**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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> MEMORANDUM OPINION AND ORDER
>
> **Adopted:** December 30, 2002 **Released:** December 31, 2002

Before the Commission: Commissioners Copps and Adelstein concurring and
issuing a joint statement; Commissioner Martin dissenting and issuing a
separate statement.

# introduction

1.  In this Order, we address SBC Communications Inc.'s (SBC's) petition
    for forbearance from the application of tariffing requirements to
    its provision of advanced services.[^1] We grant SBC's petition to
    the extent it seeks forbearance from tariff regulation of advanced
    services that SBC provides through its advanced services affiliate,
    Advanced Solutions, Inc. (ASI), which provides intraLATA advanced
    services throughout the SBC region.[^2] We otherwise deny SBC's
    petition without prejudging in any way the issues in the rulemaking
    commenced under the *Incumbent LEC Broadband Notice*.[^3]

# background

## Relevant Procedural History

2.  Because our analysis of SBC's petition for forbearance relies on
    SBC's current corporate structure, it is useful to recount in detail
    the relevant history of that structure. In October 1999, the
    Commission conditionally approved the transfer of licenses and lines
    from Ameritech Corp. (Ameritech) to SBC in connection with their
    merger.[^4] The conditions required, among other matters, that,
    starting 30 days after receiving all necessary state approvals and
    certifications, SBC provide in-region advanced services only through
    one or more structurally separate affiliates and only in accordance
    with certain structural, transactional, and non-discrimination
    safeguards.[^5] These safeguards were designed to ensure that
    competing advanced services providers received effective,
    non-discriminatory access to the bottleneck local telephone
    facilities and services that the merged entity would use as inputs
    for its advanced services offerings.[^6] The safeguards required, in
    particular, that one or more separate advanced services affiliates
    shall have overall responsibility for providing SBC's in-region
    advanced services, and that these affiliates shall own and operate
    any advanced services equipment the merged entity placed into
    service after November 7, 1999.[^7] In addition, each separate
    affiliate was required to order, in the same manner as its
    competitors, any unbundled network elements (UNEs), collocation
    space, and telecommunications services that it sought to obtain from
    affiliated incumbent local exchange carriers (incumbent LECs).[^8]
    Specifically, SBC was required to allow unaffiliated
    telecommunications carriers to order UNEs and telecommunications
    services from its incumbent LECs under the same rates, terms, and
    conditions, utilizing the same interfaces, processes, and
    procedures, as those available to its advanced services
    affiliate.[^9] In addition, that affiliate must arrange and
    negotiate for collocation space under the same terms and conditions,
    using the same processes, as those available to unaffiliated
    telecommunications carriers.[^10]

3.  In the *SBC/Ameritech Merger Order*, the Commission concluded that
    an advanced services affiliate that operated in accordance with the
    specified safeguards would be presumed not to be a "successor or
    assign" of an incumbent LEC and thus would not be subject to
    regulation under section 251 as an incumbent LEC.[^11] The
    Commission also concluded, without extensive analysis, that because
    such an advanced services affiliate would not be a "successor or
    assign" of an incumbent LEC, it would be presumed to be non-dominant
    in its provision of interstate advanced services.[^12] The merger
    conditions thus specified that the interstate telecommunications
    services offered by this presumptively non-dominant affiliate would
    be permissively detariffed.[^13] The merger conditions also
    specified that in the event a court of competent jurisdiction ruled
    that a separate advanced services affiliate operating in accordance
    with the merger conditions must be deemed a "successor or assign" of
    an incumbent LEC, SBC would have the option of providing advanced
    services directly, rather than through a separate affiliate, but did
    not otherwise address what would happen to SBC's tariffing
    obligations in such an event.[^14]

4.  In January 2001, the United States Court of Appeals for the District
    of Columbia Circuit vacated certain portions of the *SBC/Ameritech
    Merger Order*, ruling that the Commission may not permit an
    incumbent LEC to avoid section 251(c) obligations as applied to
    advanced services by establishing a wholly-owned affiliate to offer
    those services.[^15] While the D.C. Circuit did not address
    specifically whether SBC's advanced services affiliate should
    continue to be presumed non-dominant in the provision of advanced
    services, the court, by vacating the Commission's holding that those
    affiliates were not successors or assigns of an incumbent LEC,
    eliminated the basis for that presumption, as explicitly set forth
    in the *SBC/Ameritech Merger Order*.[^16]

5.  Although SBC has argued that ASI should continue to be presumed
    non-dominant in the provision of advanced services,[^17] ASI filed
    an interstate advanced services tariff on September 7, 2001, which
    became effective on September 10, 2001.[^18] ASI accordingly now
    offers its interstate advanced services pursuant to tariff. Under
    the merger conditions, the decision in *ASCENT v. FCC* gave SBC the
    option of providing advanced services directly, rather than through
    one or more separate affiliates.[^19] SBC, however, currently uses
    ASI to provide its advanced services, and there is no evidence on
    the record suggesting any immediate plans to reintegrate ASI and the
    services it presently provides into SBC's operating companies.

## ASI's Advanced Services Operations 

6.  The SBC/Ameritech merger closed on October 8, 1999. SBC states that,
    once ASI obtained the state authority and certifications it needed
    to operate, SBC withdrew its interstate advanced services tariffs
    and began offering in-region advanced services exclusively through
    contracts between ASI and its customers.[^20] SBC also states that
    ASI operated pursuant to contract for approximately 18 months prior
    to filing its advanced services tariff during September 2001.[^21]
    ASI's advanced services include asynchronous transfer mode (ATM) and
    frame relay services that ASI offers to both wholesale and retail
    customers.[^22] ASI also offers wholesale digital subscriber line
    (DSL) transport service to affiliated and unaffiliated Internet
    services providers (ISPs).[^23] In addition, ASI offers remote local
    area network (LAN) DSL transport service to businesses and network
    access point service to Internet backbone providers.[^24]

7.  ASI uses UNEs, telecommunications services, and collocation space
    purchased from the SBC operating companies, along with its own
    packet switches and digital subscriber line access multiplexers
    (DSLAMs) to create its advanced services offerings.[^25] Many of
    ASI's customers are ISPs, including affiliated ISPs, that package
    ASI's wholesale DSL transport and ATM services with their own
    Internet access services to provide end users with retail,
    high-speed, Internet access services.[^26] SBC states that, during
    the period ASI operated pursuant to contract, ASI took a number of
    specific steps to improve the processes unaffiliated ISPs use to
    obtain wholesale DSL transport service.[^27] These steps included,
    according to SBC, the posting on ASI's website of general services
    agreements containing the rates, terms, and conditions under which
    ISPs could obtain that service from ASI.[^28] SBC also states that
    ISPs that did not wish to take service under these general services
    agreements had the flexibility to negotiate different rates, terms,
    and conditions with ASI.[^29] SBC indicates that its general
    services agreements and its positions in individual negotiations
    were tailored to meet the needs of all types of ISPs, from small
    regional players to large national companies.[^30]

8.  SBC states further that ASI implemented numerous systems and process
    improvements benefiting affiliated and unaffiliated ISPs during the
    period it operated pursuant to contract.[^31] SBC states that these
    improvements included the establishment of an internal management
    organization charged with identifying and resolving ordering,
    provisioning, and maintenance issues affecting ISPs.[^32] In
    addition, SBC states that, while operating pursuant to contract, ASI
    responded to input from affiliated and unaffiliated ISPs by
    improving its operations support systems and processes.[^33] SBC
    states further that ASI's installation and repair performance
    improved significantly, and that ASI provided affiliated and
    unaffiliated ISPs with the same level of provisioning, installation,
    maintenance, and repair service, during that period.[^34]

