at 6685.
133 See Auction of Cellular Unserved Service Area License Closes, Winning Bidder Announced for Auction 77, Down
Payment due July 2, 2008, Final Payment due July 17, 2008
, Public Notice, 23 FCC Rcd 9501 (WTB 2008).
134 See 13 C.F.R. § 121.201, NAICS code 517210.
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this definition. We note that PLMR licensees generally use the licensed facilities in support of other
business activities, and therefore, it would also be helpful to assess PLMR licensees under the standards
applied to the particular industry subsector to which the licensee belongs.135
35. As of March 2010, there were 424,162 PLMR licensees operating 921,909 transmitters in the
PLMR bands below 512 MHz. We note that any entity engaged in a commercial activity is eligible to
hold a PLMR license, and that any revised rules in this context could therefore potentially impact small
entities covering a great variety of industries.
36.

Rural Radiotelephone Service

. The Commission has not adopted a size standard for small
businesses specific to the Rural Radiotelephone Service.136 A significant subset of the Rural
Radiotelephone Service is the Basic Exchange Telephone Radio System (“BETRS”).137 In the present
context, we will use the SBA’s small business size standard applicable to Wireless Telecommunications
Carriers (except Satellite), i.e., an entity employing no more than 1,500 persons.138 There are
approximately 1,000 licensees in the Rural Radiotelephone Service, and the Commission estimates that
there are 1,000 or fewer small entity licensees in the Rural Radiotelephone Service that may be affected
by the rules and policies proposed herein.
37.

Air-Ground Radiotelephone Service

. The Commission has not adopted a small business
size standard specific to the Air-Ground Radiotelephone Service.139 We will use SBA’s small business
size standard applicable to Wireless Telecommunications Carriers (except Satellite), i.e., an entity
employing no more than 1,500 persons.140 There are approximately 100 licensees in the Air-Ground
Radiotelephone Service, and we estimate that almost all of them qualify as small under the SBA small
business size standard and may be affected by rules adopted pursuant to the Order.
38.

Aviation and Marine Radio Services

. Small businesses in the aviation and marine radio
services use a very high frequency (VHF) marine or aircraft radio and, as appropriate, an emergency
position-indicating radio beacon (and/or radar) or an emergency locator transmitter. The Commission has
not developed a small business size standard specifically applicable to these small businesses. For
purposes of this analysis, the Commission uses the SBA small business size standard for the category
Wireless Telecommunications Carriers (except Satellite), which is 1,500 or fewer employees.141 Census
data for 2007, which supersede data contained in the 2002 Census, show that there were 1,383 firms that
operated that year.142 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than
100 employees. Most applicants for recreational licenses are individuals. Approximately 581,000 ship
station licensees and 131,000 aircraft station licensees operate domestically and are not subject to the
radio carriage requirements of any statute or treaty. For purposes of our evaluations in this analysis, we
estimate that there are up to approximately 712,000 licensees that are small businesses (or individuals)
under the SBA standard. In addition, between December 3, 1998 and December 14, 1998, the


135 See generally 13 C.F.R. § 121.201.
136 The service is defined in 47 C.F.R. § 22.99.
137 BETRS is defined in 47 C.F.R. §§ 22.757 and 22.759.
138 13 C.F.R. § 121.201, NAICS code 517210.
139 See 47 C.F.R. § 22.99.
140 See 13 C.F.R. § 121.201, NAICS code 517210.
141 See 13 C.F.R. § 121.201, NAICS code 517210.
142 U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 NAICS code 517210 (rel. Oct. 20, 2009),
http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&;-
ds_name=EC0751SSSZ5&-_lang=en.
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Commission held an auction of 42 VHF Public Coast licenses in the 157.1875-157.4500 MHz (ship
transmit) and 161.775-162.0125 MHz (coast transmit) bands. For purposes of the auction, the
Commission defined a “small” business as an entity that, together with controlling interests and affiliates,
has average gross revenues for the preceding three years not to exceed $15 million dollars.143 In addition,
a “very small” business is one that, together with controlling interests and affiliates, has average gross
revenues for the preceding three years not to exceed $3 million dollars.144 There are approximately
10,672 licensees in the Marine Coast Service, and the Commission estimates that almost all of them
qualify as “small” businesses under the above special small business size standards and may be affected
by rules adopted pursuant to the Order.
39.

Fixed Microwave Services

. Fixed microwave services include common carrier,145 private
operational-fixed,146 and broadcast auxiliary radio services.147 At present, there are approximately 22,015
common carrier fixed licensees and 61,670 private operational-fixed licensees and broadcast auxiliary
radio licensees in the microwave services. The Commission has not created a size standard for a small
business specifically with respect to fixed microwave services. For purposes of this analysis, the
Commission uses the SBA small business size standard for Wireless Telecommunications Carriers
(except Satellite), which is 1,500 or fewer employees.148 The Commission does not have data specifying
the number of these licensees that have more than 1,500 employees, and thus is unable at this time to
estimate with greater precision the number of fixed microwave service licensees that would qualify as
small business concerns under the SBA’s small business size standard. Consequently, the Commission
estimates that there are up to 22,015 common carrier fixed licensees and up to 61,670 private operational-
fixed licensees and broadcast auxiliary radio licensees in the microwave services that may be small and
may be affected by the rules and policies adopted herein. We note, however, that the common carrier
microwave fixed licensee category includes some large entities.
40.

Offshore Radiotelephone Service

. This service operates on several UHF television
broadcast channels that are not used for television broadcasting in the coastal areas of states bordering the
Gulf of Mexico.149 There are presently approximately 55 licensees in this service. The Commission is
unable to estimate at this time the number of licensees that would qualify as small under the SBA’s small
business size standard for the category of Wireless Telecommunications Carriers (except Satellite). Under


