Supporting Statement OMB 3060-xxxx Section 43.62 (Proposed)(2011)

OMB Control Number: 3060-xxxx July 2011

Title: Section 43.62, Annual Reporting Requirements for U.S. Providers of International Telecommunications Services and Circuits

SUPPORTING STATEMENT

A. Justification:

1. The Federal Communications Commission (Commission) is requesting that the Office of Management and Budget (OMB) approve a new information collection, section 43.62, that will replace two existing information collections, sections 43.61 (annual traffic and revenue report) and 43.82 (annual circuit-status report).

On May 12, 2011, the Commission adopted a First Report and Order and Further Notice of Proposed Rulemaking in (FCC 11-76) in Reporting Requirements for U.S. Providers of International Telecommunications Services, Amendment of Part 43 of the Commission’s Rules, IB Docket No. 04-112 (rel. May 13, 2011) (Part 43 Review Order). That Order did two things. First, in the First Report and Order portion of the Part 43 Review Order (covered by a separate supporting statement), the Commission retained the annual traffic and revenue report currently contained in section 43.61 of the Commission’s rules, but removed two reports that were also contained in that section. Also in the First Report and Order portion of the Part 43 Review Order, the Commission retained the annual circuit-status report currently contained in section 43.82 of the rules.

Second, the Further Notice of Proposed Rulemaking (FNPRM) portion of the Part 43 Review Order, proposed to modify both the traffic and revenue report and the circuit-status report to streamline them and improve the usefulness of the information the entities filing the reports will submit. The FNPRM also proposed to remove the current sections 43.61 and 43.82 and to consolidate the revised annual traffic and revenue and annual circuit-status reports into a new section 43.62. The FNPRM further proposed to replace the existing filing manuals for each report with one new, consolidated filing manual covering both reports.

The proposed new section 43.62 would read as follows:

§ 43.62 Reporting requirements for holders of international Section 214 authorizations and providers of international services.

§ 43.62(a) Annual Reports.

Not later than May 1 of each year, any person or entity that holds an authorization pursuant to section 214 of the Communications Act to provide international telecommunications service; or any person or entity that provided interconnected Voice over Internet Protocol service between the United States (as defined in the Communications Act, as amended, 47 U.S.C. § 153) and a foreign point during the previous year; shall submit the following reports:

§ 43.62(a)(1) Any person or entity that holds an authorization pursuant to section 214 to provide international telecommunications service shall report whether it provided international telecommunications services or owned international circuits the preceding year.

§ 43.62(a)(2) Each common carrier engaged in providing international telecommunications service, and each person or entity engaged in providing interconnected Voice over Internet Protocol service, between the United States (as defined in the Communications Act, as amended, 47 U.S.C. § 153) and any country or point outside that area shall file a report with the Commission showing revenues, payouts, and traffic for such international telecommunications service and interconnected Voice over Internet Protocol service provided during the preceding calendar year.

§ 43.62(a)(3) Each person or entity owning international facilities between the United States (as defined in the Communications Act, as amended, 47 U.S.C. § 153) and any country or point outside that area shall file a circuit-status report with the Commission showing the status of its circuits as of December 31 of the preceding calendar year.

§ 43.62(b) Filing Manual.

The information required under this section shall be furnished in conformance with the instructions and reporting requirements prepared under the direction of the Chief, International Bureau, prepared and published as a filing manual.

The proposed requirements are listed below for the Annual Services Report, Annual Traffic and Revenue Report, Annual Circuit-Status Report and the New Consolidated Filing Manual as follows:

Proposed Section 43.62(a)(1) (proposed Services Report) (new collection)

First, the FNPRM proposes to require providers of international telecommunications services to file a new Services Report (proposed section 43.62(a)(1) that would provide basic information on the filing entity, update its contact information, update a list of its Section 214 authorizations. The Services Checklist portion of the proposed Services Report would require filing entities to indicate whether they had provided service during the preceding year. Depending upon the answers to the questions, the Checklist would inform a filing entity whether it needed to file one or more of the filing schedules that constitute the proposed, revised annual traffic and revenue report and/or the revised annual circuit-status report.

