Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | *  | CC Docket No. 01-338         |
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| Review of the Section 251        | ** | CC Docket No. 96-98          |
| Unbundling Obligations of        |    |                              |
| Incumbent Local Exchange         | *  | CC Docket No. 98-147         |
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| Implementation of the Local      |    |                              |
| Competition Provisions of the    | *  |                              |
| Telecommunications Act of 1996   | *) |                              |
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| Deployment of Wireline Services  |    |                              |
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+----------------------------------+----+------------------------------+

**NOTICE OF PROPOSED RULEMAKING**

**Adopted: December 12, 2001 Released: December 20, 2001**

**Comment Date: 60 days after Federal Register publication of this
Notice**

**Reply Comment Date: 105 days after Federal Register publication of
this Notice**

By the Commission: Chairman Powell, Commissioners Copps and Martin
issuing separate statements.

#  {#section .Appendix-Heading}

**table of contents**

# Paragraph {#paragraph .Appendix-Heading}

I. INTRODUCTION [2](#introduction)

II\. Background [4](#background)

III\. framework for unbundling [9](#framework-for-unbundling)

A. Threshold Statutory Analysis [10](#threshold-statutory-analysis)

B. "At a Minimum" Statutory Analysis
[11](#at-a-minimum-statutory-analysis)

1\. Encouraging Facilities Investment and Broadband Deployment
[12](#encouraging-facilities-investment-and-broadband-deployment)

2\. Other Statutory Considerations [16](#other-statutory-considerations)

C. More Granular Statutory Analysis
[17](#more-granular-statutory-analysis)

1\. Service- and Location-Specific Considerations
[18](#service--and-location-specific-considerations)

2\. Facility and Capacity Considerations
[20](#facility-and-capacity-considerations)

3\. Customer and Business Considerations
[21](#customer-and-business-considerations)

4\. Triggers for Changes in UNE Availability
[22](#triggers-for-changes-in-une-availability)

D. Specific Network Elements [23](#specific-network-elements)

1\. Loop, Subloop and Network Interface Devices
[23](#loop-subloop-and-network-interface-devices)

2\. High Frequency Portion of the Loop
[25](#high-frequency-portion-of-the-loop)

3\. Switching [26](#switching)

4\. Interoffice Transmission Facilities
[29](#interoffice-transmission-facilities)

5\. Other Network Elements [32](#other-network-elements)

6\. General Unbundling Issues [33](#general-unbundling-issues)

E. The Role of the States [36](#the-role-of-the-states)

F. Implementation Issues [37](#implementation-issues)

IV\. procedural matters [39](#procedural-matters)

A. Ex Parte Presentations [39](#ex-parte-presentations)

B. Comment Filing Procedures [40](#comment-filing-procedures)

C. Initial Regulatory Flexibility Analysis
[41](#__RefHeading___Toc533572560)

1\. Need for, and Objectives of, the Proposed Rules
[42](#need-for-and-objectives-of-the-proposed-rules)

2\. Legal Basis [42](#legal-basis)

3\. Description and Estimate of the Number of Small Entities To Which
the Proposed Rules Will Apply
[42](#description-and-estimate-of-the-number-of-small-entities-to-which-the-proposed-rules-will-apply)

4\. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
[54](#description-of-projected-reporting-recordkeeping-and-other-compliance-requirements)

5\. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
[54](#steps-taken-to-minimize-significant-economic-impact-on-small-entities-and-significant-alternatives-considered)

6\. Federal Rules that May Duplicate, Overlap, or Conflict With the
Proposed Rules
[55](#federal-rules-that-may-duplicate-overlap-or-conflict-with-the-proposed-rules)

V. ordering clauses [55](#ordering-clauses)

#  {#section-1 .Appendix-Heading}

# INTRODUCTION

1.  Today we initiate our first triennial review of the Commission's
    policies on unbundled network elements (UNEs).[^1] This proceeding
    will consider the circumstances under which incumbent local exchange
    carriers (LECs) must make parts of their networks available to
    requesting carriers on an unbundled basis pursuant to sections
    251(c)(3) and 251(d)(2) of the Telecommunications Act of 1996 (1996
    Act).[^2] Recognizing that incumbent LECs control some bottleneck
    facilities, Congress adopted section 251 of the 1996 Act in order to
    permit competitors to overcome the obstacles posed by that control.
    In 1996, the Commission first applied the statute and determined
    which network elements need to be unbundled to permit requesting
    carriers to compete.[^3] Then, in 1999, the Commission revisited its
    unbundling analysis, on remand from the Supreme Court.[^4]
    Recognizing that market conditions would change and create a need
    for commensurate changes to the unbundling rules, the Commission
    determined to revisit its unbundling rules in three years \-- a
    schedule we adhere to by adopting this Notice of Proposed Rulemaking
    (NPRM) today. In this review, we undertake a comprehensive
    evaluation of our unbundling rules. We seek to ensure that our
    regulatory framework remains current and faithful to the
    pro‑competitive, market-opening provisions of the 1996 Act in light
    of our experience over the last two years, advances in technology,
    and other developments in the markets for telecommunications
    services.

2.  Over the last several years, a number of incumbent and competitive
    carriers have asked us to reconsider, modify, expand, or eliminate
    various unbundling obligations. While parties have raised these
    issues in discrete proceedings, resolving any of these issues would
    essentially require the Commission to reevaluate, on some level, our
    framework for unbundling. Rather than decide these issues piecemeal,
    we initiate this triennial review in order to comprehensively
    consider the appropriate changes, if any, to our unbundling
    approach. Moreover, we now have the benefit of over five years of
    experience since the 1996 Act was passed. Throughout this review, we
    expressly invite comment on the lessons learned from this
    experience, and further seek to explore what significant changes
    have taken place in the market since 1996. For example, we seek to
    fashion a more targeted approach to unbundling that identifies more
    precisely the impairment facing requesting carriers.

3.  In particular, we expressly focus on the facilities used to provide
    broadband services and explore the role that wireless and cable
    companies have begun to play and will continue to play both in the
    market for broadband services and the market for telephony services
    generally. At the same time, we recognize that the statute
    contemplates three modes of entry \-- through resale of tariffed
    incumbent LEC services, use of UNEs, and construction of new
    facilities.[^5] We are, therefore, statutorily bound to require
    incumbents to permit both facilities‑based and non-facilities-based
    entry. With respect to facilities-based entry, we seek to promote
    entry not only by fully facilities-based carriers but also by those
    facilities-based carriers that purchase actual UNEs, such as the
    loop.[^6]

4.  This proceeding is one of several in which we are initiating a broad
    review of our competition policies in light of our experience since
    first implementing the market-opening provisions of the 1996 Act,
    and the developments in the marketplace such as the birth of
    broadband. In particular, through the *UNE Measurements and
    Standards Notice*, we seek comment on a discrete set of national
    performance measures and standards that could improve enforcement of
    incumbents' wholesale obligations under section 251.[^7] We are also
    considering how to regulate broadband services provisioned by LECs
    that the Commission has traditionally treated as dominant in the
    provision of telephone services.[^8] Thus, at the same time as we
    consider which facilities need to be unbundled in this proceeding,
    we are also considering the appropriate regulatory treatment for
    incumbent LECs' provision of broadband services over those
    facilities. In addition, we will also initiate in the near future a
    proceeding to examine how to classify under the Act a wireline
    carrier's offering of a broadband telecommunications service bundled
    with an information service.[^9] The areas of regulation we consider
    in each of these notices are different, but our ultimate goal is the
    same: to implement the provisions of the 1996 Act in order to
    achieve its goals of bringing the benefits of competition and
    expanding broadband availability to consumers.

# Background

5.  Under section 251(d)(2) of the Act:

> In determining what network elements should be made available for
> purposes of subsection \[251\](c)(3), the Commission shall consider,
> at a minimum, whether \--

(A) access to such network elements as are proprietary in nature is
    > necessary; and

(B) the failure to provide access to such network elements would impair
    > the ability of the telecommunications carrier seeking access to
    > provide the services that it seeks to offer.[^10]