## Forbearance Request

9.  SBC filed its petition for forbearance on October 3, 2001. In its
    petition, SBC asks the Commission to forbear from application of
    tariffing regulation to its provision of advanced services.[^35] SBC
    contends that it does not have market power in the provision of
    advanced services and that it cannot leverage any power it has in
    the local market to acquire market power in the provision of
    advanced services.[^36] SBC maintains that its petition therefore
    meets the statutory forbearance criteria, regardless of whether it
    provides those services through a separate affiliate, as defined in
    the conditions adopted in the *SBC/Ameritech Merger Order*, or on an
    integrated basis.[^37] In addition to seeking forbearance from
    tariffing requirements, SBC requests that we declare it non-dominant
    in its provision of advanced services.[^38] SBC's petition, however,
    fails to request any specific forbearance relief, other than relief
    from tariffing regulation.[^39]

10. In December 2001, the Commission released the *Incumbent LEC
    Broadband Notice*. This *Notice* invited comment on SBC's petition
    as part of an overall examination of the appropriate regulation for
    incumbent LEC provision of domestic broadband telecommunications
    services.[^40] In addition to requesting that commenters address
    with specificity the statutory forbearance criteria in section 10 of
    the Communications Act,[^41] this *Notice* raised broad issues
    regarding the nature and scope of the market for domestic broadband
    services and the appropriate regulatory requirements under Title II
    of the Communications Act for the provision of broadband services by
    incumbent LECs. [^42] The comments generally address these broad
    issues, rather than the specifics of SBC's forbearance request.
    Several parties, however, support SBC's forbearance request.[^43]
    Other parties, including certain competitive local exchange carriers
    (competitive LECs) and ISPs, contend that SBC has failed to show
    that forbearance would be consistent with the statutory
    criteria.[^44]

11. On November 15, 2002 and November 26, 2002, SBC filed ex parte
    letters setting forth steps it intends to take to facilitate ISP
    broadband access in the event we grant forbearance prior to
    considering the broader network access issues raised in pending
    rulemaking proceedings.[^45] SBC states that these commitments are
    based on ASI's practices during the approximately 18 months when it
    operated pursuant to contract.[^46] Specifically, SBC commits itself
    to the following practices pending action in the broadband
    rulemakings:

-   SBC will post on its website the rates, terms, and conditions of any
    > broadband access arrangement that it has entered into with an
    > affiliated ISP. Unaffiliated ISPs that are similarly situated will
    > be able to take service under these rates, terms, and conditions.

-   SBC will post on its website the general rates, terms, and
    > conditions for ISP broadband access arrangements that unaffiliated
    > ISPs can either opt into or use as the starting point for
    > negotiating alternative rates, terms, and conditions.

-   SBC will grandfather all existing volume and term plans for the
    > remainder of their term and provide a 90-day transition period for
    > month-to-month ISP customers. If an ISP does not negotiate a
    > contract with SBC within the 90-day period, it will be
    > automatically converted to a basic month-to-month general services
    > agreement.

-   SBC will continue to implement service and process improvements for
    > its ISPs customers, including modifications that are already
    > planned for 2003.[^47]

    SBC asserts that these commitments will ensure that unaffiliated
    ISPs would be able to obtain advanced services on reasonable terms
    in the event we grant forbearance.[^48]

## Forbearance Criteria

12. Section 10 of the Communications Act requires that the Commission
    forbear from applying any regulation or provision of the Act to
    telecommunications carriers or telecommunications services, or
    classes thereof, if the Commission determines that three conditions
    set forth in section 10(a) are satisfied. In particular, section
    10(a) provides:

> \[T\]he Commission shall forbear from applying any regulation or any
> provision of this chapter to a telecommunications carrier or
> telecommunications service, or class of telecommunications carriers or
> telecommunications services, in any or some of its or their geographic
> markets, if the Commission determines that ---
>
> > \(1\) enforcement of such regulation or provision is not necessary
> > to ensure that the charges, practices, classifications, or
> > regulations by, for, or in connection with that telecommunications
> > carrier or telecommunications service are just and reasonable and
> > are not unjustly or unreasonably discriminatory;
>
> > \(2\) enforcement of such regulation or provision is not necessary
> > for the protection of consumers; and
>
> > \(3\) forbearance from applying such provision or regulation is
> > consistent with the public interest.[^49]

Section 10(b) specifies that, in making the public interest
determination under section 10(a)(3), "the Commission shall consider
whether forbearance from enforcing the provision or regulation will
promote competitive market conditions, including the extent to which
such forbearance will enhance competition among providers of
telecommunications services."[^50] Section 10(b) also specifies that,
"if the Commission determines that such forbearance will promote
competition among providers of telecommunications services, that
determination may be the basis for a Commission finding that forbearance
is in the public interest.[^51]

# discussion

## Forbearance from Tariff Regulation

13. Section 10(a) of the Act requires that we forbear from application
    of tariff regulation to SBC's advanced services if we determine that
    each of three statutory forbearance criteria is satisfied. In
    evaluating whether these criteria are met, we focus on SBC's present
    corporate structure and operations, which place all of SBC's
    advanced services operations in a structurally separate affiliate,
    ASI, rather than on other, largely hypothetical ways in which SBC
    might choose to provide advanced services.[^52] Consistent with the
    Commission's approach in the *SBC/Ameritech Merger Order*, we
    conclude that, to the extent SBC operates in accordance with the
    separate affiliate structure established in that Order, with SBC's
    commitments made in this record, and with the safeguards set forth
    below, it is not necessary to impose the burdens of tariff
    regulation on ASI's rates, terms, and conditions for the advanced
    services subject to this petition. Therefore, in this limited
    instance and subject to all of the conditions set forth herein,
    forbearance from applying tariffing regulation to ASI's advanced
    services operations meets the statutory criteria.

14. We wish to make clear, however, that we make no finding regarding
    whether SBC's operating companies or ASI is non-dominant in the
    provision of any service, and that our forbearance action
    encompasses the tariffing requirements applicable to ASI under our
    *Computer Inquiry* rules. Moreover, it applies only to services
    currently provided by ASI, such as its ATM, frame relay, and DSL
    services, and that fall within the definition of advanced services
    adopted in the *SBC/Ameritech Merger Order*. This Order does not
    relieve any tariffing obligations or other regulations applicable to
    special access and other services that competitive LECs and ISPs
    obtain from SBC's operating companies to access ASI's ATM and frame
    relay offerings, nor does it have any other impact on or application
    to these services.

15. We also wish to make clear that this Order is conditional, and only
    applies to the extent SBC chooses to continue to offer those
    services through a structurally separate affiliate and in accordance
    with its commitments it has made in this record. In addition to the
    commitment that SBC post rates, terms and conditions of broadband
    access arrangements with affiliated ISPs on its website, it must
    also make physical copies of contracts reflecting these rates, terms
    and conditions available for public inspection at a minimum of one
    place of business. To ensure that we continue to be able to evaluate
    ASI's rates in the event of a section 208 complaint, ASI must
    continue to record cost data using the methods it presently uses and
    must retain its cost data for at least two years from the date it is
    recorded. In the event of a Commission audit, ASI must provide its
    cost data within ten (10) days of a request from Commission staff.
    ASI must submit to the Commission annually an affidavit, signed by a
    responsible officer, attesting to ASI's compliance with its
    commitments in this proceeding during the preceding year.[^53]

16. We emphasize that SBC, including ASI, will remain subject to section
    251(c) of the Communications Act, including the unbundling and
    resale obligations. In addition, SBC's operating companies also will
    remain subject to dominant carrier regulation for the facilities and
    services ASI and its competitors use as inputs for their advanced
    services offerings, and ASI must continue to purchase inputs from
    SBC's operating companies on a non-discriminatory basis.[^54] Our
    granting of forbearance therefore complies fully with the D.C.
    Circuit's holding in *ASCENT v. FCC* that the establishment of a
    wholly-owned, advanced services affiliate does not permit an
    incumbent LEC to avoid its section 251 obligations, as neither ASI
    nor any of its incumbent LEC affiliates will be relieved of those
    obligations.

