Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) 1998 Biennial Regulatory Review -- ) Repeal of Part 62 of the ) CC Docket No. 98-195 Commission's Rules ) ) REPORT AND ORDER Adopted: July 7, 1999 Released: July 16, 1999 By the Commission: Commissioner Furchgott-Roth issuing a statement. I. INTRODUCTION 1. In this Report and Order (Order), we repeal Part 62 of our rules governing interlocking directorates, which implements section 212 of the Communications Act of 1934, as amended (the Act), because we conclude that Part 62 is no longer necessary in the public interest. We also conclude that we should forbear from applying those provisions in section 212 of the Act that prohibit any person from holding the position of officer or director of more than one carrier subject to the Act without obtaining prior Commission authorization. These actions will serve the public interest by reducing the regulatory burden on common carriers and other interested persons required to file with the Commission pursuant to Part 62 and by allowing such resources to be directed instead toward the deployment of services and new technologies. II. BACKGROUND 2. Congress intended section 212 of the Act, established as part of the original Communications Act of 1934, to guard against the anticompetitive potential arising from the interlocking of companies through the sharing of officers or directors. The Commission adopted Part 62 of its rules to implement the Congressional mandate set forth in section 212 of the Act. As originally adopted by the Commission, Part 62 required an individual seeking to hold positions with more than one non-affiliated carrier to file an application containing detailed information demonstrating that neither private nor public interests would be harmed by granting authorization to hold interlocking directorates. The Commission addressed each application on a case-by-case basis and usually found that the "interlocks" offended neither public nor private interests. In addition, although the Commission routinely placed each application on public notice, the applications were usually unopposed. 3. In the mid-1980s, the Commission initiated a rulemaking to consider revising its rules relating to interlocking directorates. During the course of that rulemaking, the Commission noted that in light of growing competition and advances in telecommunications, the need for stringent oversight and intervention in the free market activities of carriers had lessened. The Commission thus modified Part 62 of its rules by eliminating the requirement of prior Commission approval for interlocks between or among non-dominant carriers as defined in the Competitive Carrier Proceeding, cellular licensees in different geographic markets, or carriers and their parent companies. The Commission, concluding that these interlocks would not adversely affect public or private interests, required only that such interlocks be reported to the Commission within 30 days after occurring. The Commission, however, declined to remove the preauthorization requirement for those interlocks involving a dominant carrier or a carrier not yet found to be non-dominant, concluding that market power or control of essential facilities might allow such interlocks to engage in anticompetitive conduct. 4. We initiated this proceeding by a Notice of Proposed Rulemaking (Notice) released on November 17, 1998. In the Notice, we designated this proceeding as part of our 1998 biennial review of regulations pursuant to section 11 of the Act. Section 11 requires the Commission to conduct a biennial review, in every even-numbered year beginning in 1998, of "all regulations . . . that apply to the operations or activities of any provider of telecommunications service" and to "determine whether any such regulation is no longer necessary in the public interest as the result of meaningful economic competition between providers of such service." Section 11 further requires the Commission to repeal or to modify any regulation it determines is no longer necessary in the public interest. 5. In the Notice, we tentatively concluded that Part 62 of our rules governing interlocking directorates is no longer necessary to the public interest and therefore should be repealed. Specifically, we proposed to eliminate the requirements that: (1) application be made to hold interlocking positions with more than one carrier subject to the Act where one carrier sought to be interlocked is either a dominant carrier, or a carrier not yet determined to be non- dominant; (2) applications for findings of common ownership be filed if dominant carriers are involved; (3) interlocking positions of more than one carrier subject to the Act involving non- dominant carriers, connecting carriers, cellular licensees operating in different geographic markets, and parents of carriers, among others, be reported to the Commission within 30 days after such interlock occurs; and (4) any change in status as reported under Part 62 of the rules be reported to the Commission within 30 days of such change. 6. Additionally, in the Notice, we tentatively concluded that we should forbear from enforcing those provisions of section 212 of the Act that address interlocking directorates. Section 10 of the Act requires the Commission to forbear from applying any provision of the Act, or any regulations, to a telecommunications carrier or telecommunications service, or class thereof, if the Commission makes certain specified findings with respect to such provisions or regulations. In the Notice, we tentatively concluded that section 212 of the Act: (1) is not necessary to ensure that carriers' charges, practices, or classifications are just and reasonable, and are not unjustly or unreasonably discriminatory; and (2) is not necessary for the protection of consumers. We also tentatively concluded that forbearance from applying interlocking directorate requirements is consistent with the public interest. 