Federal Register: RULES [47 CFR Part 1]

FEDERAL COMMUNICATIONS COMMISSION

Federal Communications Commission

CFR Citation: 47 CFR Part 1

Docket ID: [MD Docket No. 08-65; FCC 08-182]

NOTICE: RULES

DOCUMENT ACTION: Final rule.

SUBJECT CATEGORY: Assessment and Collection of Regulatory Fees for Fiscal Year 2008

DATES: Effective September 25, 2008.

DOCUMENT SUMMARY: In this document, we amend our Schedule of Regulatory Fees to collect $312,000,000 in regulatory fees for Fiscal Year (FY) 2008, pursuant to section 9 of the Communications Act of 1934, as amended (the Act). These fees are mandated by Congress and are collected to recover the regulatory costs associated with the Commission's enforcement, policy and rulemaking, user information, and international activities.

SUMMARY: Assessment and Collection of Regulatory fees (2008 FY),

SUPPLEMENTAL INFORMATION

Table of Contents

Heading Paragraph No.
I. Introduction........................................ 1 II. Report and Order................................... 3

A. Calculation of Revenue and Fee Requirements..... 4

B. Additional Adjustments to Payment Units......... 5 1. Commercial Mobile Radio (``CMRS'') Messaging 7 Service.......................................
2. Private Land Mobile Radio Service 9 (``PLMRS'')...................................
3. Regulatory Fee Obligations for AM Expanded 11 Band Broadcasters.............................
4. International Bearer Circuits............... 14 a. Background.............................. 14 b. Discussion.............................. 19 [[Page 50202]]

APPENDIX A Final Regulatory Flexibility Analysis
APPENDIX B List of Commenters

ATTACHMENTS

Attachment A Sources of Payment Unit Estimates for FY 2008...........................................

Attachment B Calculation of FY 2008 Revenue

Requirements and ProRata Fees....................

Attachment C FY 2008 Schedule of Regulatory Fees...

Attachment D Factors, Measurements, and
Calculations That Determine Station Contours and

Population Coverages..............................

Attachment E FY 2007 Schedule of Regulatory Fees...

I. Introduction

1. In this Report and Order we conclude a proceeding to collect $312,000,000 in regulatory fees for Fiscal Year (``FY'') 2008, pursuant to section 9 of the Communications Act of 1934, as amended (the ``Act''). Section 9 regulatory fees are mandated by Congress and are collected to recover the regulatory costs associated with the Commission's enforcement, policy and rulemaking, user information, and international activities.\1\ In this annual regulatory fee proceeding, we retain the established methods, policies, and procedures for collecting section 9 regulatory fees adopted by the Commission in prior years. Consistent with our established practice, we intend to collect these regulatory fees during a filing window in September 2008 in order to collect the required amount by the end of our fiscal year. \1\ 47 U.S.C. 159(a).

2. As a general matter, our annual regulatory fee rulemakings must be concluded in a short time frame to allow regulatees to make their payments for the relevant fiscal year that fund Commission operations. These yearly rulemaking proceedings are not conducive to exploring more general regulatory fee issues. We have not conducted an indepth review of our regulatory fee methodology since 1994.\2\ We, however, adopt a Further Notice of Proposed Rulemaking (``FNPRM'') to explore how we can comprehensively make the Commission's regulatory fee process more equitable.
\2\ See Implementation of Section 9 of the Communications Act, Report and Order, 9 FCC Rcd 5333 (1994).

II. Report and Order

3. On May 8, 2008, we released a Notice of Proposed Rulemaking and Order (``FY 2008 NPRM'') seeking comment on regulatory fee issues for FY 2008.\3\ The section 9 regulatory fee proceeding is an annual rulemaking process to ensure the Commission collects the fee amount required by Congress each year. In the FY 2008 NPRM, we proposed to largely retain the section 9 regulatory fee methodology used in the prior fiscal year. We received nine comments and 12 reply comments.\4\ We address the issues raised in our FY 2008 NPRM below.
\3\ See Assessment and Collection of Regulatory Fees for Fiscal Year 2008, Notice of Proposed Rulemaking and Order, 23 FCC Rcd 7987 (2008) (``FY 2008 NPRM'').
\4\ See Appendix C for the list of commenters and abbreviated names.

A. Calculation of Revenue and Fee Requirements

4. In our FY 2008 regulatory fee assessment, we use the same section 9 regulatory fee assessment methodology adopted for FY 2007. Each fiscal year, the Commission proportionally allocates the total amount that must be collected via section 9 regulatory fees. The results of our FY 2008 regulatory fee assessment methodology (including a comparison to the prior year's results) are contained in Attachment B. To collect the $312,000,000 required by Congress, we adjust the FY 2007 amount upward by approximately 7.5 percent. Consistent with past practice, we then divide the FY 2008 amount by the number of payment units in each fee category to determine the unit fee.\5\ As in prior years, for cases involving small fees, e.g., licenses that are renewed over a multiyear term, we divide the resulting unit fee by the term of the license and then round these unit fees consistent with the requirements of section 9(b)(2) of the Act.
\5\ In many instances, the regulatory fee amount is a flat fee per licensee or regulatee. In some instances, the fee amount represents a perunit fee (such as for International Bearer Circuits), a perunit subscriber fee (such as for Cable, Commercial Mobile Radio Service (``CMRS'') Cellular/Mobile and CMRS Messaging), or a fee factor per revenue dollar (Interstate Telecommunications Service Provider (``ITSP'') fee). The payment unit is the measure upon which the fee is based, such as a licensee, regulatee, or subscriber fee.

B. Additional Adjustments to Payment Units

5. In calculating the FY 2008 regulatory fees listed in Attachment C, we further adjusted the FY 2007 list of payment units (Attachment A) based upon licensee databases and industry and trade group projections. In some instances, Commission licensee databases were used; in other instances, actual prior year payment records and/or industry and trade association projections were used in determining the payment unit counts.\6\ Where appropriate, we adjusted and rounded our final estimates to take into consideration events that may impact the number of units for which regulatees submit payment, such as waivers and exemptions that may be filed in FY 2008, and fluctuations in the number of licensees or station operators due to economic, technical, or other reasons. Therefore, our estimated FY 2008 payment units are based on FY 2007 actual payment units, but the number may have been rounded or adjusted slightly to account for these variables.
\6\ The databases we consulted include, but are not limited to, the Commission's Universal Licensing System (``ULS''), International Bureau Filing System (``IBFS''), Consolidated Database System (``CDBS'') and Cable Operations and Licensing System (``COALS''). We also consulted industry sources including, but not limited to, Television & Cable Factbook by Warren Publishing, Inc., and the Broadcasting and Cable Yearbook by Reed Elsevier, Inc., as well as reports generated within the Commission such as the Wireline Competition Bureau's Trends in Telephone Service and the Wireless Telecommunications Bureau's Numbering Resource Utilization Forecast and Annual CMRS Competition Report.