### Charges, Practices, Classifications, and Regulations

17. Section 10(a)(1) requires that we analyze whether application of
    tariff regulation to SBC's advanced services operations is necessary
    to ensure that the "charges, practices, classifications, or
    regulations . . . for\[\] or in connection with that . . .
    telecommunications service are just and reasonable and are not
    unjustly or unreasonably discriminatory."[^55] We conclude that, in
    the unique circumstances of this case, tariff regulation is not
    necessary within the meaning of this forbearance criterion, provided
    ASI operates in accordance with the separate affiliate structure
    established in the *SBC/Ameritech Merger Order* and SBC's
    commitments made in this record.

18. As DIRECTV Broadband suggests, our first task under this forbearance
    criterion is to identify the specific regulatory provisions at
    issue.[^56] The tariffing requirements from which SBC seeks
    forbearance are set forth in subpart E of our part 61 rules.[^57]
    These rules require that dominant carriers file tariffs setting
    forth the prices, terms, and conditions for their interstate
    telecommunications services, typically on either seven or fifteen
    days' notice.[^58] The rules also require that dominant carriers
    include supporting information, which may include detailed cost
    data, in their tariff filings.[^59] Forbearance from tariff
    regulation would allow ASI to withdraw its advanced services tariff
    and provide service pursuant to contracts negotiated with its
    customers, including its ISP affiliates. ASI would not be required
    to file the resulting contracts with the Commission, unless the
    Commission so directed. Alternatively, under forbearance, ASI would
    have the option of amending its advanced services tariff without
    complying with our rules for tariff filings. Under this approach,
    ASI would be able to amend that tariff on one-day's notice and
    without filing any cost support.[^60] Importantly, however,
    forbearance from tariff regulation would not relieve ASI of its
    statutory obligations to offer its interstate services under rates,
    terms, and conditions that are just, reasonable, and not unjustly or
    unreasonably discriminatory,[^61] or its obligation under our
    *Computer Inquiry* rules to offer ISPs non-discriminatory access to
    the transmission capabilities underlying SBC's Internet access
    services.[^62] Nor would forbearance affect our ability to enforce
    those obligations in response to a complaint pursuant to section 208
    of the Act.[^63] ASI, moreover, would continue to be required to
    give notice and obtain Commission approval prior to discontinuing,
    reducing, or impairing any of its interstate services.[^64]

19. We recognize, of course, that there are real differences between
    tariff regulation and a contract or permissive detariffing regime
    for SBC's advanced services operations. As several parties suggest,
    tariff regulation enables ASI's competitive LEC and ISP customers to
    monitor the generally available charges, practices, classifications,
    and regulations applicable to ASI's advanced services
    offerings.[^65] That form of regulation also gives ASI's customers
    an opportunity to challenge changes in those charges, practices,
    classifications, and regulations prior to their taking effect.[^66]
    On the other hand, tariff regulation does not and cannot address all
    aspects of a carrier's relationship with its customers. For example,
    even the most detailed tariff would provide no more than general
    rules to govern the many day-to-day operational issues carriers and
    their customers encounter. In particular, factually-intensive
    disputes regarding matters such as whether a carrier's operations
    support systems discriminate unreasonably against unaffiliated ISPs
    almost inevitably must be resolved through negotiation or the
    section 208 complaint process.[^67]

20. Because ASI obtains inputs for its advanced services offerings from
    SBC's operating companies, the charges, practices, classifications,
    or regulations associated with these inputs are "charges, practices,
    classifications, or regulations . . . in connection with" ASI's
    advanced services within the meaning of section 10(a).[^68] We
    conclude that, given SBC's current corporate structure and the
    commitments made in this record, tariff regulation of ASI is not
    necessary to ensure that these charges, practices, classifications,
    and regulations do not violate that section's standard. As we
    concluded in the *LEC Classification Order*, tariff regulation of a
    BOC affiliate is, at best, a clumsy tool for protecting against an
    exercise of market power by the BOC itself.[^69] Consistently, we
    conclude here that the separate affiliate structure established in
    the *SBC/Ameritech Merger*, together with the commitments and
    safeguards required herein, and the direct regulation of SBC's
    operating companies where appropriate, adequately assures that SBC's
    operating companies will likely be unable to impose unjust,
    unreasonable, or unjustly or unreasonably discriminatory charges,
    practices, classifications, or regulations for or in connection with
    the telecommunications facilities and services that ASI and its
    competitors use as inputs for their advanced services
    offerings.[^70] In particular, direct regulation of SBC's operating
    companies is the appropriate tool for addressing whether the
    operating companies' charges, practices, classifications, or
    regulations are just and reasonable. In addition, because the
    separate affiliate structure walls off from ASI any control SBC's
    operating companies might have over advanced services inputs and
    prevents the transfer to ASI of the equipment and facilities with
    which those inputs are provided, tariff regulation of ASI is not
    necessary to ensure that ASI's transactions with SBC's operating
    companies will be transparent and non-discriminatory.[^71]

21. We now turn to the question whether tariff regulation of ASI is
    necessary to ensure that ASI's own charges, practices,
    classifications, or regulations meet the standard set forth in
    section 10(a). We conclude that the separate affiliate structure
    established in the *SBC/Ameritech Merger Order*, in combination with
    SBC's commitments in this proceeding, commercial experience during
    approximately 18 months when ASI offered advanced services under
    contract, and the availability of the section 208 complaint process,
    establish that tariff regulation is not necessary to ensure that
    ASI's own charges, practices, classifications, and regulations meet
    that standard. Specifically, SBC's commitments in this proceeding,
    which are based on ASI's practices during the period it operated
    pursuant to contract, ensure that ASI will provide customers and
    competitors with notice comparable to that available under a
    dominant tariffing regime.[^72] In addition, those commitments, in
    combination with the separate affiliate structure and the prospect
    of regulation via the section 208 complaint process, help to ensure
    that the rates, terms, and conditions under which ASI offers
    advanced services will be just, reasonable, and not unjustly or
    unreasonably discriminatory.[^73]

22. Further, as stated above,[^74] the separate affiliate structure
    helps to ensure that unaffiliated advanced services providers are
    able to order access to these facilities and any requisite
    telecommunications services from SBC under the same rates, terms,
    and conditions that SBC makes available to ASI.[^75] ASI's customers
    and competitors thus receive protection against the imposition of
    unjust, unreasonable, and discriminatory rates, terms, and
    conditions by ASI comparable to that available under tariff
    regulation. In these circumstances, we are not convinced that tariff
    regulation is necessary for ensuring that the rates, terms, and
    conditions for ASI's advanced services are just, reasonable, and not
    unjustly or unreasonably discriminatory. We find instead that the
    better policy is to allow ASI to respond to technological and market
    developments without our reviewing in advance the rates, terms, and
    conditions under which ASI provides service. We emphasize that our
    findings are limited to the facts currently before the Commission --
    that is, we make this holding based entirely on the history of ASI's
    provision of advanced services under contract, the commitments made
    in this record, and the existence of the structurally separate
    affiliate described in the *SBC/Ameritech Merger Order*. We also
    emphasize that the rates, terms, and conditions under which ASI
    provides telecommunications services will remain subject to
    challenge through the section 208 complaint process.[^76] Our grant
    of forbearance should not be construed as prejudging in any way the
    outcome of any section 208 complaint proceeding.

