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ISSUES p>"(# 3  X4XX` ` A.` ` Overview ` p>"(# 3  X4XX` ` X ` ` 1. Statutory Authority and Construction p>"(# 4  X4XX` ` X ` ` 2. Definitional Issues p>"(# 5  X4XX` ` X ` ` 3. Discussion p"(# 21  X4XX` ` B.` ` Section 214 Requirements for Price Cap Carriers, Average Schedule Carriers, and Domestic, Nondominant Carriers ` p"(# 37  X4XX` ` C.` ` Section 214 Requirements for Domestic, Dominant, RateofReturn Carriers ` p"(# 52  Xa 4XX` ` X ` ` 1. Streamlined Application Procedures p"(# 52  XJ!4XX` ` X ` ` 2. Blanket Authority for Small Projects p"(# 59  X3"4XX` ` D.` ` Reporting Requirements ` p"(# 63  X#4XX` ` X ` ` 1. Current Section 214 Reporting Requirements p"(# 63  X$4XX` ` X ` ` 2. Elimination of Reports p"(# 65  X$4XX` ` E.` ` Section 214 Discontinuance Requirements ` p"(# 68  X%4XX` ` F.` ` Technical Amendments to 47 C.F.R. Part 63 ` p"(# 72 "'0*((@@%"ԌXcIII. PROCEDURAL MATTERS p"(# 74  X4XX` ` A.` ` Ex Parte Presentations ` p"(# 74  X4XX` ` B.` ` Regulatory Flexibility Act Analysis ` p"(# 75  X4XX` ` C.` ` Initial Paperwork Reduction Act Analysis ` p"(# 76  X4XX` ` D.` ` Comment Filing Procedures ` p"(# 78 XcIV. ORDERING CLAUSES p"(# 80"x0*''@@."  X4 I. A. 1. a.(1)(a) i) a) 1. 1. i.(1)(a)(i) 1) a)  U  I. INTRODUCTION AND BACKGROUND ׃  X41. Section 214 of the Communications Act of 1934, as amended, imposes regulatory obligations on common carriers seeking to change their facilities or construct new facilities. Section 214 states that "[n]o carrier shall undertake the construction of a new line or of an extension of any line, or shall acquire or operate any line, or extension thereof, or shall engage in transmission over or by means of such additional or extended line, unless and until there shall first have been obtained from the Commission a certificate that the present or future public convenience and necessity require or will require the construction, or operation,  X14or construction and operation, of such additional or extended line."Z1K] yO 'ԍ 47 U.S.C. 214 (hereinafter, "Section 214").Z Congress enacted Section 214 to prevent useless duplication of facilities that could result in increased rates being  X 4imposed on captive telephone ratepayers.e XK] {O 'ԍ 78 Cong. Rec. 10314 (1934) (Remarks of Rep. Rayburn).e  X 42. On February 8, 1996, the Telecommunications Act of 1996q K] yOp'ԍ Pub. L. No. 104104, 110 Stat. 56 (1996) (hereinafter, the "1996 Act").q was signed into law to "establish a procompetitive, deregulatory national policy" framework for the United States telecommunications industry. As part of this comprehensive legislation, Congress adopted Section 402(b)(2)(A) of the 1996 Act. This provision states that, "[t]he Commission shall permit any common carrier to be exempt from the requirements of Section 214 of the Communications Act of 1934 for the extension of any line . . . ." Under this exemption, carriers seeking to extend their lines of communication no longer need to seek Commission  X44authorization for their proposals under Section 214 or our Part 63 rules.<4zK] yO_'ԍ 47 C.F.R. Part 63.< Accordingly, we have initiated this rulemaking proceeding: (1) to implement Section 402(b)(2)(A) of the 1996 Act; and (2) to determine the extent to which the Commission should exercise its remaining  X4Section 214 authority in light of the forbearance provisions of the 1996 Act.> K] yO'ԍ 47 U.S.C. 160. >  X4} II. ISSUES ׃  X|' A.` ` Overview (#`  XN43. Section 402(b)(2)(A) exempts common carriers from the requirements of Section 214 "for the extension of any line." Accordingly, although they must continue to obtain appropriate authorization for the use of radio frequencies under Title III of the" 0*''@@<" Communications Act of 1934, carriers are free to construct, acquire, operate, or transmit over the "extension" of a line without receiving Section 214 or Part 63 approval. In this notice, we seek comment on the scope of this statutory exemption and, in particular, on how "extension of any line" should be defined. As discussed below, we tentatively conclude that an "extension of a line" is a line that allows the carrier to expand its service into a geographic territory that it is eligible to serve, but that its network does not currently reach. We also  Xv4propose to forbear, under Section 401 of the 1996 Act,=vK] yO'ԍ 47 U.S.C. 160.= from exercising Section 214 authority over "new" lines with respect to local exchange carriers ("LECs") subject to price cap regulation, LECs that are considered average schedule companies, and domestic carriers deemed nondominant, whether they are offering local or domestic, long distance services. In addition, we propose to grant Section 214 blanket authority for small projects undertaken by  X 4carriers to construct new lines.Z XK] yO 'ԍ As discussed below, we propose to provide blanket authority for projects that, in the aggregate, either (1) have a total annual cost of no more than $12,000,000 or an annual rental of no more than $3,000,000; or (2)  {O'increase the total book value of the carrier's lines by not more than 10%. See paragraph 62, infra. We also seek comment on other alternatives: namely (1) whether we should treat price cap LECs which have elected a "nosharing" Xfactor differently from other pricecap LECs; and (2) whether we should forbear altogether from applying Section 214 to small carriers.  X'` ` 1. Statutory Authority and Construction (#  Xb44. Section 214 defines a "line" as "any channel of communication established by the use of appropriate equipment, other than a channel of communications established by the  X44interconnection of two or more existing channels."@4zK] yO_'ԍ 47 U.S.C. 214(a).@ Section 214 identifies two broad categories of lines. A carrier may construct a "new line" or it may construct an "extension" of a line. Similarly, a carrier may acquire or operate a "line" or an "extension thereof," and may transmit over "such additional . . . line" or "extended line." Section 402(b)(2)(A) exempts carriers from the requirements of Section 214 with respect to the "extension of any line." Accordingly, the exemption created by Congress in 402(b)(2)(A) applies to some, not  X4all, of the carrier activities otherwise subject to Section 214 certification.  K] {Oe 'ԍ See Brotherhood of R.R. Trainmen v. Baltimore & O.R. Co., 331 U.S. 519, 52829 (1947).  X|'` ` 2. Definitional Issues (#  XN45. Although the text of Section 214 identifies discrete categories of transactions subject to Section 214 certification, historically, the certification process, standards, and requirements applicable to all such transactions have been identical. As a result, neither"  0*''@@" courts nor the Commission has had a need to provide specific definitions of these categories  X4or to distinguish among them. K] {Ob'Ѝ E.g., General Tel. Co. of California v. F.C.C., 413 F.2d 390, 402 (D.C. Cir. 1969) (affirming Commission holding that channel service facilities constructed by common carrier constituted "lines" subject to regulation  {O'under 214(a) without distinguishing whether these lines were "new" lines or "extensions"), cert. denied, 396 U.S.  {O'888 (1969); American Tel. and Tel. Co., 10 F.C.C. 315, 320 (1944) (concluding that channels of communication, which were created by new technology expanding the capacity of existing wires, constituted "lines" within the meaning of Section 214. The Commission did not state whether it considered these lines "new" or "extended"). The language of Section 402(b)(2)(A), however, requires that we now define the "extension of any line" and distinguish such an extension from "new lines," which are not exempted from the requirements of Section 214.  X46. In developing a definition of "extension of any line," we believe that appropriate guidance should be drawn from three sources: (a) the meaning of the words, "extension" and "new;" (b) Congress's original purposes in enacting Section 214 of the 1934 Act and Section 402(b)(2)(A) of the 1996 Act; and (c) court and Commission precedent interpreting the text of Section 214 and Section 1(1822) of the Interstate Commerce Act, from which Section 214 was derived.  X 47. (a) Definitions of "Extension" and "New." Webster's dictionary defines  X 4"extension" as, inter alia, "the act of extending or state of being extended" or "an addition to  X 4a main structure." FK] {O'ԍ Webster's II New Riverside University Dictionary, Riverside Publishing Co., at 456 (1994). The verb "extend" means "to expand the area or scope of" or "to increase  X 4the influence of."C K] {O4'Ѝ Id.C By contrast, the word "new" is defined as "having existed or been made for only a short time," "unfamiliar," "novel," or "recently arrived or established in a position,  X}4place or relationship."; }j K] {O'ԍ Id. at 792.;  XO48. Thus, the phrase "extension of a line" implies that, to extend its lines, a carrier should add to its network by beginning to serve new territory, thereby expanding its area of service. As distinguished from an extension, a "new line" suggests one which, independent of location, has recently been created or is in some other way "novel."  X49. (b) Legislative Intent. Section 214 was originally enacted to prevent a monopoly carrier from engaging in "useless duplication of facilities, with consequently higher charges  X4upon the users of the service."v K] {O]$'ԍ 78 Cong. Rec. 10314 (1934) (Remarks of Rep. Rayburn) (emphasis added).v The stated legislative purpose of the 1996 Act is "to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new" 0*''@@"  X4telecommunications technologies.":K] yOy'ԍ 110 Stat. at 56.: Consistent with this broad purpose, Congress enacted Section 402(b)(2)(A), intending to "eliminate[] the Section 214 approval requirement for  X4extension of lines."XK] {O'ԍ Joint Statement of Managers, S. Conf. Rept. No. 104-230, 104th Cong., 2nd Sess. (1996), at 69. In this proceeding, we seek to give effect to the deregulatory letter and spirit of the 1996 Act in general, and Section 402(b)(2)(A) specifically, thereby promoting competition by removing outdated barriers to entry in telecommunications markets.  Xv4 10. (c) Precedent. In expanding their own networks, carriers generally undertake one of two basic types of activities. They may either (1) expand the geographic area covered by their facilities; or (2) increase the capabilities of their network within their existing service area. Each type of activity has implications with respect to the definition of the "extension" of a line.  X 4 11. ` ` (1) Geographic Considerations. Congress patterned Section 214 on Section  X 41(1822) of the Interstate Commerce Act.X K] yOt'Ѝ The provisions of Section 1(1822) of the Interstate Commerce Act were enacted as part of Section 402 of the Transportation Act of 1920, 41 Stat. 456, 47778 (1920). The relevant portion is now codified at 49 U.S.C. 10901. In interpreting that provision, the Supreme Court defined "extensions" as lines "the purpose and effect [of which] is to extend substantially the  X 4line of a carrier into new territory."x K] {Of'ԍ Texas & P. Ry. Co. v. Gulf, C. & S.F. Ry. Co., 270 U.S. 266, 278 (1926).x Two 1938 Commission decisions generally followed the Supreme Court's "new territory" language in the communications context, and instruct our  X}4efforts to distinguish "new" lines from "extensions."}K] {O'ԍ See Mackay Radio and Tel. Co., 6 F.C.C. 562, 574 (1938); Southwestern Bell Tel. Co., 6 F.C.C. 529, 532 (1938). That year, the Commission used the term "extension" to describe the acquisition of telegraph lines to serve "new territory not  XO4theretofore served" by the acquiring carrier."O K] {O'Ѝ Mackay Radio and Tel. Co., 6 F.C.C. at 574. Mackay had acquired from Postal TelegraphCable Co. a telegraph line between Washington, D.C., and Baltimore, Maryland. Although Mackay served Washington, D.C., it had no facilities or service to Baltimore prior to the transaction at issue in the opinion. 6 F.C.C. at 565. The Commission termed Mackay's initiation of service to Baltimore an "extension." 6 F.C.C. at 574. In another opinion issued the same day, the Commission used the term "new, additional or supplemental facilities" to describe lines  X!4constructed by Southwestern Bell within its service area in Texas.\!K] {O#'ԍ Southwestern Bell Tel. Co., 6 F.C.C. at 532.\  X4 12. Other decisions, however, cloud the Commission's 1938 definition. Since that"r0*''@@" time, the Commission has also stated that: "Section 214 is not confined to the `extension' of a line which might reasonably be construed as requiring some part of the common carrier facilities to cross a state boundary but includes the `construction of a new line' even though wholly within a single [s]tate so long as it is part of an interstate `channel of communication'  X4or `line.'"K] {O'Ѝ General Tel. Co. of California, 13 F.C.C.2d 448, 457 (1968), aff'd, 413 F.2d 390 (D.C. Cir. 1969), cert.  {O'denied, 396 U.S. 888 (1969).  Xv4 13. In the international context, in granting certain Section 214 authorizations, the Commission staff has cautioned that "should [the carrier] obtain any interest in facilities beyond the authorized international points for the purpose of providing common carrier services, including private line service, between the U.S. and other international points, such  X 4action would constitute an extension of lines under Section 214." $K] {O 'ԍ E.g. Data General Telecommunications, Inc., 9 FCC Rcd 1724, 1724 n.2 (Com. Car. Bur. 1994). We recently indicated, however, that we would not be bound by this view and provided the following preliminary guidance with respect to the expansion of service into a new international market: "When we grant a carrier initial authority to acquire and operate facilities to a particular country, we do not grant that carrier authority for an `extension of lines' within the meaning of Section 214...but instead grant that carrier authority to acquire and operate new lines to a particular  X4geographic market."c\K] {O'Ѝ Streamlining the Int'l Section 214 Authorization Process and Tariff Requirements, IB Docket No. 95118,  {O'Report and Order, 11 FCC Rcd 12884, 1288889 (1996) ("International Section 214 Streamlining Order") (Federal Register Summary published at 61 Fed. Reg. 15724 (1996)).c Thus, in the international context, we have suggested that lines that  Xy4allow a carrier to serve new international markets should be considered "new lines."3yK] {O'ԍ Id.3  XK4 14. ` ` (2) Capacity Considerations. Carriers can create new channels of communication, not only by expanding into new territory, but also by increasing the capabilities of their existing networks. Such increases may result from the laying of lines between points the carrier serves to supplement or supplant existing lines or from the use of technologically advanced electronic multiplexing, switching, coding, or similar central office or network equipment to allow a carrier to derive additional channels of communication from its existing facilities.  