7. The Commission received eleven comments and one reply comment in this proceeding. As discussed more thoroughly below, all but one commenter support our tentative conclusions that we should repeal Part 62 of our rules and forbear from enforcing the interlocking directorate provisions of section 212 of the Act. III. DISCUSSION A. Repealing Part 62 of the Commission's Rules 8. We adopt our tentative conclusion that Part 62 of our rules is no longer necessary in the public interest and therefore should be repealed. Specifically, we eliminate the requirements that: (1) application be made to hold interlocking positions with more than one carrier subject to the Act where one carrier sought to be interlocked is either a dominant carrier, or a carrier not yet determined to be non-dominant; (2) applications for findings of common ownership be filed if dominant carriers are involved; (3) interlocking positions of more than one carrier subject to the Act involving non-dominant carriers, connecting carriers, cellular licensees operating in different geographic markets, and parents of carriers, among others, be reported to the Commission within 30 days after such interlock occurs; and (4) any change in status as reported under Part 62 of the rules be reported to the Commission within 30 days of such change. We find that interlocking directorates rarely threaten to constrain competition. More precisely, we find it difficult to envision a proposed interlock that the Commission would conclude to be anticompetitive, ab initio, such that the Commission would deny approval for such interlock. To the extent that potentially anticompetitive interlocks may occur, we further find that other Title II provisions and antitrust laws adequately protect against the particular concerns our Part 62 rules seek to address. Therefore, we find that our rules are no longer necessary in the public interest and should be repealed. 9. In the Notice, we tentatively concluded that other Title II provisions and antitrust laws would be sufficient to guard against the anticompetitive behavior that might arise from interlocking directorates. We noted, however, that not all telecommunications markets are fully competitive and, therefore, sought comment on whether any situation exists where other regulatory or legal mechanisms would not be sufficient to deter anticompetitive conduct. We also sought comment on whether, given the various product markets and the existence of differing degrees of competition within such markets, our analysis pertaining to deleting these rules should vary from market to market. As discussed more thoroughly below, although we sought comment on various product markets, commenters did not distinguish among the various telecommunications markets, with the limited exception of addressing the incumbent local exchange market. 10. We adopt our tentative conclusion that it would serve the public interest to eliminate the requirement of prior Commission approval before consummating interlocks involving dominant carriers or those carriers not yet found to be non-dominant. Our rules set forth in Part 62 are designed to guard against the anticompetitive potential arising from the interlocking of companies through the sharing of officers or directors. We agree with GTE, Qwest, Viatel, and U S WEST that the present telecommunications marketplace has changed significantly since the Commission adopted Part 62, and thus, as U S WEST states, that these rules are "products of a bygone era." The Commission's rule requiring authorization prior to assuming an interlocking position was promulgated in an era when the telecommunications market was overshadowed by a single, dominant provider. The present domestic, interstate, interexchange marketplace, for example, is distinctly different, because there are no longer dominant carriers. We specifically find that where competition exists the risk of anticompetitive behavior as a result of interlocking directorates is extremely limited. 11. We recognize that individual carriers continue to be dominant and by definition possess market power in certain telecommunications markets, particularly the local exchange market and certain individual international routes. We conclude, however, that even in these markets, the development of competition and the existence of other regulatory and legal safeguards provide adequate protections against the competitive harms sought to be addressed by the Part 62 rules. We agree with those commenters, including Ameritech, Bell Atlantic, and GTE, who state that we should repeal our Part 62 rules even in those markets that are not yet fully competitive, including the local exchange market. We find that interlocking directorates, even where dominant carriers are involved, rarely lead to anticompetitive conduct or consumer concerns. Since amending our rules in 1986, we have received approximately two dozen applications seeking preapproval of interlocking directorates. Although we sought public comment on those applications, few comments were filed, and there were no oppositions to the proposed interlocks even where such interlocks involved dominant carriers. This conclusion is also supported by our experience since our decision in 1994 to forbear from regulating pursuant to section 212 with respect to commercial mobile radio services (CMRS), even though we found that the cellular market was not yet fully competitive. In doing so, we noted that the "antitrust concerns that Section 212 was designed to address are already addressed through other Title II provisions or by antitrust laws." We are unaware of any instances where our decision to forbear from enforcing section 212 with regard to CMRS has resulted in anticompetitive conduct. 