143 See generally Amendment of the Commission’s Rules Concerning Maritime Communications, PR Docket No. 92-
257, Third Report and Order and Memorandum Opinion and Order, 13 FCC Rcd 19853, 19884–88 paras. 64–73
(1998).
144 See id.
145 See 47 C.F.R. §§ 101 et seq. (formerly, Part 21 of the Commission’s Rules) for common carrier fixed microwave
services (except Multipoint Distribution Service).
146 Persons eligible under parts 80 and 90 of the Commission’s Rules can use Private Operational-Fixed Microwave
services. See 47 C.F.R. Parts 80 and 90. Stations in this service are called operational-fixed to distinguish them
from common carrier and public fixed stations. Only the licensee may use the operational-fixed station, and only for
communications related to the licensee’s commercial, industrial, or safety operations.
147 Auxiliary Microwave Service is governed by Part 74 of Title 47 of the Commission’s Rules. See 47 C.F.R. Part
74. This service is available to licensees of broadcast stations and to broadcast and cable network entities.
Broadcast auxiliary microwave stations are used for relaying broadcast television signals from the studio to the
transmitter, or between two points such as a main studio and an auxiliary studio. The service also includes mobile
television pickups, which relay signals from a remote location back to the studio.
148 See 13 C.F.R. § 121.201, NAICS code 517210.
149 This service is governed by Subpart I of Part 22 of the Commission’s Rules. See 47 C.F.R. §§ 22.1001-22.1037.
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that SBA small business size standard, a business is small if it has 1,500 or fewer employees.150 Census
data for 2007, which supersede data contained in the 2002 Census, show that there were 1,383 firms that
operated that year.151 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than
100 employees. Thus, under this category and the associated small business size standard, the majority of
firms can be considered small.
41. 39 GHz Service. The Commission created a special small business size standard for 39 GHz
licenses—an entity that has average gross revenues of $40 million or less in the three previous calendar
years.152 An additional size standard for “very small business” is: an entity that, together with affiliates,
has average gross revenues of not more than $15 million for the preceding three calendar years.153 The
SBA has approved these small business size standards.154 The auction of the 2,173 39 GHz licenses
began on April 12, 2000 and closed on May 8, 2000. The 18 bidders who claimed small business status
won 849 licenses. Consequently, the Commission estimates that 18 or fewer 39 GHz licensees are small
entities that may be affected by rules adopted pursuant to the Order.
42.

Local Multipoint Distribution Service

. Local Multipoint Distribution Service (“LMDS”) is
a fixed broadband point-to-multipoint microwave service that provides for two-way video
telecommunications.155 The auction of the 986 LMDS licenses began and closed in 1998. The
Commission established a small business size standard for LMDS licenses as an entity that has average
gross revenues of less than $40 million in the three previous calendar years.156 An additional small
business size standard for “very small business” was added as an entity that, together with its affiliates,
has average gross revenues of not more than $15 million for the preceding three calendar years.157 The
SBA has approved these small business size standards in the context of LMDS auctions.158 There were
93 winning bidders that qualified as small entities in the LMDS auctions. A total of 93 small and very
small business bidders won approximately 277 A Block licenses and 387 B Block licenses. In 1999, the
Commission re-auctioned 161 licenses; there were 32 small and very small businesses winning that won
119 licenses.
43. 218-219 MHz Service. The first auction of 218-219 MHz spectrum resulted in 170 entities
winning licenses for 594 Metropolitan Statistical Area (MSA) licenses. Of the 594 licenses, 557 were


150 Id.
151 U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 NAICS code 517210 (rel. Oct. 20, 2009),
http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&;-
ds_name=EC0751SSSZ5&-_lang=en.
152 See Amendment of the Commission’s Rules Regarding the 37.0-38.6 GHz and 38.6-40.0 GHz Bands, ET Docket
No. 95-183, PP Docket No. 93-253, Report and Order, 12 FCC Rcd 18600, 18661–64, paras. 149–151 (1997).
153 See id.
154 See Letter to Kathleen O’Brien Ham, Chief, Auctions and Industry Analysis Division, Wireless
Telecommunications Bureau, FCC, from Aida Alvarez, Administrator, SBA (Feb. 4, 1998).
155 See Rulemaking to Amend Parts 1, 2, 21, 25, of the Commission’s Rules to Redesignate the 27.5-29.5 GHz
Frequency Band, Reallocate the 29.5-30.5 Frequency Band, to Establish Rules and Policies for Local Multipoint
Distribution Service and for Fixed Satellite Services
, CC Docket No. 92-297, Second Report and Order, Order on
Reconsideration, and Fifth Notice of Proposed Rule Making, 12 FCC Rcd 12545, 12689-90, para. 348 (1997)
(“LMDS Second Report and Order”).
156 See LMDS Second Report and Order, 12 FCC Rcd at 12689-90, para. 348.
157 See id.
158 See Alvarez to Phythyon Letter 1998.
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won by entities qualifying as a small business. For that auction, the small business size standard was an
entity that, together with its affiliates, has no more than a $6 million net worth and, after federal income
taxes (excluding any carry over losses), has no more than $2 million in annual profits each year for the
previous two years.159 In the 218-219 MHz Report and Order and Memorandum Opinion and Order, we
established a small business size standard for a “small business” as an entity that, together with its
affiliates and persons or entities that hold interests in such an entity and their affiliates, has average annual
gross revenues not to exceed $15 million for the preceding three years.160 A “very small business” is
defined as an entity that, together with its affiliates and persons or entities that hold interests in such an
entity and its affiliates, has average annual gross revenues not to exceed $3 million for the preceding three
years.161 These size standards will be used in future auctions of 218-219 MHz spectrum.
44. 2.3 GHz Wireless Communications Services. This service can be used for fixed, mobile,
radiolocation, and digital audio broadcasting satellite uses. The Commission defined “small business” for
the wireless communications services (“WCS”) auction as an entity with average gross revenues of $40
million for each of the three preceding years, and a “very small business” as an entity with average gross
revenues of $15 million for each of the three preceding years.162 The SBA has approved these
definitions.163 The Commission auctioned geographic area licenses in the WCS service. In the auction,
which was conducted in 1997, there were seven bidders that won 31 licenses that qualified as very small
business entities, and one bidder that won one license that qualified as a small business entity.
45. 1670-1675 MHz Band. An auction for one license in the 1670-1675 MHz band was
conducted in 2003. The Commission defined a “small business” as an entity with attributable average
annual gross revenues of not more than $40 million for the preceding three years and thus would be
eligible for a 15 percent discount on its winning bid for the 1670-1675 MHz band license. Further, the
Commission defined a “very small business” as an entity with attributable average annual gross revenues
of not more than $15 million for the preceding three years and thus would be eligible to receive a 25
percent discount on its winning bid for the 1670-1675 MHz band license. One license was awarded. The
winning bidder was not a small entity.
46. 3650–3700 MHz band. In March 2005, the Commission released a Report and Order and
Memorandum Opinion and Order that provides for nationwide, non-exclusive licensing of terrestrial
operations, utilizing contention-based technologies, in the 3650 MHz band (i.e., 3650–3700 MHz).164 As
of April 2010, more than 1270 licenses have been granted and more than 7433 sites have been registered.
The Commission has not developed a definition of small entities applicable to 3650–3700 MHz band
nationwide, non-exclusive licensees. However, we estimate that the majority of these licensees are
Internet Access Service Providers (ISPs) and that most of those licensees are small businesses.
47. 24 GHz – Incumbent Licensees. This analysis may affect incumbent licensees who were