X415. The Commission has consistently held that increases in capacity by either method create channels of communication requiring Section 214 authorization; however, the Commission has not clearly or consistently stated whether these channels should be"gl 0*''@@q"  X4considered "new lines" or "extensions."gK] {Oy'Ѝ American Tel. and Tel. Co., 10 F.C.C. at 320.g  X416. The Commission has suggested that inregion lines installed to supplement  X4existing ones constitute "new lines."ZK] {O'Ѝ Southwestern Bell Tel. Co., 6 F.C.C. at 532. As used in this notice, the term "inregion" is used to denote lines: (1) with respect to a BOC, within any inregion state, as defined in Section 271(i)(1), or within any other area where the BOC is offering local, exchange or longdistance services; or (2) with respect to other telecommunications carriers, within any geographic area where the carrier is offering either local, exchange or long distance services. However, when it first considered the issue of inregion increases in capacity, the Commission stated that, in enacting Section 214, "there was no intention on the part of Congress to limit the right of carriers to make full use of their own physical facilities by the derivation of as many circuits thereon or therefrom as possible. Therefore, it is not our opinion that Section 214 requires a certificate of convenience and necessity when a company of the Bell System rearranges its circuits or derives new circuits so as to make maximum use of its existing facilities, when the result is not an extension of a  X 4particular company's service into fields not theretofore served by it."  K] {O'Ѝ Mackay, 6 F.C.C. at 573. The Mackay opinion, no longer followed by the Commission, is consistent with current practice under the Interstate Commerce Act. Interpreting 49 U.S.C. 10901, the section of the Interstate Commerce Act corresponding to Section 214, the Interstate Commerce Commission (now the Surface Transportation Board) recently stated: XMany carrier improvements to their existing system lie outside our jurisdiction. For example, carriers have expanded single-track lines to double-track lines by building a new track parallel to the existing one. These projects are often extensive and require substantial capital investment. They may have a profound effect on the carriers undertaking them, their customers and their competitors. But we do not take jurisdiction over them. Double-tracking is an improvement to an existing rail line. It is neither an extension of the line nor a construction of an additional one.   {O'City of Detroit v. Canadian Nat'l Ry. Co., 9 I.C.C.2d 1208, 121819 (1993), aff'd sub nom. Detroit/Wayne  {O'County Port Auth. v. I.C.C., 59 F.3d 1314 (D.C. Cir. 1995). Therefore, the Commission did not require Section 214 certification for such projects until after Congress  X 4amended Section 214 in 1943 to define a line as "any channel of communication . . . ."= K] yO/ 'ԍ 57 Stat. 11 (1943).=  X 417. In light of the 1943 amendment, the Commission held that channels produced through the use of electronic equipment in conjunction with a preexisting wire pair were  X4"lines" within the meaning of Section 214.f"K] {Oc%'ԍ American Tel. and Tel. Co., 10 F.C.C. 315, 320 (1944).f The Commission did not, however, indicate"0*''@@8" whether these lines were "new" lines or "extensions."  X418. Noting that carriers are required to obtain Section 214 certification before installing multiplexing equipment, the Commission more recently stated that such equipment  X4creates "new `lines' or channels under Section 214."K] {O'Ѝ Regulatory Policies Concerning Resale and Shared Use of Common Carrier Services and Facilities, 60 F.C.C.2d 261, 312 (1976). Consistent with that holding, the Commission rejected a tariff filed by AT&T for Bell Packet Switching Service ("BPSS") based on the fact that AT&T had not obtained Section 214 authority to install the required equipment. The Commission stated that "the BPSS processor and interface facilities together perform multiplex operations that effectively establish new or additional channels of  X14communication."h 1"K] {O 'ԍ American Tel. and Tel. Co., 91 F.C.C.2d 1, 1314 (1982).h Although both of these opinions specifically use the term "new lines" to describe channels of communication created electronically, we find little evidence to suggest that the Commission deliberately chose that term with the intent to distinguish such lines from "extensions."  X 419. Recent Commission precedent, also, fails to indicate whether activities that increase the capabilities of a carrier's inregion network create "new" lines or "extensions." With respect to carrier installation of facilities for the provision of video dialtone ("VDT"), the Commission stated that, "an upgrade of . . . facilities to offer video dialtone service  Xb4constitutes the establishment or extension of a line . . . ." !ZbK] {O'Ѝ Television Company Cable Television Cross Ownership Rules, Sections 63.54 63.58, Memorandum Opinion and Order on Reconsideration and Third Further Notice of Proposed Rulemaking, 10 FCC Rcd 244, 310 (1994).  Although the Commission continued its discussion by stating that "[b]y constructing video dialtone platforms, LECs will  X44be installing new systems and laying fiber to create new channels of communication,"9"4K] {O'ԍ Id.9 the Commission did not indicate clearly that it had consciously distinguished between "new" lines and "extensions" in characterizing VDT facilities.  X420. With respect to international service, increases in a carrier's capacity to serve a given country would be considered "lines" under the Commission's interpretation of Section  X4214 since 1943.]#h K] {O"'ԍ American Tel. and Tel. Co., 10 F.C.C. at 320.] The Commission, however, did not assert its Section 214 jurisdiction over international lines created by electronically increasing the capacity of existing facilitites until 1964. That year, the Commission stated: "e #0*''@@"ԌXAT&T, and the various record carriers, have increased the capacity of, or the number of messages (voice and record) handled, by their respective facilities by  X4the use of appropriate equipment; e.g. the use of Time Assignment Speech Interpolation ("TASI") equipment by AT&T. To date, we have not exercised the authority given us pursuant to the provisions of Section 214 . . . to require the filing and a grant of appropriate applications before installation of such equipment. We feel, however, that, in view of the rapid growth of facilities in this field, the imminence of satellite communications, and the vast increase in facilities possible through heretofore unregulated installations, we should require such an application, and a grant thereof before the installation of such  X 4equipment.h$ K] {O 'ԍ American Tel. and Tel. Co., 37 F.C.C. 1151, 1158 (1964).h  The Commission went on to impose suitable conditions on the grant of the application at issue. The Commission did not, however, provide clear guidance as to whether it considered increases such as these to be "new lines" or "extensions," or whether it made any principled distinction between channels created electronically and channels created by constructing wholly separate, parallel facilities.  Xd'` ` 3. Discussion (#  X6421. After reviewing the legislative intent of Congress, and Commission and court precedent, we find that, to date, the Commission has not clearly defined "extension of any line" for purposes of Section 214. We, therefore, take this opportunity to seek comment on an appropriate definition. We tentatively conclude that an "extension of a line" is a line that allows the carrier to expand its service into geographic territory that it is eligible to serve, but  X4that its network does not currently reach.% ZK] yO'Ѝ This definition is consistent with Section 63.02 of our rules, 47 C.F.R. 63.02, entitled, "Special provisions relating to extensions involving small projects." Section 63.02 uses a definition similar to the one we propose here inasmuch as it applies to "extension of service into domestic territory at present not directly served by the applicant." With respect to projects that increase the capabilities of a carrier's existing network within an area it already serves, we tentatively conclude, based on a review of Commission precedent, that we should consider the resulting additional channels of communication to be "new lines." We seek comment on this tentative conclusion, including comment on whether such upgrades should be treated instead as "extensions."  X"422. Alternately, we seek comment on whether, consistent with the Surface  X 4Transportation Board's treatment of "doubletracking" of rail lines,J& BK] {O%'ԍ See note 28, supra. J we should treat inregion"  &0*''@@" increases in network capacity as "improvements," outside the scope of Section 214. We seek specific comment on whether such treatment would be: (1) consistent with the statutory definition of a line as "any channel of communication"; and (2) appropriate in light of the original intent of Section 214 to inhibit network "goldplating" and the intent of the 1996 Act to promote competition by removing outdated barriers to entry in telecommunications markets.  X_423. Extension Within the United States: The definition of extension we have proposed exempts carriers from their obligation to obtain Section 214 authorization for  X34expansions into additional domestic territory that they are otherwise eligible to serve.C'3K] yO 'ԍ Under the definition we propose, a carrier may be "eligible" to serve certain territory without any actual "authorization" to serve it. In such a case, although a carrier might need to obtain specific regulatory  {O< 'authorizations under the Communications Act before initiating service to given territory, see, e.g., 47 U.S.C. 27172 in the domestic context, it would nevertheless be "eligible" to serve that territory for purposes of  {O 'Section 402(b)(2)(A) of the 1996 Act. See paragraph 25, infra. In the international context, carriers are eligible  {O'to serve only those countries for which they have received specific Section 214 authorizations. See paragraphs  {Ob'3034, infra.C By relieving carriers of the burden of obtaining Section 214 approval for such projects, the definition would encourage carriers to expand their service areas into territory served by other carriers. We tentatively conclude that this definition would be consistent with the natural meaning of "extend," as well as court and Commission precedent because it would exempt from Section 214 certification lines that "expand the area or scope of" a carrier's network. In addition, by exempting carriers' efforts to expand their facilities or services beyond the areas in which they are currently providing service, we believe that we would encourage the development of competition, consistent with the 1996 Act.  XM424. Consistent with the original purpose underlying Section 214, under our proposed definition, the Commission would retain jurisdiction over the construction of most inregion facilities. These projects take place within the area where there is the potential danger that a dominant carrier will create needlessly duplicative facilities, the cost of which may be borne by captive telephone ratepayers. These potential dangers are especially great in the case of a LEC subject to rateofreturn regulation, which would be in a position to recover the cost of additional, unnecessary facilities from its ratepayers. We note, however, that our proposed definition would allow even a rateofreturn LEC to extend lines into additional geographic territory without specific Section 214 certification. We tentatively conclude that our existing accounting and cost allocation rules would help protect such a LEC's captive ratepayers from bearing the cost of such extensions, even if the LEC sought to build unneeded, outofregion  XP4facilities.9(ZPK] yO$'Ѝ 47 C.F.R. Parts 32 and 64. The Commission is reviewing the methods incumbent local exchange carriers use to allocate network plant costs used to provide both regulated telecommunications services and nonregulated  {O%'services, including nonregulated video programming services. Allocation of Costs Associated with Local"%'0*''%"  {O'Exchange Carrier Provision of Video Programming Services, Notice of Proposed Rulemaking, 11 FCC Rcd 17211 (1996).9 We request comment on this tentative conclusion."P "(0*''@@"Ԍ X4ԙ25. Under our proposed definition, a carrier would be able to extend its lines only into additional domestic territory that it is eligible to serve under the Communications Act, as amended, and the Commission's rules and policies. In this respect, we note that most LECs  X4(i.e., all except the BOCs and GTE) were eligible to immediately provide interstate,  X4interexchange services, consistent with the policies stated in the Competitive Carrier  X4Proceeding, even before the 1996 Act became law.+)^"K] {Od 'ԍ Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities  {O. 'Authorizations Therefor, Fifth Report and Order, 98 F.C.C.2d 1191, 1198 (1984) ("Competitive Carrier Fifth  {O 'Report").+ Under the 1996 Act, the Bell Operating Companies ("BOCs") are authorized to provide outofregion, interLATA service, and are eligible to provide inregion, interLATA service once they comply with the requirements  XN4imposed by new Sections 271 and 272.