12. We further conclude that our Part 62 rules are no longer necessary in the public interest, even where dominant carriers are involved, because we find that other Title II provisions and antitrust laws adequately guard against anticompetitive behavior that might arise from interlocking directorates. For example, the Clayton Act prevents the potential for harm arising from interlocking positions by prohibiting a person from serving as an officer or director of two competing corporations whose size exceeds certain statutory thresholds. Therefore, we find that the harm that our Part 62 rules seek to prevent can be addressed, if necessary, through other statutory provisions. Accordingly, we conclude that our rules are duplicative of other interlocking directorate provisions, and therefore, are no longer necessary in the public interest. 13. Pointing to provisions adopted as part of the 1996 Act allowing Bell Operating Companies (BOCs) to obtain up to a ten percent interest in long distance, internet, or information service companies, MCI WorldCom argues that the Clayton Act is insufficient to prevent "exclusive arrangements incumbent local exchange companies (ILECs) may [now] exercise through vertical interlocks with companies" in these markets. Therefore, MCI WorldCom argues, our Part 62 rules should be retained for dominant carriers. MCI WorldCom also asserts that the limited number of filings is not evidence that there is little potential for abuse, arguing that Part 62 has deterred interlocks that present anticompetitive risks. 14. We disagree with MCI WorldCom's argument that we should retain our Part 62 rules where dominant carriers are involved. We recognize that section 8 of the Clayton Act does not prevent all types of interlocks. As stated above, however, we find that, interlocking directorates rarely raise anticompetitive concerns. Moreover, we find that in the unlikely event that an interlocking directorate threatens to constrain competition, other Title II provisions, such as section 201(b) of the Act and the complaint process of section 208, exist to address such harm. Section 201(b) of the Act addresses the harms that may arise from anticompetitive conduct by requiring that carriers' charges, practices, and classifications be just and reasonable, and these provisions may be enforced by the Commission on its own motion or though formal complaints filed pursuant to section 208 of the Act. Thus, we find without merit MCI WorldCom's argument that the new ownership provisions of the 1996 Act create an additional risk of anticompetitive interlocks. 15. We further disagree with MCI WorldCom's contention that our Part 62 rules, unlike other Title II provisions or antitrust laws, are the only means for us "to identify the possibility of subtle, hard-to-detect abuses involving dominant carriers and competitive firms operating in downstream, interexchange, internet, and information services markets, before the abuses occur." We agree with Bell Atlantic that MCI WorldCom does not articulate what these subtle abuses might be nor how retaining our prior approval requirements would effectively serve to prevent such abuses. In particular, we find that it is unlikely that we would be presented with a particular proposed interlock that is patently anticompetitive, ab initio, such that the application should be denied. We also believe that any interlock that is so patently anticompetitive that we would deny an application also would be identified by the other statutory protections identified above. Accordingly, we conclude that the Part 62 rules provide little, if any, additional protections. 16. We also adopt our tentative conclusion that we should repeal the interlocking directorate reporting requirements set forth in our Part 62 rules. All commenters, with the exception of MCI WorldCom, agree with our tentative conclusion that the reporting requirements set forth in Part 62 of our rules are no longer in the public interest and therefore should be repealed. We note that this conclusion is consistent with our previous determination to forbear from enforcing section 212 with respect to CMRS even though the cellular market was not yet fully competitive. As stated above, we note that forbearance from enforcing section 212 with regard to CMRS has not resulted in anticompetitive conduct. As noted above, we also find that the concerns that Part 62 of our rules sought to address can be addressed, if necessary, through other more general Title II provisions as well as through antitrust or securities laws. In particular, we note that certain securities regulations, such as the 10K filing and Regulation S-K, require extensive disclosure of officers and directors. We find that these comprehensive filing requirements duplicate our Part 62 post-interlock filing requirements, permitting the repeal of the latter. 