159 See generally Implementation of Section 309(j) of the Communications Act – Competitive Bidding, PP Docket
No. 93-253, Fourth Report and Order, 9 FCC Rcd 2330 (1994).
160 See generally Amendment of Part 95 of the Commission’s Rules to Provide Regulatory Flexibility in the 218-219
MHz Service
, WT Docket No. 98-169, Report and Order and Memorandum Opinion and Order, 15 FCC Rcd 1497
(1999).
161 See id.
162 Amendment of the Commission’s Rules to Establish Part 27, the Wireless Communications Service (WCS), GN
Docket No. 96-228, Report and Order, 12 FCC Rcd 10785, 10879, para. 194 (1997).
163 See Letter from Aida Alvarez, Administrator, SBA, to Amy Zoslov, Chief, Auctions and Industry Analysis
Division, Wireless Telecommunications Bureau, FCC (Dec. 2, 1998) (Alvarez Letter 1998).
164 The service is defined in section 90.1301 et seq. of the Commission’s Rules, 47 C.F.R. § 90.1301 et seq.
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relocated to the 24 GHz band from the 18 GHz band, and applicants who wish to provide services in the
24 GHz band. For this service, the Commission uses the SBA small business size standard for the
category “Wireless Telecommunications Carriers (except satellite),” which is 1,500 or fewer
employees.165 To gauge small business prevalence for these cable services we must, however, use the
most current census data. Census data for 2007, which supersede data contained in the 2002 Census,
show that there were 1,383 firms that operated that year.166 Of those 1,383, 1,368 had fewer than 100
employees, and 15 firms had more than 100 employees. Thus under this category and the associated
small business size standard, the majority of firms can be considered small. The Commission notes that
the Census’ use of the classifications “firms” does not track the number of “licenses”. The Commission
believes that there are only two licensees in the 24 GHz band that were relocated from the 18 GHz band,
Teligent167 and TRW, Inc. It is our understanding that Teligent and its related companies have less than
1,500 employees, though this may change in the future. TRW is not a small entity. Thus, only one
incumbent licensee in the 24 GHz band is a small business entity.
48. 24 GHz – Future Licensees. With respect to new applicants in the 24 GHz band, the size
standard for “small business” is an entity that, together with controlling interests and affiliates, has
average annual gross revenues for the three preceding years not in excess of $15 million.168 “Very small
business” in the 24 GHz band is an entity that, together with controlling interests and affiliates, has
average gross revenues not exceeding $3 million for the preceding three years.169 The SBA has approved
these small business size standards.170 These size standards will apply to a future 24 GHz license auction,
if held.
49.

Satellite Telecommunications

. Since 2007, the SBA has recognized satellite firms within
this revised category, with a small business size standard of $15 million.171 The most current Census
Bureau data are from the economic census of 2007, and we will use those figures to gauge the prevalence
of small businesses in this category. Those size standards are for the two census categories of “Satellite
Telecommunications” and “Other Telecommunications.” Under the “Satellite Telecommunications”
category, a business is considered small if it had $15 million or less in average annual receipts.172 Under
the “Other Telecommunications” category, a business is considered small if it had $25 million or less in
average annual receipts.173


165 13 C.F.R. § 121.201, NAICS code 517210.
166 U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 NAICS code 517210 (rel. Oct. 20, 2009),
http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&;-
ds_name=EC0751SSSZ5&-_lang=en.
167 Teligent acquired the DEMS licenses of FirstMark, the only licensee other than TRW in the 24 GHz band whose
license has been modified to require relocation to the 24 GHz band.
168 See Amendments to Parts 1, 2, 87 and 101 of the Commission’s Rules to License Fixed Services at 24 GHz, WT
Docket No. 99-327, Report and Order, 15 FCC Rcd 16934, 16967, para. 77 (2000); see also 47 C.F.R. §
101.538(a)(2).
169 See Amendments to Parts 1, 2, 87 and 101 of the Commission’s Rules to License Fixed Services at 24 GHz, 15
FCC Rcd at 16967, para. 77; see also 47 C.F.R. § 101.538(a)(1).
170 See Letter to Margaret W. Wiener, Deputy Chief, Auctions and Industry Analysis Division, Wireless
Telecommunications Bureau, FCC, from Gary M. Jackson, Assistant Administrator, SBA (July 28, 2000).
171 See 13 C.F.R. § 121.201, NAICS code 517410.
172 Id.
173 See 13 C.F.R. § 121.201, NAICS code 517919.
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50. The first category of Satellite Telecommunications “comprises establishments primarily
engaged in providing point-to-point telecommunications services to other establishments in the
telecommunications and broadcasting industries by forwarding and receiving communications signals via
a system of satellites or reselling satellite telecommunications.”174 For this category, Census Bureau data
for 2007 show that there were a total of 512 firms that operated for the entire year.175 Of this total, 464
firms had annual receipts of under $10 million, and 18 firms had receipts of $10 million to
$24,999,999.176 Consequently, we estimate that the majority of Satellite Telecommunications firms are
small entities that might be affected by rules adopted pursuant to the Order.
51. The second category of Other Telecommunications “primarily engaged in providing
specialized telecommunications services, such as satellite tracking, communications telemetry, and radar
station operation. This industry also includes establishments primarily engaged in providing satellite
terminal stations and associated facilities connected with one or more terrestrial systems and capable of
transmitting telecommunications to, and receiving telecommunications from, satellite systems.
Establishments providing Internet services or voice over Internet protocol (VoIP) services via client-
supplied telecommunications connections are also included in this industry.”177 For this category, Census
Bureau data for 2007 show that there were a total of 2,383 firms that operated for the entire year.178 Of
this total, 2,346 firms had annual receipts of under $25 million.179 Consequently, we estimate that the
majority of Other Telecommunications firms are small entities that might be affected by our action.
52.

Cable and Other Program Distribution.

Since 2007, these services have been defined
within the broad economic census category of Wired Telecommunications Carriers; that category is
defined as follows: “This industry comprises establishments primarily engaged in operating and/or
providing access to transmission facilities and infrastructure that they own and/or lease for the
transmission of voice, data, text, sound, and video using wired telecommunications networks.
Transmission facilities may be based on a single technology or a combination of technologies.”180 The
SBA has developed a small business size standard for this category, which is: all such firms having 1,500
or fewer employees.181 According to Census Bureau data for 2007, there were a total of 955 firms in this
previous category that operated for the entire year.182 Of this total, 939 firms had employment of 999 or
fewer employees, and 16 firms had employment of 1000 employees or more.183 Thus, under this size
standard, the majority of firms can be considered small and may be affected by rules adopted pursuant to
the Order.