* NHK] yOG'Ѝ Section 104 of the 1996 Act adds new Sections 271 and 272 to the Communications Act of 1934, which governs the provision if interLATA service by the BOCs. 47 U.S.C. 271272. In general, the BOCs must apply to the Commission for authority to offer inregion interLATA service under Section 271(d)(3). These sections of the Communications Act will be addressed in a separate rulemaking proceeding. In addition, the 1996 Act replaced the GTE Consent Decree, which barred GTE from providing domestic, interstate, interexchange services; GTE may now do so consistent with the requirements of the Communications Act, as amended, and the Commission's rules and policies. Furthermore, all domestic carriers are eligible to provide exchange telephone service on a competitive basis. Some carriers are already providing such competitive local exchange service, and others may soon begin to do so, either on a facilities  X 4or resale basis.+ 0 K] {O'ԍ See Common Carrier Competition, Spring 1996, Report No. CC 969, at 3 (rel. Apr. 10, 1996). Congress intended the 1996 Act to encourage such competitive activities and we believe that the elimination of carriers' Section 214 obligations will further that  X4intent.,  K] yO 'ԍ Because a carrier facing competition cannot rationally build excessively or raise rates above the competitive level, Section 214 regulation of such carriers for these purposes will not serve the intent of Section 214. At the same time, by eliminating the significant regulatory burden imposed by Section 214, we will facilitate entry into the markets for these services. We tentatively conclude, therefore, that a domestic carrier wishing to serve new territory may extend its lines to do so without obtaining Section 214 authority, as long as the carrier obtains any other regulatory approvals that may still be required.  X:426. We recognize that this proposed definition of "extension" may produce some anomalous results. For example, a domestic IXC that does not currently have facilities that serve the entire geographic United States would be able to extend lines into additional"  ,0*''@@f"  X4territory consistent with the policies developed in the Competitive Carrier proceeding.7-^K] {Oy'Ѝ Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities  {OC'Authorizations Therefor, Third Report and Order, 48 Fed. Reg 46791, 46792 (1983) ("Competitive Carrier Third  {O 'Report").7 However, an IXC that already serves the entire domestic United States with its own facilities would not be permitted, under our proposed definition, to extend its lines without obtaining Section 214 approval. We note, however, that there should be no substantial or practical impact on the domestic IXCs because, as discussed more fully below, we tentatively conclude that we should forbear from applying Section 214 and our Part 63 rules to nondominant  Xx4IXCs under Section 401 of the 1996 Act..xK] yO 'Ѝ Section 401 added a new Section 10 to the Communications Act of 1934, codified at 47 U.S.C. 160. We believe our proposed definition would create fewer anomalies overall than other possible definitions. In addition, we are confident that we will be able to correct such results through the exercise of our forbearance authority.  X 427. Under our tentative definition, once a carrier has expanded into new territory by "extending" its lines, additional activities within that territory seemingly would create "new"  X 4lines. In the Competitive Carrier proceeding, we determined that LECs could offer interstate, interexchange services on a nondominant basis through an affiliate that met certain separation requirements; a LEC offering such services directly, by contrast, would be regulated as  X 4dominant.l/ ~K] {O'ԍ Competitive Carrier Fifth Report, 98 F.C.C.2d at 1198.l We recently extended this regulatory regime, on a temporary basis, to BOC provision of outofregion, interLATA telecommunications services to provide interim  X}4protection from potential costshifting and anticompetitive conduct by the BOCs.0}K] {O>'Ѝ Bell Operating Company Provision of OutofRegion Interstate, Interexchange Services, CC Docket No.  {O'9621, Report and Order, FCC 96288,  1925 (rel. July 1, 1996) (extending Competitive Carrier separation  {O'requirements on an interim basis to BOC provision of out-of-region interLATA and intraLATA services); see  {M'also Policy and Rules Concerning the Interstate, Interexchange Marketplace; and Implementation of Section  {Od'254(g) of the Communications Act of 1934, as amended, Notice of Proposed Rulemaking, 11 FCC Rcd 7141,  {O.'717175 (1996) ("Interexchange NPRM"). While we have recently sought comment on whether it might be appropriate at some future date to modify or eliminate the separation requirements thus imposed, those requirements remain in  X84place.]18 K] {O{ 'ԍ Interexchange NPRM, 11 FCC Rcd at 7174.] In this proceeding, while we propose forbearance from Section 214 regulation for most LECs and all nondominant carriers, as discussed below, we also propose that rateofreturn LECs remain subject to streamlined Section 214 regulation. Accordingly, rateofreturn LECs might find themselves subject to Section 214 certification requirements only for their second and subsequent lines into a given territory. We seek specific comment on these and other potential anomalies, including possible remedies. " $10*''@@"Ԍ X428. Accordingly, we ask parties to comment on whether our proposed definition of line "extensions," as it applies to all common carriers, whether they are IXCs, LECs, resellers, international carriers (discussed below), or others, satisfies the goals of Section 402(b)(2)(A). We seek specific discussion of our proposed definition's impact on particular projects subject to Section 214 regulation or the Section 402(b)(2)(A) exemption. In addition, commenters advocating revisions to our definition should propose specific language and discuss the basis for their proposals in light of the dictionary meanings, legislative history, and precedents discussed above.  X1429. Our proposed definition would exclude all carrier lines in areas within which the carrier is currently providing service. Accordingly, under our tentative conclusion in paragraph 21, above, channels of communication derived from inregion network upgrades would be treated as "new lines." Such treatment would be consistent with past Commission  X 4characterizations of such lines.^2 K] {ON'ԍ See cases cited at notes 26 34, supra.^ Furthermore, it would preserve the Commission's Section 214 authority with respect to inregion network upgrades by dominant carriers. Inregion network upgrades by dominant carriers present the greatest opportunities to duplicate facilities unnecessarily, with consequently higher charges to ratepayers. Although we expect the development of competition to lessen those opportunities, we tentatively conclude that, currently, continued Commission regulation of such projects remains consistent with the goals of Section 214. As with the IXCs, however, we tentatively conclude that the full exercise of this authority is not necessary to protect ratepayers in every instance. Specifically, as discussed more fully below, we tentatively conclude that we should forbear from regulating  X4the inregion activities of LECs that are subject to price cap regulation ("price cap carriers"),3ZK] yO'Ѝ The price cap rules are codified at Sections 61.4161.49 of the Commission's rules, 47 C.F.R.  61.41 {O'61.49. See also Section 61.1(c), 47 C.F.R.  61.1(c).  X4LECs that are considered average schedule companies,4K] yOT'ԍ The provisions governing the rate regulation procedures applied to average schedule companies are codified at Section 69.606 of the Commission's rules, 47 C.F.R.  69.606. and competitive access providers ("CAPs").  X430. International Lines: We have provided preliminary guidance with respect to the definition of a line "extension" in the international context by stating, with respect to Section 402(b)(2)(A), that: XWe do not view this provision as applicable to our authority to require common carriers to obtain Section 214 authority to acquire, operate, or resell facilities or services to serve individual countries. When we grant a carrier initial authority to acquire and operate facilities to a particular country, we do not grant that carrier authority for an "extension of lines" within the meaning of Section" 40*''@@" 214...but instead grant that carrier authority to acquire and operate new lines  X4to a particular geographic market.5K] {Ob'Ѝ International Section 214 Streamlining Order, 11 FCC Rcd at 1288889.   X431. Because the initiation of service to a new foreign point raises an array of issues not associated with the expansion of service within the domestic United States, we tentatively conclude that such initiation of service involves the construction, acquisition, or operation of "new lines." This definition would be consistent with the meaning of "new," which, in  X_4contrast to an "extension," implies something "unfamiliar" or "novel."Q6_ZK] {Oj 'ԍ See text at note 13, supra.Q We seek comment on this tentative conclusion.  X 432. Within the international context, we have stated that "the international geographic  X 4market exists in terms of separate and distinct areas determined by national borders."7 K] {O'Ѝ International Competitive Carrier Policies, Report and Order, 102 F.C.C.2d 812, 829 (1985)  {Oj'("International Competitive Carrier"). Therefore, we tentatively conclude that the initiation of service to a new country is an action fundamentally different in character from the extension of facilities domestically, where  X 4carriers have much greater economic and operational flexibility.k8 HK] {O'ԍ See International Competitive Carrier, 102 F.C.C.2d at 829.k Carrier initiation of international service raises legal, economic, policy, and facilityspecific issues different from  X4those raised by the provision of domestic service.9^K] {O'Ѝ See generally Market Entry and Regulation of ForeignAffiliated Carriers, Report and Order, 11 FCC Rcd  {O'3873 (1995) ("Foreign Carrier Entry Order"); Regulation of International Common Carrier Services, 7 FCC Rcd  {O'7331 (1992); International Competitive Carrier, 102 F.C.C.2d 812. The Commission, for example, recently adopted a routebyroute approach to reviewing foreign carrier Section 214 applications to provide international services. Where a foreign carrier holds market power in a proposed destination market, the Commission examines whether effective competitive opportunities exist for U.S. carriers in that market. This allows us to address the potential anticompetitive effects of permitting a foreign carrier to provide U.S. telecommunications services between  X4the United States and a country where it has market power.c: K] {O 'ԍ Foreign Carrier Entry Order, 11 FCC Rcd at 388488.c The legal, economic, policy, and facilityspecific issues involved in service to particular foreign points require individual consideration, as well as consultation with the Executive Branch.  X4 33. Accordingly, when we grant a carrier authority to acquire and operate facilities to a particular country, we tentatively conclude that we do not grant that carrier authority to "extend" lines within the meaning of Section 214 and Section 402(b)(2)(A), but instead grant"| :0*''@@" that carrier authority to acquire and operate new lines. International carriers are not eligible to initiate service to new international points until they receive specific Section 214  X4authorization to do so.;K] {OK'Ѝ Cf. Streamlining the International Section 214 Authorization Process and Tariff Requirements, Notice of Proposed Rulemaking, 10 FCC Rcd 13477, 13484 (1995) (carriers may provide service on a switched transit basis through intermediate countries which they are authorized to serve on a direct facilities basis regardless of whether they have specific authority to serve the terminal country, provided their certificate for the intermediate country does not prohibit such routing). We tentatively conclude, therefore, that few carrier activities involving the provision of international services can properly be considered line "extensions"  X4within the meaning of Section 214 or Section 402(b)(2)(A).%<XzK] yO 'Ѝ One exception we can identify at this time would arise when a U.S. carrier obtains an interest in facilities within a foreign country in order to extend its U.S. international halfcircuits to reach new territory within that foreign country.% Accordingly, under our proposed definition, virtually all international lines must be classified as "new." We seek comment on this tentative conclusion.  XH4!34. Our proposed definition also would exclude projects that increase a carrier's capacity to carry traffic between the United States and another country it already serves. Such projects do not involve the expansion of service into any new geographic territory. Accordingly, we tentatively conclude that such capacity increases constitute "new" lines subject to Section 214 regulation, consistent with our characterization of domestic carrier inregion network upgrades. Nevertheless, we seek specific comment on the impact of our decision on all international carrier projects.  X4"35. Other Options: We have tentatively concluded that an "extension" of a carrier's line should be defined as a line that allows the carrier to expand its service into geographic territory that it is eligible to serve, but that its network does not currently reach. We seek comment, however, on other alternatives, such as defining "extension of any line" to include:  X4(i)Xany line, some part of which crosses a state boundary, consistent with the language of  X4General Tel. Co. of California.?=K] {OS'ԍ Supra, note 22.? Lines that are wholly within a single state, but that nevertheless form part of an interstate channel of communication would be excluded from this definition.(#  X4(ii)Xany augmentation of lines in a carrier's network, heretofore subject to Section 214 certification, without distinguishing "new" lines from "extensions." Such a definition would be consistent with the Commission's historic treatment of "new" lines and "extensions" as one uniform group, without subdivision. Under such a definition, the Commission would exempt all additions to a carrier's network from the requirements"R, =0*''@@4" of Section 214. Such a definition would subject to Section 214 review only discontinuance, reduction, or impairment of service.