17. We agree with those commenters who argue that repealing our Part 62 rules would serve the public interest. GTE and GST state that complying with our reporting requirements is a costly administrative burden. Qwest similarly states that the proposed repeal "will eliminate unnecessary regulatory burdens, legal fees, and costs, direct and indirect of compliance." We find that carriers seeking permission to hold interlocking directorates incur not only costs in preparing such filings, but also "substantial delays before they can implement a potentially beneficial restructuring." To this end, we find that repealing Part 62 of our rules would eliminate a significant and unnecessary expenditure of carrier resources and that such benefit substantially outweighs any minimal protections afforded by their continued enforcement. We previously have found that the elimination of unnecessary regulatory burdens and legal costs incurred to fulfill such regulatory requirements permits resources to be directed instead toward the prompt implementation of service. We also agree with GTE that Commission resources expended to review such filings could be used for other purposes. Therefore, we conclude that repealing our Part 62 rules will serve the public interest by allowing unnecessary expenditures of both the carriers and the Commission to be directed instead toward the prompt implementation of service and the deployment of new technologies. 18. We decline to adopt in this Order the recommendations of Qwest and Viatel that we also repeal other provisions of our rules regarding interlocking directorates. Specifically, these commenters request that we repeal sections 63.18(h)(2) and 1.767(a)(6) of our rules, which require applications regarding cable landing licenses to indicate whether there are interlocking directorates. These commenters argue that our proposed repeal of the Part 62 rules "implicitly repeals all other provisions of the Commission's rules which require reporting of interlocking directorates." These commenters further state that eliminating sections 63.18(h)(2) and 1.767(a)(6) of our rules will eliminate unnecessary regulatory burdens, legal fees, and costs of compliance. We confined the Notice to comment on the interlocking directorates provisions set forth in Part 62 of our rules. The interlocking directorate reporting requirements set forth in sections 63.18(h)(2) and 1.767(a)(6) are separate and distinct from those requirements set forth in Part 62 and serve different policy goals from those set forth in Part 62. Accordingly, and without regard to the merits of these suggestions, we conclude that there is insufficient notice to adopt commenters' suggestions that we also repeal sections 63.18(h)(2) and 1.767(a)(6) of our rules. B. Statutory Forbearance 1. Background 19. The 1996 Act provides for regulatory flexibility by requiring the Commission to forbear from applying any regulation or any provision of the Act, to telecommunications carriers or telecommunications services, or classes thereof, if the Commission determines that certain conditions are satisfied. Specifically, Section 10 of the Act requires the Commission to forbear from application of its rules or provisions of the Act if it finds that: (1) enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications or regulations, by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable, and are not unjustly or unreasonably discriminatory; (2) enforcement of such regulation or provision is not necessary for the protection of consumers; and (3) forbearance from applying such provision or regulation is consistent with the public interest. In determining whether forbearance from enforcing a particular provision or regulation is in the public interest, the Commission is required to consider whether forbearance will promote competitive market conditions, including the extent to which forbearance will enhance competition among providers of telecommunications services. 20. In the Notice, we tentatively concluded that we should forbear from enforcing the provisions of section 212 of the Act requiring any person seeking to hold the position of officer or director with more than one carrier subject to the Act to seek prior Commission approval. We tentatively concluded that these provisions of section 212 of the Act: (1) are not necessary to ensure that a carrier's charges, practices, or classifications are just and reasonable, and are not unjustly or unreasonably discriminatory; and (2) are not necessary for the protection of consumers. We also tentatively concluded that forbearance from enforcing these requirements is consistent with the public interest. We recognized in the Notice that section 212 of the Act applies to carriers in telecommunications markets that may not yet be fully competitive, and therefore, sought comment on whether the analysis undertaken to consider forbearance from enforcing section 212 of the Act should vary from market to market. No commenter opposes our tentative conclusion that we should forbear from section 212 of the Act as applied to all carriers in all telecommunications markets. For all the reasons detailed previously in support of eliminating our Part 62 rules, we conclude that each of the statutory criteria for forbearance is satisfied, and therefore, that we should forbear from enforcing these provisions of section 212 of the Act in all markets. 2. Statutory Criteria for Forbearance a. Just and Reasonable Practices 21. No commenter opposes our tentative conclusion in the Notice that enforcing section 212 of the Act is not necessary in any particular telecommunications market, including those that are not yet fully competitive, to ensure that carriers' charges, practices, regulations, or classifications are just and reasonable, and not unjustly or unreasonably discriminatory. These commenters assert that the competitive nature of most sectors of the communications marketplace will ensure that a carrier's charges and practices are just and reasonable and not unjustly or unreasonably discriminatory. 