*Pages 1--82 from Microsoft Word - 14225.doc* Federal Communications Commission FCC 01- 362 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of Numbering Resource Optimization Implementation of the Local Competition Provisions of the Telecommunications Act of 1996 Telephone Number Portability ) ) ) ) ) ) ) ) ) CC Docket No. 99- 200 CC Docket No. 96- 98 CC Docket No. 95- 116 THIRD REPORT AND ORDER AND SECOND ORDER ON RECONSIDERATION IN CC DOCKET NO. 96- 98 AND CC DOCKET NO. 99- 200 Adopted: December 12, 2001 Released: December 28, 2001 By the Commission: Commissioner Martin issuing a separate statement. TABLE OF CONTENTS Paragraph Number I. INTRODUCTION .......................................................................................................... 1 II. BACKGROUND ............................................................................................................. 7 III. NATIONAL THOUSANDS- BLOCK NUMBER POOLING ......................................... 11 A. Pooling Administration ....................................................................................... 11 B. Thousands- Block Number Pooling for Non- LNP Capable Carriers ..................... 14 1. Paging Carriers .............................................................................................. 16 2. Non- LNP Capable Carriers Outside of the Largest 100 MSAs ....................... 19 3. State Authority to Require Pooling Capability ................................................ 21 C. Thousands- Block Number Pooling for Covered CMRS Carriers ......................... 22 D. Federal Cost Recovery Mechanism ..................................................................... 24 1. Federal/ State Jurisdiction ............................................................................... 26 2. Recovery of Shared Industry and Direct Carrier- Specific Costs ...................... 30 3. Identification of Costs .................................................................................... 42 1 Federal Communications Commission FCC 01- 362 2 IV. WAIVER OF GROWTH NUMBERING RESOURCE REQUIREMENTS ................... 47 A. Reconsideration of Months- to- Exhaust Criteria .................................................. 47 B. Reconsideration of Utilization Threshold and Formula ........................................ 50 1. Utilization Threshold ..................................................................................... 52 2. Utilization Formula ........................................................................................ 54 3. Applicability of Utilization Threshold to Pooling Carriers ............................... 55 C. Safety Valve ....................................................................................................... 57 1. Background ................................................................................................... 57 2. Discussion ..................................................................................................... 61 V. SERVICE- SPECIFIC AND TECHNOLOGY- SPECIFIC AREA CODE OVERLAYS .................................................................................................................. 67 A. Benefits and Costs of SOs .................................................................................. 75 B. Criteria for SOs .................................................................................................. 80 1. Technologies and Services ............................................................................. 82 2. Geographic Area ........................................................................................... 83 3. Transitional SOs ............................................................................................ 84 4. When to Implement and Transition SOs ......................................................... 85 5. Take- Backs ................................................................................................... 88 6. Ten- Digit Dialing ........................................................................................... 91 7. Rationing ....................................................................................................... 93 8. Thousands- Block Number Pooling ................................................................ 94 VI. OTHER NUMBERING RESOURCE OPTIMIZATION MEASURES .......................... 95 A. Audits ................................................................................................................ 95 1. Enforcement .................................................................................................. 95 2. State Commissions’ Authority to Conduct Audits .......................................... 99 3. Petitions for Reconsideration and Clarification ............................................. 103 B. Reserved Numbers ........................................................................................... 112 1. Reconsideration of Reservation Period ......................................................... 112 2. Fee for Reserved Numbers ........................................................................... 115 3. Clarification of Numbers Used for Intermittent or Cyclical Purposes ........... 119 C. Clarification of Top 100 MSAs ......................................................................... 123 D. Liability of Related Carriers and Withholding of Numbering Resources ............. 128 E. State Commissions’ Access to Data .................................................................. 133 2 Federal Communications Commission FCC 01- 362 3 VII. PROCEDURAL MATTERS ........................................................................................ 139 A. Ex Parte Presentations ...................................................................................... 139 B. Final Regulatory Flexibility Analysis ................................................................. 140 C. Final Paperwork Reduction Analysis ................................................................. 141 D. Ordering Clauses .............................................................................................. 142 Final Rules………………………………………………………..…………… Appendix A Final Regulatory Flexibility Analysis………………………………………… Appendix B List of Parties………………………………………………………………….. Appendix C List of the Top 100 MSAs…………………………………………………….. Appendix D I. INTRODUCTION 1. In this Third Report and Order and Second Order on Reconsideration in CC Docket No. 99- 200, we continue efforts to maximize the efficiency with which numbering resources in the North American Numbering Plan (NANP) are utilized. 1 By working with state commissions and the telecommunications industry, the Commission has been able to refine its numbering administration policies and processes, resulting in a substantial increase in the estimated life of the NANP as projected just two years ago. 2 Our efforts have also contributed to the dramatic reduction in central office code assignments and area code relief efforts over the last year. 3 With this Order, we aim to build upon this success to ensure that the limited numbering resources of the NANP continue to be used efficiently so that the NANP does not exhaust prematurely, and to 1 The NANP was established over 50 years ago by AT& T to facilitate the expansion of long distance calling. It is the basic numbering scheme for the United States, Canada, and most Caribbean countries. The NANP is based on a 10- digit dialing pattern in the format NXX- NXX- XXXX where “N” represents any digit 2- 9 and “X” represents any digit 0- 9. The first three digits represent the numbering plan area (NPA), commonly known as the area code. The second three digits represent the central office, or NXX code, commonly referred to as an exchange. The last four digits represent the subscriber line number. 2 In 1999, the North American Numbering Plan Administrator (NANPA) estimated that NANP exhaust was likely to occur in 2006 – 2012, and the North American Numbering Council (NANC) estimated that NANP exhaust was likely to occur in 2005 – 2016. In its recent study, the NANPA estimates that NANP exhaust is likely to occur well beyond 2020. See NANPA Report to the NANC, October 16- 17, 2001, p. 8. The NANPA estimates that with the introduction of thousands- block number pooling NANP exhaust is not likely to occur before 2025 – 2034. Id. at p. 9. 3 The NANPA reported that the net central office code assignments from January through October 2001 averaged 413 per month as compared to 2172 codes per month for the same period in 2000. See NANPA Report to the NANC, November 27- 28, 2001, p 2. 3 Federal Communications Commission FCC 01- 362 4 ensure that all carriers have the numbering resources they need to compete in the telecommunications marketplace. Specifically, we address issues raised in the Second Further Notice 4 and several petitions for reconsideration and/ or clarification of the First or Second Report and Orders. We also clarify, on our own motion, certain aspects of our numbering resources optimization rules and local number portability requirements. 2. Overview. In Section III, we make several decisions to address national thousands-block number pooling administration. Specifically, we decline to extend the pooling requirement to paging carriers; decline to extend pooling requirements to non- local number portability (LNP) capable carriers outside of the largest 100 Metropolitan Statistical Areas (MSAs) that have not received a request to deploy LNP from a competing carrier; and decline to alter the implementation date for covered Commercial Mobile Radio Service (CMRS) carriers to participate in pooling. 3. We also address the federal cost recovery for national thousands- block number pooling. For price cap local exchange carriers (LECs), we conclude that many of the costs associated with thousands- block number pooling are ordinary costs for which no additional special recovery is appropriate. To the extent that price cap carriers can demonstrate they have incurred extraordinary costs resulting from the implementation of the federally mandated thousands- block number pooling program, these extraordinary costs will be recovered through an exogenous adjustment to interstate access charges. We will allow, but not require, incumbent LECs (ILECs) subject to rate- of- return regulation to recover their carrier- specific costs directly related to thousands- block number pooling implementation through interstate access charges. Carriers not subject to rate regulation, such as competitive LECs (CLECs) and CMRS providers, may recover their carrier- specific costs directly related to implementation of thousands- block number pooling in any lawful manner consistent with their obligations under the Communications Act of 1934, as amended (the Act). Finally, we reaffirm that states that have conducted pooling trials should establish cost recovery mechanisms for costs incurred by carriers participating in such trials, and we encourage those states that have not yet established a mechanism to use the model established by the Commission for national pooling cost recovery. 4. In Section IV, we reaffirm that the Months- to- Exhaust (MTE) requirement for carriers is an important element in ensuring that numbering resources are used efficiently and that carriers have an adequate supply of resources to serve customers. Furthermore, we find that the utilization threshold established in the Second Report and Order is reasonable. We also decline to exempt pooling carriers from the utilization threshold. Finally, we establish a safety valve mechanism to allow carriers that do not meet the utilization threshold in a given rate center to obtain additional numbering resources, and delegate authority to state commissions to hear claims that the safety valve should be applied when the NANPA or the Pooling Administrator denies a specific numbering resource request. 5. In Section V, we revisit the prohibition of service- specific and technology- specific 4 Numbering Resouce Optimization, Second Report and Order, Order on Reconsideration in CC Docket No. 96- 98 and in CC Docket No. 99- 200, and Second Further Notice of Proposed Rulemaking in CC Docket No. 99- 200, 16 FCC Rcd 306 (2000) (Second Report and Order). 4 Federal Communications Commission FCC 01- 362 5 overlays. We conclude that we should lift the ban on such overlays, as several states have requested, and that authority to implement this area code relief option will be granted on a case-by- case basis. 6. In Section VI, we address other numbering resource optimization measures. First, we find that carriers that are found, through an audit, to violate our numbering requirements, or that fail to cooperate with the Commission staff to conduct either a “for cause” or random audit, should be denied numbering resources in certain instances. We reaffirm state commissions’ authority to conduct independent audits that are not duplicative of the national audit program. We also reaffirm our conclusion that the 180- day reservation period is sufficient and find that fees to extend the reservation period are not appropriate at this time. We also clarify, on our own motion, that the Commission intended to require all carriers in the top 100 MSAs to become LNP capable, not just those who receive a request. We further clarify that LNP is required in the top 100 MSAs identified at the time of this mandate, as well as new MSAs identified in all subsequent top 100 MSA lists. 5 Finally, we find that state commissions should be allowed password-protected access to the NANPA database for data pertaining to NPAs located within their state. II. BACKGROUND 6 7. The proliferation of area codes in the United States between 1997 and 1999, 7 coupled with the staggering estimated cost of expanding the current NANP, 8 led the Commission, in 1999, to initiate the Numbering Resource Optimization proceeding. 9 Since that time, new area code implementation has declined. 10 This is due in part to the Commission’s efforts to address two of the major factors that contribute to numbering resource exhaust: (1) the absence of regulatory, industry, or economic control over requests for numbering resources; and (2) and the allocation of numbering resources in blocks of 10,000, irrespective of the carrier’s actual need for new numbering resources. 11 By implementing a system of mandatory numbering resource utilization 5 See List from the 1990 U. S. Census reports. 6 For a more complete summary of the history of this proceeding see Numbering Resource Optimization, Report and Order and Further Notice of Proposed Rulemaking, 15 FCC Rcd 7574, 7577- 82, paras. 1- 9 (2000) (First Report and Order) and Second Report and Order, 16 FCC Rcd at 310- 14, paras. 4- 17 . 7 In the ten year period, 1984 to 1994, nine new area codes were implemented. Commencing in 1997, new area code activations increased to 32 new area codes activated in 1997, 24 activated in 1998, and 22 activated in 1999. 8 In 1999, some industry members suggested that the cost to expanding the NANP by adding one or more digits could be between $50 to $150 billion. See NANC Meeting Minutes, February 18- 19, 1999 at 13. 9 Numbering Resource Optimization, Notice of Proposed Rulemaking, 14 FCC Rcd 10322 (1999) (Notice). 10 In 2000, 14 new area codes were activated, and approximately 20 new area codes are expected to be activated by December 2001. In contrast, 46 new area codes were activated during 1998- 1999. 11 In the Notice, the Commission recognized that other factors driving premature NANP and area code exhaust include: (1) multiple rate centers in an NPA and the demand by most carriers to have at least one NXX code per rate center; and (2) the increased demand for numbering resources by new entrants and new technologies. Notice at 10328- 29, para. 15. 5 Federal Communications Commission FCC 01- 362 6 and forecast reporting, and thousands- block number pooling, we have directly, and successfully, attacked these major drivers of numbering exhaust. 8. In past orders in this docket, the Commission has adopted the following measures: a mandatory utilization and forecast data reporting requirement; a uniform set of categories of numbers for which carriers must report their utilization; a utilization threshold to increase carrier accountability and incentives to use numbers efficiently; a single system for allocating numbers in blocks of 1,000, rather than 10,000 (thousands- block number pooling); a plan for national rollout of thousands- block number pooling; cost recovery principles for thousands- block number pooling that are similar to those adopted for LNP; reclamation requirements to ensure that unused numbers are returned to the NANP inventory for assignment to other carriers; sequential numbering, where carriers are required, to the extent possible, to first assign numbering resources within thousands- blocks; and an auditing program to verify carrier compliance with the Commission’s rules. 12 9. Also, the Commission has mandated that CMRS providers begin participating in thousands- block number pooling by November 24, 2002. 13 The allocation of numbers in blocks of 10,000 has been a significant driver of premature NPA and NANP exhaust, primarily because many telephone numbers become stranded and, thus, unusable. Thousands- block number pooling allows resources to be allocated in smaller blocks, and thus frees up stranded numbers. Once CMRS providers are capable of participating in pooling, even greater efficiencies will be achieved. Carriers will have greater flexibility to port numbers between switches and even outside of rate centers. 14 10. Although the 1996 Act gave the Commission plenary jurisdiction over numbering resources, numbering resource management has been a cooperative effort involving the Commission, the North American Numbering Council (NANC), which is the Commission’s federal advisory committee on numbering issues, state commissions, and industry. The NANC has made recommendations to the Commission on several numbering resource optimization measures. 15 States, for example, have been delegated authority to make area code relief decisions, establish utilization thresholds different from the national threshold, order sequential number assignments, reclaim unused NXX codes, and implement code sharing trials. Additionally, the Commission and the Common Carrier Bureau have granted over 30 state petitions for delegated authority to institute thousands- block pooling trials, establish rationing procedures for 12 See generally, First Report and Order and Second Report and Order. 13 This coincides with an earlier mandate that CMRS become LNP capable by that date. Cellular Telecommunications Industry Association’s Petition for Forebearance from Commercial Mobile Radio Services Numbering Portability Officiations, Memorandum Opinion and Order, 14 FCC Rcd 3092 (1999) (CMRS LNP Forebearance Order). 14 See LNPA Working Group Status Report to NANC, October 16, 2001, PIM 11. 15 See Common Carrier Bureau Seeks Comment on North American Numbering Report Concerning Telephone Number Pooling and Optimization Measures, Public Notice, DA 98- 2265, NSD File No. L- 98- 134 (rel. No. 6, 1998). 6 Federal Communications Commission FCC 01- 362 7 six months following area code relief, and address requests for numbering resources outside of the rationing process. The industry has played an active role as well by developing guidelines through industry consensus, which provide technical guidance to the industry on implementing numbering policies adopted by the Commission. 16 The NANC also continues to analyze the benefits of various numbering resource optimization measures, including rate center consolidation, individual number pooling, and unassigned number porting. 17 As stewards of the NANP for the United States, we expect to continue to work closely with state commissions, the NANC, the industry, as well as with other NANP countries, to monitor the progress that has been made in optimizing the use of NANP resources. III. NATIONAL THOUSANDS- BLOCK NUMBER POOLING A. Pooling Administration 11. On June 18, 2001, the Commission announced the selection of NeuStar, Inc. (NeuStar) as the national thousands- block number Pooling Administrator. 18 As national Pooling Administrator, NeuStar is responsible for administering thousands- block number pools by assigning, managing, forecasting, reporting, and processing data that will allow service providers in areas designated for thousands- block number pooling to receive telephone numbers in blocks of 1,000. NeuStar, which also currently serves as the NANPA, has been awarded a one- year contract with four one- year options (for a potential term of five years) to be exercised at the discretion of the Commission. National thousands- block number pooling is scheduled to begin in March 2002. Currently, 107 pools in 26 states are up and running. 19 12. National Pooling Rollout Schedule. As directed by the Commission, NeuStar developed and proposed a national thousands- block number pooling schedule using the criteria established by the Commission in the First Report and Order. Specifically, NeuStar gave primary consideration to the following: NPAs that are located in the largest 100 MSAs; 20 NPAs in jeopardy; and NPAs with a projected life of at least one- year. 21 In deciding when a pool for each qualifying NPA would be established, NeuStar also followed the Commission’s directive to implement national pooling by quarter; for each three- month period, three pools in each of the 7 Number Portability Administration Center (NPAC) regions (for a total of 21 pools) would be 16 Numbering guidelines are developed by the Industry Numbering Committee (INC) and can be found at www. ATIS. org. 17 See NANP Expansion Optimization Issues Management Group Status Report to NANC, October 16, 2001. 18 Federal Communications Commission’s Common Carrier Bureau Selects NeuStar, Inc. as National Thousands-Block Number Pooling Administrator, Press Release, CC Docket 99- 200 (June 18, 2001). NeuStar was named the Pooling Administrator effective June 15, 2001. 19 See www. nanpa. com. Mandatory pooling trials that have commenced before March 15, 2002 are being transitioned into the national pooling administration program prior to national pooling rollout. 20 We clarify, on our own motion, in this Order that for the purpose of the rollout schedule, the top 100 MSAs are those listed at the end of this Order. See infra at Section VI. C and Appendix D. 21 First Report and Order, 15 FCC Rcd at 7647- 48, paras. 161- 162. 7 Federal Communications Commission FCC 01- 362 8 initiated. 22 13. On October 17, 2001, the Commission issued a Public Notice seeking comment on the proposed national thousands- block number pooling rollout schedule. State commissions seeking to opt into, or out of, the rollout schedule, or wishing to substitute an alternative NPA for the NPA listed in the rollout schedule, must make such requests in response to the Public Notice within the established initial comment cycle. 23 Upon review of the comments and requests submitted, the Commission will publish the final rollout schedule. 24 States seeking to opt out of the rollout schedule on a temporary basis should inform NeuStar of their decision three months prior to the scheduled rollout date for the applicable NPA. 25 In addition, to serve the needs of states that believe that pooling would be beneficial in an NPA that is not located in one of the largest 100 MSAs, the Common Carrier Bureau will consider petitions from state commissions to opt into the rollout schedule on a case- by- case basis. Finally, state commissions may petition to substitute an alternative NPA for an NPA listed in the rollout schedule, if the substitute NPA meets the eligibility criteria as set forth above. 26 B. Thousands- Block Number Pooling for Non- LNP Capable Carriers 14. Under the Commission’s current rules, certain carriers are exempted from pooling requirements, e. g., paging carriers, and carriers outside of the largest 100 MSAs that have not received a request to deploy LNP from a competing carrier. In the Second Further Notice, the Commission sought comment about whether it would be appropriate to extend pooling requirements to these carriers to further promote the efficient use of numbering resources. The Commission sought comment on whether the incremental number optimization benefits of requiring these carriers to participate in pooling would outweigh the associated costs. 15. Several state commissions support expanding pooling requirements, arguing that requiring all carriers to participate in pooling – regardless of their LNP status – would greatly enhance the effectiveness of pooling. 27 Several suggest that the Commission should delegate authority to states to determine for themselves, based on their own individual circumstances, whether to require non- LNP capable carriers to pool. 28 Paging carriers, carriers outside of the 22 Id. at 7645- 46, para. 159. 23 The Common Carrier Bureau Seeks Comment on the National Thousands- Block Number Pooling Rollout Schedule, Public Notice, CC Docket 99- 200, DA 01- 2419 (rel. October 17, 2001) (Thousands- Block Number Pooling Public Notice). 24 The schedule will include all NPAs in the top 100 MSAs. 25 First Report and Order, 15 FCC Rcd at 7648, para. 163. 26 See id. at 7649, para. 165. Such requests should also be made not less than three months prior to the scheduled rollout date, to ensure that the Pooling Administrator has sufficient time to prepare for implementation. 27 Iowa Utilities Board Comments at 4; Maine PUC Comments at 7; New York State Department of Public Service Comments at 7; Ohio PUC Comments at 27; Pennsylvania PUC Comments at 11. 28 State Coordination Group Comments at 8. 8 Federal Communications Commission FCC 01- 362 9 largest 100 MSAs, and other industry commenters, on the other hand, oppose extending pooling requirements and assert that the costs of implementing pooling would far outweigh any potential number optimization benefits. 29 1. Paging Carriers 16. Based on the record before us, we decline to extend pooling requirements to paging carriers. 30 We are persuaded by paging carriers’ assertions that the costs of implementing pooling would outweigh the potential numbering resource savings. In the Second Further Notice, we recognized that if the Commission were to expand pooling requirements, non- LNP capable carriers would be obligated to implement the common technological platform that is used to support both LNP and number pooling. Paging carriers assert that they would face certain unique technical challenges to establish pooling capability. Specifically, paging carriers would have to convert to signaling system 7 (SS7) signaling to be able to properly route calls. 31 Currently, paging carriers use signaling systems such as multi- frequency or dual- tone multi- frequency signaling. 32 Evidence from the record suggests that paging carriers have used these less sophisticated systems because paging switches do not originate traffic and because many of the enhanced features of SS7 signaling are unnecessary for the provision of messaging services. 33 To be able to participate in pooling, paging carriers would need to interconnect to other carriers using SS7 signaling. 34 We agree with paging carriers that the costs of converting to SS7 signaling would be significant. 35 17. There is insufficient evidence to conclude that the incremental number optimization benefits of requiring these carriers’ participation in pooling would outweigh the associated costs. Evidence from the record indicates that the paging market is mature, and that paging carriers’ 29 BellSouth Comments at 30; Cingular Reply Comments at 13- 16; Metrocall Comments at 3- 7; NTCA Comments at 2- 4; OPASTCO Comments at 6- 7; PCIA Comments at 10- 11; USTA Comments at 4- 5; Verizon Wireless Comment at 16- 17. 30 We also decline to extend pooling requirements to other messaging services and CMRS providers who are specifically excluded from LNP requirements. See Telephone Number Portability, First Report and Order and Further Notice of Proposed Rulemaking, 11 FCC Rcd 8352, 8433- 34 para. 156 (1996) (LNP First Report and Order). 31 Metrocall Comments at 3- 4; Verizon Comments at 16. 32 Verizon Comments at 16. 33 Metrocall Comments at 4; Verizon Comments at 16. 34 Metrocall Comments at 3- 4; Verizon Comments at 16. 35 Metrocall Comments at 4; Verizon Comments at 16. Metrocall states that the cost of converting to SS7 signaling necessary for both porting and pooling would be enormous and requiring implementation could threaten carriers’ economic well being. Specifically, Metrocall indicates that cost for the first year of installing and paying subscription fees for SS7 signaling would be approximately three million dollars, excluding usage fees. After the first year, Metrocall indicates that the recurring annual costs would be one and a half million dollars plus usage fees. See Metrocall Comments at 4- 5. 9 Federal Communications Commission FCC 01- 362 10 demand for numbering resources has leveled off and is unlikely to increase significantly in the future. 36 Instead, it appears more likely that paging carriers will serve customers through existing numbers made available to them through churn rather than requesting significant amounts of additional numbers. 37 Moreover, recent data shows that paging carriers, as a whole, use relatively few numbering resources. The June 30, 2001 Numbering Resource Utilization data shows that of the over 115,000 NXX codes reported by all carriers only 5,813 of those codes, or slightly over 5%, were held by paging carriers. 