(#  X4(iii)Xany channel of communication that is not created with a physically new facility. Under such a definition, capacity increases in existing facilities would be considered extensions, while the installation of physically new lines would remain subject to Section 214 certification. Such a definition potentially could influence carrier business decisions, because physically new facilities would be subject to a greater regulatory burden than capacity increases in existing facilities.(#  X 4(iv)Xany line that connects to a carrier's network. Such a definition would include any line that augments a carrier's facilities by connecting to them. It would exclude augmentations that do not directly connect to the carrier's existing lines, as well as any discontinuance, reduction, or impairment of service.(# We seek comment on these alternatives and on whether another definition would better address the considerations apparent in the language of Sections 214 and Section 402(b)(2)(A), the legislative history, and judicial and Commission precedents.  XK4#36. We note that carrier activities constituting the "extension" of a line, as defined in the course of this proceeding, are exempt from the requirements of Section 214 as of the date of enactment of the 1996 Act, February 8, 1996.  X' B.` ` Section 214 Requirements for Price Cap Carriers, Average Schedule Carriers, and Domestic, Nondominant Carriers(#`  X4  X4$37. Under the definition of line "extension" proposed above, Section 402(b)(2)(A) of the 1996 Act preserves the Commission's Section 214 authority over telecommunications carriers seeking to construct, acquire, or operate new lines of communication, or engage in transmission over such lines. Consistent with the forbearance authority granted the  XN4Commission in Section 401 of the 1996 Act,=>NK] yO'ԍ 47 U.S.C.  160.= however, and for the reasons stated herein, we propose in this notice to forbear from applying all Section 214 authorization requirements to  X 4LECs subject to price cap regulation ("price cap carriers"),? XK] yO)!'Ѝ The price cap rules are codified at Sections 61.4161.49 of the Commission's rules, 47 C.F.R.  61.41 {O!'61.49. See also Section 61.1(c), 47 C.F.R.  61.1(c). to LECs that are average  X 4schedule companies,@ K] yOl$'Ѝ The provisions governing the rate regulation procedures applied to average schedule companies are codified at Section 69.606 of the Commission's rules, 47 C.F.R.  69.606. and to all domestic carriers classified as nondominant, whether they are offering local or long distance services. Accordingly, we tentatively conclude that these" @0*''@@" carriers should no longer be required to obtain Section 214 authorization for the construction, acquisition, or operation of new lines between domestic points, or for transmission over such  X4lines. In light of this proposal, we tentatively conclude that Section 63.07 of our rulesA K] yOK'Ѝ Section 63.07(a) of our rules currently provides that "[a]ny party that would be a nondominant domestic interstate communications carrier is authorized to provide domestic, interstate services to any domestic point and to construct, acquire, or operate any transmission line as long as it obtains all necessary authorizations from the Commission for use of radio frequencies." 47 C.F.R.  63.07(a).  should be repealed.  X4%38. Section 401 amends Title I of the Communications Act of 1934 by adding a new  Xv4Section 10.=BvK] yO 'ԍ 47 U.S.C. 160.= Section 10(a) directs the Commission to forbear from enforcing a regulation or provision of the Communications Act when: (1) enforcement is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with a carrier or service are just and reasonable and not unjustly or unreasonably discriminatory; (2) enforcement is not necessary to protect consumers; and (3) forbearance is consistent with the public interest. Section 10(b) further instructs the Commission to consider whether forbearance will promote competitive market conditions and enhance competition among providers of telecommunications services. If the Commission determines that such forbearance will promote competition among providers of telecommunications services, that determination may provide the basis for the Commission's finding, pursuant to subsection 10(a)(3), that forbearance is in the public interest.  Xb4&39. We tentatively conclude that, under the first prong of the threepart forbearance analysis set forth in Section 10(a), the imposition of Section 214 authorization requirements on price cap, average schedule, and nondominant carriers is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with these carriers or their services are just, reasonable and not unreasonably discriminatory. This tentative conclusion is based primarily on the presumption that price cap and average schedule carriers, by virtue of the rate regulation schemes applied to each, are constrained in their ability to raise interstate telephone service rates. Nondominant carriers, by virtue of facing competition in their service areas also are constrained in their ability to raise rates.  X|4'40. Price cap carriers are limited in their ability to realize a regulatory benefit from overinvesting in facilities because rates for interstate services are capped in accordance with preset formulas that account for inflation and productivity growth. By capping prices rather than carrier profits, price cap regulation discourages overinvestment in facilities and encourages carriers to lower costs and increase productivity. We recognize that, under the Commission's current price cap regulations, carriers may elect a "sharing" option, which could" @B0*''@@"  X4affect the rates charged for interstate services.CK] {Oy'ԍ See Price Cap Performance Review for Local Exchange Carriers, First Report and Order, 10 FCC Rcd 8961, 905557 (1995). In general, under our current interim LEC price cap rules, a BOC could select an Xfactor option that requires it to share interstate earnings with its customers that exceed specified benchmarks and permits the BOC to make a  X4lowend adjustment if interstate earnings fall below a specified floor.?D"K] {O'ԍ Id. at 903536.? Therefore, price cap regulation of a monopoly carrier that has elected a sharing option may not eliminate entirely that carrier's incentive to invest in unnecessary facilities. Such "goldplating" activities may have the potential to increase the carrier's costs and, therefore, to reduce the carrier's  X_4obligation to share its regulated profits with its customers.E_K] yO 'Ѝ Similarly, the possibility of future recalibration of price cap levels also implies that price cap regulation does not fully sever the link between regulated costs and prices.  X14(41. Although pricecap regulation that includes a sharing option preserves some of the incentives toward "goldplating" that accompany rateofreturn regulation, we believe that all forms of price cap regulation nevertheless reduce these incentives. Price cap carriers incur sharing obligations on a sliding scale once their profits exceed certain levels; only when the carrier enters its "100% sharing" zone would it reap the full benefit of an increase in its costs.  X 4Virtually all of the pricecap carriers have adopted the "nosharing" Xfactor.ZF\ K] yO{'Ѝ Of the pricecap carriers, only U S WEST, the Southern New England Telephone Company, Citizens  {OC'Utilities Company, and certain parts of GTE have adopted a sharing Xfactor. See, e.g., 1996 Annual Access  {O 'Tariff Filings, 11 FCC Rcd 7564, 7584 (1996).Z This fact seems to indicate strongly that, in general, the benefits associated with the nosharing option exceed the benefits of adopting a sharing option and strategically overinvesting in facilities. Moreover, we expect that growth in competition for local exchange and interstate access will provide additional incentives for the pricecap LECs to increase their efficiency. Therefore, whether a price cap carrier elects a "sharing" or "no sharing" option, we tentatively conclude that additional regulation under Section 214 is not required to protect telephone service ratepayers adequately against potentially higher rates resulting from investment in unnecessary facilities. Accordingly, we tentatively conclude that "sharing" and "no sharing" price cap carriers should be treated alike for purposes of applying forbearance from the Section 214 authorization requirements. We seek comment on this tentative conclusion, and request that commenters address whether we should distinguish price cap carriers that have elected an Xfactor with no sharing requirement from other price cap carriers. We seek specific comment on whether we should apply the streamlined Section 214 procedures that we propose for rateofreturn carriers to price cap carriers that have a sharing obligation.  XN4)42. Similarly, average schedule companies are compensated for interstate telephone"N0 F0*''@@N" services through access service rates developed by the National Exchange Carrier Association  X4("NECA") on the basis of industrywide averages.GK] yOb'Ѝ Average schedule companies receive compensation for interstate common carrier services on the basis of formulas that are designed to simulate the disbursements that would be received by a cost company that is representative of average schedule companies. Average schedule formulas compensate exchange carriers on the basis of the number of their access lines, minutes of use of their central office switches, and other noncost characteristics. The formulas are based on sampled data from average schedule companies and from completed  {OJ'cost studies of cost companies that are representative of average schedule companies. See 47 C.F.R. 69.606. This constraint on the ability of average schedule carriers to raise interstate telephone service rates reduces the incentive that these carriers otherwise might have to overinvest in facilities. Accordingly, we tentatively conclude that the first prong of the Section 10 forbearance test is satisfied for carriers that are average schedule companies.  X_4*43. In the Competitive Carrier proceeding,H_BK] {OR'Ѝ Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities  {O'Authorizations Therefor, First Report and Order, 85 F.C.C.2d 1 (1980) ("Competitive Carrier First Report");  {M'Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities Authorizations  {O'Therefor, Second Report and Order, 91 F.C.C.2d 59, 7173 (1982) ("Competitive Carrier Second  {Ox'Report");("Competitive Carrier Third Report, 48 Fed. Reg 46791 (1983); Policy and Rules Concerning Rates for  {OB'Competitive Common Carrier Services and Facilities Authorizations Therefor, Fourth Report and Order, 95  {O 'F.C.C.2d 554 (1983) ("Competitive Carrier Fourth Report"), vacated sub nom. American Tel. and Tel. Co. v.  {O'FCC, 978 F.2d 727 (D.C. Cir. 1992); Competitive Carrier Fifth Report, 98 F.C.C.2d 1191; Policy and Rules  {O'Concerning Rates for Competitive Common Carrier Services and Facilities Authorizations Therefor, Sixth Report  {Oj'and Order, 99 F.C.C.2d 1020 (1985) ("Competitive Carrier Sixth Report"), vacated sub nom. MCI  {O4'Telecommunications Corp. v. FCC, 765 F.2d 1186 (D.C. Cir. 1985). the Commission granted blanket Section 214 authority to nondominant domestic carriers based on its finding that, in a competitive environment, market forces could protect the public from unreasonably high rates and undue  X 4discrimination.xIh  K] yO'Ѝ In revising Section 63.07 of the Commission's rules in 1984, the Commission "authorized" any nondominant domestic interstate carrier to construct, acquire, or operate any transmission line so long as it obtained  {O'the necessary authorizations from the Commission for use of radio frequencies. Competitive Carrier Fifth  {O'Report, 98 F.C.C.2d at 1192. On occasion, this action has been referred to by the Commission as "blanket" or  {O'"automatic" authorization. E.g., Motion of AT&T Corp. to be Reclassified as a NonDominant Carrier, 11 FCC Rcd at 3280. Although certain Court decisions have held that the Commission heretofore had no implicit  {O9'forbearance authority, e.g., MCI Telecommunications Corp. v. F.C.C., 765 F.2d 1186, 119295 (D.C. Cir. 1985), Congress granted the Commission express forbearance authority in Section 401 of the 1996 Act. Accordingly, in this notice, except with respect to the limited grant of authority to rateofreturn LECs discussed below, we do not propose to rely on "blanket" or "automatic" authorizations, to the extent that those terms imply the affirmative grant of Section 214 authority to a particular class of carriers, but instead propose express forbearance from enforcing the Section 214 mandates.x More recently, the Commission has reaffirmed its view that marketplace forces can replace regulation and make burdensome regulatory requirements unnecessary for" I0*''@@ "  X4both carriers and the Commission.JK] {Oy'Ѝ Motion of AT&T Corp. to be Reclassified as a NonDominant Carrier, 11 FCC Rcd at 3285. Ė Based on our continuing belief that market forces limit the ability of nondominant carriers to recover the cost of unnecessary facilities from telephone service ratepayers, we propose to forbear from applying the Section 214 authorization requirements to all domestic facilities of domestic nondominant carriers. Such forbearance would be consistent with our decision, under the forbearance provisions of the 1996 Act, no longer to require or to allow nondominant interexchange carriers to file tariffs  Xv4for their interstate, domestic, interexchange services.NK6 vZK] {O 'ԍ  Policy and Rules Concerning the Interstate, Interexchange Marketplace and Implementation of Section  {OK '254(g) of the Communications Act of 1934, as amended, CC Docket No. 9661, Second Report and Order, FCC  {O '96424,  77 (rel. Oct. 31. 