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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Administration of the ) North American Numbering Plan ) CC Docket No. 92-237 Carrier Identification Codes (CICs) ) ) Petition for Rulemaking of ) VarTec Telecom., Inc. ) SECOND REPORT AND ORDER Adopted: April 7, 1997 Released: April 11, 1997 By the Commission: TABLE OF CONTENTS Paragraph No. I. INTRODUCTION 1 II. BACKGROUND 5 A. The Transition to Four Digit Carrier Identification Codes5 III. DISCUSSION 11 A. Jurisdiction 11 B. Length of the Transition 12 1. Background 12 2. Comments 15 3. Decision 27 C. Petition for Rulemaking of VarTec Telecom., Inc. 48 D. Conclusion 50 E. Procedural Matters 52 1. Final Regulatory Flexibility Analysis 52 F. Ordering Clauses 53 APPENDICES Appendix A: List of Parties: April 4, 1994 Notice of Proposed Rulemaking Appendix B: List of Parties: April 30, 1996 Public Notice to Refresh Record Appendix C: Final Regulatory Flexibility Analysis I. INTRODUCTION 1. Carrier Identification Codes (CICs) are numeric codes that, as originally devised, enabled local exchange carriers (LECs), as providers of interexchange access services, to identify access customers in order to bill and route traffic to such customers. CICs facilitate competition by enabling callers to use the services of any number of telecommunications service providers. For example, they enable a caller to presubscribe to the local or long-distance carrier of his choice. In addition, a carrier's CIC, which is the suffix of that carrier's Carrier Access Code (CAC), enables callers to reach any carrier (presubscribed or otherwise) from any telephone. Thus, from any telephone, a caller may dial a seven digit CAC format ("101XXXX") to reach a carrier, with the last four digits ("XXXX") representing that carrier's unique four digit Feature Group D CIC. 2. Over the past two decades, through a series of proceedings, the Commission has developed policies to foster competition in interstate telecommunications. Among these has been its policy governing the management of CICs. In April 1994, the Commission issued a Notice of Proposed Rulemaking (NPRM) tentatively concluding that an industry plan to expand Feature Group D CICs from three to four digits, in anticipation of all the three digit codes being assigned, was a reasonable way to ensure that future demand for CICs could be met. The NPRM also tentatively concluded that a six-year transition, or permissive dialing period, was reasonable and necessary to move the industry from three to four digit CICs. During the transition, callers and carriers could use both three and four digit CICs. 3. Since the NPRM, demand for CICs has grown because the number of carriers requesting CICs has increased and because carriers are using CICs for an increasing number of purposes. Moreover, three digit Feature Group D CICs are no longer available for assignment. As of April 1, 1995, the day after assignment of the last available three digit CIC, only four digit Feature Group D CICs were available for assignment. Furthermore, implementation of the amendments to the Communications Act of 1934 (the Act) in the Telecommunications Act of 1996 (1996 Act) most likely will increase the number of telecommunications carriers entering the market and create an increased need for CICs so that traffic can be routed to these new entities. Consequently, we recently issued a Public Notice to refresh the record in this docket with information that would permit the Commission to establish a reasonable period for the industry to complete the steps necessary for a total conversion from three digit Feature Group D CICs to four digit Feature Group D CICs. 4. In this Second Report and Order, we affirm the NPRM's tentative conclusion that the Feature Group D CIC expansion plan developed by the industry is reasonable, and we determine that the transition for the conversion from three digit to four digit Feature Group D CICs will end on January 1, 1998. Because of the changing circumstances since the record in this docket closed in 1994, we find that the transition should end as soon as practicable, and that shortening the originally proposed six-year transition to a two-year and nine month transition will serve the overall pro-competitive purposes of the Act (by making more CICs available), as well as the specific purposes of Sections 251(e) (by ensuring that numbers are available on an equitable basis) and 251(b)(3) (by lessening hardships, consistent with the duty imposed on all LECs to provide nondiscriminatory access to telephone numbers, caused by the conservation plan's limiting access to CICs). To lessen any disadvantage new entrants may experience during the transition in particular, we also modify the ongoing CIC conservation plan to allow each entity to have two CIC assignments. We determine that shortening the originally proposed six-year period is reasonable because the industry has been aware for some time that equipment changes (both hardware and software) to accommodate exclusive use of four digit CICs would be necessary. We conclude that ending the transition on January 1, 1998, provides a reasonable period for carriers and equipment owners to reprogram their switch software or upgrade their switch hardware and for callers to become accustomed to the change from five to seven digit CACs. We also require the North American Numbering Plan (NANP) administrator, as the entity assigning CICs, to notify all CIC assignees of our decision in this Second Report and Order. Finally, we intend to initiate further proceedings in this docket in which we shall analyze further all issues related to CIC use and assignment. II. BACKGROUND A. The Transition to Four Digit Feature Group D Carrier Identification Codes 5. In 1989, Bell Communications Research (Bellcore), the NANP administrator for administering and assigning CICs, informed the Chief of the Common Carrier Bureau (Bureau) of the projected assignment date of the last unassigned three digit CICs. Thus, in 1989, the industry was made aware of the scarcity of CICs and that three digit CICs would soon need to be replaced by four digit CICs. The Industry Carriers Compatibility Forum (ICCF) had, in 1988, begun to develop an expansion plan, the second part of which, originally scheduled to occur in the third quarter of 1993, contemplated expansion of three digit Feature Group D CICs to four digits and eventual elimination of the 10XXX CAC format. The industry agreed that a transition was needed for two purposes, although it was unable to agree on the length of a transition during which customers could dial either five or seven digit CACs. First, the industry agreed that a transition would give carriers and equipment owners (such as PBX owners) time to make the necessary changes in their networks and support systems capable of accepting four digit Feature Group D CICs for call routing. The industry acknowledged that such changes could not occur instantaneously within the public switched network because changes would need to be made switch-by- switch. Second, the transition would give callers time to become accustomed to the new dialing pattern. This way of meeting the needs of carriers, equipment owners and callers to adjust to this numbering change would be consistent with the way other numbering changes have been introduced (e.g., area code changes). 6. In the third quarter of 1994, the assignment of all available three digit Feature Group D CICs appeared imminent, and at that time, Bellcore began assigning four digit Feature Group D CICs. By March 31, 1995, all available three digit Feature Group D CICs had been assigned. On April 1, 1995, therefore, the transition commenced, during which either three or four digit Feature Group D CICs may be used, and callers may use either the five digit (10XXX) or seven digit (101XXXX) CAC format to reach their chosen IXC. 7. For technical reasons, the permissive dialing period can last only as long as the 2,000 four digit CICs available for assignment during the transition. Because Bellcore realized that a transition, during which both three digit and four digit Feature Group D CICs would be in use, would be necessary, it refrained from issuing three digit CICs with either a "5" or a "6" as the first digit (CICs in the 5XX and 6XX range). Bellcore anticipated that in order to introduce four digit CICs while three digit CICs would still be in use, the four digit CICs would need to begin with a number different than the first number of any three digit CIC. Because it had not assigned any three digit CICs beginning with a "5" or a "6," Bellcore was able to assign four digit CICs beginning with these numbers during the transition (CICs in the 5XXX and 6XXX range). Bellcore was compelled to determine that these would be the only four digit CICs assigned during the transition. Assigning only this limited number of four digit CICs during the transition is necessary to avoid a code conflict in which calls would be misrouted. Some switches are programmed only to receive three digit CICs, and therefore, only to accept the first three digits received. If three digit and four digit CICs beginning with the same number were transmitted to such switches, calls made using four digit CICs would be misrouted because the last digit would not be translated. During the transition, if a switch programmed only to accept three digit CICs receives a four digit CIC beginning with a "5," the switch will reject the number as a misdial because, due to Bellcore's decision not to assign three digit CICs in the 5XX and 6XX range, the switch is not programmed to accept such a code. When the transition ends, only four digit CICs will be used and all CACs will be seven digits. Also, at that time, more CICs will be available for assignment, because four digit Feature Group D CICs outside the 5XXX and 6XXX range may be assigned. 8. Conservation measures also have been, and continue to be, used to manage CIC availability. In late February 1995, Bellcore informed the Bureau of an unusual and rapid increase in the demand for Feature Group D CICs, and sought Bureau assistance to slow CIC consumption. In March 1995, Bellcore again expressed concern about the rapidly growing demand for four digit CICs. Such demand, according to Bellcore, could force a significantly shortened transition. Bellcore suggested that the Commission alleviate the pressure by limiting assignment of new Feature Group D CICs to one per entity. On March 17, 1995, the Bureau directed Bellcore to limit CIC assignments to one three or four digit Feature Group D CIC per applicant until such time as the Bureau could conduct a full investigation to identify the reasons for the precipitous increase in CIC demand. 