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(1) (a) (i) 1) a)C -2( -Ct )q 2$ZdpCq1, 2, 3,?@65NumbersO@/"=(1*1÷$t ?.E1.A, B,t ?@65Uppercase Letters1 ?*1÷$t ?.E .33`O5hT(G2PDocument Style&^aO5h.K+&,$@`O5Bȗ+&>` ` ` 34`O5iT(G2PDocument Style&^aO5i.K+&,$@`O5Bȗ+&>  . 2#!eVe p 35`O5jT(G2PDocument Style&^aO5j.K+&,$@`O5Bȗ+&>  36`O5kT(G2PDocument Style&^aO5k.K+&,$@`O5Bȗ+&>  37`O5lT(G2PDocument Style&^aO5l.K+&,$@`O5Bȗ+&>*   38`O5mT(G2PDocument Style&^aO5m.K+&,$@`O5Bȗ+&>` ` ` 2U!K!FZ2$39`O5nT(G2PRight-Aligned Paragraph NumbersK+&,$@`O5Bȗ+&>8@   "i~'^09FSS999Sq+9+/SSSSSSSSSS99qqqSggnxggxx9In]nxgxgS]xgg]]?/?FS9SSISI/SS//I/xSSSS??/SInII?C/CZ9+ZF999+999999S9S/gSgSgSgSgSnnIgIgIgIgI9/9/9/9/nSxSxSxSxSxSxSxSxS]IgSxSxSxS]IxSgSgSgSgSnInInZnIxdgIgIgIgIxSxSxSxZxSxZxS9/9S999SSZZnI]/]<]9]5]/nSanSnSxSxSng?g?g?S?S?S?ZZ]<]/]FxSxSxSxSxSxSn]Z]?]?]?xS]9nSS?]9]Sd+SS8%8WuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuddddddddddddddddddddddddddddddddddddddddN H C yO-ԍ See GVNW Reply Comments at 1.M GVNW claims that the switches of smaller LECs generally  X -do not have the most recent software upgrades, which are very costlyG? C yO0-ԍ See GVNW Comments at 3.G and at times exceed  X-the cost of switch replacement.@XhC yO - xԍ See id. at 2. GVNW claims that many manufacturers charge LECs for each level of software update, and  x=that the necessary software upgrades to a Northern Telecom DMS 10 switch with Series 300 software and to  yO9"-SiemensStromberg DCO switches would cost between $150,000 and $200,000. See id. The Organization for the Promotion and Advancement of  Xy-Small Telecommunications Companies (OPASTCO),AyC yO$- xԍ OPASTCO was formerly known as the Organization for the Protection and Advancement of Small Telephone Companies. which represents more than 440 independently owned and operated telephone companies serving rural areas, supports a six"b A,N(N(ZZ"ԫ X-year transition to ease the economic burdens of switch conversion.OBC yOy-ԍ See OPASTCO Comments at 1, 56.O 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  X-companies at least eighteen months to comply after receiving such a request.;CXC yO-ԍ Id. at 56.;  X-x19.` ` The Alarm Industry Communications Committee (AICC) argues that the sixyear 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  XH-from three to four digit CICs, and five to seven digit CACs.*DHC yO - xyԍ See AICC Reply Comments at 3. AICC, representing over 90 percent of the alarm securities provided  yO -throughout the United States, is a subcommittee of the Central Station Alarm Association. See id. at 1. * 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 preprogrammed call to the central station over the  X -public switched telephone network.EE @C yO-ԍ See id. at 12.E 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  X -alarm panel installed within the protected premises.CF C yO?-ԍ See id. at 2.C AICC states that reprogramming must  X -be completed in a timely fashion to avoid endangering life, safety, and property.=G ` C yO-ԍ See id.=  Xy-x20.` ` 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  XK-and 6XXX range in less than six years;H K C yO- xԍ Some parties state that the close of the transition, rather than being defined by a specific number of months,  yO- xis necessarily triggered by the assignment of all 2000 four digit CICs in the 5XXX and 6XXX range. See, e.g.,  xAmeritech Reply Comments at 78; GTE Comments at 17; SBC Comments at 14; US WEST Comments at 15; Pacific Comments at 11; USTA Comments at 1011; Bellcore Comments at 8. (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  X-each other.IXXC yOx%- xԍ See, e.g., BellSouth Public Notice (PN) Comments at 3; Cincinnati Bell PN Comments at 3; NYNEX PN  yO@&- xComments at 3; U S WEST PN Reply Comments at 12; SBC PN Reply Comments at 2. In an April 25, 1996 ex  yO'- xparte letter filed with the Commission, US WEST raised concerns that access codes of differing lengths violate the"'H,N(N(+'"  yO- xwdialing parity requirements of the 1934 Act, as amended. See Carrier Identification Codes (CICs) and Dialing Parity,  xUS WEST, Inc. on Behalf of US WEST Communications and US WEST Media Group, CC Docket No. 92237, April 25, 1996." I,N(N(ZZ "  X-x21.` ` Parties arguing for a shorter transition propose that the transition end on dates  X-that range from December 31, 1996, to March 31, 1998.HJC yO- xԍ See, e.g., GTE PN Comments at 3 (December 31, 1996); SBC PN Comments at 4 (December 31, 1996); US  yOJ- xWEST PN Reply Comments at 3 ("end of 1996"); BellSouth PN Comments at 2 (December 31, 1997); NYNEX  x;PN Comments at 4 (6 months but no later than April 1, 1997); Cincinnati Bell PN Comments at 1 (one year from  yO- xJthe date of enact ment of the 1996 Act amendments to the 1934 Act); Sprint PN Reply Comments at 2 (March 31, 1998).H U S WEST believes that a six X-month phaseout would allow adequate time for customer education.OKC yO -ԍ See US WEST PN Comments at 89.O 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  X-necessitating only translation changes for trunk groups and switching equipment.L( C yOf- xxԍ See US West PN Comments at 8. "Translation" refers to the conversion of digits dialed by a subscriber to codes and protocols that are recognized and used by switches to complete the subscriber's call. GTE, disagreeing with AT&T's contention that a sixyear 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  X1-any indication as to the company's efforts over the last two years.jM1 C yOb-ԍ GTE PN Reply Comments at 2, quoting AT&T PN Comments at 6.j  X -x22.` ` Opponents of a lengthy transition argue that it would be costly (particularly  X -regarding customer education)MN C yO-ԍ See BellSouth Comments at 13.M and would "prolong the lack of dialing parity between  X -embedded Feature Group D providers and new service providers."wO C yO&-ԍ Id. See also GTE Comments at 20; SBC Reply Comments at 11.w US WEST argues that a sixyear transition would award incumbent IXCs an unfair advantage, to the detriment of both  X -new entrants and consumers.NP 0C yO -ԍ See US WEST PN Comments at 6. N 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  Xy-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  XK-consumers."rQKC yO%-ԍ Id. at 7, quoting Ameritech Order, 10 FCC Rcd at 4604.r Further, US WEST suggests that the Commission's proposal for a sixyear transition violates the prohibition against unreasonable discrimination in Section 201(b) of the"4PQ,N(N(ZZ"  X-1934 Act.?RC yOy-ԍ Id. at 7, n.15.? 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  X-instance.SXC yO-ԍ See Bell Atlantic PN Comments at 1-2, citing 47 U.S.C. 153(15) (definition for dialing parity). Both NYNEX and SBC, however, contend that placing providers of telephone  X-service "on equal footing with respect to CAC dialing" is necessary for full dialing parity.vTC yO& -ԍ See SBC PN Reply Comments at 2, quoting NYNEX PN comments at 3. v  X_-x23.` ` Some commenters support the shorter 18month period proposed by Bellcore.U_xC yO -ԍ See, e.g., NYNEX Comments at 15; BellSouth Comments at iii; Pacific Comments at 11. Bell Atlantic contends that there is no need for a transition longer than two years, particularly  X1-because the industry's expansion plan has already been known for six years.VV1C yO-ԍ See Bell Atlantic Reply Comments at 2.V  X -x24.