1996) ("Tariff Forbearance Order"). Our action in the Tariff Forbearance Order was  {O 'consistent with our findings in the Competitive Carrier Proceeding, up to 15 years ago, that neither mandatory nor permissive tariff filing by nondominant, domestic IXCs was necessary to prevent such carriers from charging unjust and unreasonable rates or making service unavailable. The Commission instead concluded that market forces, together with the Section 208 complaint process and the Commission's ability to reimpose tarifffiling and facilitiesauthorization requirements, were sufficient to protect the public interest with respect to nondominant interexchange carriers subject to forbearance. The Commission also noted that firms lacking market power could  {O'not charge unlawful rates because customers could always turn to competitors. See Competitive Carrier Second  {O['Report, 91 F.C.C.2d at 73; Competitive Carrier Fourth Report, 95 F.C.C.2d at 578; Competitive Carrier Fifth  {O%'Report, 98 F.C.C.2d 1191; Competitive Carrier Sixth Report, 99 F.C.C.2d 1020 (replacing the policy of permissive detariffing with one of mandatory detariffing).N  XH4+44. As discussed above, Section 214 review was intended to protect against duplicative and wasteful investments that could harm telephone service ratepayers. Our concern is that interstate telephone ratepayers not pay for such investments through increased rates for telephone service, particularly when carriers' rates are based on their costs plus a reasonable rateofreturn above those costs. Accordingly, our tentative finding that price cap, average schedule, and nondominant carriers need not be required to obtain Section 214 authorizations is consistent with the rationale for Section 214 review. Specific Section 214 review of these carriers' investments in facilities is not necessary to ensure that their charges are just and reasonable because competitive forces or other regulatory constraints on prices already ensure that these classes of carriers have little economic incentive or ability to invest in wasteful or duplicative facilities.  X44,45. We also tentatively conclude that, under the first prong of the Section 10(a) forbearance analysis, the imposition of Section 214 authorization requirements on price cap, average schedule, and domestic nondominant carriers is not necessary to prevent those carriers from engaging in anticompetitive or discriminatory practices. The Section 214 certification process is not designed to prevent such abusive practices and, furthermore, the Commission has in place rules specifically addressing anticompetitive and discriminatory"X K0*''@@"  X4practices._LK] {Oy'ԍ See, e.g., 47 C.F.R. Parts 32, 61 and 64._ We retain the ability to reimpose Section 214 requirements should it become necessary to ensure that carrier rates and practices are just, reasonable, and nondiscriminatory.  X4-46. We tentatively conclude that, under the second prong of the Section 10(a) forbearance analysis, imposition of the Section 214 authorization requirements on price cap (sharing and nonsharing), average schedule, and domestic nondominant carriers is not necessary to protect consumers. Section 214 was originally enacted to protect telephone ratepayers. The rate regulation scheme applied to price cap and average schedule carriers, and market forces acting on domestic nondominant carriers, however, minimize the risk that telephone ratepayers will pay for wasteful investments by these carriers. We also tentatively find that forbearance from imposing Section 214 authorization requirements will benefit consumers because it will reduce the regulatory costs and delay currently imposed on carriers seeking to introduce new services. Accordingly, forbearance treatment should promote the ability of carriers to satisfy consumer demands more efficiently and at lower rates.  X 4.47. We also seek comment on whether there are other factors, apart from rate-of-return regulation or sharing obligations, that may affect the potential for duplicative and wasteful investments. In particular, we seek comment on the extent to which the rules  Xb4and policies advocated by LECs in the appeal of our interconnection ordervMbZK] {Om'Ѝ Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, CC Docket  {O7'No. 9698, First Report and Order, FCC 96325 (rel. Aug. 8, 1996), motion for stay of the FCC's rules pending  {O'judicial review denied, Implementation of the Local Competition Provisions in the Telecommunications Act of  {O'1996, CC Docket No. 9698, Order, FCC 96378 (rel. Sep. 17, 1996), partial stay granted sub nom. Iowa Utils.  {O'Board v. F.C.C., No. 963321, 1996 WL 589204 (8th Cir. Oct. 15, 1996); Implementation of the Local  {O_'Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 9698, Second Report and Order and Memorandum Opinion and Order, FCC 96333 (rel. Aug. 8, 1996).v and in the  XK4universal serviceNKK] {O'ԍ FederalState Joint Board on Universal Service, CC Docket No. 9645, Recommended Decision, FCC  {Ol'96J3 (Jt. Bd. rel. Nov. 8, 1996) ("Universal Service Recommended Decision"). proceeding could affect the incentives of carriers to make investments that are inconsistent with the statutory objective(s) of Section 214.  X4/48. We tentatively conclude that, under the final prong of the Section 10(a) forbearance analysis, forbearance is in the public interest because it will promote competitive market conditions and enhance competition among providers of telecommunications services. The Commission's Section 214 review process currently appears to impose regulatory barriers to the entry of new carriers and the creation or expansion of facilities by all carriers because carriers proposing projects that do not fall within one of the Commission's blanket authority rules must engage in a potentially lengthy Commission review of their proposals and disclose potentially competitively sensitive information to rivals. By reducing the regulatory burden"e N0*''@@W" imposed by Section 214, we would encourage the development of competition by facilitating marketdriven network expansion and reducing the costs of obtaining regulatory approval. Accordingly, we tentatively conclude that forbearance from applying the Section 214 authorization requirements to price cap, average schedule, and domestic nondominant carriers would stimulate competition by facilitating entry of new carriers, price decreases, and improved offerings. Accordingly, we tentatively conclude, pursuant to Sections 10(a)(3) and 10(b), that the forbearance policy proposed herein is in the public interest.   XH4049. We seek comment on the forbearance policy proposed above. We also seek comment on the advantages and disadvantages of alternative reform proposals including, for example, streamlining our Section 214 application procedures with respect to one or more of these classes of carriers instead of forbearing from applying the Section 214 authorization requirements. In addition, we seek comment on any procedures which may be necessary with respect to Section 214 in the event a carrier subject to forbearance treatment changes its cost accounting method and, as a result, no longer falls within a forborne class of carriers.  X4150. In the Competitive Carrier proceeding, the Commission found, for purposes of assessing the market power of interexchange carriers covered by that proceeding, that: "(1) interstate, domestic, interexchange telecommunications services comprise the relevant product market, and (2) the United States (including Alaska, Hawaii, Puerto Rico, U.S. Virgin Islands, and other U.S. offshore points) comprises the relevant geographic market for this product,  X4with no relevant submarkets."OK] {O'Ѝ Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities  {Ob'Authorizations Therefor, Fourth Report and Order, 95 F.C.C.2d 554, 563 (1983) (subsequent history omitted). The Commission then noted that it considered MTS/WATS, private line, and public switched record services all  {O'to be part of the same product market, as they were close demand or supply substitutes for one another. Id. at 56364.  X4251. The Commission recently tentatively concluded that, under certain circumstances, narrower market definitions may provide a more refined analytical tool for assessing market  X4power.P$~K] {O'ԍ See Interexchange NPRM, 11 FCC Rcd at 716471; see also Implementation of the NonAccounting Safeguards of Sections 271 and 272 of the Communications Act of 1934, as amended, and Regulatory Treatment  {O'of LEC Provision of Interexchange Services Originating in the LEC's Local Exchange Area, CC Docket No. 96149, Notice of Proposed Rulemaking, FCC 96308,  108162 (rel. Jul. 18, 1996). Specifically, its tentative conclusions were: (1) to define as a "relevant product market an interstate, interexchange service for which there are no close substitutes or a group of services that are close substitutes for each other but for which there are no other close  X~4substitutes";OQ~j K] {O$'ԍ Interexchange NPRM, at  41.O and (2) to define the "relevant geographic market for interstate, interexchange"~ Q0*''@@`"  X4services as all calls (in the relevant product market) between two particular points."ERK] {Oy'ԍ Id. at  42.E Although the Commission proposed treating "interstate, interexchange calling generally as one national market," the Commission also proposed to examine credible evidence of market  X4power in particular product or pointtopoint markets.3SZK] {O'ԍ Id.3 We seek comment on how revisions to the Commission's assessment of market power in these differing contexts may affect our proposal to forbear from Section 214 regulation of nondominant carriers, if we were to adopt such revisions. In addition, we seek specific comment on the regulation under section 214 of a carrier that might be regulated as dominant in some product, geographic, or service markets, but nondominant in others.  X '   C.` ` Section 214 Requirements for Domestic, Dominant, RateofReturn Carriers      X '` ` 1. Streamlined Application Procedures   X 4352. In this notice, we propose to amend Section 63.01 of our rules?T K] yO['ԍ 47 C.F.R.  63.01.? to streamline Section 214 filing procedures for domestic carriers that we tentatively conclude should remain  X4subject to the Section 214 authorization requirements.vU\|K] yO'Ѝ The Commission recently amended Section 63.01 to restrict the applicability of that section to domestic  {O'Section 214 authorizations and created a new rule governing international authorizations. International Section  {OO'214 Streamlining Order, Appendix A, 11 FCC Rcd at 1292341.v We propose to limit this category of carriers to domestic dominant carriers that are subject to rateofreturn regulation ("dominant rateofreturn carriers"). We propose to retain a Section 214 authorization requirement for these carriers given our tentative conclusion that the rate regulation method applied to them  X44gives them an incentive to overinvest in facilitiesV4K] {O'Ѝ See Harvey Averch and Leland Johnson, Behavior of the Firm under Regulatory Constraint, 52 Am.  yOO'Econ. Rev. 1052 (December 1962). As described by Averch and Johnson, under rateofreturn regulation, regulators set prices in a manner that allows firms to earn a "normal" return on their capital. Because the regulator is fixing the firm's rate of return, or rate of profits, the firm can increase profits by increasing its level of capital. Since prices of services are directly related to a firm's rate base or its total investment in capital,  {Oo 'Averch and Johnson conclude that rateofreturn carriers possess an incentive to overinvest in capital. Id . and because they lack external constraints on their ability to pass such costs on to telephone service ratepayers. As recently stated by the Commission, "[w]e are mindful of our statutory obligations under the Communications Act of 1934 to guard against abuses of market power in situations where effective competition does not yet exist. We meet these obligations through our Section 214 authorization process"V0*''@@:"  X4and apply dominant carrier regulation and other safeguards where circumstances warrant."|WK] {Oy'Ѝ International Section 214 Streamlining Order, 11 FCC Rcd at 12886.| Since dominant rateofreturn carriers have both the incentive and the opportunity to recover the cost of duplicative or wasteful facilities directly from telephone service ratepayers, we believe that Section 214 review remains warranted for such carriers' proposals to construct, acquire, or operate new or additional domestic lines.  Xv4453. Nevertheless, we propose to amend Part 63 of our rules to reduce the burden on carriers required to file Section 214 applications. Specifically, we propose to streamline the Section 63.01 filing requirements by eliminating the filing of unnecessary information and providing for automatic approval of Section 214 applications thirtyone days after the Commission issues public notice that the application has been accepted for filing, unless (1) the Common Carrier Bureau (the "Bureau") notifies the applicant within that period that the grant will not be automatically effective; or (2) within thirty days following the issuance of public notice a party both files an opposition to the application with the Commission and serves a copy on the applicant.  X4554. As reflected in the attached appendix of proposed rule amendments, we propose to amend Section 63.01 to lessen the burden on carriers and to require carriers to file only the following information: (a) name and address of applicant; (b) state of incorporation of corporate applicant; (c) information identifying the officer to whom correspondence may be addressed; (d) points between which proposed facilities are to be located; (e) a brief description of the facilities to be added and of the applicant's existing facilities between these points; (f) an affidavit, executed under penalty of perjury: (1) that there is a public need for proposed facilities; and (2) that the facilities are economically justified; and (g) a statement whether authorization of facilities is categorically excluded from Section 1.1306 of the  X4Commission's rules.XXZK] yO'ԍ 47 C.F.R. 1.1306. Section 1.1306 provides guidance with respect to the types of modifications of existing or authorized facilities or equipment for which the preparation and filing of an environmental assessment is not required.  