38 In light of these conditions, we conclude that paging carriers’ participation in pooling would not result in significant savings of numbers. 18. Although we do not extend pooling requirements to paging carriers at this time, we expect paging carriers to contribute to other numbering resource conservation efforts. Specifically, we expect paging carriers to return unused NXX codes and to comply with the sequential number assignment rules discussed in the First Report and Order. 39 If we find that paging carriers are not contributing to these numbering resource conservation efforts, we may consider extending pooling requirements to these carriers in the future. 2. Non- LNP Capable Carriers Outside of the Largest 100 MSAs 19. For similar reasons, we also decline to extend pooling requirements to non- LNP capable carriers outside of the largest 100 MSAs that have not received a request to deploy LNP from a competing carrier. There is insufficient evidence in the record to conclude that requiring these carriers to participate in pooling would result in significant numbering resource savings. Many of the carriers outside of the largest 100 MSAs operate in rate centers where there are few, if any, competing carriers. Specifically, data from the LERG shows that in the approximately 2,012 rate centers in the 180 MSAs beyond the largest 100, approximately 1,320 are rate centers where there are no competing service providers and approximately 300 are rate centers where there is only one competing service provider. 40 We agree with commenters who argue that it would be unreasonable to require non- LNP capable carriers in these areas to establish pooling 36 Metrocall Comments at 5; PCIA Comments at 10; Verizon Comments at 17. We note that the June 30, 2001, Numbering Resource Utilization data shows an increase in the total number of NXX codes held by paging carriers as compared with the number of NXX codes held by paging carriers as of December 2000. This increase, however, is most likely attributable to the increased number of paging carriers reporting numbering resources in the most recent survey. For example, TSR Wireless, one of the largest paging carriers, did not report any NXX code holdings in December but reported in June that it held 544 NXX codes. See FCC, Common Carrier Bureau, Industry Analysis Division, Numbering Resource Utilization in the United States as of June 30, 2001, Table 1 (November 2001) (November 2001 Numbering Resource Utilization Report). This report may be downloaded (filename: utilizationjune2001.pdf) from the FCC- State Link Internet site at . 37 PCIA Comments at 10; Verizon Comments at 17. 38 See November 2001 Numbering Resource Utilization Report at Table 1. 39 First Report and Order, 15 FCC Rcd at 7684, para. 244. 40 The data on the number of CLECs in the 180 MSAs outside of the 100 largest MSAs was taken from the October 2001 LERG, which is published by Telcordia Technologies, Inc. Information on obtaining a copy of the LERG can be found at . 10 Federal Communications Commission FCC 01- 362 11 capability because they would have few, if any, carriers with which to pool. 41 In addition, there is insufficient evidence in the record for us to conclude that the non- LNP capable carriers operating outside of the largest 100 MSAs, viewed as a whole, hold significant amounts of numbering resources compared to carriers in larger metropolitan areas. Because these carriers hold relatively small amounts of numbering resources, there would be little benefit, at least from a nationwide perspective, to requiring them to participate in pooling. For example, LERG data shows that ILECs outside of the largest 100 MSAs use approximately 4.5 percent of all of the NXX codes and CLECs outside of the largest 100 MSAs only use approximately 2.3 percent of all NXX codes. 42 For these reasons, we find that requiring these carriers to participate in pooling would not result in significant number optimization benefits. 20. We also find that requiring non- LNP capable carriers outside of the largest 100 MSAs to participate in pooling would impose disproportionate costs on them in comparison to LNP capable carriers operating in the 100 largest MSAs. Evidence from the record suggests that the per line cost to establish pooling capability would be significantly higher for small and rural carriers operating outside of the largest 100 MSAs than for carriers operating inside urban and metropolitan areas because of these carriers’ limited customer bases. 43 Additionally, some commenters predict that imposing these costs on smaller and rural carriers may delay efforts to bring advanced services to rural subscribers. 44 Weighed against the limited number optimization benefits of requiring these carriers’ participation in pooling, these costs appear to be unreasonably high. 3. State Authority to Require Pooling Capability 21. Finally, we reject the State Coordination Group’s request to delegate authority to states to determine on a case- by- case basis whether to extend pooling requirements. 45 As we stated in the First Report and Order, 46 uniform national standards for pooling are necessary to minimize confusion and additional expense related to compliance with inconsistent regulatory requirements. We will, however, entertain requests from state commissions to opt into the rollout schedule for pooling in MSAs outside of the largest 100. 47 41 OPASTCO Comments at 7; USTA Reply Comments at 6. 42 In contrast, in the largest 100 MSAs, CLECs hold approximately 26. 4 percent of all NXX codes. 43 NTCA Comments at 2- 3. 44 OPASTCO Comments at 7. 45 State Coordination Group Comments at 8. 46 See First Report and Order, 15 FCC Rcd at 1761, para. 169. 47 See Thousands- Block Number Pooling Public Notice at 2. States outside of the largest 100 MSAs who wish to establish pooling may opt into the national pooling rollout schedule if they can demonstrate that: 1) an NPA in the state is in jeopardy, 2) the NPA in question has a remaining life span of at least one year, and 3) the majority of wireline carriers in the NPA are LNP- capable. See First Report and Order, 15 FCC Rcd at 7648- 49, para. 164. 11 Federal Communications Commission FCC 01- 362 12 C. Thousands- Block Number Pooling for Covered CMRS Carriers 22. In the Second Report and Order, we declined to adopt a transition period between the time that covered CMRS carriers must implement LNP and the time they must participate in mandatory pooling. Qwest, Cingular Wireless, BellSouth, Cellular Telecommunications & Internet Association (CTIA), and Sprint sought reconsideration of this issue. 48 These commenters assert that additional time is needed to make changes to their systems to implement pooling. 49 Sprint states that the Commission’s decision not to establish a separate and phased- in implementation plan for CMRS pooling is unexplained and contrary to precedent. 50 23. We decline to address in this Order whether the LNP implementation date for covered CMRS carriers should be delayed or eliminated, as some carriers suggest. 51 We find, however, that it is in the public interest to require covered CMRS carriers to participate in thousands- block number pooling as soon as possible to maximize number utilization efficiency. 52 We therefore again decline to alter the implementation date for covered CMRS carriers to participate in pooling. The record in this proceeding does not demonstrate that covered CMRS carriers need additional time to participate in pooling, as some assert. 53 As we stated in the First Report and Order, implementation of thousands- block number pooling in major markets is essential to extending the life of the NANP. 54 Because the effectiveness of pooling increases as the number of participants increase, we remain convinced that covered CMRS carriers should participate in pooling as soon as possible. 48 BellSouth Petition at 12- 15; Cingular Wireless Petition at 3- 13; CTIA Petition at 5- 14; Qwest Petition at 2- 5; Sprint Petition at 5- 12. But see Opposition of the Maine Public Utilities Commission to Petitions for Reconsideration (April 12,2001). 49 Cingular Wireless Petition at 3- 6 and Qwest Petition at 5. Both Qwest and Cingular cite numerous factors delineating why additional time is needed to implement pooling. These factors will be more fully addressed in the current proceeding in the Wireless Bureau addressing the Verizon Wireless Petition. See infra at n. 51. 50 See Sprint Petition at 5- 12. 51 See Verizon Wireless Petition Pursuant to 47 U. S. C. Sec. 160 for Partial Forbearance from the Commercial Mobile Radio Services Number Portability Obligation, WT Docket 01- 184 (filed July 26, 2001) (Verizon Wireless Petition). Verizon Wireless seeks forbearance of the requirement that covered CMRS carriers become LNP capable by November 24, 2002. The petition indicates that Verizon Wireless will, however, comply with the corresponding deadline for participation in pooling. The Commission intends to address issues raised by Verizon Wireless’s petition in a separate order. 52 We note that CMRS service providers are not exempt from numbering resource optimization measures, and that they are significant users of numbering resources. 53 Indeed, some carriers have asserted that pooling capability is more readily achievable than LNP capability. We also note that the NANC Local Number Portability Administration (LNPA) Working Group, has followed a timeline tracking LNP progress. See LNPA Working Group, Wireless Number Portability Operations Status Report to NANC, June 15, 2001. 54 First Report and Order, 15 FCC Rcd at 7625, para. 122. 12 Federal Communications Commission FCC 01- 362 13 D. Federal Cost Recovery Mechanism 24. Section 251( e)( 2) of the Act requires that “[ t] he cost of establishing telecommunications numbering administration arrangements and number portability shall be borne by all telecommunications carriers on a competitively neutral basis as determined by the Commission.” 55 This statutory provision applies both to the costs of numbering administration and to the costs of LNP. In the First Report and Order, the Commission established a competitively neutral federal cost recovery framework for thousands- block number pooling modeled on the LNP cost recovery framework. 56 The Commission concluded that requiring carriers to bear and recover their own carrier- specific thousands- block number pooling costs is consistent with section 251( e)( 2) ’s competitive neutrality requirement. 57 The Commission also concluded that shared industry costs, along with carrier- specific costs directly related to thousands- block number pooling, would be subject to an exclusively federal carrier- specific cost recovery mechanism to be established in a subsequent order. 58 Finally, the Commission concluded that costs incurred by carriers to meet state- mandated thousands- block number pooling are intrastate costs and should be recovered under state cost recovery mechanisms. 59 25. In this Third Report and Order, we direct states implementing thousands- block number pooling under delegated authority to commence cost recovery actions for state- mandated thousands- block number pooling trials. We applaud the efforts that state commissions have made in implementing pooling trials within their respective jurisdictions, and we believe that the costs should be covered within those jurisdictions that have enjoyed the benefits of such trials. On the other hand, we believe that national cost recovery is appropriate when thousands- block number pooling is extended nationwide. We also conclude that many of the costs associated with thousands- block number pooling are ordinary costs for which no additional or special recovery is appropriate. We, therefore, establish a federal cost recovery mechanism under which price cap LECs may recover their extraordinary carrier- specific costs directly related to thousands- block number pooling through an exogenous adjustment to access charges. Rate of return carriers will recover their costs in their interstate access charges in the ordinary course. We permit carriers not subject to rate regulation to recover these costs in any lawful manner. Further, because thousands- block number pooling may actually reduce network costs, in order for carriers to qualify for the exogenous adjustment to access charges that we establish here, we require them to demonstrate that pooling results in a net cost increase rather than a cost reduction. Finally, we 55 47 U. S. C. § 251( e)( 2). 56 First Report and Order, 15 FCC Rcd at 7662- 63, 7665- 67, paras. 193- 94, 201- 03. 57 Id. at 7669, para. 209. The Commission also concluded that because carrier- specific costs not directly related to thousands- block number pooling are not costs of thousands- block number pooling implementation, they are not subject to the competitively neutral requirement of Section 251. Accordingly, carriers are not allowed to recover such costs. First Report and Order, 15 FCC Rcd at 7670, para. 211 (citing Telephone Number Portability Third Report and Order, 13 FCC Rcd 11701, 11724 (1998) (LNP Third Report and Order)). 58 See First Report and Order, 15 FCC Rcd at 7663, 7668- 69, paras. 196, 207. 59 Id. at 7664, para. 197. 13 Federal Communications Commission FCC 01- 362 14 provide additional guidance as to how we will identify recoverable costs incurred “for the provision of” thousands- block number pooling. 1. Federal/ State Jurisdiction 26. To enable consumers to benefit from thousands- block number pooling as soon as feasible, the Commission granted states authority to implement thousands- block number pooling on an individual basis in advance of national implementation. 60 In the First Report and Order, the Commission determined, however, that national thousands- block number pooling cost recovery could not begin until national implementation occurs. 61 Accordingly, the Commission determined that states exercising delegated authority over number pooling must develop their own cost recovery mechanisms. 62 Development and implementation of state cost recovery is necessary to ensure that carriers recover the costs of advance implementation of thousands- block number pooling attributable to the state jurisdiction. 63 These individual cost recovery schemes will transition to the national cost recovery plan, on a forward- looking basis, when the latter becomes effective. 64 Some commenters complain that no states have established cost recovery mechanisms at the state level and that states generally have been reluctant to do so. 65 Some argue that state costs should be folded into national costs and all thousands- block number pooling costs should be recovered in the federal jurisdiction. 66 27. We decline to revisit the Commission’s prior determination on this issue. 67 We 60 See, e. g., California Public Utilities Commission Petition for Delegation of Additional Authority Pertaining to Area Code Relief and NXX Code Conservation Measures, 14 FCC Rcd 17486, 17492, para. 14 (1999); Florida Public Service Commission Petition to FCC for Expedited Decision for Grant of Authority to Implement Number Conservation Measures, 14 FCC Rcd 17506, 17511, para. 13 (1999); Massachusetts Department of Telecommunications and Energy's Petition For Waiver of Section 52. 19 to Implement Various Area Code Conservation Methods in the 508, 617, 781, and 978 Area Codes, 14 FCC Rcd 17447, 17452, para. 14 (1999); New York State Department of Public Service Petition for Additional Delegated Authority to Implement Number Conservation Measures, 14 FCC Rcd 17467, 17472, para. 13 (1999). 61 First Report and Order, 15 FCC Rcd at 7652, para. 171. 62 Id. at 7664, para. 197. 63 See id. at 7652- 53, 7664, paras. 171, 197. Costs associated with state pooling trials are excluded from the federal cost recovery mechanism. Id. at 7664, para. 197. 64 Id. at 7652, para 171. 65 See SBC Comments to First Report and Order at 3 n. 8; USTA Comments to First Report and Order at 9. But see California PUC Reply Comments to First Report and Order at 5- 6; Maine PUC Reply Comments to First Report and Order at 6- 7. 66 See Attachment to Letter from Pete Sywenki, Director Federal Regulatory Affairs, Sprint, to Magalie Roman Salas, Secretary, Federal Communications Commission, CC Docket No. 99- 200 at 2 (filed July 25, 2001); Florida Public Service Commission Comments at 9- 10; USTA Comments to First Report and Order at 9; US West Comments to First Report and Order at 3- 4; Verizon Wireless Comments to First Report and Order at 27. 67 See First Report and Order, 15 FCC Rcd at 7664, para. 197. 14 Federal Communications Commission FCC 01- 362 15 expressly reject SBC’s proposal to include its state pooling costs in the federal recovery mechanism; 68 we believe that the entire nation should not be required to bear costs incurred for the benefit of a particular state. In the past, the Commission has urged state commissions to follow the “road map” provided in the First Report and Order regarding cost recovery for thousands- block number pooling. 69 To the extent that states were awaiting additional guidance on a specific cost recovery mechanism, they may now follow the blueprint for cost recovery that we lay out here and in our prior orders, should they so choose. 28. We now direct states that have exercised delegated authority and implemented thousands- block number pooling to likewise commence cost recovery procedures for these state- specific costs. We agree with BellSouth that any state that has ordered implementation of pooling in advance of the national rollout is required to implement a cost recovery scheme. 70 In our orders delegating authority to the state commissions to institute thousands- block number pooling trials, we have reminded the states to ensure that the shared costs of thousands- block number pooling are borne and that the carrier- specific costs of thousands- block number pooling are recovered on a competitively neutral basis in accordance with Section 251( e)( 2) of the Act. 71 If, after reviewing carrier cost submissions, states determine in accordance with Section 251( e)( 2) and the Commission’s analysis here and in the First Report and Order that carriers have incurred little or no recoverable carrier- specific costs directly related to state thousands- block number pooling trials (i. e., incremental costs directly attributable to thousands- block number pooling), they should make affirmative findings to that effect. 29. Carriers maintain that the bulk of their costs attributable to thousands- block number pooling are incurred on a regional, rather than a state- specific, level and thus they are uncertain how to allocate costs between the federal and the state jurisdiction. 72 When carriers have incurred costs directly related to thousands- block number pooling at the state level prior to the implementation of national thousands- block pooling, the advancement costs of state- specific deployment should be attributed to the state jurisdiction. 73 In other words, carrier- specific costs directly related to number pooling that are incurred for national implementation of thousands-block number pooling should be recoverable through the federal mechanism, but any costs 68 See SBC Comments at 25 n. 71, SBC Comments to First Report and Order at 3 n. 8. 69 See, e. g., Petitions of Indiana Utility Regulatory Commission et al. for Delegated Authority to Implement Number Optimization Measures, 16 FCC Rcd 5474, 5484, para. 22 (2001) (Indiana Delegation Order); Petitions of the Arizona Corporation Commission, et al. for Delegated Authority to Implement Number Conservation Measures, 15 FCC Rcd 23371, 23382, para. 22 (2000) (Arizona Delegation Order). 70 See BellSouth Reply Comments at 6- 7. 71 See Indiana Delegation Order, 16 FCC Rcd at 5483- 84, para. 21; Arizona Delegation Order, 15 FCC Rcd at 23381- 82, para. 22; First Report and Order, 15 FCC Rcd at 7652- 53, para. 171 and n. 410. 72 See, e. g., Letter from Kathleen B. Levitz, Vice President – Federal Regulatory, BellSouth, to Magalie Roman Salas, Secretary, Federal Communications Commission, CC Docket Nos. 96- 98, 99- 200 (filed June 20, 2001) (BellSouth Cost Study). 73 See Bell Atlantic Reply Comments to First Report and Order at 3- 4. 15 Federal Communications Commission FCC 01- 362 16 attributable to advance deployment at the state level will be subject to state recovery mechanisms. Advancement costs should be allocated among study areas according to normal accounting procedures and assigned directly to the state jurisdiction. 2. Recovery of Shared Industry and Direct Carrier- Specific Costs a. Background 30. In the Notice, the Commission tentatively concluded that ILECs subject to rate- of-return or price cap regulation may not recover their interstate carrier- specific costs directly related to thousands- block number pooling through a federal charge assessed on end- users, but may recover their costs through other cost recovery mechanisms. 74 The Commission sought comment on how price cap carriers should be permitted to recover the costs of thousands- block number pooling implementation, particularly whether price cap carriers should be permitted to treat exogenously any of the thousands- block number pooling implementation cost categories. 75 The Commission also sought comment on whether these costs should be placed in a new price cap basket or, alternatively, in an existing basket. 76 The Commission tentatively concluded that carriers not subject to rate- of- return or price cap regulation should recover their carrier- specific costs directly related to thousands- block number pooling implementation in any lawful manner consistent with their obligations under the Act. 77 The Commission sought comment on these tentative conclusions and asked whether they meet section 251( e)( 2) ’s requirement that numbering administration costs must be borne on a competitively neutral basis. 78 To facilitate its determination, in the First Report and Order, the Commission requested additional cost information, including comment and cost studies quantifying the shared industry and direct carrier- specific cost of thousands- block number pooling. 79 The Commission also sought information on the cost savings that would be achieved through thousands- block number as opposed to the frequent area code changes that result from current numbering practices. 80 In the Second Report and Order, the Commission renewed this request for further comment and data. 81 31. Some parties argue that we should not establish an explicit cost recovery mechanism because numbering costs are an ongoing cost of doing business for which recovery is 74 Notice, 14 FCC Rcd at 10410, para. 204. 75 Id. at para. 205. 76 Id. 77 Id. at para. 204. 78 Id. 79 First Report and Order, 15 FCC Rcd at 7671, 7687- 88, paras. 214, 253. 80 Id. 81 Second Report and Order, 16 FCC Rcd at 379, para. 182. 16 Federal Communications Commission FCC 01- 362 17 inappropriate. 82 Some commenters support the tentative decision to permit thousands- block number pooling cost recovery through access charges. 83 Others argue that, like LNP, thousands-block number pooling is not an access- related service, and therefore it would not be competitively neutral to permit recovery of thousands- block number pooling costs through access charges. 84 They argue that ILEC recovery through access charges would distort the market for interstate access services, disadvantage purchasers of access services, and cause implicit subsidies, which is contrary to the statutory mandate that subsidies be explicit. 85 Some parties urge us to model our thousands- block number pooling cost recovery mechanism on the LNP cost recovery model by increasing the LNP end- user charge or extending it for a limited period of time. 86 US West argues that federal cost recovery should be divided into two parts: (a) nonrecurring costs for developing and implementing pooling should be recovered through an end- user surcharge and (b) recurring costs should be recovered through a charge added to the existing subscriber line charge (SLC) that results from price caps. 87 Other parties, however, oppose any charge. 88 b. Discussion 32. For the reasons discussed in the following paragraphs, we will allow but not require ILECs subject to rate- of- return or price cap regulation to recover their carrier- specific costs directly related to thousands- block number pooling implementation through existing cost recovery mechanisms of rate- of- return or price cap adjustments. We also conclude, as with LNP, that carriers not subject to rate regulation, such as CLECs and CMRS providers, may recover their carrier- specific costs directly related to implementation of thousands- block number pooling in any lawful manner consistent with their obligations under the Act. 89 33. Characterization of Number Pooling Costs. Despite the urging of many commenters, we resist imposing another direct charge on end- users. In the LNP Third Report and Order, the Commission chose not to include LNP costs in access charges because LNP is not an access- 82 See Ad Hoc Comments at 33- 34; NASUCA at 32; see also AT& T Reply Comments at 17- 18. 83 See NECA and NTCA Comments to First Report and Order at 2- 3; Bell Atlantic Reply Comments to First Report and Order at 6. 84 See Sprint Comments to First Report and Order at 18; WorldCom Comments to First Report and Order at 20. 85 See AT& T Reply Comments at 18 n. 58; Sprint Reply Comments at 19; CTIA Comments to First Report and Order at 8- 9; WorldCom Comments to First Report and Order at 20; AT& T Reply Comments to First Report and Order at 13; VoiceStream Reply Comments to First Report and Order at 13. 86 See BellSouth Comments at 29; SBC Comments at 27; Sprint Comments at 19; Verizon Comments at 6; AT& T Comments to First Report and Order at 16 n. 38; WorldCom Comments to First Report and Order at 20. 87 See US West Comments to First Report and Order at 2. 88 See NASUCA Comments at 30; General Services Administration Comments to First Report and Order at 10-11. 89 See LNP Third Report and Order, 13 FCC Rcd at 11774, para. 136. 17 Federal Communications Commission FCC 01- 362 18 related service, and instead imposed a direct end- user charge. 90 The Commission therefore found that recovering LNP costs through access charges would be inappropriate and would not be competitively neutral. 91 With respect to thousands- block number pooling, however, we find the opposite to be true. Although thousands- block number pooling and LNP utilize the same LRN architecture, 92 we find that because they are very different types of services, different types of recovery are appropriate. 34. We are led to the view that numbering administration is inherently access- related by the same reasoning that led us to conclude that LNP was not access- related. LNP was an entirely new service and performed no telephone network function that would benefit ILECs. It was implemented for the sole purpose of making it easier for subscribers to change carriers. Numbering administration, on the other hand, is a basic telephone network function. IXCs would not be able to route calls from their subscribers without a numbering system. 93 Thousands- block number pooling is thus different from LNP because it is, essentially, an enhancement of existing numbering administration procedures designed to extend the life of the existing numbering system. 94 Treating pooling as an access- related service is thus entirely appropriate. Access charges are the means by which access customers share in the costs of the telephone network, 95 and all carriers and subscribers will benefit from national thousands- block number pooling to the extent that it postpones or avoids area code relief and ultimately the replacement of the existing NANP. 96 35. Characterizing pooling costs as access- related and permitting recovery of the extraordinary costs of thousands- block number pooling accordingly is consistent with the statutory mandate of competitive neutrality. In the LNP Third Report and Order, the Commission noted that, in evaluating the costs and rates of telecommunications services, the Commission ordinarily applies principles of cost causation under which the purchaser of a service pays at least the incremental cost of providing that service. 97 The Commission found that 90 See id., 13 FCC Rcd at 11773, para. 135. 91 See id. 92 See First Report and Order, 15 FCC Rcd at 7622, para. 117 and n. 238. The Location Routing Number (LRN) database structure, which supports LNP, is used to route calls to customers who have been assigned telephone numbers from a pool because, as with a ported number, the NPA- NXX of a pooled number no longer necessarily identifies the switch or service provider associated with the service. The LRN is a unique ten- digit number assigned to each central office switch to identify each switch in the network for call routing purposes. Id. 93 Carriers use telephone numbers for many other access- related services such as billing, maintenance, administration, and various forms of record keeping. 94 See Notice, 14 FCC Rcd at 10384, para. 138. 95 See generally, 47 C. F. R. § 69.1 et seq. 96 See First Report and Order, 15 FCC Rcd at 7625, para. 122. 97 See LNP Third Report and Order, 13 FCC Rcd at 11726- 27, para. 41 (citing LNP First Report and Order, 11 FCC Rcd at 8419- 20). 18 Federal Communications Commission FCC 01- 362 19 following ordinary cost causation principles for assigning the costs of LNP would affect the ability of carriers to compete because LNP costs arise only when subscribers change carriers. 98 At least initially, the vast bulk of such changes would occur as entrants win incumbents’ customers. Imposing the bulk of the costs of LNP on new entrants would have contradicted the purpose of the statutory requirement for LNP, which was to make telephone markets more competitive. 