Proposed Section 43.62(a)(2)—Annual Traffic and Revenue Report (previously approved under Section 43.61(a))

In the Further Notice of Proposed Rulemaking (FNPRM) portion of the Part 43 Review Order, the Commission proposes a number of additional modifications to further streamline the traffic and revenue report and to make the information more useful. As before, the proposed, revised traffic and revenue report would require filing entities to report on three categories of international telecommunications services: (1) international message telephone service (IMTS); (2) international private line service; and (3) international miscellaneous services.

The FNPRM proposes to continue the current requirement that filing entities report on two types of IMTS: facilities-based IMTS (i.e., IMTS provided by an entity that owns, leases or otherwise controls the facilities used to provide service) and IMTS resale (i.e, IMTS provided by an entity through the resale of IMTS purchased from another U.S. carrier). The FNPRM proposes to simplify the reporting of both types of IMTS and to modify the reports to make the resulting information more useful under current market conditions..

The FNPRM first proposes to simplify the reporting of facilities-based IMTS traffic and revenues by replacing the current intricate billing codes with a simpler set of computerized filing schedules. The FNPRM also proposes to eliminate the current requirement that filing entities report the number of IMTS calls they handle and the regional totals for IMTS. The FNPRM proposes to allow filing entities to report their traditional transit traffic and revenues, and the terminating leg of reoriginated traffic on a world total basis, rather than route by route as they now do. The FNPRM proposes to allow filing entities to combine their country-direct and country-beyond services with their other IMTS traffic rather than separately reporting them as they now are required to do. Changes in the IMTS market have rendered the former detailed reporting of these data unnecessary.

To improve the usefulness of the IMTS traffic and revenue data, the FNPRM proposes to require filing entities to report separately the world total amounts they pay foreign carriers to terminate facilities-based IMTS traffic on landline and networks and the amounts they pay to terminate such traffic on mobile telephone networks. The FNPRM also proposes to require carriers to break their world total IMTS traffic and revenues for each of three classes of customers—residential and small business users; large business and government users; and other carries (i.e., IMTS resellers). The FNPRM also proposes to require filing entities to allocate their total non-route-specific revenues (those they get from monthly fees for calling plans) to the routes they serve. These new pieces of information will provide the Commission information on issues that have become more important.

The FNPRM proposes also to simplify the reporting of IMTS resale traffic and revenues. For such traffic, the FNPRM proposes to retain the current requirement that filing entities report IMTS resale traffic and revenues only on a world-total basis, but proposes to eliminate the current requirement that such entities report a list of the countries they served. Further, because many IMTS resale carriers generate very low volumes and revenues, the FNPRM proposes to introduce a $5 million revenue threshold below which a reseller need not file IMTS resale traffic and revenues. Based on 2010 figures, such a threshold would have excused more than 1,100 resellers from filing traffic and revenue data, while still obtaining data on more than 96 percent of the U.S. IMTS resale market. This proposal should remove the burden of reporting from a significant number of small resellers, while continuing to provide the Commission with information on the rapidly growing IMTS resale market.

The FNPRM also proposes a number of ways to streamline the reporting of international private lines. First, the FNPRM retains the current requirement that filing entities report their international private line traffic and revenues for each overseas route they serve, but proposes to eliminate the current requirement that filing entities report the individual private line services they offer. Rather, the FNPRM proposes to require them only to report the number of circuits they provide expressed in 64 Kilobit equivalents. The FNPRM also proposes to simplify reporting of private lines provided over resold circuits by allowing entities to report them on a world-total rather than route-by-route basis.

The FNPRM also propose to simplify the reporting of international data and miscellaneous services by allowing filing entities to report such service on a world-total rather than route-by-route basis. The FNPRM also proposes to implement a $5 million revenue threshold for

the reporting of each international data or miscellaneous service. This change should reduce the reporting burden on all filing entities, but particularly on small entities.