X4655. We propose to eliminate from our current Section 63.01 filing requirements information concerning: (a) whether the carrier is or will become a carrier subject to Section 214 of the Communications Act; (b) whether the facilities will be used to extend communication services into territory at present not directly served by the applicant or to supplement existing facilities of the applicant; (c) the types of services to be provided over the proposed facilities; (d) the applicant's present and estimated future facilities requirements; (e) the map or sketch showing the proposed facilities; (f) a description of the manner and means by which other interstate and foreign communications services of a similar character are now being rendered by the applicant and others in the area to be served by the proposed"zX0*''@@k" facilities; (g) proposed tariff charges and regulations for domestic applications; (h) a statement of the accounting proposed to be performed in connection with the project; and (i) whether  X4the carrier has an affiliation with a foreign carrier.lYXK] yOK'Ѝ Information concerning affiliation with foreign carriers remains relevant with respect to the provision of international telecommunications services. Accordingly, affiliation information continues to be required under Sections 63.11 and 63.18(h) of the Commission's rules, 47 C.F.R. 63.11 and 63.18(h).l We tentatively conclude that all of this information is either collected elsewhere by the Commission, unnecessary, confusing in light of the provisions of Section 402(b)(2)(A), or no longer of decisional significance to the Commission.  X_4756. Our proposed streamlined application procedure also would revise the current requirement that a carrier provide a summary of the factors showing the public need for the  X14proposed facility and a detailed economic justification.DZ1K] yO 'ԍ 47 C.F.R. 63.01(lm).D We propose to allow a carrier instead to certify that there is a public need for its proposed facilities and that they are economically justified. The filing of detailed statements setting forth this information is burdensome on carriers and, in recent years, it has been our experience that few (if any) carriers have filed Section 214 applications proposing projects that do not meet these requirements. Nevertheless, we retain the authority to request from a carrier this or any other  X 4detailed information our review of a specific application may require.[" xK] yO'Ѝ 47 U.S.C. 218 ("The Commission may obtain from . . . carriers and from persons directly or indirectly controlling or controlled by, 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  {O('created"); see also 47 C.F.R. 1.17.  Xy4857. We also propose automatic approval of Section 214 applications on the thirtyfirst day following the date on which each application is placed on public notice, unless the Common Carrier Bureau notifies the applicant that the grant will not be automatically effective, or another party files an opposition with the Commission and serves the opposition on the applicant. If the Bureau so notifies the applicant, or an opposition is filed and served, within 30 days, final action by the Bureau would be taken within 90 days of the expiration of  X4the 30 day period (i.e., within 120 days of the issuance of public notice.) We seek comment on these proposed Part 63 rule amendments and on alternative proposals to streamline the Section 214 approval process.  X4958. Although we have tentatively concluded that streamlined regulation will be appropriate with respect to dominant rateofreturn carriers, we recognize that the firms remaining under rate of return regulation are generally small (accounting, in the aggregate, for"gb [0*''@@W"  X4less than approximately 2% of interstate revenues),\T K] {Oy'ԍ According to our most recent data, "small" local exchange carriers, i.e. rateofreturn companies and average schedule companies with revenues under $100 million, accounted for approximately 2% of total  {O 'interstate revenues. In 1994, the total interstate revenue for all carriers was approximately $80.3 billion. See  {O'Federal Communications Commission, CCB, Industry Analysis Division, Telecommunications Industry Revenue:  {O'TRS Worksheet Data ("TRS Worksheet"), Tbl. 3, All Carriers Reporting Interstate Revenues (Feb. 1996). Local  {Oi'exchange carriers (LECs) accounted for $25.3 billion of that interstate revenue total. Id. at Tbl. 14, Local Exchange Carriers. We can estimate the portion of that $25.3 billion total interstate LEC revenue that applies to small local exchange carriers by comparing the number of presubscribed lines for this category of local exchange carrier with the total presubscribed lines for all local exchange carriers. As of December 31, 1995, larger, reporting local exchange carriers account for 92.6 percent of the total presubscribed lines. Federal  {OS 'Communications Commission, CCB, Industry Analysis Division, Preliminary Statistics of Common Carriers, Tbl. 2.3, Total Presubscribed Lines for all Local Exchange Companies (July 1996). Thus, small local exchange carriers account for 7.4 percent of the presubscribed lines. Based on our assumption that the proportion of presubscribed lines accounted for by these carriers correlates directly with their proportion of revenues, we estimate that small local exchange carriers account for approximately 7.4 percent of the interstate revenues received by all LECs and less than 2.3 percent of total interstate revenues (which includes interexchange carrier revenue, as well). and that, as a practical matter, few Section 214 applications from such firms have ever been challenged or rejected. Accordingly, we seek comment on whether, as with the other types of carriers discussed above, the Commission should forbear from regulating these small carriers under Section 214 altogether.  X'` ` 2. Blanket Authority for Small Projects   X_4:59. Current Commission rules allow carriers to file streamlined, informal applications for Section 214 certification for certain small, inregion projects with a cost of less than  X14$2,000,000 each or an annual rental of less than $500,000 each.?]1K] yO'ԍ 47 C.F.R. 63.03.? In recent years, it has been our experience that few applications have been filed under this section and those few have not been contested, but instead have been deemed approved twenty one days after the Commission issues public notice that the application has been accepted for filing. In addition, based on the size of the projects involved, we believe that projectspecific applications are not required to protect ratepayers from unnecessary rate increases. Accordingly, we tentatively conclude that we should grant blanket authority for small projects involving the construction, operation, or acquisition of new lines, or transmission over such lines.  Xb4;60. We believe that it would be difficult for a carrier to engage in any substantial wasteful duplication of facilities or to raise its rates significantly based on projects undertaken pursuant to this rule. Not only are the dollar amounts involved small, but these projects require investment in facilities that, as a general matter, must be amortized over long periods of time, with the result that even a rateofreturn carrier could include only a fraction of the total outlay in its cost data for a single accounting period. As the rule is currently written,"t]0*''@@" however, a carrier may engage in as many projects as it deems appropriate under this rule, subject to the approval of the Commission under the streamlined provisions of Section 63.03. Therefore, we tentatively conclude that a grant of blanket authority on any perproject basis would leave no meaningful check on the ability of a rateofreturn carrier to construct facilities at will, with the possible result that rates will be raised unnecessarily. Instead, we propose to grant blanket authority for carriers to construct, operate, or acquire new lines, or engage in transmission over such lines, subject to an annual cap on spending.  XH4<61. In developing an appropriate dollar amount for such an annual cap, we take initial note of the current $2,000,000 perproject limit under our streamlined rule. We propose that one such project could be undertaken by a carrier on average every two months without any  X 4significant adverse effect on ratepayers.^  K] yO| 'ԍ A carrier undertaking one $2,000,000 project every two months would engage in six such projects each year, and spend $12,000,000 annually. Accordingly, this $12,000,000 figure is proposed below as an appropriate annual cap. A larger number of smaller projects, or a smaller number of larger projects, could also fit within such an annual cap. The example is illustrative only. However, we are also aware that there are great size differences between the largest and smallest rateofreturn carriers. Accordingly, for such large carriers, we propose an alternate annual percentage cap. Specifically, we propose that a carrier could increase the total book value of its lines by up to 10% in any given year without any significant adverse effects on ratepayers. Because these investments are typically amortized over long periods of time, any potential rate increase from such projects would necessarily be small.  XK4=62. In sum, we propose to replace the current $2,000,000 perproject cap to allow carriers to engage in projects that, in the aggregate, either (1) have a total annual cost of no more than $12,000,000 or an annual rental of no more than $3,000,000; or (2) increase the total book value of the carrier's lines by not more than 10%. Projects in excess of this annual cap would be subject to the streamlined application procedures proposed above. We seek comment on this proposal, including specific comment on several issues. We request that commenters discuss (a) whether we should forbear from imposing Section 214 regulation on  X4these projects, including specific reference to the forbearance criteria in the 1996 Act;=_K] yO 'ԍ 47 U.S.C. 160.= (b) whether we should subject these projects to the streamlined regulation proposed above; and (c) whether the proposed cost limits are appropriate.  XN' D.` ` Reporting Requirements (#`  X '` ` 1. Current Section 214 Reporting Requirements (#  X4>63. In the past, the Commission has streamlined its Section 214 application process or granted blanket authorizations when it was able to conclude that review of all information"@_0*''@@k"  X4required by Section 63.01 no longer was consistent with the public interest.p`K] {Oy'ԍ See, e.g., 47 C.F.R. 63.02, 63.03, 63.04, 63.07, 63.08.p In connection with such streamlining or blanket authorization, the Commission has imposed reporting obligations on carriers engaging in the activities covered by these streamlined filing requirements or blanket authorizations. Part 63 of our rules currently imposes two such  X4reporting requirements. Section 63.03(e)BaZK] yO'ԍ 47 C.F.R. 63.03(e).B of our rules requires annual reports from carriers that have obtained continuing authority to commence small projects within their existing  Xv4service areas. Section 63.04(c)BbvK] yO 'ԍ 47 C.F.R. 63.04(c).B imposes a similar, semiannual, reporting requirement on those carriers that have obtained continuing authority to provide temporary or emergency  XH4service. ec HzK] yOs'Ѝ Until recently, our rules imposed two additional reporting requirements related to Section 214 regulation. Former Section 63.07(b) of our rules, 47 C.F.R. 63.07(b), imposed a semiannual reporting requirement on nondominant carriers subject to the blanket authorization of 63.07(a). The Common Carrier Bureau eliminated this reporting requirement, finding that "elimination of this report is consistent with our goal of reducing  {O'burdensome and unnecessary reporting." Revision of Reporting Requirements, CC Docket No. 9623, Report and Order, DA 961873,  29 (Com. Car. Bur. rel. Nov. 13, 1996). Section 63.15(b) of our rules imposed additional reporting requirements on international carriers that added circuits to a particular country under the blanket authority of 63.15(b). We recently substantially revised our international Section 214 rules and repealed Section  {O'63.15(b). International Section 214 Streamlining Order, Appendix A, 11 FCC Rcd at 1292341.  For a more  {O'general discussion of the Commission's efforts to eliminate unnecessary reporting requirements, see Improving  {OI'Commission Processes, Notice of Inquiry, 11 FCC Rcd 14006, 1401415 (1996); Public Notice, Common Carrier  {O'Bureau Eliminates and Reduces Reporting Requirements, FCC No. 55228 (rel. Aug. 10, 1995); Public Notice,  {O'Common Carrier Bureau Solicits Comments on Elimination of Divestiture Reports, Report No. CC 9534 (rel. June 14, 1995).e  X 4?64. If, as discussed above, we adopt a policy of forbearance toward certain classes of carriers, then we tentatively conclude that those classes of carriers would not be subject to any Section 214 reporting requirements under the Commission's rules. In addition, we tentatively conclude that the reporting burden should be substantially reduced for carriers required to obtain Section 214 certification.  X'` ` 2. Elimination of Reports (#  Xb4@65. We tentatively conclude that the Commission no longer needs to require carriers to file routinely the reports required under Sections 63.03(e) and 63.04(c) of our rules. In recent years, neither the public nor the Commission's staff has made significant use of the information provided in these reports. Under Section 63.03(e), carriers may request continuing authority to commence small projects to supplement existing facilities within the">c0*''@@f" carrier's service area. Projects commenced under this authority must have a construction, installation, or acquisition cost of no more than $70,000 or an annual rental cost of no more than $14,000. Carriers subject to this requirement must file this report annually.  X4A66. Under Section 63.04(c), carriers may request continuing authority to provide temporary or emergency service through the construction or installation of facilities for which the estimated construction, installation, and acquisition costs do not exceed $35,000 or an annual rental of $7000, as long as the project does not involve a "major action" under the  XH4Commission's environmental rules.NdHK] yO 'ԍ 47 C.F.R. 1.1306 1.1307.N Carriers that obtain such authority are required to file semiannual reports identifying the projects commenced over the preceding six months.  