6. We consider additional factors in determining regulatory fees for AM and FM radio stations. These factors are facility attributes and the population served by the radio station. The calculation of the population served is determined by coupling current U.S. Census Bureau data with technical and engineering data, as detailed in Attachment D. Consequently, the population served, as well as the class and type of service (AM or FM), determines the regulatory fee amount to be paid.\7\ \7\ In addition, beginning in FY 2005, we established a procedure by which we set regulatory fees for AM and FM radio and VHF and UHF television Construction Permits each year at an amount no higher than the lowest regulatory fee in that respective service category. For example, the regulatory fee for a Construction Permit for an AM radio station will never be more than the regulatory fee for an AM Class C radio station serving a population of less than 25,000.

1. Commercial Mobile Radio (``CMRS'') Messaging Service

7. CMRS Messaging Service, which replaced the CMRS OneWay Paging fee category in 1997, includes all
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narrowband services.\8\ In the FY 2008 NPRM, we proposed maintaining the messaging service regulatory fee at $0.08 per subscriber; the rate first established for this service in FY 2002.\9\
\8\ See Assessment and Collection of Regulatory Fees for Fiscal Year 1997, MD Docket No. 96186, Report and Order, 12 FCC Rcd 17161, 1718485, para. 60 (1997) (``FY 1997 Report and Order'').

\9\ FY 2008 NPRM at para. 5.

8. One commenter, AAPC, addressed this issue.\10\ AAPC agrees with our proposal and observes that maintaining the fee at the existing level is a reasonable and appropriate action due to the paging industry's declining subscriber base.\11\ We conclude that for FY 2008 we should continue this regulatory fee rate at $0.08 per subscriber due to the declining subscriber base in this industry.\12\
\10\ AAPC Comments at 14.
\11\ Id. at 2.
\12\ The subscriber base in the paging industry declined 83 percent from 40.8 million to 7.1 million, from FY 1997 to FY 2007, according to FY 2007 collection data, as of Sept. 30, 2007. 2. Private Land Mobile Radio Service (``PLMRS'')

9. Commenters observe that the proposed FY 2008 fees for a PLMRS applicant are $40 per year for exclusive use PLMRS and $20 per year for shared use PLMRS.\13\ Regulatory fees for this service have increased significantly over the past three years; \14\ however, there are 74 percent fewer licensees in 2008 than there were in 2005.\15\ PCIA also ``perceives'' a decline in Commission staffing devoted to PLMRS, which would correlate with the reduction in licensees.\16\ Enterprise observes that there are few rulemakings associated with these licensees and the Commission has not allocated additional spectrum for these users since the mid1980s.\17\ In addition, because these licenses are sitespecific, licensees often require multiple authorizations, which further increases the regulatory fee assessment.\18\ Further, these Part 90 licenses are generally private internal systems used to support businesses and are not commercial communications systems with a substantial revenue stream.\19\ For these reasons, commenters contend that we should not substantially increase the regulatory fees for PLMRS.
\13\ PCIA Comments at 2; Enterprise Reply Comments at 23. \14\ PCIA Comments at 2.
\15\ PCIA Comments at 3; Enterprise Reply Comments at 3. \16\ PCIA Comments at 3.
\17\ Enterprise Reply Comments at 4.
\18\ Enterprise Reply Comments at 45.

\19\ Enterprise Reply Comments at 56.

10. Instead of freezing the regulatory fees, we are going to address this matter more comprehensively in the attached FNPRM in the context of our entire regulatory fee structure. At this time; however, we are adopting the proposals in the FY 2008 NPRM for FY 2008. 3. Regulatory Fee Obligations for AM Expanded Band Broadcasters

11. Currently, AM expanded band stations in the 16101700 kHz range are exempt from regulatory fees, as a matter of Commission policy. In the FY 2008 NPRM, we sought comment on the most efficient way of assessing a regulatory fee on expanded band AM stations.\20\ We sought comment on whether we should assess regulatory fees when the licensee has chosen to retain the expanded band station while no longer keeping the standard AM station as well as where the licensee continues to operate the standard AM station as well as the expanded band station.\21\
\20\ FY 2008 NPRM at para. 7.

\21\ Id.

12. Two commenters addressed the AM expanded band issue. MRB is concerned with the situation where an expanded band licensee has relinquished its expanded band license but continues to operate under special temporary authority (``STA'').\22\ In such a situation, the licensee is operating the standard band and the expanded band stations, but only holds a license to the standard band station. The fiveyear transition period for allowing lower band AM licensees to continue to operate the AM expanded band and the lower band has not yet expired for all licensees.\23\
\22\ MRB has petitioned the Commission to waive the requirement that either the expanded band or the standard band license be returned.

\23\ Chisholm Reply Comments at 1.

13. There is no compelling reason to permanently exempt AM expanded band licensees from paying regulatory fees. As a general matter, it would be appropriate to treat the AM expanded band and the AM standard band similarly for regulatory fee purposes. We note, however, that currently only 20 licensees out of 54 have surrendered one of their dual licenses. The remaining 34 licensees have either conditionally surrendered one license and are operating under an STA permitting dual operation or have retained both licenses and are continuing dual operation under STAs. The Commission has before it the pending issue of whether we should permit licensees to continue to hold both standard band and expanded band licenses.\24\ This issue should be resolved before we can assess regulatory fees on the expanded band AM licensees; therefore, we are not assessing regulatory fees on expanded band AM licenses at this time.
\24\ See Petition for Stay of Effective Dates, filed Mar. 27, 2006; Request for Waiver of Rules Requiring Return of AM Licenses,'' filed Mar. 27, 2006.
4. International Bearer Circuits