174 U.S. Census Bureau, 2007 NAICS Definitions, “517410 Satellite Telecommunications”.
175 See 13 C.F.R. § 121.201, NAICS code 517410.
176 See id. An additional 38 firms had annual receipts of $25 million or more.
177 U.S. Census Bureau, 2007 NAICS Definitions, “517919 Other Telecommunications”,
http://www.census.gov/naics/2007/def/ND517919.HTM (last visited Nov. 6, 2012).
178 See 13 C.F.R. § 121.201, NAICS code 517919.
179 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, “Establishment and Firm
Size: Employment Size of Firms for the United States: 2007 NAICS Code 517919” (issued Nov. 2010).
180 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers” (partial
definition), http://www.census.gov/naics/2007/def/ND517110.HTM#N517110 (last visited Nov. 6, 2012).
181 13 C.F.R. § 121.201, NAICS code 517110.
182 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms
for the United States: 2007, NAICS code 5171102 (issued Nov. 2010).
183 See id.
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53.

Cable Companies and Systems

. The Commission has developed its own small business
size standards, for the purpose of cable rate regulation. Under the Commission’s rules, a “small cable
company” is one serving 400,000 or fewer subscribers, nationwide.184 Industry data indicate that, of
1,076 cable operators nationwide, all but eleven are small under this size standard.185 In addition, under
the Commission’s rules, a “small system” is a cable system serving 15,000 or fewer subscribers.186
Industry data indicate that, of 7,208 systems nationwide, 6,139 systems have fewer than 10,000
subscribers, and an additional 379 systems have 10,000-19,999 subscribers.187 Thus, under this second
size standard, most cable systems are small and may be affected by rules adopted pursuant to the Order.
54.

Cable System Operators

. The Act also contains a size standard for small cable system
operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate less than
1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross
annual revenues in the aggregate exceed $250,000,000.”188 The Commission has determined that an
operator serving fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues,
when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the
aggregate.189 Industry data indicate that, of 1,076 cable operators nationwide, all but ten are small under
this size standard.190 We note that the Commission neither requests nor collects information on whether
cable system operators are affiliated with entities whose gross annual revenues exceed $250 million,191
and therefore we are unable to estimate more accurately the number of cable system operators that would
qualify as small under this size standard.
55.

Open Video Services

. The open video system (“OVS”) framework was established in 1996,
and is one of four statutorily recognized options for the provision of video programming services by local
exchange carriers.192 The OVS framework provides opportunities for the distribution of video


184 See 47 C.F.R. § 76.901(e). The Commission determined that this size standard equates approximately to a size
standard of $100 million or less in annual revenues. See Implementation of Sections of the 1992 Cable Television
Consumer Protection and Competition Act: Rate Regulation
, MM Docket Nos. 92-266, 93-215, Sixth Report and
Order and Eleventh Order on Reconsideration, 10 FCC Rcd 7393, 7408 para. 28 (1995).
185 These data are derived from R.R. BOWKER, BROADCASTING & CABLE YEARBOOK 2006 A-8 & C-2 (2005) (Top
25 Cable/Satellite Operators) (data current as of June 30, 2005); WARREN COMMUNICATIONS NEWS, TELEVISION &
CABLE FACTBOOK 2006 D-1805 to D-1857 (2005) (Ownership of Cable Systems in the United States).
186 See 47 C.F.R. § 76.901(c).
187 WARREN COMMUNICATIONS NEWS, TELEVISION & CABLE FACTBOOK 2006, “U.S. Cable Systems by Subscriber
Size,” page F-2 (data current as of Oct. 2005). The data do not include 718 systems for which classifying data were
not available.
188 47 U.S.C. § 543(m)(2); see also 47 C.F.R. § 76.901(f) & nn.1–3.
189 47 C.F.R. § 76.901(f); see FCC Announces New Subscriber Count for the Definition of Small Cable Operator,
Public Notice, 16 FCC Rcd 2225 (Cable Services Bureau 2001).
190 These data are derived from R.R. BOWKER, BROADCASTING & CABLE YEARBOOK 2006 A-8 & C-2 (2005) (Top
25 Cable/Satellite Operators) (data current as of June 30, 2005); WARREN COMMUNICATIONS NEWS, TELEVISION &
CABLE FACTBOOK 2006 D-1805 to D-1857 (2005) (Ownership of Cable Systems in the United States).
191 The Commission does receive such information on a case-by-case basis if a cable operator appeals a local
franchise authority’s finding that the operator does not qualify as a small cable operator pursuant to § 76.901(f) of
the Commission’s rules.
192 47 U.S.C. § 571(a)(3)-(4). See Annual Assessment of the Status of Competition in the Market for the Delivery of
Video Programming
, MB Docket No. 06-189, Thirteenth Annual Report, 24 FCC Rcd 542, 606, para. 135 (2009)
(“Thirteenth Annual Cable Competition Report”).
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programming other than through cable systems. Because OVS operators provide subscription services,193
OVS falls within the SBA small business size standard covering cable services, which is “Wired
Telecommunications Carriers.”194 The SBA has developed a small business size standard for this
category, which is: all such firms having 1,500 or fewer employees. According to Census Bureau data for
2007, there were a total of 955 firms in this previous category that operated for the entire year.195 Of this
total, 939 firms had employment of 999 or fewer employees, and 16 firms had employment of 1000
employees or more.196 Thus, under this second size standard, most cable systems are small and may be
affected by rules adopted pursuant to the Order. In addition, we note that the Commission has certified
some OVS operators, with some now providing service.197 Broadband service providers (“BSPs”) are
currently the only significant holders of OVS certifications or local OVS franchises.198 The Commission
does not have financial or employment information regarding the entities authorized to provide OVS,
some of which may not yet be operational. Thus, again, at least some of the OVS operators may qualify
as small entities.
56.

Internet Service Providers

. Since 2007, these services have been defined within the broad
economic census category of Wired Telecommunications Carriers; that category is defined as follows:
“This industry comprises establishments primarily engaged in operating and/or providing access to
transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data,
text, sound, and video using wired telecommunications networks. Transmission facilities may be based on
a single technology or a combination of technologies.”199 The SBA has developed a small business size
standard for this category, which is: all such firms having 1,500 or fewer employees.200 According to
Census Bureau data for 2007, there were 3,188 firms in this category, total, that operated for the entire
year.201 Of this total, 3144 firms had employment of 999 or fewer employees, and 44 firms had
employment of 1000 employees or more.202 Thus, under this size standard, the majority of firms can be
considered small. In addition, according to Census Bureau data for 2007, there were a total of 396 firms
in the category Internet Service Providers (broadband) that operated for the entire year.203 Of this total,
394 firms had employment of 999 or fewer employees, and two firms had employment of 1000


193 See 47 U.S.C. § 573.
194 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers”;
http://www.census.gov/naics/2007/def/ND517110.HTM#N517110 (last visited Nov. 6, 2012).
195 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms
for the United States: 2007, NAICS code 5171102 (issued Nov. 2010).
196 See id.
197 A list of OVS certifications may be found at http://www.fcc.gov/mb/ovs/csovscer.html (last visited Nov. 6,
2012).
198 See Thirteenth Annual Cable Competition Report, 24 FCC Rcd at 606-07, para. 135. BSPs are newer firms that
are building state-of-the-art, facilities-based networks to provide video, voice, and data services over a single
network.
199 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers” (partial
definition), http://www.census.gov/naics/2007/def/ND517110.HTM#N517110 (last visited Nov. 6, 2012).
200 13 C.F.R. § 121.201, NAICS code 517110.
201 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, “Establishment and Firm
Size: Employment Size of Firms for the United States: 2007 NAICS Code 517110” (issued Nov. 2010).
202 See id.
203 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms
for the United States: 2007, NAICS code 5171103 (issued Nov. 2010).
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employees or more.204 Consequently, we estimate that the majority of these firms are small entities that
may be affected by rules adopted pursuant to the Order.
57.