22. For the reasons discussed above in conjunction with repealing our Part 62 rules, we find that we should forbear from enforcing section 212 of the Act even where dominant carriers are involved. As discussed above, we find that interlocks rarely threaten to constrain competition. We also find that in the unlikely event an interlock creates the potential for anticompetitive conduct, the specific concerns that section 212 of the Act sought to prevent can be addressed by other regulatory and legal safeguards such as other Title II provisions or by antitrust laws. More importantly, even if a potential threat to competition exists, it is unlikely that such threat could be identified, ab initio, such that the Commission would deny an application. Therefore, we adopt our tentative conclusion that enforcing section 212 of the Act is not necessary in any particular telecommunications market, including those that are not yet fully competitive, to ensure that carriers' charges, practices, regulations, or classifications are just and reasonable, and not unjustly or unreasonably discriminatory. b. Consumer Protection 23. We also adopt our tentative conclusion that section 212 of the Act is not necessary for the protection of consumers. Several commenters agree with our tentative conclusion, based on our experience reviewing interlock applications and filings, that interlocking directorates rarely raise consumer concerns. In the unlikely event that an interlocking directorate threatens to constrain competition, other Title II provisions, such as section 201(b) of the Act and the complaint process, adequately address such harm. Specifically, section 201(b) of the Act addresses the harms that may arise from anticompetitive conduct by requiring that carriers' charges, practices, and classifications be just and reasonable, and these provisions may be enforced by the Commission on its own motion or though formal complaints filed pursuant to section 208 of the Act. Therefore, and for the reasons discussed previously, we conclude that forbearance from section 212 of the Act will not deprive consumers of protection from unlawful carrier practices. c. Public Interest 24. We also adopt our tentative conclusion that forbearance is consistent with the public interest and will promote competition in the various markets affected by the requirements set forth in section 212 of the Act. We found above that our Part 62 rules are no longer necessary to the public interest. We agree with GTE that forbearance will promote competitive market conditions among providers of telecommunications services by relieving providers of the regulatory and legal costs that arise from the filing, reporting, and authorization requirements relating to interlocking directorates. Thus, forbearance will serve the public interest by allowing providers of telecommunications services to respond more quickly to competition and by allowing carriers to dedicate resources to the implementation of service and the deployment of new technologies. We also find that there is no public interest that necessitates retaining section 212 of the Act. As discussed above, section 212 is not necessary to ensure just and reasonable rates and practices or to protect consumers. Therefore, we conclude that we should forbear from those provisions of section 212 of the Act addressing interlocking directorates. C. Other 25. In the Notice, we proposed to forbear solely from those provisions set forth in section 212 of the Act that address interlocking directorates. In doing so, we specifically stated that the Notice did not address the remainder of section 212, which makes it unlawful for any officer or director of any carrier subject to this Act to receive for his own benefit directly or indirectly, any money or thing of value in respect of negotiation, hypothecation, or sale of securities issued or to be issued by such carriers, or to share in any of the proceeds thereof, or to participate in the making or paying of any dividends of such carriers from any funds properly included in the capital account. One commenter, the Securities Industry Association (SIA), however, requests that the Commission forbear from all of section 212 of the Act including the above quoted provision, which makes it unlawful for an officer or director of a carrier to benefit from certain transactions involving that carrier's securities. We did not seek comment as to whether this provision satisfied the statutory criteria for forbearance under section 10 of the Act, and therefore, forbearance from this provision of section 212 of the Act is beyond the scope of this rule making proceeding and we deny SIA's request. IV. CONCLUSION 26. Based on the foregoing determinations, we conclude that we should repeal Part 62 of our rules, which implements section 212 of the Act. Specifically, we conclude that we should delete our rules that require: (1) dominant carriers and those carriers not yet found to be non- dominant to seek Commission approval prior to accepting an interlocking directorate position; (2) non-dominant carriers, connecting carriers, parent companies, and other carriers as may be required under our rules, to file post interlocking directorate reports; (3) carriers desiring authorization to hold interlocking directorates based on a finding of common ownership to make specific filings with