9. On September 26, 1995, the Bureau modified the conservation plan to permit a carrier to apply to Bellcore for one additional four digit CIC that it could use in the presubscription process in any state that mandates intraLATA presubscription. Subsequently, the NANP administrator responded, asking: (1) for clarification of the Bureau's modification; and (2) that the Bureau revisit the limit on CIC assignments as soon as the extraordinary demand for CICs ends. The Bureau, in a letter dated October 23, 1995, emphasized that Bellcore should assign only four digit CICs, drawn from the 5XXX to 6XXX range. The Bureau noted that this policy would remain in effect until it commences a future rulemaking to address certain CIC issues and that "eliminating the limits on the number of CIC codes an entity can receive appears premature at this time." In reaching this conclusion, the Bureau noted the current lack of "safeguards or rules to protect against entities making extraordinary demands on the range of four digit CICs with the first digit "5" or "6" and on the few remaining three digit CICs." 10. Carriers, equipment owners, callers, and equipment manufacturers are affected by the expansion of CICs from three to four digits and CACs from five to seven digits. In order to prepare themselves for CIC expansion, equipment owners and carriers must reprogram switch software, and may, in addition need to upgrade switch hardware. Reprogramming switch software refers to the process by which software is modified to recognize four digit CICs and seven digit CACs. Upgrading switch hardware refers to the process by which hardware is either replaced by or expanded with increased memory to contain additional digits. Where upgrading is necessary, it must occur concurrently with reprogramming. In addition, carriers must educate callers about the need to dial seven digit CACs, and callers must be prepared to do so. Equipment manufacturers must develop and provide software and hardware to equipment owners and carriers to enable them to reprogram switch software and hardware as described above. In addition equipment manufacturers must educate their customers about the necessary changes. III. DISCUSSION A. Jurisdiction 11. The Communications Act gives the Commission exclusive jurisdiction over "those portions of the North American Numbering Plan that pertain to the United States." The NANP, in addition to conventional ten-digit telephone numbers, includes other types of numbering resources, including carrier access codes (e.g., 10XXX). CICs, which are embedded in a carrier access code, are an integral part of telephone call routing and are essential to the "efficient delivery of interstate and international telecommunications services." The Commission, therefore, under the Act, has exclusive jurisdiction over the assignment and use of these codes in the United States. B. Length of the Transition 1. Background 12. In the NPRM, the Commission noted the need for a permissive dialing period in which subscribers can use both three and four digit Feature Group D CICs. The Commission stated that the industry has been unable to agree on the length of such a period. The NANP administrator, facing a lack of industry consensus on the issue, chose an eighteen-month transition, to begin in the third quarter of 1993 and to end in the second quarter of 1995. Tentatively concluding that a longer period would reduce, or even eliminate hardships on payphone providers, manufacturers, and PBX users, the Commission, in the NPRM, proposed a six-year transition. We also noted that a longer permissive dialing period could extend the life of existing equipment that may otherwise need to be retired. 13. In the NPRM, the Commission also tentatively concluded that the plan to expand Feature Group D CICs from three to four digits is reasonable. The Commission stated that the expansion plan "appropriately reflects our policy that access should be provided to all purchasers [customers] without discrimination." The Commission noted that expansion of the current supply of Feature Group D CICs would make access to the public switched telephone network easier for long distance carriers and subscribers alike and thus would support "our nation's continued economic growth." Only one commenter, VarTec, a long distance resale carrier, challenged the Commission's tentative conclusion that the expansion plan is reasonable. VarTec suggests that the Commission require reclamation of unused three digit CICs. Sprint, although it did not oppose the NPRM's tentative conclusion on the expansion plan, also suggests that the Commission require CIC reclamation. 14. In the April 30, 1996 Public Notice in this docket, we requested further comment to refresh the record. Seeking further comment specifically on the length of the transition, we directed commenters only to update factual information in light of the following significant events that have occurred since the record closed: (1) the assignment of exclusively four digit Feature Group D CICs, which triggered the start of the transition; (2) an unexpected increase in the demand for CICs, due to the industry's new uses for codes; (3) an even greater demand for CICs accompanying the anticipated increase in carriers entering the market as a result of the 1996 Act amendments to the 1934 Act; and (4) local exchange carriers' dialing parity obligations imposed by Section 251 of the Act. 2. Comments 15. Commenters favor different periods for the transition for Feature Group D CIC expansion. Suggesting that such a period will lessen the burdens of the transition to the new format, many commenters support the six-year period proposed by the Commission. Commenters supporting that period, as well as periods of greater duration, cite the need for equipment owners and carriers to modify equipment, for carriers to avoid customer confusion, for equipment manufacturers to incorporate seven-digit CAC capability in their equipment, for callers to become accustomed to dialing extra digits, for smaller companies to, for example, complete expensive software modifications, and for independent public payphone providers to program, their payphones. Some parties suggest that the transition should be extended as long as twelve years. 16. AT&T estimates that the cost to Lucent's PBX customers to purchase and implement software and hardware modifications would range up to $15,000 for each PBX, depending on the type and age of the equipment. According to AT&T, it would take six years or more for PBXs to be upgraded or replaced so that they recognize expanded CICs. 17. VarTec, advocating twelve years as a minimum transition, argues that a longer period may lessen the possibility that customers will no longer use CACS to access IXCs, and is necessary for smaller IXCs who will require a longer consumer education period. VarTec also suggests that IXCs currently using CICs should be "grandfathered" from expansion, and that the new seven digit CACs, rather than replacing the five digit CACs, should "supplant" them. Opposing grandfathering, GTE asserts that it would "trample any notion of dialing parity." GTE also asserts that it is not technically possible to establish a "two-tier" CIC system. GTE states that transition must end when the last of the four digit Feature Group D CICs in the 5XXX and 6XXX range has been assigned. 18. GVNW Inc./Management (GVNW) supports a six-year exemption from conversion obligations for smaller, rural telephone companies, in addition to the proposed six-year permissive dialing period. GVNW claims that the switches of smaller LECs generally do not have the most recent software upgrades, which are very costly and at times exceed the cost of switch replacement. The Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), which represents more than 440 independently owned and operated telephone companies serving rural areas, supports a six-year transition to ease the economic burdens of switch conversion. OPASTCO suggests that the Commission, as it does with equal access requirements, refrain from requiring small companies to modify their switches until a "bona fide" request is submitted, and allow those companies at least eighteen months to comply after receiving such a request. 19. The Alarm Industry Communications Committee (AICC) argues that the six- year period proposed by the Commission is necessary because certain alarm companies will need to engage in significant alarm panel reprogramming in order to implement the change from three to four digit CICs, and five to seven digit CACs. AICC states that the majority of alarm panels employs an alerting device that seizes a telephone line serving protected premises and an autodialer that places a pre-programmed call to the central station over the public switched telephone network. According to AICC, alarm panels must be individually reprogrammed, a process that requires an alarm company to arrange appointments with each affected subscriber so that alarm technicians can manually change the dialing pattern in each alarm panel installed within the protected premises. AICC states that reprogramming must be completed in a timely fashion to avoid endangering life, safety, and property. 20. Parties supporting a transition shorter than that proposed by the Commission cite: (1) the likelihood of assignment of all the four digit Feature Group D CICs in the 5XXX and 6XXX range in less than six years; (2) the unfair competitive advantages for companies that customers can reach by dialing five digit CACs instead of seven digit CACs; and (3) the inability of local exchange carriers to satisfy the dialing parity requirement in Section 251(b)(3) as long as differences in CIC and CAC lengths put carriers on unequal footing with each other. 21. Parties arguing for a shorter transition propose that the transition end on dates that range from December 31, 1996, to March 31, 1998. U S WEST believes that a six- month phase-out would allow adequate time for customer education. US WEST maintains that most networks are already equipped to accept four digit CICs and that modification of older equipment and installation of new equipment has already been undertaken, thus necessitating only translation changes for trunk groups and switching equipment. GTE, disagreeing with AT&T's contention that a six-year transition is necessary because the conversion to four digit CICs will require "'an extensive modification effort at significant cost,'" argues that AT&T has neither provided facts to support its cost estimates nor given any indication as to the company's efforts over the last two years. 