X 4B67. It would be extremely difficult for carriers to construct or acquire significantly wasteful, duplicative facilities covered by either Section 63.03 or 63.04 because of the relatively small cost of the projects covered by those sections. Instead of obligating carriers to file these reports, we propose to rely on the Commission's general authority under the Communications Act to obtain information from carriers in individual instances if the  X4information becomes necessary for us to perform our regulatory duties.e"XK] yO'Ѝ 47 U.S.C. 218 ("The Commission may obtain from . . . carriers and from persons directly or indirectly controlling or controlled by, 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  {O'created"). See also 47 U.S.C. 154(i); 47 C.F.R. 1.17. Parties requesting that the Commission retain these reporting requirements should explain clearly how these reports have benefitted members of the public in the past and how the reports would benefit the public in the future.  X' E.` ` Section 214 Discontinuance Requirements  (#`  X4C68. Section 214(a) requires carriers that discontinue, reduce, or impair service to a community to obtain from the Commission a certificate that neither the present nor future  X4public convenience and necessity will be adversely affected.JfBK] yO'Ѝ 47 U.S.C.  214(a).J In general, dominant carriers seeking Commission authority to discontinue, reduce, or impair service are required, pursuant to current Section 63.61 of our rules, to file a formal application with the Commission. Depending on the nature of the service for which authority to discontinue is sought, Section 63.62 of our rules instructs applicants with respect to the contents of particular applications. Upon reviewing an application for discontinuance authority, the Commission then issues a"Nf0*''@@4"  X4formal order granting or denying such authorization.g$K] yOy'ԍ The Common Carrier Bureau recently granted blanket authority under 47 C.F.R. 63.62(g) to US West  {OA'Communications to discontinue service to small exchanges provided that certain conditions are met. Petition and  {O 'Application of US West Communications, 10 FCC Rcd. 6077, 6081 (Com. Car. Bur. 1995). The Bureau's decision is consistent with our proposal in this proceeding to streamline our procedures for dominant carriers.  X4D69. Under current Section 63.71 of our rules, nondominant carriers seeking to reduce or discontinue service are required to notify all affected customers in writing of the planned discontinuance, reduction or impairment of service unless the Commission authorizes another  X4form of notice in advance.LhK] yO 'Ѝ 47 C.F.R.  63.71(a).L Nondominant carriers must also file with the Commission an application that includes a description and the date of the planned discontinuance, reduction or impairment, the geographic areas of service affected, the dates and method of notice given to  XH4customers, and any other information the Commission may require.LiHDK] yO='Ѝ 47 C.F.R.  63.71(b).L The application is automatically granted on the thirtyfirst day after its filing with the Commission, unless the Commission notifies the applicant within that time that the grant will not automatically be  X 4effective.Bj K] yO'ԍ 47 C.F.R.  63.71(c).B  X 4E70. The 1996 Act does not alter the Commission's authority under Section 214(a) with respect to discontinuances or reductions in services. We note, however, that carriers assume a certain amount of risk when entering a new geographic or product market. If regulatory requirements create significant barriers to exit, a carrier may be reluctant to accept potential risks and, as a result, may never enter the market. Accordingly, in order to further the 1996 Act's goal to promote competition, we seek in this proceeding to eliminate any unnecessary barriers to exit currently imposed by our rules. Specifically, we seek comment on whether the streamlined discontinuance procedures set forth in Section 63.71 of our rules, which currently apply only to domestic nondominant carriers, should apply to all domestic common  X4carriers.kd K] yO'Ѝ We recently amended Section 63.71 to make that section applicable only to domestic nondominant  {O'carriers. International Section 214 Streamlining Order, 11 FCC Rcd at 1290405. In doing so, we tentatively conclude that the streamlined procedures contained in Section 63.71 appear to strike a reasonable balance between protecting consumers and reducing unnecessary barriers to exit for all carriers, whether dominant or nondominant. We seek comment on this tentative conclusion.  X4F71. As local exchange markets becomes increasingly competitive, however, many currently dominant LECs may find themselves under increasing pressure to reduce or eliminate service in unprofitable areas. Therefore, although we propose to extend the"e k0*''@@" applicability of Section 63.71 to domestic dominant carriers, we remain concerned that the relatively short advance notification period provided under Section 63.71 might allow a dominant carrier to obtain automatic discontinuance authority even though it is the only carrier serving a particular community. In addition, we are mindful of the Commission's obligation under the new universal service provisions of the 1996 Act to order a common carrier, or carriers, to provide interstate telecommunications service to an unserved  Xv4community, or portion thereof, that requests such service.l* vK] yO'ԍ Section 102(a) of the 1996 Act adds new subsection 214(e) to the Communications Act. Section 214(e)(3) provides: XIf no common carrier will provide the services that are supported by Federal universal service support mechanisms under Section 254(c) to an unserved community or any portion thereof that requests such service, the Commission, with respect to interstate services, or a State commission, with respect to intrastate services, shall determine which common carrier or carriers are best able to provide such service to the requesting unserved community or portion thereof and shall order such carrier or carriers to provide such service for that unserved community or portion thereof.   yO'The FederalState Joint Board on Universal Service recently provided its recommendations to the Commission.  {OO'See Universal Service Recommended Decision,  179182. At a minimum, therefore, we tentatively conclude that we should extend the advance notification period contained in Section 63.71 to 60 days with respect to domestic, dominant carriers, in the event that we do apply Section 63.71 to all domestic carriers. We seek comment on this tentative conclusion, including comment on (1) whether a 60 day advance notification period, in conjunction with the universal service support mechanisms recommended by the Joint Board and/or adopted by the Commission, will provide adequate incentives to carriers and protection to consumers; and (2) whether additional safeguards are necessary to protect consumers against discontinuance of service by dominant carriers; and (3) whether we should treat differently from all other carriers a dominant carrier that is either (a) the sole service provider in a particular community; or (b) relinquishing its designation as an eligible telecommunications carrier  Xy4under Section 214(e)(4).m( y K] yO'ԍ 47 U.S.C. 214(e)(4) was also added by Section 102(a) of the 1996 Act. It provides: XA State commission shall permit an eligible telecommunications carrier to relinquish its designation as such a carrier in any area served by more than one eligible telecommunications carrier. An eligible telecommunications carrier that seeks to relinquish its eligible telecommunications carrier designation for an area served by more than one eligible telecommunications carrier shall give advance notice to the State commission of such relinquishment. Prior to permitting a telecommunications carrier designated as an eligible telecommunications carrier to cease providing universal service in an area served by more than one eligible telecommunications carrier, the State commission shall require the remaining eligible telecommunications carrier or carriers to ensure that all customers served by the relinquishing carrier will continue to be served, and shall require sufficient notice to permit the purchase or construction of adequate facilities by any remaining eligible telecommunications"D&l0*''"&" carrier. The State commission shall establish a time, not to exceed one year after the State commission approves such relinquishment under this paragraph, within which such purchase or construction shall be completed.   {O'See also Universal Service Recommended Decision,  157."y zm0*''@@"Ԍ X'ԙ F.` ` Technical Amendments to 47 C.F.R. Part 63 (#`  X4G72. In light of the rule amendments proposed above, we tentatively conclude that we should rewrite the entire text of Sections 63.01, 63.02, and 63.03 of our rules, to repeal Sections 63.06 and 63.07 of our rules, and to make technical, conforming amendments to Sections 63.04, 63.08, 63.52, 63.61, 63.62 and 63.71 of our rules. We seek comment on our proposal to repeal or amend these rule sections.  XH4H73. The 1996 Act also provides that "a common carrier shall not be required to obtain a certificate under [S]ection 214 with respect to the establishment or operation of a system for  X 4the delivery of video programming."n zK] yOE'ԍ Section 651(c) of the Cable Communications Policy Act of 1984, added by Section 302(a) of the 1996 Act, codified at 47 U.S.C. 571(c). Accordingly, we propose an amendment to our rules, in the form of a new Section 63.01(b), to conform to this statutory mandate.  X 4M0 III. PROCEDURAL MATTERS ׃  X 4 A.` ` Ex Parte Presentations (#`  Xz4I74. This is a nonrestricted notice and comment rulemaking proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period provided that they are  XN4disclosed as provided in the Commission's rules.loNK] {O'ԍ See generally 47 C.F.R. 1.1202, 1.1203, and 1.1206.l  X ' B.` ` Regulatory Flexibility Act Analysis (#`  X4J75. We certify that the Regulatory Flexibility Act of 1980 is not applicable to this rulemaking proceeding. If the proposed rule changes are promulgated, there will not be a significant economic impact on a substantial number of small business entities, as defined by  X4Section 601(3) of the Regulatory Flexibility Act?pd K] yO"'ԍ 5 U.S.C. 601(3).? because these rule changes would lessen, not increase, the regulatory burden on small businesses. The Secretary shall send a copy of this Notice of Proposed Rulemaking to the Chief Counsel for Advocacy of the Small Business"! p0*''@@"  X4Administration in accordance with Section 605(b) of the Regulatory Flexibility Act.qK] yOy'ԍ 5 U.S.C. 605(b) (as amended by the Contract With America Advancement Act, Pub. L. No. 104121, 110 Stat 847, 866 (1996)).  X' C.` ` Initial Paperwork Reduction Act Analysis (#`  X4K76. This NPRM contains either a proposed or modified information collection. As part of its continuing effort to reduce paperwork burdens, we invite the general public and the Office of Management and Budget ("OMB") to take this opportunity to comment on the information collections contained in this NPRM, as required by the Paperwork Reduction Act  XH4of 1995.mrH K] {O 'ԍ Pub. L. No. 10413, codified at 44 U.S.C. 35013520.m Public and agency comments are due at the same time as other comments on this NPRM; OMB comments are due 60 days from date of publication of this NPRM in the  X 4Federal Register. Comments should address: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology.  Xd4 8  L77. In addition to filing comments with the Secretary, as detailed below, a copy of any comments on the information collections contained herein should be submitted to Dorothy Conway, Federal Communications Commission, Room 234, 1919 M Street, N.W., Washington, D.C. 20554, or via the Internet to dconway@fcc.gov and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street, N.W., Washington, D.C. 20503, or via the Internet to fain_t@al.eop.gov.  8   X' D.` ` Comment Filing Procedures (#`  X4M78. Pursuant to applicable rules set forth in Sections 1.415 and 1.419 of the Commission's rules, 47 C.F.R. 1.415 and 1.419, interested parties may file comments on or before February 24, 1997, and reply comments on or before March 17, 1997. To file formally in this proceeding, commenters and reply commenters must file an original and six copies of all comments, reply comments, and supporting comments. Commenters and reply commenters wishing each Commissioner to receive a personal copy of their comments must file an original and eleven copies. Comments and reply comments must comply with Section  X41.49 and all other applicable sections of the Commission's rules.>sK] yOW%'ԍ 47 C.F.R. 1.49.> However, we require here that a summary be included with all comments, regardless of length. All comments must be""Bs0*''@@" sent to Office of the Secretary, Federal Communications Commission, 1919 M Street, N.W., Room 222, Washington, D.C. 20554, with a copy to the Secretary, Network Services Division, Common Carrier Bureau, 2000 M Street, N.W., Suite 235, Washington, D.C. 20554. Parties must also file one copy of any documents filed in this docket with the Commission's duplicating contractor, International Transcription Services, Inc. ("ITS"), 2100 M Street, N.W., Suite 140, Washington, D.C. 20037 (tel. 2028573800). Comments and reply comments will be available for public inspection during regular business hours in the FCC Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C. 20554. Copies of comments and reply comments will also be available through ITS.  X 4N79. Parties are also asked to submit comments and reply comments on diskette. Such diskette submissions are in addition to, and not a substitute for, the formal filing requirements addressed above. Parties submitting diskettes should submit them to Secretary, Network Services Division, Common Carrier Bureau, 2000 M Street, N.W., Suite 235, Washington, D.C. 20554. Diskette submissions should be on a 3.5 inch diskette formatted in an IBMcompatible form using MSDOS 5.0 and WordPerfect 5.1 software. The diskette should be submitted in "readonly" mode. The diskette should be clearly labelled with the party's name, proceeding, type of pleading (comments or reply comments) and date of submission. The diskette should be accompanied by a cover letter.  