the Commission; and (4) carriers that undergo a change in status with respect to interlocking directorate status to file a change of status report. We also conclude that, pursuant to section 10 of the Act, we should forbear from enforcing the interlocking directorate provisions of section 212 of the Act. V. FINAL REGULATORY FLEXIBILITY ACT ANALYSIS 27. As required by the Regulatory Flexibility Act (RFA), the Commission incorporated an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities by the policies and rules proposed in the Notice. The Commission sought written public comment on the proposals in the Notice, including comment on the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA. 28. Need for, and Objectives of, this Action: The Commission initiated its examination of its Part 62 rules as part of its 1998 biennial review of regulations as required by section 11 of the Communications Act of 1934, as amended. The Commission also issued the Notice to review its regulatory regime for interlocking directorates, and to determine whether in light of section 10 of the Act, the Commission should forbear from applying such requirements. The purpose of this Order is to delete Part 62 of the Commission's rules, which the Commission finds are no longer necessary in the public interest. The Commission also has determined that it should forbear from addressing those provisions in section 212 of the Act that address interlocking directorates. 29. Summary of Significant Issues Raised by Public Comments in Response to the IRFA: In the IRFA, the Commission sought comment on whether repealing Part 62 of its rules and forbearing from section 212 would benefit small entities. The Commission received no comments in response to the IRFA. Several commenters, including one small entity, however, indicated that the proposals in the Notice would benefit small entities by reducing unnecessary regulatory burdens. 30. Description, potential impact, and number of small entities affected: In this order, the Commission has decided to repeal Part 62 of its rules, which includes eliminating the post- interlock filing requirement for non-dominant carriers, many of whom may be small entities. The Commission also has decided to forbear from enforcing those provisions of section 212 of the Act addressing interlocking directorates. Forbearance from enforcing these rules will benefit small entities by reducing the regulatory burden to which small businesses would otherwise be subject. 31. To estimate the number of small entities that would benefit from this positive economic impact, we first consider the statutory definition of "small entity" under the RFA. The RFA generally defines "small entity" as having the same meaning as the term "small business," "small organization," and "small governmental jurisdiction." In addition, the term "small business" has the same meaning as the term "small business concern" under the Small Business Act, unless the Commission has developed one or more definitions that are appropriate to its activities. Under the Small Business Act, a "small business concern" is one that: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) meets any additional criteria established by the Small Business Administration (SBA). The SBA has defined a small business for Standard Industrial Classification (SIC) categories 4812 (Radiotelephone Communications) and 4813 (Telephone Communications, Except Radiotelephone) to be small entities when they have no more than 1,500 employees. We first discuss the number of small telephone companies falling within these SIC categories, then attempt to refine further those estimates to correspond with the categories of telephone companies that are commonly used under our rules. 32. The most reliable source of information regarding the total numbers of certain common carrier and related providers nationwide, as well as the numbers of commercial wireless entities, appears to be data the Commission publishes annually in its Telecommunications Industry Revenue report, regarding the Telecommunications Relay Service (TRS). According to data in the most recent report, there are 3,459 interstate carriers. These carriers include, inter alia, local exchange carriers, wireline carriers and service providers, interexchange carriers, competitive access providers, operator service providers, pay telephone operators, providers of telephone toll service, providers of telephone exchange service, and resellers. 33. Although some affected incumbent local exchange carriers (ILECs) may have 1,500 or fewer employees, we do not believe that such entities should be considered small entities within the meaning of the RFA because they are either dominant in their field of operations or are not independently owned and operated, and therefore by definition not "small entities" or "small business concerns" under the RFA. Accordingly, our use of the terms "small entities" and "small businesses" does not encompass small ILECs. Out of an abundance of caution, however, for regulatory flexibility analysis purposes, we will separately consider small ILECs within this analysis and use the term "small ILECs" to refer to any ILECs that arguably might be defined by the SBA as "small business concerns." 