22. Opponents of a lengthy transition argue that it would be costly (particularly regarding customer education) and would "prolong the lack of dialing parity between embedded Feature Group D providers and new service providers." US WEST argues that a six-year transition would award incumbent IXCs an unfair advantage, to the detriment of both new entrants and consumers. US WEST bases its argument both on the dialing parity requirement of Section 251(b)(3) and on its view that continued use of both formats violates the Commission's statement in the Ameritech Order that "successful administration of the NANP will not unduly favor or disadvantage any particular industry segment or group of consumers." Further, US WEST suggests that the Commission's proposal for a six-year transition violates the prohibition against unreasonable discrimination in Section 201(b) of the 1934 Act. Bell Atlantic disagrees with U S WEST's assertion that the existence of access codes of differing lengths during the transition may violate the dialing parity requirements of the Act. Bell Atlantic asserts that the Act's definition of dialing parity does not address the issue of differing lengths of access codes but rather the need to dial an access code in the first instance. Both NYNEX and SBC, however, contend that placing providers of telephone service "on equal footing with respect to CAC dialing" is necessary for full dialing parity. 23. Some commenters support the shorter 18-month period proposed by Bellcore. Bell Atlantic contends that there is no need for a transition longer than two years, particularly because the industry's expansion plan has already been known for six years. 24. AirTouch suggests a maximum period of three years because of the need for competing carriers to achieve parity and for equipment providers to upgrade PBX's to accommodate expansion. Arguing that it provides sufficient time for carriers to implement new codes in the network and for customer education, Ameritech also supports a three-year transition. Ameritech argues that simultaneous use of both three digit and four digit CICs is confusing to customers and places carriers and customers required to use four digit CICs at a disadvantage. Ameritech states that during a transition, LECs must maintain two translation tables in all switches -- one for the four digit CICs and one for the three digit CICs -- which also creates added administrative burdens. 25. Several commenters suggest alternatives to the Commission's prescribing the transition's duration. Sprint, while agreeing with the Commission that a multi-year transition is needed, suggests that it is premature to set a specific date for its end because the amount of customer education and equipment reprogramming that will be needed is unknown. Instead, Sprint suggests that the Industry Numbering Committee (INC) should conduct an end- user survey "regarding the subscribers' perceptions about the meaning and length of dialing arrangements. Ameritech suggests that the NANP administrator monitor CIC demand, and then, at an agreed upon time, advise the industry to implement the transition. In the event the Commission decides to choose a specific period, Ameritech suggests that the Commission direct the industry to develop a "usage monitoring plan" that will ensure that the transition occur before the last available CICs in the 5XXX and 6XXX range are assigned. While MCI does not propose a length for the transition, it acknowledges the limited supply of CICs in the 5XXX and 6XXX ranges, and suggests that the Commission "discourag[e] the use of CICs for purposes other than those intended in the industry guidelines." MCI cautions that the industry should not "treat[] CICs as a miscellaneous numbering resource, available for any purpose." 26. While the Public Notice did not seek comment on the current conservation plan's limitation on CIC assignments to one per applicant, several commenters suggest that the conservation plan end, either immediately or soon. BellSouth, for example, cites the need for additional CICs for legitimate business use. GTE asserts that companies possessing multiple CICs have a competitive advantage over new providers that are limited to one CIC assignment. Pacific contends that a limit on CIC assignments could impede service deployment wherever such service depends on a distinct CIC. AT&T contends that the Commission should not be concerned that the need to use CICs to identify local service providers will speed the consumption of CICs if the conservation plan were ended because the INC recently reached agreement not to assign CICs for identification of local service providers. AT&T contends that, to the extent that a numeric code is needed to identify local service providers (as it may be for implementation of local number portability), that code will come from a separate resource. No other parties filing comments in response to the Public Notice addressed this issue. AT&T, relying on assignment data beginning on April 1, 1996, argues that if the conservation plan is discontinued, even with a six-year transition as initially proposed by the Commission, available CICs would remain for seven additional years. Bellcore, in its comments to the NPRM, recommends that the "current conservation limit of one FGD CIC assignment per entity be retained until the industry has developed these [conservation] measures." 3. Decision 27. We determine that the transition for the conversion from three digit Feature Group D CICs to four digit Feature Group D CICs will end on January 1, 1998. Because of changes occurring since the record in this docket closed in 1994, we conclude that the transition should end as soon as practicable. We are confident that, as discussed below, the use of only four digit Feature Group D CICs will serve the pro-competitive goals of the Act, as well as the specific objectives of Sections 251(e) and 251(b)(3). A shorter transition will allow us to end sooner the conservation plan which, as modified below, limits to two the number of CIC assignments per eligible applicant and removes the condition that second CICs be used only in connection with providing intraLATA toll services. As discussed below, we conclude that extending the transition until January 1, 1998, gives carriers and equipment owners a reasonable period to complete upgrading their equipment and educating their customers about the change from three digit Feature Group D CICs to four digit Feature Group D CICs. 28. We also affirm our tentative conclusion that the industry's plan to expand three digit Feature Group D CICs to four digit Feature Group D CICs is reasonable. As noted above, the expansion plan has already begun and four digit CICs are now being issued. As the total number of Feature Group D CIC assignments shows, the demand for these CICs has been increasing since we issued the NPRM in 1994. The number of CICs available for assignment must increase to accommodate this demand. Using codes of increased length is the only reasonable means of making more CICs available. We recognize that if the transition from three to four digit CICs is not well managed, the expansion may result, as VarTec suggests, in increased customer confusion, dialing time, dialing errors, and significant expense. We conclude, however, that VarTec's suggestion that we reclaim three digit Feature Group D CICs as an alternative to replacing them with four digit Feature Group D CICs is not a plausible long-term solution. Although reclamation of three digit CICs may provide some short-term relief, the total number of available three digit Feature Group D CICs would continue to be less than one thousand. 29. Statutory Considerations. Section 251(e) of the Act, in addition to granting the Commission jurisdiction over those portions of the NANP that pertain to the United States, also requires the Commission to ensure that numbers are "available on an equitable basis." Our modifications to the conservation plan and our determination to end the transition as soon as practicable, thus allowing for a full conversion to four digit Feature Group D CICs, are consistent with that statutory obligation. Our determinations not only respond to possible hardships, such as costs and timing of conversion to four digit CIC capability, on small business entities but also will promote the competitive objectives of the Act. 30. Parties seeking an end to the conservation plan have argued that the plan disadvantages those entities that were unable to secure multiple CICs prior to the plan's inception. Because the CIC conservation plan limits entities to no more than two CICs, the conservation plan presents the possibility that some entities may be unable to use CICs for as many purposes as those entities who were assigned multiple CICs prior to inception of the conservation plan. New entrants, in particular, may be unable to perform various functions in the same manner as carriers who use multiple CICs for the same services. Nonetheless, the conservation plan, as modified, is necessary as long as the transition continues because abolishing the conservation plan during this period would likely cause rapid depletion of unassigned four digit CICs in the 5XXX and 6XXX range and necessitate a flash-cut conversion to four digit codes. A sudden shift to four digit codes could be particularly detrimental to smaller carriers and equipment owners who could be required to modify or replace their systems to support four digit CICs. A flash-cut conversion would give no warning to those members of the industry who have yet to prepare their equipment, switches and networks for the conversion and no warning to callers that they may no longer dial five digit CACs, but instead must dial seven digit CACs. For these reasons, we find any disadvantages resulting from continuation of the conservation plan to be less burdensome than the harm of a flash-cut conversion. Although AT&T states that the INC recently reached agreement not to assign CICs to identify local service providers, the decision not to use CICs for this purpose would not necessarily slow CIC consumption enough to enable us to end the conservation plan earlier than January 1, 1998. Likewise, AT&T does not provide adequate support for its argument in its comments to the Public Notice that if the conservation plan were discontinued, available CICs would remain for seven additional years. AT&T, in making this argument, relies on Bellcore assignment data from April 1, 1996, at which time the conservation plan had been in place for over a year. Neither does AT&T's reliance in its comments to the NPRM on Bellcore's statement that the supply of CICs would last 11 years provide that support. Comments in response to the NPRM were filed in 1994, and although they were filed at a time in which there was no conservation plan in place, they were also filed prior to enactment of the 1996 Act amendments to the 1934 Act. Therefore, those predictions did not consider the possibility of an increase in new entrants into the telecommunications services market as a result of those amendments to the Act. 31. We modify the conservation plan as follows: Entities with only one Feature Group D CIC assignment (whether it is a three digit CIC or a four digit CIC), and who are currently ineligible to receive another CIC, may apply for and receive a second CIC; An entity that has no CICs upon the effective date of this Second Report and Order may apply for and receive two four digit Feature Group D CICs; Each entity that had only one CIC, and received an additional CIC under the intraLATA presubscription exception to the conservation plan, may decide itself how it will use its second CIC; Entities with two or more CICs (whether they are three digits or four digits), may not receive any additional CICs; and Bellcore may assign only four digit Feature Group D CICs. We modify the conservation plan to lessen the disadvantage the plan imposes on competing providers, which may include small business entities. The ability to have access to two CICs should be of particular benefit to smaller entities currently entering the telecommunications services market in their effort to compete with established carriers. The Commission, through the NANP administrator, will closely monitor CIC consumption under the modified conservation plan. If it appears that the supply of CICs in the 5XXX and 6XXX range is in jeopardy of being depleted before January 1, 1998, the Commission may impose new conservation measures. We direct the Common Carrier Bureau to modify the conservation plan as needed to respond to changes in CIC consumption under its delegated authority. 