a. Background

14. In our FY 2006 NPRM,\25\ we observed that VSNL Telecommunications (US) Inc. (``VSNL'') had filed a Petition for Rulemaking urging the Commission to revise its regulatory fee methodology for international bearer circuits (``IBCs'').\26\ In the Petition, VSNL proposes that the Commission: (1) Reclassify noncommon carrier submarine cable service as a new fee category \27\ (all other carriers subject to IBC fees would be in the second category); \28\ (2) apportion the IBC fee revenue requirement between the two categories, based on a comparative assessment of the regulatory services used by the entities in each category; \29\ and (3) assess a flat annual fee per cable system for noncommon carrier submarine cable operators.\30\ \25\ See Assessment and Collection of Regulatory Fees for Fiscal Year 2006, MD Docket No. 0668, Notice of Proposed Rulemaking, 21 FCC Rcd 3708, 3718, n.20 (2006) (``FY 2006 NPRM'').
\26\ See Petition for Rulemaking of VSNL Telecommunications (US) Inc., RM11312 (filed Feb. 6, 2006) (``VSNL Petition''). VSNL Telecommunications is now Tata Communications. We released a Public Notice designating the proceeding as RM11312 and seeking comment on the Petition. See Consumer and Governmental Affairs Bureau, Reference Information Center, Public Notice, Report No. 2759 (rel. Feb. 15, 2006). In our FY 2006 Report and Order we stated that the issues presented in the Petition warranted consideration separately from the Commission's annual regulatory fee proceeding. See Assessment and Collection of Regulatory Fees for Fiscal Year 2006, MD Docket No. 0668, Report and Order, 21 FCC Rcd 8092, 809899, para. 18 (2006) (``FY 2006 Report and Order'').
\27\ Petition at 5. See also Apollo RM11312 Comments at 24. AT&T filed comments disagreeing with this proposal and observing that the proposed new fee category would likely exclude all or most facilitiesbased carrier circuits on noncommon carrier cables as well as the international bearer circuits on common carrier cables. AT&T RM11312 Comments at 6. SIA agrees that regulatory fee reform is needed, but contends that such reform should extend to the treatment on noncommon carrier satellite operators as well. SIA RM 11312 Comments at 14.
\28\ Petition at 5.
\29\ Id. at 56. See also Level 3 RM11312 Comments at 67. \30\ Petition at 6. See also Hibernia Atlantic RM11312 Comments at 78; Level 3 RM11312 Comments at 810 (supporting a flat per system fee on all submarine cable systems); Level 3 RM11312 Reply Comments at 89.

15. In our FY 2008 NPRM, we granted VSNL's petition and sought comment on the methodology used to calculate
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regulatory fees for providers of international bearer circuits.\31\ We specifically sought comment on whether the Commission should retain the current methodology used to assess these regulatory fees, or modify the methodology.\32\ In addition to the comments filed to the FY 2008 NPRM, a Revised Joint Proposal for amending our IBC regulatory fee methodology was filed as an ex parte by a group of carriers on July 11, 2008.\33\
\31\ The Commission's website provides the following information regarding International and Satellite License Fees, for FY 2007:

International Bearer Circuits

Who Must Pay: Regulatory fees for International Bearer Circuits are to be paid by facilitiesbased common carriers that have active international bearer circuits as of December 31, 2006 in any transmission facility for the provision of service to an end user or resale carrier, which includes active circuits to themselves or to their affiliates. In addition, noncommon carrier satellite operators must pay a fee for each circuit sold or leased to any customer, including themselves or their affiliates, other than an international common carrier authorized by the Commission to provide U.S. international common carrier services. Noncommon carrier submarine cable operators are also to pay fees for any and all international bearer circuits sold on an indefeasible right of use (IRU) basis or leased to any customer, including themselves or their affiliates, other than an international common carrier authorized by the Commission to provide U.S. international common carrier services. If you are required to pay regulatory fees, you should pay based on your active 64 KB circuit count as of December 31, 2006.

For more information regarding compliance with regulatory fee payment requirements for international bearer circuits, refer to FCC Public Notice: Compliance with Regulatory Fee Requirements by Cable Landing Licensees Operating on a NonCommon Carrier Basis (DA 04 2027, released July 6, 2004).

Fee Calculation: $1.05 per active 64 KB circuit or equivalent.

See http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC

275938A6. pdf.
\32\ FY2008 NPRM at para. 8. Comments filed earlier in response to the VSNL Petition are referred to as ``RM11312 Comments.'' Many of the same commenters filed comments on this issue in response to our FY 2008 NPRM. On May 30, 2008, a joint proposal for reforming International Bearer Circuit fees was submitted by Level 3 Communications, LLC, Brasil Telecom of America, Inc., Columbus Networks USA, Inc., ARCOS1 USA, Inc., A.SUR Net, Inc., Hibernia Atlantic U.S. LLC, Pacific Crossing Limited, and PC Landing Corp. See Joint Proposal, MD Docket No. 0865, Attach. (filed May 30, 2008).
\33\ See Letter from Kent D. Bressie, Counsel, Level 3 Communications, LLC to Marlene H. Dortch, Secretary, FCC, MD Docket No. 0865, Attach. (filed July 11, 2008). This revised joint proposal was submitted by Brasil Telecom of America, Inc., Columbus Networks USA, Inc., ARCOS1 USA Inc., A.SUR Net, Inc., Global Crossing Ltd., Level 3 Communications, LLC, HiberniaAtlantic U.S. LLC, Marine Cable Corp., Pacific Crossing Limited and PC Landing Corp., Reliance Globalcom Limited (fka FLAG Telecom Group Limited), and Tata Communications (US) Inc. (formerly VSNL International (US) Inc.) (``Revised Joint Proposal'').

16. This proposal modified the earlier joint proposal to address several concerns raised by the parties. The Revised Joint Proposal would do the following: (1) Create a new regulatory fee category for submarine cablesystems, a new SCS fee, for both common carrier and non common carrier systems.\34\ The new SCS fee would be a flat fee, per cable landing license, with a reduced fee amount for ``smallcapacity systems.'' In addition, a consortium would be considered one cable landing license for SCS fee purposes, regardless of how many licensees were members of the consortium. (2) The SCS fee would be based originally on onehalf of the current IBC category. According the Revised Joint Proposal, this would subsequently be revised downward based on the Commission's internal calculations of regulatory effort expended to regulate this industry.\35\ (3) In addition, there would be a new IBC fee based on active circuits, originally based on the remaining onehalf of the current fee category, for common carriers. Thus, under the Revised Joint Proposal, common carriers would pay the flat SCS per license fee and a per circuit fee and noncommon carriers would pay only the flat SCS per license fee.
\34\ Revised Joint Proposal at 1.

\35\ Id.

17. Our current rules provide that regulatory fees for international bearer circuits are to be paid by facilitiesbased common carriers that have active international bearer circuits in any transmission facility for the provision of service to an end user or resale carrier, which includes active circuits to themselves or to their affiliates.\36\ Noncommon carrier submarine cable operators are also to pay fees for any and all international bearer circuits sold on an indefeasible right of use (``IRU'') basis or leased to any customer, including themselves or their affiliates, other than an international common carrier authorized by the Commission to provide U.S. international common carrier services.\37\ Regulatory fees are based on the number of active 64 kbps international bearer circuits as of December 31 of the previous year.
\36\ See Implementation of Section 9 of the Communications Act, Assessment and Collection of Regulatory Fees for Fiscal Year 2006, Report and Order, 21 FCC Rcd 8092, 8107, n. 62 (2006) (``FY 2006 Report and Order''); Assessment and Collection of Regulatory Fees for Fiscal Year 2001, MD Docket No. 0176, Report and Order, 16 FCC Rcd 13525, 13593 (2001); Regulatory Fees Fact Sheet: What You OweInternational and Satellite Services Licensees for FY 2005 at 3 (rel. July 2005) (the fact sheet is available on the FCC Web site at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/

DOC249904A4.pdf).
\37\ FY 2006 Report and Order, 21 FCC Rcd at 8107, n. 62.