### Protection of Consumers

23. In order to forbear from applying tariff regulation to SBC's
    advanced services operations, section 10(a)(2) requires us to
    analyze whether such application is necessary to ensure the
    protection of consumers.[^77]

24. For reasons similar to those that persuade us that tariff regulation
    is not necessary within the meaning of section 10(a)(1), we also
    conclude that tariff regulation is not necessary for the protection
    of consumers. Given SBC's maintenance of the separate affiliate
    structure and SBC's commitments in this record, forbearance from
    tariff regulation of ASI's advanced services operations should not
    adversely affect any entity's ability to provide consumers with
    telecommunications and Internet access services. Specifically, as
    ASI operates in accordance with those conditions and commitments,
    consumers will continue to be able to receive services from carriers
    that rely on telecommunications facilities and services obtained
    from SBC's operating companies as inputs for their advanced services
    offerings. Forbearance from tariff regulation of ASI will not affect
    the rates, terms, and conditions under which these
    telecommunications facilities and services are provided. In
    addition, ISPs that rely on telecommunications services obtained
    from ASI or its competitors will continue to be able to receive
    those services with protections, including the section 208 complaint
    process, against the imposition of unjust, unreasonable, and
    unjustly or unreasonably discriminatory rates, terms, or conditions.
    Finally, because SBC has committed itself to making its wholesale
    DSL transport service and other advanced services available to
    similarly situated unaffiliated ISPs on the same rates, terms, and
    conditions under which affiliated ISPs obtain those services,[^78]
    forbearance will not affect consumers' ability to obtain Internet
    access service from ISPs of their choosing.[^79]

### Public Interest

25. In order to forbear, section 10(a)(3) requires us to analyze whether
    forbearance would be consistent with the public interest.[^80]
    Specifically, we must "consider whether forbearance from the
    provision or regulation will promote competitive market conditions,
    including the extent to which such forbearance will enhance
    competition among providers of telecommunications services."[^81] We
    conclude that, by allowing ASI to compete more effectively in the
    provision of advanced services, forbearance from tariff regulation
    will promote competition among advanced services providers, provided
    ASI operates in accordance with the separate affiliate structure
    established in the *SBC/Ameritech Merger Order* and SBC's
    commitments made in this record. We therefore also conclude that
    forbearance subject to operation in accordance with that structure
    and those commitments would be consistent with the public interest.

26. We believe that tariff regulation imposes significant costs on ASI,
    irrespective of whether it is non-dominant in its provision of
    advanced services, as SBC urges, or dominant in its provision of
    those services, as several competitive LECs and ISPs contend.[^82]
    Specifically, we find that tariff regulation impedes ASI from
    quickly introducing new services in response to customer demands and
    opportunities created by technological developments. We also find
    that tariff regulation reduces ASI's ability to respond quickly to
    its competitors' advanced services offerings and tailor its own
    offerings to meet customers' individualized needs. In particular,
    such regulation diminishes ASI's ability to reduce prices and
    improve service in response to competitive pressures.

27. In this case, the separate affiliate structure established in the
    *SBC/Ameritech Merger Order* and SBC's commitments provide many of
    the beneficial features of tariff regulation without the costs
    identified above. Certain parties argue, for example, that tariffs
    provide the information consumers and regulators need to detect
    unreasonable discrimination.[^83] The separate affiliate structure,
    however, should ensure that ASI's competitors will obtain
    telecommunications facilities and services from SBC at the same
    rates, terms, and conditions as are available to ASI; and SBC's
    commitments will help ensure that unaffiliated carriers and ISPs
    will be able to obtain ASI's services at the same rates, terms, and
    conditions as are available to affiliated ISPs. Those commitments
    also should ensure that unaffiliated ISPs have non-discriminatory
    access to the transmission capabilities underlying the Internet
    access services provided by ASI's ISP affiliates, as our *Computer
    Inquiry* rules require. Similarly, several parties contend that
    tariffing facilitates detection of unreasonable rates, terms, and
    conditions.[^84] SBC's commitments in this proceeding, however, will
    provide ASI's customers and competitors with the same ability to
    detect unreasonable rates, terms, and conditions as tariff
    regulation provides, as ASI posts on its website generally available
    rates, terms, and conditions for its advanced services offerings
    that parties can review and analyze for reasonableness.

28. Certain of ASI's competitors and customers also point out that
    forbearance from tariff regulation would eliminate their ability to
    challenge, and have us review, changes in advanced services rates,
    terms, and conditions prior to their taking effect.[^85] While we
    would hope that third party and our own prior review of rates,
    terms, and conditions under which carriers provide
    telecommunications services would benefit competition in some
    circumstances, we find, given the separate affiliate structure
    established in the *SBC/Ameritech Merger Order* and SBC's
    commitments in this record, subjecting the rates, terms, and
    condition under which ASI provides advanced services to our dominant
    carrier tariffing process is more likely to impede, than promote,
    competition. That structure and those commitments help protect
    against the initial imposition of unjust, unreasonable, or unjustly
    or unreasonably discriminatory rates, terms, and conditions. By
    interjecting regulatory delay into an otherwise dynamic process,
    tariff regulation would more likely reduce the overall level of
    innovation and responsiveness to consumer demands in advanced
    services.[^86] We therefore find that, given that separate affiliate
    structure, those commitments, and the availability of the section
    208 complaint process, any benefits of tariff regulation of ASI are
    not sufficiently substantial as to exceed the costs of that
    regulation.

## Other Matters

29. As stated above,[^87] our focus in addressing SBC's forbearance
    request is on the separate affiliate structure and commitments under
    which SBC intends to provide advanced services, rather than on
    other, largely hypothetical ways in which SBC might choose to
    conduct its advanced services operations. In view of our findings
    above that operation in accordance with that structure and those
    commitments warrants forbearance from tariff regulation of ASI, we
    reject any suggestion that more stringent safeguards are needed to
    keep SBC's operating companies from leveraging any control they
    might have over essential inputs to impede competition in advanced
    services and Internet access services.[^88] The separate affiliate
    structure established in the *SBC/Ameritech Merger Order* was
    specifically designed to ensure that competing advanced services
    providers received effective, non-discriminatory access to the
    inputs needed for their advanced services offerings.[^89] The record
    in this proceeding identifies no specific aspect of that structure
    that requires changing in order for this purpose to be realized. As
    we have set forth above, in order to qualify for the relief granted
    in this Order, we still require SBC and ASI to maintain the separate
    affiliate structure they currently use, ASI to purchase its inputs
    in a nondiscriminatory manner, SBC and ASI to meet all of the
    commitments they have placed in the record, and in order to ensure
    effective enforcement of these conditions additionally require SBC
    and ASI to abide by the requirements we have set forth above
    regarding data retention, attestation, and making physical copies of
    the rates, terms and conditions under which affiliated ISPs purchase
    broadband access available for public inspection. In these
    circumstances, we cannot find that more stringent safeguards are
    needed to meet the statutory forbearance standards.

30. We also reject SBC's forbearance request to the extent it argues
    that lesser safeguards would suffice in the event it were to change
    its affiliate structure and ways of dealing with its advanced
    services customers.[^90] We find that relief narrowly tailored to
    SBC's present circumstances is consistent with section 10.
    Specifically, although SBC argues in its petition that forbearance
    would be warranted even if it were to provide advanced services on
    an integrated basis, that petition does not suggest that any SBC
    affiliate other than ASI, or the SBC operating companies, will
    provide advanced services during the foreseeable future. Nor does
    that petition request forbearance from tariff regulation with
    respect to SBC's operating companies generally. We have granted
    appropriate forbearance given the facts SBC has pled, and find that
    the question of whether such relief should also apply to allow SBC's
    operating companies to provide advanced services on an integrated
    basis free from tariff regulation is not yet ripe for
    resolution.[^91] Accordingly, we grant SBC's petition to the extent
    set forth herein, and otherwise dismiss SBC's petition.