32. US WEST contends that the dialing disparity between three and four digit CICs, which persists during the transition, violates the prohibition in the Act against unreasonable discrimination. We note that, during any transition, because customers of some carriers may need to dial seven digit CACs while those of other carriers may dial five digit CACs, there will be disparity. We find, however, that the transition does not violate Section 201(b)'s prohibition against unreasonable practices or Section 202(a)'s prohibition against unreasonable discrimination. The transition is reasonable and necessary to avoid a flash-cut conversion to four digit CICs which would be contrary to the public interest. We also conclude, however, that we should end the transition as soon as practicable to lessen any negative effects of the disparity that exists during the transition. 33. Our decisions to modify the conservation plan and end the transition as soon as practicable also are consistent with the duty imposed on all LECs in Section 251(b)(3) to "permit all . . . [competing providers of telephone exchange service and telephone toll service] to have nondiscriminatory access to telephone numbers." Our actions to modify the conservation plan and end the transition as soon as practicable are intended to lessen any hardships that might result from the conservation plan's limiting access to CICs and to the services that access to multiple CICs makes possible. 34. Several parties argue that the existence of CICs and CACs of varying lengths during the transition violates the dialing parity requirement in the Act, as amended. Section 251(b)(3) requires that all local exchange carriers "provide dialing parity to competing providers of telephone exchange service and telephone toll service. . . ." The Act defines "dialing parity" to mean that: a person that is not an affiliate of a local exchange carrier is able to provide telecommunications services in such a manner that customers have the ability to route automatically, without the use of any access code, their telecommunications to the telecommunications services provider of the customer's designation from among 2 or more telecommunications services providers (including such local exchange carrier). Thus, the dialing parity requirement of Section 251(b)(3) extends only to calls made on a presubscribed basis; it does not govern the number of digits subscribers must dial to reach carriers to which they are not presubscribed (i.e., CAC dialing). Therefore, although CICs are used for access, the existence of CICs with different numbers of digits during the transition does not violate the Act's dialing parity requirement. We agree with Bell Atlantic that the dialing parity provision of the Act "simply does not reach the issue of access codes of different lengths." Notwithstanding this finding, and although in paragraph 31, supra, we find that the transition does not violate Section 201(b)'s prohibition against unreasonable practices or Section 202(a)'s prohibition against unreasonable discrimination, we reserve the right to address discrimination under those sections of the Act under other circumstances. 35. Other Considerations. We find that continuing the transition until January 1, 1998, properly balances the competing interests of callers, carriers and equipment owners. We balance the hardships of a short transition, which may burden some carriers (perhaps smaller, rural carriers) and some equipment owners, by requiring them to reprogram and upgrade equipment more quickly than their business plans might have projected, and callers by requiring them to learn new, longer carrier access codes more quickly, against the hardships a long transition may impose upon new entrants. We also have considered the burdens on such entities as providers of payphones, alarm companies, and small, rural carriers. We find that our decision to keep the transition in place until January 1, 1998, imposes any burdens that may occur equitably among all of the affected parties. 36. We are not persuaded that carriers, PBX equipment owners, payphone providers, alarm companies, and small, rural carriers need a transition beyond January 1, 1998. Based on the information discussed below, we are confident not only these entities, both large and small, have had reasonable notice about the need to upgrade their systems to accept four digit CICs, but also that a transition ending on January 1, 1998, provides ample time to complete the upgrades and educate callers about the change. 37. Since 1989, the industry should have been aware that it would need to replace three digit CICs with four digit CICs and five digit CACs with seven digit CACs. Since then, the industry also should have been aware that it needed to develop the software and hardware necessary to support four digit CICs and seven digit CACs in accordance with Bellcore's expansion plan, to upgrade or replace equipment, and to upgrade networks, either through software or hardware changes. By January 1, 1998, the period during which carriers and equipment owners should have been aware that three digit CICs would need to be replaced will have been over eight years. Furthermore, the transition itself will have lasted almost three years. In the NPRM, the Commission stated that "the stock of three digit codes available for assignment will likely be exhausted within a year or so . . . [and the industry's change from three to four digit Feature Group D CICs] is planned for the first half of 1995. Therefore, since May 1994, when the Commission's NPRM was published in the Federal Register, the industry was on notice that changes to accommodate expansion to four digit Feature Group D CICs would likely begin to be necessary in the following year. Consistent with the Commission's statement in the NPRM, the transition began on April 1, 1995, the day after which the last three digit Feature Group D CIC was assigned, and the day on which Bellcore began to assign exclusively four digit codes. A permissive dialing period commenced during which callers could dial either five or seven digit CACs to reach their preferred carrier. PBXs that cannot recognize four digit CICs have been unable since April 1, 1995, to direct calls to carriers who have been assigned only four digit CICs. We believe, therefore, that the incentive to upgrade older PBX equipment is strong because it will enable owners of older PBXs to benefit from the services of carriers that have entered the market since April 1, 1995. 38. We have attempted to assess when equipment manufacturers (network switch manufacturers and PBX manufacturers) made available the hardware and software necessary to enable PBX owners to reprogram software and upgrade hardware and to enable carriers to do the same with network switches. 39. Regarding network switches, in order to make this assessment, Commission staff requested and received information from two manufacturers, Lucent Technologies (Lucent) and Northern Telecom (Nortel), who cumulatively represent approximately 91 percent of the total United States market for local network switches, as measured by sales. Lucent listed five network switch product units capable of processing four digit CICs that it began to offer to its customers between November 1993 and March 1994. Nortel noted that it began making available to its customers network switches that had the capability of processing four digit CICs during the first quarter of 1994. Although Lucent did not disclose how many of its local network switch customers have purchased the newer products, Nortel states that all of its customers requiring equal access software also have the four digit CIC capability. 40. Regarding PBX systems, in addition to Lucent and Nortel we received information from Mitel, NEC, and Hitachi Telecom. These five companies, cumulatively, represent an average of approximately 67.4 percent of the total United States market for PBX equipment between 1991 and 1995, as measured by sales. The information we received indicates that an average of 82 percent of PBX customers of equipment manufacturers representing this 67.4 percent of the PBX market currently has systems with four digit CIC capability. A large number of the PBX customers in the 18 percent that does not yet have this capability would need only software changes to bring their systems into compliance, fewer would need both hardware and software changes, and a very small percent would need to completely replace their systems. It is noteworthy that manufacturers representing smaller portions of the PBX market (1) began selling systems with inherent four digit CIC capability much earlier than those manufacturers representing larger potions of the market; and (2) currently have higher percentages of their PBX customers with four digit CIC capable systems. From our analysis of the responses we received to requests about costs software and hardware modifications, both in terms of system "downtime" and dollars, it appears that costs may vary greatly depending on PBX system types. 41. In an effort to include data from smaller entities, Commission staff also requested and received information from the MultiMedia Telecommunications Association (MMTA), a trade association of approximately 500 members, 120 of which are manufacturers and the remainder of which include suppliers, distributors and users of business telecommunications equipment. MMTA's membership includes small business entities. Hitachi, an MMTA member, filed its information through MMTA. We also received information from Teleco Inc. (Teleco), a manufacturer of voice processing equipment and distributor of PBXs, and Comdial Corporation (Comdial), a manufacturer of telephone systems, including PBXs and key systems, through MMTA. Comdial indicated that its newer digital telephone systems, which include PBXs, are software controlled and would accommodate the conversion to four digit CICs through system programming with no significant cost to customers. Comdial also noted that the conversion would have "no effect" on the ability of people to dial calls from any Comdial telephone system. In contrast, Teleco Inc. estimated that 80 percent of its telephone systems would require a hardware upgrade to be able to process four digit CICs. MMTA and Comdial also reported that many older PBX systems may need to be upgraded with a replacement to process the expanded CIC format. 