` ` 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  X -accommodate expansion.xW C yO-ԍ See AirTouch Comments at 8. See also, Allnet Comments at 1.x Arguing that it provides sufficient time for carriers to implement new codes in the network and for customer education, Ameritech also supports a threeyear  X -transition.LX ( C yO-ԍ See Ameritech Comments at 7.L 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  XK-also creates added administrative burdens.;YK C yO-ԍ Id. at 78.;  X-x25.` ` Several commenters suggest alternatives to the Commission's prescribing the  X-transition's duration.ZH C yO"- x<ԍ See, e.g., Ameritech Reply Comments at 8; AT&T Comments at 7; MCI Reply Comments at 1415; SBC Reply Comments at 11. Sprint, while agreeing with the Commission that a multiyear 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"Z,N(N(ZZ"  X-arrangements.:[C yOy-ԍ Id. at 14.: Ameritech suggests that the NANP administrator monitor CIC demand, and  X-then, at an agreed upon time, advise the industry to implement the transition.G\XC yO-ԍ Ameritech Reply Comments at 8.G 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  X-occur before the last available CICs in the 5XXX and 6XXX range are assigned.3]C yO= -ԍ Id.3 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  X_-CICs for purposes other than those intended in the industry guidelines."?^_xC yO -ԍ MCI PN Comments at 3.? MCI cautions that the industry should not "treat[] CICs as a miscellaneous numbering resource, available for any  X1-purpose."9_X1C yO- xJԍ MCI PN Comments at 23. GTE, in its reply comments, concurs that the Commission should discourage uses  yO- x=of CICs that would deplete the remaining four digit CICs in the 5XXX and 6XXX range. See GTE PN Reply comments at 4.9  X - x26.` ` 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  X -the conservation plan end, either immediately~` ( C yO-ԍ See, e.g., US WEST PN Reply Comments at 2; AT&T PN Reply Comments at 5. ~ or soon.ka C yO>-ԍ See e.g., SBC PN Comments at 4; GTE PN Comments at 4.k BellSouth, for example, cites the  X -need for additional CICs for legitimate business use.sbX H C yO- xxԍ See BellSouth PN Comments at 5, citing Letter from Ronald R. Conners, Director, NANP Administration,  xxto Kathleen M.H. Wallman, Chief, Common Carrier Bureau (October 2, 1995) which states that the "tariffs that caused the extraordinary CIC demands in March are currently not in effect."s GTE asserts that companies possessing multiple CICs have a competitive advantage over new providers that are limited to one CIC  X-assignment.IchC yO -ԍ See GTE PN Comments at 3.I Pacific contends that a limit on CIC assignments could impede service  Xy-deployment wherever such service depends on a distinct CIC.UdyC yO"#-ԍ See Pacific Telesis PN Comments at 3.U 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"4d,N(N(ZZ"  X-providers.eC yOy- xjԍ See AT&T PN Comments at 89, citing INC Issue Identification Form, Issue No. 72, Service Provider Identification for Local Network Interconnection (December 15, 1995). 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  X-code will come from a separate resource.=f C yO-ԍ See id.= No other parties filing comments in response to  X-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 sixyear transition as initially proposed by the Commission, available CICs would remain for seven additional  Xv-years.gxvC yO - xYԍ These data from the North American Numbering Plan Administrator show that as of April 1, 1996, 306 four  xdigit codes have been assigned, leaving 1,694 of the 2,000 codes available to support permissive dialing during the  yOg - xYtransition. See AT&T PN Comments at 8. In its comments to the NPRM, AT&T, disagreeing with parties arguing  xthat the 2,000 four digit CICs in the 5XXX and 6XXX range will all be assigned in fewer than 6 years, argued that  xnone of those parties provides support for their claims. According to AT&T, "even Bellcore acknowledges that at  xthe current rate of assignment, the initial supply of codes would last 11 years." AT&T Reply Comments at 89,  yO-citing Bellcore Comments at 8. 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  XH-[conservation] measures."hH C yO- xKԍ Bellcore Comments at 8. Bellcore refers to the FCC's recommendation to use the industry forum process  yO- xto make changes to existing conservation measures in order to ensure an adequate transition. Id. Bellcore states:  xw"[u]nder conservation rules in effect since March, 1989, NANPA assigns only one FGD CIC per entity. As specified  xin the CIC guidelines, when FGD CICs are expanded to 4 digits (currently projected to be during the first quarter  xx1995), this limit will increase to 6 FG CICs per entity, which will result in a substantial but undetermined increase  yO-in demand." Id.  X -x` ` 3. Decision  X -x27.` ` 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 procompetitive 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. "hh,N(N(ZZq"Ԍ X-x28.` ` 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  X-been increasing since we issued the NPRM in 1994.i C yO- xԍ Feature Group D CIC assignments totalled 796 by the fourth quarter of 1993, 947 by the fourth quarter of  yO- xZ1994, 1,209 by the fourth quarter of 1995, and 1,299 by the second quarter of 1996. See Long Distance Carrier  xJCode Assignments, Industry Analysis Division, Common Carrier Bureau, Federal Communications Commission (Oct 1996) at Table 1.  The number of CICs available for assignment must increase to accommodate this demand. Using codes of increased length is  Xv-the only reasonable means of making more CICs available.jXvC yO - xԍ According to Bellcore, the four digit Feature Group D CIC format can provide the industry with 9,798 CICs.  yO - xSee Letter from Ron Conners, Director of NANP Administration, to Elizabeth Nightingale, Federal Communications Commission, Common Carrier Bureau, dated December 17, 1996 (Bellcore December 17, 1996 Letter) at 1. 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  X -Group D CICs as an alternative to replacing them with four digit Feature Group D CICsPk C yO-ԍ See para. 13, supra.P is not a plausible longterm solution. Although reclamation of three digit CICs may provide some shortterm relief, the total number of available three digit Feature Group D CICs would  X -continue to be less than one thousand.l  ` C yO- xԍ According to Bellcore, the three digit Feature Group D CIC format can only provide the industry with 969  yO- xYCICs. See Letter from Nancy K. Fears, NANP Administration, to Octavia Florence of the Common Carrier Bureau,  xDated July 9, 1996. Therefore, a maximum of 969 three digit CICs are available for all members of the industry, and reclamation will not increase this number.  X -x29.` ` 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,  Xy-also requires the Commission to ensure that numbers are "available on an equitable basis."@myH C yOr-ԍ 47 U.S.C.  251(e).@ 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  X-business entities but also will promote the competitive objectives of the Act.Sn C yO$- x=ԍ The transition to the use of only four digit CICs also will serve the goal of Section 257 of the Act, by  yOW%- xreducing barriers to entry of new small carriers and perhaps other small entities. See 47 U.S.C.  257. The  yO&- xCommission issued a Notice of Inquiry in May 1996 to begin implementing Section 257. See In the Matter of  yO&- xiSection 257 Proceeding to Identify and Eliminate Market Entry Barriers for Small Businesses, Notice of Inquiry,"&m,N(N('"  yO- xiGN Docket No. 96-113, 11 FCC Rcd. 6280 (1996). See Final Regulatory Flexibility Analysis, Appendix C, for a discussion and definition of small business entities.S" n,N(N(ZZ"Ԍ X-ԙx30.