The FNPRM also addressed the fact that a number of important providers of international telecommunications services do not now file the annual traffic and revenue report. First, the FNPRM clarifies that an operator of a “spot market” that itself carriers international IMTS traffic over its own facilities must file the annual traffic and revenue report. A spot market is a market where IMTS providers can buy or sell call completion services for calls, including IMTS calls. A customer of the spot market enters into a contract with the spot market owner to buy or sell call completion services by interconnecting at a spot market point of presence. The spot market owner acts as broker by facilitating the exchange of calls between spot market customers, who may not know each other’s identity. Because spot markets allow carriers to shop for the lowest cost termination service to a particular destination they have become important components in the overall IMTS market. Most spot market owners act as a broker and are not required to report traffic. A few spot market operators, however, haul IMTS traffic between a point in the United States and a foreign point, using their own facilities. Such operators would be responsible for reporting such traffic and revenue.

Finally, the FNPRM sought comment whether the Commission should require providers of interconnected voice over internet protocol (VoIP) service to submit traffic and revenue data regarding their provision of international telephone services under the proposed streamlined reporting rules. Interconnected VoIP service refers to the provision of telephone service over the internet rather than through the traditional circuit-switched telephone network. Providers of VoIP service that interconnect their service with the public switched telephone network provide a voice service that is substantially identical with IMTS. The FNPRM noted that customers are increasingly substituting interconnected VoIP services for IMTS and questioned whether it could get an accurate picture of the international voice messaging market without getting information from all significant providers of such services.

Proposed Section 43.62(a)(3)—Annual Circuit-status Report (previously approved under Section 43.82)

The FNPRM also proposes a number of ways to streamline the annual circuit-status report under which filing entities report the number of international transmission circuits they own on December 31^st of each year. The FNPRM proposes to replace the current report format with a simplified filing schedule. The FNPRM also proposes to eliminate the current requirement that carriers report the various services for which they use their international circuits. Rather, the revised report would require carriers simply to report their active and idle circuits, expressed in 64 Kbps circuit equivalences. The Commission also proposes to eliminate the reporting of extra virtual circuits they derive from the use of circuit-multiplication equipment used on their bearer circuits. These changes should simplify the filing of circuit-status reports by both large and small carriers.

Additionally, the FNPRM addresses the fact that there are a number of important providers of international transmission circuits that do not now file the annual circuit-status report. At present, only common carriers and the providers of common carrier international transmission facilities are required to file the report. Common carriers that use circuits obtained from non-common carrier providers of international circuits are required to report those non-common carrier circuits along with their common carrier circuits. Common carriers must also report circuits they provide to non-common carriers. Providers of non-common carrier circuits are not now required to report their circuits, even though they may be required to pay regulatory fees on those circuits. In the past virtually all international circuits were in common carrier facilities. Nowadays, however, most circuits are provided on non-common carrier (international terrestrial, submarine cable, and satellite) facilities. As a result the Commission is getting information only on a small segment of the current international circuit market.

The FNPRM seeks comment whether the more complete view of the market from requiring all providers of international facilities to file the circuit-status report. The Commission noted that the fact that important providers of international circuits do not now file the circuit-status also hampers the ability of the Commission to monitor compliance with the requirement for such entities to pay regulatory fees under the Omnibus Budget Reconciliation Act of 1993. Without this information, the Commission’s efforts to achieve a more competitive international telecommunications marketplace will be impeded. Also, the Commission would not have the information necessary to analyze proposed mergers.

Proposed Section 43.62(b)—New Consolidated Filing Manual [replaces the separate filing manuals now used for the traffic and revenue report and the circuit-status report]

The FNPRM proposes to replace the current separate filing manuals that filing entities use for the annual traffic and revenue report and the circuit-status report with one consolidated filing manual for both reports. The Commission noted that one filing manual would simplify compliance with both reports by ensuring common definitions and procedures. The FNPRM directed the Chief of the International Bureau to prepare and circulate for comment a consolidated filing manual that would embody all the proposed modifications to the traffic and revenue and circuit-status reports.

Authority for the proposed, revised information collections:

The Commission has authority for this information collection under Sections 1, 4(i)-4(j), 11, 201-205, 211, 214, 219, 220, 303(r), 309 and 403 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i)-154(j), 161, 201-205, 211, 214, 219-220, 303(r), 309, 403.