Internet Publishing and Broadcasting and Web Search Portals

. Our action may pertain
to interconnected VoIP services, which could be provided by entities that provide other services such as
email, online gaming, web browsing, video conferencing, instant messaging, and other, similar IP-enabled
services. The Commission has not adopted a size standard for entities that create or provide these types
of services or applications. However, the Census Bureau has identified firms that “primarily engaged in
1) publishing and/or broadcasting content on the Internet exclusively or 2) operating Web sites that use a
search engine to generate and maintain extensive databases of Internet addresses and content in an easily
searchable format (and known as Web search portals).”205 The SBA has developed a small business size
standard for this category, which is: all such firms having 500 or fewer employees.206 According to
Census Bureau data for 2007, there were 2,705 firms in this category that operated for the entire year.207
Of this total, 2,682 firms had employment of 499 or fewer employees, and 23 firms had employment of
500 employees or more.208 Consequently, we estimate that the majority of these firms are small entities
that may be affected by rules adopted pursuant to the Order.
58.

Data Processing, Hosting, and Related Services

. Entities in this category “primarily …
provid[e] infrastructure for hosting or data processing services.”209 The SBA has developed a small
business size standard for this category; that size standard is $25 million or less in average annual
receipts.210 According to Census Bureau data for 2007, there were 8,060 firms in this category that
operated for the entire year.211 Of these, 7,744 had annual receipts of under $ $24,999,999.212
Consequently, we estimate that the majority of these firms are small entities that may be affected by rules
adopted pursuant to the Order. .
59.

All Other Information Services

. The Census Bureau defines this industry as including
“establishments primarily engaged in providing other information services (except news syndicates,
libraries, archives, Internet publishing and broadcasting, and Web search portals).”213 Our action pertains
to interconnected VoIP services, which could be provided by entities that provide other services such as
email, online gaming, web browsing, video conferencing, instant messaging, and other, similar IP-enabled
services. The SBA has developed a small business size standard for this category; that size standard is


204 See id.
205 U.S. Census Bureau, “2007 NAICS Definitions: 519130 Internet Publishing and Broadcasting and Web Search
Portals,” http://www.naics.com/censusfiles/ND519130.HTM (last visited Nov. 6, 2012).
206 See 13 C.F.R. § 121.201, NAICS code 519130.
207 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, “Establishment and Firm
Size: Employment Size of Firms for the United States: 2007 NAICS Code 519130” (issued Nov. 2010).
208 Id.
209 U.S. Census Bureau, “2007 NAICS Definitions: 518210 Data Processing, Hosting, and Related Services”,
http://www.census.gov/naics/2007/def/NDEF518.HTM (last visited Nov. 6, 2012).
210 See 13 C.F.R. § 121.201, NAICS code 518210.
211 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 4, “Establishment and Firm
Size: Receipts Size of Firms for the United States: 2007 NAICS Code 518210” (issued Nov. 2010).
212 Id.
213 U.S. Census Bureau, “2007 NAICS Definitions: 519190 All Other Information Services”,
http://www.census.gov/naics/2007/def/ND519190.HTM (last visited Nov. 6, 2012).
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$7.0 million or less in average annual receipts.214 According to Census Bureau data for 2007, there were
367 firms in this category that operated for the entire year.215 Of these, 334 had annual receipts of under
$5.0 million, and an additional 11 firms had receipts of between $5 million and $9,999,999.
Consequently, we estimate that the majority of these firms are small entities that may be affected by our
action.

D.

Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements

60. The analysis addressed in this Initial Regulatory Flexibility Analysis will be performed on
data collected as described in the Report and Order section of this document. There are no reporting
requirements associated with the proposals in this Further Notice of Proposed Rulemaking. A Final
Regulatory Flexibility Analysis of that data collection is addressed in Appendix B.

E.

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

61. The RFA requires an agency to describe any significant alternatives that it has considered in
reaching its approach, which may include the following four alternatives, among others: (1) the
establishment of differing compliance or reporting requirements or timetables that take into account the
resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use of performance, rather than design,
standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.216
62. The proposals in this Further Notice of Proposed Rulemaking address the analysis of data. It
does not address the collection of that data. The data collection is addressed in the Report and Order and
the Final Regulatory Flexibility Analysis at Appendix B. Therefore, there are no reporting requirements
considered in this Further Notice of Proposed Rulemaking and no burdens imposed on small entities.
63. Section IV.B of the Further Notice of Proposed Rulemaking seek comment on possible
changes to the Commission’s pricing flexibility rules after it conducts the one-time, multi-faceted market
analysis discussed in Section IV.A of the Further Notice of Proposed Rulemaking. Section IV.C seeks
comment on the reasonableness of terms and conditions offered by incumbent LECs in the special access
market. As SBA observed, changes in special access prices may have an impact on small carriers,
including small competitive carriers.217 Once the data described in the Report and Order is collected and
analyzed, we may modify the existing pricing flexibility rules or adopt a new set of rules that will apply to
requests for special access pricing flexibility, and/or adopt remedies when we identify areas where market
power exists, and determine whether a particular term or condition is unreasonable in a given area or that
anticompetitive tying between competitive and non-competitive areas is occurring. Any such actions will
accrue to the benefit of all carriers, including small competitive carriers, as it they will ensure the
availability of special access services at just and reasonable rates.

F.