    In 1996, the Commission adopted the *Local Competition First Report
    and Order*, which implemented the local competition provisions of
    the 1996 Act.[^11] In that order, the Commission interpreted the
    terms "necessary" and "impair" in section 251(d)(2), which contains
    standards that must be considered in determining the network
    elements that must be made available. For network elements that are
    "proprietary in nature," the Commission must consider whether access
    to them is "necessary" to competitors.[^12] For network elements
    that are not proprietary, the Commission must consider whether "the
    failure to provide access to such network elements would impair the
    ability of the telecommunications carrier seeking access to provide
    the services that it seeks to offer."[^13] In the *Local Competition
    First Report and Order*, the Commission interpreted these terms as
    standards by which it could limit the general obligation in section
    251(c)(3) to provide access to all UNEs where technically
    feasible.[^14]

```{=html}
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```
6.  On appeal of the *Local Competition First Report and Order*, the
    United States Supreme Court affirmed in part, reversed in part, and
    remanded to the Commission.[^15] In particular, the Supreme Court
    required the Commission to reexamine the "necessary" and "impair"
    standards of section 251(d)(2) \-- the same standards that we review
    and apply in this proceeding. The Court directed the Commission to
    give substance to the "necessary" and "impair" standards, and to
    develop a limiting standard for imposing unbundling obligations that
    is "rationally related to the goals of the Act."[^16] The Court
    vacated the Commission's list of elements to be unbundled and
    remanded for consideration of a new interpretation and application
    of section 251(d)(2) that takes into consideration the availability
    of elements outside the incumbent's network and does not assume that
    any increase in cost or decrease in quality imposed by denial of a
    network element causes the failure to provide that element to impair
    the entrant's ability to furnish its desired services.[^17] In
    addition, the Court upheld the Commission's determination that
    competitors do not need to deploy their own facilities to be
    eligible to purchase UNEs.[^18]

7.  To respond to the Supreme Court's directives, the Commission adopted
    the *UNE Remand Order*.[^19] In that order, the Commission revised
    its interpretation of the "necessary" and "impair" standards of
    section 251(d)(2) in order to identify specifically where requesting
    carriers are impaired without access to the incumbent's network,
    rather than making UNEs available wherever it is technically
    feasible to do so, as the Commission had done in the *Local
    Competition First Report and Order*.[^20] Specifically, the
    Commission held with regard to proprietary network elements that:

    \[A\] proprietary network element is "necessary" within the meaning
    of section 251(d)(2)(A) if, taking into consideration the
    availability of alternative elements outside the incumbent's
    network, including self-provisioning by a requesting carrier or
    acquiring an alternative from a third-party supplier, lack of access
    to that element would, as a practical, economic, and operational
    matter, *preclude* a requesting carrier from providing the services
    it seeks to offer.[^21]

    Second, the Commission held with regard to non-proprietary network
    elements that:

    \[T\]he failure to provide access to a network element would
    "impair" the ability of a requesting carrier to provide the services
    it seeks to offer if, taking into consideration the availability of
    alternative elements outside the incumbent's network, including
    self-provisioning by a requesting carrier or acquiring an
    alternative from a third-party supplier, lack of access to that
    element *materially diminishes* a requesting carrier's ability to
    provide the services it seeks to offer.[^22]

8.  The Commission considered several factors in deciding whether a
    requesting carrier's ability to provide services would be
    "materially diminished" if it were not able to use the incumbent's
    network. Specifically, the Commission considered: (1) the costs
    incurred using alternatives to the incumbent's network;[^23] (2)
    delays caused by use of alternative facilities;[^24] (3) material
    degradation in service quality;[^25] (4) the ability of a requesting
    carrier to serve customers ubiquitously using its own facilities or
    those acquired from third-party suppliers;[^26] and (5) the impact
    that self-provisioning a network element or obtaining it from a
    third-party supplier may have on network operations.[^27]

9.  Section 251(d)(2) requires the Commission to consider the
    "necessary" and "impair" standards "at a minimum."[^28] Recognizing
    that it can and should consider other factors that promote the goals
    of the Act in its unbundling analysis, the Commission also
    considered (1) whether an unbundling obligation is likely to promote
    the rapid introduction of competition in all markets; (2) whether
    the obligation will promote facilities-based competition,
    investment, and innovation; (3) the extent to which the Commission
    can reduce regulatory obligations as alternatives to the incumbent's
    network become available; (4) whether the unbundling requirements
    will provide uniformity and predictability to new entrants and
    market certainty in general; and (5) whether the unbundling
    obligations are administratively practical.[^29] In addition, the
    Commission emphasized that "unbundling rules that are based on a
    preference for development of facilities-based competition in the
    long run will provide incentives for both incumbents and competitors
    to invest and innovate, and should allow the Commission to reduce
    regulation once true facilities-based competition develops."[^30]

10. Applying this section 251(d)(2) analysis to incumbents' networks,
    the Commission identified seven network elements without which
    requesting carriers were impaired: (1) loops, including
    high-capacity lines, dark fiber, line conditioning, and some inside
    wire; (2) subloops; (3) network interface devices; (4) local circuit
    switching (but not most packet switching); (5) interoffice
    transmission facilities, including dedicated transport from DS1 to
    OC96 capacity levels and such higher capacities as evolve over time,
    dark fiber, and shared transport; (6) signaling networks and
    call-related databases; and (7) operations support systems
    (OSS).[^31] In a separate order released shortly after the *UNE
    Remand Order*, the Commission added the high frequency portion of
    the loop to the list of elements that must be unbundled on a
    national basis.[^32]

11. We intend in this proceeding to draw on our experience with both the
    1996 Act and the rules adopted in the *UNE Remand Order* in order to
    inform our unbundling analysis. Since the *UNE Remand Order* was
    adopted, many interrelated issues have surfaced through petitions,
    requests for waivers, and *ex parte* communications. We describe
    below the relationship between these proceedings and this NPRM, and
    we hereby incorporate the comments and *ex parte* presentations of
    these proceedings into this docket. In particular, and as described
    below, we incorporate the records of pending proceedings as they
    apply to: (1) availability of loops, transport, and combinations
    thereof (also known as enhanced extended links, or EELs);[^33]
    (2) high-capacity loops and dedicated transport;[^34] (3) local
    switching;[^35] and (4) next-generation networks.[^36] Commenters
    need not resubmit material previously filed in these proceedings.

12. We first incorporate the record amassed when the Commission, on
    several occasions, sought comment on the availability of UNE loops,
    transport, or combinations thereof. In the *Shared Transport Order*,
    the Commission sought comment on whether requesting carriers may use
    unbundled dedicated transport or shared transport to carry
    interstate toll traffic for end users to whom the requesting carrier
    does not provide local exchange service.[^37] In the *Fourth Further
    Notice of Proposed Rulemaking*, the Commission asked whether the Act
    or the Commission's rules would support making entrance facilities
    (a form of transport) unavailable on an unbundled basis, or whether
    these facilities could be available only for use in providing local
    exchange service.[^38] In the *Supplemental Order*, the Commission
    expanded this inquiry to ask about support in the Act for limiting
    the availability of EELs to local exchange service, and to ask about
    the policy ramifications of permitting the use of EELs for solely
    exchange access service.[^39] In regard to the various temporary
    restrictions on EELs, the Commission had sought comment on petitions
    for waiver of the co-mingling prohibition that WorldCom and
    ITC\^DeltaCom filed.[^40] Most recently, two commercial mobile radio
    service (CMRS) carriers filed a petition for declaratory ruling
    asking the Commission to confirm that CMRS carriers may purchase
    dedicated transport on an unbundled basis.[^41] The issues raised
    therein are suitable for resolution in this proceeding. We also
    incorporate the Joint Petition of SBC, BellSouth, and Verizon asking
    the Commission to find that requesting carriers are no longer
    impaired without access to high-capacity loops and dedicated
    transport,[^42] and the comments and *ex parte* communications filed
    in response.

13. We also incorporate the record generated by the petitions for
    reconsideration of the *UNE Remand Order*. Among other challenges to
    that decision, parties have questioned how the Commission determined
    where and under what circumstances local switching need not be
    unbundled (the "switching carve-out").[^43] We incorporate those
    petitions and all related *ex parte* communications for both the
    information they contain about switching and other issues, and for
    what they can teach us about ways to refine the impairment
    analysis.[^44] Further, we incorporate the petition recently filed
    by competitors seeking to establish certain procedures and standards
    for this triennial review.[^45]

14. Finally, we incorporate the record on several issues relating to
    next-generation network architectures. In the *Fifth Further Notice
    of Proposed Rulemaking*, the Commission sought comment generally on
    whether the deployment of next-generation network architectures
    requires any change to the Commission's unbundling rules.[^46] More
    recently, in the *Third Further Notice of Proposed Rulemaking and
    Sixth Further Notice of Proposed Rulemaking*, the Commission
    specifically sought comment on the impact of the deployment of
    next-generation network architectures on the Commission's line
    sharing rules.[^47]

# framework for unbundling

15. The *UNE Remand Order* set forth definitions of "necessary" and
    "impair," and also clarified the application of the "at a minimum"
    language of section 251(d)(2). That decision, and the many
    subsequent filings from different parties addressing related issues,
    serve as the building blocks of this proceeding. As we move past
    that initial phase of our implementation of the statute, we look to
    those records and seek comment on establishing a framework to
    reflect comprehensively the technological advances and marketplace
    changes that have taken place during the interim.

16. We seek comment generally on how to apply the section 251(d)(2)
    analysis in a manner that is faithful to the Act and promotes its
    goals, as further discussed below. First, in Section III.A, we ask
    about the weight we should assign the factors in our "impair"
    standard, and whether we should first identify network elements or
    impairments.[^48] In Section III.B, we seek comment on weighing the
    many important goals of the Act as we consider whether and how to
    refine our unbundling analysis in interpreting, among other things,
    the "at a minimum" language of the statute. Then, in Section III.C,
    we ask whether both the "necessary" and "impair" standards as well
    as other statutory language support an unbundling analysis that is
    more targeted, and seek comment on various approaches to unbundling
    that take into consideration specific services, facilities, and
    customer and business considerations. In Section III.D, we seek
    comment on applying the unbundling analysis to define the network
    elements and to resolve specific implementation issues. We request
    comment on the appropriate role of state commissions in Section
    III.E, and ask in Section III.F whether we should retain or modify a
    periodic review cycle for UNE reevaluation.

17. In responding to this NPRM, parties are strongly encouraged to
    submit evidence regarding actual marketplace conditions, which will
    inform our understanding of how the Commission's unbundling rules
    have shaped the market to date. In particular, we encourage parties
    to submit evidence detailing what alternatives to the incumbents'
    networks are available, and where they are available. Based on our
    experience from prior proceedings, we anticipate that we will find
    evidence of actual marketplace conditions to be more probative than
    other kinds of evidence, such as cost studies or hypothetical
    modeling. We invite parties to suggest what data would be useful to
    our consideration in this proceeding,[^49] including how any of the
    information the Commission routinely collects could be of use.[^50]

## Threshold Statutory Analysis

18. Throughout this NPRM, we ask specific questions about the manner in
    which we should apply the section 251(d)(2) "necessary"[^51] and
    "impair" standards. Section 251(d)(2)(A) states that "\[i\]n
    determining what network elements should be made available for
    purposes of subsection (c)(3), the Commission shall consider, at a
    minimum, whether . . . access to such network elements as are
    proprietary in nature is necessary."[^52] In the *UNE Remand Order*,
    the Commission adopted a limited definition of "proprietary in
    nature,"[^53] and interpreted the "necessary" standard to mean
    "taking into consideration the availability of alternative elements
    outside the incumbent's network, including self-provisioning by a
    requesting carrier or acquiring an alternative from a third-party
    supplier, lack of access to that element would, as a practical,
    economic, and operational matter, *preclude* a requesting carrier
    from providing the services it seeks to offer."[^54]

19. For elements that are not proprietary, the Act provides that the
    Commission "shall consider, at a minimum, whether . . . the failure
    to provide access to such network elements would impair the ability
    of the telecommunications carrier seeking access to provide the
    services that it seeks to offer."[^55] As explained above, the
    Commission interpreted this standard in the *UNE Remand Order* as
    requiring the Commission to consider whether, "taking into
    consideration the availability of alternative elements outside the
    incumbent's network, including self-provisioning by a requesting
    carrier or acquiring an alternative from a third-party supplier,
    lack of access to that element materially diminishes a requesting
    carrier's ability to provide the services it seeks to offer."[^56]
    The Commission considered the factors of cost, timeliness, quality,
    ubiquity, and operational issues in making this "materially
    diminish" determination.[^57] We seek comment on whether we should
    assign more or less weight to any of the factors of the standard.
    For example, should cost be afforded less weight than other
    factors?[^58]

20. In prior orders, the Commission has generally set forth network
    element definitions and then made a determination as to whether
    requesting carriers were impaired without access to those elements.
    We seek comment on whether we should continue this approach, or
    whether we should first identify impairments to requesting carriers'
    ability to provide service, and then define network elements that
    specifically address such impairments.

## "At a Minimum" Statutory Analysis

21. In the *UNE Remand Order*, the Commission determined that section
    251(d)(2) contemplates that factors advancing the goals of the Act
    are relevant to an unbundling analysis. That is, an initial finding
    that a network element satisfies the "necessary" or "impair"
    standard does not automatically lead to the designation of a UNE,
    because "\[i\]n determining what network elements should be made
    available for purposes of subsection \[251\](c)(3), the Commission
    shall consider, *at a minimum*," the "necessary" and "impair"
    standards.[^59] Applying this interpretation in the *UNE Remand
    Order*, the Commission identified five factors that further the
    goals of the Act for consideration in its unbundling determination:
    the rapid introduction of competition in all markets; promotion of
    facilities-based competition, investment, and innovation; reduced
    regulation; market certainty; and administrative practicality.[^60]
    We seek comment on the considerations that should come into play in
    our unbundling analysis. As we review our experience with the
    factors identified in the *UNE Remand* *Order* and application of
    them, we seek comment on whether the list is complete, and on the
    relative weight to assign different factors. In particular, and as
    discussed below, we seek input on whether and how to carry out the
    advanced services mandate contained in section 706 of the 1996 Act
    as an explicit factor in our unbundling analysis, as some parties
    have suggested.[^61] We also ask whether our section 251(d)(2)
    determination should explicitly take into account other goals of the
    Act.

### Encouraging Facilities Investment and Broadband Deployment

22. We seek comment on whether and to what extent our unbundling
    analysis should expressly consider the Act's goal of encouraging the
    deployment of advanced telecommunications capability. More
    specifically, Congress declared that encouraging the provision of
    new services and technologies to the public is a policy of the
    United States,[^62] and in section 706 of the 1996 Act provided
    specific direction to the Commission to:

    encourage the deployment on a reasonable and timely basis of
    advanced telecommunications capability to all Americans (including,
    in particular, elementary and secondary schools and classrooms) by
    utilizing, in a manner consistent with the public interest,
    convenience, and necessity, price cap regulation, regulatory
    forbearance, measures that promote competition in the local
    telecommunications market, or other regulating methods that remove
    barriers to infrastructure investment.[^63]

    "Advanced telecommunications capability" is defined "without regard
    to any transmission media or technology, as high-speed, switched,
    broadband telecommunications capability that enables users to
    originate and receive high-quality voice, data, graphics, and video
    telecommunications using any technology."[^64] Although "broadband"
    is not defined by statute, the Commission has used this term to mean
    sufficient capacity to transport large amounts of information, and
    recognized that under its evolving nature the Commission "may
    consider today's 'broadband' services to be 'narrowband' services
    when tomorrow's technologies appear."[^65]

23. We seek comment on whether we can balance the goals of sections 251
    and 706 by encouraging broadband deployment through the promotion of
    local competition and investment in infrastructure. Some parties
    have argued that imposing unbundling requirements on incumbent LECs,
    particularly with respect to innovative, new facilities, may deter
    investment by both incumbent LECs and others.[^66] That is,
    requiring incumbents to unbundle new or upgraded facilities may
    discourage them from investing in those facilities in the first
    place.[^67] Moreover, the availability of incumbent facilities at
    cost-based rates may discourage competitive carriers and others from
    investing in or using alternatives to the incumbent's network. In
    its past unbundling orders, the Commission noted these policy
    concerns and formulated rules that limited incumbents' obligation to
    unbundle transport to existing facilities.[^68] Others have argued,
    alternatively, that facilities investment can be made possible only
    through first establishing a competitive presence in a market,
    through the purchase of UNEs. Thus, they argue, unbundling
    obligations are necessary for sustainable competition.[^69]

24. We seek comment on whether we should modify or limit incumbents'
    unbundling obligations going forward so as to encourage incumbents
    and others to invest in new construction.[^70] For example, should
    we exempt from an unbundling obligation any facilities that an
    incumbent LEC constructs after a set point in time? If so, should
    those facilities be exempt in perpetuity or for a limited duration
    in time? Commenting parties should also address whether we should
    exempt from unbundling obligations only certain types of new
    facilities, such as those intended to provide advanced
    telecommunications capabilities. In particular, should fiber loops
    be categorically de‑listed, while copper loops remain UNEs? Or, as
    one party has suggested, should we exempt from unbundling all
    fiber-based broadband facilities deployed by incumbents "in new
    build and total rehab situations?"[^71] Would such policies bias
    investment and maintenance decisions? Are there other proposals that
    more effectively advance the goals of the Act? In seeking comment on
    how newly-installed facilities should be treated, we ask whether new
    facilities should automatically trigger new unbundling obligations,
    and how we should consider overlays of existing facilities with
    upgraded new facilities in defining unbundling obligations. In
    addition, we ask how, if at all, we should distinguish between
    overlay construction and new facilities in new residential
    developments. Commenters should explain the statutory support for
    any such distinction, and the appropriate legal framework for the
    balance of the statutory goals.[^72] In particular, we seek comment
    on whether the "at a minimum" language in section 251(d)(2) can
    support a distinction between unbundling facilities used for analog
    voice telephony, and those used for advanced technologies.
    Additionally, we seek comment on whether, in lieu of limiting
    incumbents' unbundling obligations to encourage investment in new
    facilities, we might clarify or modify our pricing rules to allow
    incumbent LECs to recover for any unique costs and risks associated
    with such investment. Would such an approach adequately encourage
    new construction?

25. Moreover, to gauge the means of achieving meaningful, innovative
    competition in the future, we ask commenters to discuss the role
    that investment in new facilities has played over the last half
    decade. As we move into the second phase of statutory implementation
    and seek lasting competition, we ask for comment on the benefits of
    facilities-based competition compared to those of other forms. Does
    actual marketplace experience demonstrate that decreased dependence
    on the incumbents' networks correlates to more sustainable
    competition? Over the last five years, where and how has investment
    by carriers -- including incumbents -- led to technological and
    service innovations that ultimately benefited consumers? What are
    the primary causes of the observed behavior? Is a five-year period
    sufficient to draw any relevant definitive conclusions? In addition,
    we seek comment on experience relating increased investment in the
    nation's telecommunications infrastructure with increased redundancy
    and reliability necessary to ensure the continuous delivery of all
    services to the public.

26. While we examine more broadly whether and how to draw lines on the
    basis of service-specific or facilities considerations in Section
    III.C below, interpreting section 251(d)(2) to take into account the
    broadband goals embodied in section 706 raises some threshold
    questions about the meaning of "advanced telecommunications
    capability." For example, in order to ensure that our unbundling
    analysis adequately considers the goal of encouraging deployment of
    advanced telecommunications capability, do we need to consider
    whether this capability corresponds to a facility, a service, a
    market, or something different? We also ask for comment on whether
    drawing lines to account for this capability is only necessary with
    respect to loops and other "last-mile" facilities, or whether it
    also has implications for other network elements. For example, could
    alternative unbundling rules for switching or transport encourage
    deployment by incumbent LECs of this capability?

27. The task set out by the statute \-- to implement a competition
    policy that provides incentives for the "deployment" of advanced
    telecommunications capability without regard to transmission
    technology \-- requires a special focus on questions of intermodal
    and intramodal competition as they relate to broadband
    technology.[^73] First, we seek data both on how widely intermodal
    alternatives are deployed, and for what purposes they can be used.
    For example, how widely is upgraded cable plant deployed, and how
    much of it can support telephony, broadband, or both applications?
    Can satellites, fixed wireless, or mobile telephones provide an
    alternative to incumbent facilities, and if so, where? To what
    extent do intermodal competitors share common ownership with
    incumbent LECs, and how should we address this in our analysis?
    Should we consider only the actual capabilities of deployed
    platforms, or weigh their potential as well? If we are to weigh
    their potential, precisely how should we do so? Is this deployment
    significant for our impairment analysis, regardless of whether there
    is currently a wholesale market?

28. We next ask parties to comment on whether we should consider these
    intermodal providers as competitive alternatives to the incumbent's
    network. Although section 251(d)(2)(B) does not require
    technological neutrality explicitly, it contains no reference to the
    types of technology that the Commission must consider in unbundling
    the network. In the *UNE Remand Order*, the Commission did consider
    alternative technologies as part of the ubiquity and quality factors
    in its impairment analysis, but found that mobile telephones and
    fixed wireless were "not yet viable alternatives to the incumbent's
    wireline loop facilities."[^74] The Commission made a similar
    finding with regard to cable television plant as an alternative to
    the incumbent's loop.[^75] We seek comment on whether these
    conclusions are still valid in light of deployment over the last two
    years. We also seek comment on how should we weigh the competing
    interests in having broadband-capable facilities deployed in the
    first place, and encouraging competition and consumer choice in the
    broadband services market. That is, deployment of telephone
    facilities, wireless technologies, and cable plant that are all
    capable of carrying broadband services may provide a choice of
    service provider to end users served by more than one provider. But
    if none of these service providers has unbundling obligations,
    consumer choice may be limited to those two or three enterprises. We
    seek comment on how to balance the interests in broadband deployment
    and competition in our unbundling analysis.

29. We seek comment on what the Commission should consider to be
    "facilities‑based" competition for the purposes of the Act and this
    proceeding.[^76] Should we encourage investment in particular kinds
    of facilities in order to promote the goals of innovation,
    competition, and reliability that we describe above? For example, is
    it equally beneficial to encourage investment in transmission
    facilities as in switching facilities?

30. We also recognize that reduced dependence on incumbent facilities
    does not necessarily mean that competitors must own all of their own
    facilities. For example, they could obtain the use of non-incumbent
    facilities from third parties on a wholesale basis. We seek comment
    on whether unbundling obligations should operate as a competitive
    stimulus and encourage the development of a wholesale market in some
    kinds of facilities. Would it be more practical and economical for a
    single "wholesaler" to construct new facilities within an area and
    lease them to other carriers, rather than having multiple entities
    obtaining rights of way and permits and engaging in disruptive and
    duplicative construction? Would this "wholesaling" be more effective
    for some kinds of facilities, such as those that are more fungible
    from carrier to carrier like transmission, than for switching or
    other "intelligent" components? In particular, we also seek comment
    on the viability of an intermodal and third-party intramodal
    wholesale facilities market, particularly for high-capacity loops.
    For instance, could an unbundling policy be revised to encourage
    fixed wireless providers to build out to office buildings or
    multi-dwelling units, and then sell loop facilities or services to
    other carriers? Is the development of such a wholesale market for
    different technologies feasible? What barriers currently exist to
    the development of a third-party wholesale market, and what steps
    should we take to reduce such barriers?

### Other Statutory Considerations

31. In the *UNE Remand Order*, we also listed several factors for
    consideration in our unbundling analysis that advance statutory
    goals.[^77] We seek comment on whether there are other goals that
    the Commission should take into account in its unbundling analysis.
    For example, as the Commission has recognized, unfettered