18. We agree with the commenters who argue that our methodology for calculating IBC regulatory fees needs to be reformed and we intend to adopt a revised methodology to be effective for FY 2009. We recognize that an indepth review of our IBC regulatory fee methodology may be long overdue. We also note that there appears to be significant non compliance with our current regulatory fee requirements. One issue raised by several commenters is that the regulatory fee for IBCs is far too high. We will need to address the issue of noncompliance to determine if the fee is still considered unreasonably high after non payors are contributing as well.\38\ As we mentioned earlier, if some do not pay their share of regulatory fees, the amount of fees due is increased for the remaining parties. We consider rule noncompliance a serious issue affecting all regulatees.
\38\ We note that the flat fee proposed by commenters may address the noncompliance issue as well.

b. Discussion

19. Several commenters argue that noncommon carrier submarine cable operators generate only a fraction of the regulatory costs common carriers generate, yet they pay the same per unit regulatory fees.\39\ AT&T and Verizon disagree, and argue that due to recent deregulation such as elimination of tariff filing requirements, the reduced disparities between the Commission's treatment of these services support the continued application of the same regulatory fees to all international bearer circuits.\40\ AT&T observes that the private carriers' argument ignores the regulatory costs incurred in connection with the Commission's international representational activities, work with foreign regulators, and other activities in support of the Commission's international regulatory goals to promote effective competition in the global marketplace.\41\ AT&T contends that the same fees should be applied to all types of submarine cable systems.\42\ The difference in size between common carrier systems and private carrier systems, contends AT&T, is even larger now than when VSNL filed its petition.\43\ AT&T, Verizon, and Qwest
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oppose any new fee structure that would impose higher fees on facilitiesbased common carriers, such as the proposal that noncommon carriers would no longer pay fees on active circuits.\44\
\39\ See, e.g., Petition at 10; Flag RM11312 Comments at 3; SIA RM11312 Comments at 4; Level 3 RM11312 Reply Comments at 67; Level 3 Comments at 1114.
\40\ AT&T RM11312 Comments at 8; Verizon RM11312 Reply Comments at 23; Verizon Reply Comments at 4.
\41\ AT&T RM11312 Comments at 9; Verizon RM11312 Reply Comments at 3; AT&T Reply Comments at 17; Verizon Reply Comments at 5.
\42\ AT&T RM11312 Reply Comments at 7.
\43\ AT&T Comments at 3. AT&T observes that that the average capacity of the 27 U.S.licensed noncommon carrier systems is approximately 3.2 million circuits, almost ten times larger than the average capacity of U.S. common carrier systems. Id. at note 4. \44\ AT&T Reply Comments at 16; Verizon Reply Comments at 2; Qwest Reply Comments at 2.

20. VSNL argues in its Petition that the number of active 64 kpbs circuits bears no relationship to the regulatory costs that operators generate.\45\ For example, one commenter explains, if a licensee doubles its cable's capacity through a technology upgrade, the regulatory fee obligations will nearly double even though the regulatory costs to the Commission do not change.\46\ Pacific contends that there is no correlation between cable system size and the Commission's regulatory effort.\47\ Commenters observe that the 64 kbps increment measurement is an artifact of the original channelized telephone systems, but is not relevant to the current broadband environment where data passes unchannelized in packetized form.\48\ \45\ Petition at 78. Level 3 contends that this fee timing issue can make owners base their capacity turnup decisions on non market factors, such as activating circuits only at certain times of the year. Level 3 RM11312 Comments at 5.
\46\ Flag RM11312 Comments at 6. Reliance observes that, with respect to highcapacity leases, the per 64 kbps circuit fee distorts the market. Reliance Reply Comments at 5.
\47\ Pacific Reply Comments at 5.
\48\ Joint Commenters RM11312 Reply Comments at 45; Global Crossing Comments at 2; Pacific Comments at 11; Tata Comments at 2 4. Commenters also observe that IBC operators sell services as a ``back up'' or restoration service, which does not fit the definition of ``active'' circuits. Level 3 Comments at 15. AT&T and Qwest, on the other hand, contend that IBC fees are based on ``active'' capacity, which provides a reasonable and
nondiscriminatory method to allocate fees and is similar to the fee structure for other licensees. AT&T RM11312 Comments at 1113; Qwest Reply Comments at 3.

21. The flat annual fee proposed by VSNL as an alternative to our current circuitbased fee would be derived by dividing the revenue requirement for noncommon carrier submarine cable systems by the number of licensed systems.\49\ The Joint Proposal suggested by Level 3 and others and the Revised Joint Proposal ex parte would assess a per system fee on common carriers and private carriers (regardless of system size) and would also impose a percircuit fee for active circuits common carriers own or lease.\50\ The net effect of either of the flat fee proposals would be to provide significant advantages to private carriers.\51\ Global Crossing observes that the Joint Proposal would result in double counting where a common carrier has capacity from an affiliated private operator.\52\ Common carriers disagree with the flat fee proposal on the grounds that this would require smaller systems to pay higher fees per circuit and would adversely affect common carrier systems which are generally smaller than noncommon carrier systems.\53\ The Joint Commenters contend that a flat per system fee would discourage investment in the deployment of new submarine cable systems in the Caribbean or South America.\54\ Instead, the Joint Commenters argue, the Commission should adopt a twotiered approach.\55\
\49\ Petition at 6. Apollo agrees with VSNL and argues that a fee per cable landing license, rather than a per 64 kpbs
international bearer circuit, should be adopted. Apollo RM11312 Comments at 6. SIA suggests assessing a flat fee based on section 214 authorizations and cable landing licenses. SIA RM11312 Comments at 2. Pacific agrees that a per system fee would be fair, equitable, and easily administrated. Pacific Comments at 4. Telstra suggests that if we adopt a flat fee, we should establish a twoyear ramp up period for newlylicensed systems. Telstra Reply Comments at 23. \50\ Level 3 Comments at 18; Level 3 Reply Comments at 5; Verizon Reply Comments at 3; Global Crossing Reply Comments at 23; Qwest Reply Comments at 4. Reliance supports the Joint Proposal. Reliance Reply Comments at 7.
\51\ AT&T Reply Comments at 5. Qwest observes that the Joint Proposal contains different fee structures for submarine cable operators based on their common carrier or noncommon carrier status and is not competitively neutral. Qwest Reply Comments at 5. \52\ Global Crossing Reply Comments at 2.
\53\ AT&T RM11312 Comments at 1011; Qwest RM11312 Reply Comments at 4; AT&T Comments at 3; AT&T Reply Comments at 16; Verizon Reply Comments at 13. The Joint Commenters, who operate smaller systems, contend that they would be unfairly prejudiced by a flat persystem fee. Joint Commenters at 2.
\54\ Joint Commenters at 2.