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

64. None.


214 See 13 C.F.R. § 121.201, NAICS code 519190.
215 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 4, “Establishment and Firm
Size: Receipts Size of Firms for the United States: 2007 NAICS Code 519190” (issued Nov. 2010).
216 5 U.S.C. § 603.
217 SBA 2005 NPRM IRFA Reply at 1, 3-4.
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STATEMENT OF

CHAIRMAN JULIUS GENACHOWSKI

Re:
Special Access for Price Cap Local Exchange Carriers, WC Docket No. 05-25; AT&T
Corporation Petition for Rulemaking to Reform Regulation of Incumbent Local Exchange Carrier
Rates for Interstate Special Access Services
, RM-10593
Competition is the lifeblood of our free market economy, driving private investment, innovation,
and benefits to consumers. Today the Commission acts to promote competition in communications
services by taking the next important step in the process of modernizing policies for access to dedicated
business communications lines, known as “special access.” We issue a comprehensive data collection to
assess today’s market, and lay the foundation for acting on this data expeditiously once it comes in,
quickly removing regulation where it is no longer needed, and efficiently addressing anticompetitive
practices where our analysis shows that targeted intervention is needed to ensure a robust competitive
market.
Special access services – services that provide dedicated, high-quality data connections – are a
vital input to our broadband economy. Mobile providers use these connections to link cell towers to
wireline backbone networks. Banks, credit card companies, technology companies, insurance providers,
and other large enterprises all use special access links to communicate among their branch offices. Small
businesses rely on these services for Internet access and have made clear that promoting competition in
the market for special access is essential to helping them grow and create new jobs. And our nation’s
schools, libraries, and government institutions use special access connections every day to provide
services to their constituents. Altogether, these services constitute a $12-$18 billion market annually.
As one group of businesses, including representatives from the financial services, automotive,
manufacturing, insurance, aerospace, package delivery, information technology, and transportation
industries, has told us, “special access services [are] the building blocks of their corporate networks.”
Yet, as we recognized this summer, the rules that have governed these services – rules that were
adopted in good faith over a decade ago, but were based on the predictive judgment of the agency at the
time – have not been working as intended and fail to reflect today’s market realities. Confirming the
virtual unanimity among industry on this point, our staff conducted a thorough and careful analysis of the
last decade of history and two voluntary data collections and found that our rules measure competition
poorly. Based on this analysis, we temporarily suspended new grants of pricing flexibility under the
current rules and launched a process to update the rules based on today’s market.
Today, we take the next step in that process, launching a detailed data collection to get a
comprehensive nationwide picture of the competitive landscape for special access services, and I’m
pleased that we’re able to move ahead unanimously. The core of today’s Order, a carefully crafted
nationwide collection of facilities, pricing, and demand information, will give us an exceptionally robust
data set to analyze the market for special access services.
The data collection will also allow us to test the question of whether “best efforts” services are
significant participants in this market. Although this issue was raised quite late, I believe we’ve found a
way to address it that provides us high quality data without dramatically increasing the burden on
respondents, as some other proposed approaches could have done. I thank my colleagues of both parties
for their work on this solution.
In addition, while providing appropriate Commission-level guidance about the categories of data
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to be collected, today’s Order preserves the critical flexibility for the Wireline Bureau to bring this
process to an efficient conclusion. Specifically, we provide an initial version of the specific data
collection with today’s Order, while delegating to our expert staff the authority to adjust it as needed.
And we ensure that if a part of the collection doesn’t receive OMB approval, the remainder can go ahead.
This approach ensures we can finish our work without unnecessary delay.
To the same end, today’s Further Notice of Proposed Rulemaking initiates an open process to
gather input on the comprehensive market analysis we’ll undertake once the data come in, and the rules
we should adopt based on that analysis. Here too, we are largely unanimous.
Two of my colleagues dissent, however, from a part of this notice and ask that it be delayed to a
greater or lesser degree. I disagree. Just a few months ago, Commissioner McDowell lamented that the
Commission “measure[s] the frequency of its actions on special access matters in geologic time” and
asked that the Commission “act with alacrity” in this proceeding. And Commissioner Pai said, “We
should bring this decade-old proceeding to a close soon so that special-access providers and purchasers
will have the regulatory certainty they need to carry out their businesses and invest in high-capacity
infrastructure.”
They’re right. Which is why waiting months to issue the full NPRM is the wrong approach. It
would be a decision for delay, not alacrity, and it is completely unnecessary. The options before us are
clearly defined and well known. We will run an open and data driven process over the coming months;
parties will have ample opportunity to debate the specifics; we have not prejudged adoption of any rules,
and final decisions will be made on the record that is developed. On behalf of the thousands of businesses
and tens of millions of consumers whose access to broadband is affected by competition in special access,
we should minimize the procedural steps, and not delay getting the process fully underway.
Finally, a particular thank you to the fantastic team in the Wireline Competition Bureau for their
work on this item. Crafting this data collection was an exceptionally complicated task even by the
standard of Commission work, requiring detailed economic and market analysis over many months, and
an intense attention to detail. You have laid a strong and careful foundation for our action on this vital
issue.
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STATEMENT OF

COMMISSIONER ROBERT M. McDOWELL

APPROVING IN PART AND DISSENTING IN PART

Re:
Special Access for Price Cap Local Exchange Carriers, WC Docket No. 05-25; AT&T
Corporation Petition for Rulemaking to Reform Regulation of Incumbent Local Exchange Carrier
Rates for Interstate Special Access Services
, RM-10593
During my career in the private sector and my six and a half years at the Commission, I have
spent an immeasurable amount of time working on the complex public policy questions surrounding
“special access” services and facilities. I have reviewed competing, and often conflicting arguments,
hypotheses and scenarios. To analyze this issue, in pursuit of a final resolution to the byzantine questions
raised, the Commission conducted several data collections on a voluntary basis, but the collections only
focused on a limited number of markets. Although those exercises were instructive, they did not produce
an adequate record for this proceeding. Having to rely on a persistent lack of relevant information is why
I have consistently called upon the FCC to seek detailed and up-to-date special access market data on a
nationwide basis. Any potential changes to the special access rules must be transparent and legally-
sustainable.218 Accordingly, I am encouraged that the Commission is now taking the necessary step of
conducting this comprehensive data collection, on a mandatory and largely nationwide219 basis. This is a
necessary step prior to the Commission attempting to approve any additional changes to the special access
rules.220 Also, I am pleased that this order seeks data that will specifically shine a light on market
participants’ future plans to offer special access services.
Furthermore, I am encouraged that my colleagues have agreed to collect and analyze data
regarding “best efforts” business broadband Internet access service. A thorough examination of “best
efforts” services is a crucial part of the analysis. Technology has changed considerably since 1999 when
the special access rules were adopted by the FCC. Today, many enterprise customers may not perceive
the functional difference between services that have been traditionally defined as special access services
and high speed Internet access services that are offered on a best efforts basis. I would have preferred that
this critical information be gathered at the same granular level as the other data covered in this order.
Nevertheless, the inclusion of this information, even at a less granular level, is probative. The
Commission’s analysis should rely on a complete picture of all substitutable products and services as seen
through the eyes of affected consumers.
Additionally, I support seeking comment regarding the analytical framework to be used upon
receiving this data. The FCC’s analysis of the data received in response to this massive data request is