    availability of UNEs can implicate universal service funding and
    damage the system of access charges.[^78] In response to this
    concern, the Commission imposed restrictions on the use of certain
    UNEs and initiated ongoing proceedings in response to these issues.
    More specifically, shortly after issuing the *UNE Remand Order*, in
    order to preserve the status quo with regard to incumbent LEC
    special access revenues pending a resolution of the issues contained
    in the *Fourth Further Notice of Proposed Rulemaking*, the
    Commission determined that competitive LECs must provide a
    "significant amount of local exchange service" to a particular
    customer in order to obtain UNE pricing for the EEL used to serve
    that customer.[^79] In the subsequent *Supplemental Order
    Clarification*, the Commission reasoned on the record before it that
    the related co-mingling restrictions in the safe harbors ensured
    that interexchange carriers did not use UNEs solely or primarily to
    bypass special access services.[^80]

32. We seek comment on whether and to what extent universal service and
    access charge issues should be considered in the unbundling
    analysis. Some carriers assert that the *CALLS Order* removed all
    implicit subsidies from interstate access charges, and therefore
    universal service considerations should not implicate unbundling
    policy.[^81] Others have argued that the threat to the entire
    interstate access regime is massive,[^82] that universal service
    issues arising from intrastate access charges still remain,[^83] and
    that section 251(g) protects incumbent LECs' receipt of compensation
    and the entire access charge regime until the Commission modifies
    it.[^84] We seek comment on how, if at all, to factor universal
    service considerations into our unbundling analysis. Interested
    parties in particular should comment on whether the court decision
    in the *CALLS Order*[^85] and, more recently, our issuance of the
    *MAG Order*,[^86] or any other development since we issued the
    *January 24, 2001 Public Notice* should inform our analysis. Is
    there still a risk to universal service if interexchange carriers
    migrate from switched access to UNEs?

33. More broadly, we also ask commenters to identify any additional
    factors not raised previously for consideration in our unbundling
    analysis that would further statutory goals. For example, should
    issues of public safety, national security, or network integrity be
    explicitly considered in our implementation of section 251?

## More Granular Statutory Analysis

34. In contrast to the *Local Competition First Report and Order* where
    the Commission required very broad unbundling when "technically
    feasible," the Commission sought to tailor the unbundling rules to
    address actual impairment in the *UNE Remand Order*. For example,
    the Commission declined to require unbundling of the operator
    services/directory assistance element after finding that
    alternatives to the incumbent are available to competitors.[^87] The
    Commission also constructed switching rules that did not require
    unbundling in dense urban areas,[^88] and the Commission declined to
    require the unbundling of packet switching, in most
    circumstances.[^89] Since the *UNE Remand Order*, parties have
    suggested other ways to apply the unbundling analysis in a more
    granular way.[^90] As discussed more fully below, in this proceeding
    we probe whether and to what extent we should adopt a more
    sophisticated, refined unbundling analysis.

35. Specifically, we first seek comment on applying the unbundling
    analysis to specific services and specific geographic locations.
    Second, we seek comment on applying the unbundling analysis to
    differing facilities, in order to take into account competitors'
    abilities to self-provision different kinds of facilities, and also
    specifically to encourage the deployment of facilities with
    broadband capabilities. Third, we seek comment on crafting
    unbundling rules that take into account customer and business
    considerations. That is, should unbundling rules differ based on the
    type of customer the carrier seeks to serve, or what kind of carrier
    the requesting carrier is? Finally, we seek comment on different
    mechanisms for transitioning to a more competitive marketplace.

### Service- and Location-Specific Considerations

36. We seek comment on applying the unbundling analysis to specific
    services, and in a manner that takes into account geographic
    variations in the availability of alternatives to the incumbent's
    network. In the *Supplemental Order Clarification*, the Commission
    noted section 251(d)(2)'s "services" language as it limited the
    conversion of special access circuits to combinations of loop and
    transport UNEs:

> \[Section 251(d)(2)\] asks whether denial of access to network
> elements "would impair the ability of the telecommunications carrier
> seeking access to provide *the services that it seeks to offer*."
> Although ambiguous, that language is reasonably construed to mean that
> we may consider the markets in which a competitor "seeks to offer"
> services and, at an appropriate level of generality, ground the
> unbundling obligation on the competitor's entry into those markets in
> which denial of the requested elements would in fact impair the
> competitor's ability to offer services.[^91]

In a Public Notice following the *Supplemental Order Clarification*, the
Commission solicited comment on whether it should undertake to conduct
its impairment analysis on a service-by-service or market-by-market
basis, and if so, how.[^92] Here, we seek to refine this line of inquiry
in two ways. First, we seek comment on applying the service-specific
approach beyond just impairment to all aspects of the section 251(d)(2)
analysis. Second, we seek to broaden the inquiry to include a geographic
component.

37. We seek comment on whether section 251(d)(2) requires us to take
    into account the particular "service" the requesting carrier seeks
    to offer. Alternatively, does section 251(c)(3) suggest the
    opposite, and limit in part or in whole our ability to define
    "network elements" in terms of "services"? Interested parties should
    expressly comment on whether and how to take services into account
    in our unbundling analysis. If we take a service-specific approach,
    should our identification of services for this purpose be governed
    by the Act's categories and definitions of services (*e.g.*,
    telephone exchange service, exchange access, CMRS), or is there some
    other principle we can use to categorize services at a level of
    generality that makes analysis practical? Is it useful to conduct
    unbundling analyses for individual services? Or would such an
    analysis stifle innovation and creativity as carriers decline to
    expand the services they offer for fear of losing access to UNEs?

38. In addition, how should we consider the level of competition for a
    particular service? For example, should the particular
    characteristics of the CMRS market affect the availability of UNEs
    to CMRS carriers?[^93] What effect, if any, would CMRS carrier
    access to UNEs have on the goal of encouraging the development of
    intermodal alternatives to the incumbents' networks? If an element
    is unbundled for one service, should we limit its availability to
    that service, or should we permit it to be used for any service? We
    note that the competitive checklist of section 271(c)(2)(B) requires
    BOCs to "provide\[\] or generally offer\[\]" local loops, local
    transport, and local switching.[^94] What, if anything, should we
    infer for purposes of the unbundling analysis from Congress'
    descriptions of these items as "local" in the section 271
    competitive checklist? Does the fact that the Act described these
    items as "local" have any bearing on our unbundling analysis under
    section 251?

39. We also seek comment on whether and how to take geography into
    account in the unbundling analysis. In the *UNE Remand Order*, the
    Commission took geographic considerations into account in
    formulating rules for determining under what circumstances incumbent
    LECs did not have to unbundle switching.[^95] Here, we seek comment
    on targeting the unbundling analysis by expanding the
    geographic-specific approach to all elements. What precisely are the
    considerations that could justify unbundling rules that vary from
    location to location? Is geographic location a better indicator of
    impairment for some elements, like loops, than for others, like
    switching and OSS? What kinds of geographic delineations would be
    useful to our unbundling analysis: political boundaries,
    metropolitan statistical areas (MSAs), density zones, or other
    delineations? We also ask parties to comment on how or whether a
    service- or location-specific unbundling analysis intersects with
    any "market-specific" dominance analysis we undertake in the
    *Incumbent LEC Broadband Services* proceeding.

40. We ask parties to comment on the competing interests involved in
    conducting a service- or location-specific unbundling analysis. On
    the one hand, such an analysis may more accurately pinpoint the
    circumstances under which unbundling is necessary to promote the
    goals we have identified. On the other hand, a service- or
    location-specific analysis will be administratively more difficult,
    because it will involve more data and more review, and appropriate
    classifications may vary over time. In addition, the resulting rules
    could be more administratively burdensome on carriers because it
    would be more difficult to keep track of where and under what
    circumstances certain elements must be unbundled.[^96] How should
    the Commission weigh the benefits of more refined unbundling rules
    against the administrative burden of conducting the more detailed
    analysis and applying more complicated rules?

### Facility and Capacity Considerations

41. We also seek comment on whether UNEs should be differentiated by
    facility type in order to account for differing availability of
    alternatives outside the incumbents' network. More specifically, in
    the past, the Commission has required incumbents to unbundle
    facilities largely without regard to those facilities' capacities or
    capabilities. For example, the Commission required the unbundling of
    "all technically feasible capacity-related services such as DS1-DS3
    and OC3-OC96 dedicated transport services."[^97] We seek comment on
    whether our unbundling analysis should take facilities'
    characteristics into account. Specifically, should UNEs be defined
    by capacity level of transmission facilities? Generally,
    higher-capacity transmission facilities have the potential to
    generate more revenue for the carrier than lower‑capacity
    transmission facilities, and therefore could be more economical to
    self-provision. Is there any reason to consider whether a facility
    is freestanding or whether it is merely part of a larger facility?
    For example, should the unbundling rules be different for a
    freestanding DS1 as opposed to a DS1 channel that rides on a larger
    facility, such as a DS3? Should we distinguish between facilities
    that are used exclusively for "local" services and those that are
    used exclusively to provide toll services, such as intercity
    transmission?[^98] For transmission or switching facilities, can we
    or should we distinguish between facilities using circuit-switched
    versus packet-switched technologies? Are there other distinctions we
    can or should make regarding transmission or switching facilities?

### Customer and Business Considerations

42. In the *UNE Remand Order*, the Commission found that "the type of
    customers that a competitive LEC seeks to serve is relevant to our
    analysis of whether the cost of self-provisioning or acquiring an
    element from a third-party supplier impairs the ability of a
    requesting carrier to provide the services it seeks to offer."[^99]
    The Commission applied this approach as it analyzed whether
    requesting carriers are impaired without access to local circuit
    switching.[^100]

43. We ask parties to comment on whether we should consider the type of
    customer that a requesting carrier seeks to serve as we implement
    the unbundling provisions of the Act. The Commission cannot, as a
    practical matter, consider the characteristics of each customer
    individually. Are there categories of customers contemplated by the
    Act? For example, should the availability of UNEs differ depending
    on whether the requesting carrier is using them to serve residential
    customers as opposed to business customers? Should the number of
    lines a customer takes, or other customer-specific characteristics,
    be considered in the analysis? Some parties may assert that
    alternate facilities are more widely available for larger business
    customers as a group. Should our unbundling rules differ for
    facilities serving larger business customers, or should those
    facilities be distinguished geographically or otherwise? We ask
    commenters to address the interplay of customer and business
    considerations with section 251(c)(3)'s requirement that elements be
    made available on a nondiscriminatory basis.

44. We also ask for commenters' input on whether the Commission should
    consider any characteristics of the requesting carrier in the
    unbundling analysis. For example, some incumbents have argued that
    it is unreasonable to require them to provide unbundled elements to
    wireless carriers, because those carriers have already assembled
    their networks using incumbents' tariffed special access
    services.[^101] Should access to UNEs differ depending on whether a
    particular requesting carrier is impaired without them, as opposed
    to whether requesting carriers as a whole are impaired? Should the
    availability of tariffed offerings play a role in the Commission's
    unbundling analysis?

### Triggers for Changes in UNE Availability

45. We recognize that, as alternative facilities become more available
    and the market for telecommunications in general grows more
    competitive, our unbundling rules will need to change in order to
    maintain the proper balance between requiring incumbent LECs to
    unbundle their facilities and encouraging other carriers to invest
    in alternatives. Some parties have suggested that the UNEs,
    particularly switching, could be phased out over time. Specifically,
    one party has suggested that, if certain conditions are met,
    competitive LECs could commit to serving no more than 75 percent of
    their customers' access lines using UNE-P[^102] after 12 months of
    adopting such a rule, with a goal of serving no more than 50 percent
    of their customers' access lines with UNE-P.[^103] We seek comment
    on whether, consistent with the statute, we can or should impose
    absolute temporal boundaries on UNE availability, including
    approaches in which the requirements that incumbents unbundle
    specific network elements would sunset as of a date certain. We also
    seek comment on whether any of the metrics we adopt pursuant to the
    *UNE Measurements and Standards Notice* or the *Special Access
    Measurements and Standards Notice* could be used as triggers for
    phasing out certain UNEs.[^104]

46. More broadly, we seek comment on other, non-temporal triggers that
    might signal that requesting carriers no longer need access to
    particular UNEs. For example, one carrier has suggested that
    requesting carriers may not be impaired in their ability to serve
    business customers without access to unbundled switching if four or
    more competitive LECs have deployed switches in an MSA where the
    incumbent makes EELs available.[^105] As another example, could a
    competitive LEC purchasing the UNE-P be required to migrate
    customers to its own facilities once it begins providing service to
    a sufficient number of customers served by a single central office?
    To what extent is the availability of collocation a relevant factor
    for a requesting carrier's access to UNEs? Alternatively, are there
    triggers that could result from the incumbent's own improvements?
    For example, could we limit the availability of the UNE-P to
    circumstances where an incumbent continues to use manual cutovers to
    provision unbundled loops, as opposed to those circumstances where
    the incumbent has automated the cutover process, such as by
    deploying digital cross-connects? We encourage parties to suggest
    other triggers that might signal when requesting carriers no longer
    need access to a particular element.

## Specific Network Elements

47. In the prior parts of this NPRM, we requested comment on the most
    appropriate way to interpret sections 251(d)(2) and 251(c)(3) in
    accordance with the intent of the Act. In this section, we seek to
    apply these sections and develop specific requirements concerning
    incumbent LECs' obligations to unbundle and provide access to
    network elements. We intend to build on the experience of all
    participants in the telecommunications industry with our existing
    rules. Accordingly, we seek comment on our existing unbundling rules
    and how we should apply the more granular analytical approach to the
    statute discussed above in deciding whether to retain, modify or
    eliminate these rules. We also seek comment on a number of
    outstanding issues regarding incumbent LEC obligations to provide
    access to network elements under these existing rules. In addition
    to the specific issues we identify below, we encourage commenters to
    address any other areas of uncertainty stemming from our existing
    network element rules.

### Loop, Subloop and Network Interface Devices

48. In the *UNE Remand Order*, we required incumbent LECs to provide
    access to loops, subloops, and network interface devices (NIDs) in
    order for requesting carriers to provide telecommunications
    services.[^106] We defined the loop (and subloop) as "a transmission
    facility" and all of its features, functions and capabilities.[^107]
    We found that requesting carriers were impaired without access to
    all available loop capacities (*e.g.*, DS1, DS3, OC3) and dark
    fiber.[^108] We defined the NID as "any means of interconnection of
    end-user customer premises wiring to the incumbent LEC's
    distribution plant."[^109] We seek comment on whether, in light of
    changed circumstances, we should retain these unbundling
    requirements and if so, whether we should modify these requirements
    or the existing definitions for these network elements.[^110] We
    also seek comment on the benefits and burdens resulting from
    continuing these unbundling requirements and whether there are
    alternative, less burdensome options available to achieve the goals
    of the Act.

49. The loop, subloop and NID as currently defined enable requesting
    carriers to connect end user customers to the carriers'
    equipment.[^111] We seek comment as to whether these network
    elements essentially provide similar functionality differing
    primarily only in the point of access they provide to the incumbent
    LEC's network. If so, should we consider the replacement of these
    existing network elements with a single "unified" loop network
    element? Would doing so require that we explicitly incorporate the
    functionality of additional equipment, such as packet switching,
    splitters or other passive devices into the definition of the
    loop?[^112] Alternatively, should we define such a "unified" loop as
    a particular level of bandwidth between a point in the incumbent
    LEC's network and a specific end user? Should our loop definition
    take into consideration and distinguish between various levels of
    bandwidth and quality of service (*e.g.*, constant bit rate,
    variable bit rate[^113])? How would any such changes to the loop
    definition impact the Act's goal of ensuring the deployment of
    broadband capabilities and encouraging investment in facilities?

50. As discussed above, we also seek comment on how we should treat
    deployment of new facilities by incumbent LECs for the purposes of
    our loop unbundling requirements.[^114] Should we apply the same
    requirements to all transmission facilities or should we distinguish
    between copper, fiber and wireless facilities? Should we adopt
    unbundling requirements specific to the unique characteristics of
    the underlying facilities? For example, the transmission capacity of
    fiber optic facilities is significantly larger than a standard
    copper loop. Should our rules treat different local exchange network
    architectures differently? For example, should we distinguish
    between the deployment of fiber optic facilities directly to the
    home (*i.e.*, "fiber to the curb") and fiber optic facilities only
    to remote terminals? Should we treat all loop facilities the same or
    should we distinguish between existing facilities and new
    construction? Should we adopt different rules for new "overlay"
    facilities that duplicate existing facilities than for new
    deployment that completely replaces old facilities? In other words,
    should we consider whether the incumbent LEC has multiple
    alternative facilities in place to serve a specific customer in
    determining what, if any, facilities the incumbent must provide on
    an unbundled basis? To what extent can requesting carriers use older
    facilities, such as spare copper plant, after an incumbent LEC has
    deployed "overlay" network facilities? What operational issues are
    created by such overlapping facilities? For example, are there
    additional spectrum management or interference problems (*i.e.*,
    "cross-talk") associated with the simultaneous deployment of
    packet-switched services over older copper facilities and new fiber
    optic facilities?

51. We also seek comment generally on how we should apply the more
    granular unbundling analysis we seek to develop in this proceeding.
    Should we, as described above, apply service, geographic, capacity
    or other distinctions to the unbundled loop? If we were to limit
    access to unbundled loops to specific geographic areas what type of
    data should we review to make such a determination? Should we
    distinguish unbundling obligations by the services (*e.g.*,
    circuit-switched analog voice, packet-switched digital data) that
    the requesting carrier seeks to provide with access to the loop? Can
    we, and if so, should we make meaningful distinctions between those
    loops capable of providing basic services versus those capable of
    advanced or broadband services?

52. In the *UNE Remand Order*, we found that requesting carriers were
    impaired without access to all high-capacity loops and dark fiber
    loops.[^115] Some commenters have suggested that loops of DS1 or
    greater capacity should not be unbundled because requesting carriers
    can self-provision or obtain such capacity from third parties.[^116]
    Others have suggested that marketplace conditions still pose an
    impairment, even for high-capacity loops.[^117] We seek comment on
    whether application of a more refined impairment analysis would
    result in a continued requirement of access to all capacity levels
    for unbundled loops. To the extent that we continue to require
    unbundling of high-capacity loops (DS1s and above), do we have the
    authority to require incumbent LECs to engage in the activities
    necessary to activate such loops that are not currently activated in
    the network, such as attaching any necessary electronics to the loop
    facility? If we do have this authority, should we impose such a
    requirement? From both a legal and policy perspective, what should
    be the limits of any such requirement?[^118] For example, although
    it may be unreasonable to expect an incumbent to engage in
    construction of new outside plant as part of an unbundling
    obligation, it may not be unreasonable to make use of spare port
    capacity on an existing multiplexer. Taking account of the goals of
    the Act to encourage broadband deployment and facilities investment,
    we ask parties to specify the appropriate contours of the incumbent
    LECs' unbundling obligations in this context.

### High Frequency Portion of the Loop

53. In the *Line Sharing Order*, we required incumbent LECs to provide
    access to the high frequency portion of the loop necessary for the
    provisioning of line sharing arrangements between incumbent LECs and
    competitive LECs.[^119] More specifically, access to this network
    element allows competitive LECs to provide an advanced service, such
    as assymetric digital subscriber line (ADSL), over the same loop
    facility that the incumbent LEC uses to provide the customer with
    voice service. We have also found that competitors are impaired
    without access to line splitting arrangements supported by incumbent
    LECs that allow for competitive LECs voluntarily to cooperate in the
    provision of advanced and basic services to a single customer over a
    single unbundled loop.[^120] We seek comment on whether, in light of
    changed circumstances, we should retain this unbundling requirement
    and if so, whether we should modify this requirement or the existing
    definition for this network element. We also seek comment on the
    benefits and burdens resulting from continuing these unbundling
    requirements and whether there are alternative, less burdensome
    options available to achieve the goals of the Act.

54. At least one party has urged us to require incumbent LECs to provide
    access to a low-frequency network element in order to facilitate the
    provisioning of basic services, with or without the provisioning by
    another party of an advanced service on the same facility.[^121] We
    seek comment generally on parties' experience with our current rules
    concerning access to the high frequency portion of the loop and the
    proposals for further sub-frequency unbundling put forth and
    incorporated by reference in this proceeding.

### Switching

55. In the *UNE Remand Order*, the Commission required incumbent LECs,
    with some restrictions, to provide access to "local switching
    capability" and "tandem switching capability" for the provision of a
    telecommunications service.[^122] The Commission defined "local
    circuit switching capability" to include "line-side facilities,"
    "trunk-side facilities," and all the features, functions and
    capabilities of the switch.[^123] We seek comment on whether, in
    light of changed circumstances, we should retain these unbundling
    requirements and if so, whether we should modify these requirements
    or the existing definitions for these network elements. We also seek
    comment on the benefits and burdens resulting from continuing these
    unbundling requirements and whether there are alternative, less
    burdensome options available to achieve the goals of the Act.

56. In the *UNE Remand Order*, the Commission recognized that under
    certain circumstances, lack of access to unbundled local circuit
    switching would not impair requesting carriers and that our
    unbundling rules should take such circumstances into account.[^124]
    Specifically, in density zone one of the top fifty MSAs, incumbent
    LECs that make the EEL combination available are not obligated to
    provide unbundled circuit switching to requesting carriers for
    serving customers with four or more lines. [^125] We seek comment on
    the how well this "carve-out" to unbundled switching has worked in
    practice; whether the elements of the carve‑out should be altered or
    refined; or whether, based on the experience of the past three
    years, a substantially revised approach is called for.[^126]

57. First, we seek comment on the geographic component of the switch
    carve-out. In the *UNE Remand Order*, the Commission selected the
    top fifty MSAs because switch deployment appeared to be concentrated
    in these MSAs, and in all but two of the top fifty MSAs, competitors
    had deployed at least three switches.[^127] Parties seeking
    reconsideration of the *UNE Remand Order* question whether switch
    deployment as recorded in the Local Exchange Routing Guide (LERG) is
    a reliable indication of whether competitors can serve the mass
    market using their own switches. These parties suggest that
    competing carriers may have deployed switches primarily to serve
    business customers using digital lines, and not to serve residences
    and smaller businesses using voice grade analog lines, and
    therefore, overall switch deployment is a poor proxy for gauging
    competition in the mass market.[^128] On the other hand, incumbent
    LECs generally support use of switch deployment as a proxy for
    impairment, but argue that the number of switches deployed warrants
    a substantially larger geographic switch carve-out than created by
    our current rules.[^129] We seek comment, in light of our experience
    since the *UNE Remand Order*, on whether a geographic limit is most
    appropriate for a switch carve-out, or whether other factors such as
    customer size or the capacity level of the transmission facilities
    may be better suited to matching availability of the incumbent
    carrier's switch to impairment of the requesting carrier. We also
    solicit information regarding the precise nature of the LERG data.
    In particular, we ask commenters to discuss whether some facilities
    designated by the LERG as switches may not be suitable for providing
    local exchange service to mass market customers, and whether the
    methodology used by the LERG could lead to over- or under-counting
    of switches.

58. Second, we seek comment on the customer-size component of the switch
    carve-out. In the *UNE Remand Order*, the Commission determined
    that, without access to unbundled local switching, requesting
    carriers were impaired in their ability to serve the mass
    market.[^130] Noting that commenters had not identified the
    characteristics that distinguish the mass market from medium and
    large business customers, the Commission found that a significant
    portion of the mass market could be captured by a four-line limit
    because that limit would include nearly all residential users and