\55\ Id. at 3.

22. Pacific contends that the rate proposed in our FY 2008 NPRM of $1.09 is too high because the number of active circuits used in the calculation was far too low.\56\ According to Pacific, international common carriers alone maintained 7.55 million active 64 kpbs circuits, so our estimate of 7.5 million for common carrier and noncommon carrier combined must be revised upward.\57\ Pacific concludes that if the Commission used more realistic estimates of active circuits, the per unit fee would be $.20 per circuit instead of $1.09 per circuit.\58\ Several commenters observe that the prices for higher capacity circuits have dropped more steeply than the prices for low capacity circuits, thus the regulatory fee is an increasing percentage of the price of highercapacity circuits.\59\ The current IBC regulatory fee methodology discourages new investment to increase the capacity of existing undersea cables.\60\ Verizon observes that under our current regulatory fee methodology, the IBC fee has dropped from $7.00 per circuit in 2000 to $1.09 per circuit in 2008, showing that increased demand has resulted in lower per circuit fees.\61\ AT&T notes that private carriers have continued to rapidly expand their U.S. underseas cable capacity.\62\
\56\ Pacific Comments at 78.
\57\ Id. citing the Commission's ``International Bureau Report on 2006 Section 43.82 Circuit Status Data,'' at 29, table 5. \58\ Pacific Comments at 8.
\59\ Hibernia Atlantic RM11312 Comments at 67; Apollo RM11312 Comments at 67; Level 3 RM11312 Comments at 3; Joint Commenters RM11312 Reply Comments at 37; Global Crossing Comments at 3; Reliance Reply Comments at 56; Qwest Reply Comments at 2.
\60\ Reliance Reply Comments at 6.
\61\ Verizon Reply Comments at 5.

\62\ AT&T Reply Comments at 10.

23. Commenters also observe that the Commission has no way to monitor active IBCs and therefore cannot enforce compliance with regulatory fee requirements.\63\ More stringent reporting requirements, generally opposed by private carriers, could eliminate the fee avoidance problem and further reduce the per circuit fee.\64\ Pacific contends that the total number of active circuits is more than five times the number of payment units counted by the Commission.\65\ Such significant undercounting of active circuits results in certain providers overpaying while others are underpaying.\66\ Qwest observes that the Commission's reliance on section 43.82 reports of active circuits do not capture the circuits of private carriers.\67\ The current practice of assessing fees based on a snapshot of active capacity on December 31 encourages operators to take capacity off line on December 31st to avoid having such capacity considered active.\68\ \63\ Level 3 Comments at 16. Nonpayment by some operators raises the costs for others. Verizon Reply Comments at 56.
\64\ AT&T Reply Comments at 78; Qwest Reply Comments at 3, note 9.
\65\ Pacific Reply Comments at 3.
\66\ Pacific Reply Comments at 4.
\67\ Qwest Reply Comments at 3.

\68\ Level 3 Comments at 17.

24. We agree with the commenters who argue that our methodology for calculating IBC regulatory fees needs to be reformed. We intend to resolve this issue within 60 days of adoption of this Order. Our rules should treat all providers subject to our regulatory fees in a nondiscriminatory and competitively neutral manner. If our rules permit certain entities to avoid complying with our regulatory fee requirements, the remaining carriers must pay a higher amount to compensate for those within the fee
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category who avoid payment. For FY 2008, however, we are using our current methodology and the rate set forth in Attachment C.\69\ \69\ $0.93 per active 64 KB circuit.

Appendix AFinal Regulatory Flexibility Analysis

25. As required by the Regulatory Flexibility Act (``RFA''),\1\ the Commission prepared an Initial Regulatory Flexibility Analysis (``IRFA'') of the possible significant economic impact on small entities by the policies and rules proposed in its Notice of Proposed Rulemaking.\2\ Written public comments were sought on the FY 2008 fees proposal, including comments on the IRFA. This present Final Regulatory Flexibility Analysis (``FRFA'') conforms to the RFA.\3\
\1\ 5 U.S.C. 603. The RFA, 5 U.S.C. 601612 has been amended by the Contract With America Advancement Act of 1996, Public Law 104 121, 110 Stat. 847 (1996) (``CWAAA''). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 (``SBREFA'').
\2\ See Assessment and Collection of Regulatory Fees for Fiscal Year 2008, MD Docket No. 0865, Notice of Proposed Rulemaking, (``FY 2008 NPRM'').
\3\ 5 U.S.C. 604.

I. Need for, and Objectives of, the Proposed Rules

26. This rulemaking proceeding is initiated to amend the Schedule of Regulatory Fees in the amount of $312,000,000, the amount that Congress has required the Commission to recover. The Commission seeks to collect the necessary amount through its revised Schedule of Regulatory Fees in the most efficient manner possible and without undue public burden.
II. Summary of Significant Issues Raised by Public Comments in Response to the IRFA

27. No parties have raised significant issues in response to the IRFA.
III. Description and Estimate of the Number of Small Entities To Which the Proposed Rules Will Apply

28. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the proposed rules and policies, if adopted.\4\ The RFA generally defines the term ``small entity'' as having the same meaning as the terms ``small business,'' ``small organization,'' and ``small governmental jurisdiction.'' \5\ In addition, the term ``small business'' has the same meaning as the term ``small business concern'' under the Small Business Act.\6\ A ``small business concern'' is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.\7\
\4\ 5 U.S.C. 603(b)(3).
\5\ 5 U.S.C. 601(6).
\6\ 5 U.S.C. 601(3) (incorporating by reference the definition of ``smallbusiness concern'' in the Small Business Act, 15 U.S.C. 632). Pursuant to 5 U.S.C. 601(3), the statutory definition of a small business applies ``unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register.''

\7\ 15 U.S.C. 632.

