The Regulatory Flexibility Act and

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The Regulatory Flexibility Act and
Telecommunications Rulemakings
A presentation of the Office of Advocacy, U.S.
Small Business Administration Pursuant to
Executive Order 13272
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The Office of Advocacy

• Congress established the Office of Advocacy
  under the Regulatory Flexibility Act (RFA), to
  represent the views of small entities before
  Federal agencies and Congress.
• The RFA requires agencies to consider the
  economic impact of actions on small entities when
  promulgating regulations.

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Advocacy Overview

• Office of the Chief Counsel
• Office of Interagency Affairs
• Office of Economic Research
• Office of Information
• Administrative Services Branch

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Why Advocacy?

• Congress was concerned about regulations that
  unduly burdened small entities. Such
  regulations
• Adversely affect competition
• Discourage innovation entrepreneurship
• Restrict improvements in productivity
• Require small entities to comply with regulations
  that fix problems not caused by them

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Small Telecom Entities

• For RFA purposes, small businesses are defined by
  SBA size standards and the definition of small
  entities may also include small organizations and
  small governmental jurisdictions
• For the telecom industry, small entities include
  small CLECs, VoIP providers, small and rural
  ILECs, small cable operators, et. cet.
• SBA size standards for these various types of
  entities can be found at
• http//www.sba.gov/advo/research/us05_n6.pdf

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RFA Compliance is Required for All Agencies

• Congressional interest
• Enabling legislation in 1980 and 1996
• Ongoing committee and budgetary oversight
• Court intervention
• Clear court precedents on RFA requirements and
  agencies compliance
• Advocacy has Amicus authority in Federal courts
• White House initiatives
• Two Executive Orders 12866 and 13272
• OIRA works closely with Advocacy on RFA
  compliance issues

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The Benefits of RFA Compliance

• For Agencies
• Minimizes legal problems and challenges
• Avoids delays due to challenges
• Improves public and congressional support
• Improves compliance with the regulation
• For small telecom businesses
• Provides a more level playing field
• Reduces regulatory costs so that small telecom
  providers can invest in creating new technologies
  and deploying broadband

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Advocacys Involvement in Telecom

• Advocacy works with the following agencies, as
  well as Congress on telecommunications and
  information issues
• Federal Communications Commission (FCC)
• National Telecommunications and Information
  Administration (NTIA)
• Federal Trade Commission (FTC)

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How Advocacy Becomes Involved

• Small business outreach
• Public comment letters
• Interagency filings and other non-public comments
• Meetings with agencies and industry
• Roundtables

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The FCC and the RFA

• Advocacy continues to work closely with the FCC
  and other agencies to improve RFA compliance
• The FCC rarely certifies its rules, and usually
  performs an initial regulatory flexibility
  analysis (IRFA)
• Advocacy works with the FCC and industry to
  strengthen the economic analyses in the FCCs
  proposed rules

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Rules Where Advocacy Has Made an Impact

• Restrictions on Fax Advertising
• Customer Proprietary Network Information
• Video Programming Access
• Forbearance Procedures

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Restrictions on Fax Advertising

• On July 3, 2003 the FCC released a rule in the
  do-not-call proceeding intended to curb
  intrusive telemarketing practices
• With regard to the do-not-fax portion of the
  rule, Advocacy requested that the FCC reinstate
  the established business relationship exemption
  to allow small businesses to fax customers if an
  opt-out provision is included on the cover page
• The FCC stayed that portion of the rule, and
  Congress eventually passed the Junk Fax
  Prevention Act of 2005, codifying this definition
  and saving small businesses more than 3.5
  billion in initial cost savings and 711 million
  annually (Based on a U.S. Chamber of Commerce
  study)

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Customer Proprietary Network Information (CPNI)

• Advocacy communicated concerns of small VoIP
  providers that were economically burdened by the
  rules new technical requirements
• Advocacy requested an extended timeline to
  mitigate the economic burden imposed by the final
  rule
• The FCC extended the timeline by 6 months, saving
  small businesses an estimated 6 million in cost
  savings in FY 2007

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Video Programming Access

• In March 2007, the FCC sought comment on whether
  the prohibition on exclusive contracts in the
  multichannel video programming distribution
  market was still needed.
• Small cable providers expressed their concern
  that the elimination of this ban would impede
  competition and diversity in the distribution of
  video programming services
• Advocacy filed public comment, expressing these
  concerns, and the FCC extended the ban on
  exclusive contracts for five years, saving small
  businesses unquantifiable cost savings