    those business users that, because they took fewer than four access
    lines, were more akin to residential users than they were to large
    businesses.[^131] We seek comment on how best to determine the mass
    market. For example, commenters might discuss whether the mass
    market is best understood as those customers that are courted by
    mass media and marketing campaigns, or as those customers obtaining
    service by means of a certain technology, a specific capacity level
    of the transmission facilities (*e.g.*, analog loop market), or that
    are served by no more than a certain number of lines.

59. We also seek comment whether, for purposes of the switch carve-out,
    a more suitable division might lie between residences and
    businesses.[^132] If we again adopt a line-count limit to target the
    mass market, we ask commenters to discuss how such an approach
    should treat specific end users, such as a growing or seasonal
    businesses, that originally qualify under the limit, but later
    exceed it on a temporary or permanent basis. We also ask commenters
    to consider whether, for serving the mass market, requesting
    carriers may view the incumbent's switch less as an independent
    network element than as a dependable method of obtaining access to
    the incumbents' loops.[^133] If so, we seek comment whether
    incumbents that adopt a mechanized method of transferring loops to a
    competitive carrier's switch should be excused from the obligation
    to provide unbundled switching to mass market customers. In
    particular, we seek comment regarding possible gating factors such
    as cost, reliability, and scalability that would determine the
    feasibility of transferring loops on a mechanized basis. Finally, we
    ask commenters to discuss any other technological developments that
    we should consider in determining the extent and duration of the
    switch carve-out.

60. Third, in the *UNE Remand Order*, the Commission required incumbent
    LECs to make the EEL combination available as a precondition to
    taking advantage of the switch carve-out. We now ask commenters to
    discuss whether that precondition is appropriate and whether the
    availability of the EEL combination serves to address impairment
    that would otherwise exist in the absence of unbundled switching in
    these geographic areas.

61. Finally, in the *UNE Remand Order*, the Commission defined "packet
    switching capability" as "routing or forwarding packets, frames,
    cells or other data units based on address or other routing
    information contained in the packets, frames, cells or other data
    units" as well as the functions performed by Digital Subscriber Line
    Access Multiplexers (DSLAMs).[^134] The Commission required
    incumbent LECs, in limited circumstances, to provide access to
    "packet switching capability."[^135] We seek comment on whether, in
    light of changed circumstances, we should retain this unbundling
    requirement and, if so, whether we should modify this requirement or
    the existing definition for this network element. Specifically, some
    parties have asserted that the term "forwarding" in our current
    definition sweeps in fiber optic facilities in the loop used in the
    transmission (*i.e.*, "forwarding") of packets. We seek comment on
    whether our current definition is correct as a technical matter.
    Should we alter our definition of packet switching to explicitly
    include or exclude the fiber optic facilities used in the
    transmission of packets to a central office termination point?

62. Similarly, we also seek comment on whether we should retain or
    modify our current definition of DSLAM functionality. Specifically,
    as a technical matter, should our definition include the "ability to
    forward voice channels, if present, to a circuit switch?"[^136] Does
    this forwarding of voice channels encompass the fiber optic
    facilities in the loop used in such transmission? We seek comment on
    the benefits and burdens resulting from the packet switching
    unbundling requirement and seek comment on whether there are
    alternative, less burdensome options available to achieve the goals
    of the Act. In particular, we seek comment on whether we should
    alter the Commission's standard for those circumstances in which
    incumbent LECs must unbundle packet switching. Is this standard
    still tailored to the actual impairment facing competitors seeking
    to access next-generation architecture? We seek comment on the level
    of competitive LEC demand for and use of unbundled packet switching
    under our existing standard and the impact of that standard on
    incumbent LEC investment in packet switching capability at remote
    terminal facilities.

### Interoffice Transmission Facilities

61\. In the *UNE Remand Order*, the Commission found that requesting
carriers are impaired without access to entrance facilities and
interoffice facilities on a shared or dedicated basis.[^137] We defined
dedicated transport as "incumbent LEC transmission facilities . . .
dedicated to a particular customer or carrier, that provide
telecommunications between wire centers owned by incumbent LECs or
requesting telecommunications carriers, or between switches owned by
incumbent LECs or requesting telecommunications carriers."[^138] The
Commission defined shared transport as "transmission facilities shared
by more than one carrier, including the incumbent LEC, between end
office switches, between end office switches and tandem switches, and
between tandem switches, in the incumbent LEC network."[^139] The
Commission also found that requesting carriers were impaired without
access to all available transport capacities (*e.g.*, DS1, DS3, OC3) and
dark fiber. We seek comment on whether, in light of changed
circumstances, we should retain these unbundling requirements and if so,
whether we should modify these requirements or the existing definitions
for these network elements. For example, some CMRS carriers assert that
incumbent LECs have refused to provide unbundled transport on the basis
that a CMRS cell site (*i.e.*, base station) is not a switch or wire
center and therefore, transport to such location does not meet the
definition for unbundled transport.[^140] We seek comment on whether the
facilities requested by CMRS carriers fit within our current definition
for unbundled transport and if not, whether we should modify our
definition of transport to include the unbundling of these
facilities.[^141] We also seek comment on the benefits and burdens
resulting from continuing these unbundling requirements and whether
there are alternative, less burdensome options available to achieve the
goals of the Act.

62\. We seek comment on whether we should apply to transport the more
granular unbundling analysis we seek to develop in this proceeding. For
example, given the prevalence of competitive transport providers, should
we apply service, geographic, capacity or other distinctions to the
availability of unbundled transport? Given the point-to-point nature of
most transport facilities, how would we apply geographic disaggregation
to this network element? Could we consider all potential routes
originating and terminating in a specific geographic area, such as a
MSA? For example, should we limit access to unbundled transport in
geographic areas where sufficient levels of alternative transport
facilities exist? Should we limit the availability of transport to
certain capacity levels? Some parties assert that dedicated transport of
a DS1 or greater capacity can be self-provisioned or acquired from third
parties.[^142] Others state that marketplace conditions still pose an
impairment to requesting carriers.[^143] In the *UNE Remand Order*, we
required incumbent LECs to provide access to all technically feasible
capacity levels of unbundled transport (*i.e.*, DS1, DS3, OC3). We seek
comment on whether application of a more refined impairment analysis
would lead to different requirements for different levels of capacity.
Should we distinguish by the services that the requesting carrier seeks
to provide with access to unbundled transport? Are there distinctions we
can and should make between classes of requesting carriers? For example,
are there fewer transport alternatives available to CMRS carriers than
to other types of requesting carriers?[^144] Some CMRS carriers assert
that they obtain almost all of their high-capacity special access
circuits from incumbent LEC tariffs.[^145] What other alternatives are
available to a CMRS carrier seeking to transport traffic between its MSC
and base stations, and between base stations?

63\. We also seek comment on the extent to which incumbent LECs have an
obligation to modify their existing networks in order to provide access
to network elements as required under rules prescribed by the
Commission. The Commission previously concluded that because the
incumbent LECs' networks were not initially constructed in a manner that
provides for access to network elements, incumbent LECs have an
obligation to modify those networks in order to comply with their
unbundling requirements under the Act.[^146] The Commission has also
recognized that in at least some circumstances, incumbent LECs are not
required to build new facilities in order to fulfill competitors'
requests for network elements. For example, our current rules exempt
incumbent LECs from any obligation "to construct new transport
facilities to meet specific competitive LEC point-to-point demand
requirements for facilities that the incumbent LEC has not deployed for
its own use."[^147] In the *UNE Remand Order*, the Commission also
prohibited the conversion of the entrance facility portion of a tariffed
special access service to network element pricing to limit the ability
of carriers to bypass access charges.[^148] Should these policies be
limited to interoffice transmission facilities, or are they equally
applicable to loops and other network elements? Do special construction
provisions of special access tariffs, such as non-recurring charges and
term guarantees with termination liabilities, protect the incumbent LECs
from uncompensated UNE conversions?[^149] We seek comment on the extent
of incumbent LECs' obligations to take reasonable steps to comply with
their unbundling obligations and invite proposals for guidelines or
bright line rules that would provide sufficient guidance all parties
involved to minimize disputes arising from implementation of unbundling
requirements adopted in this proceeding.[^150]

63. In the *UNE Remand Order*, the Commission concluded that ring
    architecture transport was included within the definition of
    unbundled transport and that incumbent LECs must provide it on an
    unbundled basis.[^151] The Commission also noted that incumbent LECs
    did not have to provide SONET capabilities to requesting carriers
    where the incumbent LEC did not already have SONET capabilities in
    place.[^152] Some parties have interpreted language in the *UNE
    Remand Order* to mean that incumbent LECs have no obligation to
    provide SONET capabilities to requesting carriers, regardless of
    whether or not the facilities existed at the time of the request. We
    seek comment on the extent to which incumbent LECs should not have
    to provide ring architecture transport, particularly those
    facilities supporting SONET capabilities. Are there specific
    considerations about SONET technology or ring architectures that
    warrant exemption from unbundling?

### Other Network Elements

64. In the *UNE Remand Order*, the Commission found requesting carriers
    were impaired without access to incumbent LECs' OSS functions,
    signaling networks and call-related databases.[^153] The Commission
    defined OSS functions as consisting of "pre-ordering, ordering,
    provisioning, maintenance and repair, and billing functions
    supported by an incumbent LEC's databases and information.[^154] The
    Commission defined signaling networks to include "signaling links
    and signaling transfer points"[^155] and call-related databases as
    "databases, other than operations support systems, that are used in
    signaling networks for billing and collection, or the transmission,
    routing, or other provision of a telecommunications service."[^156]
    We seek comment on whether, in light of changed circumstances, we
    should retain these unbundling requirements and if so, whether we
    should modify these requirements or the existing definitions for
    these network elements. We also seek comment on the benefits and
    burdens resulting from continuing these unbundling requirements and
    whether there are alternative, less burdensome options available to
    achieve the goals of the Act.

65. In the *UNE Remand Order*, the Commission noted that there were
    signaling alternatives available, but found that they were not
    sufficient to address the impairment to requesting carriers created
    by lack of access to the incumbent LEC's signaling system.[^157] In
    particular, we seek comment on the deployment of signaling services
    that provide competitors with an alternative to the incumbent LEC's
    signaling system whether those services are obtained on a wholesale
    basis or as the result of self-deployment of facilities. What type
    of data should we consider to determine whether requesting carriers
    continue to be impaired without access to incumbent LECs' signaling
    systems?

66. In the *UNE Remand Order*, the Commission found that requesting
    carriers were impaired without access to incumbent LECs'
    call-related databases, "including, but not limited to, the Calling
    Name Database, 911 Database, E911 Database, Line Information
    Database, Toll Free Calling Database, Advanced Intelligent Network
    Databases, and downstream number portability databases."[^158] We
    seek comment on whether we need to apply our unbundling analysis
    more specifically to each call-related database. For example, should
    we apply service or customer distinctions to our existing
    requirements for call-related databases?

67. The Commission has found that requesting carriers are impaired
    without nondiscriminatory access to incumbent LECs' OSS functions,
    including the pre-ordering function. The Commission has more
    specifically required incumbent LECs, as part of the pre-ordering
    function for loops supporting advanced services, to provide
    requesting carriers with access to line information necessary to
    determine whether advanced services can be provisioned to specific
    customers.[^159] In contrast, we have set forth no such specific
    guidelines for the pre-ordering function for other loop types and
    our understanding is that no incumbent LEC provides similar
    information concerning facilities characteristics for other loop
    types during the pre-ordering function. Our experience in recent
    applications for section 271 authority indicates that at least two
    incumbent LECs do not provide information concerning facilities
    characteristics for high-capacity loops to competitors until after
    the OSS ordering function has been completed.[^160] We request
    comment, therefore, on whether incumbent LECs, as part of the
    pre-ordering function for high-capacity loops, should provide
    requesting carriers with access to information concerning network
    infrastructure such that the requesting carrier can adequately
    determine whether to order the specific requested loop from the
    incumbent and when that order will be completed. Commenters should
    address whether, in light of changed circumstances, declining to
    provide such access impairs competitive LECs within the meaning of
    section 251(d)(2). We also seek comment on whether there are other
    aspects of access to OSS functions that might require further
    guidance or clarification from the Commission. Finally, we seek
    comment on whether any of our existing OSS requirements can be
    streamlined or modified to eliminate unnecessary regulatory burdens.

### General Unbundling Issues

68. The Commission has previously concluded that Congress intended for
    the term "nondiscriminatory" in section 251 to impose a more
    stringent standard for prohibiting discrimination than the "unjust
    and unreasonable discrimination" standard in section 202 of the
    Act.[^161] The Commission also interpreted the terms "just" and
    "reasonable" in section 251 to require incumbent LECs to provide
    competitors with access to network elements that provides "a
    meaningful opportunity to compete."[^162] In prior orders, the
    Commission has required incumbent LECs to provide all technically
    feasible methods of access to network elements. As an alternative,
    we seek comment on whether we should identify and require only those
    methods of access that fulfill the "just, reasonable and
    nondiscriminatory" standard of section 251(c)(3).

69. We also seek comment on the relationship between "services,"
    including both retail services and wholesale services (governed by
    sections 251(c)(4) and 251(b)(1)), and "network elements" (governed
    by sections 251(d)(2) and 251(c)(3)).[^163] For example, several
    parties have requested that we require incumbent LECs to provide a
    requesting carrier with both network elements and wholesale services
    in order to serve a single customer.[^164] In particular,
    competitive LECs propose to request access to a combination of
    network elements including the loop (*i.e.*, UNE-platform), in order
    to provide voice service to a customer while providing advanced
    telecommunications services, such as xDSL-based services, to the
    same customer via the resale of the incumbent LEC's retail
    telecommunications offering. We seek comment on whether the Act
    *requires* incumbent LECs to provide such a combination of network
    elements and services and the underlying statutory analysis that
    supports such a requirement. Several parties have asserted that we
    should expressly allow co-mingling of network elements with access
    services.[^165] Should we continue to impose limits on the ability
    of requesting carriers to combine certain network elements and
    services in order to serve a specific customer or class of
    customers? [^166] We seek comment generally on the rights and
    obligations of all carriers in regards to the use and provision of
    services and network elements, particularly when combined over the
    same facilities or when used in combination to serve a specific
    customer or class of customers.

70. We also seek comment specifically on the co-mingling restrictions
    currently in place. In the safe harbor provisions of the
    *Supplemental Order Clarification*, the Commission articulated two
    specific prohibitions on the co-mingling of services and network
    elements: (1) requesting carriers may not "connect" loop-transport
    combinations to the incumbent LEC's tariffed services, and (2)
    requesting carriers may not "combine" loop network elements or
    loop‑transport combinations with tariffed special access
    services.[^167] Since that time, some commenters have suggested that
    we should impose a general prohibition on "connecting" or
    "combining" any network elements or combinations with any access
    services. Incumbent LECs in particular, argue that their billing
    systems are not designed to treat a single circuit as part network
    element and part tariffed service, and that they have separate
    personnel to handle provisioning, repair, maintenance, billing and
    other functions for network elements as opposed to tariffed access
    services that would make it difficult to manage circuits that
    co-mingled network elements and tariffed services.[^168] In
    contrast, competitive LECs state that the current co‑mingling
    restrictions force them to build and operate two duplicate,
    inefficient networks (*i.e.*, one for network elements and one for
    tariffed services), thereby adding excessive cost and delay to their
    provision of competitive services.[^169] We seek comment from all
    parties on these assertions and whether there are practical
    difficulties in co-mingling network elements with tariffed services.
    We also seek comment on methods to overcome such difficulties.
    Finally, are there any other legal or policy reasons for permitting
    or prohibiting co-mingling restrictions?

71. In addition, we note that the safe harbor provisions limit
    requesting carriers' access to EEL combinations in order to preserve
    the status quo with regard to the Commission's current access charge
    regime.[^170] We seek comment on whether the Commission's safe
    harbor provisions, in practice, are effectively tailoring access to
    EEL combinations to those requesting carriers seeking to provide
    "significant local usage" to their end users. Based on practical
    experience, how many circuits eligible for conversion under the safe
    harbors have actually been converted? More broadly, do our safe
    harbors appropriately target competitive LEC impairment to local
    exchange service?

72. We seek comment on the relationship between section 271(c)(2)(B) and
    sections 251(d)(2) and 251(c)(3). The Act requires BOCs, as part of
    the application for authority to provide interLATA services, to
    demonstrate that they provide or generally offer local loop
    transmission, local transport, local switching, databases and
    signaling.[^171] The Commission has previously considered these
    requirements to be informative in determining which network elements
    must be unbundled pursuant to section 251.[^172] With respect to the
    potential limitation or removal of unbundling obligations that
    overlap the requirements of section 271(c)(2)(B), should we treat
    those network elements differently from other elements and, if so,
    how? In the *UNE Remand Order*, the Commission found that where
    there is no longer a requirement to unbundle a network element
    comparable to a section 271 checklist item, the market price for
    that checklist item should prevail.[^173] We seek comment on how to
    evaluate a checklist item where there is no unbundling requirement
    for the network element that corresponds to that checklist item, and
    on the appropriateness of evaluating a tariffed service that
    corresponds to that network element.[^174]

73. Similarly, we seek comment on how, in the absence of a section 251
    unbundling obligation for a network element, sections 201 and 202 of
    the Act may be applied to encourage broadband deployment and
    investment in facilities by both incumbents and competitors. For
    example, one incumbent LEC has asserted that mandatory unbundling of
    its broadband network is not necessary to incent facilities
    investment and ensure customer access, where other carriers can
    purchase a wholesale service at its central offices to reach their
    customers at a "commercially reasonable rate."[^175] We ask
    interested parties to comment on how commercially reasonable prices
    should be determined. Should they be established solely through
    private negotiation or is some regulation appropriate? At what level
    should prices be set to maximize investment in advanced
    telecommunications infrastructure, while still affording competitive
    access? Those parties advocating regulations should specify the
    method and degree of regulation, and how sections 201 and 202 of the
    Act or other statutory provisions provide authority for such
    regulation.

74. We seek comment on whether any specific quality or variation of a
    "network element" provided by an incumbent LEC to itself, to its
    customers or other carriers should be considered "superior" under
    the now invalidated Rule 51.311(c). There is very little evidence in
    CC Docket No. 96-98 concerning specific examples of "superior"
    network elements or "superior" access to network elements, and the
    Eighth Circuit opinion invalidating the rule also does not refer to
    specific examples.[^176] We seek comment on whether the quality of a
    network element could be found to be something other than "superior"
    if it allows the provision of services that could not be provisioned
    using network elements of another quality. To the extent that a
    network element encompasses functionality, features and capabilities
    of an existing or prior offering of a service, or other arrangement
    of an incumbent LEC, we seek comment as to whether this is
    presumptive evidence that the quality of or access to a network
    element is not "superior."

## The Role of the States

75. We seek comment on the proper roles of state commissions in the
    implementation of unbundling requirements for incumbent LECs.
    Section 251(d)(3) of the Act permits state commissions to establish
    access obligations that are consistent with Commission unbundling
    rules.[^177] In the *UNE Remand Order*, we interpreted section
    251(d)(3) to grant authority to state commissions to impose
    additional obligations upon incumbent LECs so long as they met the
    requirements of section 251 and national policy framework of that
    order.[^178] However, the Commission found that "state-by-state
    removal of elements from the national list would substantially
    prevent implementation of the requirements and purposes of this
    section and the Act,"[^179] particularly with regard to uncertainty
    and frustration of business plans.[^180] As a result of our attempt
    to apply the Act's unbundling requirements more precisely here, it
    is not unreasonable to expect the administrative burden on the
    Commission to increase. We also recognize that state commissions may
    be more familiar than the Commission with the characteristics of
    markets and incumbent carriers within their jurisdictions, and that
    entry strategies may be more sophisticated in recognizing regional
    differences. We seek comment, therefore, on the extent to which
    state commissions can act in creating, removing, and implementing
    unbundling requirements and the statutory provisions that would
    provide authority for states to act, consistent with applicable
    limitations on delegations of authority to the states.

76. Specifically, should the Commission establish national standards
    that the states will apply to their incumbents' networks, much like
    the Commission has done with regard to setting network element
    pricing? For example, if the Commission determined that accessing
    end users (*i.e.*, "last mile") presented an impairment to
    requesting carriers, could each state commission adopt a definition
    of that element that specifically dealt with the unique architecture
    of its incumbent LECs and the impairment factors we have identified
    above? Or, more broadly, are states better situated to tailor
    unbundling rules that more precisely fit their markets? Do state
    commissions have the resources to conduct such an investigation?
    Should the development of federal unbundling standards rely on any
    of the federal performance standards that may be established in the
    *UNE Measurements and Standards Notice* and *Special Access
    Measurements and Standards Notice*? For example, where an incumbent
    is meeting the standard set forth for a particular UNE on a
    consistent basis, should the Commission rely on this performance as
    a factor in de-listing that element for that state?[^181] We
    encourage state commissions in particular to comment on these
    issues. We also seek comment on a proposal to convene a
    Federal-State Joint Conference on UNEs pursuant to section 410(b) of
    the Act[^182] to inform and coordinate our three‑year review.[^183]

## Implementation Issues

77. We undertake this review of UNEs consistent with the Commission's
    pronouncement in the *UNE Remand Order* that it needed to reevaluate
    its national rules periodically to determine whether unbundling the
    incumbent's network meets the requirements of section 251 and the
    goals of the Act.[^184] The Commission established a quiet period
    for the filing of petitions to remove elements prior to these
    reviews in order to provide a measure of certainty for competitors
    to design networks, attract investment capital, and carry out their
    business plans, as well as to prevent the administrative
    impracticality of entertaining numerous *ad hoc* petitions.[^185] As
    for the length of the review cycle, the Commission chose a triennial
    review period for three reasons: (1) parties were expected to
    implement the new rules as they negotiated new interconnection
    agreements, which typically have three-year terms; (2) three years
    is generally sufficient time for competitors to implement their
    plans; and (3) the Modified Final Judgment used a triennial review
    process.[^186] We request comment on the burden of proof that a
    party seeking to modify current rules and policies should
    bear.[^187] In declining to adopt a sunset period for removing
    unbundling obligations, the Commission noted that the record before
    it did not provide a basis for making predictive judgments about
    when an unbundling standard will no longer be met.[^188] We seek
    comment on this conclusion specifically. We invite interested
    parties to comment on whether we should continue with a fixed period
    review process that bars the filing of petitions to remove
    unbundling obligations between cycles, and on whether we should
    adopt a sunset period for removing unbundling obligations. We seek
    comment in particular on whether a sunset period for remaining
    unbundling obligations could create incentives for facilities
    deployment and investment. If not, the details of alternative plans
    should be provided. Commenters are also invited to provide guiding
    principles that should be employed to determine whether and how
    existing unbundling rules should be modified on an ongoing basis.

78. Further, to the extent we retain a periodic review cycle, we request
    comment on whether three years is the appropriate length for the
    review cycle in light of competitors' experiences with network
    design, ability to attract investment, and execution of their
    business strategies. We also note that the Joint Petitioners
    questioned the consistency of a triennial UNE review with the
    requirement of section 11 of the Act to review in even‑numbered
    years whether regulations in effect continue to serve the public
    interest.[^189] Although our completion of the instant review in
    2002 satisfies both review cycles, we seek comment on whether the
    Commission could wait until 2005 for a subsequent UNE review, or