This information collection does not impact individuals. Therefore, there are no impacts under the Privacy Act.

2. The uses to which the Commission puts the information from the annual services report, annual traffic and revenue report and the annual circuit-status report are as follows:

(a) Annual Services Report [proposed Section 43.62 (a) (1)]

The Commission would use the very simple information from the proposed Services Report to update its data base of entities authorized to provide international telecommunications services and whether such entities are in fact providing services. The Commission would also use information from the Service Report to update contact information for the entities authorized to provide service. The report would also assist the Commission in ensuring that all authorized service provider have provided the Commission with the name and address of its authorized agent in the District of Columbia required by Section 413 of the Communications Act. Finally, the Commission would use information from the Services Report to update its database of Section 214 authorizations in use and determine if and when a service provider has terminated service. The Services report would also inform filing entities which filing schedules of the annual traffic and revenue report and the annual circuit-status report they are required to file.

(b) Annual Traffic and Revenue Report [proposed Section 43.62 (a) (2)]

The annual traffic and revenue report provides the Commission the only information the commission has on the operations of the U.S. carriers and other entities that provide international telecommunications services. The Commission uses data this report to analyze the U.S. international telecommunications market, track market developments, and to determine the competitiveness of each service and geographical market. Furthermore, the Commission uses the traffic and revenue data to formulate rules and policies consistent with the public interest, to monitor compliance with those rules and policies, and to gauge the competitive effect of Commission decisions on the international market. Moreover, the reports provide a means by which to determine whether a U.S. carrier’s foreign-carrier correspondents are engaging in anti-competitive conduct.

(c) Annual Circuit-Status Report [proposed Section 43.62 (a) (3)]

The annual circuit-status report provides the Commission with the only information it has on the ownership and use of international transmission facilities. The Commission uses this information to analyze the international telecommunications market and to monitor the change of that market to a competitive market. The Commission also uses the information to develop international communications policies and to monitor industry compliance with those policies. The Commission also uses the information to ensure that carriers with market power do not engage in anticompetitive behavior. Additionally, the Commission uses the information to analyze proposed mergers and other transactions. Finally, the Commission uses the information from the circuit-status report to ensure compliance with congressionally mandated regulatory fees.

(d) Proposed Consolidated Filing Manual [proposed Section 43.62(b)]

3. The FNPRM did not address the method by which filing entities would file their information under the revised information collection. At present, facilities-based and facilities-resale carriers must file three paper copies and three compact discs (CDs) containing the required traffic and revenue data. The paper copies must contain data that is identical to the data submitted on the CDs. Two copies (one copy of the paper submission and one of the CD) of the submitted information are used by the Commission's copy contractor. Carriers that provide only pure switched resale services are not required to file data on CDs. Carriers are also permitted, but not required, also to submit their traffic and revenue information on a commercially available spreadsheet program. Because filing entities must submit hard copies of their traffic and revenue reports to the Commission, the agency collects no more than 50 percent of the submitted traffic and revenue information electronically.

With respect to the circuit-status report, carriers must submit three paper copies of their circuit-status information. Carriers must also submit a copy of their circuit data on CDs. Alternatively, carriers are permitted, but not required, to submit their circuit-status data in the form of Excel files. Again, because carriers must submit hard copies of their circuit-status to data to the Commission, the agency collects no more than fifty percent of the circuit-status data electronically.

4. This information collection requirement is not duplicated elsewhere in the Commission’s rules.

5. The FNPRM portion of the Part 43 Review Order continues the overall review of the Commission’s international reporting requirements that the Commission initiated in 2004 with a Notice of Proposed Rulemaking (NPRM) (FCC 04-70). In the NPRM, the Commission had proposed a number of ways to simplify the information that the carriers, both small and large, must submit for any traffic and revenue reports. As noted, in the First Report and Order portion of the Part 43 Review Order, the Commission retained the annual traffic and revenue report, with a few modifications described above. The FNPRM portion of the Part 43 Review Order modified some of the proposals contained in the original 2004 NPRM and seeks additional public comment on those proposals.