218 While such a comprehensive data collection may seem daunting, the Department of Justice was able to gather
such valuable information during its review of the SBC/AT&T and Verizon/MCI mergers in the last decade.
219 While I am pleased that most of the data will be collected on a nationwide basis for most aspects of this order, I
would have preferred that the data regarding the historical evolution of competitive provider networks also be
collected on a nationwide basis. If the Commission decides to change course from the reasoned deregulatory path
paved under the leadership of then-FCC Chairman Bill Kennard, it should only do so with a full record of all of the
competitive choices available to consumers.
220 I note that any historical reference to the Commission’s decision to suspend the pricing flexibility rules this past
August should not be construed as my endorsement of such decision. I dissented from that order because that
decision was made without a complete record or adequate analysis. It is my hope that this mandatory data collection
will lead to a full and complete record of which any future changes to the regulatory framework will be legally
sustainable.
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equally important to the comprehensive nature of this collection.
I dissent, however, from the sections221 of the further notice that seek additional comment on
proposed rules. Among other defects, finalizing a further notice before the record is filled with new
evidence is premature. Instead, the Commission should collect the data, analyze it and then issue a
further notice. I am concerned about the precedential value of this backwards arrangement. It has all the
markings of an outcome-based proceeding.
I thank the Chairman for his leadership and patience throughout this process. I also thank each of
my colleagues for accommodating many of my priorities. Additionally, I acknowledge the critical part
the dedicated expert staff members have played in this process. They have toiled on these issues for
many years and will continue to be vital to this process. As we move to the next step, I look forward to
working with all of my colleagues and the legions of stakeholders to ensure that we leave no stone
unturned in this process so that we have the necessary evidence to make a sound decision.
For all of the reasons set forth above, I respectfully approve, in part, and dissent, in part.


221 Sections IV B and IV C.
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STATEMENT OF

COMMISSIONER MIGNON L. CLYBURN

Re:
Special Access for Price Cap Local Exchange Carriers, WC Docket No. 05-25; AT&T
Corporation Petition for Rulemaking to Reform Regulation of Incumbent Local Exchange Carrier
Rates for Interstate Special Access Services
, RM-10593
Today's Order and FNPRM are important next steps for analyzing the state of the marketplace for
special access services. Based on the record to date, here is what we know so far from the record,
including a voluntary data submission for a limited number of geographic markets: (1) the pricing
flexibility rules we froze this summer were not good indicators for predicting where competition would
materialize, thus we were unable to ensure that the rates would remain just and reasonable once they are
deregulated; (2) we lack the data to properly assess when flexibility should be granted in the future and
when we should reassert regulation where flexibility was granted prematurely; and (3) serious questions
have been raised regarding whether the terms and conditions for special access services are harming the
development of competitive alternatives.
This Commission has worked diligently to be data-driven under Chairman Genachowski, and
such is the case with this proceeding. While this particular action has been under consideration for a
number of months, I believe the finished product properly reflects the types of data each Commissioner
believes is necessary to complete the agency’s review of the special access services marketplace. There
should be no doubt that this collection of data is sufficient for us to proceed to final analysis and
conclusions. Industry and the consumers impacted have waited long enough. The agency has carefully
balanced the request for information with the burden on industry to submit that data, and where possible,
we are relying upon information the Commission already possesses.
The proposed analysis in the Further Notice observes the value of the antitrust agencies'
horizontal merger guidelines, as well as our recent precedent using those guidelines and relying upon a
market power analysis, that was upheld by the U.S. Court of Appeals for the 10th Circuit. I believe it is
important that we fully consider and follow those guidelines, as we perform our analysis of the data we
obtain in this Order. The proposal in the Further Notice is consistent with this. By obtaining the data we
seek today, and performing the proposed regression analyses with such data, we will be able to observe
what factors in the marketplace impact prices, terms, and conditions, entry and exit in the marketplace, as
well as what services users of special access view as substitutes, among other issues. I believe these
factors will be useful in our analysis of the special access marketplace, and I look forward to reviewing
the comments in the Further Notice concerning our proposed analytical approach in this proceeding.
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STATEMENT OF

COMMISSIONER JESSICA ROSENWORCEL

Re:
Special Access for Price Cap Local Exchange Carriers, WC Docket No. 05-25; AT&T
Corporation Petition for Rulemaking to Reform Regulation of Incumbent Local Exchange Carrier
Rates for Interstate Special Access Services
, RM-10593
I am pleased that today we begin the long-overdue process of collecting the data we need to reform
our special access rules.
As I said in August when I supported suspending our pricing flexibility triggers, our special access
rules would benefit from a fresh look. Large and small businesses and institutions rely on these high-
capacity dedicated services to meet their voice and communications needs. But the pricing flexibility
triggers we had in place for more than a decade were a poor proxy for competitive conditions in a
geographic market. In some circumstances they were overinclusive, while in others they were
underinclusive. This led a wide variety of interests, including the Small Business Administration, the
Government Accountability Office, the American Petroleum Institute, and wireline and wireless carriers
to call for reform of our special access rules.
Through the data collection and rulemaking we initiate today, it is my hope that we can lay the
foundation for a new system that promotes competition, investment, and deployment of high-capacity
services across the country.
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STATEMENT OF

COMMISSIONER AJIT PAI

APPROVING IN PART AND DISSENTING IN PART

Re:
Special Access for Price Cap Local Exchange Carriers, WC Docket No. 05-25; AT&T
Corporation Petition for Rulemaking to Reform Regulation of Incumbent Local Exchange Carrier
Rates for Interstate Special Access Services
, RM-10593
The marketplace for enterprise data services—high-capacity data services targeted at businesses
small and large—is vast and varied. Coffee shops and barbershops that accept credit cards, office parks,
schools, retail outlets, high-rise buildings, online businesses, and factories are all likely to have some
high-capacity data connection. Today, these enterprise customers have more options than ever before to
meet their needs. Traditional time-division-multiplexing-based dedicated services (DS1s and DS3s) are
one option. For a higher-capacity dedicated service, they can try Frame Relay service, Asynchronous
Transfer Mode service, Multi-Protocol Label Switching service, or Ethernet service. A gas station in the
middle of the desert can connect using a satellite-based solution. Companies willing to trade off
dedicated service for lower costs and higher capacity can obtain broadband Internet access services
(usually marketed as “business class” variants on residential service). Companies that need the security
of a private line on that Internet access service can consider software-based virtual private networking
solutions that rely on encryption rather than physically separated signals to provide security and privacy.
Those seeking to do business on the go can rely on over-the-top providers like Square to turn a tablet or
smartphone into a portable credit card reader.
It is not surprising that the majority of enterprise data services are left untouched by federal
regulation. After all, incumbent local exchange carriers (LECs), competitive LECs, cable operators, and
wireless providers—terrestrial or satellite-based, fixed or mobile—are all competing for a limited number
of business opportunities. Many of these providers have deployed fiber, the gold standard, to particular
enterprise customers and to downtown office districts, providing competitive alternatives to older
infrastructure. And competitive alternatives abound even where there is no fiber: Ethernet over copper is
now viable,1 and dedicated services may be delivered over networks where coaxial cable is the last leg.2
Indeed, we recognized earlier this year that “cable operators have expansive—and in some areas,
ubiquitous—network facilities that can be upgraded to compete in telecommunications services markets
at relatively low incremental cost.”3
What is surprising is that the Commission continues to regulate one small corner of this market:
the traditional special access services offered by incumbent LECs. And this is not light-touch regulation,
but an invasive structuring of the marketplace. Incumbent LECs must offer traditional special access
services throughout their study areas at the same prices. They must construct new copper facilities upon
demand by an enterprise customer or a competitor. In many areas, the rates they may charge for such