    whether section 11 requires a UNE review in 2004.

79. We also seek comment on whether and to what extent we should
    specifically address the financial impact created by changes to UNE
    availability to all affected carriers and access providers. Such an
    examination is consistent with our prior actions in recognizing new
    unbundling obligations as well as introducing other regulations. For
    example, in the *UNE Remand Order*, the Commission acknowledged that
    making entrance facilities available on an unbundled basis could
    have a large impact on incumbent LECs, and sought comment on the
    extent any such impact should be taken into account.[^190] In the
    *Supplemental Order Clarification*, the Commission identified a
    reason for a temporary constraint on the EEL independent from the
    protection of universal service or access charges: "An immediate
    transition to unbundled network element-based special access could
    undercut the market position of many facilities-based competitive
    access providers."[^191] More recently, in correcting market
    distortions of the intercarrier compensation regimes for ISP-bound
    traffic, the Commission adopted a transitional interim regime to
    avoid a "flash cut" that would upset the "legitimate business
    expectations of carriers and their customers."[^192] Commenters
    should discuss whether the Commission should address the financial
    impact of changes to UNE availability in a similar manner for all
    affected carriers, or whether the Commission can and should target
    its concerns to facilities-based providers or other classes of
    carriers.

80. In addition, we note that the Commission has previously tied the
    offset of BOC loss of revenues from switching unbundling with
    increased revenues from section 271 approval,[^193] and we encourage
    parties to identify cut-off dates and triggers that relate to the
    goals of the Act. Additionally, while the Commission has previously
    disallowed relief for competitors from termination liabilities for
    UNE conversions of special access circuits,[^194] we seek comment on
    what bases competitors should be able to obtain a "fresh look" for
    long term commitments.[^195]

# procedural matters

## Ex Parte Presentations

81. These matters shall be treated as a "permit-but-disclose" proceeding
    in accordance with the Commission's *ex parte* rules.[^196] 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 listing of the
    subjects discussed. More than a one or two sentence description of
    the views and arguments presented in generally required.[^197] Other
    requirements pertaining to oral and written presentations are set
    forth in section 1.1206(b) of the Commission's rules.

## Comment Filing Procedures

82. Pursuant to sections 1.415 and 1.419 of the Commission's
    rules,[^198] interested parties may file comments within 60 days
    after publication of this NPRM in the Federal Register and may file
    reply comments within 105 days after publication of this NPRM in the
    Federal Register. All filings should refer to CC Docket No. 01-338.
    Comments may be filed using the Commission's Electronic Comment
    Filing System (ECFS) or by filing paper copies.[^199] Comments filed
    through ECFS can be sent as an electronic file via the Internet to
    http://www.fcc.gov/e‑file/ecfs.html\>. Generally, only one copy of
    an electronic submission must be filed. In completing the
    transmittal screen, commenters should include their full name,
    postal service mailing address, and the applicable docket numbers,
    which in this instance are CC Docket No. 01-338, CC Docket No.
    96-98, and CC Docket No. 98-147. Parties may also submit an
    electronic comment by Internet e-mail. To get filing instructions
    for e-mail comments, commenters should send an e-mail to
    <ecfs@fcc.gov>, and should include the following words in the body
    of the message: "get form\<your e-mail address\>." A sample form and
    directions will be sent in reply.

83. Parties that choose to file by paper must file an original and four
    copies of each, and are hereby notified that effective December 18,
    2001, the Commission\'s contractor, Vistronix, Inc., will receive
    hand-delivered or messenger-delivered paper filings for the
    Commission\'s Secretary at a new location in downtown
    Washington, DC. The address is 236 Massachusetts Avenue, NE, Suite
    110, Washington, DC 20002. The filing hours at this location will be
    8:00 a.m. to 7:00 p.m. All hand deliveries must be held together
    with rubber bands or fasteners. Any envelopes must be disposed of
    before entering the building.

84. This facility is the only location where hand-delivered or
    messenger-delivered paper filings for the Commission\'s Secretary
    will be accepted. Accordingly, the Commission will no longer accept
    these filings at 9300 East Hampton Drive, Capitol Heights, MD 20743.
    In addition, this is a reminder that, effective October 18, 2001,
    the Commission discontinued receiving hand-delivered or
    messenger-delivered filings for the Secretary at its headquarters
    location at 445 12th Street, SW, Washington, DC 20554.

85. Other messenger-delivered documents, including documents sent by
    overnight mail (other than United States Postal Service (USPS)
    Express Mail and Priority Mail), must be addressed to 9300 East
    Hampton Drive, Capitol Heights, MD 20743. This location will be open
    8:00 a.m. to 5:30 p.m. The USPS first-class mail, Express Mail, and
    Priority Mail should continue to be addressed to the Commission\'s
    headquarters at 445 12th Street, SW, Washington, DC 20554. The USPS
    mail addressed to the Commission\'s headquarters actually goes to
    our Capitol Heights facility for screening prior to delivery at the
    Commission.

+----------------------------------+-----------------------------------+
| **If you are sending this type   | It should be addressed for        |
| of document or using this        | delivery to . . .                 |
| delivery\                        |                                   |
| method . . .**                   |                                   |
+----------------------------------+-----------------------------------+
| Hand-delivered or                | 236 Massachusetts                 |
| messenger-delivered paper        |                                   |
| filings for the Commission's     | Avenue, NE, Suite 110,            |
| Secretary                        |                                   |
|                                  | Washington, DC 20002 (8:00 to     |
|                                  | 7:00 p.m.)                        |
+----------------------------------+-----------------------------------+
| Other messenger-delivered        | 9300 East Hampton Drive,          |
| documents, including documents   |                                   |
| sent by overnight mail (other    | Capitol Heights, MD 20743         |
| than United States Postal        |                                   |
| Service Express Mail and         | (8:00 a.m. to 5:30 p.m.)          |
| Priority Mail)                   |                                   |
+----------------------------------+-----------------------------------+
| United States Postal Service     | 445 12^th^ Street, SW             |
| first-class mail, Express Mail,  |                                   |
| and Priority Mail                | Washington, DC 20554              |
+----------------------------------+-----------------------------------+

Parties who choose to file by paper should also submit their comments on
diskette. These diskettes should be submitted to Janice Myles, Policy &
Program Planning Division, Common Carrier Bureau, Federal Communications
Commission, at the filing window at 236 Massachusetts Avenue, NE, Suite
110, Washington, DC 20002. Such a submission should be on a 3.5 inch
diskette formatted in an IBM compatible format using Microsoft Word or
compatible software. The diskette should be accompanied by a cover
letter and should be submitted in "read only" mode. The diskette should
be clearly labeled with the commenter's name, proceeding (including the
docket numbers, in this case, CC Docket No. 01-338, CC Docket No. 96-98,
and CC Docket No. 98-147), type of pleading (comment or reply comment),
date of submission, and the name of the electronic file on the diskette.
The label should also include the following phrase: "Disk Copy \-- Not
an Original." Each diskette should contain only one party's pleading,
preferably in a single electronic file. In addition, commenters must
send diskette copies to the Commission's copy contractor, Qualex
International, Portals II, 445 12^th^ Street S.W., CY-B402, Washington,
D.C. 20554.

86. Regardless of whether parties choose to file electronically or by
    paper, parties should also file one copy of any documents filed in
    this docket with the Commission's copy contractor, Qualex
    International, Portals II, 445 12^th^ Street S.W., CY-B402,
    Washington, D.C. 20554 (telephone 202-863-2893; facsimile
    202-863-2898) or via e-mail at <qualexint@aol.com>.

87. Comments and reply comments must include a short and concise summary
    of the substantive arguments raised in the pleading. Comments and
    reply comments must also comply with section 1.48 and all other
    applicable sections of the Commission's rules.[^200] We direct all
    interested parties to include the name of the filing party and the
    date of the filing on each page of their comments and reply
    comments. All parties are encouraged to utilize a table of contents,
    regardless of the length of their submission. We also strongly
    encourage that parties track the organization set forth in the NPRM
    in order to facilitate our internal review process.

## Initial Regulatory Flexibility Analysis

88. As required by the Regulatory Flexibility Act of 1980, as amended
    (RFA),[^201] the Commission has prepared the present Initial
    Regulatory Flexibility Analysis (IRFA) of the possible significant
    economic impact on a substantial number of small entities by the
    policies and rules proposed in this NPRM. Written public comments
    are requested on this IRFA. Comments must be identified as responses
    to the IRFA and must be filed by the deadlines for comments on the
    NPRM provided above in Section IV.B. The Commission will send a copy
    of the NPRM, including this IRFA, to the Chief Counsel for Advocacy
    of the Small Business Administration.[^202] In addition, the NPRM
    and IRFA (or summaries thereof) will be published in the Federal
    Register.[^203]

### Need for, and Objectives of, the Proposed Rules

89. We initiate this proceeding to begin a comprehensive examination of
    the Commission's approach to UNEs, and the circumstances under which
    incumbent LECs must make UNEs available to requesting carriers
    pursuant to sections 251(c)(3) and 251(d)(2) of the 1996 Act. The
    Commission last reviewed its unbundling rules comprehensively in
    1999 in the *UNE Remand Order*. Recognizing that market conditions
    would change and create a need for commensurate changes to the
    unbundling rules, the Commission determined to revisit its
    unbundling rules again in three years \-- a schedule observed by
    issuing this NPRM. The NPRM also incorporates the records of several
    ongoing proceedings involving various UNE rules.

90. The NPRM seeks comment on all aspects of the Commission's unbundling
    framework. In particular, the NPRM seeks comment on the goals of the
    Act that should play a role in shaping unbundling policy, such as
    broadband deployment, investment in facilities, and others. The NPRM
    seeks comment on how the Commission could apply its unbundling
    analysis in a more sophisticated manner, by considering whether the
    unbundling rules should vary by type of service, facility,
    geography, or other factors. The NPRM then seeks comment on applying
    the unbundling approach to specific elements and resolving certain
    existing disputes or ambiguities in the unbundling rules. The NPRM
    also seeks comment on the proper role of the states, and how best to
    implement any new rules.

### Legal Basis

91. The legal basis for any action that may be taken pursuant to the
    NPRM is contained in sections 1-4, 157, 201-05, 251, 252, 254, 256,
    271, 303(r), and 332 of the Communications Act, as amended, 47
    U.S.C. §§ 151‑54, 157, 201-05, 251, 252, 254, 256, 271, 303(r), and
    332.

### Description and Estimate of the Number of Small Entities To Which the Proposed Rules Will Apply

92. The RFA directs agencies to provide a description of and, where
    feasible, an estimate of the number of small entities that will be
    affected by the proposed rules.[^204] The RFA generally defines the
    term "small entity" as having the same meaning as the terms "small
    business," "small organization," and "small governmental
    jurisdiction."[^205] In addition, the term "small business" has the
    same meaning as the term "small business concern" under the Small
    Business Act.[^206] 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 Small Business Administration (SBA).[^207]

93. In this section, we further describe and estimate the number of
    small entity licensees and regulatees that may be affected by rules
    adopted pursuant to this NPRM. The most reliable source of
    information regarding the total numbers of certain common carrier
    and related providers nationwide, as well as the number of
    commercial wireless entities, appears to be the data that the
    Commission publishes in its *Trends in Telephone Service*
    report.[^208] In a news release, the Commission indicated that there
    are 4,822 interstate carriers.[^209] These carriers include, *inter
    alia*, local exchange carriers, wireline carriers and service
    providers, interexchange carriers, competitive access providers,
    operator service providers, pay telephone operators, providers of
    telephone service, providers of telephone exchange service, and
    resellers.

94. The SBA has defined establishments engaged in providing
    "Radiotelephone Communications" and "Telephone Communications,
    Except Radiotelephone" to be small businesses when they have no more
    than 1,500 employees.[^210] Below, we discuss the total estimated
    number of telephone companies falling within the two categories, and
    the number of small businesses in each. We then attempt to further
    refine those estimates to correspond with the categories of
    telephone companies that are commonly used under our rules.

95. We have included small incumbent LECs 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."[^211] The SBA's
    Office of Advocacy contends that, for RFA purposes, small incumbent
    LECs are not dominant in their field of operation because any such
    dominance is not "national" in scope.[^212] We have therefore
    included small incumbent LECs in this RFA analysis, although we
    emphasize that this RFA action has no effect on Commission analyses
    and determinations in other, non-RFA contexts.

96. *Total Number of Telephone Companies Affected*. The U.S. Bureau of
    the Census ("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.[^213] This number contains a variety
    of different categories of carriers, including local exchange
    carriers, interexchange carriers, competitive access providers,
    cellular carriers, mobile service carriers, operator service
    providers, pay telephone operators, covered specialized mobile radio
    providers, and resellers. It seems certain that some of these 3,497
    telephone service firms may not qualify as small entities because
    they are not "independently owned and operated."[^214] For example,
    a PCS provider that is affiliated with an interexchange carrier
    having more than 1,500 employees would not meet the definition of a
    small business. It is reasonable to conclude that fewer than 3,497
    telephone service firms are small entity telephone service firms
    that may be affected by the new rules.

97. *Wireline Carriers and Service Providers*. The SBA has developed a
    definition of small entities for telephone communications companies
    except radiotelephone (*i.e.*, 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.[^215] According
    to the SBA's definition, a small business telephone company other
    than a radiotelephone company is one employing no more than 1,500
    persons.[^216] All but 26 of the 2,321 non-radiotelephone companies
    listed by the Census Bureau were reported to have fewer than 1,000
    employees. Thus, even if all 26 of those companies had more than
    1,500 employees, there would still be 2,295 non-radiotelephone
    companies that might qualify as small entities. We do not have data
    specifying the number of these carriers tha[t]{.underline} are not
    independently owned and operated, and thus 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 the SBA's definition. Consequently, we estimate 2,295 or fewer
    small telephone communications companies other than radiotelephone
    companies are small entities that may be affected by rules adopted
    pursuant to this *NPRM*.

98. *Local Exchange Carriers*. Neither the Commission nor the SBA has
    developed a definition for small providers of local exchange
    services. The closest applicable definition under the SBA rules is
    for telephone communications companies other than radiotelephone
    (*i.e.*, wireless) companies.[^217] According to the most recent
    *Telecommunications Industry Revenue* data, 1,335 incumbent carriers
    reported that they were engaged in the provision of local exchange
    services.[^218] We do not have data specifying the number of these
    carriers that are either dominant in their field of operations, are
    not independently owned and operated, or have more than 1,500
    employees, and thus are unable at this time to estimate with greater
    precision the number of LECs that would qualify as small business
    concerns under the SBA's definition. Consequently, we estimate that
    1,335 or fewer providers of local exchange service are small
    entities or small incumbent LECs that may be affected by the new
    rules.

99. *Interexchange Carriers*. Neither the Commission nor the SBA has
    developed a definition of small entities specifically applicable to
    providers of interexchange services (IXCs). The closest applicable
    definition under the SBA rules is for telephone communications
    companies other than radiotelephone (*i.e.*, wireless)
    companies.[^219] According to the most recent *Trends in Telephone
    Service* data, 204 carriers reported that they were engaged in the
    provision of interexchange services.[^220] We do not have data
    specifying the number of these carriers that are not independently
    owned and operated or have more than 1,500 employees, and thus are
    unable at this time to estimate with greater precision the number of
    IXCs that would qualify as small business concerns under the SBA's
    definition. Consequently, we estimate that there are 204 or fewer
    small-entity IXCs that may be affected by rules adopted pursuant to
    this *NPRM*.

100. *Competitive Access Providers*. Neither the Commission nor the SBA
     has developed a definition of small entities specifically
     applicable to competitive access services providers (CAPs). The
     closest applicable definition under the SBA rules is for telephone
     communications companies other than radiotelephone (*i.e.*,
     wireless) companies.[^221] According to the most recent *Trends in
     Telephone Service* data, 349 CAP/CLEC carriers and 60 other LECs
     reported that they were engaged in the provision of competitive
     local exchange services.[^222] We do not have data specifying the
     number of these carriers that are not independently owned and
     operated, or have more than 1,500 employees, and thus are unable at
     this time to estimate with greater precision the number of CAPs
     that would qualify as small business concerns under the SBA's
     definition. Consequently, we estimate that there are 349 or fewer
     small-entity CAPs and 60 or fewer other LECs that may be affected
     by rules adopted pursuant to this *NPRM*.

101. *Operator Service Providers*. Neither the Commission nor the SBA
     has developed a definition of small entities specifically
     applicable to providers of operator services. The closest
     applicable definition under the SBA rules is for telephone
     communications companies other than radiotelephone (*i.e.*,
     wireless) companies.[^223] According to the most recent *Trends in
     Telephone Service* data, 21 carriers reported that they were
     engaged in the provision of operator services.[^224] We do not have
     data specifying the number of these carriers that are not
     independently owned and operated or have more than 1,500 employees,
     and thus are unable at this time to estimate with greater precision
     the number of operator service providers that would qualify as
     small business concerns under the SBA's definition. Consequently,
     we estimate that there are 21 or fewer small-entity operator
     service providers that may be affected by rules adopted pursuant to
     this *NPRM*.

102. *Pay Telephone Operators*. Neither the Commission nor the SBA has
     developed a definition of small entities specifically applicable to
     pay telephone operators. The closest applicable definition under
     SBA rules is for telephone communications companies other than
     radiotelephone (*i.e.*, wireless) companies.[^225] According to the
     most recent *Trends in Telephone Service* data, 758 carriers
     reported that they were engaged in the provision of pay telephone
     services.[^226] We do not have data specifying the number of these
     carriers that are not independently owned and operated or have more
     than 1,500 employees, and thus are unable at this time to estimate
     with greater precision the number of pay telephone operators that
     would qualify as small business concerns under the SBA's
     definition. Consequently, we estimate that there are 758 or fewer
     small-entity pay telephone operators that may be affected by rules
     adopted pursuant to this *NPRM*.

103. *Resellers* (*including debit card providers*). Neither the
     Commission nor the SBA has developed a definition of small entities
     specifically applicable to resellers. The closest applicable SBA
     definition for a reseller is a telephone communications company
     other than radiotelephone (*i.e.*, wireless) companies.[^227]
     According to the most recent *Trends in Telephone Service* data,
     454 toll and 87 local entities reported that they were engaged in
     the resale of telephone service.[^228] We do not have data
     specifying the number of these carriers that are not independently
     owned and operated or have more than 1,500 employees, and thus are
     unable at this time to estimate with greater precision the number
     of resellers that would qualify as small business concerns under
     the SBA's definition. Consequently, we estimate that there are 454
     or fewer small-toll-entity resellers and 87 or fewer
     small-local-entity resellers that may be affected by rules adopted
     pursuant to this *NPRM*.

104. *Toll-Free 800 and 800-Like Service Subscribers*.[^229] Neither the
     Commission nor the SBA has developed a definition of small entities
     specifically applicable to 800 and 800-like service ("toll free")
     subscribers. The most reliable source of information regarding the
     number of these service subscribers appears to be data the
     Commission collects on the 800, 888, and 877 numbers in use.[^230]
     According to our most recent data, at the end of January 1999, the
     number of 800 numbers assigned was 7,692,955; the number of 888
     numbers that had been assigned was 7,706,393; and the number of 877
     numbers assigned was 1,946,538. We do not have data specifying the
     number of these subscribers that are not independently owned and
     operated or have more than 1,500 employees, and thus are unable at
     this time to estimate with greater precision the number of toll
     free subscribers that would qualify as small business concerns
     under the SBA's definition. Consequently, we estimate that there
     are 7,692,955 or fewer small-entity 800 subscribers, 7,706,393 or
     fewer small-entity 888 subscribers, and 1,946,538 or fewer
     small-entity 877 subscribers that may be affected by rules adopted
     pursuant to this *NPRM*.

105. *Cellular Licensees*. Neither the Commission nor the SBA has
     developed a definition of small entities applicable to cellular
     licensees. Therefore, the applicable definition of small entity is
     the definition under the SBA rules applicable to radiotelephone
     (*i.e.*, wireless) companies. This definition provides that a small
     entity is a radiotelephone company employing no more than 1,500
     persons.[^231] According to the Bureau of the Census, only 12
     radiotelephone firms out of a total of 1,178 such firms that
     operated during 1992 had 1,000 or more employees.[^232] Therefore,
     even if all 12 of these firms were cellular telephone companies,
     nearly all cellular carriers were small businesses under the SBA\'s
     definition. In addition, we note that there are 1,758 cellular
     licenses; however, we do not know the number of cellular licensees,
     since a cellular licensee may own several licenses. The most
     reliable source of information regarding the number of cellular
     service providers nationwide appears to be data the Commission
     publishes annually in its *Telecommunications Industry Revenue*
     report, regarding the Telecommunications Relay Service (TRS). The
     report places cellular licensees and Personal Communications
     Service (PCS) licensees in one group. According to recent data, 808
     carriers reported that they were engaged in the provision of either
     cellular or PCS services.[^233] We do not have data specifying the
     number of these carriers that are not independently owned and
     operated or have more than 1,500 employees, and thus are unable at
     this time to estimate with greater precision the number of cellular
     service carriers that would qualify as small business concerns
     under the SBA\'s definition. Consequently, we estimate that there
     are no more than 808 small cellular service carriers.

106. *220 MHz Radio Service---Phase I Licensees*. The 220 MHz service
     has both Phase I and Phase II licenses. Phase I licensing was
     conducted by lotteries in 1992 and 1993. There are approximately
     1,515 such non‑nationwide licensees and 4 nationwide licensees
     currently authorized to operate in the 220 MHz band. The Commission
     has not developed a definition of small entities specifically
     applicable to such incumbent 220 MHz Phase I licensees. To estimate
     the number of such licensees that are small businesses, we apply
     the definition under the SBA rules applicable to radiotelephone
     communications companies. This definition provides that a small
     entity is a radiotelephone company employing no more than 1,500
     persons.[^234] According to a 1995 estimate by the Bureau of the
     Census, only 12 radiotelephone firms out of a total of 1,178 such
     firms that operated during 1992 had 1,000 or more employees.[^235]
     Therefore, assuming that this general ratio has not changed
     significantly in recent years in the context of Phase I 220 MHz
     licensees, we estimate that nearly all such licensees are small
     businesses under the SBA\'s definition.

107. *220 MHz Radio Service---Phase II Licensees*. The Phase II 220 MHz
     service is a new service, and is subject to spectrum auctions. In
     the *220 MHz Third Report and Order*, we adopted criteria for
     defining small businesses and very small businesses for purposes of
     determining their eligibility for special provisions such as
     bidding credits and installment payments.[^236] We have defined a
     small business as an entity that, together with its affiliates and
     controlling principals, has average gross revenues not exceeding
     \$15 million for the preceding three years. Additionally, a very
     small business is defined as an entity that, together with its
     affiliates and controlling principals, has average gross revenues
     that are not more than \$3 million for the preceding three
     years.[^237] The SBA has approved these definitions.[^238] An
     auction of Phase II licenses commenced on September 15, 1998, and
     closed on October 22, 1998.[^239] Nine hundred and eight (908)
     licenses were auctioned in three different-sized geographic areas:
     3 nationwide licenses, 30 Regional Economic Area Group (REAG)
     licenses, and 875 Economic Area (EA) licenses. Of the 908 licenses
     auctioned, 693 were sold. Companies claiming small business status
     won: 1 of the Nationwide licenses, 67% of the Regional licenses,
     47% of the REAG licenses and 54% of the EA licenses. As of January
     22, 1999, the Commission announced that it was prepared to grant
     654 of the Phase II licenses won at auction.[^240] A second 220 MHz
     Radio Service auction began on June 8, 1999 and closed on June
     30, 1999. This auction offered 225 licenses in 87 EAs and 4 REAGs.
     (A total of 9 REAG licenses and 216 EA licenses. No nationwide
     licenses were available in this auction.) Of the 215 EA licenses
     won, 153 EA licenses (71%) were won by bidders claiming small
     business status. Of the 7 REAG licenses won, 5 REAG licenses (71%)
     were won by bidders claiming small business status.

108. *Private and Common Carrier Paging*. The Commission has adopted a
     two-tier definition of small businesses in the context of
     auctioning licenses in the Common Carrier Paging and exclusive
     Private Carrier Paging services. A small business will be defined
     as either: (1) an entity that, together with its affiliates and
     controlling principals, has average gross revenues for the three
     preceding years of not more than \$3 million; or (2) an entity
     that, together with affiliates and controlling principals, has
     average gross revenues for the three preceding calendar years of
     not more than \$15 million. Because the SBA has not yet approved
     this definition for paging services, we will utilize the SBA\'s
     definition applicable to radiotelephone companies, *i.e.*, an
     entity employing no more than 1,500 persons.[^241] At present,