31. We note that SBC's petition also requests that we issue a
    declaratory ruling that it is non-dominant in the provision of
    advanced services. This request, unlike SBC's forbearance request,
    is not subject to a statutory timetable. As we have noted above, we
    do not decide or otherwise prejudge this issue here, as we only
    conclude that, under the limited circumstances identified in this
    petition, forbearance from tariffing requirements is warranted. We
    intend to address non-dominance issues in the *Incumbent LEC
    Broadband* rulemaking as part of our broader examination of the
    appropriate regulation for incumbent LEC provision of domestic
    broadband telecommunications services. As part of that examination,
    we will consider the parties' arguments regarding the nature and
    scope of the market for domestic broadband services and the
    appropriate regulatory requirements under Title II of the
    Communications Act for those services.[^92] We also will consider,
    in the *Wireline Broadband* rulemaking, whether to retain, modify,
    or eliminate the *Computer Inquiry* rules, which hinge on the
    assumption that incumbent LECs have market power in the provision of
    transmission services underlying information services. The
    *Incumbent LEC Broadband* rulemaking is one of several ongoing
    proceedings in which we are focusing on the regulatory treatment of
    broadband. Because fundamental questions regarding how broadband
    services should be defined and whether they are telecommunications
    services subject to Title II regulation are before us in other
    proceedings, we find that the most orderly procedure is to defer
    action on the non-forbearance issues raised in SBC's petition
    pending resolution of those questions.[^93] We will monitor ASI's
    provision of services under the approach we adopt here, and may
    consider ASI's track record when we ultimately resolve these
    proceedings.

# ordering clause

32. Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 4(j), 10,
    and 201-205 of the Communications Act of 1934, as amended, 47 U.S.C.
    §§ 151, 154(i), 154(j), 160, 201-205, that the petition for
    forbearance filed, October 3, 2001, by SBC Communications Inc., IS
    GRANTED to the extent and subject to the conditions set forth above
    and OTHERWISE IS DISMISSED.

    FEDERAL COMMUNICATIONS COMMISSION

    Marlene H. Dortch Secretary

APPENDIX -- LIST OF COMMENTERS

(CC Docket No. 01-337)

**Comments**

1.  Ad Hoc Telecommunications Users Committee (Ad Hoc)

2.  Alaska Communications Systems Affiliated Local Exchange Companies
    (ACS)

3.  Alcatel USA, Inc. (Alcatel)

4.  Alliance for Public Technology (APT)

5.  Association for Local Telecommunications Services (ALTS)

6.  Association of Communications Enterprises (ASCENT)

7.  AT&T Corp. (AT&T)

8.  BellSouth Corporation (BellSouth)

9.  Cbeyond Communications and NuVox Communications (Cbeyond and NuVox)

10. Citizens for a Sound Economy Foundation (CSE Foundation)

11. Competitive Telecommunications Association (CompTel)

12. Corning Incorporated (Corning)

13. Covad Communications Company (Covad)

14. David M. Sharnoff

15. DIRECTV Broadband, Inc. (DIRECTV Broadband)

16. DLS Forum

17. DSLNet Communications, LLC, Focal Communications Corporation, and
    Pac-West Telecom, Inc. (DSLNet *et al.*)

18. EarthLink, Inc. (EarthLink)

19. Fiber-to-the-Home Council (Fiber-to-the Home)

20. Fred Williamson & Associates, Inc. (FW&A)

21. Information Technology Association of America (ITAA)

22. IP Communications Corporation (IP Communications)

23. Moultrie Independent Telephone Company (Moultrie)

24. Mpower Communications Corp. (Mpower)

25. National Telecommunications Cooperative Association (NTCA)

26. New Edge Network, Inc. (New Edge)

27. New Mexico Internet Professionals Association (NMIPA)

28. New York Public Service Commission (New York Commission)

29. Public Service Commission of the State of Missouri (Missouri
    Commission)

30. Public Service Commission of Wisconsin (Wisconsin Commission)

31. Qwest Communications International, Inc. (Qwest)

32. SBC Communications Inc. (SBC)

33. SouthEast Telephone (SouthEast)

34. Sprint Corporation (Sprint)

35. SureWest Communications (SureWest)

36. Teletruth

37. Texas Coalition of Cities for Utility Issues and City of Plano,
    Texas (Texas Coalition and Plano)

38. Time Warner Telecom (Time Warner)

39. United States Internet Industry Association (USIIA)

40. US LEC Corp. (US LEC)

41. Verizon

42. WorldCom, Inc. (WorldCom)

Replies

1.  Ad Hoc

2.  ACS

3.  Alcatel

4.  Allegiance Telecom, Inc. (Allegiance)

5.  AOL Time Warner Inc. (AOL)

6.  ASCENT

7.  AT&T

8.  BellSouth

9.  Consumer Federation of America, Consumers Union, Media Access
    Project, Center for Digital Democracy, United Church of Christ,
    Office of Communication, Inc., the Association for Independent Video
    and Filmmakers, and the National Association for Media Arts and
    Culture (CFA *et al.*)

10. Debra J. Aron *et al.* (43 Economists)

11. DIRECTV Broadband

12. EarthLink

13. Focal Communications Corporation and Pac-West Telecomm, Inc. (Focal
    and Pac-West)

14. FW&A

15. General Communication, Inc. (GCI)

16. General Services Administration (GSA)

17. GVNW Consulting, Inc. (GVNW)

18. ITAA

19. IP Communications

20. Kenneth Arrow *et al.*

21. Michigan Public Service Commission (Michigan Commission)

22. National Association of State Utility Consumer Advocates (NASUCA)

23. National Association of the Deaf

24. NuVox Communications, Cbeyond Communications, and KMC Telecom, Inc.
    (NuVox, Cbeyond, and KMC)

25. Organization for the Promotion and Advancement of Small
    Telecommunications Companies (OPASTCO)

26. Qwest

27. SBC

28. Sprint

29. The People of the State of California and the California Public
    Utilities Commission (California)

30. United States Telecom Association (USTA)

31. US LEC

32. Verizon

33. Women Impacting Public Policy (WIPP)

34. WorldCom

35. Wyoming Public Service Commission (Wyoming Commission)

JOINT STATEMENT OF

COMMISSIONER MICHAEL J. COPPS AND\
COMMISSIONER JONATHAN ADELSTEIN,

CONCURRING

*Re:* *SBC's petition for forbearance from application of dominant
carrier status to its provision of advanced services*

We concur, with both reluctance and disappointment, in this Order to
forbear from requiring SBC's separate affiliate to file tariffs or cost
support for its provision of certain broadband services. We support this
Order, not because it is the optimal outcome, or even a good one, but
because it is significantly superior to the option presented to us of no
decision from the Commission and the resultant forbearance from such
Commission inaction. A failure to reach agreement would have resulted,
under the Communications Act, in an automatic grant of SBC's entire
request for forbearance, a result that we find incomprehensible in light
of the record before us.

Previously, the Commission concluded that a separate affiliate providing
advanced services is not a successor or assign of the Bell company and
therefore, unlike the Bell company, would be nondominant. The D.C.
Circuit overturned the Commission's decision, thereby eliminating the
basis for the Commission's determination that the affiliate does not
exercise market power. Thus, in the absence of a finding of
nondominance, we must presume that SBC's affiliate exercises market
power in its provision of advanced services.

We do not believe the forbearance criteria are met to detariff and
eliminate cost support for a dominant carrier. In previous orders
forbearing from tariff requirements, the Commission has rested its
decision on its conclusion that carriers lacking market power could not
successfully charge rates that violate the Communications Act. In
today's Order, we extend that conclusion to a provider with market
power. Some may read this Order to prejudge our decision in the broader
proceeding in which we are examining whether incumbents are dominant in
their provision of broadband. We want to express explicitly that this
Order does not support such a conclusion.