42. The information we received indicates also that manufacturers made available much of the software with four digit CIC capability (both modification software to enhance older systems and base software in systems with inherent four digit CIC capability) as part of a package including not only this capability but also the capability to recognize the new, interchangeable numbering plan areas (INPAs). The information we received also indicates that manufacturers engaged in extensive education/marketing campaigns as early as 1993 in which they sought to educate both PBX customers and carriers about the upcoming expansion to four digit CICs, area codes changes and other NANP related changes. The campaigns included for example, mailings to customer base, participation in user group meetings, briefings, seminars, industry fora, and Bellcore Education seminars. 43. To reach the conclusions presented here, we rely on the information received in response to all of our requests. Although some parties express concerns about older systems, it appears that the hardware and software necessary for local network switches and PBXs to process four digit CICs have been on the market for at least two to three years, and in some cases, much longer. Given the availability of this switching equipment, and the high percentage of PBX customers that currently is equipped to implement expansion to four digit CICs, we find that the additional time remaining until January 1, 1998, is sufficient to allow carriers and PBX owners to complete necessary reprogramming and upgrades. The status of conversion and education efforts of equipment manufacturers also show that sufficient notice of the change has been given to carriers and PBX owners. 44. We also find that the time remaining until January 1, 1998, is sufficient to allow callers to become accustomed to dialing the extra digits. Callers have already begun to use seven digit CACs to reach carriers assigned four digit CICs. Extending the transition until the end of 1997 should give ample time for carriers to educate callers. Callers subscribing to new carriers who might have only four digit CICs should already be aware of the need to dial seven digit CACs from any phone, whether a residential phone or pay telephone. As with area code changes, it is in the carriers' best interest to emphasize customer education, because callers who know how to reach the carriers' services are more likely to use them. 45. We believe that the supply of unassigned CICs remaining in the 5XXX and 6XXX pool will not outlast a longer transition, because CIC consumption is likely to increase as new carriers enter the telecommunications services market, particularly given that the services authorized for A&B block PCS licensees are expected to become operational during the spring and summer of 1997. We estimate that the remaining unassigned CICs in the 5XXX and 6XXX range should be sufficient to meet carrier demand until January 1, 1998, but perhaps not significantly beyond that date. 46. Some commenters request that we grandfather the continued use of three digit CICs already in use when the transition ends. Grandfathering would exempt these CICs from the conversion to four digits. We must deny such requests because grandfathering three digit Feature Group D CICs would make it impossible to assign four digit Feature Group D CICs other than those in the 5XXX and 6XXX range. For the same reason, we deny OPASTCO's request that the Commission refrain from requiring small companies to modify their switches until a "bona fide" request is submitted, and allow those companies at least eighteen months to comply after receiving such a request. 47. We require the NANP administrator to notify all CIC assignees of our decision in this Second Report and Order. We find that educating consumers about the change from three digit Feature Group D CICs to four digit Feature Group D CICs should be a joint responsibility of the Commission and the industry. Based on our experience with interchangeable numbering area code changes, which also require equipment upgrades and caller education, we conclude that the remaining time of the transition is reasonable to fulfill this responsibility. C. Petition for Rulemaking of VarTec Telecom., Inc. 48. VarTec filed a petition for rulemaking on May 11, 1995. The petition reiterates VarTec's request in its comments to the NPRM that the Commission grandfather existing three digit CICs. To the extent that it restates that request, we dismiss VarTec's petition, without prejudice, as repetitive under Section 1.401(e) of the Commission's rules. To the extent, however, that the petition raises issues related to the NPRM's regulatory flexibility certification, even though VarTec had the opportunity to address regulatory flexibility concerns in its comments to the NPRM, we will treat the petition as an ex parte communication and address the concerns it raises. We will do so because the requirements governing agency treatment of regulatory flexibility issues have become more stringent while this docket has been open. 49. After carefully reviewing the portion of VarTec's petition contesting the certification in the NPRM that the proposed rules would not have a significant economic impact on a substantial number of small entities, we find that VarTec's opposition is equivalent to, and restates, the request for grandfathering appearing in other parts of its petition and in its comments to the NPRM. In addition, this Second Report and Order, which sets a date for the end of the transition, resolves VarTec's uncertainty regarding when the transition would end. D. Conclusion 50. The Commission, on several occasions, has characterized telephone numbers as a national public resource. CICs facilitate competition by enabling entities to gain access to the telecommunications network and to services and technologies that support economic growth. It is in the public interest that numbering resources not only meet the needs of incumbents, but also accommodate new entrants in the market. Indeed, the 1934 Act, as amended, requires this. We have attempted, therefore, wherever possible, to ensure that new entrants have access to numbering resources on the same basis as incumbents. 51. We conclude that ending the transition on January 1, 1998, will allow equipment upgrades and customer education to occur and also allow us to end the conservation plan as quickly as possible. E. Procedural Matters 1. Final Regulatory Flexibility Analysis 52. The Commission's Final Regulatory Flexibility Analysis appears in Appendix C. F. Ordering Clauses 53. Accordingly, IT IS ORDERED, pursuant to Sections 1, 4(i),201-205, and 251(e)(1) of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 201-205, and 251(e)(1), that the Second Report and Order is hereby ADOPTED. 54. IT IS FURTHER ORDERED, that Bellcore, as the NANP administrator must notify all CIC assignees of the Commission's decision in this Second Report and Order, consistent with the terms described herein. 55. IT IS FURTHER ORDERED, that Bellcore, as the NANP administrator must assign CICs in conformity with the Commission's modification to the conservation plan in this Second Report and Order. 56. IT IS FURTHER ORDERED, that the PETITION FOR RULEMAKING filed by VarTec Telecom, Inc. is hereby DISMISSED IN PART and GRANTED IN PART to the extent contained herein. 57. IT IS FURTHER ORDERED, that the Commission directs the Common Carrier Bureau to take further actions modifying the conservation plan in response to changes in CIC consumption under its delegated authority. 58. IT IS FURTHER ORDERED, that this Second Report and Order is effective upon 30 days after publication in the Federal Register. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary APPENDIX A: LIST OF PARTIES: APRIL 4, 1994 NPRM Parties Filing Comments (June 7, 1994) Ad Hoc Telecommunications Users Committee (Ad Hoc) AirTouch Communications (AirTouch) Alarm Industry Communications Committee (AICC) Alliance for Telecommunications Industry Solutions (ATIS) Allnet Communications Services, Inc. (Allnet) American Mobile Telecommunications Association, Inc. (AMTA) American Personal Communications (APC) American Petroleum Institute (API) American Public Communications Council (APCC) Ameritech Operating Companies (Ameritech) Association for Local Telecommunications Services (ALTS) AT&T Corp (AT&T) Bell Atlantic Bell Communications Research, Inc. (Bellcore) BellSouth Telecommunications, Inc. (BellSouth) Canadian Steering Committee on Numbering (CSCN) Cathay, Hutton & Associates, Inc. (CHA) Cellular Telecommunications Industry Association (CTIA) Cincinnati Bell Telephone Company (CBT) Communications Managers Association (CMA) Competitive Telecommunications Association (CompTel) Dean Brothers Publishing Company (Dean Brothers) GTE Service Corporation (GTE) GVNW Inc./Management (GVNW) McCaw Cellular Communications, Inc. (McCaw) MCI Telecommunications Corporation (MCI) MFS Communications Company, Inc. (MFS) Missouri Public Service Commission (MoPSC) National Association of Regulatory Utility Commissioners (NARUC) National Communications System (NCS) National Exchange Carrier Association, Inc. (NECA) Nextel Communications, Inc. (Nextel) North American Telecommunications Association (NATA) NYNEX Corporation (NYNEX) Organization for the Protection and Advance of Small Telephone Companies (OPASTCO) Pacific Bell and Nevada Bell (Pacific) Personal Communications Industry Association (PCIA) Rock Hill (RHTC), Fort Mill (FMTC) and Lancaster Telephone Companies (LTC) Southwestern Bell Corporation (SBC) Sprint Corporation (Sprint) Stentor Resource Centre Inc. (Stentor) Telaccess APPENDIX A (continued) Parties Filing Comments (June 7, 1994) (continued) Tele-Communications Association (TA) Telco Planning, Inc. (Telco Planning) Telecommunications Resellers Association (TRA) Teleport Communications Group Inc. (TCG) United States Telephone Association (USTA) US WEST, Inc. (US WEST) Vanguard Cellular Systems, Inc. (Vanguard) VarTec Telecom, Inc. (VarTec) Parties Filing Reply Comments (June 30, 1994) Ad Hoc Aeronautical Radio, Inc. (ARINC) ATIS Allnet ALTS Ameritech APCC AT&T Bell Atlantic Comptel CTIA GTE McCaw MCI MFS NATA National Telephone Cooperative Association (NTCA) New York State Department of Public Service (NYDPS) Nextel NYNEX Pacific PCIA SBC Sprint TA TCG Telco Planning Telecommunications Services of Trinidad and Tobago Limited (TSTT) USTA US WEST APPENDIX B: LIST OF PARTIES: APRIL 30, 1996 PUBLIC NOTICE Parties Filing Comments (may 21, 1996) AT&T BellSouth Bell Atlantic Cincinnati Bell GTE MCI NYNEX Pacific Telesis