` ` 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  X-conservation plan.ko C yO^ -ԍ For examples of multiple uses, see footnote 9, supra.k 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 flashcut 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 flashcut 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 flashcut conversion. Although AT&T states that the INC recently reached  Xb-agreement not to assign CICs to identify local service providers,JpbC yO-ԍ See para. 26, supra.J 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  X-plan were discontinued, available CICs would remain for seven additional years.=q@C yO-ԍ See id.= 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  X-comments to the NPRM on Bellcore's statement that the supply of CICs would last 11 years  X-provide that support.OrC yO+!-ԍ See footnote 103, supra. O 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."N` r,N(N(ZZ"  X-x31.` ` We modify the conservation plan as follows: XxEntities with only one Feature Group D CIC assignment (whether it is a three  X-digit CIC or a four digit CIC),WsC yO4- xԍ Based on Bellcore's July 1996 CIC distribution list, we estimate that there currently are approximately 941  yO- xentities with only one Feature Group D CIC assignment (either a three or four digit CIC). See Bellcore's July 1,  yO- x1996, Carrier Identification Code Distribution List. Based on calculations by Common Carrier Bureau staff analyzing  xdata in Bellcore letters, we estimate that there are approximately 1,693 four digit Feature Group D CICs available  yOT- xfor assignment during the transition (those in the 5XXX and 6XXX range). See Fears June 26, 1996 Bellcore Facsimile Cover Sheet to Octavia Florence of the Common Carrier Bureau (Bellcore June 26, 1996 Facsimile).W and who are currently ineligible to receive another CIC, may apply for and receive a second CIC;   Xv-XxAn entity that has no CICs upon the effective date of this Second Report and  X_-Order may apply for and receive two four digit Feature Group D CICs;  XxEach entity that had only one CIC, and received an additional CIC under the  X -intraLATA presubscription exception to the conservation plan,It @C yO -ԍ See para. 9, supra.I may decide itself how it will use its second CIC;  XxEntities with two or more CICs (whether they are three digits or four digits), may not receive any additional CICs; and  XxBellcore may assign only four digit Feature Group D CICs.  We modify the conservation plan to lessen the disadvantage the plan imposes on competing  XK-providers, which may include small business entities.quKC yO-ԍ See Local Competition Second Report and Order at para. 101.q 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.  Xe-x32.` ` 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" ` u,N(N(ZZz" 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 flashcut  X-conversion to four digit CICs which would be contrary to the public interest.XvC yO4-ԍ See discussion in para. 30, supra.X We also conclude, however, that we should end the transition as soon as practicable to lessen any  X-negative effects of the disparity that exists during the transition.UwXXC yO- x<ԍ We note that the United States Court of Appeals for the D.C. Circuit has recognized agency flexibility to  yO^ - ximplement a transitional process in its regulatory policies. See Rural Telephone Coalition v. FCC, 838 F.2d 1307, 1315 (D.C. Cir. 1988).U  X_-x 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]  X -to have nondiscriminatory access to telephone numbers."Cx xC yOC-ԍ 47 U.S.C.  251(b)(3).C 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  X -services that access to multiple CICs makes possible.Jy C yO-ԍ See para. 31, supra.J  X -x!34. ` ` Several parties argue that the existence of CICs and CACs of varying lengths  X-during the transition violates the dialing parity requirement in the Act, as amended.JzC yO-ԍ See para. 22, supra.J Section 251(b)(3) requires that all local exchange carriers "provide dialing parity to competing  Xb-providers of telephone exchange service and telephone toll service. . . ."B{b( C yO;-ԍ 47 U.S.C. 251(b)(3).B The Act defines "dialing parity" to mean that: Xxa 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  X-providers (including such local exchange carrier).@| C yO%-ԍ 47 U.S.C. 153(15).@  Thus, the dialing parity requirement of Section 251(b)(3) extends only to calls made on a"|H |,N(N(ZZn" presubscribed basis; it does not govern the number of digits subscribers must dial to reach  X-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  X-does not violate the Act's dialing parity requirement.}XC yO4- xԍ The Commission recently adopted rules addressing the issue of dialing parity and the related issue of  yO- xpresubscription. See Local Competition Second Report and Order at paras. 2296. See also id. at Appendix B,  51.5. 51.205, 51.207, 51.209, 51.211, 51.213, 51.215. We agree with Bell Atlantic that the dialing parity provision of the Act "simply does not reach the issue of access codes of  X-different lengths."~C yO& -ԍ See Bell Atlantic PN Comments at 1-2, citing 47 U.S.C.  153(15) (Act's definition of dialing parity). 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.  X -x"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  X -smaller, rural carriers)Z  xC yO- xKԍ We also address issues related to smaller carriers in the Final Regulatory Flexibility Analysis, Appendix C.  yO- xAs noted above (see footnote 31, supra), because the results of a recent survey of equipment manufacturers (see  yO- xYparas. 3843, infra.) indicate that the hardware and software necessary for expansion to four digit CICs have already  yOV-been manufactured, we exclude manufacturers from our analysis in this Second Report and Order.Z 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.  X-x#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.  X|-x$37.` ` Since 1989, the industry should have been aware that it would need to replace  Xe-three digit CICs with four digit CICs and five digit CACs with seven digit CACs.Ie` C yOv%-ԍ See para. 5, supra.I 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"7 ,N(N(ZZ" Bellcore's expansion plan, to upgrade or replace equipment, and to upgrade networks, either  X-through software or hardware changes.hC yOb-ԍ See Bellcore Expansion Document at Section 1, p.3.h 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  X-almost three years./XXC yO- xԍ The determination that the total transition will have lasted almost three years assumes that period began on  xZApril 1, 1995, when Bellcore began assigning exclusively four digit Feature Group D CICs, and ending on January 1, 1998./ 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  X_-of 1995.N_xC yO -ԍ See NPRM at para. 4748.N Therefore, since May 1994, when the Commission's NPRM was published in the  XH-Federal Register,OHC yO-ԍ See 59 FR 24103 (May 10, 1994).O 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.  