We believe that a vastly preferable approach would have been for the
Commission to conduct the requisite market analysis first. We could then
detariff SBC or its affiliate only in those markets in which we had
first determined the carrier does not exercise market power. But in the
absence of an economic market analysis, we do not see how we can
conclude that the forbearance criteria are met. Therefore, we would have
preferred to deny SBC's request for forbearance and required it to
maintain its tariffs and cost support until the Commission completes its
examination of dominance in the broadband market.

We recognize that the Commission has been operating under tight
deadlines which require difficult resource allocation decisions.
Nonetheless, we believe that as a result of the Commission's having not
completed its work in this proceeding in a timely fashion, and in order
to avoid more far-reaching forbearance through Commission inaction, we
are left only with the option to concur in the Order.

PRESS STATEMENT OF COMMISSIONER

KEVIN J. MARTIN

Dissenting

RE: Review of Regulatory Requirements for Incumbent LEC Broadband
Telecommunications Services, CC Docket No. 01-337

Fifteen months ago, SBC asked the Commission to "find it non-dominant in
its provision of advanced services...and to forbear from dominant
carrier regulation of those services."[^94]

Today, the Commission fails to act on the heart of SBC's requested
relief and puts off for another day any discussion, economic market
analysis, or decision on whether SBC is non-dominant in its provision of
advanced services. In my view, the decision to ignore SBC's petition for
forbearance from dominant carrier regulation in the provision of
advanced services and instead grant [limited]{.underline} forbearance
from the application of tariffing requirements based on SBC's corporate
structure and future commitments is inconsistent with several recent
mandates from the United States Court of Appeals for the District of
Columbia Circuit ("DC Circuit").

In several recent decisions, the DC Circuit has reversed Commission
orders because: 1) the Commission had engaged in a "naked disregard" of
the competition from cable modem service in evaluating the competition
context for an incumbents' provision of advanced services;[^95] 2) a
separate affiliate structure does not provide a mechanism to avoid
requirements that prohibit an incumbent local exchange carrier from
abusing market power, but that, without market power, such a
structurally separate affiliate would not be "necessary---or even
useful"[^96]; and 3) the availability of alternative regulatory relief
"...does not diminish the Commission's responsibility to fully consider
petitions under section 10."[^97]

I fear that in this one order, we may be ignoring all three of these
recent mandates by: 1) ignoring the competition that SBC faces in its
provision of high speed internet access services in the residential
market where cable modem service is available by refusing to act on the
petition for forbearance from dominant carrier regulation of

advanced services; 2) reapplying the exact same structurally separate
affiliate requirements that the DC Circuit has already rejected as
either insufficient protections or unnecessary in light of competition;
and 3) again relying on an alternative regulatory approach (i.e.,
separate affiliate safeguards) to avoid a petitioner's explicit request
for complete "...forbearance from applying dominant carrier regulation,
including tariff requirements, to SBC's provision of advanced
services."[^98]

I fear that, in once again removing tariff obligations but imposing a
separate affiliate requirement while ignoring the broader forbearance
relief requested, the Commission is attempting to re-impose its view of
a better regulatory relief mechanism for affected companies. As the DC
Circuit recently admonished the Commission, that is not an appropriate
avenue.

> "There is no doubt that the Commission expressed great enthusiasm over
> the availability of the Pricing Flexibility Order as a mechanism for
> relief of the sort sought here by US WEST and other BOCs. Indeed, the
> Commission suggested that might be a better mechanism for affected
> companies, because
>
> non-dominance showings \[under section 10\] are neither
> administratively simple nor easily verifiable. The Commission
> \[bases\] non-dominance findings on complex criteria, including market
> share and supply elasticity. Market share analyses require
> considerable time and expense, and they generate controversy that is
> difficult to resolve.
>
> The Commission may or may not be right in what it surmises about the
> purported advantages of the Pricing Flexibility Order; but, at least
> for now, these surmises are beside the point. Congress has established
> section 10 as a viable and independent means of seeking forbearance.
> The Commission has no authority to sweep it away by mere reference to
> another, very different, regulatory mechanism."[^99]

While the majority may continue to have great enthusiasm for the
separate affiliate mechanism as an answer for regulatory relief, that
does not justify its failure to act on the broader forbearance petition.

[^1]: SBC Petition for Expedited Ruling that It Is Non-Dominant in Its
    Provision of Advanced Services and for Forbearance from Dominant
    Carrier Regulation of Those Services, CC Docket No. 01-337 (filed
    Oct. 3, 2001).

[^2]: SBC provides interLATA advanced services through a different
    affiliate in those states where it has received in-region, interLATA
    authority pursuant to section 271 of the Communications Act of 1934,
    as amended (Communications Act or Act).

[^3]: *See Review of Regulatory Requirements for Incumbent LEC Broadband
    Telecommunications Services*, CC Docket No. 01-337, Notice of
    Proposed Rulemaking, 16 FCC Rcd 22745 (2001) (*Incumbent LEC
    Broadband Notice*).

[^4]: *Applications of Ameritech Corp., Transferor, and SBC
    Communications, Inc. Transferee, for Consent to Transfer Control of
    Corporations Holding Commission Licenses and Lines Pursuant to
    Sections 214 and 310(d) of the Communications Act and Parts 5, 22,
    24, 25, 63, 90, 95, and 101 of the Commission's Rules*, CC Docket
    No. 98-141, Memorandum Opinion and Order, 14 FCC Rcd 14712 (1999)
    (*SBC/Ameritech Merger Order*), *vacated in part sub nom.*,
    *Association of Communications Enterprises v. FCC*, 235 F.3d 662
    (D.C. Cir. 2001) (*ASCENT v. FCC*).

[^5]: *Id.* at 14859-867, paras. 363-76, & 14970-82, Conditions I.3-I.4.
    The conditions define "Advanced Services" as:

    > \[I\]ntrastate or interstate wireline telecommunications services,
    > such as ADSL, IDSL, xDSL, Frame Relay, Cell Relay and VPOP-Dial
    > Access Service (an SBC Frame Relay-based service) that rely on
    > packetized technology and have the capability of supporting
    > transmission\[\] speeds of at least 56 kilobits per second in both
    > directions. This definition of Advanced Services does not include
    > (1) data services that are not primarily based on packetized
    > technology, such as ISDN, (2) x.25-based and x.75-based packet
    > technologies, or (3) circuit switched services (such as circuit
    > switched voice grade service) regardless of the technology,
    > protocols or speeds used for the transmission of such services.

    *Id.* at 14969, Condition I.2.

[^6]: *See id.* at 14859, para. 363. We note that these safeguards were
    based on the safeguards that section 272 of the Communications Act,
    47 U.S.C. § 272, prescribes to govern a separate interLATA services
    affiliate's relationship with a Bell Operating Company (BOC). *See
    SBC/Ameritech Merger Order*, 14 FCC Rcd at 14901, para. 460, &
    14969-70, Condition I.3.

[^7]: *Id.* at 14972, Condition I.3.d, & 14974, Condition I.4. November
    7, 1999 was 30 days after the merger closing date of October 8,
    1999.

[^8]: *Id.* at 14974, Condition I.4.a.3, & 14978, Condition I.4.f.

[^9]: *Id.* Additional safeguards require, among other matters, that the
    affiliated BOCs conduct transactions with the advanced services
    affiliates in the same manner in which they conduct transactions
    with unaffiliated entities, limit asset transfers from the
    affiliated BOCs to the advanced services affiliates, and preclude
    the affiliated BOCs from discriminating between their advanced
    services affiliate and any other entity in the provision or
    procurement of goods, services, facilities, or information, or in
    the establishment of standards. *Id.* at 14902-14905, paras.
    462-467. For the complete safeguards, see *id.* at 14969-90,
    Conditions I.1-I.13.