99 For this reason, in the case of LNP, departure from ordinary cost causation principles was necessary. 100 36. In the case of thousands- block number pooling, it is not clear who is the “cost causer.” The need for pooling results from extraordinary growth of subscribership and the provision of new services in recent years, as well as the entry of new carriers that require blocks of numbers in each rate center. 101 These factors have combined to make space in the number spectrum scarce. All carriers that provide numbers to subscribers have contributed to the number exhaust problem, regardless of whether they began using the numbers long ago or recently. All carriers can contribute to resolving the exhaust problem by using numbers more efficiently, in part through number conservation measures such as thousands- block number pooling. In this context, thousands- block number pooling is simply an enhancement to the previous numbering administration plan that facilitates more efficient coordination among all carriers, and thus there is no “cost causer” in the traditional sense. 37. Recoverable Costs. This same reasoning informs our analysis of the kind of costs for which carriers may seek recovery. We agree with those commenters that maintain that the costs of numbering administration are generally and appropriately treated as an ordinary cost of doing business. 102 The recent growth in demand for number resources have required that ILECs and other carriers implement number conservation and numbering management practices, for example, reusing numbers assigned to former subscribers, area code splits, and overlays. We have considered the costs of these numbering administration measures to be ordinary LEC administrative functions that are recovered in LEC rates generally. 103 Under price caps, they are usually considered normal network upgrades that do not qualify for extraordinary recovery ( i. e., through an exogenous adjustment to the price cap formula). Under rate- of- return, an adjustment was granted only through the normal review process, that is, upon a showing by the carrier that it would not otherwise earn its authorized rate- of- return. This means that, in principle, recovery of the costs of numbering administration is already provided for in LEC compensation. 98 See id. 99 See id. at 11727, para. 43 (citing LNP First Report and Order, 11 FCC Rcd at 8420- 21). 100 See id. at 11726- 28, 11731- 32, paras. 41- 44, 52- 53. 101 See First Report and Order 15 FCC Rcd at 7577, 7578- 79, paras. 2, 5. 102 See Ad Hoc Comments at 33- 34; NASUCA Comments at 32. 103 See Telephone Number Portability Cost Classification Proceeding, Memorandum Opinion and Order, 13 FCC Rcd 24495, 24499, para. 7 (1998) (LNP Cost Classification Order). 19 Federal Communications Commission FCC 01- 362 20 38. Thus, the rationale that supported extraordinary cost recovery for LNP implementation does not support such recovery for thousands- block number pooling. That is, LNP was a new service that did not benefit local exchange operations, but instead made it easier for subscribers to change carriers. In contrast, thousands- block number pooling is, in principle, an enhancement of existing numbering administration procedures, the costs of which are already being recovered through existing mechanisms. 104 However, because the Commission has mandated thousands- block number pooling as a national numbering resource optimization strategy, increased costs, if any, associated with thousands- block number pooling are distinguishable from those associated with NPA relief. Therefore, we conclude that a very narrow approach to thousands- block number pooling recovery is appropriate, and that extraordinary recovery should be granted only for extraordinary implementation costs. Because access charges are intended to recover a portion of telephone network costs, including the extraordinary costs of number pooling and permitting recovery of these extraordinary costs in access charges as we would any other cost of administration does not constitute a subsidy, implicit or explicit. More specific guidance as to how these extraordinary costs are to be identified is provided in section 3 below. 39. Recovery Methodology. Price cap carriers may recover extraordinary costs as follows. Under the price cap rules, extraordinary cost increases that result from mandates of this Commission may result in an exogenous increase in price cap ceilings that apply to access charges. 105 Thus, any appropriate adjustment for price cap carriers should be made in this manner. 106 The extraordinary costs of thousands- block number pooling will be assigned to the common line basket because they are most closely associated with lines. Because recovery for numbering administration expenses is already included in basic LEC compensation, however, LECs seeking extraordinary recovery of thousands- block number pooling costs in the form of an exogenous adjustment to their price cap formula must overcome a rebuttable presumption that no additional recovery is justified. 40. Moreover, in order to qualify for an exogenous upward adjustment, carriers must also demonstrate that thousands- block number pooling results in a net cost increase rather than a cost reduction. Unlike other mandates of the Commission, thousands- block number pooling may reduce network costs. Some commenters argued that savings associated with thousands- block number pooling are speculative or de minimus. 107 Others argue that implementation of thousands- block number pooling will save substantial costs over current area code relief practices 104 Moreover, implementation of thousands- block number pooling will enable continued growth of carriers’ subscriber base. This, and the revenue from the additional services sold as a result, will provide some substantial recovery for numbering administration costs, including the costs of implementing thousands- block number pooling. 105 See 47 C. F. R. § 61.45( d). 106 For rate- of- return carriers, of course, costs arising from thousands- block number pooling would be treated in the same manner as other costs in each carrier’s biennial rate adjustments. See 47 C. F. R. § 61.39. 107 See NECA Comments at 3; SBC Comments at 25; Verizon Comments at 5. 20 Federal Communications Commission FCC 01- 362 21 and could result in a cost savings. 108 In the absence of carrier- specific evidence, we do not endorse either line of argument. However, as the Commission has already observed, to the extent that thousands- block number pooling postpones or avoids area code relief and ultimately the replacement of the existing NANP, all carriers and subscribers will benefit. 109 To qualify for an exogenous adjustment, carriers must show that costs for which extraordinary treatment is sought exceed the costs that would have been incurred had the carrier engaged in an area code split, overlay or other numbering relief that would otherwise have been required in the absence of pooling. Only extraordinary upward costs will be subject to direct assignment to interstate access for separations purposes under the federal cost recovery mechanism we have established in this Order. 110 That is, consistent with historical treatment, ordinary costs will flow though jurisdictional separations in the normal manner. 111 41. Because the extraordinary federal recovery mechanism is intended to recover only the initial implementation costs of thousands- block number pooling and, as in the case of LNP, pooling will ultimately become a normal network feature recovered through existing means, 112 any exogenous increase in an ILEC's permitted price cap revenues should be reversed after those initial extraordinary costs have been recovered. Based upon our review of the carriers’ filings, the cost of thousand- block number pooling implementation is anticipated to be substantially lower than LNP implementation. Thus, we believe the five- year recovery period for LNP costs represents the longest reasonable period for recovering the cost of thousands- block number pooling. On the other hand, a one- time charge would create an inordinate financial hardship on access customers. We are thus required to establish some reasonable period of time, shorter than five years, over which these costs may be recovered. Given that an ILEC's unrecovered capital investment will be subject to an 11. 25 percent after- tax return, however, a longer recovery period greatly increases the total cost, while a shorter recovery period would decrease total cost by decreasing the interest expense. Accordingly, we conclude that recovery should be spread over a two- year period. This is appropriate given the two- year national rollout period recently proposed. 113 After this implementation period, thousands- block number pooling will have become a normal network function and recovery of ongoing costs will be through existing means. Price cap carriers should file tariffs reflecting recovery through an exogenous recovery adjustment for a two- year period beginning April 2, 2002. Setting the effective date at the beginning of the month 108 See Ad Hoc Comments at 31- 33; Joint Consumer Comments to First Report and Order at 42; General Services Administration Reply Comments to First Report and Order at 16- 17. 109 See supra at n. 96 and accompanying text (citing First Report and Order, 15 FCC Rcd at 7625, para. 122). 110 In the First Report and Order, the Commission concluded that ILECs will be able to recover qualifying costs of thousands- block number pooling through an exclusively federal cost recovery mechanism and that qualifying costs are assigned directly to the interstate jurisdiction for separations purposes. See First Report and Order, 15 FCC Rcd at 7663- 64, paras. 196- 197. 111 See generally, 47 C. F. R. § 36. 112 See LNP Third Report and Order, 13 FCC Rcd at 11777, para. 144. 113 See Thousands- Block Number Pooling Public Notice. 21 Federal Communications Commission FCC 01- 362 22 following scheduled implementation will be administratively convenient both for carrier billing systems and for the Commission's tariff review. Capital costs should be amortized over the recovery period. Non- price cap carriers subject to rate regulation may include these costs in the common line category in their biennial rate adjustment. 114 3. Identification of Costs 42. In the First Report and Order, the Commission determined that shared industry costs, along with other carrier- specific costs directly related to thousands- block number pooling, will be subject to a federal carrier- specific cost recovery mechanism, 115 which we have now established as discussed above. The amount and detail of the data provided in response to the Commission’s request for estimates of the costs of thousands- block number pooling, however, did not adequately reveal the amount and/ or magnitude of such costs. This made selection of the appropriate cost recovery mechanism difficult. 116 Accordingly, the Commission again requested cost information. 117 Ultimately, several carriers filed cost studies. 118 Our preliminary review of these initial cost studies indicates that some carriers may have included costs that are inappropriate under the test for extraordinary recovery that we established in the First Report and Order. Some of the cost items included are very similar to cost claims rejected in the LNP Tariff Investigation Orders. 119 Accordingly, we briefly explain how we will identify recoverable costs incurred “for the provision of” thousands- block number pooling. 43. In the First Report and Order, the Commission concluded that the same strict 114 Some commenters have argued that a cost recovery mechanism should be established for nonpooling carriers. See, e. g., NECA Comments at 4- 5; USTA Reply Comments to First Report and Order at 5- 6. In the LNP context, some non- LNP capable carriers have incurred costs associated with LNP database queries. Because these carriers are not LNP- capable, they are ineligible to recover these costs under current Commission rules. See 47 C. F. R. § 52. 33. Commenters in the instant proceeding seek to avoid being subject to similar rules that might preclude recovery for thousands- block number pooling query charges. In areas in which thousands- block number pooling has been implemented, one database query will retrieve both LNP and thousands- block number pooling routing information. A petition for reconsideration of the LNP Third Report and Order, which raises the issue of cost recovery for database query charges incurred by non- LNP capable carriers, is currently pending before the Commission. See NECA Expedited Petition for Reconsideration, CC Docket No. 95- 116 (filed July 29, 1998). Because number pooling can be implemented only where LRN LNP has been deployed, see First Report and Order, 15 FCC Rcd at 7622, para. 117, and because only one database query will occur for both the LNP and pooling inquiries, this issue is appropriately resolved in the LNP proceeding rather than in this matter. 115 First Report and Order, 15 FCC Rcd at 7669, para. 207. 116 Id. at 7671, 7687, paras. 214, 253. 117 See Second Report and Order, 16 FCC Rcd at 379, para. 182; First Report and Order, 15 FCC Rcd at 7671, 7687, paras. 214, 253. 118 See BellSouth Cost Study; Qwest Comments at Appendix A; SBC Comments (Cost Support Data); Sprint Reply Comments (Cost Study); see also US West Comments to First Report and Order at Workpapers 1- 3. 119 See Long- Term Number Portability Tariff Filings, Ameritech Operating Companies, et al., 14 FCC Rcd 11883 (1999); Long- Term Number Portability Tariff Filings, 14 FCC Rcd 11983 (1999) (collectively LNP Tariff Investigation Orders). 22 Federal Communications Commission FCC 01- 362 23 standards applied to evaluate claimed costs of implementing LNP will also apply to thousands-block number pooling. 120 Thus, under these standards, to be eligible for the extraordinary recovery we establish above, thousands- block number pooling costs must satisfy each of three criteria identified in the LNP proceedings. First, only costs that would not have been incurred “but for” thousands- block number pooling are eligible for recovery. 121 Second, only costs incurred “for the provision of” thousands- block number pooling are eligible for recovery. 122 Finally, only “new” costs are eligible for recovery. 123 To be eligible for extraordinary recovery, carriers’ thousands- block number pooling shared industry and carrier- specific costs directly related to thousands- block number pooling must satisfy all three of these criteria. 124 Through the adoption of the LNP three- pronged test, the Commission sought both to prevent the overrecovery of thousands- block number pooling and number portability costs 125 and to prevent the recovery of costs not directly related to thousands- block number pooling. 126 44. The first two criteria shall be interpreted as follows. Only costs that were incurred “for the provision of” thousands- block number pooling are eligible for recovery through this extraordinary mechanism, but these must also be costs that would not have been incurred “but for” thousands- block number pooling. 127 This means that only the demonstrably incremental costs of thousands- block number pooling may be recovered. 128 The Commission adopted a narrow definition of the phrase “for the provision of” in the LNP proceedings. The only eligible LNP costs were the “costs carriers incur specifically in the provision of number portability services, such as for the querying of calls and the porting of telephone numbers from one carrier to another.” 129 Similarly, we conclude here that costs specifically incurred in the narrowly defined thousands- block pooling functions are those incurred specifically to identify, donate and receive blocks of pooled numbers, to create and populate the regional databases and carriers’ local copies 120 See First Report and Order, 15 FCC Rcd at 7673, paras. 218- 19. 121 See id. at 7673, para. 218. 122 See id. 123 See id. at 7673, para. 219. 124 Carrier- specific costs not directly related to thousands- block number pooling implementation are not eligible for recovery. See id. at 7670, para. 211. 125 Because changes to the network for both thousands- block number pooling and number portability are similar, and because carriers are currently recovering the costs of number portability through a separate end- user charge, carriers were directed to distinguish the costs of providing number portability from the costs of implementing thousands- block number pooling. See id. at 7672, para. 216. 126 See id. at 7672- 73, paras. 216- 17. 127 See id. at 7673, para. 218. 128 See id. at 7672- 75, paras. 217- 24. 129 See LNP Cost Classification Order, 13 FCC Rcd at 24501, para. 12 (citing LNP Third Report and Order, 13 FCC Rcd at 11740, para. 72). 23 Federal Communications Commission FCC 01- 362 24 of these databases, and to adapt the procedures for querying these databases and for routing calls so as to accommodate a number pooling environment. These findings are based on our review of the filed cost studies. 130 45. As with LNP, costs that carriers incur as an “incidental consequence” of thousands-block number pooling implementation are not incurred specifically in the provision of narrowly defined thousands- block pooling functions. Thus, costs incurred to adapt other systems to the presence of thousands- block number pooling are not incurred for the provision of thousands-block number pooling and are ineligible for recovery. 131 Examples of such systems include those for maintenance, repair, billing and other functions not directly involved in the provision of thousands- block number pooling. These systems are not part of the provisioning of thousands-block number pooling. Similarly, costs incurred to facilitate the continued provision of other services in the presence of number pooling are an “incidental consequence” and are not eligible for recovery. For example, database- related costs such as those involving service control points (SCPs) that support services such as third- party billing or calling card calls are not eligible even though these costs would not have been incurred but for number pooling. 46. The third part of our test requires that thousands- block number pooling costs must also be “new” costs in order to qualify for recovery though the extraordinary mechanism. Costs incurred prior to the implementation of thousands- block number pooling are ineligible for recovery because they are embedded investments already subject to recovery through standard mechanisms. Thus, permitting recovery of these costs again through this extraordinary mechanism would amount to double recovery. 132 Costs are not “new,” and thus are ineligible for extraordinary treatment as thousands- block number pooling charges, if they previously were incurred, are already being recovered under ordinary recovery mechanisms, or are already being recovered thorough the number portability end- user charge or query charge. IV. WAIVER OF GROWTH NUMBERING RESOURCE REQUIREMENTS A. Reconsideration of Months- to- Exhaust Criteria 47. In the First Report and Order, the Commission mandated that carriers demonstrate that their inventory of numbering resources will exhaust within six months before obtaining additional numbering resources by completing a Months- to- Exhaust (MTE) Worksheet. 133 Several carriers seek reconsideration of the MTE requirement. 134 SBC recommends eliminating it, 130 See generally, BellSouth Cost Study; Qwest Comments at Appendix A; SBC Comments (Cost Support Data); Sprint Reply Comments (Cost Study). 131 See LNP Cost Classification Order, 13 FCC Rcd at 24501, para. 12 (citing LNP Third Report and Order, 13 FCC Rcd at 11740, para. 72). 132 See First Report and Order, 15 FCC Rcd at 7673, para. 219; see also LNP Cost Classification Order, 13 FCC Rcd at 24503, para. 18. 133 First Report and Order, 15 FCC Rcd at 7615- 16, para. 101- 102. 134 BellSouth Petition at 1; SBC Petition at 1- 2; USTA Petition at 2. 24 Federal Communications Commission FCC 01- 362 25 but maintaining the utilization requirement. 135 Similarly, USTA argues that carriers should not be required to meet both the MTE and utilization requirements. 136 USTA also suggests that if both the MTE and utilization requirements are retained, distinctions should be adopted between wireline and wireless carriers and pooling and non- pooling areas. 137 48. We reaffirm that the MTE requirement is an important tool to ensure that numbering resources are used efficiently and that carriers have an adequate supply of resources to serve customers. 138 This requirement seeks to prevent carriers from carrying excessive inventories of numbering resources. 139 To ensure that carriers request and receive numbering resources only when and where needed, carriers must continue to be required to demonstrate in the MTE calculation that they need numbering resources to provide services. The MTE requirement coupled with the utilization threshold requirement deters carriers from stockpiling excessive inventories. 140 It also helps maintain a level playing field among carriers. We therefore reject USTA’s suggestions to exempt certain carriers in certain areas from the MTE requirement. 141 We also reject the argument that the MTE should be calculated on a per- switch basis. We continue to believe that the rate center- based projection is appropriate because it encourages carriers to use number efficiently within a local calling area and because the utilization threshold is calculated on a rate- center basis. 49. In addition, we are not persuaded by the comments that suggest a MTE requirement is not necessary in light of the utilization threshold requirement. Both requirements serve important, but different, functions in promoting the Commission’s numbering optimization policies: the MTE requirement deters stockpiling, and the utilization requirement helps ensure that carriers optimize the use of existing resources. None of the comments in this proceeding have persuasively demonstrated that the utilization requirement alone will also deter stockpiling. Accordingly, we decline to eliminate the MTE requirement. B. Reconsideration of Utilization Threshold and Formula 50. In addition to meeting the MTE requirement, carriers must meet a 60% minimum 135 SBC Comments at 2. 136 USTA Comments at 2. 137 Id. at 3. USTA suggests that the MTE and utilization criteria should be calculated at the switch level in a non-pooling environment and at the rate center level in a pooling environment. 138 In response to several petitions for reconsideration that opposed adoption of the MTE criteria, and a utilization threshold, the Commission affirmed both requirements. Second Report and Order, 16 FCC Rcd at 320, para. 29. 139 See Notice, 14 FCC Rcd at 10348. 140 Both requirements are necessary to optimize the use of numbering resources. They serve as objective needs-based criteria to allow carriers access to numbering resources in a competitively neutral manner. 141 As noted in the First Report and Order, we decline to require different criteria for different market segments in order to maintain competitive neutrality. See First Report and Order, 15 FCC Rcd at 7618, para. 106. 25 Federal Communications Commission FCC 01- 362 26 utilization threshold in order to obtain growth numbering resources. 142 The threshold will increase by 5% annually commencing June 30, 2002, until it reaches 75% on June 30, 2004. 143 The utilization level is calculated by dividing all numbers assigned to end- users (numerator) by the total numbering resources assigned to that carrier (denominator) and multiplying the result by 100. 144 Several carriers seek reconsideration of the utilization requirements and the method for calculating utilization. Specifically, some carriers request reconsideration of the Commission’s decision to exclude intermediate numbers from the numerator. 145 Cingular and BellSouth would also include reserved, aging, and administrative numbers in the numerator. Cingular also contends that if the utilization calculation is not modified, the Commission should significantly reduce the utilization threshold. 51. SBC and Verizon object to the Commission’s decision to allow state commissions that had established higher utilization levels to retain the higher threshold. 146 USTA and Verizon contend that the states that have authority to use higher utilization thresholds should either be allowed to continue to use their own formula for calculating those levels or be required to adjust the utilization threshold down to the federal 60% level. 147 Verizon requests reconsideration of the utilization calculation or, alternatively, confirmation that resellers are subject to the utilization level. 148 WorldCom requests reconsideration of the decision that pooling carriers must achieve the same utilization level as non- pooling carriers. 149 1. Utilization Threshold 52. We decline to lower the utilization threshold established in the Second Report and Order. No carrier has demonstrated in the record that the utilization threshold is not readily achievable, or that the ability in most instances to serve customers is hampered because the threshold level is too high. To the contrary, utilization studies show that many carriers can meet 142 Second Report and Order, 16 FCC Rcd at 316, para. 22. See also Second Report and Order, 16 FCC Rcd at 319- 20, para. 29, wherein the Commission addresssed petitions for reconsideration of the utilization requirement. 143 Id. at 318, paras. 25- 26. 144 First Report and Order, 15 FCC Rcd at 7619, para. 109. 145 SBC Petition at 3; CTIA Petition at 3; USTA Petition at 4. Intermediate numbers are numbers that are made available for use by another telecommunications carrier or non- carrier entity for the purpose of providing telecommunications service to an end user or customer. Numbers ported for the purpose of transferring an established customer’s service to another service provider shall not be classified as intermediate numbers. See 47 C. F. R. § 52.15( f)( v). 146 SBC Petition at 5- 7; Verizon Wireless Petition at 8- 10. 147 USTA Petition at 6; Verizon Petition at 8- 9. 148 Verizon Wireless Petition at 4- 7. 149 WorldCom Petition at 1- 6. 26 Federal Communications Commission FCC 01- 362 27 or exceed the 60% utilization threshold. 150 A lower utilization threshold, or no utilization threshold as some commenters suggest, provides little incentive for carriers to optimize the use of their existing inventories. The utilization threshold is thus an important tool in achieving our numbering resource optimization goals, and petitioners have made no convincing arguments for eliminating or lowering it. 151 53. We will allow state commission that have established utilization thresholds higher than 60% to continue to use higher thresholds. In deference to state commissions and to encourage their progress in dealing with numbering exhaust, we support these stricter requirements. Grandfathered utilization thresholds cannot exceed the national 75% ceiling and must be calculated in the manner established in the First Report and Order. 152 We clarify, however, that states may lower grandfathered utilization levels to compensate for having to use the federal utilization methodology. We are satisfied that carriers that need additional numbering resources to serve their customers before they are able to meet the required utilization threshold have sufficient redress at both the state and federal level. 153 Accordingly, we decline to eliminate the grandfathered utilization levels. 2. Utilization Formula 54. Previously, the Commission denied requests to reconsider the manner in which the utilization level is calculated. 154 The petitioners present no arguments in support of their renewed request to change the calculation that have not already been rejected. The Commission previously found unpersuasive, and therefore rejected, arguments that administrative, aging, intermediate, and reserved numbers should be included in the numerator or that the utilization threshold should otherwise be reduced. 155 The Commission explained that basing the utilization calculation on assigned numbers is the appropriate measure, because it provides a more accurate representation of the percentage of numbers being used to serve customers. We continue to believe that this is the proper approach for furthering our numbering optimization goals. 156 We reaffirm that the utilization threshold should be calculated by dividing assigned numbers by the total numbering resources assigned to the carrier multiplied by 100. 150 See November 2001 Numbering Utilization Report at Figures 1- 4. The data shows that where carriers have ten to twenty NXXs in a rate center LECs report over 65% utilization, CLECs report approximately 40% utilization, and wireless carriers report over 60% utilization. 151 We also note that the utilization threshold applies to all carriers, including resellers, that receive numbering resources from the NANPA or the pooling administrator. 152 Second Report and Order, 16 FCC Rcd at 317, para 23. 153 See infra at Section IV. C. 154 Second Report and Order, 16 FCC Rcd at 320, para. 30. 155 Id. 156 First Report and Order, 15 FCC Rcd at 7618, para. 107 and Second Report and Order, 16 FCC Rcd at 320, para. 30. 27 Federal Communications Commission FCC 01- 362 28 3. Applicability of Utilization Threshold to Pooling Carriers 55. In the Second Report and Order, the Commission determined that the utilization threshold should be applied to pooling carriers. 