In summary, the proposals discussed in the FNPRM would minimize the economic impact on small entities to the greatest extent possible, while ensuring that the Commission gets the complete information it needs to discharge its regulatory obligations.

6. If the information collection were not conducted or were conducted less frequently, the Commission would not be able to ensure compliance with its international rules and policies. Furthermore, the Commission would not have sufficient information to take measures to prevent anticompetitive conduct in the provision of international communications services. The Commission would not have adequate information to respond to failures in the U.S.-international market. The Commission would not be able to

promote effective competition in the global market for communications services. The lack of effective competition would adversely affect the U.S. revenues in the telecommunications industry. The agency would not be able to comply with the international regulations stated in the World Trade Organization (WTO) Basic Telecom Agreement. Carriers and other entities outside the Commission, such as other government agencies, international organizations, and academia, use the information to analyze industry trends. Other government agencies use the information in merger analyses and negotiations with foreign countries. If the information collection was not conducted, carriers, government

agencies and other entities would not have accurate industry data available in order to conduct analyses.

7. . There are no special circumstances that would prevent the Commission from following all guidelines regarding the information collection.

8. The Commission placed a 60 day notice in the Federal Register pursuant to 5 CFR § 1320.8(d).  See 76 FR 42613, dated July 19, 2011, seeking comments from the public on the information collection requirements contained in this supporting statement. To date, no comments have been received from the public.

9. The Commission will not provide any payment or gift to respondents.

10. The Commission has generally treated the information submitted pursuant to

Section 43.61 as non-confidential. However, the Commission allowed carriers to request proprietary treatment for specific pieces of information, such as information on transit traffic, under exceptions to the Freedom of Information Act. See 47 CFR 0.459. The Commission proposes to continue its policy of generally making the carriers’ annual traffic and revenue data available to the public. The FNPRM proposes to clarify its polices on the confidentiality of traffic and revenue information by identifying particular, disaggregated pieces of information that it would treat as not routinely available for public inspection and to specify such information in its rules. The remaining, aggregated data that could not be readily used to derive route-specific traffic or cost information the Commission would treat as routinely available for public inspection.

In the interest of public access to information, even where the Commission grants a request to keep a particular piece of information confidential, the agency proposed to include that information in the industry-wide totals it compiles in the annual International Telecommunications Data Reports.

The information identified by this proceeding as disaggregated information that is not routinely available to the public would be identified in a new rule Section 0.457(d)(1)(viii) that would provide confidential treatment for the information so identified. Beyond that, filing entities that seek to protect the confidentiality of particular data elements may request such treatment under section 0.459 of the Commission’s rules. That rule requires such a carrier to justify fully its request for confidentiality by providing enough information for the Commission to determine the need for confidential treatment. The FNPRM directs the International Bureau to act upon such requests at the time they are filed.

The rule requires a carrier requesting confidentiality to submit an unredacted version of its data, as well as a redacted version to be made publicly available. Should the Commission decide to grant a request for confidential treatment of information that does not fall within a specific exemption pursuant to the Freedom of Information Act (FOIA), that Act requires the Commission to disclose publicly the information upon an appropriate request. The Commission may grant requests for confidential treatment either conditionally or unconditionally. As such, the Commission has the discretion to release on public interest grounds information that does fall within the scope of a FOIA exemption. The Commission is requesting public comment on the granting of confidential treatment for particular pieces of data in the annual traffic and revenue or circuit-status reports.

11. The Commission does not propose to collect information from the public, only from telecommunications common carriers and other for-profit businesses. As a result, there are no personal questions of a sensitive nature proposed to be from the public.