[^10]: *Id.* at 14974, Condition I.4.a.3.

[^11]: *Id.* at 14900, para. 458.

[^12]: *Id.* at 14900, n.834, & 14988, Condition I.9.

[^13]: *Id*. at 14988, Condition I.9.

[^14]: *Id.* at 14989, Condition I.12.c. The conditions spell out
    certain requirements that would apply if SBC were to provide
    advanced services through its operating companies. *Id.* at
    14989-90, Condition I.13.

[^15]: *ASCENT v. FCC*, 235 F.3d at 663.

[^16]: *See SBC/Ameritech Merger Order*, 14 FCC Rcd at 14900, n.834, &
    14988, n.41.

[^17]: *See, e.g.,* Letter from Gary L. Phillips, General Attorney, SBC,
    to Dorothy Attwood, Chief, Common Carrier Bureau, FCC, at 1 (filed
    Feb. 15, 2001) (*SBC Feb. 15, 2001 Letter*).

[^18]: SBC Advanced Solutions, Inc., Tariff FCC No. 1, Original Title
    Page (issued Sept. 7, 2001) (*ASI FCC Tariff*). This tariff was
    filed approximately 18 months after ASI began to provide advanced
    services pursuant to contract. Letter from Jeffry Brueggeman,
    General Attorney, SBC, to Marlene H. Dortch, Secretary, FCC, at 3
    (filed Nov. 15, 2002) (*SBC Nov. 15, 2002 Letter*). We note that the
    Common Carrier Bureau or its successor, the Wireline Competition
    Bureau, waived cost support and notice requirements for this filing
    as well as for subsequent amendments to this tariff. *See, e.g.,*
    Letter from Jane E. Jackson, Chief, Competitive Pricing Division,
    Common Carrier Bureau, FCC, to Debbie Clemons, Associate Director --
    Federal Regulatory, SBC, Special Permission No. 01-095 (Sept. 7,
    2001).

[^19]: *SBC/Ameritech Merger Order*, 14 FCC Rcd at 14989, Condition
    I.12.c. The conditions spell out certain requirements that would
    apply if SBC were to provide advanced services directly. *Id.* at
    14989-90, Condition I.13.

[^20]: *SBC Nov. 15, 2002 Letter*, at 7 n.7.

[^21]: *Id.* at 3.

[^22]: *ASI FCC Tariff*, at §§ 4-5. ATM is a "high bandwidth, low-delay,
    connection-oriented packet-like switching and multiplexing
    technique" in which "\[u\]sable capacity is segmented into 53-byte
    fixed-sized cells, consisting of header and information fields
    \[and\] allocated to services on demand." Harry Newton, *Newton\'s
    Telecom Dictionary: The Official Dictionary of Telecommunications
    and the Internet*, 63 (17th ed. 2001) (*Newton\'s Telecom
    Dictionary*); *see ASI FCC Tariff*, at § 4.1. Frame relay is a
    "high-speed, packet-switched technology used to transmit digital
    data between, among other things, geographically dispersed local
    area networks (LANs)." *Independent Data Communications
    Manufacturers Association, Inc.*, Memorandum Opinion and Order, 10
    FCC Rcd 13717, 13720, para. 6 (Com. Car. Bur. 1995) (*Frame Relay
    Order*); *see ASI FCC Tariff*, at § 5.1. ASI sells its ATM and frame
    relay services primarily to businesses, but its tariff places no
    restrictions on the availability of these services. *Id.* at §§ 4.1,
    5.1.

[^23]: *Id.* at § 6. This service connects network interface devices
    (NIDs) located at end-users' premises with ASI's packet switches.
    *Id.* at § 6.1.1. An ISP typically combines this service with ATM
    service (which may be self-provisioned, provisioned by ASI, or
    provisioned by an ASI competitor) to obtain end-to-end connections
    between the end users' premises and the ISPs point of presence. ASI
    sells its DSL transport service primarily to ISPs, including
    affiliated ISPs, but its tariff states that this service "may be
    purchased by any information service provider or carrier to connect
    to their End User for the purposes \[sic\] of providing to that End
    User a retail service that includes high speed DSL." *Id.* at §
    6.1.1. End users cannot purchase this service. *Id.* at 9
    (definition of end user). We note that in the *SBC Missouri/Arkansas
    Order*, the Commission determined that ASI need not offer its DSL
    transport service at a resale discount pursuant to section
    251(c)(4). *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*,
    Memorandum Opinion and Order, 16 FCC Rcd 20719, para. 80 (2001)
    (*SBC Missouri/Arkansas 271Order*).

[^24]: *ASI FCC Tariff*, at §§ 7-8. Remote LAN DSL transport service
    enables businesses to allow remote access to their LANs over DSL
    lines. *Id.* at § 7.1.1. A typical application would enable a
    business to provide its telecommuting employees with access to the
    LAN at their workplace. *Id.* ASI's tariff states that the business
    purchasing this service is the retail customer and that the service
    "may not be used as a wholesale input to provide another retail
    offering, such as high-speed Internet service." *Id.* Network access
    point service uses clusters of ATM switches to allow Internet
    backbone providers to interconnect and "peer" (i.e., exchange
    traffic). *Id.* at § 8.1.1. ASI's tariff indicates that this service
    is available to government, research, and educational organizations
    as well as to ISPs. *Id.*

[^25]: ASI owns, in addition to DSLAMs and packet switching equipment,
    routers, servers, test equipment, operations support systems
    equipment, multiplexing and cross-connect equipment, power
    equipment, and customer premises equipment (CPE) kept in inventory.
    Letter from Jeffry Brueggeman, General Attorney, SBC, to Marlene H.
    Dortch, Secretary, FCC, at 2 (filed Nov. 26, 2002) (*SBC Nov. 26,
    2002 Letter*). ASI does not own any local loops, interoffice
    transmission lines, or other transmission lines. *Id.*

[^26]: *See generally* DIRECTV Broadband Comments at 1-2; EarthLink
    Comments at 7.

[^27]: *SBC Nov. 15, 2002 Letter*, at 5-7.

[^28]: *Id.* at 5.

[^29]: *Id.*

[^30]: *Id.*

[^31]: *Id.* at 5-7; *see SBC Nov. 26, 2002 Letter*, at 1.

[^32]: *SBC Nov. 15, 2002 Letter*, at 6; *see SBC Nov. 26, 2002 Letter*,
    at 1.

[^33]: *SBC Nov. 15, 2002 Letter*, at 6. SBC indicates that these
    improvements included, for example, web-based programs that allow
    ISPs to use the Internet to learn the status of their wholesale DSL
    transport service orders and trouble reports. *Id.*

[^34]: *Id.* at 6-7.

[^35]: SBC Petition at 1.

[^36]: *Id.* at 15-72.

[^37]: *Id.* at 73-83.

[^38]: *Id.* at 1.

[^39]: *Id.*, *passim*.

[^40]: *Incumbent LEC Broadband Notice*, 16 FCC Rcd at 22748, para. 7, &
    22766, n.88. An appendix to this Order lists the parties filing
    comments and replies in response to the *Incumbent LEC Broadband
    Notice.*

[^41]: *Id.* at 22766, n.88.

[^42]: *Id.* at 22754-769, paras. 17-48.

[^43]: *See, e.g.,* Alcatel Comments at 7-9; BellSouth Comments at
    49-53.

[^44]: *See, e.g.,* EarthLink Comments at 31-34; IP Communications
    Comments at 4-5; WorldCom Comments at 29-32.