157 Encouraged by the results of pooling trials with utilization thresholds, the Commission concluded that the rationale for applying the utilization threshold in a non- pooling environment applies equally in a pooling environment. 158 WorldCom seeks reconsideration of the Commission’s extension of the utilization threshold to pooling carriers, arguing that there is a no record basis for establishing a utilization threshold for pooling carriers. 159 56. Requiring all carriers to meet the utilization threshold helps ensure that requests for additional numbering resources are needs- based. It furthers our numbering resource optimization policies by ensuring that all carriers retain only the numbers that they need in their inventories. We conclude that exempting pooling carriers from the utilization requirement will undermine the efficiencies that we have achieved by requiring non- pooling carriers to meet a utilization threshold. The need for a utilization threshold is especially present in large metropolitan areas where the demand for numbering resources is the greatest. Utilization thresholds provide an objective measure of determining when carriers are in need of additional numbering resources, and they provide a competitively neutral means for assigning numbering resources when and where needed. Accordingly, we affirm that the utilization threshold is appropriate for pooling carriers. C. Safety Valve 1. Background 57. In the Second Further Notice of Proposed Rulemaking, the Commission sought comment on the need to establish a “safety valve” apart from the general waiver process to allow carriers that do not meet the utilization threshold in a given rate center to obtain additional numbering resources. Specifically, the Commission sought empirical data on the extent to which this problem exists, possible solutions (e. g., intra- company and intra- rate center pooling or porting of unassigned numbers among switches), and comment on whether the NANPA or state commissions should be given the authority to decide requests for waiver in certain narrowly defined instances. 58. The Commission noted that certain conditions might prevent carriers from meeting the rate center- based utilization threshold when they actually need additional numbers. 160 These conditions might include situations where a carrier has multiple switches within a rate center but it 157 Second Report and Order, 16 FCC Rcd at 319, para. 27- 28. 158 Id. 159 WorldCom Petition at 1. 160 Second Report and Order, 16 FCC Rcd at 381, para. 188. 28 Federal Communications Commission FCC 01- 362 29 is unable to readily share numbering resources among those switches. 161 In addition, some commenters suggested that a safety valve may be warranted where a carrier is unable to meet the utilization threshold because it has a large block of intermediate numbers that must be made available to other carriers and are unavailable for use by the carrier to provide service to its customers. 162 59. Most carriers support the use of a safety valve mechanism, particularly where a new switch is put into service to increase capacity in a given rate center. 163 Other carriers support use of a safety valve when the growth requirements cannot be met and numbering resources are needed to meet a specific customer request. 164 In contrast, Cox opposes an explicit safety valve for utilization waivers. 165 It argues that a safety valve runs counter to the Commission’s number usage and assignment goals and may become the rule rather than the exception. 166 None of the commenters provided empirical data on the extent to which carriers are unable to comply with the growth numbering resource requirements and yet need numbering resources in order to serve customers. 167 60. The state commissions urge caution in creating a safety valve mechanism, and note that it should be applied only in exceptional circumstances. 168 The Pennsylvania PUC suggests that state commissions should have the flexibility to grant waivers within the context of a nationally mandated utilization threshold. 169 2. Discussion 61. We agree with the commenting parties that a safety valve mechanism should be established, and we delegate authority to state commissions to hear claims that a safety valve should be applied when the NANPA or Pooling Administrator denies a specific request for numbering resources. 170 State commissions should only apply a safety valve mechanism as a last resort and, to the extent possible, use it as a stop gap measure to enable carriers in need of 161 Id. at 380- 81, para. 187. 162 Id. 163 Verizon Comments at 2; Warner Telecom Comments at 7- 9. 164 ALTS Comments at 18; Focal Communications Comments at 7. 165 Cox Comments at 16. 166 Id. 167 Since the growth requirements became effective on May 8, 2001, the Common Carrier Bureau has received five waiver requests. 168 Texas PUC Comments at 19; Ohio PUC Comments at 28- 29; New Hampshire PUC Comments at 7. 169 Pennsylvania PUC Comments at 9. 170 See Ad Hoc Telecommunications Users Comments at 36- 37; BellSouth Comments at 31. 29 Federal Communications Commission FCC 01- 362 30 additional numbering resources to continue to serve their customers. We adopt one specific safety valve to address the numbering resource requirements of carriers experiencing rapid growth in a given rate area. We also clarify that states may grant requests by carriers that receive a specific customer request for numbering resources that exceeds their available inventory. Finally, we give states some flexibility to direct the NANPA or Pooling Administrator to assign additional numbering resources to carriers that have demonstrated a verifiable need for additional numbering resources outside of these specifically enumerated instances. 62. We share Cox’s concern that the safety valve mechanism not be used to circumvent our growth resources requirements. When applying the safety valve, state commissions must take into consideration the extent to which the carrier has used available numbering resource optimization strategies, including intra- company porting. Carriers should pursue all available measures before applying for a “safety valve” waiver. The burden is on the carrier requesting application of the safety valve to demonstrate that deviation from the growth requirements is warranted. We reject Qwest’s suggestion that carriers need only certify that they have met the safety valve parameters. As discussed in the prior orders, self- certification defeats the purpose of establishing needs- based tests. 171 63. We establish a safety valve to ensure that carriers experiencing rapid growth in a given market will be able to meet customer demand. States may use this safety valve to grant requests from carriers that demonstrate the following: 1) the carrier will exhaust its numbering resources in a market or rate area within three months (in lieu of the 6 months- to- exhaust requirement); and 2) projected growth is based on the carrier’s actual growth in the market or rate area, or on the carrier’s actual growth in a reasonably comparable market, but only if that projected growth varies no more than 15 percent from historical growth in the relevant market. 64. We also agree with WinStar that a carrier should be able to get additional numbering resources when there is a verifiable need due to the carrier’s inability to satisfy a specific customer request. 172 We therefore clarify that states may also grant relief if a carrier demonstrates that it has received a customer request for numbering resources in a given rate center that it cannot meet with its current inventory. Carriers may demonstrate such a need by providing the state with documentation of the customer request and current proof of utilization in the rate center. States may not accommodate requests for specific numbers (i. e., vanity numbers), but may grant requests for customers seeking contiguous blocks of numbers. Any numbering resources granted for this reason may be initially activated only to serve the requesting customer for whom the application was made. If the customer request is withdrawn or declined, the requesting carrier must return the numbering resources to the NANPA or Pooling Administrator, and may not retain the numbering resources to serve other customers without first meeting our growth numbering resource requirements. 65. Additionally, we do not wish to foster practices that encourage carriers to use numbering resources in a manner that segments service offerings or customer classes (e. g., using 171 See First Report and Order, 15 FCC Rcd at 7610- 13, paras. 86- 92. 172 WinStar Comments at 9. 30 Federal Communications Commission FCC 01- 362 31 separate switches and blocks of numbering resources for specific services or customer classes). We find that such practices are inconsistent with our numbering resource optimization goals. Although new numbering resources are used by carriers to activate new switches, we encourage carriers to pursue other alternatives, such as pooling, to activate those switches and to prevent numbering resources from becoming stranded as the result of installing multiple switches in the same rate center. The safety valve mechanism should be narrowly applied to meet specific customer requests or to meet a carrier’s immediate numbering needs. We nevertheless will allow states to consider requests from carriers with multiple switches in a given rate center to determine whether relief is warranted on a case- by- case basis. 66. Finally, we recognize that in many instances, the failure to address a request for additional numbering resources can impair a carrier’s ability to stay in or expand business. We therefore direct states to act on carrier requests for a safety valve as expeditiously as possible. Although we do not establish a specific time limit for states to act on these requests, we believe that, in most instances, 10 business days from receipt of a request that the state determines to be sufficiently detailed and complete will be sufficient time to review and act upon safety valve requests. If a state does not reach a decision on a safety valve request within a reasonable timeframe, carriers may submit such requests to the Commission for resolution. In addition, carriers may appeal to the Commission safety valve decisions made by states, and we delegate authority to the Common Carrier Bureau to review such petitions as expeditiously a possible. V. SERVICE- SPECIFIC AND TECHNOLOGY- SPECIFIC AREA CODE OVERLAYS 67. In the Second Report and Order, the Commission decided to revisit the prohibition against service- specific and technology- specific overlays (collectively specialized overlays or SOs). 173 In this Order, we grant, in part, the petitions of California, Connecticut, Indiana, Massachusetts, Ohio, and Pennsylvania by lifting the ban on SOs, and will allow state commissions seeking to implement SOs to request delegated authority to do so on a case- by- case basis. 174 We decline, at this time, to address the merits of the state petitions seeking specific 173 See Second Report and Order, 16 FCC Rcd at 306, 359- 66, paras. 124- 143. In a service- specific overlay, numbering resources are assigned to carriers that provide a particular type of service or services, such as unified messaging and/ or vehicle response (e. g., OnStar) services. In contrast, numbering resources in a technology-specific overlay are assigned to carriers that use a particular type of technology or technologies, such as wireless. For convenience, we will refer to both service- specific and technology- specific overlays collectively as SOs. 174 See Common Carrier Bureau Seeks Comment on a Petition of the California Public Utilities Commission and the People of the State of California for a Waiver to Implement a Technology- Specific or Service- Specific Area Code, Public Notice, 14 FCC Rcd 7490 (1999); Connecticut Department of Public Utility Control Files Petition for Rulemaking, Public Comment Invited, Public Notice, 13 FCC Rcd 7416 (1998); Petition of the Connecticut Department of Public Utility Control for Authority to Conduct a Transitional Service/ Technology Specific Overlay Trial, filed Mar. 12, 2001 (Connecticut Petition); Petition of the Indiana Utility Regulatory Commission for Waiver of 47 C. F. R. § 52. 19( c)( 3), filed Apr. 17, 2001; Common Carrier Bureau Seeks Comment on Massachusetts Department of Telecommunications and Energy Petition for Waiver to Implement a Technology-Specific Overlay in the 508, 617, 781, and 978 Area Codes, Public Notice, 14 FCC Rcd 5083 (1999); Common Carrier Bureau Seeks Comments on the Ohio Public Utilities Commission’s Petition for Delegation of Additional Authority to Implement Number Conservation Measures, Public Notice, DA 99- 2016 (1999). Common Carrier Bureau Seeks Comment on the Pennsylvania Public Utility Commission’s Petition for Delegation of Additional (continued….) 31 Federal Communications Commission FCC 01- 362 32 authority to implement SOs, but invite these states and others to supplement their petitions or seek delegated authority to implement SOs in accordance with the criteria outlined below. 175 68. Background. In 1996, the Commission rejected a wireless- only overlay plan for the 708 NPA proposed by Ameritech after determining that the plan was unreasonably discriminatory and was an unjust and unreasonable practice in violation of sections 202( a) and 201( b) of the Act. 176 In the Local Competition Second Report and Order, the Commission applied principles set forth in the Ameritech Order 177 to prohibit SOs, reiterating that such plans would be unreasonably discriminatory and unduly inhibit competition. 178 In 1999, however, the Commission decided to reconsider whether to modify or lift the prohibition on SOs, based on the increased urgency of the numbering crisis and the broader issues raised in the Numbering Resource Optimization proceeding. 179 In the Notice, the Commission sought comment on whether to consider exceptions to the prohibition on a case- by- case basis or to adopt general guidelines, and whether requests for SOs should be addressed at the federal level or whether state commissions should have authority to implement SOs applying federal guidelines. 180 The issue was revisited in the Second Report and Order, which noted that commenters in response to the Notice argued that changes in the use of numbering resources warranted reconsideration of this ban. 181 The Commission also sought comment on a proposal by the Joint Wireless Commenters (JWC) to adopt a framework for allowing transitional SOs subject to certain conditions. 182 (Continued from previous page) Authority to Implement Number Conservation Measures, Public Notice, 15 FCC Rcd 2904 (2000). 175 See, e. g., California Commission Comments at 2- 3; Connecticut Commission Comments at 7- 10; Florida Commission Comments at 5; Illinois Commission Comments at 4- 7; Michigan Commission Comments at 1- 2; New Hampshire Commission Comments at 5- 6; New York State Department of Public Services Comments at 1- 2; Ohio Commission Comments at 5; and Texas Commission Comments at 7- 8. 176 See Proposed 708 Relief Plan and 630 Numbering Plan Area Code by Ameritech – Illinois, Declaratory Ruling and Order, 10 FCC Rcd 4596, 4607- 12, paras. 25- 29, 33- 35 (1996) (Ameritech Order); see also 47 U. S. C. §§ 201( b), 202( a). 177 Administration of the NANP should (1) seek to facilitate entry into the communications marketplace by making numbering resources available on an efficient and timely basis; (2) not unduly favor or disadvantage a particular industry segment or group of consumers; and (3) not unduly favor one technology over another. Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, Second Report and Order and Memorandum Opinion and Order, 11 FCC Rcd 19392, 19516- 17, para. 281 (1996) (citing Ameritech Order, 10 FCC Rcd at 4604, para. 18) (Local Competition Second Report and Order), vacated in part, California v. FCC, 124 F. 3d 934 (8 th Cir. 1997), rev’d AT& T v. Iowa Utils. Bd., 199 S. Ct. 721 (1999). 178 See Local Competition Second Report and Order, 11 FCC Rcd at 19518, para. 285 (1996). 179 Notice, 14 FCC Rcd at 10431, para. 257. 180 Id. at 10432, para. 261. 181 Second Report and Order, 16 FCC Rcd at 361, para. 128. 182 See Second Report and Order, 16 FCC Rcd at 361- 63, 364- 66, paras. 127, 130, 135- 141 (citing Letter from Judith St. Ledger- Roty and Todd Daubert, Kelley, Drye & Warren, LLP, to Magalie Roman Salas, Secretary, FCC, dated November 15, 2000 (joint filing on behalf of PCIA, AT& T Wireless, Nextel, Verizon Wireless Messaging (continued….) 32 Federal Communications Commission FCC 01- 362 33 69. Although most commenters appear to presume that any SO approved by the Commission would be applicable only to wireless and paging providers, we do not limit our discussion of SOs to those carriers. SOs may also include technologies and services other than or in addition to wireless services. For example, a service- specific overlay could include services that generally do not require numbers from a specific geographic area (e. g., some data services, automatic teller machines (ATMs), and unified messaging services), or a technology- specific overlay could include broader groups of technologies (e. g., non- pooling carriers). We therefore address SOs in this broader context. 70. Discussion. A number of commenters favor lifting the ban on SOs, 183 arguing, among other things, that the life of existing area codes used by pooling carriers could be prolonged by creating SOs for exclusive assignment to non- pooling service providers. 184 Other commenters oppose such a measure, because they believe that SOs are discriminatory. 185 Moreover, they contend that SOs would not improve number efficiency and would accelerate exhaust of the NANP by dividing demand for numbers by service or technology. 186 Most commenters that oppose lifting the ban, however, seem more amenable to SOs that are transitional in nature. 187 For example, some wireless carriers state that in areas where an area code is in jeopardy, a technology- specific overlay could be created for use by non- pooling carriers and then converted to an all- services overlay when such carriers become pooling- capable. Thus, at least in the context of transitional SOs, earlier concerns raised over the potential discriminatory effects of SOs have been tempered by carriers’ concerns over the availability of numbering resources in certain areas, particularly where state commissions have postponed needed area code relief. 71. Despite an apparent shift in views on the potential discriminatory effects of SOs, we continue to be concerned that placing specific services and technologies in SOs could have an (Continued from previous page) Services and VoiceStream Wireless) and letter from Celia Nogales, SBC, to Magalie Roman Salas, Secretary, FCC, dated November 19, 1999). In the transitional SO, the SO would convert into an all- services overlay at a designated time or when certain events occurred, such as the exhaust of the underlying area code. 183 Ad Hoc Comments at 3, 6 (imminent exhaust of the NANP justifies the use of SOs); Cox Comments at 2 (expanded SOs should ensure that numbering resources are not being underutilized within that SO); Illinois Commerce Commission Comments at 7 (expanded SOs were not included in the proposal rejected by the FCC in the Ameritech Order); Michigan PSC Reply Comments at 3 (lifting the prohibition on SOs would provide state commissions with more options for providing area code relief); NASUCA Comments at 5- 6; Ohio PUC Comments at 5 (state commissions should be allowed to determine whether a SO should be transitional). 184 See, e. g., Ad Hoc Comments at 3. 185 See, e. g., BellSouth Comments at 3, 10; Cingular Comments at 8; PCIA Comments at 7 (wireless carriers often compete with wireline carriers); Sprint Reply Comments at 8, 10 (SOs would not improve number conservation or the efficient use of numbering resources, even if the Commission required take- backs because the wireless carriers’ level of number utilization would be the same in the SO); USTA Reply Comments at 2; Verizon Wireless Reply Comments at 3; VoiceStream Comments at 3- 4; WinStar Comments at 1- 2. 186 See, e. g., Sprint Reply Comments at 10; WorldCom Reply Comments at 2. 187 See, e. g., BellSouth Comments at 3, 10; Cingular Comments at 6- 8; PCIA Comments at 7, 8; Verizon Wireless Reply Comments at 3; VoiceStream Comments at 3- 5. 33 Federal Communications Commission FCC 01- 362 34 adverse impact on the affected customers and service providers. 188 For example, consumers may be dissuaded from signing up for wireless service if they do not have access to numbers in the “incumbent” area code. In the Ameritech Order, we considered whether, in light of such discriminatory effects, the different terms or conditions as applied to a specific group of service providers were “just and reasonable under the circumstances.” 189 At that time, we found that they were not. 72. We now believe, however, that circumstances have changed since the Ameritech Order that justify lifting the blanket prohibition on SOs and, instead, we will consider SO proposals on a case- by- case basis. First, carriers in 1996 were not faced with the exigent numbering shortages that exist today. Thus, the benefits of making more numbering resources available through SOs may, in some circumstances, outweigh their potential discriminatory effect. Second, in recent years, there has been a proliferation of new telecommunications services that use vast amounts of numbering resources but do not necessarily need numbering resources from a particular geographic area. 190 If, through the use of service- specific overlays for such services, geographic identity for some areas can be preserved, that too might outweigh any potential discrimination. 73. We disagree with Sprint that re- examination of the ban on SOs is not justified by changes in the use of numbering resources. 191 We find that, given the potential for premature NANP exhaust, we should examine all options, including SOs, which may be able to provide some form of relief to the numbering resource shortage. Thus, we can no longer fully embrace the notion that placing certain technologies and services in a separate overlay is necessarily unreasonably discriminatory, particularly if numbering resource optimization benefits are realized. We continue to focus on our goals of numbering use efficiency, nevertheless, and agree with commenters that in some cases, SOs may not promote number efficiency. We therefore set forth criteria below to provide some guidance to states on what types of proposals would likely merit our approval, and to help ensure that the numbering resource optimization benefits of any proposed SO are realized. 74. We have not pre- determined how the optimal SO would be structured, but believe that some SOs would be more likely to achieve our optimization goals than others. For example, as a general matter, we are extremely reluctant to consider permanent technology- specific overlays, because of the likelihood that numbering resources in the technology- specific overlay would lie fallow. Therefore, a technology- specific overlay that includes, for example, wireless and paging 188 Particularly, we question NASUCA’s argument that discrimination does not exist for wireless providers because they serve a separate market. See NASUCA Comments at 6. See also Wireless Order, 16 FCC Rcd at 13381, 13382 (acknowledging that, for some consumers, wireless service has replaced wireline service, and that some wireless carriers have been competing directly with local wireline providers). 189 See Ameritech Order, 10 FCC Rcd at 4607, para. 25 (citing MCI Telecommunications Corp. v. FCC, 842 F. 2d 1296 (D. C. Cir. 1988). 190 Examples of these services include atms, On- Star, and unified messaging services. 191 Sprint Reply Comments at 8. 34 Federal Communications Commission FCC 01- 362 35 carriers, that is transitional in nature, that avoids take- backs, and that covers a sufficiently large geographic area such that the demand for numbers is substantial, would likely pass muster. We would also likely favor service- specific overlays that would include non- geographically sensitive services (such as data lines like those used for automatic teller machines or credit card approval, unified messaging services, or vehicle response systems such as OnStar) and that would require take- backs of such numbers from established area codes. Such service- specific overlays could even be permanent, to the extent that the demand for use of such numbers was sufficient to adequately utilize the service- specific overlay area code, which could be achieved if the geographic area covered by the service- specific overlay was sufficiently large. We emphasize that these examples are illustrative and not dispositive of any pending petition, since each area must be examined and evaluated on a case- by- case basis. Carriers should continue to work with the NANPA and state commissions to develop creative solutions to prevent premature exhaust of the NANP, including the possible use of service- specific overlays across multiple jurisdictions. We believe the NANC would be an appropriate forum for discussing such creative solutions. A. Benefits and Costs of SOs 75. The only actual data we have on the potential benefits of SOs, from a numbering resource optimization perspective, come from the technology- specific overlay implemented in New York City by the New York Public Service Commission (New York Commission). The New York Commission implemented the 917 overlay in 1992, prior to the Commission’s prohibition of SOs. 192 Expecting exhaust of the 212 NPA by 1993, the New York Commission adopted a plan to implement the 917 overlay, under which new wireless and paging customers would receive numbers in the 917 NPA. Under that plan, existing paging customers were transitioned to the 917 NPA over a four- year period, and existing Bronx and Manhattan wireless customers were relocated to the 917 NPA over a six- year period. The plan also moved Bronx landline customers from the 212 NPA to the 718 NPA, and called for the inclusion of certain designated wireline services in the 917 overlay at an unspecified point in time. 193 By 1999, wireline customers were also receiving numbers from the 917 overlay. 194 76. As a result of this overlay plan, the 212 and 718 NPAs did not need relief again until 1999. 195 The life of the 212 NPA was thus prolonged for six years beyond projected exhaust in part due to the implementation of the 917 technology- specific overlay. In addition, although the 192 Proceeding on Motion of the Commission Pursuant to Section 97( 2) of the Public Service Law Concerning the Supply of Telephone Numbers Available to New York Telephone Company in New York City, Order Approving Stipulation, Case 90- C- 0347 (Issued and effective Jan. 7, 1991) (New York Order). 193 At that time, Bellcore stated that, under national guidelines, all area codes had to be associated with landline services that had a geographic identity. See generally, New York Order. 194 See Gersh Kuntzman and Emily Lambert, Looking for 212? Your Number’s Up, N. Y. Post, June 28, 1999. 195 At that time, the New York Commission adopted a plan to implement the 646 and 347 NPAs as all- services overlays. This information is available at . In addition, voluntary thousands- block number pooling in the 212 and 718 NPAs did not commence until July 1, 1998 and March 1, 1999, respectively, and mandatory pools commenced on August 31, 2001. This information is available at . 35 Federal Communications Commission FCC 01- 362 36 917 NPA has now reached exhaust, it is currently estimated that the other area codes in New York City (646, 718, and 347) will last until the first quarter of 2006. 196 Wireless customers in New York reportedly supported having wireless phones and pagers in their own code, which suggests that under some circumstances, the benefits of a specialized overlay may outweigh the potential discriminatory effects from a wireless consumer perspective. 197 Furthermore, in New York City, the potentially discriminatory effects of take- backs 198 on paging and wireless providers and customers were likely mitigated by the phased- in schedule, which allowed a gradual transfer of previously existing wireless and paging subscribers to the 917 SO. 77. The New York experience suggests that there may be circumstances in which SOs are beneficial because they prolong the life of the underlying area code by placing certain technologies and service providers into a separate area code, 199 thereby easing the cost and inconvenience of frequent area code relief. SOs may also benefit consumers by facilitating the preservation of geographic identity for wireline customers in a particular area. Finally, and perhaps most significantly, SOs can make available additional resources to certain service providers that would otherwise be subject to rationing or other limitations on access to numbering resources because they operate in an area with thousands- block number pooling, but are not capable of participating in pooling. 78. On the other hand, SOs can also have significant costs associated with them. In the Ameritech Order and the Local Competition Second Report and Order, we recognized that Ameritech’s proposed technology- specific overlay placed wireless and paging providers at a competitive disadvantage because it (1) excluded these providers from the underlying area code; (2) segregated these providers into a separate area code; and (3) required these providers and their customers to incur the cost and inconvenience of changing their numbers (i. e., surrendering their numbers in the underlying area code and obtaining numbers from the new area code, also referred to as “take- backs”). We therefore must weigh the costs of allowing state commissions to implement SOs against the benefits to be realized. 