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Forbearance Procedures

• Verizons Forbearance Petitions
• Qwests Forbearance Petitions
• FCCs Rulemaking on Forbearance Procedures

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Verizons Forbearance Petitions

• On November 7, 2007, Advocacy filed public
  comment requesting that the FCC examine new
  market data in its forbearance analysis of
  Verizons request for regulatory relief in the
  six metropolitan statistical areas.
• Advocacy also recommended that the Commission
  analyze those areas where UNE forbearance had
  already been granted.
• The FCC denied Verizons request for forbearance
  in six metropolitan statistical areas based on
  insufficient competition in those areas

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Qwests Forbearance Petitions

• On July 25, 2008, Advocacy filed public comment
  requesting that the FCC continue to examine new
  economic data to better analyze Qwests request
  for forbearance in the Phoenix, Minneapolis-St.
  Paul, Seattle and Denver Metropolitan Statistical
  Areas (MSAs)
• The FCC denied Qwests request for forbearance
  due to a lack of sufficient competition in the
  MSAs

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FCC Rulemaking on Forbearance

• The FCC opened a rulemaking to examine its
  forbearance procedures under Section 10 of the
  Communications Act of 1934
• Advocacy filed comment to encourage the FCC to
  develop procedural rules to better govern
  forbearance procedures, including
• Making forbearance subject to notice and comment
  procedures
• Establishing complete-as-filed requirements and
  fully enforcing these requirements
• Clarifying whether the petitioner maintains the
  burden of proof
• Coordinating with state public utilities
  commissions

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Rules on the Horizon

• Digital Television Conversion
• Special Access
• Intercarrier Compensation
• Universal Service

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Digital Television Conversion

• The FCC proposed a rule that would require cable
  systems to provide consumers with broadcast and
  digital signals (dual carriage) in preparation
  for the 2009 Digital Television Transition
• Small cable operators explained how this new
  requirement would unnecessarily burden their
  operations from both a technical and economic
  standpoint, and possibly force some companies out
  of business
• Advocacy filed public comment requesting that the
  Commission exempt small carriers with 5,000 or
  fewer subscribers or an activated channel
  capacity of 552 MHz or less

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Special Access

• The FCC requested that parties refresh the record
  on interstate special access services for price
  cap local exchange carriers notice of proposed
  rulemaking (NPRM)
• Since the docket was initially opened, several
  significant telecom mergers took place, and the
  GAO released a study examining the lack of
  facilities-based competitive alternatives for
  dedicated access
• Advocacy filed public comment, highlighting how
  this recent consolidation in the market further
  compromises small carriers ability to receive
  just and reasonable rates, and encouraging the
  FCC to utilize the data presented by the GAO
  moving forward

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Intercarrier Compensation

• Advocacy has remained active on intercarrier
  compensation issues, encouraging the FCC to
  simplify the patchwork of different compensation
  schemes
• Different requirements for compensation make it
  more difficult for smaller carriers to comply due
  to sophisticated technology requirements and the
  high level of technical expertise involved

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Universal Service

• Universal service fund (USF) reform is a good
  example of a wedge issue for small
  telecommunications carriers not all smalls agree
  on the path forward
• The FCC opened a rulemaking to examine proposals
  for USF reform in January 2008
• Advocacy coordinated with small rural ILECs and
  small wireless carriers to better understand
  their needs, and filed public comment in March
  2008

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Future Policy for Small Telecoms

• Just and reasonable rates special access reform
  will be critical in ensuring that small carriers
  maintain a competitive stance in the U.S. market
• Spectrum auctions the FCC must strengthen the
  designated entity (DE) program and find other
  ways to enable small entities to meaningfully
  participate in spectrum auctions
• Broadband The federal government must continue
  efforts to bridge the digital divide

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Where to get more information

• Advocacy website
• www.sba.gov/ADVO
• Cheryl Johns
• Assistant Chief Counsel for Telecommunications
• 202-205-6949
• cheryl.johns_at_sba.gov
• Dr. Radwan Saade
• Regulatory Economist
• 202-205-6878
• radwan.saade_at_sba.gov

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THANK YOU!