SBC Telco Planning US WEST VarTec Parties Filing Reply Comments (May 28, 1996) AT&T CompTel GTE Pacific Telesis SBC Sprint U S WEST APPENDIX C: FINAL REGULATORY FLEXIBILITY ANALYSIS 1. As required by the Regulatory Flexibility Act (RFA), 5 U.S.C.  601 et seq., the Commission considered regulatory flexibility issues in the Notice of Proposed Rulemaking (NPRM) in this proceeding, and certified that there was no significant economic impact on a substantial number of small entities. The Commission sought written public comments on the proposals in the NPRM. Although there were no comments filed in response to the certification, as discussed below, because of parties' concerns about the effect of our actions on small entities, we have reconsidered our certification in the NPRM and decided to undertake a Final Regulatory Flexibility Analysis (FRFA) in conformity with the RFA, as amended by the SBREFA. A. Need for and Objectives of this Second Report and Order 2. This Second Report and Order addresses issues related to the expansion of Feature Group D carrier identification codes (Feature Group D CICs), and particularly the length of the transition, or permissive dialing period, during which both three and four digit Feature Group D CICs, and five and seven digit CACS, may be used. This Second Report and Order determines that the transition will end January 1, 1998. After that date, only four digit Feature Group D CICs, and seven digit Feature Group D CACS, may be used. The Commission's determinations in this Second Report and Order are consistent with the national telecommunications policy embodied in the 1934 Act, as amended by the Telecommunications Act of 1996, by seeking to promote the pro-competitive, deregulatory markets envisioned by Congress. With respect to the 1996 Act amendments to the 1934 Act, Congress and the Commission have recognized that lowering barriers to entry and promoting competition in the local exchange and long distance marketplace is desirable. Expansion of the number of possible Feature Group D CIC assignments should allow for more new entrants in the telecommunications services market, some of which may be small businesses. The Second Report and Order states that the Commission intends to initiate further proceedings in this docket in which the Commission shall analyze further all issues related to CIC use and assignment. B. Analysis of Significant Issues Raised in Response to the Certification 3. In the NPRM, the Commission certified that the rules it proposed to adopt in this proceeding would not have a significant economic impact on a substantial number of small entities because "while the rules proposed in this proceeding would apply to telecommunications corporations of all sizes that are now assigned telephone numbers or that may in the future seek such assignments, the impact on small business entities served by these corporations and on small telecommunications companies is not likely to be significant." No comments were submitted in response to the certification. In response to the actions proposed in the NPRM, however, parties did express concern about the possible effects of our actions on small entities. Also, in a Petition for Rulemaking, VarTec contests the Commission's certification and requests that the Commission publish a regulatory flexibility analysis. Even though VarTec had the opportunity to address regulatory flexibility concerns in its comments to the NPRM, we will treat the petition as an ex parte communication and address these concerns. We will do so because the requirements governing agency treatment of regulatory flexibility issues have become more stringent while this docket has been open. We find that VarTec's regulatory flexibility concerns expressed in its petition merely repeat its request for grandfathering in its comments and other portions of the petition. However, because of parties' concerns about the effect of our actions on small entities, we have, on our own motion, reconsidered our certification in the NPRM and decided to undertake a FRFA. 4. In addition, we also consider and implement alternatives in this Second Report and Order that seek to benefit competing providers of telephone exchange service and telephone toll service which may include small business entities. Our determination to modify the conservation plan and end the transition as soon as practicable not only responds to possible hardships, such as costs and timing of conversion to four digit CIC capability, on small business entities but also will promote the competitive objectives of the Act, as amended. For example, in the Second Report and Order, we modify the CIC conservation plan to allow each entity to have two CIC assignments. The ability to have access to two CICs should be of particular benefit to smaller entities currently entering the telecommunications services market in their effort to compete with established carriers. We also determine that the transition must end as soon as practicable in order, among other things, to enable us to end the conservation plan, which limits the number of CIC assignments per entity, thus posing a particular disadvantage to new entrants, as soon as possible. 5. VarTec, in its Petition, reiterates its request in its comments that IXCs currently using CICs should be "grandfathered" from expansion, suggesting that the new seven digit CACs, rather than replacing the five digit CACs, should "supplant" them. VarTec asks the Commission, if it is unable to implement grandfathering, to at least set a specific date for the termination of the permissive dialing period. VarTec offers an extensive overview of its experiences with different LECs when inquiring as to when IXCs would be required by the LECs' system to use four digit Feature Group D CICs. In addition, VarTec explains how a specific compliance date can help smaller IXCs plan for the change to four digit Feature Group D CICs. 6. In the Second Report and Order we deny requests that the Commission grandfather the continued use of three digit CICs already in use when the transition ends. Grandfathering would exempt these CICs from the conversion to four digits. The Second Report and Order denies such requests because grandfathering three digit Feature Group D CICs would make it impossible to assign four digit Feature Group D CICs other than those in the 5XXX and 6XXX range. For the same reason, the Second Report and Order denies OPASTCO's request that the Commission refrain from requiring small companies to modify their switches until a "bona fide" request is submitted, and allow those companies at least eighteen months to comply after receiving such a request. 7. As we stated in the Second Report and Order, after carefully reviewing the portion of VarTec's petition in which it contested the Commission's certification in the NPRM that the proposed rules would not have a significant economic impact on a substantial number of small entities, we find that VarTec's opposition is equivalent to, and restates, the request for grandfathering appearing in other parts of its petition and in its comments to the NPRM. We note that this Second Report and Order, which sets a date for the end of the transition, resolves VarTec's uncertainty regarding when the transition would end. 8. VarTec also requests that the Commission "establish national network criteria policies" pursuant to guidelines ensuring that end users are able to dial both three and four digit CICs during the permissive dialing period, setting a date by which LECs providing Feature Group D access services must have network facilities upgraded for both three and four digit CICs during the permissive dialing period, and setting a date by which IXCs must convert trunk group configurations to the four digit format. This Second Report and Order addresses each of these concerns. 9. Although no comments to the NPRM addressed the Commission's regulatory flexibility certification, we have reviewed the general comments for issues that might impact small businesses. In addition to VarTec, several other small entities filed comments to the NPRM. For example, GVNW Inc./Management (GVNW) GVNW Inc./Management (GVNW), supporting a six-year exemption from conversion obligations for smaller, rural telephone companies, in addition to the proposed six year permissive dialing period, contends that such an exemption is appropriate for their transition to be cost-effective. GVNW claims that the switches of smaller LECs generally do not have the most recent software upgrades because these companies are not always aware of the current changes because "of a lack of demand for new services offered in software updates." GVNW states that many manufacturers charge LECs for "each level of software update" which, according to GVNW, would lead to much expense in order to modify switches to accept four digit CIC codes. The Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), which represents more than 440 independently owned and operated telephone companies serving rural areas, supports a six-year transition to ease the economic burdens of switch conversion. OPASTCO suggests that the Commission, as it does with equal access requirements, refrain from requiring small companies to modify their switches until a "bona fide" request is submitted, and allow those companies at least eighteen months to comply after receiving such a request. The Alarm Industry Communications Committee (AICC) argues that the six-year period proposed by the Commission is necessary because certain alarm companies will need to engage in significant alarm panel reprogramming in order to implement the change from three to four digit CICs, and five to seven digit CACs. AICC states that the majority of alarm panels employs an alerting device that seizes a telephone line serving protected premises and an autodialer that places a pre-programmed call to the central station over the public switched telephone network. According to AICC, alarm panels must be individually reprogrammed, a process that requires an alarm company to arrange appointments with each affected subscriber so that alarm technicians can manually change the dialing pattern in each alarm panel installed within the protected premises. AICC states that reprogramming must be completed in a timely fashion to avoid endangering life, safety, and property. 10. We note that commenters to the NPRM and the Public Notice issued April 30, 1996 (asking for further comments), which included carriers of varying sizes, favored different time periods for the transition for Feature Group D CIC expansion. In the Second Report and Order, our modifications to the CIC conservation plan and our determination to end the transition as soon as practicable, thus allowing for a full conversion to four digit Feature Group D CICs, is not only consistent with our statutory obligation in Section 251(e) of the Act to ensure that numbers are "available on an equitable basis," but also responsive to possible hardships on small business entities such as costs and timing of conversion to four digit CIC capability. The transition to the use of only four digit CICs also will serve the goal of Section 257 of the Act by reducing barriers to entry of new small carriers and perhaps other small entities. 