1 See, e.g., Letter from Jeff Reedy, Co-founder and Chief Strategy Officer, Overture Networks, Inc., to Marlene H.
Dortch, Secretary, FCC, GN Docket Nos. 09-47, 09-51, 09-137, RM-11358 (filed Dec. 7, 2012); Letter from Tamar
E. Finn, Counsel for MegaPath Corporation, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 10-188, Attach.
at 5 (filed Aug. 15, 2012).
2 See Letter from Glenn T. Reynolds, USTA, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 05-25 (filed
Dec. 3, 2012).
3 Petition for Declaratory Ruling to Clarify 47 U.S.C. § 572 in the Context of Transactions Between Competitive
Local Exchange Carriers and Cable Operators; Conditional Petition for Forbearance from Section 652 of the
Communications Act for Transactions Between Competitive Local Exchange Carriers and Cable Operators
, WC
Docket No. 11-118, Order, 27 FCC Rcd 11532, 11545, para. 28 (2012) (footnote omitted).
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services are set by regulation, and they may not offer term or volume discounts to attract or retain
customers. In other areas, incumbent LECs have more flexibility. But they must still tariff their
contracts, offering the terms of each deal to all comers; individually negotiated arrangements between an
incumbent and an enterprise customer are not even a possibility. And all this is just one part of the
relevant regulations: Among other rules, incumbents must also offer their facilities up for competitor use
on an unbundled basis.
It is against this background that I join today’s order adopting a data collection on special access
services and their economic substitutes and proposing a one-time, multi-faceted market analysis. The
negotiations that led to this item were long and hard, and I thank Chairman Genachowski for his
willingness to work with Commissioner McDowell and me to find common ground. Although the
Chairman certainly could have moved forward with his original proposal on a party-line vote, he instead
was willing to make substantial changes in order to secure unanimous support for this data collection.
This may not have been the easy decision, but it was the right one. The collaboration among our offices
produced a much better item.
The data collection incorporates many of my suggestions to ensure that we capture a fuller picture
of the market for enterprise data services. For example, the data collection recognizes that we must
incorporate not just existing competition but also potential competition into our analysis. It thus seeks
information about facilities capable of providing dedicated service4 as well as competitive offerings
regardless of the facilities used.5 The data collection recognizes that dedicated services are only one
portion of the enterprise data services market. It thus seeks information about “best efforts” business
broadband Internet access services, an increasingly important alternative for small- and medium-sized
businesses.6 And the data collection recognizes the need to ensure that all dedicated services are
included. It thus specifically includes special access services offered via state-level contracts or tariffs
within its scope.7 Although we will not capture every enterprise data service in this collection (for
example, best-efforts services offering point-to-point connection are excluded), I hope that the data we
collect will be sufficient to analyze the marketplace fully and complete this proceeding.
I am also pleased that today’s order rejects the call to conduct a simple market share analysis8 and
goes beyond even the traditional market-power analysis used to determine whether a carrier is dominant
in a market.9 Instead, we propose a one-time, multi-faceted market analysis that will take into account
actual and potential competition, the effect of regulation on investment as well as prices, and the
substitution by enterprise customers of one service for another.10 This analysis, in line with the antitrust
principle that regulation should focus on anticompetitive conduct, not mere dominance, should inform us
of the “efficacy of various forms of regulations, including their effects on both prices and investment”11 as
well as the “steps the Commission could take to remove such barriers to promote a robust competitive


4 See supra note 38.
5 See supra para. 42.
6 See supra para. 18.
7 See supra para. 19.
8 See supra para. 67.
9 See supra note 162.
10 See supra para. 67.
11 See supra note 162.
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market and permit the competitive determination of price levels.”12
The essence of compromise is that you don’t always get everything you want. This compromise
is no different. My primary concern with the data collection is the substantial burden it is likely to place
on industry at a time when everyone is looking for ways to cut costs. For example, I believe that a
nationwide data collection—seeking information about every cell tower, office building, factory, farm,
and other enterprise facility in the country—is substantially overbroad at this time. I would have
preferred that we follow the approach taken in the voluntary data requests: Start with a sample of markets
granted different levels of pricing flexibility. The chief flaw of the voluntary data requests, after all, was
not their limited geographic scope; the flaw was that they were purely voluntary.
Similarly, I wish the data collection took more steps to protect the confidentiality of respondents
and reduce the burden of compliance. For example, I had proposed a staged approach to collecting
data—collecting the most public data first (such as requests for proposal, which are by their nature shared
with third parties), reviewing it, and then moving on to collect more data only if necessary—and adopting
a particularly stringent protective order. And I had proposed putting the burden of geocoding street
addresses on the Commission rather than private industry. Each of these proposals survives in some form
in today’s order. For instance, my colleagues accepted a staged approach with strict limitations on bureau
authority before any company is required to turn over documents and internal emails13 and the Wireline
Competition Bureau agreed “to facilitate whenever possible the conversion of street addresses to
geocoded coordinates for small providers and purchasers.”14 But we should have done more.
Finally, I dissent from the portion of today’s order that purports to propose rules to amend our
special access regulations.15 Although it makes sense to seek comment on the one-time, multi-faceted
market analysis we propose to use to analyze the data we collect, I hardly see the sense in proposing rules
when we have not even collected the data yet, let alone reviewed it. The sensible course would be to
collect the data, review it to ensure that we have what we need, and then propose new, specific rules that
the public can comment on with full access to the data. Instead, we seek comment without any concrete
proposals and set a deadline for such comment without any regard to how long the data collection (which
still requires approval from the Office of Management and Budget) actually takes. Additionally, the
further notice discards the notion that the data we collect (including data on terms and conditions) is
relevant to our rules (i.e., rules about terms and conditions) by setting a comment deadline before the data
is even collected. The only plausible reason for putting this cart before the horse is a desire to regulate—
to decide even before the data is in that we need more regulation of the copper-based services of
yesteryear. I hope that I am wrong, that we will review the data with fresh eyes, and that we will refocus
our rules on incentivizing deployment of the next-generation infrastructure that will lead us to an all-
Internet Protocol future.


12 See supra para. 67.
13 See supra para. 43.
14 See supra para. 53.
15 See supra sections IV.B, IV.C.
128

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