34. Total Number of Telephone Companies Affected. The United States Bureau of the Census ("the Census Bureau") reports that, at the end of 1992, there were 3,497 firms engaged in providing telephone services, as defined therein, for at least one year. This number contains a variety of different categories of carriers, including local exchange carriers, interexchange carriers, competitive access providers, cellular carriers, mobile service carriers, operator service providers, pay telephone operators, and resellers. It seems certain that some of those 3,497 telephone service firms may not qualify as small entities or small incumbent LECs because they are not "independently owned and operated." Additionally, we note that the number of small entities affected by this rule change as set forth in this Order is less than the total number of telephone companies as stated herein, because as discussed above, the Commission already has decided to forbear from applying section 212 of the Act with regard to CMRS providers. It seems reasonable to conclude, therefore, that fewer than 3,497 telephone service firms are small entity telephone service firms or small incumbent LECs that may be affected by this Order. 35. Wireline Carriers and Service Providers. SBA has developed a definition of small entities for telephone communications companies other than radiotelephone companies. The Census Bureau reports that, there were 2,321 such telephone companies in operation for at least one year at the end of 1992. According to SBA's definition, a small business telephone company other than a radiotelephone company is one employing no more than 1,500 persons. All but 26 of the 2,321 non-radiotelephone companies listed by the Census Bureau were reported to have fewer than 1,000 employees. Thus, even if all 26 of those companies had more than 1,500 employees, there would still be 2,295 non-radiotelephone companies that might qualify as small entities or small incumbent LECs. Although it seems certain that some of these carriers are not independently owned and operated, we are unable at this time to estimate with greater precision the number of wireline carriers and service providers that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 2,295 small entity telephone communications companies other than radiotelephone companies that may be affected by the decisions in this Order. 36. Local Exchange Carriers. Neither the Commission nor SBA has developed a definition of small providers of local exchange services (LECs). The closest applicable definition under SBA rules is for telephone communications companies other than radiotelephone (wireless) companies. 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, 1,371 companies reported that they were engaged in the provision of local exchange services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1,500 employees, we are unable at this time to estimate with greater precision the number of LECs that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 1,371 small entity LECs or small incumbent LECs that may be affected by the decisions in this Order. 37. Interexchange Carriers. Neither the Commission nor SBA has developed a definition of small entities specifically applicable to providers of interexchange services (IXCs). The closest applicable definition under SBA rules is for telephone communications companies other than radiotelephone companies. 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, 143 companies reported that they were engaged in the provision of interexchange services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1,500 employees, we are unable at this time to estimate with greater precision the number of IXCs that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 143 small entity IXCs that may be affected by the decisions in this Order. 38. Competitive Access Providers. Neither the Commission nor SBA has developed a definition of small entities specifically applicable to providers of competitive access services (CAPs). The closest applicable definition under SBA rules is for telephone communications companies other than radiotelephone companies. 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 the TRS. According to our most recent data, 109 companies reported that they were engaged in the provision of competitive access services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1,500 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 109 small entity CAPs that may be affected by the decisions in this Order. 39. Pay Telephone Operators. Neither the Commission nor SBA has developed a definition of small entities specifically applicable to pay telephone operators. The closest applicable definition under SBA rules is for telephone communications companies except radiotelephone (wireless) companies. The most reliable source of information regarding the number of pay telephone operators nationwide is the data that we collect annually in connection with the TRS Worksheet. According to our most recent data, 441 companies reported that they were engaged in the provision of pay telephone services. We do not have information on the number of carriers that are not independently owned and operated, nor have more than 1,500 employees, and thus 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 small pay telephone operators. 40. Operator Service Providers. Neither the Commission nor SBA has developed a definition of small entities specifically applicable to providers of operator services. The closest applicable definition under SBA rules is for telephone communications companies other than radiotelephone companies. 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 the TRS. According to our most recent data, 27 companies reported that they were engaged in the provision of operator services. Although it seems certain that some of these companies 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 operator service providers that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 27 small entity operator service providers that may be affected by the decisions in this Order. 