X -Consistent with the Commission's statement in the NPRM, the transition began on April 1,  X -1995, C yOL- xԍ Telco, in a footnote to its comments, contends that the transition has not commenced because "the  x[Commission has not adopted a specific 'transition period' on the record in any final decision." See Telco PN  xYComments at 6, n.2. We note that Telco did not explain why the Commission must determine the beginning of the  yO- xwtransition. Indeed, the CIC expansion plan was developed and begun by the industry. In the NPRM the Commission  yOl- xstated that the industry's change from three to four digit FGD CICs was planned for the first half of 1995. See  yO4-NPRM at para. 48. 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.  X4-x%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.  X-x&39.` ` Regarding network switches, in order to make this assessment, Commission staff requested and received information from two manufacturers, Lucent Technologies",N(N(ZZp"  X-(Lucent)C yOy- xԍ See Federal Communications Commission Request for Information from Lucent Technologies, CC Docket  x,No. 92237, September 25, 1996, and Federal Communications Commission Supplemental Request for Information  xfrom Lucent Technologies, CC Docket No. 92237, October 8, 1996; Lucent Technologies Response to FCC Request  xYfor Information, dated October 4, 1996 (Lucent October 4, 1996 Filing) and Lucent Technologies Response to FCC  xSupplemental Request for Information, dated October 15, 1996 (Lucent October 15, 1996 Filing). Lucent was the manufacturing arm of AT&T Corp. before AT&T sold the company in the Fall of 1996. and Northern Telecom (Nortel), @C yO- x-ԍ See Federal Communications Commission Request for Information from Nortel, CC Docket No. 92237,  xZOctober 7, 1996; Northern Telecom Response to FCC Request for Information, dated October 15, 1996 (Nortel  xOctober 15, 1996 Filing). Northern Telecom is the manufacturing subsidiary of the Canadian telecommunications conglomerate, BCE Inc. who cumulatively represent approximately 91  X-percent of the total United States market for local network switches, as measured by sales.b( C yO - xyԍ Lucent and Nortel, while they do not provide their own sales figures, do refer to estimates provided by  xNorthern Business Information (NBI). Lucent states that NBI estimates that AT&T Network Systems (now Lucent)  yOR- xx"was the leader in U.S. CO switch sales for 1994 with 46% of total sales." See Lucent October 15, 1996 Filing at  yO- x1. Nortel cites NBI to estimate that Nortel's share of the local network switch market is 45%. See Nortel October 15, 1996 Filing.b Lucent listed five network switch product units capable of processing four digit CICs that it  X-began to offer to its customers between November 1993 and March 1994.  C yOD- xԍ Those product units are: 1A ESS; 2B ESS; 4ESS; 5ESS2000; and OSPS. See Lucent October 4, 1996  xyFiling at 1. These switch products are used by telephone companies of varying sizes. The 2B ESS switch, for  yO- xexample, is used by both smaller and larger carriers serving less densely populated areas. See "Engineering and Operations in the Bell System," Bell Telephone Laboratories, pp. 420-421 (1983).  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.  X -x'40.` ` Regarding PBX systems, in addition to Lucent and Nortel  C yO- xԍ In addition to the information solicited and received from Lucent and Nortel in October 1996, Commission  yOS- x-Staff also solicited and received updated information from them in March 1997. See April 2, 1997 Response of  xLucent Technologies to FCC request for Further Information Dated March 20, 1997 (Lucent April 2, 1997 Filing); March 31 Nortel FCC Further Information Regarding CC Docket 92237 (Nortel March 31, 1997 Filing). we received  X -information from Mitel, NEC, and Hitachi Telecom. C yO\"- xzԍ See April 10, 1997 Mitel Response to Request for Information; March 25, 1997 NEC Response to Information (March 25, 1997 NEC Filing); April 3, 1997 Hitachi Response to Information. These five companies, cumulatively, represent an average of approximately 67.4 percent of the total United States market for PBX" ,N(N(ZZ" "  X-equipment between 1991 and 1995, as measured by sales. C yOy- xԍ See 1996 Multimedia Telecommunications Market Review and Forecast at Table III1.6. These data come  xxfrom a period (19921995) during which Lucent was still AT&T. The data show the following regarding average PBX sales percentages during this period: AT&T (now Lucent) (26.7 percent); Nortel (24.2 percent); Mitel (7.9 percent); NEC (6.5 percent); and Hitachi (2.1 percent). 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  X-capability.C yO - xԍ The information we describe below represents a compilation of information received from the filings cited above. 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  X -systems. C yO- xԍ Lucent (representing 26.7 percent of the market) and Nortel (representing 24.2 percent of the market) began  xoffering systems with inherent four digit CIC capability in 1992 and 19941995, respectively. NEC (representing  x6.5 percent of the market) and Mitel (representing 7.9 percent of the market) began offering such products in  xapproximately 1983 and 1985 respectively. While Lucent indicates that as of March 1997, 6873 percent of its PBX  xcustomers have four digit CIC capable systems, and Nortel indicates 75 percent, Hitachi, representing only 2.1 percent of the PBX sales market, states that 90 percent of its customers have 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  X -costs may vary greatly depending on PBX system types.x C yO- xԍ See, e.g., Lucent Oct ober 4, 1997 Filing (software changes for both new area codes and CICs would cost  x1-5% of the PBX purchase price and require one hour of down time); Lucent April 2, 1997 Filing (hardware/software  xchanges would cost either approximately $15,000 for one type of system or $7,500, for another type of system, and  xboth would require 4 hours of down time); Hitachi April 3, 1997 Filing (upgrade costs can vary from $2,000 to  x$40,000 depending upon system release level and configuration for a complete NANP upgrade); Nortel March 31,  x1997 Filing (whether software or both hardware and software changes would be necessary, and how much these would cost would vary depending on the installed system type and software release level desired).  X - x(41.` ` In an effort to include data from smaller entities, Commission staff also requested and received information from the MultiMedia Telecommunications Association (MMTA), a trade association of approximately 500 members, 120 of which are manufacturers and the remainder of which include suppliers, distributors and users of business  Xb-telecommunications equipment.XbC yO$- xԍ See Federal Communications Commission Request for Information from MultiMedia Telecommunications  yO%- xAssociation members; see MultiMedia Telecommunications Association, dated October 9, 1996 (MMTA October 9, 1996 Filing). MMTA was formerly the North American Telecommunications Association, or NATA. MMTA's membership includes small business entities. Hitachi, an MMTA member, filed its information through MMTA. We also received"K,N(N(ZZI"  X-information from Teleco Inc. (Teleco),C yOy- xiԍ See Teleco, Inc. Response to FCC Request for Information, dated September 25, 1996 (Teleco September 25, 1996 Filing). a manufacturer of voice processing equipment and  X-distributor of PBXs, and Comdial Corporation (Comdial), C yO- xԍ See Comdial Response to FCC Request for Information, dated September 27, 1996 (Comdial September 27, 1996 Filing). 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.  