79. We believe that, in some areas, SOs may offer a viable alternative to traditional forms of area code relief. We recognize the frustration experienced by state commissions that must choose the best form of area code relief, the frustration of carriers unable to obtain numbers due to delays in area code relief, and the frustration of consumers who must bear the cost and inconvenience of area code relief. We thus will review on a case- by- case basis, at least initially, 196 Id. Thus, over a ten- year period, from 1996 to 2006, only two new area codes will have been implemented in New York City. 197 See, e. g., Eric Malnic, New Area Code Coming to Some in North O. C., Los Angeles Times, Mar. 23, 1994 (noting that the customers of NYNEX, a telephone company serving New York state, reacted positively to the 917 SO). 198 Take- backs in New York City required existing paging and wireless subscribers with numbers in the 212 and 718 NPAs to change their numbers to the 917 SO. 199 SOs may be particularly beneficial for non- pooling service providers that significantly drain numbering resources because they must take 10,000 instead of 1,000 numbers at a time. 36 Federal Communications Commission FCC 01- 362 37 each scenario to determine whether a proposed SO would likely result in numbering resource optimization in a given area. 200 Accordingly, we lift the prohibition on SOs and will allow states to seek specific authority to implement SOs on a case- by- case basis. B. Criteria for SOs 80. As an initial matter, we emphasize that SOs are another form of area code relief available to state commissions in addition to all- services overlays, area code splits, and area code boundary realignments. As such, any delegated authority granted to state commissions to implement SOs will be limited to areas in which a state has properly determined that area code relief is needed. The effect of allowing SOs to be implemented in areas that are not nearing exhaust could be staggering, because of the potential for multiple requests for area codes over a short period of time. In direct contravention of our numbering resource optimization goals, this would lead to an acceleration of NANP exhaust. We also emphasize that SOs are numbering resource optimization measures; thus, states seeking to implement a SO must also demonstrate that the benefits will outweigh the costs of implementing the SO. 81. To provide further guidance to state commissions, we set forth the criteria that each request for delegated authority to implement a SO should address. This will enable us to examine the feasibility of SOs in a particular area, and determine whether the Commission’s stated goals are likely to be met if the SO is implemented. As an initial matter, a state commission seeking to implement a SO should discuss why the numbering resource optimization benefits of the proposed SO would be superior to implementation of an all- services overlay. State commissions should also specifically address the following: (1) the technologies or services to be included in the SO; (2) the geographic area to be covered; (3) whether the SO will be transitional; (4) when the SO will be implemented and, if a transitional SO is proposed, when the SO will become an all- services overlay; (5) whether the SO will include take- backs; (6) whether there will be 10- digit dialing in the SO and the underlying area code( s); (7) whether the SO and underlying area code( s) will be subject to rationing; and (8) whether the SO will cover an area in which pooling is taking place. 1. Technologies and Services 82. To provide any meaningful benefits, a SO should divert significant demand from the underlying area code to extend the life of that area code. We believe, for example, that in areas subject to thousands- block number pooling, non- pooling carriers could receive numbering resources from a SO to relieve demand on the underlying code. Moreover, we agree with commenters that SOs should initially include non- pooling providers, such as wireless and paging providers, as well as non- geographic- based service providers, 201 who are also unable to 200 We agree that public opinion and the use of expanded overlays are factors in support of SOs. However, commenters fail to provide evidence, establishing that the public supports SOs, and in particular, that wireless subscribers support giving up their number in favor of implementing a SO (with take- backs). Commenters also fail to provide empirical data establishing that an expanded SO within a particular region would ensure that numbers would be used efficiently. Also, commenters fail to explain how state commissions would handle the exhaust of one of the underlying area codes encompassed by an expanded SO. 201 See, e. g., Ad Hoc Comments at 3; Connecticut Department of Public Utility Control Comments at 8; Illinois Commerce Commission Comments at 5. Non- geographic- based services include unified messaging services and (continued….) 37 Federal Communications Commission FCC 01- 362 38 participate in thousands- block number pooling. We specifically favor service- specific overlays that would include and retain non- geographic based services as a means to further reduce the demand in the underlying area code. State commissions seeking delegated authority to implement a SO should therefore provide specific information on which technologies and services will be placed in any proposed SO. 2. Geographic Area 83. A number of commenters support expanded SOs, i. e., SOs that cover multiple existing area codes. 202 The Ohio Commission suggests that the SO could cover entire regions within a state. Other commenters believe, on the other hand, that SOs should conform to existing area code boundaries. 203 The Connecticut Commission raises concerns about how expanded SOs would affect transition into an all- services overlay. 204 We find that SOs that cover more than one area code are superior from a numbering resource optimization perspective because they would reduce the demand for numbers in multiple area codes, and the increased number of subscribers included in the SO would lead to better utilization of numbering resources in the SO NPA. We also believe that service- specific overlays that include non- geographic based services may be ideal, from a numbering resource optimization perspective, if implemented across a wide geographic area, including multiple states and encourage states to work together to explore this option. Because we agree with concerns raised regarding routing and rating issues, however, state commissions proposing expanded SOs should address specifically how they will resolve such issues, especially the rating and routing of calls placed between the underlying area codes and the SO NPA. 3. Transitional SOs 84. As discussed in the Second Report and Order, the JWC provided a proposal to implement a framework for allowing SOs that would require a “transition” into an all- services overlay at a designated time. Recognizing the need for additional relief tools, we find that transitional overlays may provide some of the relief that proponents of SOs are seeking but limit the potentially discriminatory effects of creating a permanent SO. Moreover, because transitional SOs eventually include all providers, there is less danger of not being able eventually to utilize all of the numbers in a given SO NPA. We favor technology- specific overlays that are transitional primarily for this reason, and because they offer more flexibility, and thus more benefit. On the other hand, we favor service- specific overlays, particularly those that include non- geographic-based services, that are permanent in nature because they tend to preserve geographic identity. In addition, we note that there is significant support for transitional technology- specific overlays that are based on specific technologies, such as the ability to participate in thousands- block number (Continued from previous page) automobile- based services such as OnStar. Consumers of such services are likely unaware of, or have no preference for, where their number comes from. 202 See, e. g., Cingular Comments at 7; Illinois Commerce Commission Comments at 7; Ohio PUC Comments at 9, 10; WorldCom Comments at 4. 203 See, e. g., Connecticut Department of Public Utility Control Comments at 7; CTIA Comments at 7. 204 Connecticut Department of Public Utility Control Comments at 7. 38 Federal Communications Commission FCC 01- 362 39 pooling. 205 4. When to Implement and Transition SOs 85. Some commenters submit that states should not be allowed to implement SOs when the underlying NPA is near jeopardy. 206 BellSouth, for example, argues that the underlying NPA should have a life span of more than one year. 207 Verizon supports prohibiting the use of SOs when to do so would postpone full area code relief; when they would be utilized in areas outside of the top 100 MSAs; and if they would be implemented after November 24, 2002. 208 We believe that, to optimize their value, SOs should not be implemented when the underlying NPA has a projected life span of less than one year. 209 For transitional SOs, this time frame should allow consumers to experience the benefits of the transitional overlay before it converts into an all-services overlay. At the same time, we do not want to encourage states to open new NPAs prematurely. If this occurred, SOs could accelerate NANP exhaust rather than alleviate it. Therefore, we will generally not grant authority to create SOs until the state commissions have determined, in accordance with our rules and orders, that area code relief is needed. This will enable states to take advantage of pooling and other numbering resource optimization measures, in addition to the SO, to extend the life of the underlying NPA. 86. In the case of transitional SOs, generally most commenters support transition to an all-services overlay when the underlying area code nears exhaust or when wireless carriers are able to participate in thousands- block number pooling. 210 Regarding transitional SOs in which criteria other than pooling capability is used to determine which carriers are placed in the SO (e. g., a wireless only overlay), the exhaust trigger can conserve NPAs because, by making additional numbering resources available to those served by the underlying area code, additional area code relief can be delayed. It is likely that states would gain additional time to implement other numbering resource optimization measures, thereby potentially increasing the life of the underlying area code even further. If the pooling trigger is used, all transitional overlays would be scheduled to transition by November 24, 2002, the deadline for wireless carriers to pool. This deadline would, unlike the exhaust trigger, diminish the benefits of the transitional SOs, by, in effect, providing relief for the underlying area code prematurely. We therefore favor the exhaust 205 See, e. g., AT& T Corp. Comments at 5- 8; BellSouth Comments at 3, 10; Cingular Comments at 6- 8; PCIA Comments at 7, 8; Verizon Wireless Reply Comments at 3; VoiceStream Comments at 3- 5. 206 See, e. g., ALTS Comments at 5; BellSouth Comments at 5; Cingular Comments at 7. 207 BellSouth Comments at 5- 6. 208 Verizon Comments at 7. 209 We acknowledge that in some instances, such as when a state already scheduled area code relief and can demonstrate the benefits of implementing a transitional SO in lieu of an all- services overlay, a SO may be appropriate. See generally, Connecticut Petition . 210 See, e. g., ALTS Comments at 6 (supporting transition on November 24, 2002); BellSouth Comments at 7; Connecticut Department of Public Utility Control Comments at 8 (transition should occur when underlying NPA nears exhaust); PCIA Comments at 9; Verizon Wireless Comments at 11; VoiceStream Comments at 7. 39 Federal Communications Commission FCC 01- 362 40 trigger in cases where criteria other than pooling capability is used to determine which carriers are placed in the SO. 87. In the case of transitional SOs for non- pooling capable carriers, we find that there are arguments in favor of transitioning into an all- services overlay when carriers currently unable to participate in thousands- block number pooling become pooling capable. The benefits of number pooling are enhanced when a larger number of carriers are able to participate in pooling within an NPA, which diminishes the need to restrict access to the SO to a subset of users of numbering resources. At the same time, we recognize that because of the significant demand for wireless services in some areas, there are arguments that the effectiveness of some SOs can be increased if wireless carriers continue to be included in SOs even after they are able to participate in thousands- block number pooling. 211 Therefore, if state commissions propose a transitional SO that segregates non- pooling carriers into the SO NPA, they bear the burden of demonstrating why the transition should not occur when wireless participation in pooling commences. State commissions should, in all instances, indicate which of these transition triggers they propose to use, and explain how the proposed transition mechanism meets our numbering resource optimization goals and equitably balances the interests of affected carriers and consumers in their proposal for transitioning SOs to all services overlays. 5. Take- Backs 88. Most commenters oppose mandatory take- backs, 212 with several commenters arguing that take- backs are anti- competitive to those technologies and service providers that receive numbering resources from the SO NPA. 213 Take- backs require certain providers to reprogram their equipment and change their customers’ phone numbers. 214 Thus, take- backs result in significant cost and inconvenience to those customers and their service providers that are required to relinquish their existing numbers and use numbering resources in the SO NPA. If take- backs were imposed in the context of a wireless services technology- specific overlay, for example, the costs would be particularly significant due to the large and rapidly growing number of wireless 211 This approach could help to ensure that the demand for numbering resources in the underlying NPA is not affected by an increase in the demand for wireless services, while increasing the likelihood that the SO is not underutilized. 212 See, e. g., AT& T Wireless Comments at 6; BellSouth Comments at 8; Cingular at 6; CTIA Comments at 7; Illinois Commerce Commission Comments at 5; Ohio PUC Comments at 8- 9; PCIA Comments at 8; Verizon Comments at 8; VoiceStream Comments at 6. 213 See, e. g., AT& T Wireless Comments at 6; Illinois Commerce Commission Comments at 5; Ohio PUC Comments at 8- 9; Verizon Wireless Comments at 8; VoiceStream Comments at 5- 6. Other commenters support take- backs only under certain circumstances. For example, the Connecticut Department of Public Utility Control supports take- backs, but only for unopened NXX codes, and Cox supports take- backs only for certain service providers such as point- of- service technologies that have little impact on the public. Connecticut Department of Public Utility Control Comments at 6; Cox Comments at 4- 5. 214 However, as Ad Hoc notes, wireline providers and their subscribers experience the cost and inconvenience of take- backs when a geographic split occurs. See Ad Hoc Comments at 4. 40 Federal Communications Commission FCC 01- 362 41 subscribers, particularly in major markets. 215 We acknowledge, therefore, that take- backs have significant drawbacks and costs, which need to be considered in determining whether a SO should include take- backs. 89. We decline to impose a blanket prohibition against take- backs, however. In some instances, the use of take- backs may enhance the effectiveness of SOs, from a numbering resource optimization perspective, by freeing up numbering resources in the underlying area code. Take-backs could increase the life of the underlying NPA, which, in turn, would preserve the geographic identity of a given area. Conversely, creating SOs without freeing up numbering resources in the underlying area code may not provide meaningful benefits because the life of the underlying NPA would not likely be significantly prolonged. 216 There may also be instances in which the impact of take- backs on consumers can be mitigated either through voluntary incentives for consumers to relinquish their numbers or by limiting take- backs to services or technologies in which the telephone number is not directly used by or even necessarily known to the customer. 217 90. Therefore, although we do not favor take- backs as a matter of policy, we do not completely rule out the possibility of states using take- backs under circumstances designed to mitigate their potential harmful effects. Specifically, we would likely favor service- specific overlays that include take- backs of non- geographic- based numbers, but we would likely oppose technology- specific overlays that would include take- backs of numbers that are geographically sensitive. To ensure that the costs and benefits of take- backs are given careful consideration, we will require state commissions proposing to use take- backs include a strong showing that the consumer and industry costs associated with take- backs are outweighed by the optimization benefits of the take- backs. In their petitions, state commissions seeking to use take- backs would have to specifically demonstrate that the negative effects of take- backs will be mitigated by the benefits in the particular area by showing, for example, that: (1) consumers, particularly subscribers that would be required to relinquish their telephone numbers, support such a measure; 218 (2) the state will provide incentives for providers and their current customers to relinquish their numbers in the underlying area code; and (3) a phased- in approach will help ease the cost burden on customers and service providers. 215 According to data set forth by the CTIA, wireless subscribership has more than tripled since 1995. See FCC, Common Carrier Bureau, Industry Analysis Division, Trends in Telephone Service, Table 12.2 (as reported by the CTIA) (Aug. 2001). This report is available at . See also Cahners In- Stat Group Expects 32% Increase in Wireless Phone Use by Corporate Employees by 2000, Press Release (Oct. 5, 1998). This document is available at . 216 It could be argued, however, that there would be some limited benefit because the demand for additional numbering resources in the underlying NPA would be reduced. 217 Examples of services where the telephone number is not necessarily known or used directly by the customer include atms, fax machines, and j- fax. 218 Evidence of strong consumer support would weigh in favor of allowing take- backs, because consumers, especially wireless consumers, would be the primary group to be negatively impacted. 41 Federal Communications Commission FCC 01- 362 42 6. Ten- Digit Dialing 91. In the Second Report and Order, we asked commenters whether ten- digit dialing should be imposed for transitional SOs. 219 The JWC proposed a waiver of ten- digit dialing until either the transitional SO transformed into an all- services overlay or November 24, 2002. In response, most, but not all, commenters agree with JWC’s proposal. CTIA, for example, states that any waiver of the ten- digit dialing requirement should cease when the pooling administrator receives NXX codes from the new NPA or when wireless pooling commences, whichever comes first. 220 A number of state commissions do not support ten- digit dialing, 221 and the Connecticut Commission only supports ten- digit dialing once competition is demonstrated between wireline and wireless providers and the transitional SO has been converted into an all- services overlay. 222 92. Because we continue to believe that ubiquitous ten- digit dialing when an overlay is implemented would maximize numbering resource optimization, 223 we favor SO proposals that include ten- digit dialing in the SO NPA as well as the underlying area code, in the same manner that ten- digit dialing is required when all- services overlays are implemented. Mandatory ten- digit dialing, we believe, minimizes anti- competitive effects due to dialing disparities, which, in turn, avoids customer confusion. 224 We, nevertheless, will not necessarily require ten- digit dialing with SOs at this time, at least not until we are better able to determine whether a temporary waiver of the ten- digit dialing requirement in any way increases the use and effectiveness of SOs. We emphasize that, although temporary waivers might be warranted, it is not likely that requests for permanent waiver of the ten- digit dialing requirement, especially after a transitional SO is expanded to include all services, will be granted. State commissions seeking a waiver of the ten-digit dialing requirement should clearly indicate when any requested waiver would terminate. 7. Rationing 93. Rationing is a number conservation measure that limits the amount of numbering resources made available for allocation to carriers in a given area, in accordance with an industry-implemented or state- implemented rationing plan. 225 Rationing may be implemented pursuant to a 219 See Second Report and Order, 16 FCC Rcd at 365, para. 137. 220 CTIA Comments at 8. 221 See, e. g., Michigan PSC Comments at 2; New York State Department of Public Service Comments at 2; State Coordination Group Outline at 1. 222 Connecticut Department of Public Utility Control Comments at 10. 223 We note that the U. S. Court of Appeals recently affirmed the Commission’s authority to require ten- digit dialing when an all- services overlay is implemented. See People of the State of New York et al. v. Federal Communications Commission, Docket No. 99- 4205 (2 nd Cir. 2001). 224 See Local Competition Second Report and Order, 11 FCC Rcd at 19518- 19, para. 287. 225 See, e. g., Petition for Declaratory Ruling and Request for Expedited Action on July 15, 1997 Order of the Pennsylvania Public Utility Commission Regarding Area Codes 412, 610, 215, and 717, Memorandum Opinion (continued….) 42 Federal Communications Commission FCC 01- 362 43 declaration by the NANPA that a jeopardy situation exists, which means that the underlying area code is projected to exhaust before the new area code is scheduled to be implemented. 226 Some state commissions have been delegated authority to continue an established rationing plan for six months after the new area code is activated. 227 A number of commenters agree with the JWC that rationing in the underlying area code should cease upon implementation of the transitional SO, 228 and that rationing should not occur in the transitional SO once it is established. 229 We find that any SO that achieves the purposes for which it is implemented (that is, the availability of numbering resources is increased for all carriers), should not need to be subject to rationing. Thus, we agree with commenters that neither the SO NPA nor the underlying area code( s) should be subject to rationing. 8. Thousands- Block Number Pooling 94. Most commenters argue that SOs should only be implemented in areas where thousands- block number pooling has been implemented. We disagree. We encourage states to use the numbering optimization measures available to them, but for area codes that do not qualify for pooling, implementing a SO may still be a viable option, particularly if non- pooling providers possess a significant portion of the underlying area code’s numbering resources. Thus, SOs will be allowed in non- pooling areas provided the state commissions can justify the SO based on the criteria set forth in this Order. In particular, we will closely scrutinize any plans for SOs in non-pooling area codes to ensure that number utilization is sufficiently high. Also, the Commission will look favorably upon petitions from state commissions pursuing other numbering optimization measures in the underlying area code, such as rate center consolidation and unassigned number porting, and recommends that such measures be noted in their petitions. We also clarify that, as with all- services overlays, pooling must be implemented in the SOs if it covers an area in which pooling is taking place. (Continued from previous page) and Order and Order on Reconsideration, 13 FCC Rcd at 19025- 19027, paras. 23- 26; see also Central Office Code (NXX) Assignment Guidelines (95- 0407- 008), § 9.0, September 2001, available at . 226 See id. 227 Currently, several states have authority to continue rationing in both the overlay area code and the underlying area code for a period of six months after area code relief is implemented. See, e. g., Numbering Resource Optimization, Order, 16 FCC Rcd 15842, 15857- 15858, paras. 39- 42 (2001) (delegating authority to the Michigan Public Service Commission); Numbering Resource Optimization, Order, 16 FCC Rcd 5474, 5490- 5491, paras. 37- 38 (2001) (delegating authority to the West Virginia Public Service Commission); Florida Public Service Commission Petition for Expedited Decision for Grant of Authority to Implement Number Conservation Measures, Order, 14 FCC Rcd 17506, 17517- 17518, paras. 25- 28 (1999). 228 See, e. g., BellSouth Comments at 10; CTIA Comments at 9. 229 WorldCom Comments at 3. 43 Federal Communications Commission FCC 01- 362 44 VI. OTHER NUMBERING RESOURCE OPTIMIZATION MEASURES A. Audits 1. Enforcement 95. In the Second Report and Order, the Commission set forth a comprehensive audit program to verify carrier compliance with federal rules and orders and industry guidelines, 230 and concluded that auditors in the Accounting Safeguards Division of the Common Carrier Bureau, or other Commission designated agents, would perform the audits. 231 The Commission also stated that carriers found to be in violation of our requirements may be subject to possible enforcement action, which may include monetary forfeitures, revocation of interstate operating authority and cease and desist orders. 232 96. In addition to our traditional enforcement tools, the Commission tentatively concluded that carriers that violate its numbering requirements, or that fail to cooperate with the auditor to conduct either a “for cause” or random audit, should also be denied numbering resources in certain instances, and sought comment on this tentative conclusion. It also sought comment on the process by which this additional remedy should be invoked; specifically, whether only the Commission should direct the NANPA or Pooling Administrator to withhold numbering resources. 233 97. We conclude that carriers that are audited and found to have violated our numbering requirements, or that fail to cooperate with the auditor to conduct either a “for cause” or random audit, may be denied numbering resources in appropriate cases. State and industry commenters generally support this conclusion. 234 In their comments, state commissions indicate a growing need for additional penalties for, in particular, carriers that fail to file Numbering Resource Utilization Forecast (NRUF) data because they do not anticipate a need for numbering resources in the near future. 235 Additional penalties may include reclamation of numbering resources, depending on the nature of the violation. By also reaching carriers that fail to cooperate with auditing efforts, we hope to increase the effectiveness of our auditing program. 230 Second Report and Order, 16 FCC Rcd at 344- 50, paras. 81- 99. 231 Id. at 347, para. 90. 232 Id. at 349, para. 96. 233 The Commission noted that section 220( f) bars public release of audit findings by a member, officer, or employee of the Commission except as directed by the Commission or court. 47 U. S. C. § 220( f). 234 See, e. g., ALTS Comments at 14; California PUC Comments at 10- 11; Cingular Wireless Comments at 17- 19; Connecticut Department of Public Utility Control Comments at 3- 4; Maine PUC Comments at 5- 6; Maryland PSC Comments at 2; Michigan PSC Comments at 6; NASUCA Comments at 32- 33; New Hampshire PUC Comments at 1; Ohio PUC Comments at 22; Pennsylvania PUC Comments at 1. 235 That is, unless they need numbering resources there is no incentive for these carriers to file NRUF reports because currently the only penalty is denial of resources until the data is filed. See, e. g., Maine PUC Comments at 1; Maryland PSC Comments at 2; New Hampshire PUC Comments at 1. 44 Federal Communications Commission FCC 01- 362 45 98. We further conclude that, to invoke this additional remedy, only the Commission, specifically the Common Carrier Bureau and the Enforcement Bureau, shall direct the NANPA or National Pooling Administrator to withhold numbering resources from carriers for audit- related violations. 236 We decline, at this time, to delegate authority to state commissions or the NANPA to determine when a carrier shall be liable under this provision, primarily to ensure that this remedy is invoked uniformly. We encourage state commissions and the NANPA to work with the Commission to identify violators and target them for enforcement. We also confine the authority to deny numbering resources to the Commission to limit the release of proprietary information contained in audit findings only to those entities that need it to determine compliance with the rules and audit procedures, and to determine liability. 2. State Commissions’ Authority to Conduct Audits 99. In the Second Report and Order, the Commission determined that the audit program would consist of “for cause” and random audits, performed by an auditor designated by the Common Carrier Bureau. 