41. Resellers. Neither the Commission nor SBA has developed a definition of small entities specifically applicable to resellers. The closest applicable definition under SBA rules is for all telephone communications companies. 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 the TRS. According to our most recent data, 339 companies reported that they were engaged in the resale of telephone services. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1,500 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 339 small entity resellers that may be affected by the decisions adopted in this Order. 42. Private Paging. At present, there are approximately 24,000 Private Paging licenses. We do not have data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of paging carriers that would qualify as small business concerns under the SBA's definition. We estimate that the majority of private paging providers would qualify as small entities under the SBA definition. We note that private paging does not include common carrier paging, for which the Commission has adopted auction rules and has proposed to SBA a special small business size standard definition. 43. Wireless (Radiotelephone) Carriers. SBA has developed a definition of small entities for radiotelephone (wireless) companies. The Census Bureau reports that there were 1,176 such companies in operation for at least one year at the end of 1992. According to SBA's definition, a small business radiotelephone company is one employing no more than 1,500 persons. The Census Bureau also reported that 1,164 of those radiotelephone companies had fewer than 1,000 employees. Thus, even if all of the remaining 12 companies had more than 1,500 employees, there would still be 1,164 radiotelephone companies that might qualify as small entities if they are independently owned are operated. Although it seems certain that some of these carriers are not independently owned and operated, we are unable at this time to estimate with greater precision the number of radiotelephone carriers and service providers that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 1,164 small entity radiotelephone companies that may be affected by the decisions adopted in this Order. 44. Recording, record keeping, and other compliance requirements: No additional paperwork will be required by the decisions adopted in this proceeding. This proceeding eliminates filing requirements set forth in Part 62 of the Commission's rules. 45. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered: The impact of this proceeding should be beneficial to small businesses, because eliminating the Commission's Part 62 rules will reduce the reporting or recordkeeping requirements on all communications common carriers. 46. Report to Congress: The Commission will send a copy of this Order, including this FRFA, in a report to be sent to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C.  801(a)(1)(A). In addition, the Commission will send a copy of this Order, including FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the Order and FRFA (or summaries thereof) will also be published in the Federal Register. VI. ORDERING CLAUSES 47. Accordingly, IT IS ORDERED that pursuant to sections 1, 4, 10, 11, and 212, of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154, 160, 161, and 212, the policies, rules, and requirements set forth herein ARE ADOPTED. 48. IT IS FURTHER ORDERED that pursuant to section 11 of the Communications Act of 1934, as amended, 47 U.S.C.  161, that Part 62 of the Commission's rules, 47 C.F.R. Part 62, is no longer in the public interest, and therefore is REMOVED, effective 30 days after publication of the text thereof in the Federal Register. 49. IT IS FURTHER ORDERED that pursuant to section 10 of the Communications Act of 1934, as amended, 47 U.S.C.  160, the Commission WILL FORBEAR from those provisions of section 212 addressing interlocking directorates, 47 U.S.C.  212, effective 30 days after publication of the text thereof in the Federal Register. 50. IT IS FURTHER ORDERED that the Commission's Office of Public Affairs, Reference Operations Division, SHALL SEND a copy of this Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary Appendix A: Parts Removed Accordingly, under the authority 47 U.S.C.  154, amend 47 C.F.R. chapter I by removing Part 62. Statement of Commissioner Harold W. Furchtgott-Roth Re: 1998 Biennial Regulatory Review -- Repeal of Part 62 of the Commission's Rules, Report and Order, CC Docket No. 98-195 I support adoption of this Report and Order wherein, pursuant to the Commission's duty under Section 11(b) of the Communications Act of 1934, as amended, 47 U.S.C. Sect. 161(b), we have repealed or modified regulations that we have determined to be no longer necessary in the public interest. The regulations at issue here were chosen for repeal or modification as part of the Commission's 1998 Biennial Review, which was conducted pursuant to Section 11(a) of the Act, Id. at Sect. 161(a). However, as thoroughly described in my Report on Implementation of Section 11 by the Federal Communications Commission (Dec. 21, 1998), which can be found on the FCC WWW site at , I believe that the 1998 Section 11(a) review was not as thorough as it should have been. I look forward to working with the chairman and other commissioners on the 2000 Biennial Review, planning for which should begin in mid-1999. * * * * * * *