29. Nationwide, there are a total of 22.4 million small businesses, according to SBA data.\8\ A ``small organization'' is generally ``any notforprofit enterprise which is independently owned and operated and is not dominant in its field.'' \9\ Nationwide, as of 2002, there were approximately 1.6 million small organizations.\10\ The term ``small governmental jurisdiction'' is defined generally as ``governments of cities, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.'' \11\ Census Bureau data for 2002 indicate that there were 87,525 local governmental jurisdictions in the United States.\12\ We estimate that, of this total, 84,377 entities were ``small governmental jurisdictions.'' \13\ Thus, we estimate that most governmental jurisdictions are small. Below, we further describe and estimate the number of small entities, applicants and licensees, that may be affected by our action. \8\ See SBA, Programs and Services, SBA Pamphlet No. CO0028, at p. 40 (July 2002).
\9\ 5 U.S.C. 601(4).
\10\ Independent Sector, The New Nonprofit Almanac & Desk Reference (2002).
\11\ 5 U.S.C. 601(5).
\12\ U.S. Census Bureau, Statistical Abstract of the United States: 2006, Section 8, page 272, Table 415.
\13\ We assume that the villages, school districts, and special districts are small and total 48,558. See U.S. Census Bureau, Statistical Abstract of the United States: 2006, section 8, p. 273, Table 417. For 2002, Census Bureau data indicate that the total number of county, municipal, and township governments nationwide was 38,967, of which 35,819 were small. Id.

30. Incumbent Local Exchange Carriers (``ILECs''). Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. The appropriate size standard under SBA rules is for the category Wired
Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.\14\ According to Commission data,\15\ 1,303 carriers have reported that they are engaged in the provision of incumbent local exchange services. Of these 1,303 carriers, an estimated 1,020 have 1,500 or fewer employees and 283 have more than 1,500 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses that may be affected by these rules. \14\ 13 CFR 121.201, North American Industry Classification System (NAICS) code 517110.
\15\ FCC, Wireline Competition Bureau, Industry Analysis and Technology Division, ``Trends in Telephone Service'' at Table 5.3, Page 55 (June 2005) (hereinafter ``Trends in Telephone Service'').

31. Competitive Local Exchange Carriers (``CLECs''), Competitive Access Providers (``CAPs''), ``SharedTenant Service Providers,'' and ``Other Local Service Providers.'' Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.\16\ According to Commission data,\17\ 769 carriers have reported that they are engaged in the provision of either competitive access provider services or competitive local exchange carrier services. Of these 769 carriers, an estimated 676 have 1,500 or fewer employees and 94 have more than 1,500 employees. In addition, 12 carriers have reported that they are ``SharedTenant Service Providers,'' and all 12 are estimated to have 1,500 or fewer employees. In addition, 39 carriers have reported that they are ``Other Local Service Providers.'' Of the 39, an estimated 38 have 1,500 or fewer employees and one has more than 1,500 employees. Consequently, the Commission estimates that most providers of competitive local exchange service, competitive access providers, ``SharedTenant Service Providers,'' and ``Other Local Service Providers'' are small entities that may be affected by these rules. \16\ 13 CFR 121.201, NAICS code 517110.

\17\ ``Trends in Telephone Service'' at Table 5.3.

32. Local Resellers. The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.\18\ According to Commission data,\19\ 143 carriers have reported that they are engaged in the provision of local resale services. Of these, an estimated 141 have 1,500 or fewer employees and two have more than 1,500 employees. Consequently, the Commission estimates that the majority of local resellers are small entities that may be affected by these rules.
\18\ 13 CFR 121.201, NAICS code 517310.

\19\ ``Trends in Telephone Service'' at Table 5.3.

33. Toll Resellers. The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.\20\ According to Commission data,\21\ 770 carriers have reported that they are engaged in the provision of toll resale services. Of these, an estimated 747 have 1,500 or fewer employees and 23 have more than 1,500 employees. Consequently, the Commission estimates that the majority of toll resellers are small entities that may be affected by these rules.
\20\ 13 CFR 121.201, NAICS code 517310.

\21\ ``Trends in Telephone Service'' at Table 5.3.

34. Payphone Service Providers (``PSPs''). Neither the Commission nor the SBA has developed a small business size standard specifically for payphone services providers. The appropriate size standard under SBA rules is for the category Wired
Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.\22\ According to Commission data,\23\ 654 carriers have reported that they are engaged in the provision of payphone services. Of these, an estimated 652 have 1,500 or fewer employees and two have more than 1,500 employees. Consequently, the Commission estimates that the majority of payphone service providers
[[Page 50207]]
are small entities that may be affected by these rules.
\22\ 3 CFR 121.201, NAICS code 517110.

\23\ ``Trends in Telephone Service'' at Table 5.3.

35. Interexchange Carriers (``IXCs''). Neither the Commission nor the SBA has developed a small business size standard
specifically for providers of interexchange services. The
appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.\24\ According to Commission data,\25\ 316 carriers have reported that they are engaged in the provision of interexchange service. Of these, an estimated 292 have 1,500 or fewer employees and 24 have more than 1,500 employees. Consequently, the Commission estimates that the majority of IXCs are small entities that may be affected by these rules.
\24\ 13 CFR 121.201, NAICS code 517110.

\25\ ``Trends in Telephone Service'' at Table 5.3.

36. Operator Service Providers (``OSPs''). Neither the Commission nor the SBA has developed a small business size standard specifically for operator service providers. The appropriate size standard under SBA rules is for the category Wired
Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.\26\ According to Commission data,\27\ 23 carriers have reported that they are engaged in the provision of operator services. Of these, an estimated 20 have 1,500 or fewer employees and three have more than 1,500 employees. Consequently, the Commission estimates that the majority of OSPs are small entities that may be affected by these rules.
\26\ 13 CFR 121.201, NAICS code 517110.

\27\ ``Trends in Telephone Service'' at Table 5.3.

37. Prepaid Calling Card Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for prepaid calling card providers. The appropriate size standard under SBA rules is for the category Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.\28\ According to Commission data,\29\ 89 carriers have reported that they are engaged in the provision of prepaid calling cards. Of these, an estimated 88 have 1,500 or fewer employees and one has more than 1,500 employees. Consequently, the Commission estimates that the majority of prepaid calling card providers are small entities that may be affected by these rules. \28\ 13 CFR 121.201, NAICS code 517310.

\29\ ``Trends in Telephone Service'' at Table 5.3.

38. 800 and 800Like Service Subscribers.\30\ Neither the Commission nor the SBA has developed a small business size standard specifically for 800 and 800like service (``toll free'')
subscribers. The appropriate size standard under SBA rules is for the category Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.\31\ The most reliable source of information regarding the number of these service subscribers appears to be data the Commission receives from Database Service Management on the 800, 866, 877, and 888 numbers in use.\32\ According to our data, at the end of December 2004, the number of 800 numbers assigned was 7,540,453; the number of 888 numbers assigned was 5,947,789; the number of 877 numbers assigned was 4,805,568; and the number of 866 numbers assigned was 5,011,291. We do not have data specifying the number of these subscribers that are independently owned and operated or have 1,500 or fewer employees, and thus are unable at this time to estimate with greater precision the number of toll free subscribers that would qualify as small businesses under the SBA size standard. Consequently, we estimate that there are 7,540,453 or fewer small entity 800 subscribers; 5,947,789 or fewer small entity 888 subscribers; 4,805,568 or fewer small entity 877 subscribers, and 5,011,291 or fewer entity 866 subscribers.
\30\ We include all tollfree number subscribers in this category, including those for 888 numbers.
\31\ 13 CFR 121.201, NAICS code 517310.
\32\ ``Trends in Telephone Service'' at Tables 18.4, 18.5, 18.6, and 18.7.