237 Although the Commission recognized that a national program will provide uniformity in the way that audits are conducted, it also recognized that state commissions would benefit from having a role in conducting these carrier audits. 238 The Commission therefore sought comment on whether state commissions should be given independent authority to conduct “for cause” and random audits in lieu of or in addition to the national audit program established in the Second Further Notice, and what parameters should apply to any such authority. 239 In particular, commenters were asked to address concerns about state commissions employing different standards in performing “for cause” and random audits that might force carriers operating in multiple states to comply with different demands. 240 In seeking comment on this issue, the Commission did not address state commissions’ authority to perform audits under state law. 241 100. Comments by state commissions generally support giving authority to conduct audits in addition to, but not in lieu of, the national audit program. 242 Many contend that state level and national level audit results could and should be shared, possibly by incorporating state 236 NANPA shall continue to withhold numbering resources from carriers who fail to comply with the mandatory reporting requirements. First Report and Order, 15 FCC Rcd at 7609, para. 84. 237 Second Report and Order, 16 FCC Rcd at 344- 50, paras. 81- 99. 238 Id. at 347, para. 92. 239 Id. at 370, para. 155. 240 Id. 241 Id. 242 See, e. g., Connecticut Department of Public Utility Control Comments at 13; New Hampshire PUC Comments at 6; New York State DPS Comments at 6; Pennsylvania PUC Comments at 7; but see Ohio PUC Comments at 24. 45 Federal Communications Commission FCC 01- 362 46 results into a national audit and vice versa. 243 Several industry commenters, on the other hand, do not support giving states authority in addition to or in lieu of the national audit program. AT& T, for example, argues that the audits conducted by the states would have the same objective as the national audit plan, thus negating any reason to empower more than one body. 244 In addition, some industry commenters indicate that the Commission has already taken appropriate steps to ensure an adequate level of state participation in its audit program. 245 101. The Commission values input from the states and considers coordination with them to be vitally important to advancing our shared policy goals of administering numbering resources efficiently. We reaffirm that states continue to have authority to conduct audits to the extent permitted under state law. Moreover, in recognition that states can serve a valuable role in helping the Commission to monitor carriers’ number use, we clarify that states may conduct audits, at their own expense, to determine whether a particular carrier is in compliance with the Commission’s numbering rules to discharge their own responsibilities. For example, state audits that seek to gather information needed to facilitate area code relief decisions would be appropriate to the extent that the information sought is not available through another source, such as NRUF data reports. 246 This ability, coupled with the states’ right to request “for cause” audits under the national auditing program, should provide states with sufficient and effective tools for carrying out their area code relief responsibilities. We expect that state commissions will not conduct audits that are duplicative of our national audits or that request information readily available from other sources. This should alleviate concerns by the industry that state audits would serve the same purpose as Commission audits. 247 102. Pursuant to long- standing delegated authority, we expect the Commission audit staff to cooperate with state commissions by coordinating compliance and enforcement activities and sharing information gathered in the course of audits under the national audit program. 248 We expect, for example, to share with the requesting state the audit results arising out of any “for 243 See, e. g., California PUC Comments at 11; Connecticut Department of Public Utility Control Comments at 3- 4; Maine PUC Comments at 1; Maryland PSC Comments at 2; New Hampshire PUC Comments at 1; Texas PUC Comments at 14. 244 AT& T Comments at 14- 15. 245 See, e. g., ALTS Comments at 14- 15; BellSouth Comments at 21; Cingular Comments at 19- 20. 246 See, e. g., California Public Utilities Commission Telecommunications Division, Report on the 619 Area Code, March 13, 2001. 247 AT& T Comments at 14- 15. 248 See 47 C. F. R. § 0.291( b). To improve operating and administrative efficiency, the Commission delegated authority to the Common Carrier Bureau to coordinate compliance and enforcement activities with state commissions when: (i) there is a shared policy interest, and (ii) the states have processes for protecting confidential information. Amendment of Parts 0, 1, and 64 of the Commission’s Rules with Respect to Delegation of Authority to the Chief, Common Carrier Bureau, Report and Order, 5 FCC Rcd 4601 (1990); Delegation of Authority to the Chief, Common Carrier Bureau, Memorandum Opinion and Order, 50 Fed. Reg. 18487- 03 (1985), on reconsideration, 104 F2d 733 (1986). 46 Federal Communications Commission FCC 01- 362 47 cause” audits requested by a state commission. We encourage states believing audits are required in certain circumstances to request “for cause” audits by making a written request to the Commission. 249 3. Petitions for Reconsideration and Clarification 103. On March 12, 2001, BellSouth, Qwest, Sprint and USTA each filed a Petition for Reconsideration and/ or Clarification requesting that the Commission reconsider certain aspects of its decision requiring audits. First, Qwest requests that the Commission reconsider its decision to require random audits as part of its national audit program and that it give carriers the opportunity to rebut a case for a “for cause” audit. 250 Second, BellSouth requests that the Commission reconsider its decision that all carriers share the costs incurred to conduct “for cause” audits. 251 Similarly, USTA requests that audits should be paid for by carriers participating in the audits. 252 Finally, Sprint requests clarification regarding state’s independent authority under state law to conduct number utilization audits. 253 104. Random Audits. In the Second Report and Order, the Commission concluded that because “for cause” audits are conducted only if there are specific allegations of non- compliant or inappropriate conduct on the part of a carrier, carrier compliance with our rules and orders and applicable industry guidelines should also be monitored through the use of random audits. 254 The Commission found that random audits, in conjunction with the use of “for cause” audits, would provide the audit program with more flexibility to accomplish the stated goals, and would serve as a strong deterrent. 255 Qwest argues that including random audits as part of our audit program is unsound regulatory policy. 256 Qwest explains that promulgating rules and expecting compliance is the general regulatory model that has worked for decades, 257 and contends that it is simply unnecessary to promulgate rules then create regulation to monitor their enforcement. 258 105. We find Qwest’s arguments unpersuasive. The auditing program was established not only to monitor, but also to identify and correct violations of our rules and orders and 249 Id. at 345, para. 87. 250 Qwest Petition at 2. 251 BellSouth Petition at 15- 16. 252 USTA Petition at 7. 253 Sprint Petition at 12- 14. This request has been addressed in the previous section. See supra at para. 99- 102. 254 Second Report and Order, 16 FCC Rcd at 346, para. 88. 255 Id. 256 Qwest Petition at 6. 257 Id. 258 Id. at 6- 7. 47 Federal Communications Commission FCC 01- 362 48 applicable industry guidelines. As noted in the Second Report and Order, the program can serve to provide a level of confidence in the accuracy of data reported by carriers; 259 ensure that carriers are complying with our rules by serving as a deterrent against non- compliance; 260 and allow us to identify inefficiencies in the manner in which carriers use numbers, such as excessive use of certain categories of numbers such as administrative, aging, or intermediate numbers. We therefore deny Qwest’s petition, and retain random audits as part of our national audit program. 106. Carrier Opportunity to Rebut. The Commission concluded in the Second Report and Order that “for cause” audits may be initiated based on information drawn from a variety of sources. 261 Specifically, the NANPA, the Pooling Administrator, or a state commission may make a written request to the Common Carrier Bureau to request a “for cause” audit. 262 The request should state the reason for which a “for cause” audit is being requested and include documentation of the alleged anomaly, inconsistency, or violation of the Commission rules or orders or applicable industry guidelines. 263 The audit staff will determine from the application whether a “for cause” audit is warranted. 264 Qwest accurately points out that the discussion did not address a carrier’s ability to rebut the prima facie case that would trigger an audit. 265 107. We clarify that, although not stated explicitly, the audit program does, in fact, allow carriers to respond to the allegations before any enforcement action is taken as a result of audit findings. We also clarify that requests for a “for cause” should be submitted to the Common Carrier Bureau and the Enforcement Bureau. Once the Bureaus have received a request for a “for cause” audit, the carrier will be notified of that request and be given up to 30 days to respond to the allegation( s). This notification may involve a data request from the Commission staff and the carrier’s response may result in a decision not to proceed with the requested “for cause” audit. If the carrier’s response indicates that the alleged violation exists but will be corrected, then the Commission staff can allow the carrier up to 60 days to comply before performing the audit. We note that the Common Carrier Bureau will issue a Public Notice providing additional information on the audit plan shortly. 108. Consistent with standard auditing practices, we expect that the audit process will afford carriers ample opportunity to present their views during the audit, even beyond commenting on an initial allegation or request to conduct a 'for cause' audit. We direct state commissions conducting numbering related carrier audits, in accordance with the parameters set forth herein, to provide carriers the same opportunity to explain their views and/ or rebut audit 259 Second Report and Order, 16 FCC Rcd at 344, para. 83. 260 Id. 261 Id. at 345, para. 86. 262 Id. at 345, para. 87. 263 Id. at 345- 46, para. 87. 264 Id. at 346, para. 87. 265 Qwest Petition at 7. 48 Federal Communications Commission FCC 01- 362 49 findings. Finally, we note that an audit report itself does not constitute a legal determination of compliance or noncompliance. That determination is reserved for the Commission, and we expect to consider the audited carrier's views in making such judgments. 109. Auditing Costs. In the Second Report and Order, the Commission concluded that the costs associated with our comprehensive auditing program are numbering administration costs, and, as such, they should be borne by all telecommunications carriers on a competitively neutral basis, as required by section 251( e)( 2) of the Act. 266 In the case of “for cause” audits, BellSouth contends that since these audits will be conducted only if there is an alleged violation of the Commission’s rules, the arrangement for auditing costs is unfair to carriers not subject to the “for cause” audit. 267 BellSouth encourages the Commission to adopt a policy whereby the costs for a “for cause” audit are borne by the carrier subject to that audit, while the costs for random audits are shared by all carriers. 268 110. In its request that the Commission reconsider the allocation of auditing costs, USTA’s stated concern is that the Commission’s policy regarding these costs provides funding that is unchecked and could result in unnecessary audits. 269 USTA encourages the Commission to maintain the policy whereby carriers that are subject to the audits, not the industry as a whole, pay for audits conducted under the Commission’s auspices. 270 To the extent it requires carriers subject to random audits to bear the costs of such audit, KMC Telecom, Inc. (KMC) opposes USTA’s request. 271 PCIA also opposes USTA’s request, stating that the use of the NBANC fund is the clear method of assuring competitive neutrality. 272 USTA’s response to the objections indicate that the Commission’s concern that costs are recovered on a competitively neutral basis is seemingly satisfied by recovering costs related to work performed by designated agents through the NBANC fund and thus including auditing costs for numbering in the Commission’s fee schedule violates no statutory restriction. 273 111. We are not persuaded that the costs for audits should not be borne by all telecommunications carriers on a competitively neutral basis as required by section 251( e)( 2). Auditing has general deterrent effects which benefits all carriers by improving the efficiency with which numbering resources are used, and thus, increasing the availability of numbering resources. 266 Second Report and Order, 16 FCC Rcd at 349, para. 98. 267 BellSouth Petition at 15. 268 Id. at 15- 16. 269 USTA Petition at 7. 270 Id. 271 See KMC Opposition at 2 (concluding that such a requirement would be unfair because these carriers are not suspected of violating the Commission’s rules regarding numbering). 272 PCIA Opposition at 2. 273 USTA Reply at 1- 2. 49 Federal Communications Commission FCC 01- 362 50 As such, all carriers should bear the costs of auditing, whether random or “for cause.” 274 Moreover, individual carriers subject to “for cause” audits bear additional individual costs to comply that are not attributed to all carriers. Therefore, we believe at this time that all auditing costs are properly borne by all carriers. B. Reserved Numbers 1. Reconsideration of Reservation Period 112. In the First Report and Order, the Commission concluded that reserved numbers, defined as numbers held by service providers at the request of specific end use customers for their future use, may be held in reserve status for a maximum of 45 days. 275 In petitions for reconsideration 276 of the First Report and Order, as well as numerous ex partes, 277 several parties asserted that the 45- day reservation period is a major departure from current business practices and should be increased to enable them to meet specific customer needs. 113. In the Second Report and Order, the Commission concluded that the maximum period for reserving numbers should be increased to 180 days, 278 and sought comment on the NANC’s proposal to allow unlimited reservations on a month- to- month basis in exchange for a fee. 279 The Commission also stated that if a reservation extension fee is mandated in the future, it will reconsider whether the 180- day period remains appropriate. The commenters in this proceeding are fairly evenly split on the issue of extending reservation periods. A number of carriers support extended or unlimited number reservations for a fee. 280 Many of the state commissions and consumer associations, however, oppose extending reservations for a fee and do 274 These additional costs should not be viewed as punitive in nature, however, since the initiation of an audit is not necessarily an indication that a carrier has done something wrong. The purpose of an audit is not to punish the carrier by imposing additional costs on the carriers that are audited. 275 First Report and Order, 15 FCC Rcd at 7587- 88, paras. 22- 23. 276 See, e. g., AT& T Petition for Reconsideration of First Report and Order; SBC Petition for Reconsideration and Clarification of First Report and Order; Qwest Petition for Reconsideration of First Report and Order. 277 See, e. g., Letter from Don Melton, Director, State of Arkansas Department of Information Services, to FCC, dated July 21, 2000; Letter from Kathleen B. Levitz, BellSouth, to Magalie Roman Salas, FCC, dated August 25, 2000; Letter from Glen Whitmer, Assistant Director, Computing and Communicating Services Office, University of Illinois, Urbana- Champaign, to FCC, dated August 14, 2000. 278 Second Report and Order, 16 FCC Rcd at 355- 56, para. 114. 279 Id. at 369, para. 152. 280 See BellSouth Comments at 20; Cox Comments at 20; Qwest Comments at 5- 6; Verizon Commenrs at 3- 4; Winstar Comments at 6; WorldCom Comments at 11. 50 Federal Communications Commission FCC 01- 362 51 not believe the current 180- day policy should be altered. 281 114. We reaffirm that the 180- day reservation period is sufficient, for the same reasons we discussed in the Second Report and Order, and should remain in place. Although they have generally alleged that the 180- day period is insufficient, carriers have not demonstrated or persuasively argued that 180 days is insufficient to accommodate most customer requirements, or how a longer reservation period might be compatible with our number conservation efforts. 2. Fee for Reserved Numbers 115. In addition to the issue of whether the maximum reservation period should be extended and whether to allow extensions, in the Second Further Notice, the Commission sought further comment on the NANC’s proposal to allow unlimited reservations of numbers on a month- to- month basis. 282 The Commission noted in the Second Further Notice the NANC’s recommendation that a fee for extensions be established. Specifically, the NANC proposed that the fee be paid by end users, and the Commission sought comment on whether imposing a fee on end users would provide the appropriate incentives in this context. Alternatively, the Commission sought comment on whether charging a fee to carriers would provide more appropriate incentives for number use. 283 116. Several commentaries believe that the current 180- day reservation period will be sufficient for most customers and that reservation fees are not appropriate at this time. 284 Focal Communications states that a new requirement for fees would fall most heavily on new entrants that are already having a difficult time obtaining capital. Thus, a reservation fee system could harm new entrants’ ability to compete in the market. 285 Reservations fees also may promote the hoarding of numbers. NASUCA states that reservations fees may have the unintended effect of accelerating number depletion if carriers with greater financial resources buy up quantities of numbers for future use. 286 New York also believes that a fee will not protect against hoarding and that some entities may be willing to lock up numbers although they have no intention of putting 281 See Ad Hoc Comments at 24; NASUCA Coments at 25- 31; New York State Department of Public Service Comments at 4- 5; Ohio PUC Comments at 21- 22; SBC Comments at 12; State Coordination Group Comments at 5- 6; Verizon Wireless Comments at 33- 34. 282 See Letter from John Hoffman, Chairman, North American Numbering Council, to Dorothy Attwood, Chief, Common Carrier Bureau, dated September 20, 2000. 283 See Second Report and Order, 16 FCC Rcd at 369, para. 152. 284 See Ad Hoc Comments at 23; SBC Comments at 11- 12; Connecticut Department of Public Utility Control Comments at 3; Verizon Wireless Comments at 33; Focal Communications Comments at 5; Ohio PUC Comments at 21. Although ALTS supports the use of reservation fees, it notes that the 180- day reservation period should be sufficient for most customers. See ALTS Comments at 12. 285 Focal Communications Comments at 5- 6. 286 NASUCA Comments at 23. 51 Federal Communications Commission FCC 01- 362 52 the numbers in service. 287 117. Several commenters, however, support the proposal for charging a reservation fee for numbers. 288 WinStar, for example, states that a number reservation fee would decrease the quantity of numbers held in reserve, while meeting the needs of users who have a legitimate reason to reserve numbers. 289 WinStar also states that there is no incentive for carriers to abuse extensions. 290 WorldCom also believes that reservation fees may deter needless or fraudulent reservations. 291 118. We conclude that a reservation fee would be too administratively burdensome to generate any significant benefit, especially in light of the fact that there is, most likely, no benefit from a numbering optimization perspective. 292 We agree with commenters that do not believe charging fees will help conserve numbers. 293 Rather, such a fee may promote the hoarding of numbers by “well- heeled” carriers and would thus have the unintended effect of accelerating the depletion of numbers by carriers with greater financial resources. 294 Therefore, we find that a reservation fee may undermine our conservation efforts. Accordingly, we decline to establish a fee structure to enable carriers to extend the 180- day reservation period. 3. Clarification of Numbers Used for Intermittent or Cyclical Purposes 119. Numbers used for intermittent purposes are numbers designated for use by a particular customer that may be “working” in the Public Switched Telephone Network (PSTN) periodically, but that remain designated for the customer’s use even if they are not “working.” 287 New York State Department of Public Service Comments at 5. 288 See ALTS Comments at 12; BellSouth Comments at 20; Cox Comments at 10; Verizon Comments at 3– 4; Winstar Comments at 6. Although Verizon has generally opposed charging fees for the use of reservation of telephone number, it also believes that some customers have legitimate needs to reserve numbers for more time that is permitted by the rules. Given the choice of no fees with 180- day reservation limits, or charging fees for longer reservation periods, Verizon would support the NANC proposal to allow carriers to maintain a fee for reservations. Verizon, however supports extending the reservation period to one year. Verizon Comments at 3; Winstar Comments at 6; WorldCom Comments at 11. 289 See Winstar Comments at 6. 290 Id. 291 See WorldCom Comments at 11. 292 For example, we would have to determine, among other things, whether carriers or end users would pay the fee; for what purposes the money collected would be used; what amount should be charged; whether and how to limit the extent of reservation, or whether they could be indefinite. 293 See, et al, Connecticut Department of Public Utility Control Comments at 3; NASUCA Comments at 29; New Hampshire PUC Comments at 1- 2; New York State Department of Public Service Comments at 5; State Coordination Group Comments at 5. 294 See supra at para. 110. 52 Federal Communications Commission FCC 01- 362 53 These may include numbers contained in blocks assigned to Centrex or Private Branch Exchange (PBX) users, or to large corporations that require an inventory of spare numbers to accommodate internal usage on short notice. These customers typically use all or a portion of a block of numbers at any given time. Numbers used for cyclical purposes are numbers designated for use that are typically “working” for regular intervals of time. Customers with numbers used for cyclical purposes typically wish to retain the same number even when the numbers are not “working.” A customer’s summer home telephone number that is in service for six months out of the year, or a college student’s telephone number that is in service only for the school year, are examples of numbers used for cyclical purposes. 120. On our own motion, we now clarify that numbers used for intermittent or cyclical purposes should not be categorized as reserved numbers for NRUF reporting purposes. To the extent that these numbers are “working,” they would be categorized as assigned numbers. 295 It is less clear how these numbers must be categorized when they are not “working.” In reviewing the record in the proceeding, certain commenters appear to presume that intermittent and cyclical should be categorized as “reserved.” The Association for Telecommunications Professionals in Higher Education (ACUTA), for example, believes that colleges and universities should not be subject to any limitation on reserving blocks of numbers due to the unique way in which they utilize numbers. 296 Specifically, ACUTA explains that colleges and universities need to hold blocks of numbers beyond the 180- day maximum period for reserving numbers in order to provide students with the same number throughout their stay at the college or university. 297 In addition, ACUTA explains that the 180- day reservation period fails to address the needs of higher education institutions to retain all numbers within NXX codes in order to achieve public safety 298 and educational objectives. 299 Thus, ACUTA believes that if colleges and universities are forced to return inactive numbers within an NXX code after 180 days, these important needs will be compromised. 300 121. Our purpose in establishing reserved numbers and limiting the reservation period is 295 First Report and Order, 15 FCC Rcd at 7585, para. 16. 296 ACUTA Comments at 4. 297 Id. at 6. 298 On many campuses, the association between numbers and dormitory rooms allows for calling locations to be identifed in order to facilitate implementation of E911 systems. This speeds access to emergency services, including fire, police, and medical staff. See ACUTA Comments at 6- 7. 299 Id. at 6. According to ACUTA, colleges and universities use reserved numbers to: hold numbers for students or rooms while the student is absent, or rooms are empty during summer breaks or semesters abroad; retain abbreviated dialing patterns between staff, students, and faculty offices and rooms for safety administrative purposes; assign specific features and capabilities only to blocks of numbers; assist campus telecommunications professionals in administering billing of telecommunications services to specific user groups; and, preserve a sense of community and identity through the unique NXX code that becomes associated with a campus or university system. 300 Id. 53 Federal Communications Commission FCC 01- 362 54 to allow carriers the ability to set aside numbers for specific customers’ use in the near term. We did not intend, however, to limit carriers’ ability to maintain the same telephone number or block of numbers for customers that activate service to particular lines on an intermittent or cyclical basis. Accordingly, we clarify that numbers assigned to specific end user customers for intermittent or cyclical use should not be categorized as reserved numbers. 122. Although we believe that customers with numbers used for intermittent or cyclical purposes should not be subject to losing these numbers when they are turned off for short periods of time, we are concerned that some of these numbers that remain unused indefinitely could be used to provide service to other customers. We therefore clarify that numbers contained in blocks assigned for use in Centrex or PBX systems may be categorized as assigned numbers by reporting carriers, to the extent that fifty percent (50%) or more of such numbers are “working” at all times. 301 With this requirement, we seek to limit the amount of numbers that are set aside for use by a particular customer, but are not being used to provide service on a regular basis. Thus, in order to categorize such blocks of numbers as assigned numbers, carriers may have to decrease the amount numbers set aside for a particular customer. We also clarify that numbers “working” periodically for regular intervals of time, such as numbers assigned to summer homes or student residences, may be categorized as assigned numbers, to the extent that they are “working” for a minimum of 90 days during each calendar year in which they are assigned to a particular customer. Any numbers used for intermittent or cyclical purposes that do not meet these requirements may not be categorized as assigned numbers, and must be made available for use by other customers. We believe these limitations on the definitions of assigned numbers strike an appropriate balance between carriers’ legitimate need to provide numbers for intermittent or cyclical use to their customers, and our responsibility to ensure that scarce numbering resources do not lie fallow. C. Clarification of Top 100 MSAs 123. The 1996 Act requires LECs to offer, "to the extent technically feasible, number portability in accordance with requirements prescribed by the FCC.” 302 The Commission required wireline carriers in the largest 100 MSAs to offer LNP pursuant to a phased implementation schedule spread over five quarters, which ended on December 31, 1998. 303 Beginning January 1, 1999, telecommunications carriers outside of the largest 100 MSAs were permitted to file requests for number portability with LNP- capable carriers, which are required to provide LNP no later than six months after a request is received. 304 The Commission established a separate LNP 301 For example, if 50 numbers out of a block of 100 are being used, all 100 numbers may be categorized as “assigned.” 302 47 U. S. C. § 252( e). 303 Telephone Number Portability, First Memorandum Opinion and Order on Reconsideration, 12 FCC Rcd 7236, 7283, 7625- 27, 7346- 47 (1997) modifying LNP First Report and Order, 11 FCC Rcd at 8355, 9393- 96, 8482- 85) (LNP First Reconsideration Order). In a series of orders, the Common Carrier Bureau granted a number of petitions for extension of the LNP deployment schedule due to the change of the NPAC in the Southeast, Western, and West Coast regions and certain technical problems. 