     there are approximately 24,000 Private Paging licenses and 74,000
     Common Carrier Paging licenses. According to recent data, 172
     carriers reported that they were engaged in the provision of either
     paging or \"other mobile\" services, which are placed together in
     the data.[^242] We do not have data specifying the number of these
     carriers that are not independently owned and operated or have more
     than 1,500 employees, and thus are unable at this time to estimate
     with greater precision the number of paging carriers that would
     qualify as small business concerns under the SBA\'s definition.
     Consequently, we estimate that there are no more than 172 small
     paging carriers. We estimate that the majority of private and
     common carrier paging providers would qualify as small entities
     under the SBA definition.

109. *Mobile Service Carriers*. Neither the Commission nor the SBA has
     developed a definition of small entities specifically applicable to
     mobile service carriers, such as paging companies. As noted above
     in the section concerning paging service carriers, the closest
     applicable definition under the SBA rules is that for
     radiotelephone (*i.e.*, wireless) companies,[^243] and recent data
     show that 172 carriers reported that they were engaged in the
     provision of either paging or "other mobile" services.[^244]
     Consequently, we estimate that there are no more than 172 small
     mobile service carriers.

110. *Broadband Personal Communications Service* (*PCS*). The broadband
     PCS spectrum is divided into six frequency blocks designated A
     through F, and the Commission has held auctions for each block. The
     Commission defined \"small entity\'\' for blocks C and F as an
     entity that has average gross revenues of less than \$40 million in
     the three previous calendar years.[^245] For block F, an additional
     classification for \"very small business\" was added and is defined
     as an entity that, together with affiliates, has average gross
     revenues of not more than \$15 million for the preceding three
     calendar years.[^246] These regulations defining \"small entity\'\'
     in the context of broadband PCS auctions have been approved by the
     SBA.[^247] No small businesses within the SBA-approved definition
     bid successfully for licenses in blocks A and B. There were 90
     winning bidders that qualified as small entities in the C block
     auctions. A total of 93 small and very small business bidders won
     approximately 40% of the 1,479 licenses for blocks D, E and
     F.[^248] On March 23, 1999, the Commission held another auction
     (Auction No. 22) of C, D, E and F block licenses for PCS spectrum
     returned to the Commission by previous license holders. In that
     auction, 48 bidders claiming small business, very small business or
     entrepreneurial status won 272 of the 341 licenses (80%) offered.
     Based on this information, we conclude that the number of small
     broadband PCS licensees includes the 90 winning C block bidders,
     the 93 qualifying bidders in the D, E and F blocks, and the 48
     winning bidders from Auction No. 22, for a total of 231
     small-entity PCS providers as defined by the SBA and the
     Commission\'s auction rules.

111. *Narrowband PCS.* The Commission has auctioned nationwide and
     regional licenses for narrowband PCS. There are 11 nationwide and
     30 regional licensees for narrowband PCS. The Commission does not
     have sufficient information to determine whether any of these
     licensees are small businesses within the SBA-approved definition
     for radiotelephone companies. At present, there have been no
     auctions held for the major trading area (MTA) and basic trading
     area (BTA) narrowband PCS licenses. The Commission anticipates a
     total of 561 MTA licenses and 2,958 BTA licenses will be awarded by
     auction. Such auctions, however, have not yet been scheduled. Given
     that nearly all radiotelephone companies have no more than 1,500
     employees, and no reliable estimate of the number of prospective
     MTA and BTA narrowband licensees can be made, we assume, for our
     purposes here, that all of the licenses will be awarded to small
     entities, as that term is defined by the SBA.

112. *Rural Radiotelephone Service.* The Commission has not adopted a
     definition of small entity specific to the Rural Radiotelephone
     Service.[^249] A significant subset of the Rural Radiotelephone
     Service is the Basic Exchange Telephone Radio Systems
     (BETRS).[^250] We will use the SBA\'s definition applicable to
     radiotelephone companies, *i.e.*, an entity employing no more than
     1,500 persons.[^251] There are approximately 1,000 licensees in the
     Rural Radiotelephone Service, and we estimate that almost all of
     them qualify as small entities under the SBA\'s definition.

113. *Air-Ground Radiotelephone Service.* The Commission has not adopted
     a definition of small entity specific to the Air-Ground
     Radiotelephone Service.[^252] Accordingly, we will use the SBA\'s
     definition applicable to radiotelephone companies, *i.e.*, an
     entity employing no more than 1,500 persons.[^253] There are
     approximately 100 licensees in the Air-Ground Radiotelephone
     Service, and we estimate that almost all of them qualify as small
     under the SBA definition.

114. *Specialized Mobile Radio* (*SMR*). The Commission awards bidding
     credits in auctions for geographic area 800 MHz and 900 MHz SMR
     licenses to two tiers of firms: (1) \"small entities,\" those with
     revenues of no more than \$15 million in each of the three previous
     calendar years; and (2) \"very small entities,\" those with
     revenues of no more than \$3 million in each of the three previous
     calendar years. The regulations defining \"small entity\" and
     \"very small entity\" in the context of 800 MHz SMR (upper 10 MHz
     and lower 230 channels) and 900 MHz SMR have been approved by the
     SBA. The Commission does not know how many firms provide 800 MHz or
     900 MHz geographic area SMR service pursuant to extended
     implementation authorizations, nor how many of these providers have
     annual revenues of no more than \$15 million. One firm has over
     \$15 million in revenues. We assume, for our purposes here, that
     all of the remaining existing extended implementation
     authorizations are held by small entities, as that term is defined
     by the SBA. The Commission has held auctions for geographic area
     licenses in the 800 MHz (upper 10 MHz) and 900 MHz SMR bands. There
     were 60 winning bidders that qualified as small and very small
     entities in the 900 MHz auction. Of the 1,020 licenses won in the
     900 MHz auction, 263 licenses were won by bidders qualifying as
     small and very small entities. In the 800 MHz SMR auction, 38 of
     the 524 licenses won were won by small and very small entities.

115. *Marine Coast Service*. Between December 3, 1998 and December 14,
     1998, the Commission held an auction of 42 VHF Public Coast
     licenses in the 157.1875-157.4500 MHz (ship transmit) and
     161.775-162.0125 MHz (coast transmit) bands. For purposes of this
     auction, and for future public coast auctions, the Commission
     defines a \"small\" business as an entity that, together with
     controlling interests and affiliates, has average gross revenues
     for the preceding three years not to exceed \$15 million dollars. A
     \"very small\" business is one that, together with controlling
     interests and affiliates, has average gross revenues for the
     preceding three years not to exceed \$3 million dollars.[^254]
     There are approximately 10,672 licensees in the Marine Coast
     Service, and the Commission estimates that almost all of them
     qualify as \"small\" businesses under the Commission\'s definition,
     which has been approved by the SBA.

116. *Fixed Microwave Services*. Microwave services include common
     carrier,[^255] private‑operational fixed,[^256] and broadcast
     auxiliary radio services.[^257] At present, there are approximately
     22,015 common carrier fixed licensees and 61,670 private
     operational‑fixed licensees and broadcast auxiliary radio licensees
     in the microwave services. The Commission has not yet defined a
     small business with respect to microwave services. For our purposes
     here, we will utilize the SBA\'s definition applicable to
     radiotelephone companies---*i.e.*, an entity with no more than
     1,500 persons.[^258] Under this definition, we estimate that all of
     the Fixed Microwave licensees (excluding broadcast auxiliary
     licensees) would qualify as small entities.

117. *Local Multipoint Distribution Service*. The Commission held two
     auctions for licenses in the Local Multipoint Distribution Services
     (LMDS) (Auction No. 17 and Auction No. 23). For both of these
     auctions, the Commission defined a small business as an entity,
     together with its affiliates and controlling principals, having
     average gross revenues for the three preceding years of not more
     than \$40 million. A very small business was defined as an entity,
     together with affiliates and controlling principals, having average
     gross revenues for the three preceding years of not more than \$15
     million. Of the 144 winning bidders in Auction Nos. 17 and 23, 125
     bidders (87%) were small or very small businesses.

118. *24 GHz---Incumbent 24 GHz Licensees*. The rules that we may later
     adopt could affect incumbent licensees who were relocated to the
     24 GHz band from the 18 GHz band, and applicants who wish to
     provide services in the 24 GHz band. The Commission has not
     developed a definition of small entities applicable to licensees in
     the 24 GHz band. Therefore, the applicable definition of small
     entity is the definition under the SBA rules for the radiotelephone
     industry, providing that a small entity is a radiotelephone company
     employing fewer than 1,500 persons.[^259] The 1992 Census of
     Transportation, Communications and Utilities, conducted by the
     Bureau of the Census, which is the most recent information
     available, shows that only 12 radiotelephone firms out of a total
     of 1,178 such firms that operated during 1992 had 1,000 or more
     employees.[^260] This information notwithstanding, we believe that
     there are only two licensees in the 24 GHz band that were relocated
     from the 18 GHz band, Teligent and TRW, Inc.[^261] Both Teligent
     and TRW, Inc. appear to have more than 1,500 employees. Therefore,
     it appears that no incumbent licensee in the 24 GHz band is a small
     business entity.

119. *Future 24 GHz Licensees*. The rules that we may later adopt could
     also affect potential new licensees on the 24 GHz band. Pursuant to
     47 C.F.R. § 24.720(b), the Commission has defined "small business"
     for Blocks C and F broadband PCS licensees as firms that had
     average gross revenues of less than \$40 million in the three
     previous calendar years. This regulation defining "small business"
     in the context of broadband PCS auctions has been approved by the
     SBA.[^262] With respect to new applicants in the 24 GHz band, we
     shall use this definition of "small business" and apply it to the
     24 GHz band under the name "entrepreneur." With regard to "small
     business," we shall adopt the definition of "very small business"
     used for 39 GHz licenses and PCS C and F block licenses: businesses
     with average annual gross revenues for the three preceding years
     not in excess of \$15 million. Finally, "very small business" in
     the 24 GHz band shall be defined as an entity with average gross
     revenues not to exceed \$3 million for the preceding three years.
     The Commission will not know how many licensees will be small or
     very small businesses until the auction, if required, is held. Even
     after that, the Commission will not know how many licensees will
     partition their license areas or disaggregate their spectrum
     blocks, if partitioning and disaggregation are allowed.

120. *39 GHz*. The Commission held an auction (Auction No. 30) for fixed
     point-to-point microwave licenses in the 38.6 to 40.0 GHz band (39
     GHz Band).[^263] For this auction, the Commission defined a small
     business as an entity, together with affiliates and controlling
     interests, having average gross revenues for the three preceding
     years of not more than \$40 million. A very small business was
     defined as an entity, together with affiliates and controlling
     principals, having average gross revenues for the three preceding
     years of not more than \$15 million. The SBA has approved these
     definitions.[^264] Of the 29 winning bidders in Auction No. 30, 18
     bidders (62%) were small business participants.

121. *Multipoint Distribution Service* (*MDS*). This service involves a
     variety of transmitters, which are used to relay data and
     programming to the home or office, similar to that provided by
     cable television systems.[^265] In connection with the 1996 MDS
     auction, the Commission defined small businesses as entities that
     had annual average gross revenues for the three preceding years not
     in excess of \$40 million.[^266] This definition of a small entity
     in the context of MDS auctions has been approved by the SBA.[^267]
     These stations were licensed prior to implementation of Section
     309(j) of the Communications Act of 1934, as amended.[^268]
     Licenses for new MDS facilities are now awarded to auction winners
     in Basic Trading Areas (BTAs) and BTA-like areas.[^269] The MDS
     auctions resulted in 67 successful bidders obtaining licensing
     opportunities for 493 BTAs. Of the 67 auction winners, 61 meet the
     definition of a small business.

122. MDS is also heavily encumbered with licensees of stations
     authorized prior to the MDS auction. SBA has developed a definition
     of small entities for pay television services, which includes all
     such companies generating \$11 million or less in annual
     receipts.[^270] This definition includes MDS systems, and thus
     applies to incumbent MDS licensees and wireless cable operators
     which may not have participated or been successful in the MDS
     auction. Information available to us indicates that there are 832
     of these licensees and operators that do not generate revenue in
     excess of \$11 million annually. Therefore, for purposes of this
     analysis, we find there are approximately 892 small MDS providers
     as defined by the SBA and the Commission's auction rules.

123. *Offshore Radiotelephone Service*. This service operates on several
     UHF TV broadcast channels that are not used for TV broadcasting in
     the coastal area of the states bordering the Gulf of Mexico.[^271]
     At present, there are approximately 55 licensees in this service.
     We are unable at this time to estimate the number of licensees that
     would qualify as small under the SBA\'s definition for
     radiotelephone communications.

124. *Wireless Communications Services* (*WCS*). This service can be
     used for fixed, mobile, radio-location and digital audio
     broadcasting satellite uses. The Commission defined \"small
     business\" for the WCS auction as an entity with average gross
     revenues of \$40 million for each of the three preceding years, and
     a \"very small business\" as an entity with average gross revenues
     of \$15 million for each of the three preceding years. The
     Commission auctioned geographic area licenses in the WCS service.
     In the auction, there were seven winning bidders that qualified as
     very small business entities, and one winning bidder that qualified
     as a small business entity. We conclude that the number of
     geographic area WCS licensees affected includes these eight
     entities.

125. *General Wireless Communication Service* (*GWCS*). This service was
     created by the Commission on July 31, 1995[^272] by transferring 25
     MHz of spectrum in the 4660-4685 MHz band from the federal
     government to private sector use. The Commission sought and
     obtained SBA approval of a refined definition of \"small business\"
     for GWCS in this band.[^273] According to this definition, a small
     business is any entity, together with its affiliates and entities
     holding controlling interests in the entity, that has average
     annual gross revenues over the three preceding years that are not
     more than \$40 million.[^274] By letter dated March 30, 1999, NTIA
     reclaimed the spectrum allocated to GWCS and identified alternative
     spectrum at 4940-4990 MHz. On February 23, 2000, the Commission
     released its *Notice of Proposed Rulemaking* in WT Docket No. 00-32
     proposing to allocate and establish licensing and service rules for
     the 4.9 GHz band.[^275]

### Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements

126. In this NPRM, we seek comment on crafting unbundling rules that
     promote the goals of the Act and on a more granular approach to
     unbundling.[^276] In addition, we ask for comment on how to involve
     the experience and expertise of state commissions.[^277] As a
     result, our unbundling regulations may require incumbent LECs to
     unbundle their networks by facility, service, or geography, rather
     than on a national basis for an entire element as they currently
     do. However, to identify which factors advancing the goals of the
     Act are relevant to an unbundling analysis, we ask about the weight
     to assign to reducing regulatory obligations as alternatives to the
     incumbent's network becomes available, and whether the unbundling
     obligations are administratively practical.[^278]

### Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered

127. The RFA requires an agency to describe any significant small
     business, 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.[^279]

128. In this NPRM, we seek comment on refining our unbundling rules by
     examining whether we should consider the type of customer that a
     requesting carrier seeks to serve.[^280] In particular, we ask
     whether the availability of UNEs should differ on the basis of
     whether the requesting carrier serves business or residential
     customers, and whether to have different rules for facilities
     serving larger business customers.[^281] We ask questions in
     considerable depth with regard to the carve-out for the residential
     market for local switching, and seek comment on the practical
     experience of the carve-out has worked in practice and whether a
     substantially revised approach is warranted.[^282] The size of the
     entity as a subscriber to telecommunications services is therefore
     an important component of our unbundling analysis.

129. In addition to examining the economic impact on customers, we also
     examine the economic impact on carriers. We especially seek comment
     from small entities on these issues. As we consider undertaking a
     more granular approach, we recognize that the resulting rules could
     be more administratively burdensome on carriers because it would be
     more difficult to keep track of where and under what circumstances
     certain elements must be unbundled. Accordingly, we ask for comment
     about balancing any administrative burden against the benefits of a
     refined approach to unbundling.[^283] Particularly with regard to
     definitions of different network elements, we ask whether there are
     less burdensome alternatives available to achieve the goals of the
     Act.[^284]

### Federal Rules that May Duplicate, Overlap, or Conflict With the Proposed Rules

130. None.

# ordering clauses

131. Accordingly, IT IS ORDERED that pursuant to sections 1-4, 157,
     201-05, 251, 252, 254, 256, 271, 303(r), and 332 of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 151-54, 157,
     201-05, 251, 252, 254, 256, 271, 303(r), and 332, this NOTICE OF
     PROPOSED RULEMAKING is hereby ADOPTED.

132. IT IS FURTHER ORDERED that the Consumer Information Bureau,
     Reference Information Center, SHALL send a copy of this NOTICE OF
     PROPOSED RULEMAKING, including the INITIAL REGULATORY FLEXIBILITY
     ANALYSIS, to the Chief Counsel for Advocacy of the Small Business
     Administration.

     FEDERAL COMMUNICATIONS COMMISSION

     Magalie Roman Salas

     Secretary

SEPARATE STATEMENT OF CHAIRMAN MICHAEL K. POWELL

*Re: Review of Regulatory Requirements for Incumbent LEC Broadband
Telecommunications Services et al., CC Docket No. 01-337 et al.*

*Re: Review of the Section 251 Unbundling Obligations of Incumbent Local
Exchange Carriers et al., CC Docket Nos. 01-338 et al.*

In this combined statement, I write separately to underscore my support
for these two *Notices of Proposed Rulemaking*, which comprise the
second and third in a series of notices the Commission recently
announced that will begin Phase II of our local competition
implementation and enforcement efforts under the 1996 Act.[^285]

Review of Regulatory Requirements for Incumbent LEC Broadband
Telecommunications Services

I vigorously support the *Notice* we hereby adopt that initiates a
review of the regulatory requirements applicable to incumbent LEC
provision of high-speed telecommunications services. In this proceeding,
the Commission will ask whether potentially robust competition among
multiple types of broadband service providers suggests that we should
avoid subjecting incumbents to the same regulatory burdens that we
impose on these carriers with respect to their provision of local
telephone service. That is, we ask whether incumbent LECs, which are so
clearly dominant in the provision of local phone service, must also be
treated as dominant as they use DSL and other technologies to provide
high-speed telecommunications services in competition with cable modem
service providers and other types of platforms. I would point out that
this item focuses on traditional Title II common carrier regulation,
historically arising out of the section 201 and 202 of the
Communications Act of 1934, as applied to incumbent LEC provision of
high-speed *telecommunications services.* In contrast, the
aforementioned proceeding regarding regulation of incumbent LEC
broadband information services will address the question whether Title I
should apply when incumbent LECs provide a bundled high-speed
*information service* offering.

I would emphasize that our initiation of this proceeding should not
suggest a grand departure from our ongoing efforts to implement
unbundling, collocation and other market-opening requirements with
respect to incumbent LECs pursuant to section 251(c)(3) of the Act.
These other requirements are intended to allow competing carriers,
particularly facilities-based carriers, to provide new and innovative
telecommunications services. By the express terms of the statute, the
Commission is duty-bound to continue our implementation and enforcement
of these provisions, and we will.

Rather, this *Notice of Proposed Rulemaking* is intended to develop
further one more avenue of thinking about how regulation can serve to
help (or hinder) broadband deployment. It is, in that sense, not a
signpost heralding a new direction but an attempt to add yet another
arrow to the regulatory quiver we will use to attack and, in conjunction
with other forces outside our purview, eventually subdue the broadband
beast.

Notwithstanding my enthusiasm for our decision to initiate this inquiry,
I for one have an open mind as to how these questions should be
answered. For example, it may prove too unwieldy for both carriers and
the Commission to treat incumbents as dominant for their provision of
traditional local service but non-dominant for their provision of
high-speed telecommunications services. I also acknowledge that
declaring incumbent LEC provision of broadband telecommunications
services non-dominant could have consequences in other areas of
regulation that the Commission has not yet fully anticipated. Yet the
importance of broadband deployment to the public interest and welfare is
too great to disregard any potential method of facilitating that
deployment. In sum, we must ensure that we leave no stone unturned in
our pursuit of this important goal.

Review of the Section 251 Unbundling Obligations of Incumbent Local
Exchange Carriers

I similarly and wholeheartedly support the *Notice* we adopt here that
initiates our scheduled triennial review of UNE obligations imposed on
incumbent LECs pursuant to sections 251(c)(3) and 251(d)(2). Taking our
cues from the Supreme Court in its opinion remanding to the Commission
the task of giving meaningful effect to these provisions, my former
colleagues and I determined that the agency would, in three years,
revisit its decisions regarding the availability of UNEs.[^286] The
purpose of this triennial review would be to keep those decisions
current with ongoing market and regulatory developments. That was in
1999, and now the year 2002 fast approaches.

Not surprisingly, however, I support this item for reasons other than
the fact that it will put the Commission in a position to deliver on the
commitment it made in 1999. [First]{.underline}, it underscores the
Commission's ongoing commitment to the promotion of facilities-based
competition, which was pronounced most clearly by my former colleagues
and I in the 1999 *UNE Remand Order*.[^287] I believe this commitment
should focus, in particular, on both so-called "full facilities-based"
competition and competition from newer entrants who supplement their own
facilities with network elements leased from the incumbent. As I have
demonstrated in my decisions and public statements over my four years at
the Commission, I fully support the use of facilities and individual
UNEs as means to promote local competition while simultaneously
furthering the related goals of encouraging deregulation and innovation.
The 1996 Act and our experience since its passage demand no less.

[Second]{.underline}, I support this item because it emphasizes further
an area of inquiry begun in the *UNE Remand Order.* Specifically, in
that *Order,* we considered how the Act's goals of encouraging broadband
deployment and investment in competing facilities should shape
unbundling policy.[^288] I support our decision here to continue and to
expand this area of inquiry.

[Third]{.underline}, I support the Commission's decision, in seeking
comment here on whether to unbundle aspects of the incumbent's network,
to ask whether and the extent to which we should take note of the
availability of technologies other than circuit-switched telephony
provided by traditional common carriers. In particular, this *Notice*
expressly focuses on the roles that cable and wireless companies have
begun and will continue to play in the market for telephony and
broadband telecommunications services. This emphasis may also be viewed
as expansion of an avenue of inquiry begun by the previous Commission.
Specifically, in the *UNE Remand Order,* my former colleagues and I
appropriately followed the Supreme Court's demand that we not blind
ourselves to the availability of self-provisioned or other alternative
facilities in determining whether to unbundle elements of the incumbent
LEC's network.[^289]

To my mind, it seems premature to suggest that the availability of such
technologies should be fully dispositive of the question whether to
require the availability of specific UNEs. Yet it does stand to reason
that such availability may give us some indication of the alternative
tools newer entrants could use to serve customers if the Commission were
to decline to unbundle any particular element of the network. I
encourage parties to provide detailed and well-supported comments in
order to help us determine whether this line of reasoning is, in fact,
sound.

As this *Notice* itself reminds us, the Commission now has the benefit
of two years of experience with the current unbundling rules and almost
six years of experience with promoting competition since the 1996 Act
was passed. These are no doubt merely the opening chapters of a
regulatory epic that will take many years to rewrite a near century-long
history of legally sanctioned monopoly in the telephone market. But I
believe it is critical that we take stock of the lessons we have learned
so far and make any changes that may be necessary to ensure that our
rules remain faithful to the statute and its goals of promoting
competition, deregulation and innovation in telecommunications markets.

\* \* \*

I thank the Common Carrier Bureau staff and my colleagues for their
enormous work on these *Notices* and look forward to working with them,
as well as my state commission colleagues, in carrying out both of these
important "Phase II" proceedings.

SEPARATE STATEMENT OF

COMMISSIONER MICHAEL J. COPPS

*Re:* *Review of the Section 251 Unbundling Obligations of Incumbent
Local Exchange Carriers, Notice of Proposed Rulemaking; and Review of
Regulatory Requirements for Incumbent LEC Broadband Telecommunications
Services, Notice of Proposed Rulemaking.*

I will vote to approve these Notices of Proposed Rulemaking because I
think they have been significantly improved, and given more balance,
during the discussions preceding today's meeting. These Notices
recognize the importance of competition and, importantly, do not reach
tentative conclusions. Nevertheless, I do not vote for these Notices
without some concern for the competition framework laid out by Congress
in the 1996 Act.

I understand the need to ask questions. In particular, the Commission
indicated in 1999 that it would reexamine every three years the list of
network elements that need to be unbundled pursuant to section
251(c)(3). I generally do not mind asking questions, but we must be
sensitive to the larger context.

This is a time of great uncertainty in the economy, for the
telecommunications industry, and for competition for both
telecommunications and Internet services. The years since passage of the
Act have seen high-flying expectations, and lately, descent into worry
and trepidation. I hear from competitors and incumbents alike the desire
for certainty and stability in the regulatory environment. I fear that
these broad Notices may not be meeting this need.

Some parties may read these Notices and conclude that the Commission has
a predetermined agenda to remake the competition framework. Whether
accurate or not, this perception, coupled with the uncertainty created
by these broad Notices, can damage competition as surely as any final
rules adopted by this Commission.

We must recognize that setting competition policy is the exclusive