39. International Service Providers. There is no small business size standard developed specifically for providers of international service. The appropriate size standards under SBA rules are for the two broad census categories of ``Satellite Telecommunications'' and ``Other Telecommunications.'' Under both categories, such a business is small if it has $13.5 million or less in average annual receipts.\33\

\33\ 13 CFR 121.201, NAICS codes 517410 and 517910.

40. The first category of Satellite Telecommunications ``comprises establishments primarily engaged in providing pointto point telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite telecommunications.'' \34\ For this category, Census Bureau data for 2002 show that there were a total of 371 firms that operated for the entire year.\35\ Of this total, 307 firms had annual receipts of under $10 million, and 26 firms had receipts of $10 million to $24,999,999.\36\ Consequently, we estimate that the majority of Satellite Telecommunications firms are small entities that might be affected by our action.
\34\ U.S. Census Bureau, 2002 NAICS Definitions, ``517410 Satellite Telecommunications;'' http://www.census.gov/epcd/naics02/

def/NDEF517.HTM.
\35\ U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, ``Establishment and Firm Size (Including Legal Form of Organization),'' Table 4, NAICS code 517410.
\36\ Id. An additional 38 firms had annual receipts of $25 million or more.

41. The second category of Other Telecommunications ``comprises establishments primarily engaged in (1) providing specialized telecommunications applications, such as satellite tracking, communications telemetry, and radar station operations; or (2) providing satellite terminal stations and associated facilities operationally connected with one or more terrestrial communications systems and capable of transmitting telecommunications to or receiving telecommunications from satellite systems.'' \37\ For this category, Census Bureau data for 2002 show that there were a total of 332 firms that operated for the entire year.\38\ Of this total, 259 firms had annual receipts of under $10 million and 15 firms had annual receipts of $10 million to $24,999,999.\39\ Consequently, we estimate that the majority of Other Telecommunications firms are small entities that might be affected by our action.
\37\ U.S. Census Bureau, 2002 NAICS Definitions, ``517910 Other Telecommunications''; http://www.census.gov/epcd/naics02/def/

NDEF517.HTM.
\38\ U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, ``Establishment and Firm Size (Including Legal Form of Organization),'' Table 4, NAICS code 517910.
\39\ Id. An additional 14 firms had annual receipts of $25 million or more.

42. Wireless Telecommunications Carriers (except Satellite). Since 2007, the Census Bureau has placed wireless firms within this new, broad, economic census category.\40\ Prior to that time, such firms were within the nowsuperseded categories of ``Paging'' and ``Cellular and Other Wireless Telecommunications.'' \41\ Under the present and prior categories, the SBA has deemed a wireless business to be small if it has 1,500 or fewer employees.\42\ Because Census Bureau data are not yet available for the new category, we will estimate small business prevalence using the prior categories and associated data. For the category of Paging, data for 2002 show that there were 807 firms that operated for the entire year.\43\ Of this total, 804 firms had employment of 999 or fewer employees, and three firms had employment of 1,000 employees or more.\44\ For the category of Cellular and Other Wireless Telecommunications, data for 2002 show that there were 1,397 firms that operated for the entire year.\45\ Of this total, 1,378 firms had employment of 999 or fewer employees, and 19 firms had employment of 1,000 employees or more.\46\ Thus, we
[[Page 50208]]
estimate that the majority of wireless firms are small.
\40\ U.S. Census Bureau, 2007 NAICS Definitions, ``517210 Wireless Telecommunications Categories (Except Satellite)''; http://

www.census.gov/naics/2007/def/ND517210.HTM#N517210.

\41\ U.S. Census Bureau, 2002 NAICS Definitions, ``517211 Paging''; http://www.census.gov/epcd/naics02/def/NDEF517.HTM; U.S. Census Bureau, 2002 NAICS Definitions, ``517212 Cellular and Other Wireless Telecommunications''; http://www.census.gov/epcd/naics02/

def/NDEF517.HTM.
\42\ 13 CFR 121.201, NAICS code 517210 (2007 NAICS). The now superseded, pre2007 CFR citations were 13 CFR 121.201, NAICS codes 517211 and 517212 (referring to the 2002 NAICS)).
\43\ U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, ``Establishment and Firm Size (Including Legal Form of Organization,'' Table 5, NAICS code 517211 (issued Nov. 2005)). \44\ Id. The census data do not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is for firms with ``1000 employees or more.''
\45\ U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, ``Establishment and Firm Size (Including Legal Form of Organization,'' Table 5, NAICS code 517212 (issued Nov. 2005)). \46\ Id. The census data do not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is for firms with ``1000 employees or more.''

43. Internet Service Providers. The SBA has developed a small business size standard for Internet Service Providers. This category comprises establishments ``primarily engaged in providing direct access through telecommunications networks to computerheld information compiled or published by others.''\47\ Under the SBA size standard, such a business is small if it has average annual receipts of $21 million or less.\48\ According to Census Bureau data for 1997, there were 2,751 firms in this category that operated for the entire year.\49\ Of these, 2,659 firms had annual receipts of under $10 million, and an additional 67 firms had receipts of between $10 million and $24,999,999.\50\ Thus, under this size standard, the great majority of firms can be considered small entities.
\47\ Office of Management and Budget, North American Industry Classification System, page 515 (1997). NAICS code 518111, ``OnLine Information Services.''
\48\ 13 CFR 121.201, NAICS code 518111.
\49\ U.S. Census Bureau, 1997 Economic Census, Subject Series: ``Information,'' Table 4, Receipts Size of Firms Subject to Federal Income Tax: 1997, NAICS code 514191.

\50\ Id.

44. Television Broadcasting. The Census Bureau defines this category as follows: ``This industry comprises establishments primarily engaged in broadcasting images together with sound. These establishments operate television broadcasting studios and facilities for the programming and transmission of programs to the public.'' \51\ The SBA has created a small business size standard for Television Broadcasting entities, which is: such firms having $13 million or less in annual receipts.\52\ According to Commission staff review of the BIA Publications, Inc., Media Access Pro Television Database as of December 7, 200, about 825 (66 percent) of the 1,250 commercial television stations in the United States had revenues of $13 million or less. We note, however, that in assessing whether a business entity qualifies as small under the above definition, business (control) affiliations \53\ must be included. Our estimate, therefore, likely overstates the number of small entities that might be affected by our action, because the revenue figure on which it is based does not include or aggregate revenues from affiliated companies.
\51\ U.S. Census Bureau, 2002 NAICS Definitions, ``515120 Television Broadcasting'' (partial definition); http://

www.census.gov/epcd/naics02/def/NDEF515.HTM.