12. Estimate of Burden Hours for Information Collection::

The following represents the estimated hour burden of the various information collections included in proposed section 43.62. (We note that the burden hour estimates are our best estimate based on our overall experience with the earlier forms of the information collections covered by this Supporting Statement):

Estimate of Burden Hours:1
Explanation	Number	Frequency	Time	Annual
of Burden Estimate	Of Responses	of Responses	Per Response	Burden Hours
47 CFR 43.62 (a)(1) Services Report	2,200	Annual	1 Hour	2,200 Hours
Proposed Section 43.62(a) (2) Annual Traffic and Revenue Reports	506 *	Annual	200 Hours	101,200 Hours
	86**	Annual	2 Hours	172 Hours
Proposed Section 43.62 (a) (3) (Annual Circuit-Status Report):
	54+	Annual	50	2,700
	80++	Annual	10	800
	50+++	Annual	2	100
Totals	2,976			107,172 Hours

* 506 is the number of facilities-based carriers, providers of interconnected VoIP service and operators of spot markets that file country-by-country traffic and revenue information = 506 reports filed annually

** 86 is the number of resale carriers that file worldwide traffic and revenue information of more than $5 million = 86 reports filed annually

*** 1,146 is the number of resale carriers that reported revenues less than $ 5 million and would not have to file a report under the proposed revenue threshold = 0 reports

+ Large Carriers: This category includes large facilities-based common carriers, providers of providers of non-common carrier international undersea cable facilities, providers of non-common carrier international satellite systems, and providers of non-common carrier international terrestrial transmission facilities

++ Tier 2 Carriers. These carriers file a simplified circuit-status report

+++ Tier 3 Carriers. The carriers only file a letter.

In-House Costs: In house staff paid at $35/hour will fulfill the requirements. Therefore, the in-house costs are as follows: 107,172 hours x $35/hour = $3,751,020.

13. Estimated Annual Cost Burden to Respondents to Comply with Information Collection is as follows:

(a) Total Capital and Start-up Costs: Zero

(b) Total Operation and Maintenance and Purchase of Services: $15,300

Compliance with the Annual Traffic and Revenue Report will not require respondents to maintain any special equipment. Compliance may require respondents to hire outside attorneys, calculated as follows:

Description	Annual Responses	Costs per Hour	Hourly Processing per Response	Total
Outside Legal Counsel (for 10 percent of 506 filings by facilities-based carriers (51 responses)) [Resale IMTS providers are not likely to require review of their filings by outside legal counsel]	51	$300 per Hour (Based on industry survey)	1 Hour/ Response	$15,300 (O&M)

(c) Total Annual Costs: $15,300

14. Estimated Annual Costs to the Federal Government for the information collection requirements are as follows:

Government Staff	Annual Burden Hours	Costs
Section 43.62(a)(1) Annual Services Reports
GS-13/Step 5 Hourly Rate: $48.35	Review and Process 100 % of the filings =2,200 filings (@ 1 hour/filing) = 2,200 hours for staff	$106,370.00
Section 43.62(a)(2) Annual Traffic and Revenue Reports
GS-15/Step 5 Hourly Rate: $67.21	Review and Process10% of the filings by facilities-based providers = 51 filings x 3 hours/filing = 153 hours for staff	$10,283.13
GS-13/Step 5 Hourly Rate: $48.35	Review and Process 100% of filings by IMTS Resale providers = 86 filings x 3 hours/filing = 258 hours for staff Review and process 90% of the filings by facilities-based carriers = 455 filings x 3 hours/filing = 1,365 hours for staff	$12,474.30 $65,997.75
Section 43.62(a)(3) (Annual Circuit Status Reports
GS-14/Step 5 Telecommunications Specialist @ $57.13 per hour	184 Responses Received X 3 hours of work per response received = 552 hours for staff	$31,535.76
Total Costs to the Federal Government:		$226,660.94

15. This is a new information collection.

16. The Federal Communications Commission reviews, consolidates and releases the collected traffic and revenue information and the collected circuit-status information to the public.

17. The Commission is requesting a waiver to not display the OMB control number and expiration date on the new, consolidated filing manual that filing entities will use in submitting their traffic and revenue and circuit-status information. This will relieve the Commission from having to update the OMB expiration date on the section 43.62 consolidated filing manual whenever it is resubmitted to OMB. The Commission will use an edition date in lieu of the OMB expiration date. Finally, all OMB-approved information collections (including this one) will be published in 47 CFR 0.408 that “displays” the title, OMB control number and OMB expiration date.

18. There are no other exceptions to the Certification Statement.

.

1 There are no burdens attached to § 43.62(b) for the filing manual.

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