jurisdiction of Congress. I approach these proceedings optimistic that
the Commission will show proper restraint and will not presume to
question the statutory competitive framework. Instead, the Commission
should use these proceedings to understand the marketplace better in our
role as policy implementers and not policy makers. And we should not
create concern, even unwittingly, that our zeal to deregulate before
meaningful competition develops might cripple the very competition that
Congress sought to engender.

Let the record show, however, that if our proceedings should ever turn
into an attempt to undermine the competitive framework that Congress
adopted in the 1996 Act, I will -- without hesitation -- oppose such
overreaching.

**SEPARATE STATEMENT OF\
COMMISSIONER KEVIN J . MARTIN**

*Re: Review of the Section 251 Unbundling Obligations of Incumbent Local
Exchange Carriers*, Notice of Proposed Rulemaking

I am pleased to join in approving this item, which initiates our first
triennial review of the Commission's policies on unbundled network
elements (UNEs). In this proceeding, we will revisit the circumstances
under which incumbent local exchange carriers must make parts of their
networks available to requesting carriers.

This proceeding goes hand-in-hand with our inquiries on national
performance measures in terms of promoting facilities-based competition.
*See* Separate Statement of Commissioner Kevin J. Martin, *Performance
Measurements and Standards for Unbundled Network Elements And
Interconnection*, Notice of Proposed Rulemaking, FCC 01-331, 2001 WL
1461061 (rel. Nov. 19, 2001). As I have stated, the promotion of
facilities-based competition should be a fundamental priority of this
Commission. The goal of the Telecommunications Act of 1996 was to
establish an environment that promotes meaningful competition and allows
for deregulation. To get to true deregulation, we need facilities-based
competition. Without such competition, we will always need a regulatory
body to set wholesale and retail prices.

This proceeding presents an important opportunity for the Commission to
consider carefully how our rules affect facilities deployment. In
particular, we inquire how the necessary and impair standard, which is
used to determine what elements must be unbundled, should apply to
elements that are readily available and to new facilities and
infrastructure being built by the ILECs. Any changes we make to our
rules -- if, indeed, any are necessary -- should ensure there are
adequate incentives for both ILECs and CLECs to invest in new equipment.

At the same time, I reiterate my commitment to making sure that CLECs
are able to obtain, in a reasonable and timely manner, those facilities
of the ILECs that are truly essential. No one expects CLECs to build
entire networks from scratch overnight. Enabling CLECs to gain
meaningful access to essential facilities controlled by ILECs thus
remains crucial to promoting facilities-based competition. Accordingly,
I view our inquiries on establishing national performance measures for
UNEs and special access as equally important to the proceeding we
initiate today. In all of these proceedings, I look forward to
furthering our goal of making meaningful facilities-based competition a
reality.

[^1]: *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98, Third Report
    and Order and Fourth Further Notice of Proposed Rulemaking, 15 FCC
    Rcd 3696, 3766, para. 151 & n.269 (1999) (*UNE Remand Order*) ("We
    expect to reexamine our national list of network elements that are
    subject to the unbundling obligations of the Act every three years.
    . . . The review may begin after approximately only two years of
    experience so that it can be completed in three-year intervals.").

[^2]: Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56,
    codified at 47 U.S.C. §§ 251 *et seq*; s*ee* 47 U.S.C. § 251(c)(3),
    (d)(2). We refer to the Communications Act of 1934, as amended, as
    the Act.

[^3]: *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98, First Report
    and Order, 11 FCC Rcd 15499 (1996) (*Local Competition First Report
    and Order*), *aff'd in part and vacated in part sub nom.*,
    *Competitive Telecommunications Ass'n v. FCC*, 117 F.3d 1068 (8^th^
    Cir. 1997) and *Iowa Utils. Bd. v. FCC*, 120 F.3d 753 (8^th^ Cir.
    1997) (*Iowa Utils. Bd.*), *aff'd in part and remanded*, *AT&T v.
    Iowa Utils. Bd.*, 525 U.S. 366 (1999), *on remand*, *Iowa Utils Bd.
    v. FCC*, 219 F.3d 744 (8^th^ Cir. 2000), *petitions for writ of
    certiorari granted*, *Verizon Communications Inc. v. FCC*, 121 S.
    Ct. 877, 878 (2001); Order on Reconsideration, 11 FCC Rcd 13042
    (1996), Second Order on Reconsideration, 11 FCC Rcd 19738 (1996),
    Third Order on Reconsideration and Further Notice of Proposed
    Rulemaking, 12 FCC Rcd 12460 (1997), further recons. pending.

[^4]: *See Iowa Utils. Bd*., 525 U.S. at 366; *UNE Remand Order*, 15 FCC
    Rcd at 3696.

[^5]: *See UNE Remand Order*, 15 FCC Rcd at 3700, para. 5.

[^6]: We examine in greater detail below how to define the concept of
    "facilities-based competition" with regard to the Act and the
    instant proceeding. *See infra* Section III.B.1.

[^7]: *See Performance Measurements and Standards for Unbundled Network
    Elements and Interconnection, et al.*, CC Docket No. 01-318, FCC No.
    01-331, Notice of Proposed Rulemaking (rel. Nov. 19, 2001) (*UNE
    Measurements and Standards Notice*). We also adopted a similar
    notice regarding incumbent LECs' provisioning of special access
    services, which also serve as inputs for carriers seeking to provide
    competitive telephony services. *See Performance Measurements and
    Standards for Interstate Special Access Services, et al.*, Notice of
    Proposed Rulemaking, CC Docket No. 01-321, FCC No. 01-339 (rel. Nov.
    19, 2001) (*Special Access Measurements and Standards Notice*).

[^8]: *Development of a Regulatory Framework for Incumbent LEC Broadband
    Services, Notice of Proposed Rulemaking*, CC Docket No. 01-337, FCC
    No. 01-360 (adopted Dec. 12, 2001) (*Incumbent LEC Broadband
    Services*).

[^9]: The question of how to classify "cable modem service" (referring
    to "high-speed access to the Internet provided to subscribers over
    cable infrastructure") is the subject of a separate proceeding
    currently pending. *See Inquiry Concerning High-Speed Access to the
    Internet Over Cable and Other Facilities*, GN Docket No. 00-185, 15
    FCC Rcd 19287, 19287 & n.1 (2000).

[^10]: 47 U.S.C. § 251(d)(2).

[^11]: *Local Competition First Report and Order*, 11 FCC Rcd 15499.

[^12]: 47 U.S.C. § 251(d)(2)(A).

[^13]: *Id.* § 251(d)(2)(B).

[^14]: *See Local Competition First Report and Order*, 11 FCC Rcd at
    15640-44, paras. 277-88.

[^15]: *Iowa Utils. Bd*., 525 U.S. 366.

[^16]: *Id.* at 388.

[^17]: *Id.* at 389-91.

[^18]: *Id.* at 392-93 (citing *Local Competition First Report and
    Order*, 11 FCC Rcd at 15666-71, paras. 328-40).

[^19]: *UNE Remand Order*, 15 FCC Rcd 3696.

[^20]: *See Local Competition First Report and Order*, 11 FCC Rcd at
    15640-44, paras. 277-88.

[^21]: *UNE Remand Order*, 15 FCC Rcd at 3721, para. 44 (emphasis in
    original).

[^22]: *Id.* at 3725, para. 51 (emphasis added).

[^23]: The Commission especially considered "the difference between the
    cost to the requesting carrier of obtaining the unbundled element
    from the incumbent LEC at forward-looking costs and the cost of an
    alternative element." *Id.* at 3734-40, paras. 72-88. The Commission
    was careful to analyze the costs \-- not the profitability \-- of
    using alternatives, because profitability depends on the individual
    circumstances of both requesting carriers and incumbents. *Id.* at
    3734, para. 73.

[^24]: *Id.* at 3740-43, paras. 89-95.

[^25]: *Id.* at 3743, para. 96.

[^26]: *Id.* at 3744-45, paras. 97-98.

[^27]: *Id.* at 3744, para. 99.

[^28]: *Id.* at 3745, para. 101 (quoting 47 U.S.C. § 251(d)(2)).

[^29]: *Id.* at 3747-50, paras. 107-16.

[^30]: *Id.* at 3704, para. 14.

[^31]: *Id.* at 3771-3890, paras. 162-437.

[^32]: *Deployment of Wireline Services Offering Advanced
    Telecommunications Capability and Implementation of the Local
    Competition Provisions of the Telecommunications Act of 1996*, Third
    Report and Order in CC Docket No. 98-147 and Fourth Report and Order
    in CC Docket No. 96-98, 14 FCC Rcd 20912 (1999) (*Line Sharing
    Order*). The Commission addressed line sharing issues in a separate
    proceeding so that it could more fully develop a record on specific
    technical and operational issues relating to such unbundling. *See
    UNE Remand Order*, 15 FCC Rcd at 3787, para. 201.

[^33]: *See, e.g.*, Public Notice, *Comments Sought on the Use of
    Unbundled Network Elements To Provide Exchange Access Service*, CC
    Docket No. 96-98, DA 01-169 (rel. Jan. 24, 2001) (*January 24, 2001
    Public Notice*).

[^34]: *See, e.g.*, Public Notice, *Pleading Cycle Established for
    Comments on Joint Petition of BellSouth, SBC and Verizon*, CC Docket
    No. 96-98, DA 01-911 (rel. Apr. 10, 2001) (*Joint Petition Public
    Notice*).

[^35]: *See, e.g.*, Petition for Partial Reconsideration of Birch
    Telecom, Inc., in *Implementation of the Local Competition
    Provisions of the Telecommunications Act of 1996*, CC Docket No.
    96-98 (filed Feb. 17, 2000).

[^36]: *See Deployment of Wireline Services Offering Advanced
    Telecommunications Capability and Implementation of the Local
    Competition Provisions of the Telecommunications Act of 1996*, Third
    Report and Order on Reconsideration in CC Docket No. 98-147, Fourth
    Report and Order on Reconsideration in CC Docket No. 96-98, Third
    Further Notice of Proposed Rulemaking in CC Docket No. 98-147, and
    Sixth Further Notice of Proposed Rulemaking in CC Docket No. 96-98,
    16 FCC Rcd 2101 (2001) (*Third Further Notice of Proposed Rulemaking
    and Sixth Further Notice of Proposed Rulemaking*).

[^37]: *See Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, Third Order on Reconsideration and
    Further Notice of Proposed Rulemaking, 12 FCC Rcd 12460, 12494-96,
    paras. 60-61 (1997) (*Shared Transport Order*).

[^38]: *See UNE Remand Order*, 15 FCC Rcd at 3914-15, paras. 492-96.

[^39]: *See Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, Supplemental Order, 15 FCC Rcd 1760
    (1999) (*Supplemental Order*). The Commission asked even more
    detailed questions about EEL availability in the *January 24, 2001
    Public Notice*.

[^40]: *See* Public Notice, Comments Requested on WorldCom Petition for
    Waiver of the Supplemental Order Clarification Regarding UNE
    Combinations, CC Docket No. 96-98, DA 00-2131 (rel. Sept. 18, 2000);
    Public Notice, *Common Carrier Bureau Seeks Comment on Petition of
    ITC\^DeltaCom Communications, Inc. for Waiver of Supplemental Order
    Clarification*, CC Docket No. 96-98, DA 01-2030 (rel. Aug. 28,
    2001).

[^41]: Petition for Declaratory Ruling of AT&T and VoiceStream, in
    *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed Nov. 19,
    2001) (ATTWS & VoiceStream Petition for Declaratory Ruling).

[^42]: *See Joint Petition Public Notice*.

[^43]: *See, e.g.*, Petition for Reconsideration and Clarification of
    Sprint Corporation, in *Implementation of the Local Competition
    Provisions of the Telecommunications Act of 1996*, CC Docket No.
    96-98 at 7-14 (filed Feb. 17, 2000).

[^44]: The switching carve-out is the subject of litigation pending at
    the D.C. Circuit as part of the appeal of the *UNE Remand Order*.
    *See United States Telecom Ass'n, et al. v. FCC*, D.C. Circuit Nos.
    00-1015 *et al.* (filed Jan. 19, 2000).

[^45]: *See* Petition of the Competitive Telecommunications Association,
    in *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed Nov. 26,
    2001) (CompTel Joint Conference Petition). We address certain issues
    raised in this pleading, including a request for Federal-State Joint
    Conference on UNEs, in Section III.E, *infra*.

[^46]: *See Deployment of Wireline Services Offering Advanced
    Telecommunications Capability and Implementation of the Local
    Competition Provisions of the Telecommunications Act of 1996*, Order
    on Reconsideration and Second Further Notice of Proposed Rulemaking
    in CC Docket No. 98-147 and Fifth Further Notice of Proposed
    Rulemaking in CC Docket No. 96-98, 15 FCC Rcd 17806 (2000) (*Fifth
    Further Notice of Proposed Rulemaking*). We will address in a
    separate proceeding the remaining collocation issues, including
    remote terminal issues, that were the subject of the companion
    Further Notice of Proposed Rulemaking.

[^47]: *See Third Further Notice of Proposed Rulemaking and Sixth
    Further Notice of Proposed Rulemaking*, 16 FCC Rcd at 2101.

[^48]: Several parties have appealed the *UNE Remand Order* to the D.C.
    Circuit in litigation that is not yet resolved. Among other issues,
    the parties have asked the court to find that the Commission's
    interpretation of "impair" does not "impose\[\] a meaningful
    limiting standard on the availability of unbundled elements," as the
    Supreme Court directed. Brief of Petitioners and Supporting
    Intervenors at 19, in *United States Telecom Ass'n v. FCC*,
    Nos. 00‑1015 & 00-1025 (D.C. Cir. filed June 1, 2001). In raising
    issues of statutory interpretation, we emphasize that we are not
    suggesting that any of the analysis in our prior decisions is
    incorrect. Rather, the purpose of asking these questions is to seek
    comment on how to read the Act on a prospective basis only.

[^49]: To assess impairment of loops and transport, one party has
    proposed that the Commission acquire specific data by location
    regarding customer demand concentration for different circuit
    capacities, and the extent to which competing carriers can and do
    self‑provision different circuit types. *See* Letter from Henry G.
    Hultquist, Associate Counsel, WorldCom, to Magalie Roman Salas,
    Secretary, Federal Communications Commission, in *Implementation of
    the Local Competition Provisions of the Telecommunications Act of
    1996*, CC Docket No. 96-98, *Joint Petition of BellSouth, SBC, and
    Verizon*, CC Docket No. 96-98 (filed Nov. 9, 2001) (WorldCom
    November 9, 2001 *Ex Parte*).

[^50]: *See, e.g.*, Local Telephone Competition: Status as of December
    31, 2000, Industry Analysis Division, Common Carrier Bureau, Federal
    Communications Commission at 1-3 (May 2001).

[^51]: The Commission recently interpreted the term "necessary" as it
    appears in section 251(c)(6) very similarly to the way the
    Commission interpreted the term as it appears in section
    251(d)(2)(A). *Compare Deployment of Wireline Services Offering
    Advanced Telecommunications Capability*, Fourth Report and Order, 16
    FCC Rcd 15435, 15446-47, at paras. 19-21 (2001) (*Collocation
    Order*) *with* *UNE Remand Order*, 15 FCC Rcd at 3720-23, paras.
    41‑47. The Commission found in the *Collocation Order* that the
    statutory contexts in which the term arises justify largely similar
    (but slightly differing) interpretations. Commenters are free,
    however, to suggest that the Commission's interpretation in section
    251(d)(2)(A) should now be altered. We note that several parties
    have appealed the *Collocation Order* to the D.C. Circuit, and
    litigation of those appeals is not yet resolved. *See* Petition for
    Review, *Verizon California, Inc. v. FCC*, No. 01-1371 (D.C. Cir.
    filed August 23, 2001).

[^52]: 47 U.S.C. § 251(d)(2)(A).

[^53]: "We find that if an incumbent LEC can demonstrate that it has
    invested resources (time, material, or personnel) to develop
    proprietary information or network elements that are protected by
    patent, copyright, or trade secret law, the product of such an
    investment is 'proprietary in nature' within the meaning of section
    251(d)(2)(A)." *UNE Remand Order*, 15 FCC Rcd at 3717, para. 35.

[^54]: *Id.* at 3721, para. 44 (emphasis in original).

[^55]: 47 U.S.C. § 251(d)(2).

[^56]: *UNE Remand Order*, 15 FCC Rcd at 3725, para. 51; *see supra*
    para. 7.

[^57]: *See supra* para. 8.

[^58]: *Iowa Utils. Bd.*, 525 U.S. at 389-90.

[^59]: 47 U.S.C. § 251(d)(2) (emphasis added).

[^60]: *UNE Remand Order*, 15 FCC Rcd at 3747-50, paras. 107-16.

[^61]: *See, e.g.*, Comments of Intel Corporation at 15, in
    *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 98-146 (filed Sept.
    24, 2001).

[^62]: 47 U.S.C. § 157(a).

[^63]: Section 706 of the Telecommunications Act of 1996, Pub. L.
    104-104, 110 Stat. 56 (1996), reproduced in the notes under 47
    U.S.C. § 157 (47 U.S.C. § 157 nt).

[^64]: *Id.* § 157 nt (c).

[^65]: *Line Sharing Order*, 14 FCC Rcd at 20914, para. 1, n.2.

[^66]: *E.g.*, Comments of SBC and Verizon at 25-28, in *Implementation
    of the Local Competition Provisions of the Telecommunications Act of
    1996*, CC Docket No. 96-98 (filed Apr. 5, 2001).

[^67]: Letter from Thomas J. Tauke, Senior Vice President, Verizon
    Communications, to Michael Powell, Chairman, Federal Communications
    Commission, at 4 (filed Nov. 6, 2001) (Verizon November 6, 2001 *Ex
    Parte*).

[^68]: In the *Local Competition First Report and Order*, the Commission
    considered the economic impact of its transport rules on small
    incumbent LECs, and expressly limited the provision of unbundled
    interoffice facilities to *existing* incumbent LEC facilities.
    *Local Competition First Report and Order*, 11 FCC Rcd at 15722,
    para. 451 (emphasis in original). While the *UNE Remand Order*
    concluded that an incumbent LEC must unbundle its "ubiquitous
    transport network, including ring transport architectures," it did
    not require construction of new transport facilities that the
    incumbent LEC has not deployed for its own use. *UNE Remand Order*,
    15 FCC Rcd at 3843, para. 324.

[^69]: *See, e.g.*, Comments of WorldCom at 30, in *Implementation of
    the Local Competition Provisions of the Telecommunications Act of
    1996*, CC Docket No. 96-98 (filed Apr. 5, 2001). In the *UNE Remand
    Order*, the Commission agreed with competitive LECs that access to
    UNEs would lead to initial acceleration of alternative facilities
    build-out because acquisition of sufficient customers and necessary
    market information would justify new construction. *UNE Remand
    Order*, at 3749, para. 112.

[^70]: We ask similar questions in more detail in paragraphs 50 and 73,
    *infra*.

[^71]: Letter from Wendell P. Weeks, President, Corning Communications,
    to Michael Powell, Chairman, Federal Communications Commission, CC
    Docket Nos. 96-98, 98-147 (filed Dec. 3, 2001).

[^72]: Commenters should be aware that the Commission has already sought
    comment on certain aspects of overlay construction, spare copper,
    and other related issues. *See Fifth Further Notice of Proposed
    Rulemaking*, 15 FCC Rcd at 17856-62, paras. 118-31.

[^73]: In this context, we refer to "intramodal competition" as the
    competing provision of services over platforms using the same or
    similar technology. In addition, we refer to "intermodal
    competition" as the competing provision of services over alternative
    technological platforms.

[^74]: *UNE Remand Order*, 15 FCC Rcd at 3782, para. 188.

[^75]: *Id.* at 3782, para. 189.

[^76]: For example, in the SBC/Ameritech merger the Commission defined
    an out-of-region "facilities-based service" to mean a service
    provided by SBC/Ameritech "utilizing its own switch or utilizing
    switching capability from a party other than the incumbent LEC" or
    affiliate. *Applications of Ameritech Corp., Transferor, and SBC
    Communication Inc., Transferee*, 14 FCC Rcd 14712, 15027, at
    Appendix C, para. XXI.c(3) (1999). In contrast, for the purpose of
    permitting Bell operating company (BOC) entry into interLATA
    services, section 271 of the Act defines "facilities‑based
    competitors" as those that offer telephone exchange service "either
    exclusively over their own telephone exchange service facilities or
    predominantly over their own telephone exchange service facilities
    in combination with the resale of the telecommunications services of
    another carrier." 47 U.S.C. § 271(c)(1)(A). More broadly, in other
    areas the Commission has looked to indicia such as ownership in
    transmission facilities, the property interest in bare capacity or
    the existence of two wireline service providers. *See, e.g*.,
    *Independent Data Communications Mfrs. Ass'n, Inc., Petition for
    Declaratory Ruling and American Tel. & Tel. Co., Petition for
    Declaratory Ruling*, Memorandum Opinion and Order, 10 FCC Rcd 13717,
    13718 (Comm. Carr. Bur. 1995) (defining common carriers owning
    transmission facilities as facilities-based carriers for the
    purposes of requiring them to unbundle their basic frame relay
    services from their enhanced service offerings); 47 C.F.R. § 63.18
    n.2 (defining an international facilities-based carrier as the
    holder of "an ownership, indefeasible-right-of-user, or leasehold
    interest in bare capacity in an international facility");
    *Implementation of Section 302 of the Telecommunications Act of
    1996, Open Video Systems*, Second Report and Order, CS Docket No.
    96-46, 11 FCC Rcd 18223, 18258, para. 52, n.143 (defining
    "facilities‑based competition" for video programming as competition
    "between at least two wireline service providers").

[^77]: *UNE Remand Order*, 15 FCC Rcd at 3747-50, paras. 107-16.

[^78]: The *UNE Remand Order* barred the conversion of the entrance
    facility portion of special access service to UNE pricing to address
    the bypass of access charges and undermining of universal service.
    *Id.* at 3912, para. 485 (citing Letter from William B. Barfield,
    Associate General Counsel, BellSouth Corporation, to Lawrence E.
    Strickling, Chief, Common Carrier Bureau, Federal Communications
    Commission, CC Docket No. 96-98, at 1 (filed Aug. 9, 1999)
    (BellSouth August 9, 1999 *Ex Parte*). This prohibition on
    conversion remains in effect, even though the entrance facility is
    available for ordering as a new UNE. *Id*. at 3852, 3913, paras.
    348, 488.

[^79]: *Supplemental Order*, 15 FCC Rcd at 1762, para. 5 (1999). The
    Commission intended for this temporary usage constraint to address
    concerns that universal service could be harmed if interexchange
    carriers were permitted to use the incumbent LECs' networks solely
    to originate and terminate long distance calls without paying their
    assigned share of the incumbents' costs recovered normally through
    access charges.

[^80]: *See Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, Supplemental Order Clarification,
    CC Docket No. 96-98, 15 FCC Rcd 9587, 9598-600, 9602, paras. 22, 28
    (2000) (*Supplemental Order Clarification*). The three safe harbors
    for providing a "significant amount of local exchange service" to a
    particular customer are met if the requesting carrier certifies that
    it is the exclusive provider of local exchange service, or if it
    certifies that it meets certain traffic thresholds and other
    conditions.

[^81]: *E.g.*, Comments of AT&T Corp. at 4, 14, in *Implementation of
    the Local Competition Provisions of the Telecommunications Act of
    1996*, CC Docket No. 96-98 (filed Apr. 5, 2001) (citing Access
    Charge Reform, Price Cap Performance Review for Local Exchange
    Carriers, CC Docket Nos. 96-262 and 94-1, Sixth Report and Order,
    Low-Volume Long-Distance Users, CC Docket No. 99-249, Report and
    Order, Federal-State Joint Board on Universal Service, CC Docket No.
    96-45, Eleventh Report and Order, 15 FCC Rcd 12962 (*CALLS Order*)),
    *aff'd in part, rev'd in part, and remanded in part*, *Texas Office
    of Public Util. Counsel, et al. v. FCC*, 265 F.3d 313 (5^th^ Cir.
    2001).

[^82]: *E.g*., Joint Comments of the National Exchange Carrier Ass'n,
    Inc., *et al.* at 4, in *Implementation of the Local Competition
    Provisions of the Telecommunications Act of 1996*, CC Docket No.
    96-98 (filed Apr. 5, 2001).

[^83]: *E.g.*, Comments of BellSouth at 32, in *Implementation of the
    Local Competition Provisions of the Telecommunications Act of 1996*,
    CC Docket No. 96-98 (filed Apr. 5, 2001).

[^84]: *E.g.*, Comments of SBC and Verizon at 24, in *Implementation of
    the Local Competition Provisions of the Telecommunications Act of
    1996*, CC Docket No. 96-98 (filed Apr. 5, 2001).

[^85]: *See* Public Notice, *Common Carrier Bureau Seeks Comment on
    Remand of \$650 Million Support Amount Under Interstate Access
    Support Mechanism for Price Cap Carriers*, CC Docket Nos. 96-262,
    94-1, 99-249, and 95‑45 (rel. Dec. 4, 2001).

[^86]: *Multi-Association Group (MAG) Plan for Regulation of Interstate
    Services of Non-Price Cap Incumbent Local Exchange Carriers and
    Interexchange Carriers*, Second Report and Order and Further Notice
    of Proposed Rulemaking, CC Docket No. 00-256, *Federal-State Joint
    Board on Universal Service,* Fifteenth Report and Order in CC Docket
    No. 96-45, *Access Charge Reform for Incumbent Local Exchange
    Carriers Subject to Rate-of-Return Regulation, Prescribing the
    Authorized Rate of Return for Interstate Services of Local Exchange
    Carriers*, Report and Order in CC Docket Nos. 98-177 and 98-166
    (rel. Nov. 8, 2001).

[^87]: *See UNE Remand Order*, 15 FCC Rcd at 3891-92, paras. 441-42.

[^88]: *See id.* at 3822-32, paras. 276-99.

[^89]: *See id.* at 3835-40, paras. 306-17.

[^90]: *See, e.g.*, WorldCom November 9, 2001 *Ex Parte*.

[^91]: *Supplemental Order Clarification*, 15 FCC Rcd at 9595, para. 15
    (footnotes omitted) (emphasis in original). Several parties have
    petitioned the D.C. Circuit to review the *Supplemental Order
    Clarification*. *See* Statement of Issues of Petitioner, in
    *Competitive Telecommunications Ass'n v. FCC*, Case No. 00-1272
    (D.C. Cir. filed Jul. 31, 2001).

[^92]: The record of that inquiry is incorporated herein as explained
    *supra* Section II. Some carriers have argued that the Commission
    *must* take into account individual services when it makes its
    determination whether to unbundle a network element. They argue that
    the reference in section 251(d)(2)(B) to "the *services*" the
    requesting carrier seeks to offer means that the Commission *must*
    conduct an impairment analysis for each separate service that
    requesting carriers might offer. *See, e.g.*, Reply Comments of SBC
    and Verizon at 9, in *Implementation of the Local Competition
    Provisions of the Telecommunications Act of 1996*, CC Docket No.
    96-98 (filed Apr. 30, 2001). On the other hand, others argue that
    the Commission has no authority to conduct an impairment analysis
    that is specific to individual services. They focus on the language
    of section 251(d)(2)(B) that explains that the Commission applies
    its impairment analysis in order to determine "what network elements
    should be made available." And because a "network element," they
    argue, is a "facility or equipment," the impairment analysis results
    in unbundled facilities over which any number of services may be
    provided. *See, e.g.*, Comments of CompTel at 23, in *Implementation
    of the Local Competition Provisions of the Telecommunications Act of
    1996*, CC Docket No. 96-98 (filed Apr. 5, 2001); Comments of AT&T at
    9, in *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed Apr. 5,
    2001). They also argue that any service-specific "elements" would be
    contrary to the requirements of section 251(c)(3) that elements be
    made available on a "nondiscriminatory basis." *See* Comments of
    WorldCom at 8-9, in *Implementation of the Local Competition
    Provisions of the Telecommunications Act of 1996*, CC Docket No.
    96-98 (filed Apr. 5, 2001); Comments of AT&T at 12, in
    *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed Apr. 5,
    2001).

[^93]: *See, e.g.*, Letter from W. Scott Randolph, Director \--
    Regulatory Affairs, Verizon Communications, to Magalie Roman Salas,
    Secretary, Federal Communications Commission, at 2, in
    *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed Aug. 22,
    2001). Some parties have suggested that CMRS providers should not
    have access to UNEs. *Compare* Letter from John W. Kure, Executive
    Director \-- Federal Law and Policy, Qwest, to Magalie Roman Salas,
    Secretary, Federal Communications Commission, in *Implementation of
    the Local Competition Provisions in the Telecommunications Act of
    1996*, CC Docket No. 96-98 (filed Sept. 26, 2001) *with* ATTWS &
    VoiceStream Petition for Declaratory Ruling.

[^94]: 47 U.S.C. § 271(c)(2)(B).

[^95]: The Commission recognized that competitive carriers had more
    opportunities to deploy their own switches or use the switches of
    non-incumbents in density zone 1 of the top 50 metropolitan
    statistical areas (MSAs). *UNE Remand Order*, 15 FCC Rcd at 3823,
    para. 278. Evidence in the *UNE Remand* proceeding demonstrated that
    approximately 61% of the 700 switches deployed by competitors had
    been deployed in the top 50 MSAs, and that in 48 of those MSAs there
    were four or more competitive switches. *See id.* at 3824, para.
    280. Looking even more granularly, the Commission found that most of
    these competitive switches had been deployed in density zone 1 of
    each of the top 50 MSAs. The Commission thus determined that
    requesting carriers were impaired only outside of density zone 1 of
    the top 50 MSAs, and it limited the incumbents' unbundling
    obligation to that geographic area. *See id.* at 3826, para. 285.
    The Commission only permitted the incumbents not to unbundle local
    circuit switching in this geographic area if the incumbent provided
    EELs within that area. The Commission also maintained the unbundling
    obligation in this same geographic area for end users with three or
    fewer lines. *See id.* at 3828-31, paras. 288-98.

[^96]: Parties addressing this concern of geographic differentiation
    should also take into account the role of the states, as discussed
    in Section III.D, *infra.*

[^97]: *UNE Remand Order*, 15 FCC Rcd at 3842, para. 322.

[^98]: *See* 47 U.S.C. § 271(c)(2)(B) (requiring BOCs to demonstrate
    that they make available "local" loops, transport, and switching in
    order to obtain section 271 authority).

[^99]: *UNE Remand Order*, 15 FCC Rcd at 3737, para. 81.

[^100]: *Id.* at 3829, paras. 291-94.

[^101]: *See, e.g.*, Letter from John W. Kure, Executive Director -
    Federal Policy and Law, Qwest, to Magalie Roman Salas, Secretary,
    Federal Communications Commission, attach. at 2, in *Implementation
    of the Local Competition Provisions in the Telecommunications Act of