304 Id. 54 Federal Communications Commission FCC 01- 362 55 implementation schedule for CMRS providers, which are scheduled to become LNP capable by November 24, 2002. 305 In addition, the Commission mandated that carriers required to be LNP capable also be capable of participating in pooling in the top 100 MSAs by that date. 306 124. Some states have advised that not all wireline carriers in the top 100 MSAs are LNP capable. 307 Apparently, some carriers have interpreted our rules to require LNP capability only when a request is received from a competing carrier, even in the top 100 MSAs. This issue was brought to light when state pooling trials were implemented and certain carriers had not acquired the necessary capability to participate in thousands- block number pooling. We therefore clarify, on our own motion, that the LNP and pooling requirements extend to all carriers in the largest 100 MSAs, regardless of whether they have received a specific request to provide LNP from another carrier. We also clarify that the “top 100 MSAs” include those MSAs listed in the LNP First Report and Order, Appendix D used to determine the scope of LNP deployment in 1996, as well as all areas included on any subsequent top 100 MSA list. 308 125. Covered Carriers. As explained in the Commission’s News Release announcing the adoption of rules on telephone number portability, the Commission intended to require all wireline carriers to become LNP capable in the largest 100 MSAs, and to make number portability available in areas outside of the largest 100 MSAs within six months of a request from another carrier. 309 The requirement applies to carriers operating in and entering into these markets. The limitation that carriers need to become LNP- capable only when they receive a request from a competing carrier only applies outside of the largest 100 MSAs. To clarify any uncertainty in our rules, we modify them herein. 310 To the extent that wireline carriers in the top 100 MSAs may have misinterpreted these rules as requiring LNP capability only when they receive a request from a competing carrier, we give non- compliant carriers six months from the effective date of this order to become LNP capable in the top 100 MSAs. Carriers that enter markets in the largest 100 MSAs are required to be LNP capable upon entry. We also retain the requirement that carriers outside of the top 100 MSAs become LNP capable within six months of receiving a request from a competing carrier. 305 CMRS carriers were originally required to have the capability of delivering calls from their networks to ported numbers anywhere in the country by December 31, 1998. See LNP First Report and Order, 11 FCC Rcd at 8355, 8439- 40. In addition, CMRS carriers in the top 100 MSAs were required to offer LNP, including the ability to support roaming, throughout their networks by June 30, 1999. On February 9, 1999, the Commission granted a CTIA forbearance petition extending the deadline for CMRS providers to support service provider LNP until November 24, 2002. CMRS LNP Forebearance Order, 14 FCC Rcd at 3092. 306 Second Report and Order, 16 FCC Rcd at 329- 30, paras. 49- 51. 307 See California Comments at 17. 308 The top 100 MSAs list in the LNP First Report and Order is based on 1990 U. S. Census data updated with 1994 information. 309 Commission Adopts Rules on Telephone Number Portability, News Release, Report No. DC 96- 60 (June 27, 1996). 310 See Appendix D for a list of the applicable MSAs. 55 Federal Communications Commission FCC 01- 362 56 126. Scope of the Top 100 MSAs. Upon initially determining the scope of required LNP deployment, the Commission used the 1990 U. S. Census data, updated with 1994 information, which was the most current at that time. 311 We note that, with the 2000 U. S. Census, the 100 largest MSAs have changed in several respects from those identified in the 1990 U. S. Census. For example, several MSAs that were on the 1990 list of the 100 largest MSAs are now combined in Consolidated Metropolitan Statistical Areas (CMSAs). In addition, several new areas and MSAs are included on the current list of the 100 largest MSAs, 312 127. We believe that widespread LNP and pooling deployment will further our competition and numbering resource optimization goals. Rather than limit deployment to a list that is not reflective of the current and ever- changing population and competitive landscape, we conclude that new entrants on the top 100 MSA list should be included. We decline, however, to delete any areas that may subsequently fall off the list; we believe that those areas will, in most instances, continue to be heavily populated and competitive and, thus, should continue to be targeted for LNP and pooling. We also find that it would be discriminatory to allow new entrants into markets in which all carriers are LNP capable to enter these markets as competitors without being subject to the same requirements. We therefore clarify that LNP is required in the top 100 MSAs identified in the 1990 U. S. Census reports and all subsequent updates; areas on the original list but no longer on the current list are still subject to LNP requirements. As new areas are added to the list of the top 100 MSAs, carriers will be given a six month period after release of the updated list to comply with LNP and pooling capability requirements. D. Liability of Related Carriers and Withholding of Numbering Resources 128. In the Second Report and Order, the Commission tentatively concluded that carriers should, in certain instances, have numbering resources withheld when related carriers are 311 LNP First Report and Order, Appendix D. 312 The 100 largest MSAs have changed in the following respects: the Bergen, NJ, Jersey City, NJ, Middlesex, NJ, Monmouth, NJ, Nassau, NY, Newark, NJ, and New Haven, CT MSAs are now part of the New York- Northern New Jersey- Long Island, NY- NJ- CT- PA CMSA; the Orange County, CA and Riverside, CA MSAs are now part of the Los Angeles- Riverside- Orange County, CA CMSA; the Gary, IN MSA is now part of the Chicago- Gary-Kenosha, IL- IN- WI CMSA; the Baltimore, MD MSA is now part of the Washington- Baltimore, DC- MD- VA- WV CMSA; the Oakland, CA, San Jose, CA, and Vallejo, CA MSAs are now part of the San Francisco- Oakland- San Jose, CA CMSA; the Wilmington, DE MSA is now part of the Philadelphia- Wilmington- Atlantic City, PA- NJ- DE-MD CMSA; the Ann Arbor, MI MSA is now part of the Detroit- Ann Arbor- Flint, MI CMSA; the Fort Worth TX MSA is now part of the Dallas- Fort Worth, TX (CMSA); the Fort Lauderdale, FL MSA is now part of the Miami-Fort Lauderdale, FL CMSA; the Tacoma, WA MSA is now part of the Seattle- Tacoma- Bremerton, WA CMSA; and the Akron, OH MSA is now part of the Cleveland, OH CMSA. The Census Bureau’s Metropolitan Areas Ranked by Population: 2000 table is available at . The following are now part of the 100 largest MSAs: the San Juan- Caguas- Arecibo, PR CMSA, McAllen-Edinburg- Mission, TX MSA, Colorado Springs, CO MSA, Daytona Beach, FL MSA, Lakeland- Winter Haven, FL MSA, Johnson City- Kingsport- Bristol, TN- VA MSA, Lexington, KY MSA, Augusta- Aiken, GA- SC MSA, Melbourne- Titusville- Palm Bay, FL MSA, Lancaster, PA MSA, Chattanooga, TN- GA MSA, Des Moines, IA MSA, Kalamazoo- Battle Creek, MI MSA, Lansing- East Lansing, MI MSA, Modesto, CA MSA, Fort Myers- Cape Coral, FL MSA, Jackson, MS MSA, Boise City, ID MSA, Madison, WI MSA, Spokane, WA MSA, and the Pensacola, FL MSA. 56 Federal Communications Commission FCC 01- 362 57 subject to withholding for failure to comply with our mandatory reporting requirements. 313 The Commission sought comment on how to identify the relationships among reporting carriers, and what geographic limitations should be placed on those relationships in determining liability among related carriers. The Commission also stated its belief that parent companies should play an active role in number conservation efforts, even if the parent companies themselves are not reporting carriers. 314 Particularly, by monitoring and offering incentives from the top down, parent companies can contribute to the success of our number optimization goals. In addition, the Commission asked commenters to discuss alternative methods of providing incentives for parent companies to encourage compliance from all their related carriers and to ensure that our numbering resource optimization goals are not undermined by the complexities of corporate structures. 129. We decline at this time to hold related carriers accountable for reporting violations. In addition to the difficulty of determining which carriers should be deemed “related” for enforcement purposes, 315 we are not convinced that related carrier liability is necessary or that it would be an effective deterrent to carriers seeking to circumvent our numbering reporting requirements. We continue to believe that parent companies should play an active role in ensuring that their related companies comply with the reporting requirements. We also believe that states will continue to play an important role in helping us to achieve our numbering resource optimization goals, and we encourage states to use their ability to request “for cause” audits in furtherance of these goals. Rather than focusing our enforcement efforts on related carriers, however, we find that dealing directly with the violating carrier is the better approach. 130. We nevertheless intend to use, as necessary, the full range of enforcement options available to us against carriers that fail to comply with the reporting requirements, including fines and forfeitures, especially for egregious and repeated violations. Fines and forfeitures, however, may be of limited value to motivate certain carriers to comply with reporting violations because some companies may consider them a minor additional cost of doing business. Relying on fines and forfeitures alone may also disproportionately affect smaller companies that do not have the resources of larger carriers. Withholding numbers is therefore a more equitable means of deterring reporting violations for carriers who refuse to observe number optimization requirements. We emphasize that we will take appropriate enforcement action upon discovering that a carrier is attempting to circumvent our reporting requirements, for example, by establishing a separate company for the sole purpose of receiving initial numbering resources. 131. When we determine by audit or are notified by the NANPA or a state commission that a reporting carrier is not in compliance with mandatory numbering reporting requirements, 313 See Second Report and Order, 16 FCC Rcd at 369, para. 151. 314 The term "parent company," as used herein, refers to the highest related legal entity located within the state for which the reporting carrier is reporting data. See also 47 C. F. R. §52.15( f)( 3)( ii). 315 Some commenters attribute this difficulty to the current climate of mergers and divestments in the telecommunications industry. See Cingular Comments at 13; PCIA Comments at 23; Verizon Wireless Comments at 19; BellSouth Comments at 18. Verizon also argues that any determination of how carriers are “related” is problematic for wireless carriers because many wireless systems are owned by partnerships or joint ventures. 57 Federal Communications Commission FCC 01- 362 58 the reporting carrier will be notified in writing that it is subject to withholding of numbering resources. Some commenters raise concerns that carriers will not have sufficient opportunity to respond to or rebut findings that they should be subject to withholding of numbering resources before withholding occurs. 316 Reporting carriers that have failed to submit semi- annual NRUF data are given ample opportunity to respond to notifications of apparent violations. For example, NANPA currently notifies carriers who have failed to provide necessary reports, and allows carriers the opportunity to respond or rectify the reporting violation, as necessary. 317 Similarly, the Commission will give reporting carriers an opportunity to respond to and rebut findings. If the carrier fails to respond or remedy a reporting violation within a specified or reasonable period of time, the reporting carrier will be subject to withholding of numbering resources. We delegate authority to the Common Carrier Bureau and the Enforcement Bureau to determine when numbering resources should be withheld from carriers. 132. Accurate number utilization reporting and forecast data are essential for the NANPA, the Pooling Administrator, and the Commission to achieve our numbering resource optimization goals. We are persuaded by reports of inaccurate, incomplete, and missing reporting data 318 that additional incentive is needed to encourage carriers to comply with our reporting requirements, and we believe that the possibility of having numbering resources withheld will provide such incentive. E. State Commissions’ Access to Data 133. In the Second Report and Order, the Commission clarified the scope of states access to carriers’ utilization and forecast data submitted semi- annually to the NANPA. Specifically, the Commission stated that states shall have access to all such mandatorily reported data received by NANPA. 319 The Commission also noted that some states have asserted that they require full access to the database in which reported utilization and forecast data is stored, and tentatively concluded that states should have password- protected access to the database. The Commission further noted that NeuStar has proposed to provide the states with password-protected access to obtain forecast and utilization data from NANPA. The Commission sought comment on whether the type of access NeuStar proposes is necessary or sufficient, or whether the access already granted is sufficient to accommodate the states’ request. The majority of commenters support the proposal, 320 and several state commissions commented that it was important for them to have vital utilization and forecasting information in making decisions 316 ALTS Comments at 10; WorldCom Comments at 10. 317 See First Report and Order, 15 FCC Rcd at 7609, para. 84. 318 See Michigan PSC Comments at 5. 319 See Second Further Notice, 16 FCC Rcd at 369, para. 151. 320 Illinois Commerce Commission Comments at 11; Maine PUC Comments at 4- 5; Ohio PUC Comments at 2- 3; Pennsylvania PUC at 4- 5; California PUC Comments at 9: NASUCA Comments at 18; State Coordination Group Comments at 5; WorldCom Comments at 10; SBC Comments at 10; Verizon Comments at 10. 58 Federal Communications Commission FCC 01- 362 59 regarding area code relief. 321 Several industry commenters oppose password- protected access on the grounds that carrier- specific data will not be sufficiently protected from public disclosure. 322 134. By this Order we hold that state commissions should have password- protected access to the NANPA database for data pertaining to NPAs located within their state. Each state commission may designate a person or persons to whom NeuStar will provide password-protected access, and the state commission must maintain the confidentiality of carrier- specific data as set forth in the First Report and Order. 323 135. The advantages of providing states with password- protected access to forecast and utilization data include the ability to access data on a more timely basis, and access to the data in a format that allows manipulation of the data and the creation of customized reports. We conclude that such access will only enhance the ability of states to determine when and what area code relief is necessary. Further, we do not believe that allowing state commissions password-protected access to carrier- specific forecast and utilization data will pose any greater security risks than the current reporting system, in which NANPA distributes this data in semi annual reports. Moreover, we find that the value to state commissions of timely access to forecast and utilization data outweighs the confidentiality concerns expressed by the carriers required to submit this data to the NANPA. 136. Despite this finding, we nevertheless reiterate that the confidentiality protections for forecast and utilization data adopted in the First Report and Order apply to state commissions when accessing carrier- specific data, whether in the form of semiannual reports or through the use of password- protected access. Specifically, state commissions must have appropriate protections in place (which may include confidentiality agreements or designation of information as proprietary under state law) that would preclude disclosure to any entity other than the NANPA or the Commission. 324 Any state that cannot certify its ability to keep such data confidential shall not have access, password- protected or otherwise. 137. Additionally, we agree with commenters 325 stating that state commissions’ access to reported utilization and forecast data should be limited to data concerning rate centers and NPAs within the requesting state, just as data in the form of semi- annual reports from the NANPA is so limited. Limiting access to individual states provides a further measure of protection for such data by ensuring that access will be granted only to state commission staff that uses this data for area code relief purposes. 321 Illinois Commerce Commission Comments at 11; Maine PUC Comments at 4- 5; Ohio PUC Comments at 2- 3; Pennsylvania PUC Comments at 4- 5. 322 See Cingular Comments at 16; Winstar Comments at 5; Verizon Wireless Comments at 35. 323 See First Report and Order, 15 FCC Rcd at 7608, paras. 81- 82; see also Second Report and Order, 16 FCC Rcd at 357, para. 119 324 Id. at 7574, paras. 81– 82. 325 Cingular Comments at 16; ATLTS Comments at 11- 12; Focal Communications Comments at 5. 59 Federal Communications Commission FCC 01- 362 60 138. We have consulted with NeuStar, the entity that serves as the NANPA, regarding the availability of and cost of providing password- protected access to state commissions. NeuStar has indicated that it can provide password- protected access to its current database for mandatory reported data. 326 However, NeuStar has not provided any information on whether such access will exceed the cost of its current NANPA contract. The Common Carrier Bureau will continue to work with NeuStar to develop the manner in which such access can be provided as quickly as possible. VII. PROCEDURAL MATTERS A. Ex Parte Presentations 139. This matter shall be treated as a “permit- but- disclose” proceeding in accordance with the Commission’s ex parte rules. 327 Persons making oral ex parte presentations are reminded that memoranda summarizing the presentations must contain summaries of the substance of the presentations and not merely a list of the subjects discussed. More than a one or two sentence description of the views and arguments presented is generally required. 328 B. Final Regulatory Flexibility Analysis 140. See Appendix B for the Final Regulatory Flexibility Analysis. C. Final Paperwork Reduction Analysis 141. This Third Report and Order contains some new and/ or modified information collections, which will be submitted to OMB for approval, as prescribed by the Paperwork Reduction Act. D. Ordering Clauses 142. Accordingly, IT IS ORDERED that pursuant to Sections 1, 3, 4, 201- 205, 251 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151, 153, 154, 201- 205, and 251, this THIRD REPORT AND ORDER is hereby ADOPTED and Part 52 of the Commission’s rules ARE AMENDED AND ADOPTED as set forth in the attached Appendix A. 143. IT IS FURTHER ORDERED that the policies, rules and requirements adopted herein are adopted and SHALL BE EFFECTIVE 30 days after publications in the Federal Register. 144. IT IS FURTHER ORDERED that incumbent local exchange carriers seeking to 326 See Second Report and Order, 16 FCC Rcd at 369, para. 151. See also NeuStar Inc. Petition for Compensation Adjustment, Request for Approval of Implementation Scehdule and Emergency request of Interim Relief, CC Docket No. 99- 200 (June 30, 2001) 327 See Amendment of 47 C. F. R. § 1.1200 et seq. Concerning Ex Parte Presentations in Commission Proceedings, Report and Order, 12 FCC Rcd 7348, 7356- 57 (1997) (citing 47 C. F. R. § 1.1204( b)( 1)). 328 See 47 C. F. R. § 1.1206( b)( 2). 60 Federal Communications Commission FCC 01- 362 61 recover carrier- specific costs directly related to national thousands- block number pooling as described herein MAY FILE the necessary tariffs to take effect no earlier than April 2, 2002. 145. IT IS FURTHER ORDERED that the Commission’s Consumer Information Bureau, Reference Information Center, SHALL SEND a copy of this Third Report and Order and Second Order on Reconsideration in CC Docket No. 96- 98 and CC Docket No. 99- 200, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary 61 Federal Communications Commission FCC 01- 362 62 Appendix A Final Rules PART 52 – NUMBERING Subpart B – Administration 1. The authority citation for Part 52 continues to read as follows: AUTHORITY: Sections 1, 2, 4, 5, 48 Stat. 1066, as amended; 47 U. S. C. § 151, 152, 154, 155 unless otherwise noted. Interpret or apply secs. 3, 4, 201- 05, 207- 09, 218, 225- 7, 251- 2, 271 and 332, 48 Stat. 1070, as amended, 1077; 47 U. S. C. 153, 154, 201- 205, 207- 09, 218, 225- 7, 251- 2, 271 and 332 unless otherwise noted. 2. Section 52.15 is revised to read as follows: § 52.15 Central office code administration. *** (g) Applications for Numbering Resources. *** (3) Growth Numbering resources. *** (iv) (deleted) (4) Non- Compliance. The NANPA shall withhold numbering resources from any U. S. carrier that fails to comply with the reporting and numbering resource application requirements established in this part. The NANPA shall not issue numbering resources to a carrier without an Operating Company Number (OCN). The NANPA must notify the carrier in writing of its decision to withhold numbering resources within ten (10) days of receiving a request for numbering resources. The carrier may challenge the NANPA’s decision to the appropriate state regulatory commission. The state commission may affirm, or may overturn, the NANPA’s decision to withhold numbering resources from the carrier based on its determination that the carrier has complied with the reporting and numbering resource application requirements herein. The state commission also may overturn the NANPA’s decision to withhold numbering resources from the carrier based on its determination that the carrier has demonstrated a verifiable need for numbering resources and has exhausted all other available remedies. (5) State Access to Applications. State regulatory commissions shall have access to service provider’s applications for numbering resources. The state commissions 62 Federal Communications Commission FCC 01- 362 63 should request copies of such applications from the service providers operating within their states, and service providers must comply with state commission requests for copies of numbering resource applications. Carriers that fail to comply with a state commission request for numbering resource application materials shall be denied numbering resources. *** (k) Numbering Audits. (1) All telecommunications service providers shall be subject to “for cause” and random audits to verify compliance with Commission regulations and applicable industry guidelines relating to numbering administration. (2) The Enforcement Bureau will oversee the conduct and scope of all numbering audits conducted under the Commission’s jurisdiction, and determine the audit procedures necessary to perform the audit. Numbering audits performed by independent auditors pursuant to this section shall be conducted in accordance with generally accepted auditing standards and the American Institute of Certified Public Accountants’ standards for compliance attestation engagements, as supplemented by the guidance and direction of the Chief of the Enforcement Bureau. (3) Requests for “for cause” audits shall be forwarded to the Chief of the Enforcement Bureau, with a copy to the Chief of the Common Carrier Bureau. Requests must state the reason for which a “for cause” audit is being requested and include documentation of the alleged anomaly, inconsistency, or violation of the Commission rules or orders or applicable industry guidelines. The Chief of the Enforcement Bureau will provide carriers up to 30 days to provide a written response to a request for a “for cause” audit. 3. Section 52.19 is revised to read as follows: *** (c)*** (3) An all services area code overlay, which occurs when a new area code is introduced to serve the same geographic area as one or more existing area code( s), subject to the following conditions: (i) No all services area code overlay may be implemented unless all numbering resources in the new overlay area code are assigned to those entities requesting assignment on a first- come, first- serve basis, regardless of the identity of, technology used by, or type of service provided by that entity, except to the extent that a technology- or service- specific overlay is authorized by the Commission. No group of telecommunications carriers 63 Federal Communications Commission FCC 01- 362 64 shall be excluded from assignment of numbering resources in the existing area code, or be assigned such resources only from the all services overlay area code, based solely on that group’s provision of a specific type of telecommunications service or use of a particular technology; and (ii) *** (4) A technology- specific or service- specific overlay, which occurs when a new area code is introduced to serve the same geographic area as one or more existing area code( s) and numbering resources in the new area code overlay are assigned to a specific technology( ies) or service( s). State commissions may not implement a technology- specific or service- specific overlay without express authority from the Commission. 4. Section 52.21 is revised to read as follows: *** (r) The term 100 largest Metropolitan Statistical Areas (MSAs) refers to the MSAs set forth in the appendix to this part and any subsequent MSAs identified by U. S. Census Bureau data to be in the largest 100 MSAs. 64 Federal Communications Commission FCC 01- 362 65 Appendix B FINAL REGULATORY FLEXIBILITY ANALYSIS 1. As required by the Regulatory Flexibility Act, as amended, (RFA), 1 an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Second Report and Order, Order on Reconsideration in CC Docket No. 96- 98 and CC Docket No. 99- 200, and Second Further Notice of Proposed Rulemaking (Second Further Notice). 2 The Commission sought written public comment on the proposals in the Second Further Notice, including comment on the IRFA. No comments received addressed the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA. 3 A. Need for, and Objectives of, the Third Report and Order 2. In the Second Further Notice, we sought public comment on (a) the relative advantages of service- specific and technology- specific overlays as opposed to all- services overlays, and the conditions under which service- specific and technology- specific overlays, if adopted, should be implemented in order to promote competitive equity, maximize efficient use of numbering resources, and minimize customer inconvenience; (b) whether carriers should be held accountable when related carriers fail to comply with reporting requirements; (c) whether state commissions should be granted direct, password- protected access to the mandatory reporting data received by the North American Numbering Plan Administrator (NANPA); (d) whether we should allow extensions (for a fee or otherwise) on the 180- day reservation period for numbers; (e) what enforcement mechanisms should be applied when a carrier either fails to cooperate with an audit, or fails to resolve identified areas of noncompliance; (f) whether state commissions should be allowed to conduct audits; (g) the costs associated with thousands- block number pooling; (h) whether the Commission should require carriers to acquire Local Number Portability (LNP) capabilities for the purpose of participating in thousands- block number pooling; and (i) whether a “safety valve” should be established for carriers that need additional numbering resources, but fail to meet the utilization threshold in a given rate center. 3. In this Third Report and Order and Second Order on Reconsideration (Third Report and Order), we continue efforts to utilize efficiently the numbering resources in the North American Numbering Plan (NANP). Our goal with this Third Report and Order is to build upon previous success working with the state commissions and the telecommunications industry to ensure that the limited numbering resources of the NANP do not exhaust prematurely, and to 1 See 5 U. S. C. § 603. The RFA, see 5 U. S. C. § 601 et. seq., has been amended by the Contract With America Advancement Act of 1996, Pub. L. No. 104- 121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). 2 Numbering Resource Optimization, Second Report and Order, Order on Reconsideration in CC Docket No. 96- 98 and CC Docket No. 99- 200, and Second Further Notice of Proposed Rulemaking, 16 FCC Rcd 306 (2000) (Second Further Notice). 3 See 5 U. S. C. § 604. 