X -x)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,  X -interchangeable numbering plan areas (INPAs).  xC yO- xԍ See, e.g., Lucent April 2, 1997 Filing at 1; Mitel April 10, 1997 Filing. INPAs are area codes that use a  xJnumber other than "1" or "0" as the middle digit. They were introduced into the public switched telephone network  yO`- xin January 1995. See Administration of the North American Numbering Plan, CC Docket No. 92-237, Report and Order, 11 FCC Rcd 2588 (1995) at n.8. 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  Xb-to four digit CICs, area codes changes and other NANP related changes.b` C yOs-ԍ See, e.g., Lucent October 4, 1996 Filing at 23; Nortel October 15, 1996 Filing; Mitel April 10, 1997 Filing. The campaigns included for example, mailings to customer base, participation in user group meetings, briefings, seminars, industry fora, and Bellcore Education seminars.  X-x*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."7 ,N(N(ZZ"Ԍ X-ԙx+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.  X -x,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,  X-but perhaps not significantly beyond that date.W C yO - xԍ According to Bellcore 474 four digit Feature Group D CICs (in the 5XXX and 6XXX range) were already  yO- xassigned as of February 28, 1997 (See Letter dated March 6, 1997, to Dave Ward, Common Carrier Bureau, from  yO- xNancy Fears, Bellcore, NANP Administration; see also Bellcore December 17, 1996 Letter at 2), and according to  yOa- xAT&T, CIC consumption for the six months prior to May 1996, was 16 CICs per month (see AT&T PN Comments  yO)- xat 8). The CIC consumption average between December 1996 and February 1997 was also 16 CICs per month (see  xYMarch 6, 1997 Nancy Fears Bellcore Letter). If monthly consumption were to continue at this rate between March  x1, 1997, and January 1, 1998, 160 CICs would be consumed. We estimate, however, that CIC consumption could  xincrease by an additional 16 CICs per month because the conservation plan modifications allow the assignment of  xan additional CIC to each applicant who qualifies (totalling 32 CICs per month). Therefore, we estimate, based on  xthe 16permonth CIC consumption average and the possibility that it could increase due to the conservation plan  x;modifications, that an additional 160 CICs could be assigned between March 1, 1997, and January 1, 1998 (totalling  yO- x320 CICs). Finally, the approximately 1,066 carriers who currently hold only one three or four digit CIC may also  yOi- xqualify for an additional CIC under the conservation plan modifications (See Letter dated March 6, 1997, to Dave  xWard, Common Carrier Bureau, from Nancy Fears, Bellcore, NANP Administration, stating 1,066 figure). If 75%  xof current single CIC holders ultimately obtain an additional CIC, we estimate CIC consumption will increase by  x800 CICs. In summary, the total estimated CIC consumption figure, without considering CIC demand from  xunanticipated new competitive entrants beyond the anticipated 16 new entrants per month, is 1,594 CICs. When this  x;figure is subtracted from the 1,969 four digit Feature Group D CICs in the 5XXX and 6XXX range that are available  xfor assignment, 375 CICs remain available for assignment to, for example, new entrants between March 1, 1997, and  xJanuary 1, 1998. If each new entrant is assigned two CICs, then the remaining 375 CICs can support up to 187.5  xnew entities during the transition (or 18.75 new entities per month). We find, given the absence of anything contrary  xin the record, that 375 CICs constitute an adequate supply for growth until January 1, 1998. We note that in the  xApril 30, 1996 Public Notice, we asked commenters to refresh the record on the issue of the transition in light of,  xamong other things, the anticipated increase in carriers entering the market as a result of these amendments to the Act. The record contains no specific forecasts of CIC consumption resulting from the amendments.W  Xb-x-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"4,N(N(ZZ" Feature Group D CICs would make it impossible to assign four digit Feature Group D CICs  X-other than those in the 5XXX and 6XXX range.IC yOb-ԍ See para. 7, supra.I 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  X-eighteen months to comply after receiving such a request.JXC yO-ԍ See para. 18, supra.J  Xv-x.47.` ` We require the NANP administrator to notify all CIC assignees of our decision  X_-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  X -this responsibility. C yO- xԍ A recent area code change in California directed the LEC administering the area code change to give 24  yOM- xmonths of notice to the affected area. See AirTouch Communications, et al., v. Pacific Bell, Case 9409058 Decision  x9508052 (August 11, 1995), at p. 67. Similarly, in Texas, the LEC had to effectuate the cutover and educate the  yO- x-public in twelve months. See Petition of MCI, et al., Order on Rehearing, Texas PUC Consolidated Docket No. 14447, SOAH Docket No. 473951003 (April 29, 1996), at p. 46.  X - xC.` ` Petition for Rulemaking of VarTec Telecom., Inc.  X-x/48.` ` VarTec filed a petition for rulemaking on May 11, 1995.C yO- xԍ See Petition for Rulemaking, CC Docket No. 92237, filed by VarTec Telecom Inc., May 11, 1995 (VarTec Petition). The petition  Xy-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  XK-petition, without prejudice, as repetitive under Section 1.401(e) of the Commission's rules.MK C yO-ԍ See 47 C.F.R.  1.401(e). M  X4-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  X-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  X-this docket has been open.f C yO$-ԍ See Final Regulatory Flexibility Analysis, Appendix C.f",N(N(ZZ"  X-x049.` ` After carefully reviewing the portion of VarTec's petition contesting the  X-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  X-petition and in its comments to the NPRM.C yO- x<ԍ We restate this assessment of VarTec's opposition in the Final Regulatory Flexibility Analysis, Appendix C at para. 7. 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.  XH- xD.` ` Conclusion  X -x150.` ` The Commission, on several occasions, has characterized telephone numbers as  X -a national public resource.X C yO- xԍ See, e.g., NANP Order at para. 4 (stating that telephone numbers are a public resource); The Need to  yO- xPromote Competition and Efficient Use of Spectrum for Radio Common Carrier Services, Declaratory Ruling, 2 FCC  yOd-Rcd 2910, 2912 (1987), recon., 4 FCC Rcd 2369 (1989) (stating that NXX codes are a national 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.  Xb-x251.` ` 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.  X- xE.` ` Procedural Matters  X-x` ` 1. Final Regulatory Flexibility Analysis  X-x352.` ` The Commission's Final Regulatory Flexibility Analysis appears in Appendix C.  Xe- xF.` ` Ordering Clauses  X7-x453.` ` Accordingly, IT IS ORDERED, pursuant to Sections 1, 4(i),201205, and 251(e)(1) of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i),  X -201205, and 251(e)(1), that the Second Report and Order is hereby ADOPTED." @,N(N(ZZ="  X-x554.` ` IT IS FURTHER ORDERED, that Bellcore, as the NANP administrator must  X-notify all CIC assignees of the Commission's decision in this Second Report and Order, consistent with the terms described herein.  X-x655.` ` 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  Xv-this Second Report and Order.  XH-x756.` ` 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.  