11. The Second Report and Order finds that continuing the transition until January 1, 1998, properly balances the competing interests of callers, carriers, and equipment owners. The Commission has balanced the hardships of a short transition, which may burden some carriers (perhaps smaller, rural carriers) and some equipment owners, by requiring them to reprogram and upgrade equipment more quickly than their business plans might have projected, and callers by requiring them to learn new, longer carrier access codes more quickly, against the hardships a long transition may impose upon new entrants. We also considered the burdens on such entities as providers of payphones, alarm companies, and small, rural carriers. The Second Report and Order finds that the decision to keep the transition in place until January 1, 1998, imposes any burdens that may occur equitably among all of the affected parties. Also, our decision to keep the conservation plan, as modified, in place as long as the transition continues takes into consideration that abolishing the conservation plan during the transition would likely cause rapid depletion of unassigned four digit CICs in the 5XXX and 6XXX range and necessitate a flash-cut conversion to four digit codes. A sudden shift to four digit codes could be a particularly detrimental outcome for smaller carriers and equipment owners who could need to modify or replace their systems to support four digit CICs. A flash-cut conversion would give no warning to those members of the industry who have yet to prepare their equipment, switches, and networks for the conversion and no warning to callers that they may no longer dial five digit CACs, but instead must dial seven digit CACs. For these reasons we find any disadvantages resulting from continuation of the conservation plan to be less burdensome than the harm of a flash-cut conversion. C. Description and Estimates of the Number of Small Entities Affected by this Second Report and Order 12. The RFA defines "small entity" to include the definition of "small business concern" under the Small Business Act, 15 U.S.C.  632. Under the Small Business Act, a "small business concern" is one that: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) meets any additional criteria established by the Small Business Administration (SBA). The SBA has defined companies listed under Standard Industrial Classification (SIC) categories 4812 (radiotelephone communications) and 4813 (telephone communications, except radiotelephone) to be small entities when they have 1500 or fewer employees. These standards also apply in determining whether an entity is a small business for purposes of the RFA. 13. Because the small incumbent LECs that would be subject to these rules are either dominant in their field of operations or are not independently owned and operated, consistent with our prior practice, they are excluded from the definition of "small entity" and "small business concerns." Accordingly, our use of the terms "small entities" and "small businesses" does not encompass small incumbent LECs. Out of an abundance of caution, however, for regulatory flexibility analysis purposes, we will consider small incumbent LECs within this analysis and use the term "small incumbent LECs" to refer to any incumbent LECs that arguably might be defined by SBA as "small business concerns." 14. The decisions made by the Commission in this Second Report and Order may apply to a variety of entities listed below. 15. Local Exchange Carriers. Neither the Commission nor SBA has developed a definition of small entity specifically applicable to providers of local exchange services. The closest applicable definition is that under SBA rules for telephone communications, except radiotelephone, SIC 4813, which defines a small entity as one with 1500 or fewer employees. The most reliable source of information regarding the number of LECs nationwide of which we are aware appears to be the data that we collect annually in connection with the Telecommunications Relay Service (TRS). According to our most recent data, 1,347 companies reported that they were engaged in the provision of local exchange service. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1500 employees, we are unable at this time to estimate with any more certainty the number of LECs that would qualify as small business concerns. Consequently, we estimate that there are fewer than 1,347 small incumbent LECs that may be affected by the decision and rules adopted in this Second Report and Order. 16. Interexchange Carriers. Neither the Commission nor SBA has developed a definition of small entity specifically applicable to providers of interexchange services (IXCs). The closest applicable definition is that under SBA rules for telephone communications, except radiotelephone, SIC 4813. The most reliable source of information regarding the number of IXCs nationwide of which we are aware appears to be the data that we collect annually in connection with TRS. According to our most recent data, 130 companies reported that they were engaged in the provision of interexchange services, and 30 companies reported they were engaged in "other" toll services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1500 employees, we are unable at this time to estimate with greater precision the number of IXCs that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 130 small entity IXCs and 30 "other" toll carriers that may be affected by the decision and rules adopted in this Second Report and Order. 17. Wireless Service Providers. Neither the Commission nor SBA has developed a definition of small entity specifically applicable to providers of wireless services. The closest applicable definition is that under SBA rules for radiotelephone communications, SIC 4812, which defines a small entity as one with 1500 or fewer employees. The 1992 Census of Transportation, Communications, and Utilities, conducted by the Bureau of the Census, shows that only 12 radiotelephone firms out of a total of 1,176 such firms that operated during 1992 had 1,000 or more employees. Therefore, even if all 12 of these large firms were radiotelephone companies, all of the remainder were small businesses under the SBA's definition. We assume that, for purposes of our evaluations and conclusions in the FRFA, all of the current radiotelephone licensees are small entities, as that term is defined by the SBA. 18. Cellular and Mobile Radio Telephone Service. In an effort to further refine our calculation of the number of radiotelephone companies affected by the rules adopted herein, we consider the categories of radiotelephone carriers, Cellular Service Carriers and Mobile Service Carriers. Neither the Commission nor the SBA has developed a definition of small entities specifically applicable to Cellular Service Carriers and to Mobile Service Carriers. The closest applicable definition under SBA rules for both services is for telephone companies other than radiotelephone (wireless) companies. The most reliable source of information regarding the number of Cellular Service Carriers and Mobile Service Carriers nationwide of which we are aware appears to be the data that we collect annually in connection with the TRS. According to our most recent data, 792 companies reported that they are engaged in the provision of cellular services and 138 companies reported that they are engaged in the provision of mobile services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1,500 employees, we are unable at this time to estimate with greater precision the number of Cellular Service Carriers and Mobile Service Carriers that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 792 small entity Cellular Service Carriers and fewer than 138 small entity Mobile Service Carriers that might be affected by the actions and rules adopted in this Second Report and Order. We assume that all of the current rural cellular and mobile licensees are small businesses. 19. Personal Communications Service. The broadband PCS spectrum is divided into six frequency blocks designated A through F and the Commission has held auctions for each block. The Commission defined "small entity'' for Blocks C and F as an entity that has average gross revenues of less than $40 million in the three previous calendar years. For Block F, an additional classification for "very small business" was added and is defined as an entity that, together with their affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. These regulations defining "small entity'' in the context of broadband PCS auctions have been approved by the SBA. No small businesses within the SBA-approved definition bid successfully for licenses in Blocks A and B. There were 90 winning bidders that qualified as small entities in the Block C auctions. A total of 93 small and very small business bidders won approximately 40% of the 1,479 licenses for Blocks D, E, and F. However, licenses for blocks C through F have not been awarded fully, therefore there are few, if any, small businesses currently providing PCS services. Based on this information, we conclude that the number of small broadband PCS licensees will include the 90 winning C Block bidders and the 93 qualifying bidders in the D, E, and F blocks, for a total of 183 small PCS providers as defined by the SBA and the Commission's auction rules. 20. Paging and Radiotelephone Service, and Private Land Mobile Radio Services, Paging Operations. Neither the Commission nor SBA has developed a definition of small entity specifically applicable to providers paging services. The closest applicable definition is that under SBA rules for radiotelephone communications, SIC 4812, which defines a small entity as one with 1500 or fewer employees. The Commission anticipates that a total of 15,531 non-nationwide geographic area licenses will be granted or auctioned. The geographic area licenses will consist of 3,050 MTA licenses and 12,481 EA licenses. In addition to the 47 Rand McNally MTAs, the Commission is licensing Alaska as a separate MTA and adding three MTAs for the U.S. territories, for a total of 51 MTAs. No auctions of paging licenses have been held yet, and there is no basis to determine the number of licenses that will be awarded to small entities. Because nearly all radiotelephone companies have fewer than 1,000 employees, and no reliable estimate of the number of prospective paging licensees can be made, we assume, for purposes of this FRFA, that all the 15,531 geographic area paging licenses will be awarded to small entities, as that term is defined by the SBA. We estimate that the approximately 600 current paging carriers could partition or disaggregate a license or take the opportunity to obtain an additional license through partitioning or disaggregation. We estimate that up to 48,393 licensees or potential licensees could take the opportunity to partition or disaggregate a license or obtain a license through partitioning or disaggregation. This estimate is based on the total estimate of paging carriers (approximately 600) and non-nationwide geographic area licenses to be awarded (15,531) and our estimate that each license will probably not be partitioned or disaggregated among more than three parties. Because nearly all radiotelephone companies have fewer than 1,000 employees, and no reliable estimate of the number of future paging licensees can be made, we assume for purposes of this FRFA that all of the licensees will be awarded to small businesses. We believe that it is possible that a significant number of the estimated 48,393 licensees or potential licensees who could take the opportunity to partition or disaggregate a license or who could obtain a license through partitioning or disaggregation will be a small business. 