\52\ 13 CFR 121.201, NAICS code 515120.
\53\ ``Concerns are affiliates of each other when one concern controls or has the power to control the other or a third party or parties controls or has the power to control both.'' 13 CFR 21.103(a)(1).

45. In addition, an element of the definition of ``small business'' is that the entity not be dominant in its field of operation. We are unable at this time to define or quantify the criteria that would establish whether a specific television station is dominant in its field of operation. Accordingly, the estimate of small businesses to which rules may apply do not exclude any television station from the definition of a small business on this basis and are therefore overinclusive to that extent. Also as noted, an additional element of the definition of ``small business'' is that the entity must be independently owned and operated. We note that it is difficult at times to assess these criteria in the context of media entities and our estimates of small businesses to which they apply may be overinclusive to this extent.

46. There are also 2,117 low power television stations (``LPTV'').\54\ Given the nature of this service, we will presume that all LPTV licensees qualify as small entities under the above SBA small business size standard.
\54\ FCC News Release, ``Broadcast Station Totals as of September 30, 2007.''

47. Radio Broadcasting. The SBA defines a radio broadcast entity that has $6 million or less in annual receipts as a small
business.\55\ Business concerns included in this industry are those ``primarily engaged in broadcasting aural programs by radio to the public.\56\ According to Commission staff review of the BIA Publications, Inc., Master Access Radio Analyzer Database, as of May 16, 2003, about 10,427 of the 10,945 commercial radio stations in the United States have revenue of $6 million or less. We note, however, that many radio stations are affiliated with much larger corporations with much higher revenue, and that in assessing whether a business concern qualifies as small under the above definition, such business (control) affiliations \57\ are included.\58\ Our estimate, therefore likely overstates the number of small businesses that might be affected by the rules adopted herein.
\55\ See OMB, North American Industry Classification System: United States, 1997, at 509 (1997) (Radio Stations) (NAICS code 515112).
\56\ Id.
\57\ ``Concerns are affiliates of each other when one concern controls or has the power to control the other, or a third party or parties controls or has the power to control both.'' 13 CFR 121.103(a)(1).
\58\ ``SBA counts the receipts or employees of the concern whose size is at issue and those of all its domestic and foreign affiliates, regardless of whether the affiliates are organized for profit, in determining the concern's size.'' 13 CFR 121(a)(4).

48. Auxiliary, Special Broadcast and Other Program Distribution Services. This service involves a variety of transmitters, generally used to relay broadcast programming to the public (through translator and booster stations) or within the program distribution chain (from a remote news gathering unit back to the station). The Commission has not developed a definition of small entities applicable to broadcast auxiliary licensees. The applicable definitions of small entities are those, noted previously, under the SBA rules applicable to radio broadcasting stations and television broadcasting stations.\59\

\59\ 13 CFR 121.201, NAICS codes 513111 and 513112.

49. The Commission estimates that there are approximately 5,618 FM translators and boosters.\60\ The Commission does not collect financial information on any broadcast facility, and the Department of Commerce does not collect financial information on these auxiliary broadcast facilities. We believe that most, if not all, of these auxiliary facilities could be classified as small businesses by themselves. We also recognize that most commercial translators and boosters are owned by a parent station which, in some cases, would be covered by the revenue definition of small business entity discussed above. These stations would likely have annual revenues that exceed the SBA maximum to be designated as a small business ($6.5 million for a radio station or $13.0 million for a TV station). Furthermore, they do not meet the Small Business Act's definition of a ``small business concern'' because they are not independently owned and operated.\61\
\60\ FCC News Release, ``Broadcast Station Totals as of September 30, 2007.''

\61\ 15 U.S.C. 632.

50. Cable and Other Program Distribution. The Census Bureau defines this category as follows: ``This industry comprises establishments primarily engaged as thirdparty distribution systems for broadcast programming. The establishments of this industry deliver visual, aural, or textual programming received from cable networks, local television stations, or radio networks to consumers via cable or directtohome satellite systems on a subscription or fee basis. These establishments do not generally originate programming material.'' \62\ The SBA has developed a small business size standard for Cable and Other Program Distribution, which is: all such firms having $13.5 million or less in annual receipts.\63\ According to Census Bureau data for 2002, there were a total of 1,191 firms in this category that operated for the entire year.\64\ Of this total, 1,087 firms had annual receipts of under $10 million, and 43 firms had receipts of $10 million or more but less than $25 million.\65\ Thus, under this size standard, the majority of firms can be considered small.
\62\ U.S. Census Bureau, 2002 NAICS Definitions, ``517510 Cable and Other Program Distribution;'' http://www.census.gov/epcd/

naics02/def/NDEF517.HTM.
\63\ 13 CFR 121.201, NAICS code 517510.
\64\ U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, Table 4, Receipts Size of Firms for the United States: 2002, NAICS code 517510.
\65\ Id. An additional 61 firms had annual receipts of $25 million or more.

51. Cable Companies and Systems. The Commission has also developed its own small business size standards, for the purpose of cable rate regulation. Under the Commission's rules, a ``small cable company'' is one serving 400,000 or fewer subscribers,
nationwide.\66\ Industry data indicate that, of 1,076 cable operators nationwide, all but eleven are small under this size standard.\67\ In addition, under the
[[Page 50209]]
Commission's rules, a ``small system'' is a cable system serving 15,000 or fewer subscribers.\68\ Industry data indicate that, of 7,208 systems nationwide, 6,139 systems have less than 10,000 subscribers, and an additional 379 systems have 10,00019,999 subscribers.\69\ Thus, under this second size standard, most cable systems are small.
\66\ 47 CFR 76.901(e). The Commission determined that this size standard equates approximately to a size standard of $100 million or less in annual revenues. Implementation of Sections of the 1992 Cable Act: Rate Regulation, Sixth Report and Order and Eleventh Order on Reconsideration, 10 FCC Rcd 7393, 7408 (1995).
\67\ These data are derived from: R.R. Bowker, Broadcasting & Cable Yearbook 2006, ``Top 25 Cable/Satellite Operators,'' pages A8 & C2; Warren Communications News, Television & Cable Factbook 2006, ``Ownership of Cable Systems in the United States,'' pages D1805 to D1857.
\68\ 47 CFR 76.901(c).
\69\ Warren Communications News, Television & Cable Factbook 2006, ``U.S. Cable Systems by Subscriber Size,'' page F2 (data current as of Oct. 2005). The data do not include 718 systems for which classifying data were not available.

52. Cable System Operators. The Communications Act

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