X -x857.` ` 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.  X-x958.` ` IT IS FURTHER ORDERED, that this Second Report and Order is effective  Xy-upon 30 days after publication in the Federal Register. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhWilliam F. Caton x` `  hhActing Secretary",N(N(ZZ"  X- APPENDIX A: LIST OF PARTIES: APRIL 4, 1994 NPRM  X-) Parties Filing Comments (June 7, 1994) ă 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"#',N(N(ZZ%"Ԍ X-ԙq APPENDIX A (continued)  X- Parties Filing Comments (June 7, 1994) (continued) ă TeleCommunications 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)  X -  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"Q% ,N(N(ZZ $"  X- APPENDIX B: LIST OF PARTIES: APRIL 30, 1996 PUBLIC NOTICE Parties Filing Comments (may 21, 1996)  X- AT&T BellSouth Bell Atlantic Cincinnati Bell GTE MCI NYNEX Pacific Telesis SBC Telco Planning US WEST VarTec  Xy- Parties Filing Reply Comments (May 28, 1996) ă AT&T CompTel GTE Pacific Telesis SBC Sprint U S WEST"!,N(N(ZZ"  X- APPENDIX C: FINAL REGULATORY FLEXIBILITY ANALYSIS  X-  1. 1. 1. a.(1)(a) i) a): I. A. 1. a.(1)(a) i) a)  X-x1.` ` 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  X-(NPRM) in this proceeding, and certified that there was no significant economic impact on a  X-substantial number of small entities. C yO- xxԍ See NPRM at para. 59. We note that the certification was issued prior to enactment of the amendments to  xZthe RFA in the Small Business Regulatory Enforcement Fairness Act of 1996 ("SBREFA"), which was enacted as  xSubtitle II of the Contract With America Advancement Act of 1996 (CWAAA), Pub. L. No. 104121, 110 Stat. 847 (1996). The Commission sought written public comments on  Xv-the proposals in the NPRM. Although there were no comments filed in response to the  X_-certification, as discussed below,I_C yO -ԍ See para. 3, infra.I because of parties' concerns about the effect of our actions  XH-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.  X -x A.` ` Need for and Objectives of this Second Report and Order x`  X -x2.` ` 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  Xy-Feature Group D CICs, and five and seven digit CACS, may be used. This Second Report  Xb-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  X4-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 procompetitive, 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  X-telecommunications services market, some of which may be small businesses. The Second  X|-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.  X -x B.` ` Analysis of Significant Issues Raised in Response to the Certification  X-x3.` ` 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" "@,N(N(ZZ" 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  X-corporations and on small telecommunications companies is not likely to be significant."KC yOK-ԍ See NPRM at para. 59.K No comments were submitted in response to the certification. In response to the actions proposed  X-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  Xv-certification and requests that the Commission publish a regulatory flexibility analysis.9XvXC yO - xԍ See Petition for Rulemaking, CC Docket No. 92237, filed by VarTec Telecom Inc., May 11, 1995 (VarTec  xPetition) at 11. VarTec filed its petition prior to enactment of the CWAAA. We note that VarTec is a small business entity.9 Even though VarTec had the opportunity to address regulatory flexibility concerns in its comments  XH-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  X -grandfathering in its comments and other portions of the petition.I xC yO-ԍ See para. 7, infra.I However, because of parties' concerns about the effect of our actions on small entities, we have, on our own  X -motion, reconsidered our certification in the NPRM and decided to undertake a FRFA.  X-x4.` ` In addition, we also consider and implement alternatives in this Second Report  Xy-and Order that seek to benefit competing providers of telephone exchange service and  Xb-telephone toll service which may include small business entities.bC yO-ԍ See para. 12, infra, fora discussion of the definition of small business. 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  X-amended. For example, in the Second Report and Order, we modify the CIC conservation  X-plan to allow each entity to have two CIC assignments.^C yO8-ԍ See Second Report and Order at para. 31.^ 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.  XN-x5.` ` 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"7#( ,N(N(ZZ"  X-CACs, rather than replacing the five digit CACs, should "supplant" them.cC yOy-ԍ See VarTec Petition at 1314; Vartec Comments at 6.c VarTec asks the Commission, if it is unable to implement grandfathering, to at least set a specific date for the  X-termination of the permissive dialing period.I XC yO-ԍ See VarTec Petition at 16.I VarTec offers an extensive overview of its experiences with different LECs when inquiring as to when IXCs would be required by the  X-LECs' system to use four digit Feature Group D CICs.E C yO= -ԍ See id. at 610.E In addition, VarTec explains how a specific compliance date can help smaller IXCs plan for the change to four digit Feature  Xv-Group D CICs. vxC yO - xZԍ See id. at 25 ("While competition in the interexchange telecommunications market is increasing, failure by  x<the Commission to promulgate clear rules establishing practices and procedures utilized during the Feature Group  xD CIC expansion would provide larger telecommunications entities an unfair advantage over smaller telecommunications companies.").  XH-x6.` ` 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.  X -Grandfathering would exempt these CICs from the conversion to four digits. The Second  X -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  X -the 5XXX and 6XXX range.  ` C yO- xԍ See Second Report and Order at para. 46. For an explanation of CICs in the 5XXX and 6XXX range, see  yO-id. at para. 7. 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  X-eighteen months to comply after receiving such a request.P  C yO-ԍ See id. at para. 46.P  Xb-x7.` ` 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  X4-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  X-NPRM. We note that this Second Report and Order, which sets a date for the end of the  X-transition, resolves VarTec's uncertainty regarding when the transition would end.PH C yO$-ԍ See id. at para. 49.P"$,N(N(ZZ"  X-x8.` ` 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  X-convert trunk group configurations to the four digit format.JC yO-ԍ See VarTec Petition at 18.J This Second Report and Order addresses each of these concerns.  XH-x9.` ` 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  X -NPRM. For example, GVNW Inc./Management (GVNW) GVNW Inc./Management  X -(GVNW),^ XC yO-ԍ See Second Report and Order at para. 18.