X44A IV. ORDERING CLAUSES ׃  X4O80. Accordingly, IT IS HEREBY ORDERED that, pursuant to Sections 1, 4(i), 4(j), 10, 214, 218, 254 and 571 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 214, 218, 254 and 571, a NOTICE OF PROPOSED RULEMAKING is hereby ADOPTED.  X4P81. IT IS FURTHER ORDERED that the Secretary shall send a copy of this NOTICE OF PROPOSED RULEMAKING, including the regulatory flexibility certification to the Chief Counsel for Advocacy of the Small Business Administration, in accordance with Section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(b).  X'` `  ,hh] FEDERAL COMMUNICATIONS COMMISSION ` `  ,hh]William F. Caton ` ` ,hh]Acting Secretary"h$#s0*''@@""  X4u APPENDIX A ă  X4_] PROPOSED RULES ă Part 63 of Title 47 of the Code of Federal Regulations is revised as follows:  Xv' PART 63 NEW LINES, EXTENSION OF LINES AND DISCONTINUANCE, REDUCTION, OUTAGE AND IMPAIRMENT OF SERVICE BY COMMON CARRIERS; AND GRANTS OF RECOGNIZED PRIVATE OPERATING AGENCY  X1'STATUS  X 41.The authority citation for Part 63 is amended by revising the citation as follows:  X 4AUTHORITY: Sections 1, 4(i), 4(j), 10, 11, 201205, 214, 218, 403 and 571 of the  X 4Communications Act of 1934, as amended, 47 U.S.C. secs. 151, 154(i), 154(j), 160, 201205,  X4 214, 218, 403, and 571 unless otherwise noted.  XK42.Section 63.01 is revised to read as follows:  X'  63.01 Exemption for extensions of lines and for systems for the delivery of video  X'programming. (a) Any common carrier proposing to undertake the extension of any line is exempt from the requirements of Section 214 of the Communications Act of 1934, as amended. For  X4the purpose of this section, an extension of any line shall mean "a line that allows the carrier to expand its service into geographic territory that it is eligible to serve, but that its network does not currently reach." This section does not relieve any common carrier from the obligation to obtain all necessary authorizations from the Commission for use of radio frequencies. (b) A common carrier shall not be required to obtain a certificate under Section 214 of the Communications Act of 1934 with respect to the establishment or operation of a system for the delivery of video programming.  X!43.Section 63.02 is revised to read as follows:  X#'  63.02 Forbearance from Section 214 requirements for price cap carriers, average  Xj$'schedule carriers, and domestic, nondominant carriers. "S%$s0*''@@#"Ԍ(a) For the purpose of this section, the following definitions shall apply:  X4(1) Price cap carrier shall mean a carrier subject to regulation under 47 C.F.R. Sections 61.41 through 61.49 of this chapter.  X4(2) Average schedule carrier shall mean a carrier that employs average schedules in lieu of determining its costs.  XL4(3) Domestic, nondominant carrier shall mean a domestic carrier meeting the definition of a nondominant carrier provided in Section 61.3(u) of this chapter. (b) Any common carrier deemed to be a price cap, average schedule, or domestic, nondominant carrier that is proposing to construct, acquire, or operate a new line, or engage in transmission over or by means of such line, and such line originates and terminates in the United States, is not required to file for authority pursuant to Section 214 of the Communications Act of 1934, as amended. This section does not relieve any common carrier from the obligation to obtain all necessary authorizations from the Commission for use of radio frequencies.  X:44.Section 63.03 is revised to read as follows:  X '  63.03 Special procedures for dominant, rateofreturn carriers. (a) For the purpose of this section, the following definitions shall apply:  X4(1) Dominant carrier shall mean a carrier meeting the definition of a dominant carrier provided in Section 61.3(o) of this chapter.  Xm4(2) Rate of return carrier shall mean a local exchange carrier or a group of affiliated carriers that is not subject to price cap regulation under Sections 61.41 through 61.49 of this chapter, and that is not an average schedule carrier, as that term is defined in Section 63.02(a)(2) of this chapter. (b) Any common carrier deemed to be a dominant, rateofreturn carrier is hereby granted authority under Section 214 of the Communications Act of 1934, 47 U.S.C. 214, to construct, acquire, or operate new lines, or engage in transmission over or by means of such lines, subject to the following restrictions:  X#4(1)` ` The lines must originate and terminate within the United States;(#`  Xr$4(2)` ` The lines must be categorically excluded from environmental processing under Section 1.1306 of this chapter.(#` "[%%s0*''@@e#"Ԍ X4(3)` ` A carrier's authority under this subsection is limited to lines:(#`  X4` ` (a) With a total annual construction or acquisition cost not exceeding $12,000,000; or(#  X4` ` (b) With a total annual rental cost not exceeding $3,000,000; or(#  X4` ` (c) Which increase the aggregate book value of the carrier's lines by not more than 10%.(# (c) Any common carrier deemed to be a dominant, rateofreturn carrier that is seeking authority pursuant to Section 214 of the Communications Act of 1934, as amended, to construct, acquire, or operate a new line, or engage in transmission over or by means of such line, and such line originates and terminates in the United States, and such line is not subject to the blanket authorization of subsection (b) of this section, shall request such authority by formal application which shall be accompanied by a statement showing how the grant of the application will serve the public interest, convenience, and necessity. Such statement shall consist of the following information, as applicable:  X4(1)` ` The name, address, and telephone number of each applicant;  Xy4(2)` ` The Government, State, or Territory under the laws of which each corporate or partnership applicant is organized;(#`  XK4(3)` ` The name, title, post office address, and telephone number of the officer and any other person, such as legal counsel, to whom correspondence concerning the application is to be addressed;(#`  X4(4)` ` The points between which the proposed facilities are to be located;   X4(5)` ` A description of the facilities for which authority is requested and of the applicants existing facilities between the points identified above;(#`  X4(6)` ` The following affidavit, executed by the carrier's president, chief executive officer, or other corporate officer with appropriate authority, under oath and subject to penalty for perjury:(#`  Xe4XX` ` X "I, (name and title), under oath and subject to penalty for perjury, certify that (a) there is a public need for these proposed facilities; and (2) these proposed facilities are economically justified. I have  X"4appropriate authority to make this certification on behalf of (applicant), and I agree to provide any information the Commission requests to allow it to evaluate this certification or any other aspect of this application."(#  X!4(7)` ` A statement whether an authorization of the facilities is categorically excluded as defined by  1.1306 of the Commission's rules. If answered affirmatively, an environmental assessment as described in  1.1311 need not be filed with the application.(#` "U%&s0*''@@e#"Ԍ(c) An original and three copies of the application shall be filed with the Secretary, Federal Communications Commission, Washington, D.C. 20554. Applicant shall furnish a copy to the Governor of the state in which the line is to be constructed, and also to the Secretary of Defense, Attn. Special Assistant for Telecommunications, Pentagon, Washington, D.C. 20301. (d) An application filed under this section shall be deemed granted without further Commission action on on the thirty first (31st) day following the issuance of public notice that the application has been accepted for filing unless: (1) the Common Carrier Bureau notifies the applicant within 31 days of the issuance of such public notice that the application will not be automatically granted; or (2) within thirty days of the issuance of such public notice, a party files an opposition to the application with the Commission and serves it on the applicant. In either case, final action on the application will be taken by the Bureau within 120 days after the issuance of public notice that the application was accepted for filing. (e) This section does not relieve any common carrier from the obligation to obtain all necessary authorizations from the Commission for use of radio frequencies.  XK45.` ` Section 63.04 is amended by revising section (c) as follows:  X'  63.04 Special provisions relating to temporary or emergency service .xx * * * * *  X4(c)` ` Without regard to the other requirements of this part, and by application setting forth the need therefor, any carrier may request continuing authority, subject to termination by the Commission at any time upon 10 days' notice to the carrier, to provide temporary or emergency service by the construction or installation of facilities where the estimated construction, installation, and acquisition costs do not exceed $35,000 or an annual rental of not more than $7,000 provided that such project does not involve a major action under the Commission's environmental rules. (See Subpart I of Part 1 of this chapter.) * * * * *  X 46.` ` Sections 63.06 and 63.07 are removed and reserved, as follows:  X"' 63.06 63.07 [Reserved]  XQ%47.` ` Section 63.08 is revised to read as follows:"Q%'s0*''@@e#"Ԍ X'ԙ 63.08 Lines outside of a carrier's exchange telephone service area.  X4(a)` ` An exchange telephone common carrier or its affiliate is not required to file for authority pursuant to 47 U.S.C. 214 to provide lines, or for existing lines, outside of the exchange telephone service area of that carrier and any of its affiliates if the lines are * * *  Xv4(b)` ` If a nondominant common carrier and its affiliates are not affiliated with an exchange telephone common carrier, the nondominant carrier or its affiliate is not required to file for authority pursuant to 47 U.S.C. 214 to provide lines, or for existing lines, of the types described in paragraph (a) of this section between any domestic points. * * *  X 4(c)` ` A common carrier or its affiliate is not required to file for authority pursuant to 47 U.S.C. 214 to discontinue, reduce, or impair * * * * * * * *  Xy48.` ` Section 63.52 is revised to read as follows:  XK' 63.52 Copies required; fees; and filing periods. * * * * *  X4(b)` ` No application accepted for filing and subject to the provisions of 63.03, 63.62, 63.69, 63.91, 63.502 or 63.505 of these rules shall be granted * * * * * * * *  Xe49.` ` Section 63.61 is revised to read as follows:  X7' 63.61 Applicability. Any carrier subject to the provisions of Section 214 of the Communications Act of 1934, as amended, except any nondominant carrier as that term is defined in 61.3(u) of this chapter * * *  X!4 10.` ` Section 63.62 is revised to read as follows:  X#' 63.62 Type of discontinuance, reduction, or impairment of telephone or telegraph  Xh$'service requiring formal application. "Q%(s0*''@@e#"Ԍ* * * * *  X4(a)` ` The dismantling of removal of a trunk line (for contents of application see 63.500) for dominant international carriers except as modified in Section 63.19; * * * * *  XJ411.` ` Section 63.71 is amended by revising the section heading, first paragraph, and subsection (c) to read as follows:  X '  63.71 Special procedures for discontinuance, reduction or impairment of service by  X 'domestic carriers . Any domestic carrier that seeks to discontinue, reduce or impair service shall be subject to the following procedures in lieu of those specified in  63.61 through 63.62 and 63.64 through 63.601: (a) * * * * * * * *  X4(5)` ` One of the following statements:  X4` ` (i) If the carrier is nondominant with respect to the service being discontinued, reduced or impaired, the notice shall state: "The FCC will normally authorize this proposed discontinuance of service (or reduction or impairment) unless it is shown that customers would be unable to receive service or a reasonable substitute from another carrier. If you wish to object, you should file your comments within 15 days after receipt of this notification. Address them to the Federal Communications Commission, Washington, D.C. 20554, referencing the 63.71 Application of (carrier's name). Comments should include specific information about the impact of this proposed discontinuance (or reduction or impairment) upon you or your company, including any inability to acquire reasonable substitute service."  X 4` ` (ii) If the carrier is dominant with respect to the service being discontinued, reduced or impaired, the notice shall state: "The FCC will normally authorize this proposed discontinuance of service (or reduction or impairment) unless it is shown that customers would be unable to receive service or a reasonable substitute from another carrier. If you wish to object, you should file your"S%)s0*''@@e#" comments within 30 days after receipt of this notification. Address them to the Federal Communications Commission, Washington, D.C. 20554, referencing the 63.71 Application of (carrier's name). Comments should include specific information about the impact of this proposed discontinuance (or reduction or impairment) upon you or your company, including any inability to acquire reasonable substitute service." (b) * * * * * * * * (4) Whether the carrier is considered dominant or nondominant with respect to the service to be discontinued, reduced or impaired. (5) Any other information the Commission may require.  X 4(c)` ` The application to discontinue, reduce or impair service, if filed by a domestic, nondominant carrier, shall be automatically granted on the 31st day after its filing with the Commission without any Commission notification to the applicant unless the Commission has notified the applicant that the grant will not be automatically effective. The application to discontinue, reduce or impair service, if filed by a domestic, dominant carrier, shall be automatically granted on the 60th day after its filing with the Commission without any Commission notification to the applicant unless the Commission has notified the applicant that the grant will not be automatically effective.