65 Federal Communications Commission FCC 01- 362 66 ensure that all carriers have the numbering resources they need to compete in the telecommunications marketplace. In particular, we address issues raised in the Second Further Notice and several petitions for reconsideration and/ or clarification of the First or Second Report and Order. In addition, we also clarify, on our own motion, certain aspects of our numbering resources optimization rules and local number portability requirements. B. Summary of Significant Issues Raised by Public Comments in Response to the IRFA 4. In a recent letter, the Small Business Administration (SBA) contends that in the Final Regulatory Flexibility Analysis of the Second Report and Order (Second Report and Order FRFA) the Commission failed to “. . . include a description of telecommunications service providers that are directly affected by the audit provisions. . .” and believes that the “. . .oversight may be due to the inconsistency in the text of the Order itself. Under the Commission’s numbering rules, carriers and service providers are two separate classes.” 4 The SBA then notes that the terms “carrier” and “service provider” were used interchangeably within the audit provisions of the Second Report and Order. 5. Although the terms “carrier” and “service provider” were used interchangeably within the audit provisions, the rule on auditing procedures in section 52.15( k) of the Commission’s rules (in Appendix A of the Second Report and Order) clearly applies to telecommunications service providers. 5 As discussed in section 52.5( i) of the Commission’s numbering rules, a service provider is an “. . .entity that receives numbering resources from the NANPA . . .” 6 Thus, given that the rule is clear, we conclude that an adequate description of telecommunications service providers existed in this Second Report and Order FRFA and that no clarifications are needed in this FRFA. 6. In the SBA Letter, the SBA argues that, in the Second Report and Order FRFA, the Commission fails to “. . . adequately consider alternatives to the audit program that would minimize the impact on small businesses.” 7 In the FRFA, the Commission is only required to discuss those significant alternatives that would affect the impact on small businesses. Thus, the Commission is not required to create significant alternatives for every proposal in a rulemaking order. 8 In crafting the final rule for audits, we considered no other significant alternatives to the rule that would influence the impact on small businesses. Therefore, no significant alternatives 4 Letter to Susan Walthall, SBA, to Michael K. Powell, Chairman, FCC, dated March 30, 2001. (SBA Letter). 5 See 47 C. F. R. § 52.15( k). 6 47 C. F. R. § 52.5( i). 7 SBA Letter at 5. 8 We addressed significant alternatives where applicable in the Second Report and Order FRFA. For example, we discussed a significant alternative that would prohibit state commissions from implementing geographic splits. Small businesses that incur the costs of geographic splits may have benefited from this proposal, but we found that states should continue to have the flexibility in implementing area code relief. See Second Report and Order, 16 FCC Rcd at 397, para. 28. 66 Federal Communications Commission FCC 01- 362 67 were available to be discussed in the Second Report and Order FRFA. We also note that, of the small businesses that commented on our audit proposal, small businesses were in favor of audits. 9 7. Commenters responded to several issues addressed in the Second Further Notice that concern small entities. Their opinions are summarized below. In addition, the Commission has considered any potential significant economic impact of the rules on small entities. 8. Thousands- Block Number Pooling for Non- LNP Capable Carriers. Commenters generally agree that the costs to small and rural carriers to participate in thousands- block pooling would outweigh any benefits derived from the pooling requirements. 10 The Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO) fears that the costs may be so prohibitive as to delay the implementation of advanced services to rural subscribers. 11 We agree with commenters that there is insufficient evidence in the record to conclude that requiring non- LNP capable carriers to participate in pooling would result in significant number resource savings. Data from the Local Exchange Routing Guide (LERG) shows that in the approximately 2,012 rate centers in the 180 Metropolitan Statistical Areas (MSAs) beyond the largest 100, approximately 1,320 are rate centers where there are no competing service providers and approximately 300 are rate centers where there is only 1 competing service provider. Because these carriers hold relatively few numbering resources, we agree that requiring them to participate in pooling would not result in significant number optimization benefits. 9. Independent State Commissions’ Authority to Conduct Audits. One commenter expressed concern that allowing states individual authority to conduct audits may expose carriers to two different standards. 12 It predicts that this result would impose costs and burdens on small carriers that outweigh the benefits of the additional audits. 13 We declined to give states the independent authority to conduct audits, concluding that most of the audits that states would be given authority to conduct would serve the same purpose as the Commission audits, thus posing the potential burden of overlapping audits that would outweigh the benefits of the additional audits. It is our expectation, however, that the Commission audit staff will cooperate with state commissions, including coordinating compliance and enforcement activities and sharing information gathered during the course of the audits. In addition, as we noted, this order does not modify a state commission's authority to conduct audits under state law. 9 See id. at 390, 397, paras. 7, 30, Appendix B. 10 NTCA Comments at 2- 3; OPASTCO Comments at 7. 11 OPASTCO Comments at 7. 12 Id. at 4. 13 Id. 67 Federal Communications Commission FCC 01- 362 68 C. Description and Estimate of the Number of Small Entities to Which Rules Will Apply 10. 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 rules adopted herein. 14 The RFA defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 15 The term “small business” has the same meaning as the term “small business concern” under the Small Business Act, unless the Commission has developed one or more definitions that are appropriate for its activities. 16 Under the Small Business Act, 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. 17 11. The most reliable source of information regarding the total numbers of certain common carrier and related providers nationwide appears to be data the Commission publishes annually in its Telecommunications Provider Locator report, derived from filings made in connection with the Telecommunications Relay Service (TRS). 18 According to data in the most recent report, there are 5,679 interstate service providers. 19 These providers include, inter alia, local exchange carriers, wireline carriers and service providers, interexchange carriers, competitive access providers, operator service providers, pay telephone operators, providers of telephone service, providers of telephone exchange service, and resellers. 12. We have included small incumbent local exchange carriers (LECs) 20 in this present RFA analysis. As noted above, a "small business" under the RFA is one that, inter alia, meets the pertinent small business size standard (e. g., a telephone communications business having 1,500 or fewer employees), and "is not dominant in its field of operation." 21 The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent LECs are not dominant in their field 14 5 U. S. C. § 604( a)( 3). 15 5 U. S. C. § 601( 6). 16 5 U. S. C. § 601( 3) (incorporating by reference the definition of “small business concern” in 15 U. S. C. § 632). Pursuant to the RFA, 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.” 5 U. S. C. § 601( 3). 17 15 U. S. C. § 632. 18 FCC, Common Carrier Bureau, Industry Analysis Division, Telecommunications Provider Locator, Tables 1- 2 (November 2001) (Provider Locator). See also 47 C. F. R. § 64.601 et seq. 19 Provider Locator at Table 1. 20 See 47 U. S. C 251( h) (defining “incumbent local exchange carrier”). 21 15 U. S. C. § 632. 68 Federal Communications Commission FCC 01- 362 69 of operation because any such dominance is not "national" in scope. 22 We have therefore included small incumbent LECs in this RFA analysis, although we emphasize that this RFA action has no effect on FCC analyses and determinations in other, non- RFA contexts. 13. Total Number of Telephone Companies Affected. The Census Bureau reports that, at the end of 1992, there were 3,497 firms engaged in providing telephone services, as defined therein, for at least one year. 23 This number contains a variety of different categories of carriers, including LECs, interexchange carriers, competitive access providers, operator service providers, pay telephone operators, and resellers. It seems certain that some of these 3,497 telephone service firms may not qualify as small entities or small incumbent LECs because they are not "independently owned and operated." 24 It seems reasonable to conclude that fewer than 3,497 telephone service firms are small entity telephone service firms or small incumbent LECs that may be affected by these rules. 14. Wireline Carriers and Service Providers. The SBA has developed a definition of small entities for telephone communications companies other than radiotelephone (wireless) companies. The Census Bureau reports that there were 2,321 such telephone companies in operation for at least one year at the end of 1992. 25 According to the SBA's definition, a small business telephone company other than a radiotelephone (wireless) company is one employing no more than 1,500 persons. 26 All but 26 of the 2,321 non- radiotelephone (wireless) companies listed by the Census Bureau were reported to have fewer than 1,000 employees. Even if all 26 of the remaining companies had more than 1,500 employees, there would still be 2, 295 non- radiotelephone (wireless) companies that might qualify as small entities or small ILECs. Although it seems certain that some of these carriers are not independently owned and operated, we are unable at this time to estimate with greater precision the number of wireline carriers and service providers that would qualify as small business concerns under SBA’s definition. Therefore, we estimate that fewer than 2,295 small telephone communications companies other than radiotelephone (wireless) companies are small entities or small incumbent LECs that may be affected by these rules. 22 Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to William E. Kennard, Chairman, FCC (May 27, 1999). The Small Business Act contains a definition of "small business concern," which the RFA incorporates into its own definition of "small business." See 15 U. S. C. § 632( a) (Small Business Act); 5 U. S. C. § 601( 3) (RFA). SBA regulations interpret "small business concern" to include the concept of dominance on a national basis. 13 C. F. R. § 121.102( b). Since 1996, out of an abundance of caution, the Commission has included small incumbent LECs in its regulatory flexibility analyses. See, e. g., Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, CC Docket, 96- 98, First Report and Order, 11 FCC Rcd 15499, 16144- 45 (1996), 61 FR 45476 (Aug. 29, 1996). 23 U. S. Department of Commerce, Bureau of the Census, 1992 Census of Transportation, Communications, and Utilities: Establishment and Firm Size, at Firm Size 1- 123 (1995) (1992 Census). 24 See generally 15 U. S. C. § 632( a)( 1). 25 1992 Census at Firm Size 1- 123. 26 13 C. F. R. § 121.201, North American Industry Classification System (NAICS) codes 513310, 513330, and 513340. 69 Federal Communications Commission FCC 01- 362 70 15. Local Exchange Carriers, Competitive Access Providers, Interexchange Carriers, Operator Service Providers, Payphone Providers, and Resellers. Neither the Commission nor the SBA has developed a definition for small LECs, competitive access providers (CAPS), interexchange carriers (IXCs), operator service providers (OSPs), payphone providers, or resellers. The closest applicable definition for these carrier- types under SBA rules is for telephone communications companies other than radiotelephone (wireless) companies. 27 The most reliable source of information that we know regarding the number of these carriers nationwide appears to be the data that we collect annually in connection with the TRS. 28 According to our most recent data, there are 1,329 LECs, 532 CAPs, 229 IXCs, 22 OSPs, 936 payphone providers, and 710 resellers. 29 Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1,500 employees, we are unable at this time to estimate with greater precision the number of these carriers that would qualify as small business concerns under the SBA's definition. Therefore, we estimate that there are fewer than 1,329 small entity LECs or small incumbent LECs, 532 CAPs, 229 IXCs, 22 OSPs, 936 payphone providers, and 710 resellers that may be affected by these rules. 16. Wireless Telephony and Paging and Messaging. Wireless telephony includes cellular, personal communications services (PCS) or specialized mobile radio (SMR) service providers. Neither the Commission nor the SBA has developed a definition of small entities applicable to cellular licensees, or to providers of paging and messaging services. The closest applicable SBA definition is a telephone communications company other than radiotelephone (wireless) companies. 30 According to the most recent Provider Locator data, 858 carriers reported that they were engaged in the provision of wireless telephony and 576 companies reported that they were engaged in the provision of paging and messaging service. 31 We do not have data specifying the number of these carriers that are not independently owned or operated, and thus are unable at this time to estimate with greater precision the number that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are fewer than 858 small carriers providing wireless telephony services and fewer than 576 small companies providing paging and messaging services that may be affected by these rules. D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements 17. The numbering resource optimization requirements discussed herein should not require additional reporting, recordkeeping or compliance requirements for service providers. In this Report and Order, we are not mandating new recordkeeping and compliance requirements. 27 13 C. F. R. § 121.201, NAICS codes 513310, 513330, and 513340. 28 See 47 C. F. R. § 64.601 et seq.; Provider Locator at Table 1. 29 Provider Locator at Table 1. The total for resellers includes both toll resellers and local resellers. 30 13 C. F. R. § 121.201, NAICS codes 513321 and 513322. 31 Provider Locator at Table 1. 70 Federal Communications Commission FCC 01- 362 71 Rather, in most instances, we are affirming or clarifying these requirements. E. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered 18. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities. 32 19. Thousands- Block Number Pooling for Non- LNP Capable Carriers. In this Third Report and Order, we decline to extend pooling requirements to paging carriers and non- LNP capable carriers outside of the largest 100 MSAs that have not received a request to deploy LNP from a competing carrier. We believe the costs associated with the alternative of requiring all carriers, including small entities, to participate in pooling would greatly outweigh any number optimization benefits. In addition, these costs imposed on smaller and rural carriers may delay efforts in bringing advanced services to rural subscribers. Thus we reaffirm our current rules that certain carriers, e. g., paging carriers and carriers outside of the largest 100 MSAs who have not received a request to deploy LNP from a competing carrier, are exempted from pooling requirements. 20. Service- Specific and Technology- Specific Area Code Overlays. In this order, we lift the prohibition on technology- specific overlays (SOs) and will consider proposals submitted by state commissions to implement SOs on a case- by- case basis. Such an approach allows state commissions to consider the surrounding local circumstances, including the needs of small, local businesses, in deciding whether or how to provide area code relief. In the alternative, we examined a requirement mandating that state commissions impose all- services area code overlays as the primary method for area code relief. However, the Commission believes that states should have the flexibility to determine the best form of area code relief. In addition, we considered a 50% utilization threshold as an alternative to a higher threshold, which would have been less burdensome to service providers, including small service providers. We determined, however, that a 60% utilization threshold would more successfully encourage service providers to use numbers from their current inventories and would still be a reasonable threshold level for service providers to satisfy before requesting additional numbering resources. 32 5 U. S. C. § 603( c). 71 Federal Communications Commission FCC 01- 362 72 21. Report to Congress: The Commission will send a copy of this Third Report and Order, including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act. 33 In addition, the Commission will send a copy of this Third Report and Order, including this FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of this Third Report and Order and FRFA (or summaries thereof) will also be published in the Federal Register. 34 33 See 5 U. S. C. § 801( a)( 1)( A). 34 See 5 U. S. C. § 604( b). 72 Federal Communications Commission FCC 01- 362 73 Appendix C List of Parties Numbering Resource Optimization Third Report and Order and Second Order on Reconsideration A. Parties Filing Comments in Response to Second Report and Order 1. Association for Telecommunications Professionals in Higher Education (ACUTA) 2. Ad Hoc Telecommunications Users Committee (Ad Hoc) 3. Allegiance Telecom 4. Association for Local Telecommunications Services (ALTS) 5. Association of Communications Enterprises 6. AT& T 7. BellSouth 8. California PUC 9. Cingular Wireless (Cingular) 10. Connecticut Department of Public Utility Control 11. Cox Communications, Inc. (Cox) 12. Cellular Telecommunications Industry Association (CTIA) 13. Florida PSC 14. Focal Communications Corporation (Focal Communications) 15. Global NAPS, Inc. 16. Illinois Commerce Commission 17. Indiana Office of Utility Consumer Counselor 18. Iowa Utilities Board 19. Level 3 Communications, LLC (Level 3) 20. Maine PUC 21. Maryland PSC 22. Metrocall 23. Michigan PSC 24. National Association of State Utility Consumer Advocates (NASUCA) 25. National Exchange Carrier Association, Inc.( NECA) 26. NENA 27. New Hampshire PUC 28. New York State Department of Public Service 29. National Telephone Cooperative Association (NTCA) 30. Office of the Consumer Advocate 31. Ohio PUC 32. Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO) 33. Personal Communications Industry Association PCIA 34. Pennsylvania PUC 35. Qwest 36. Rural Cellular Association 37. State Coordination Group Comments 73 Federal Communications Commission FCC 01- 362 74 38. SBC Communications 39. Texas PUC 40. Time Warner Telecom 41. United States Telephone Association (USTA) 42. Verizon Communications (Verizon) 43. Verizon Wireless 44. VoiceStream Wireless (VoiceStream) 45. WinStar Communications (WinStar) 46. WorldCom, Inc. (WorldCom) B. Parties Filing Reply Comments in Response to Second Report and Order 1. Ad Hoc 2. Allegiance Telecom, Inc. 3. ASCENT 4. AT& T 5. BellSouth 6. California PUC 7. CTIA 8. Cingular 9. Iowa Utilities Board 10. Global NAPS, Inc. 11. Metrocall 12. Michigan PSC 13. Minnesota PUC 14. NECA 15. National Emergency Number Association (NENA) 16. NASUCA 17. PCIA 18. Qwest 19. SBC 20. Sprint 21. Tennessee Regulatory Authority 22. USTA 23. Verizon Wireless 24. VoiceStream 25. WorldCom 26. Z- Tel 74 Federal Communications Commission FCC 01- 362 75 C. Parties Filing Comments in Response to First Report and Order 1. AT& T 2. CTIA 3. General Services Administration 4. Joint Consumer Comments 5. NECA 6. NTCA 7. SBC 8. Sprint 9. USTA 10. US West 11. Verizon Wireless 12. WorldCom D. Parties Filing Reply Comments in Response to First Report and Order 1. AT& T 2. Bell Atlantic 3. California PUC 4. Maine PUC 5. VoiceStream E. Parties Filing Petitions for Reconsideration and/ or Clarification* 1. AT& T Wireless* 2. BellSouth 3. CTIA 4. Cingular* 5. Qwest 6. SBC 7. Sprint 8. USTA 9. Verizon 10. Verizon Wireless 11. WorldCom 75 Federal Communications Commission FCC 01- 362 76 F. Parties Filing Oppositions to and Support for Petitions 1. KMC Telecom, Inc. (KMC) 2. Maine PUC 3. PCIA G. Parties Filing Replies to and Comments on Opposition to Petitions 1. SBC* 2. USTA *indicates that the petition was not addressed in this proceeding 76 Federal Communications Commission FCC 01- 362 77 Appendix D List of the Top 100 Metropolitan Statistical Areas (MSAs) A. 100 Largest MSAs and Their Populations: Year 2000 Census 1. New York-- Northern New Jersey-- Long Island, NY-- NJ-- CT-- PA CMSA 21, 199,865 2. Los Angeles-- Riverside-- Orange County, CA CMSA 16,373,645 3. Chicago-- Gary-- Kenosha, IL-- IN-- WI CMSA 9,157,540 4. Washington-- Baltimore, DC-- MD-- VA-- WV CMSA 7,608,070 5. San Francisco-- Oakland-- San Jose, CA CMSA 7,039,362 6. Philadelphia-- Wilmington-- Atlantic City, PA-- NJ-- DE-- MD CMSA 6,188,463 7. Boston-- Worcester-- Lawrence, MA-- NH-- ME-- CT CMSA 5,819,100 8. Detroit-- Ann Arbor-- Flint, MI CMSA 5,456,428 9. Dallas-- Fort Worth, TX CMSA 5,221,801 10. Houston-- Galveston-- Brazoria, TX CMSA 4,669,571 11. Atlanta, GA MSA 4, 112,198 12. Miami-- Fort Lauderdale, FL CMSA 3,876,380 13. Seattle-- Tacoma-- Bremerton, WA CMSA 3,554,760 14. Phoenix-- Mesa, AZ MSA 3, 251,876 15. Minneapolis-- St. Paul, MN-- WI MSA 2, 968,806 16. Cleveland-- Akron, OH CMSA 2,945,831 17. San Diego, CA MSA 2, 813,833 18. St. Louis, MO-- IL MSA 2, 603,607 19. Denver-- Boulder-- Greeley, CO CMSA 2,581,506 20. San Juan-- Caguas-- Arecibo, PR CMSA 2,450,292 21. Tampa-- St. Petersburg-- Clearwater, FL MSA 2, 395,997 22. Pittsburgh, PA MSA 2, 358,695 23. Portland-- Salem, OR-- WA CMSA 2,265,223 24. Cincinnati-- Hamilton, OH-- KY-- IN CMSA 1,979,202 25. Sacramento-- Yolo, CA CMSA 1,796,857 26. Kansas City, MO-- KS MSA 1, 776,062 27. Milwaukee-- Racine, WI CMSA 1,689,572 28. Orlando, FL MSA 1, 644,561 29. Indianapolis, IN MSA 1, 607,486 30. San Antonio, TX MSA 1, 592,383 31. Norfolk-- Virginia Beach-- Newport News, VA-- NC MSA 1, 569,541 32. Las Vegas, NV-- AZ MSA 1, 563,282 33. Columbus, OH MSA 1, 540,157 34. Charlotte-- Gastonia-- Rock Hill, NC-- SC MSA 1, 499,293 35. New Orleans, LA MSA 1, 337,726 36. Salt Lake City-- Ogden, UT MSA 1, 333,914 37. Greensboro-- Winston- Salem-- High Point, NC MSA 1, 251,509 38. Austin-- San Marcos, TX MSA 1, 249,763 39. Nashville, TN MSA 1, 231,311 40. Providence-- Fall River-- Warwick, RI-- MA MSA 1, 188,613 41. Raleigh-- Durham-- Chapel Hill, NC MSA 1, 187,941 42. Hartford, CT MSA 1, 183,110 77 Federal Communications Commission FCC 01- 362 78 43. Buffalo-- Niagara Falls, NY MSA 1, 170,111 44. Memphis, TN-- AR-- MS MSA 1, 135,614 45. West Palm Beach-- Boca Raton, FL MSA 1, 131,184 46. Jacksonville, FL MSA 1, 100,491 47. Rochester, NY MSA 1, 098,201 48. Grand Rapids-- Muskegon-- Holland, MI MSA 1, 088,514 49. Oklahoma City, OK MSA 1, 083,346 50. Louisville, KY-- IN MSA 1, 025,598 51. Richmond-- Petersburg, VA MSA 996,512 52. Greenville-- Spartanburg-- Anderson, SC MSA 962,441 53. Dayton-- Springfield, OH MSA 950,558 54. Fresno, CA MSA 922,516 55. Birmingham, AL MSA 921,106 56. Honolulu, HI MSA 876,156 57. Albany-- Schenectady-- Troy, NY MSA 875,583 58. Tucson, AZ MSA 843,746 59. Tulsa, OK MSA 803,235 60. Syracuse, NY MSA 732,117 61. Omaha, NE-- IA MSA 716,998 62. Albuquerque, NM MSA 712,738 63. Knoxville, TN MSA 687,249 64. El Paso, TX MSA 679,622 65. Bakersfield, CA MSA 661,645 66. Allentown-- Bethlehem-- Easton, PA MSA 637,958 67. Harrisburg-- Lebanon-- Carlisle, PA MSA 629,401 68. Scranton-- Wilkes- Barre-- Hazleton, PA MSA 624,776 69. Toledo, OH MSA 618,203 70. Baton Rouge, LA MSA 602,894 71. Youngstown-- Warren, OH MSA 594,746 72. Springfield, MA MSA 591,932 73. Sarasota-- Bradenton, FL MSA 589,959 74. Little Rock-- North Little Rock, AR MSA 583,845 75. McAllen-- Edinburg-- Mission, TX MSA 569,463 76. Stockton-- Lodi, CA MSA 563,598 77. Charleston-- North Charleston, SC MSA 549,033 78. Wichita, KS MSA 545,220 79. Mobile, AL MSA 540,258 80. Columbia, SC MSA 536,691 81. Colorado Springs, CO MSA 516,929 82. Fort Wayne, IN MSA 502,141 83. Daytona Beach, FL MSA 493,175 84. Lakeland-- Winter Haven, FL MSA 483,924 85. Johnson City-- Kingsport-- Bristol, TN-- VA MSA 480,091 86. Lexington, KY MSA 479,198 87. Augusta-- Aiken, GA-- SC MSA 477,441 88. Melbourne-- Titusville-- Palm Bay, FL MSA 476,230 89. Lancaster, PA MSA 470,658 90. Chattanooga, TN-- GA MSA 465,161 91. Des Moines, IA MSA 456,022 92. Kalamazoo-- Battle Creek, MI MSA 452,851 78 Federal Communications Commission FCC 01- 362 79 93. Lansing-- East Lansing, MI MSA 447,728 94. Modesto, CA MSA 446,997 95. Fort Myers-- Cape Coral, FL MSA 440,888 96. Jackson, MS MSA 440,801 97. Boise City, ID MSA 432,345 98. Madison, WI MSA 426,526 99. Spokane, WA MSA 417,939 100. Pensacola, FL MSA 412,153 B. 100 Largest Metropolitan Statistical Areas (MSAs) and Their Populations (from the LNP First Report and Order FCC 96- 286) 1. Los Angeles, CA 9,150,000 2. New York, NY 4,474,000 3. Detroit, MI 4,307,000 4. Houston, TX 3,653,000 5. Atlanta, GA 3,331,000 6. Boston, MA* 3, 211,000 7. Riverside, CA 2,907,000 8. Dallas, TX 2,898,000 9. Minneapolis, MN 2,688,000 10. Nassau, NY 2,651,000 11. San Diego, CA 2,621,000 12. Orange Co., CA 2,543,000 13. St. Louis, MO 2,536,000 14. Phoenix, AZ 2,473,000 15. Baltimore, MD 2,458,000 16. Pittsburgh, PA 2,402,000 17. Akron, OH 2,222,000 18. Oakland, CA 2,182,000 19. Seattle, WA 2,180,000 20. Tampa, FL 2,157,000 21. Miami, FL 2,025,000 22. Newark, NJ 1,934,000 23. Denver, CO 1,796,000 24. Portland, OR 1,676,000 25. Kansas City, KS 1,647,000 26. San Francisco, CA 1,646,000 27. Cincinnati, OH 1,581,000 28. San Jose, CA 1,557,000 29. Norfolk, VA 1,529,000 30. Fort Worth, TX 1,464,000 31. Indianapolis, IN 1,462,000 32. Milwaukee, WI 1,456,000 33. Sacramento, CA 1,441,000 34. San Antonio, TX 1,437,000 35. Columbus, OH 1,423,000 36. Fort Lauderdale, FL 1,383,000 37. Orlando, FL 1, 361,000 79 Federal Communications Commission FCC 01- 362 80 38. New Orleans, LA 1,309,000 39. Bergen, NJ 1,304,000 40. Charlotte, NC 1,260,000 41. Buffalo, NY 1,189,000 42. Salt Lake City, UT 1,178,000 43. Hartford, CT* 1, 156,000 44. Providence, RI* 1, 131,000 45. Greensboro, NC 1,107,000 46. Rochester, NY 1,090,000 47. Las Vegas, NV 1,076,000 48. Nashville, TN 1, 070,000 49. Middlesex, NJ 1,069,000 50. Memphis, TN 1,056,000 51. Monmouth, NJ 1,035,000 52. Oklahoma City, OK 1,007,000 53. Grand Rapids, MI 985,000 54. Louisville, KY 981,000 55. Jacksonville, FL 972,000 56. Raleigh, NC 965,000 57. Austin, TX 964,000 58. Dayton, OH 956,000 59. West Palm Beach, FL 955,000 60. Richmond, VA 917,000 61. Albany, NY 875,000 62. Honolulu, HI 874,000 63. Birmingham, AL 872,000 64. Greenville, SC 837,000 65. Fresno, CA 835,000 66. Syracuse, NY 754,000 67. Tulsa, OK 743,000 68. Tucson, AZ 732,000 69. Ventura, CA 703,000 70. Cleveland, OH 677,000 71. El Paso, TX 665,000 72. Omaha, NE 663,000 73. Albuquerque, NM 646,000 74. Tacoma, WA 638,000 75. Scranton, PA 637,000 76. Knoxville, TN 631,000 77. Gary, IN 620,000 78. Toledo, OH 614,000 79. Allentown, PA 612,000 80. Harrisburg, PA 610,000 81. Bakersfield, CA 609,000 82. Youngstown, OH 604,000 83. Springfield, MA* 584,000 84. Baton Rouge, LA 558,000 85. Jersey City, NJ 552,000 86. Wilmington, DE 539,000 87. Little Rock, AR 538,000 80 Federal Communications Commission FCC 01- 362 81 88. New Haven, CT* 527,000 89. Charleston, SC 522,000 90. Sarasota, FL 518,000 91. Stockton, CA 518,000 92. Ann Arbor, MI 515,000 93. Mobile, AL 512,000 94. Wichita, KS 507,000 95. Columbia, SC 486,000 96. Vallejo, CA 483,000 97. Fort Wayne, IN 469,000 * Population figures for New England's city and town based MSAs are for 1992, while others are for 1994. 81 Federal Communications Commission FCC 01- 362 82 SEPARATE STATEMENT OF COMMISSIONER KEVIN J . MARTIN Re: Numbering Resource Optimization, Third Report and Order and Second Order on Reconsideration in CC Docket No. 96- 98 and CC Docket No. 99- 200 I join in approving this Order because it is an important step in providing the States the additional flexibility they require to address numbering issues. As I have said before, State commissions often bear the brunt of consumer complaints. Particularly, with regard to numbering issues, it is the State commissions that hear all of the complaints. Therefore, I appreciate this Commission’s actions in granting States additional numbering flexibility. This Order grants the requests of several States to lift the prohibition on technology specific and service specific overlays. Allowing States such flexibility in how to address numbering issues is crucial, as the States are on the front lines of this battle. We must remember that it is the State Commissions, not this Commission, that feel the outcry from consumers when number conservation measures are adopted. I am thus hopeful that this Order will provide the States significant additional tools. This item hardly ends our task, however. I expect this Commission to continue to work with the States to facilitate their number conservation plans in the future, providing expeditious decisions on applications for technology specific and service specific overlays and granting States additional flexibility as they need it. 82