21. Competitive Access Providers. Neither the Commission nor SBA has developed a definition of small entity specifically applicable to providers of competitive access services (CAPs). The closest applicable definition is that under SBA rules for telephone communications, except radiotelephone, SIC 4813, which defines a small entity as one with 1500 or fewer employees. The most reliable source of information regarding the number of CAPs nationwide of which we are aware appears to be the data that we collect annually in connection with TRS. According to our most recent data 57 companies reported that they were engaged in the provision of competitive access services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1500 employees, we are unable at this time to estimate with greater precision the number of CAPS that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 57 small entity CAPS that may be affected by the decision and rules adopted in this Second Report and Order. 22. Operator Service Providers. Neither the Commission nor SBA has developed a definition of small entity specifically applicable to providers of operator services. The closest applicable definition is that under SBA rules for telephone communications, except radiotelephone, SIC 4813. The most reliable source of information regarding the number of operator service providers nationwide of which we are aware appears to be the data that we collect annually in connection with TRS. According to our most recent data 25 companies reported that they were engaged in the provision of operator services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1500 employees, we are unable at this time to estimate with greater precision the number of operator service providers that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 25 small entity operator service providers that may be affected by the decision and rules adopted in this Second Report and Order. 23. Pay Telephone Operators. Neither the Commission nor SBA has developed a definition of small entity specifically applicable to providers of pay telephone operator services. The closest applicable definition is that under SBA rules for telephone communications, except radiotelephone, SIC 4813. The most reliable source of information regarding the number of pay telephone operators nationwide of which we are aware appears to be the data that we collect annually in connection with TRS. According to our most recent data, 271 companies reported that they were engaged in the provision of pay telephone services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1500 employees, we are unable at this time to estimate with greater precision the number of pay telephone operators that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 271 pay telephone operators that may be affected by the decision and rules adopted in this Second Report and Order. 24. Resellers. Neither the Commission nor the SBA has developed a definition of small entity specifically applicable to resellers. The closest applicable definition is that under SBA rules for all telephone communications companies, SIC 4812 and SIC 4813, combined, both of which define a small entity as one with 1500 or fewer employees. The most reliable source of information regarding the number of resellers nationwide of which we are aware appears to be the data that we collect annually in connection with TRS. According to our most recent data, 260 companies reported that they were engaged in the resale of telephone services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1500 employees, we are unable at this time to estimate with greater precision the number of resellers that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 260 small entity resellers that may be affected by the decision and rules adopted in this Second Report and Order. 25. Telecommunications Equipment Manufacturers. The SBA classifies manufacturers of telecommunications equipment in two categories, one for wireless and another for wireline. 26. Wireline Telecommunications Equipment Manufacturers. Neither the Commission nor the SBA has developed a specific definition of small entities applicable to manufacturers of wireline telecommunications equipment. Therefore, we will utilize the SBA definition of manufacturers of Telephone and Telegraph Apparatus. According to the SBA's regulations, a small entity must have 1000 or fewer employees in order to qualify as a small business concern. Census Bureau data indicates that there are 479 U.S. firms that manufacture telephone and telegraph equipment, and that 436 of these firms have fewer than 1000 employees and would be classified as small entities. The Census Bureau category is very broad, and specific figures are not available as to how many of these firms are manufacturers of wireline telecommunications equipment that would be subject to these rules or how many are independently owned and operated. Consequently, we estimate that there are fewer than 436 small manufacturers of wireline telecommunications equipment. 27. Wireless Telecommunications Equipment Manufacturers. Neither the Commission nor the SBA has developed a specific definition of small entities applicable to manufacturers of wireless telecommunications equipment. Therefore, we will utilize the SBA definition of manufacturers of Radio and Television Broadcasting and Communications Equipment. According to the SBA's regulations, a small entity must have 750 or fewer employees in order to qualify as a small business concern. Census Bureau data indicates that there are 858 U.S. firms that manufacture radio and television broadcasting and communications equipment, and that 778 of these firms have fewer than 750 employees and would be classified as small entities. The Census Bureau category is very broad, and specific figures are not available as to how many of these firms are manufacturers of wireless telecommunications equipment or how many are independently owned and operated. Consequently, we estimate that there are fewer than 778 small manufacturers of wireless telecommunications equipment. 28. Fire and Burglar Equipment Manufacturers. The Commission has not developed a definition of small entities applicable to manufacturers of fire and burglar alarm equipment. We will utilize the SBA classification of such manufacturers under Communications Equipment Not Elsewhere Classified. This definition provides that a small entity is an alarm equipment manufacturer employing 750 or less persons. Census Bureau data indicates that there are 498 U.S. firms that manufacture alarm equipment, and that 469 of these firms have fewer than 750 employees and would be classified as small entities. The Census Bureau category is very broad, and includes manufacturers of other equipment such as traffic signalling and intercommunications equipment. Specific figures are not available as to how many of these firms produce alarm equipment or how many are independently owned and operated. Consequently, we estimate that there are fewer than 469 small manufacturers of alarm equipment that may be affected by the decision and rules adopted in this Second Report and Order. 29. Alarm Service Providers. The SBA has developed a definition of alarm service providers (SIC 7382) which are entities that are primarily engaged in the monitoring and maintenance of security systems devices, such as burglar and fire alarms. According to the SBA, a small security system provider must have $9 million or less in annual receipts. Census Bureau data reports that there were 2,190 security system service providers with $7.499 million or less in annual receipts and 2,200 with less than $9.999 million in annual receipts. Therefore, we tentatively conclude that there are approximately 2,190 small security system service providers that may be affected by the decision and rules adopted in this Second Report and Order. D. Description of Projected Reporting, Recordkeeping and Other Compliance Requirements of the Rules 30. Bell Communications Research (Bellcore) Bellcore, as the NANP administrator, is required to notify all CIC assignees of the decision in this Second Report and Order, consistent with the terms described therein. Furthermore, Bellcore, as the NANP administrator must assign CICs in conformity with the Commission's modification to the conservation plan in this Second Report and Order. There are no specific reporting, recordkeeping or other compliance requirements imposed by this Second Report and Order on other entities. E. Significant Alternatives Minimizing Impact on Small Entities and Consistent with Stated Objectives 31. As noted above, by keeping the conservation plan, as modified, in place as long as the transition continues, and by setting a date to end the transition, we avoid a flash- cut conversion that could be detrimental in particular to smaller carriers and equipment owners that could need to modify or replace their systems to support four digit CICs. We considered various alternatives, such as reclamation of unused CICs. In the Second Report and Order, we conclude that VarTec's suggestion that we reclaim three digit Feature Group D CICs as an alternative to replacing them with four digit Feature Group D CICs is not a plausible long-term solution. Although reclamation of three digit CICs may provide some short-term relief, the total number of available three digit Feature Group D CICs would continue to be less than one thousand. 32. In determining to end the transition on January 1, 1998, we considered all arguments raised by parties and, as stated above, this determination carefully balances the competing interests of callers, carriers, and equipment owners. F. Report to Congress 33. The Commission shall send a copy of this Final Regulatory Flexibility Analysis, along with this Second Report and Order, in a report to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C.  801(a)(1)(A). A copy of this FRFA will also be published in the Federal Register.