    1996*, CC Docket No. 96-98 (filed Sept. 26, 2001); Letter from W.
    Scott Randolph, Director - Regulatory Affairs, Verizon, to Magalie
    Roman Salas, Secretary, Federal Communications Commission, at 3-4,
    in *Implementation of the Local Competition Provisions in the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed Aug. 22,
    2001).

[^102]: We refer to the combination of unbundled loops, switches, and
    transport elements as "UNE-P" or "UNE‑platform."

[^103]: Conditions for such a transition would include incumbents'
    making unbundled loops available consistent with their provisioning
    requirements. *See* Letter from Steven C. Andreassi, Managing
    Director - Regulatory Affairs, Broadview Networks, Inc., to Magalie
    Roman Salas, Secretary, Federal Communications Commission, in
    *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed Jul. 5,
    2001).

[^104]: *See UNE Measurements and Standards Notice; Special Access
    Measurements and Standards Notice*.

[^105]: *See* Letter from Thomas Jones, Counsel for Allegiance Telecom,
    to Magalie Roman Salas, Secretary, Federal Communications
    Commission, at 1, in *Implementation of the Local Competition
    Provisions of the Telecommunications Act of 1996*, CC Docket No.
    96-98 (filed Jan. 30, 2001).

[^106]: *UNE Remand Order*, 15 FCC Rcd at 3772, 3789, 3801, paras. 165,
    205, 232; *see* 47 C.F.R. §§ 51.319(a)-(b).

[^107]: 47 C.F.R. § 51.319(a)(1). The subloop is defined as "any portion
    of the loop that is technically feasible to access at terminals in
    the incumbent LEC's outside plant." 47 C.F.R. § 51.319(a)(2).

[^108]: *UNE Remand Order*, 15 FCC Rcd at 3776-77, paras. 174, 176.

[^109]: 47 C.F.R. § 51.319(b).

[^110]: To the extent necessary, we seek comment on whether we need to
    clarify under our existing rules whether the NID is part of the
    unbundled loop when a competitor requests access to the loop or
    subloop. In the *UNE Remand Order* we stated that the loop network
    element may terminate at the NID, before the NID or beyond the NID.
    *Id.* at 3801, para. 233 n.457. We also stated, however, that we
    declined to adopt parties' proposals to include the NID in the
    definition of the loop. *Id.* at 3802, para. 235; *see also* *Line
    Sharing Order*, 14 FCC Rcd at 20923, para. 17 n.29 ("In the \[*UNE
    Remand Order*\], however we identify subloops and \[NIDs\] as
    separate network elements, even though the loop network element
    includes subloops and NIDs, because a competitor's subloop or NID
    access is not contingent upon its access of the entire loop.").

[^111]: In addition, network element combinations including the loop,
    such as the UNE-platform and the EEL, enable carriers to connect end
    user customers to the carriers' equipment.

[^112]: The Commission has previously requested comment on whether
    attached electronics used for both voice and data services, such as
    the splitter, should be included in the definition of the loop.
    *Fifth Further Notice of Proposed Rulemaking,* 15 FCC Rcd. at 17858,
    para. 122. The Commission has also indicated that the splitter might
    be considered part of the packet switching network element discussed
    below. *See Application by SBC Communications Inc., Southwestern
    Bell Tel. Co. and Southwestern Bell Communications Servs., Inc.
    d/b/a Southwestern Bell Long Distance Pursuant to Section 271 of the
    Telecommunications Act of 1996 To Provide In-Region, InterLATA
    Services In Texas*, Memorandum Opinion and Order, 15 FCC Rcd 18354,
    18517, para. 328 (2000).

[^113]: Constant Bit Rate (CBR) refers to a service where information
    (*i.e.*, data) is conveyed regularly in time and at a constant rate.
    Variable Bit Rate (VBR) refers a service in which information is
    allowed to vary within defined limits. Harry Newton, Newton's
    Telecom Dictionary 210, 918 (16^th^ ed. 2000).

[^114]: *See* *supra* para. 24.

[^115]: *UNE Remand Order*, 15 FCC Rcd at 3776-77, paras. 174-77.

[^116]: *See, e.g.*, Comments of United States Telecom Ass'n, at 9-11,
    in *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed June 11,
    2001).

[^117]: *See, e.g.*, Comments of Cbeyond *et al.*, at 21, in
    *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed June 11,
    2001).

[^118]: By asking these questions, we are not seeking comment on the
    legality of unbundling dark fiber. Rather, we are seeking comment on
    whether, and to what extent, incumbents should be obligated to
    complete orders for high-capacity loops when spare facilities and/or
    capacity on those facilities is unavailable. *See, e.g.*,
    *Application of Verizon Pennsylvania Inc., et al., To Provide
    In-Region, InterLATA Services in Pennsylvania*, 16 FCC Rcd 17419,
    17468-69, paras. 91-92 (2001) (*Pennsylvania Section 271 Order*).

[^119]: *Line Sharing Order*, 14 FCC Rcd at 20926, para. 25.

[^120]: *Deployment of Wireline Services Offering Telecommunications
    Capability and Implementation of the Local Competition Provisions of
    the Telecommunications Act of 1996*, Third Report and Order on
    Reconsideration in CC Docket No. 98-147, Fourth Report and Order on
    Reconsideration in CC Docket No. 96-98, 16 FCC Rcd 2101 (2001)
    (*Line Sharing Recon. Order*). We note that under our current rules,
    incumbent LECs do not have any obligation to provide the splitter as
    part of line splitting and that at least one party has requested the
    Commission to impose such a requirement on incumbents. *See, e.g.*,
    Letter from Frank S. Simone, Government Affairs Director, AT&T, to
    Magalie Roman Salas, Secretary, Federal Communications Commission,
    at 2, in *Deployment of Wireline Services Offering
    Telecommunications Capability*, CC Docket No. 98-147,
    *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed Jan. 16,
    2001).

[^121]: *See* Petition for Reconsideration and Clarification of the
    Competitive Telecommunications Association, *Deployment of Wireline
    Services Offering Telecommunications Capability*, CC Docket No.
    98-147, *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed Mar. 8,
    2001) (CompTel Recon. Petition) (seeking reconsideration of the
    *Line Sharing Recon. Order*). We note that the specific issues
    raised by CompTel in its petition are pending and our request for
    comment does not prejudice our decision in that proceeding.

[^122]: *UNE Remand Order*, 15 FCC Rcd at 3808-09, 3822, paras. 253,
    275; *see* 47 C.F.R. § 51.319(c).

[^123]: 47 C.F.R. § 51.319(c)(1). "Local tandem switching capability" is
    defined as "trunk-connect facilities" and other functions
    centralized in tandem switches. 47 C.F.R. § 51.319(c)(3).

[^124]: 47 C.F.R. § 51.319(c)(2).

[^125]: *UNE Remand Order*, 15 FCC Rcd at 3822-31, paras. 276-298; 47
    C.F.R. § 69.123 (defining the parameters for the establishment of
    density pricing zones with density zone one as the geographic area
    with the highest access line density and amount of traffic volume).

[^126]: For example, AT&T has proposed an approach wherein the
    Commission would set forth "basic considerations" for state
    commissions to apply in making specific determinations as to whether
    or not unbundled switching must be made available. Letter from
    Robert W. Quinn, Jr., Vice President Federal Government Affairs,
    AT&T, to Magalie Roman Salas, Secretary, Federal Communications
    Commission, in *Implementation of the Local Competition Provisions
    of the Telecommunications Act of 1996*, CC Docket No. 96-98 (filed
    Apr. 2, 2001) (AT&T April 2, 2001 *Ex Parte*).

[^127]: *UNE Remand Order*, 15 FCC Rcd at 3824, para. 280 & n.555.

[^128]: *See, e.g.*, Petition of AT&T Corp. for Reconsideration and
    Clarification of the Third Report and Order at 16, in
    *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed Feb. 17,
    2000); Petition of MCI WorldCom Inc. for Reconsideration at 22, in
    *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed Feb. 17,
    2000); Letter from Genevieve Morelli, Counsel for the PACE
    Coalition, to Magalie R. Salas, Secretary, Federal Communications
    Commission, CC Docket No. 96-98 at 2 (filed May 19, 2000).

[^129]: *See, e.g.*, Letter from Gary L. Phillips, General Attorney, SBC
    Telecommunications, Inc., to Magalie R. Salas, Secretary, Federal
    Communications Commission, CC Docket No. 96-98 at 1 (filed June 13,
    2000) (stating that competitive LECs have obtained collocation and
    deployed switches not only throughout the 100 largest MSAs, but even
    in some MSAs that are smaller than the largest 150).

[^130]: *UNE Remand Order*, 15 FCC Rcd at 3829, para. 291.

[^131]: *Id*. at 3829, para. 293.

[^132]: Letter from Thomas J. Tauke, Senior Vice President Public Policy
    & External Affairs, and Michael E. Glover, Senior Vice President and
    Deputy General Counsel, Verizon Communications, to Michael Powell,
    Chairman, Federal Communications Commission, CC Docket No. 96-98
    (filed Oct. 19, 2001).

[^133]: Letter from Robert A. Curtis, Senior Vice President, Strategic
    Planning and Thomas M. Koutsky, Vice President, Law and Public
    Policy, Z-Tel, to Chairman Michael K. Powell, Federal Communications
    Commission, at 4-5, CC Docket No. 96-98 (filed Dec. 5, 2001); AT&T
    April 2, 2001 *Ex Parte* at 2 ("The manual nature of the 'hot cut'
    processes required to access the incumbent's loop infrastructure has
    resulted in unacceptably poor service quality during the
    provisioning process, including significant service outages, which
    cause higher costs, gated volumes, and customer dissatisfaction. In
    an effort to combat (or at least more effectively control) these
    service quality and economic impairments, AT&T has implemented
    processes designed to acquire business customers via UNE-P and then
    subsequently convert large volumes of those customers in a single
    central office from a UNE-P product to a UNE-loop product on a
    project basis.").

[^134]: *UNE Remand Order*, 15 FCC Rcd at 3833-34, paras. 302-04; *see*
    47 C.F.R. § 51.319(c)(4).

[^135]: 47 C.F.R. § 51.319(c)(5). An incumbent LEC must provide access
    to unbundled packet switching only where the incumbent LEC has
    deployed digital loop carrier systems or otherwise deployed fiber
    optic facilities in the distribution part of the loop; has no spare
    copper loops capable of providing the xDSL service the requesting
    carrier seeks to offer; has not permitted the requesting carrier to
    collocate its own DSLAM at an appropriate subloop point; and has
    deployed packet switching for its own use. *See id.*

[^136]: 47 C.F.R. § 51.319(c)(4)(iii).

[^137]: *UNE Remand Order*, 15 FCC Rcd at 3842, para. 321; *see* 47
    C.F.R. § 51.319.

[^138]: 47 C.F.R. § 51.319(d)(1)(i).

[^139]: 47 C.F.R. § 51.319(d)(1)(iii).

[^140]: *See* ATTWS & VoiceStream Petition for Declaratory Ruling.

[^141]: At least one incumbent LEC argues that section 51.319(d)(1)(i)
    of the Commission's rules only requires incumbent LECs to provide
    unbundled transport if both the mobile switching center (MSC) and
    the cell site are switches or wire centers owned by the requesting
    CMRS carriers, which Verizon asserts they are not. *See* Letter from
    W. Scott Randolph, Director -- Regulatory Affairs, Verizon
    Communications, to Magalie Roman Salas, Secretary, Federal
    Communications Commission, CC Docket No. 96-98, at 1-2 (filed Aug.
    22, 2001). CMRS carriers, however, argue that channel terminations
    to base stations qualify as dedicated transport because base
    stations are switches and are the functional equivalent of a wire
    center. These issues, among others, are addressed in AT&T Wireless,
    Inc.'s and VoiceStream's petition for a declaratory ruling. *See*
    ATTWS & VoiceStream Petition for Declaratory Ruling at 23‑24.

[^142]: *See, e.g.*, Comments of United States Telecom Ass'n, at 12, in
    *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed June 11,
    2001).

[^143]: *See, e.g.*, Joint Comments of Cbeyond, *et al.*, at 30, in
    *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed June 11,
    2001).

[^144]: *See* ATTWS & VoiceStream Petition for Declaratory Ruling at 30.

[^145]: *See id.* at 10.

[^146]: *Local Competition First Report and Order*, 11 FCC Rcd at
    15602-03, 15605, paras. 198, 202. The Commission has given further
    shape to this obligation in certain circumstances by more clearly
    delineating the activities necessary to fulfill this obligation.
    *See*, *e.g.*, *UNE Remand Order*, 15 FCC Rcd at 3775, paras.
    172-73.

[^147]: *UNE Remand Order*, 15 FCC Rcd at 3843, para. 324.

[^148]: *Id.* at 3912, para. 485 (citing BellSouth August 9, 1999 *Ex
    Parte* at 1).

[^149]: For example, incumbent LECs state that when requesting carriers
    order a special access circuit, the incumbent will build
    high-capacity circuits at the request of competitive carriers. *See,
    e.g.*, Letter from John W. Kure, Executive Director \-- Federal
    Policy and Law, Qwest, to Magalie Roman Salas, Secretary, Federal
    Communications Commission, CC Docket No. 96-98 (filed Sept. 26,
    2001).

[^150]: *See* Letter from W. Scott Randolph, Director \-- Regulatory
    Affairs, Verizon Communications, to Magalie Roman Salas, Secretary,
    Federal Communications Commission, at 1, in *Implementation of the
    Local Competition Provisions of the Telecommunications Act of 1996*,
    CC Docket No. 01-138 (Aug. 21, 2001) (stating that where Verizon
    does not presently have facilities, but identifies new construction
    that would lead to its being able to fulfill a request, Verizon will
    provide the requested network element upon completion of that new
    construction).

[^151]: *UNE Remand Order*, 15 FCC Rcd at 3843, para. 324.

[^152]: *Id*. ("Notwithstanding the fact that we require incumbents to
    unbundle high-capacity transmission facilities, we reject Sprint's
    proposal to require incumbent LECs to provide unbundled access to
    SONET rings.").

[^153]: *Id.* at 3867, 3875, 3887, paras. 383, 402, 433; s*ee* 47 C.F.R.
    §§ 51.319(e), (g).

[^154]: 47 C.F.R. § 51.319(g).

[^155]: *Id.* § 51.319(e)(1).

[^156]: *Id.* § 51.319(e)(2).

[^157]: *UNE Remand Order*, 15 FCC Rcd at 3869-70, paras. 389-90.

[^158]: *Id.* at 3875, 3878, paras. 402, 410; *see* 47 C.F.R. §
    51.319(e)(2)(i).

[^159]: *UNE Remand Order*, 15 FCC Rcd at 3884-87, paras. 426-31.

[^160]: *See, e.g., Joint Application by SBC Communications, Inc.,
    Southwestern Bell Telephone Company, and Southwestern Bell
    Communications Services, Inc. d/b/a Southwestern Bell Long Distance
    Pursuant to Section 271 of the Telecommunications Act of 1996 To
    Provide In-Region InterLATA Services in Arkansas and Missouri*, 16
    FCC Rcd 20719, 20772-73 para. 107 (2001); *Pennsylvania Section 271
    Order*, 16 FCC Rcd at 17468-69, para. 90.

[^161]: *Local Competition First Report and Order*, 11 FCC Rcd at 15612,
    paras. 217-18 ("We believe the term 'nondiscriminatory' as used
    throughout section 251, applies to the terms and conditions an
    incumbent LEC imposes on third parties as well as on itself.").

[^162]: *Id.* at 15660, para. 315.

[^163]: In the *Local Competition First Report and Order*, the
    Commission explicitly left this question unresolved. *Id.* at 15671,
    para. 341.

[^164]: *Pennsylvania Section 271 Order*, 16 FCC Rcd at 17472, para. 97.

[^165]: *See, e.g.*, Comments of Focal Communications Corporation, at
    10-12, in *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed Apr. 5,
    2001) (Focal April 5, 2001 Comments).

[^166]: *See Supplemental Order Clarification*, 15 FCC Rcd at 9602,
    para. 28.

[^167]: *Id*. at 9598-99, 9602, paras. 22, 28.

[^168]: *See, e.g.*, Opposition of SBC Communications, Inc. to
    ITC\^DeltaCom Petition for Waiver, at 6, in *Implementation of the
    Local Competition Provisions in the Telecommunications Act of 1996*,
    CC Docket No. 96-98 (filed Sept. 18, 2001); Opposition of the
    Verizon Telephone Companies, at 9-10, in *Implementation of the
    Local Competition Provisions in the Telecommunications Act of 1996*,
    CC Docket No. 96-98 (filed Sept. 19, 2001).

[^169]: *See, e.g.*, Comments of Cbeyond, *et al.*, at 14-16, in
    *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98 (filed Apr. 5,
    2001).

[^170]: *Supplemental Order Clarification*, 15 FCC Rcd at 9591-92,
    paras. 7-8.

[^171]: 47 U.S.C. § 271(c)(2)(B).

[^172]: "Although we do not conclude that the checklist determines
    definitively that all incumbent LECs are required, pursuant to
    section 251, to unbundle the items enumerated in section 271, we
    find that section 271 sheds some light on what elements Congress
    believed should be unbundled in order to open local markets to
    competition." *UNE Remand Order*, 15 FCC Rcd at 3748, para. 109.

[^173]: *Id.* at 3906, para. 473.

[^174]: *See also Application by Bell Atlantic New York for
    Authorization Under Section 271 of the Communications Act to Provide
    In-Region, InterLATA Service in the State of New York*, Memorandum
    Opinion and Order, 15 FCC Rcd 3953, 4126-27, para. 340 (1999).

[^175]: Verizon November 6, 2001 *Ex Parte* at 3.

[^176]: *Iowa Utils. Bd.*, 120 F.3d at 812-13.

[^177]: 47 U.S.C. § 251(d)(3); *UNE Remand Order*, 15 FCC Rcd at 3767,
    para. 154.

[^178]: 15 FCC Rcd at 3767, para. 154.

[^179]: *Id.*

[^180]: *Id.* at 3768-70, paras. 155-61

[^181]: One party has already proposed a framework where states would
    recommend to the Commission that unbundled switching obligations be
    relaxed, subject to incumbent LEC demonstration of the sufficiency
    of certain operational processes and other conditions. *See* AT&T
    April 2, 2001 *Ex Parte*.

[^182]: 47 U.S.C. § 410(b).

[^183]: CompTel Joint Conference Petition at 6-7; *see also* Letter from
    Joan Smith, Chair, NARUC Communications Committee, *et al.*, to
    Michael Powell, Chairman, Federal Communications Commission, CC
    Docket No. 96-98 (filed Dec. 5, 2001) (NARUC December 5, 2001 *Ex
    Parte*) (supporting CompTel's proposal for the Commission to convene
    a Federal-State Joint conference on UNEs pursuant to section 410(b)
    of the Communications Act).

[^184]: *UNE Remand Order*, 15 FCC Rcd at 3765, paras. 148-49.

[^185]: *Id.* at 3765-66, para. 150.

[^186]: *Id.* at 3766, para. 151 & n.269.

[^187]: CompTel Joint Conference Petition at 13 (asking the Commission
    to make clear that parties seeking to modify existing rules and
    policies must show by a preponderance of the record evidence that
    the requested relief is justified); *see also* NARUC December 5,
    2001 *Ex Parte* at 1-2 (supporting CompTel's proposal on the burden
    of proof for requested relief).

[^188]: *UNE Remand Order*, 15 FCC Rcd at 3766, para. 152.

[^189]: Opposition of Joint Petitioners at 2; *see also* Separate
    Statement of Commissioner Harold Furchtgott-Roth, Concurring in Part
    and Dissenting in Part, *Implementation of the Local Competition
    Provisions of the Telecommunications Act of 1996*, Third Report and
    Order and Fourth Further Notice of Proposed Rulemaking, CC Docket
    No. 96-98, 16 FCC Rcd 1727, 1731 (1999) (stating that the three-year
    review period is illegal, because section 11 of the 1996 Act, 47
    U.S.C. § 161, would require a biennial review in 2000).

[^190]: *UNE Remand Order*, 15 FCC Rcd at 3915, para. 496.

[^191]: *Supplemental Order Clarification*, 15 FCC Rcd at 9597, para.
    18.

[^192]: *Intercarrier Compensation for ISP-Bound Traffic*, Order on
    Remand and Report and Order, CC Docket No. 96‑98, CC Docket No.
    99-68, FCC 01-132 at para. 77 (rel. Apr. 27, 2001).

[^193]: "BOCs shall not be permitted to recover these revenues once they
    are authorized to offer in-region interLATA service, because at that
    time the potential loss of access charge revenues faced by a BOC
    most likely will be able to be offset by new revenues from interLATA
    services." *Local Competition First Report and Order*, 11 FCC Rcd at
    15866, para. 724. We note that the Commission instituted a section
    271 approval trigger date in conjunction with a temporal phase-in,
    and that the purpose of protecting revenues was to protect universal
    service and an unreformed access charge regime rather than the
    market position or business expectations of the BOCs. *Id.* at
    15866, para. 725.

[^194]: *UNE Remand Order*, 15 FCC Rcd at 3912, para. 486 n.985.

[^195]: Focal April 5, 2001 Comments at 12-14.

[^196]: 47 C.F.R. §§ 1.1200-1.1216.

[^197]: *See* 47 C.F.R. § 1.1206(b)(2).

[^198]: 47 C.F.R. §§ 1.415, 1.419.

[^199]: *See* Electronic Filing of Documents in Rulemaking Proceedings,
    63 Fed. Reg. 24121 (1998).

[^200]: *See* 47 C.F.R. § 1.48.

[^201]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et. seq.*,
    has been amended by the Small Business Regulatory Enforcement
    Fairness Act of 1996 (SBREFA), Pub. L. No. 104-121, 110 Stat. 857
    (1996).

[^202]: *See* 5 U.S.C. § 603(a).

[^203]: *See id.*

[^204]: 5 U.S.C. §§ 603(b)(3), 604(a)(3).

[^205]: *Id*. § 601(6).

[^206]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    "small business concern" in the Small Business Act, 15 U.S.C.
    § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a
    small business applies "unless an agency, after consultation with
    the Office of Advocacy of the Small Business Administration and
    after opportunity for public comment, establishes one or more
    definitions of such terms which are appropriate to the activities of
    the agency and publishes such definitions(s) in the Federal
    Register."

[^207]: 15 U.S.C. § 632.

[^208]: Federal Communications Commission, Common Carrier Bureau,
    Industry Analysis Division, *Trends in Telephone Service*, Table
    16.3 (Dec. 2000) (*Trends in Telephone Service*).

[^209]: *Id.*

[^210]: *See* 13 C.F.R. § 121.201, Standard Industrial Classification
    (SIC) codes 4812 and 4813, now NAICS codes 51331-34; *see also*
    Executive Office of the President, Office of Management and Budget,
    *Standard Industrial Classification Manual* (1987).

[^211]: 5 U.S.C. § 601(3).

[^212]: 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); 5 U.S.C. § 601(3). SBA regulations interpret "small
    business concern" to include the concept of dominance on a national
    basis. 13 C.F.R. § 121.102(b).

[^213]: 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*).

[^214]: *See generally* 15 U.S.C. § 632(a)(1).

[^215]: *1992 Census* at Firm Size 1-123.

[^216]: 13 C.F.R. § 121.201, NAICS code 513310.

[^217]: *Id*.

[^218]: *Trends in Telephone Service* at Table 16.3.

[^219]: 13 C.F.R. § 121.201, NAICS code 513310.

[^220]: *Trends in Telephone Service* at Table 16.3.

[^221]: 13 C.F.R. § 121.201, NAICS code 513310.

[^222]: *Trends in Telephone Service* at Table 16.3.

[^223]: 13 C.F.R. § 121.201, NAICS code 513310.

[^224]: *Trends in Telephone Service* at Table 16.3.

[^225]: 13 C.F.R. § 121.201, NAICS code 513310.

[^226]: *Trends in Telephone Service* at Table 16.3.

[^227]: 13 C.F.R. § 121.201, NAICS code 513330.

[^228]: *Trends in Telephone Service* at Table 16.3.

[^229]: We include all toll-free number subscribers in this category,
    including 888 number subscribers.

[^230]: *Trends in Telephone Service* at Table 19.2.

[^231]: 13 C.F.R. § 121.201, NAICS code 513322.

[^232]: *1992 Census* at Firm Size 1-123.

[^233]: Federal Communications Commission, Common Carrier Bureau,
    Industry Analysis Division, *Trends in Telephone Service*, Table
    19.3 (Mar. 2000).

[^234]: 13 C.F.R. § 121.201, NAICS code 513322.

[^235]: *1992 Census* at Firm Size 1-123.

[^236]: *Amendment of Part 90 of the Commission's Rules to Provide for
    the Use of the 220-222 MHz Band by the Private Land Mobile Radio
    Service*, PR Docket No. 89-552, Third Report and Order, 12 FCC Rcd.
    10943, 11068-70 paras. 291-95 (1997).

[^237]: *Id.* at 11068-69 para. 291.

[^238]: *See* Letter from A. Alvarez, Administrator, SBA, to D.
    Phythyon, Chief, Wireless Telecommunications Bureau, Federal
    Communications Commission (filed Jan. 6, 1998).

[^239]: *See generally* Phase II 220 MHz Service Auction Closes, Auction
    No. 18, *Public Notice*, 14 FCC Rcd. 605 (1998).

[^240]: Public Notice, *FCC Announces It is Prepared to Grant 654 Phase
    II 220 MHz Licenses After Final Payment is Made*, Auction No. 18, 14
    FCC Rcd 1085 (1999).

[^241]: 13 C.F.R. § 121.201, NAICS code 513321.

[^242]: Federal Communications Commission, Common Carrier Bureau,
    Industry Analysis Division, *Trends in Telephone Service*, Table
    19.3 (Feb. 19, 1999).

[^243]: 13 C.F.R. § 121.201, NAICS code 513321.

[^244]: *Trends in Telephone Service* at Table 19.3.

[^245]: *See Amendment of Parts 20 and 24 of the Commission's
    Rules---Broadband PCS Competitive Bidding and the Commercial Mobile
    Radio Service Spectrum Cap*, WT Docket No. 96-59, Report and Order,
    11 FCC Rcd. 7824, 7850-53, paras. 57-60 (1996) (*CMRS Spectrum Cap
    Order*); 61 FR 33859 (Jul. 1, 1996); *see also* 47 C.F.R. §
    24.720(b).

[^246]: *CMRS Spectrum Cap Order*, 11 FCC Rcd at 7852, para. 60.

[^247]: *See, e.g., In the Matter of Implementation of Section 309(j) of
    the Communications Act---Competitive Bidding*, PP Docket No. 93-253,
    Fifth Report and Order, 9 FCC Rcd. 5532, 5581-84 (1994).

[^248]: FCC News, *Broadband PCS, D, E and F Block Auction Closes*, No.
    71744 (rel. Jan. 14, 1997).

[^249]: The service is defined in section 22.99 of the Commission's
    Rules, 47 C.F.R. § 22.99.

[^250]: BETRS is defined in sections 22.757 and 22.759 of the
    Commission's Rules, 47 C.F.R. §§ 22.757 and 22.759.

[^251]: 13 C.F.R. § 121.201, NAICS code 513322.

[^252]: The service is defined in section 22.99 of the Commission's
    Rules, 47 C.F.R. § 22.99.

[^253]: 13 C.F.R. § 121.201, NAICS code 513322.

[^254]: *Amendment of the Commission\'s Rules Concerning Maritime
    Communications*, PR Docket No. 92-257, Third Report and Order and
    Memorandum Opinion and Order, 13 FCC Rcd 19853 (1998).

[^255]: 47 C.F.R. §§ 101 *et seq*. (formerly, part 21 of the
    Commission\'s Rules).

[^256]: Persons eligible under parts 80 and 90 of the Commission\'s
    rules can use Private Operational-Fixed Microwave services. *See* 47
    C.F.R. parts 80 and 90. Stations in this service are called
    operational-fixed to distinguish them from common carrier and public
    fixed stations. Only the licensee may use the operational-fixed
    station, and only for communications related to the licensee\'s
    commercial, industrial or safety operations.

[^257]: Auxiliary Microwave Service is governed by Part 74 of Title 47
    of the Commission\'s Rules. *See* 47 C.F.R. § 74 *et seq.* Available
    to licensees of broadcast stations and to broadcast and cable
    network entities, broadcast auxiliary microwave stations are used
    for relaying broadcast television signals from the studio to the
    transmitter, or between two points such as a main studio and an
    auxiliary studio. The service also includes mobile TV pickups, which
    relay signals from a remote location back to the studio.

[^258]: 13 C.F.R. § 121.201, NAICS code 513322.

[^259]: *See* 13 C.F.R. § 121.201, NAICS code 513322.

[^260]: *1992 Census* at *Firm Size* 1-123.

[^261]: Teligent has acquired the DEMS licenses of FirstMark, the only
    other licensee in the 24 GHz band whose license has been modified to
    require relocation to the 24 GHz band.

[^262]: *See Section 309(j) of the Communications Act---Competitive
    Bidding*, Fifth Report and Order, 9 FCC Rcd. 5532, 5581-82 para. 115
    (1994).

[^263]: *See* Public Notice, *39 GHz Band Auction Closes; Winning
    Bidders of 2,173 Licenses Announced*, DA 00-1035 (rel. May 10,
    2000).

[^264]: *See* Letter from Aida Alvarez, Administrator, Small Business
    Administration, to Kathleen O'Brien Ham, Chief, Auctions and
    Industry Analysis Division, Wireless Telecommunications Bureau,
    Federal Communications Commission (filed Feb. 4, 1998).

[^265]: For purposes of this item, MDS includes both the single channel
    Multipoint Distribution Service (MDS) and the Multichannel
    Multipoint Distribution Service (MMDS).

[^266]: 47 C.F.R. § 1.2110 (a)(1).

[^267]: *Amendment of Parts 21 and 74 of the Commission\'s Rules with
    Regard to Filing Procedures in the Multipoint Distribution Service
    and in the Instructional Television Fixed Service; Implementation of
    Section 309(j) of the Communications Act---Competitive Bidding*, MM
    Docket No. 94-131, PP Docket No. 93-253, Report and Order, 10 FCC
    Rcd. 9589 (1995), 60 FR 36524 (Jul. 17, 1995).

[^268]: 47 U.S.C. § 309(j).

[^269]: *Id*. A Basic Trading Area (BTA) is the geographic area by which
    the Multipoint Distribution Service is licensed. *See* Rand McNally,
    1992 Commercial Atlas and Marketing Guide 36-39 (123rd ed. 1992).

[^270]: 13 C.F.R. §121.201.

[^271]: This service is governed by subpart I of Part 22 of the
    Commission\'s Rules. *See* 47 C.F.R. §§ 22.1001-22.1037.

[^272]: *See Allocation of Spectrum Below 5 GHz Transferred from Federal
    Government Use*, ET Docket No. 94-32, Second Report and Order, 11
    FCC Rcd. 624 (1995).

[^273]: *See* Letter from Aida Alvarez, Administrator, Small Business
    Administration, to Daniel B. Phythyon, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission (filed
    May 19, 1998).

[^274]: *See* 47 C.F.R. § 26.4.

[^275]: *See The 4.9 GHz Band Transferred From Federal Government Use*,
    WT Docket No. 00-32, Notice of Proposed Rulemaking, 15 FCC Rcd. 4778
    (2000).

[^276]: *See supra, e.g.*, Section III.C.

[^277]: *See supra* Section III.E*.*

[^278]: *See supra* Section III.B.

[^279]: 5 U.S.C. § 603(c).

[^280]: *See supra* Section III.C.2.

[^281]: *See supra* Section III.C.3.

[^282]: *See supra* Section III.D.3.

[^283]: *See supra* Section III.C.1.

[^284]: *See supra* Section III.D.

[^285]: The first of these items was the *Notice of Proposed Rulemaking*
    regarding performance requirements for UNE provisioning that we
    adopted at the November agenda meeting. *Performance Measurements
    and Standards for Unbundled Network Elements and Interconnection, et
    al*., CC Docket No. 01-318, Notice of Proposed Rulemaking, FCC
    01-331 (rel. Nov. 19, 2001). In addition to that *Notice* and the
    two items captioned above, we will in the coming weeks seek comment
    on the appropriate regulatory framework for incumbent LEC provision
    of broadband information services.

[^286]: *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996,* Third Report and Order and Fourth
    Further Notice of Proposed Rulemaking, 15 FCC Rcd 3696 (1999) ("*UNE
    Remand Order*"), ¶ 151.

[^287]: *UNE Remand Order,* ¶ 14.

[^288]: *UNE Remand Order,* ¶¶ 107-113.

[^289]: *UNE Remand Order,* ¶ 8.