^ supporting a sixyear exemption from conversion obligations for smaller, rural telephone companies, in addition to the proposed six year permissive dialing period, contends  X -that such an exemption is appropriate for their transition to be costeffective.M C yOW-ԍ See GVNW Reply Comments at 1.M 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  Xy-demand for new services offered in software updates."GyxC yO-ԍ See GVNW Comments at 3.G GVNW states that many manufacturers charge LECs for "each level of software update" which, according to GVNW,  XK-would lead to much expense in order to modify switches to accept four digit CIC codes.?KC yO-ԍ See id. ? The Organization for the Promotion and Advancement of Small Telecommunications  X-Companies (OPASTCO),C yOf- xԍ OPASTCO was formerly known as the Organization for the Protection and Advancement of Small Telephone Companies. which represents more than 440 independently owned and operated  X-telephone companies serving rural areas,J C yO -ԍ See OPASTCO Comments at 1.J supports a sixyear 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  X-to comply after receiving such a request.w C yO%-ԍ See Second Report and Order at para. 18; OPASTCO Comments at 56.w The Alarm Industry Communications Committee (AICC) argues that the sixyear period proposed by the Commission is necessary because"%,N(N(ZZ" certain alarm companies will need to engage in significant alarm panel reprogramming in  X-order to implement the change from three to four digit CICs, and five to seven digit CACs.sXC yOb- xԍ See Second Report and Order at para. 19, AICC Reply Comments at 3. AICC, representing over 90 percent  xof the alarm securities provided throughout the United States, is a subcommittee of the Central Station Alarm  yO-Association. See AICC Reply Comments at 1. s 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 preprogrammed call  X-to the central station over the public switched telephone network.OC yO= -ԍ See AICC Reply Comments at 12.O 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  X_-change the dialing pattern in each alarm panel installed within the protected premises.C_xC yO -ԍ See id. at 2.C AICC states that reprogramming must be completed in a timely fashion to avoid endangering life,  X1-safety, and property.=1C yO-ԍ See id.=  X -x 10.` ` We note that commenters to the NPRM and the Public Notice issued April 30,  X -1996 (asking for further comments), C yO5- xԍ Further Comments, Carrier Identification Codes, CC Docket 92237, Public Notice, DA 96678 (Common Carrier Bureau, April 30, 1996). which included carriers of varying sizes, favored  X -different time periods for the transition for Feature Group D CIC expansion. In the Second  X -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)  Xy-of the Act to ensure that numbers are "available on an equitable basis,"Jy C yO-ԍ See 47 U.S.C.  251(e).J but also responsive to possible hardships on small business entities such as costs and timing of conversion to four  XK-digit CIC capability.bK C yO|-ԍ See Second Report and Order at paras. 2931.b 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  X-other small entities.XC yO"- x.ԍ See 47 U.S.C.  257. The Commission issued a Notice of Inquiry in May 1996 to begin implementing  yO#- xSection 257. See In the Matter of Section 257 Proceeding to Identify and Eliminate Market Entry Barriers for Small  yOn$-Businesses, Notice of Inquiry, GN Docket No. 96-113, 11 FCC Rcd. 6280 (1996).   X-x 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. "&0,N(N(ZZ" 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  Xv-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  XH-among all of the affected parties.^HC yO -ԍ See Second Report and Order at para. 35.^ 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 flashcut 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 flashcut 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 flashcut  XK-conversion.J KXC yOT-ԍ See id. at para. 30.J  X-x C.` ` Description and Estimates of the Number of Small Entities  X-Affected by this Second Report and Order x`  X-x 12.` ` The RFA defines "small entity" to include the definition of "small business  X-concern" under the Small Business Act, 15 U.S.C.  632.!C yOZ- x-ԍ See 5 U.S.C.  601(6) (incorporating by reference the definition of "small business concern" in 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  X|-Small Business Administration (SBA).M"|@C yOm!-ԍ See 15 U.S.C.  632(1)(a).M 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  X7-1500 or fewer employees.#7C yO%- x-ԍ See 13 C.F.R.  121.201, Standard Industrial Classification (SIC) Codes 4812 and 4813 (SIC 4812 and SIC 4813, respectively). These standards also apply in determining whether an entity is a small business for purposes of the RFA." '( #,N(N(ZZ"Ԍ X-ԙx 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  X-"small business concerns."$C yO4- x<ԍ See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, First  yO- xReport and Order, 11 FCC Rcd 15499 (1996) (First Interconnection Order), motion for stay of the FCC's rules  yO- xpending judicial review denied, Implementation of the Local Competition Provisions in the Telecommunications Act  yO- xof 1996, Order, 11 FCC Rcd 11754 (1996), partial stay granted, Iowa Utilities Board v. FCC, No. 963321, 1996  yOT-WL 589204 (8th Cir. Oct. 15, 1996) (Iowa Utilities Board v. FCC) at paras. 13281330 and 1342. Accordingly, our use of the terms "small entities" and "small  X-businesses" does not encompass small incumbent LECs.R%xC yO -ԍ See id. at para. 1342.R 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."  X1-x 14.` ` The decisions made by the Commission in this Second Report and Order may apply to a variety of entities listed below.  X -x15.` ` 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  XK-companies reported that they were engaged in the provision of local exchange service.f&XKC yO- xjԍ Federal Communications Commission, CCB, Industry Analysis Division, Telecommunications Industry  yO- xxRevenue: TRS Fund Worksheet Data, Tbl. 1 (Average Total Telecommunications Revenue Reported by Class of  yO-Carrier) (Dec.1996) (TRS Worksheet). f 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  X-affected by the decision and rules adopted in this Second Report and Order.  X-x16.` ` 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" (( &,N(N(ZZz"  X-they were engaged in "other" toll services. 'C yOy- xԍ Id. Firms filing TRS Worksheets are asked to select a single category that best describes their operation. As a result, some carriers describes themselves as IXCs, some as resellers, some as OSPs, and some as "other."  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  X-the decision and rules adopted in this Second Report and Order.  X_-x17.` ` 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 12radiotelephone firms out of a total of 1,176 such firms that operated during 1992  X -had 1,000 or more employees.;(X C yO- xYԍ U.S. Bureau of the Census, U.S. Department of Commerce, 1992 Census of Transportation, Communications,  x-and Utilities, UC92-S-1, Subject Series, Establishment and Firm Size, Table 5, Employment Size of Firms: 1992, SIC 4812 (issued May 1995).; 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.  Xb- x18.` ` 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  Xe-are engaged in the provision of mobile services.H)e@C yOV"-ԍ See TRS Worksheet.H 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")),N(N(ZZ<"  X-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.  X-x19.` ` 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  Xv-average gross revenues of less than $40 million in the three previous calendar years.*XvC yO- xZԍ See Amendment of Parts 20 and 24 of the Commission's Rules Broadband PCS Competitive Bidding and  yO- xthe Commercial Mobile Radio Service Spectrum Cap, Report and Order, FCC 96278, WT Docket No. 96253, paras.  yO -57 60 (rel. June 24, 1996); See also 47 C.F.R.  24.720(b) . 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  X1-million for the preceding three calendar years. <+X1C yO - xZԍ See Amendment of Parts 20 and 24 of the Commission's Rules Broadband PCS Competitive Bidding and  yO- xthe Commercial Mobile Radio Service Spectrum Cap, Report and Order, FCC 96278, WT Docket No. 96253, para. 60 (1996).< These regulations defining "small entity'' in the context of broadband PCS auctions have been approved by the SBA. No small businesses within the SBAapproved 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  X -Blocks D, E, and F., C yOw-ԍ FCC News, Broadband PCS, D, E and F Block Auction Closes, Mimeo No. 71744 (rel. Jan. 14, 1997). 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  Xb-total of 183 small PCS providers as defined by the SBAJ-bC yO-ԍ See para. 17, supra.J and the Commission's auction rules.  X-x20.` ` Paging and Radiotelephone Service, and Private Land Mobile Radio Services,  X-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 nonnationwide 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" *( -,N(N(ZZ" 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 nonnationwide 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.  X-x21.` ` 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  X-that they were engaged in the provision of competitive access services.H.C yOh-ԍ See TRS Worksheet.H 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  X|-affected by the decision and rules adopted in this Second Report and Order.  XN-x22.` ` 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  X -reported that they were engaged in the provision of operator services.3/ XC yO$-ԍ Id.3 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""+/,N(N(ZZ!" 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  X-service providers that may be affected by the decision and rules adopted in this Second Report  X-and Order.  X-x23.` ` 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  X -services.30 C yOe -ԍ Id.3 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  X-pay telephone operators that may be affected by the decision and rules adopted in this Second  Xy-Report and Order.  XK-x24.` ` 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  X-services.31XC yO-ԍ Id.3 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  XN-resellers that may be affected by the decision and rules adopted in this Second Report and  X7-Order.  X -x25.` ` Telecommunications Equipment Manufacturers. The SBA classifies manufacturers of telecommunications equipment in two categories, one for wireless and another for wireline.  X!-x26.` ` Wireline Telecommunications Equipment Manufacturers. Neither the Commission nor the SBA has developed a specific definition of small entities applicable to"",1,N(N(ZZ!" 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  X-business concern.K2C yO4-ԍ 13 C.F.R.  121.201, SIC 3661.K 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  X-1000 employees and would be classified as small entities.3XC yO- xԍ U.S. Dept. of Commerce, 1992 Census of Transportation, Communications and Utilities, Table 1D, (issued May 1995), SIC 3661. 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.  X -x27.` ` 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  X -Equipment.4 C yO- xԍ This category excludes establishments primarily engaged in the manufacturing of household audio and visual equipment which is categorized as SIC 3651. According to the SBA's regulations, a small entity must have 750 or fewer  X-employees in order to qualify as a small business concern.K5C yOI-ԍ 13 C.F.R.  121.201, SIC 3663.K 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  XK-would be classified as small entities.6KC yO- xԍ U.S. Dept. of Commerce, 1992 Census of Transportation, Communications and Utilities, Table 1D, (issued May 1995), SIC 3663. 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.  X-x28.` ` 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  Xe-entity is an alarm equipment manufacturer employing 750 or less persons.K7e C yO'-ԍ 13 C.F.R.  121.201, SIC 3669.K Census Bureau"e- 7,N(N(ZZ" data indicates that there are 498 U.S. firms that manufacture alarm equipment, and that 469 of  X-these firms have fewer than 750 employees and would be classified as small entities.8C yOb- xԍ U.S. Dept. of Commerce, 1992 Census of Transportation, Communications and Utilities, Table 1D, (issued May 1995), SIC 3669. 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  Xv-alarm equipment that may be affected by the decision and rules adopted in this Second Report  X_-and Order.  X1-x29.` ` 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  X -maintenance of security systems devices, such as burglar and fire alarms.9 C yO- x>ԍ Standard Industrial Classification Manual, (SIC) 7382, Executive Office of the President, Office of Management and Budget (1987). According to the  X -SBA, a small security system provider must have $9 million or less in annual receipts.K: xC yO-ԍ 13 C.F.R.  121.201, SIC 7382.K 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  X -receipts.; C yO`- xKԍ 1992 Economic Census Industry and Enterprise Receipts Size Report, Table 2D, SIC 7382 (U.S. Bureau of the Census data under contract to the Office of Advocacy of the U.S. Small Business Administration).  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  Xy-this Second Report and Order.  XK-x D.` ` Description of Projected Reporting, Recordkeeping and  X4-Other Compliance Requirements of the Rules x`  X-x30.` ` Bell Communications Research (Bellcore) Bellcore, as the NANP  X-administrator, is required to notify all CIC assignees of the decision in this Second Report and  X-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  X-conservation plan in this Second Report and Order. There are no specific reporting,  X-recordkeeping or other compliance requirements imposed by this Second Report and Order on other entities."|.` ;,N(N(ZZ"  X-x E.` ` Significant Alternatives Minimizing Impact on Small Entities  X-and Consistent with Stated Objectives x`  X-x31.` ` 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 flashcut conversion that could be detrimental in particular to smaller carriers and equipment owners  Xv-that could need to modify or replace their systems to support four digit CICs.^<vC yO-ԍ See Second Report and Order at para. 30.^ We  X_-considered various alternatives, such as reclamation of unused CICs. In the Second Report  XH-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 longterm solution. Although reclamation of three digit CICs may provide some shortterm relief, the total number of available three digit Feature Group D CICs would  X -continue to be less than one thousand.i= XC yO- xԍ See id. at para. 28. According to Bellcore, the three digit Feature Group D CIC format can only provide the  yO- x[industry with 969 CICs. See Letter from Nancy K. Fears, NANP Administration, to Octavia Florence of the  xCommon Carrier Bureau, Dated July 9, 1996. Therefore, a maximum of 969 three digit CICs are available for all  yOM- xmembers of the industry, and reclamation will not increase this number. See Second Report and Order at footnote 108.i  X -x32.` ` 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.  Xb-x` ` F. Report to Congress   X4-x 33.` ` The Commission shall send a copy of this Final Regulatory Flexibility  X-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.