[^45]: *SBC Nov. 26, 2002 Letter*, *supra* at 1; *SBC Nov. 15, 2002
    Letter*, at 7-8; *see Incumbent LEC Broadband Notice*, 16 FCC Rcd at
    22754-69, paras. 17-48; *Appropriate Framework for Broadband Access
    to the Internet over Wireline Facilities, Universal Service
    Obligations of Broadband Providers, Computer III Further Remand
    Proceedings: Bell Operating Company Provision of Enhanced Services;
    1998 Biennial Regulatory Review - Review of Computer III and ONA
    Safeguards and Requirements*, CC Docket Nos. 02-33, 95-20, 98-10,
    Notice of Proposed Rulemaking, 17 FCC Rcd 3019, 3029-56, paras.
    17-83 (2002) (*Wireline Broadband Notice*).

[^46]: *SBC Nov. 15, 2002 Letter*, at 7.

[^47]: *SBC Nov. 26, 2002 Letter*, at 1; *SBC Nov. 15, 2002 Letter*, at
    7-8.

[^48]: *SBC Nov. 15, 2002 Letter*, at 8.

[^49]: 47 U.S.C. § 160(a).

[^50]: 47 U.S.C. § 160(b).

[^51]: *Id.*

[^52]: We note that SBC is planning to deploy a passive optical network
    technology to provide advanced services through its operating
    company to the Mission Bay housing development in San Francisco,
    California. Our grant of forbearance does not encompass this
    project.

[^53]: The first attestation will be due January 2, 2004.

[^54]: Our statement here is in no way intended to change how ASI
    currently does so, or in any way mandate any particular method of
    doing so. Rather, ASI shall continue to purchase inputs in the same
    way as it currently does, whether that is through a statement of
    generally available terms, tariff or interconnection agreement,
    assuming this method is currently compliant with the Act and the
    Commission's implementing rules.

[^55]: 47 U.S.C. § 160(a)(1).

[^56]: DIRECTV Broadband Reply at 2.

[^57]: 47 C.F.R. § 61.31-61.59.

[^58]: 47 C.F.R. § 61.58(a)(2)(i).

[^59]: 47 C.F.R. § 61.38. If the Commission determines that a tariff
    filing contains unjust, unreasonable, or unjustly or unreasonably
    discriminatory rates, terms, or conditions, it may reject the
    tariff, or investigate, and if it finds the tariff unlawful, order
    the carrier to refund any overcharges. 47 U.S.C. § 204.

[^60]: *See Regulatory Treatment of LEC Provision of Interexchange
    Services Originating in the LEC's Local Exchange Area and Policy and
    Rules Concerning the Interstate, Interexchange Marketplace*, CC
    Docket Nos. 96-149, 96-61, Second Report in CC Docket No. 96-149 and
    Third Report and Order in CC Docket No. 96-61, 12 FCC Rcd 15756,
    15766, para. 12 (*LEC Classification Order*), Order on
    Reconsideration, 12 FCC Rcd 8730 (1997) (*LEC Classification
    Reconsideration Order*), Order, 13 FCC Rcd 6427 (Comm. Car. Bur.
    1998) (*LEC Classification Partial Stay Order*); Second Order on
    Reconsideration and Memorandum Opinion and Order, 14 FCC Rcd 10771
    (1999) (*LEC Classification Second Reconsideration Order*).

[^61]: 47 U.S.C. §§ 201-02; *see* SBC Comments at 56-57.

[^62]: *See, e.g., Wireline Broadband Notice*, 17 FCC Rcd at 3040-43,
    paras. 43-52.

[^63]: 47 U.S.C. § 208; *see* SBC Comments at 56-57.

[^64]: *See* 47 U.S.C. § 214(a); 47 C.F.R. § 63.71. We note that, absent
    a declaration of non-dominance, forbearance from tariff regulation
    would not preclude ASI from retaining its tariff. *See generally* 47
    C.F.R. § 61.19(a).

[^65]: *E.g.,* AT&T Comments at 12; EarthLink Comments at 25-26; US LEC
    Comments at 11.

[^66]: *E.g.,* DIRECTV Broadband Comments at 12; WorldCom Reply at 22.

[^67]: *Cf. LEC Classification Order*, 12 FCC Rcd at 15831, para. 128
    (concluding that the Commission can address any predatory pricing by
    the BOC section 272 affiliates through the section 208 complaint
    process).

[^68]: 47 U.S.C. § 180(a).

[^69]: *LEC Classification Order*, 12 FCC Rcd at 15808, para. 91
    (concluding that tariff regulation of BOC's section 272 affiliates
    would be at best a clumsy tool for protecting against an exercise of
    market power by the BOC).

[^70]: *See, e.g.*, *SBC/Ameritech Merger Order*, 14 FCC Rcd at 14978,
    Condition I.4.f (requirements that ASI order, in the same manner as
    its competitors, any UNEs and telecommunications services that it
    seeks to obtain from SBC and that SBC must allow non-affiliates to
    order UNEs and telecommunications services from its incumbent LECs
    under the same rates, terms, and conditions, and utilizing the same
    interfaces, processes, and procedures, as are available to ASI);
    ITAA Comments at 27 (contending that structural separation, coupled
    with appropriate price regulation of operating companies'
    telecommunications services, helps deter anti-competitive abuses);
    New Edge Comments at 9-10 (arguing that structural separation
    protects against discrimination in connection with the facilities
    and services that advanced services providers obtain from operating
    companies).

[^71]: *See, e.g.,* Time Warner Comments at 11-12 (arguing that
    structural separation helps limit an incumbent's ability to leverage
    its control over bottleneck end-user connections to inhibit
    competition in advanced services).

[^72]: *SBC Nov. 15, 2002 Letter*, at 7 (commitments to post on ASI's
    website the general rates, terms, and conditions under which ASI is
    willing to provide advanced services as well as the rates, terms,
    and conditions of any broadband access arrangement that ASI has with
    an affiliated ISP).

[^73]: *SBC Nov. 26, 2002 Letter*, at 1 (commitment to allow
    unaffiliated ISPs that are similarly situated to take service under
    those rates, terms, and conditions made available to affiliated
    ISPs).

[^74]: *See* para. 20, *supra*.

[^75]: *See SBC/Ameritech Merger Order*, 14 FCC Rcd at 14978, Condition
    I.4.f.

[^76]: 47 U.S.C. § 208; *see, e.g., Hyperion Telecommunications, Inc.
    Petition Requesting Forbearance, Time Warner Communications Petition
    for Forbearance, Complete Detariffing for Competitive Access
    Providers and Competitive Exchange Carriers*, Memorandum Opinion and
    Order and Notice of Proposed Rulemaking, 12 FCC Rcd 8596, 8609,
    para. 25 (1997); BellSouth Comments at 50 (arguing that sections 201
    and 202, in conjunction with the section 208 complaint process,
    ensure that rates and practices are just, reasonable, and not
    unreasonably discriminatory); SBC Comments at 56-57. *But* *see*
    EarthLink Reply at 13 (arguing that the section 208 complaint
    process is time consuming and resource intensive and ignores the
    practical need to redress anticompetitive conduct when it happens).

[^77]: 47 U.S.C. § 160(a)(2).

[^78]: *SBC Nov. 26, 2002 Letter*, at 1.

[^79]: *See* AOL Reply at 4 (arguing that we should not allow SBC to
    restrict consumers' choice of ISPs).

[^80]: 47 U.S.C. § 160(a)(3).

[^81]: 47 U.S.C. § 160(b).

[^82]: The Commission has long recognized that tariff regulation has
    many drawbacks. *See, e.g., LEC Classification Order*, 12 FCC Rcd at
    15806, para. 88; *Motion of AT&T Corp. to be Reclassified as a
    Non-Dominant Carrier*, Order, 11 FCC Rcd 3271, 3288, para. 27 (1995)
    (*AT&T Reclassification Order*). Tariff regulation can prevent a
    carrier from quickly introducing new services and from quickly
    responding to its competitors' new offerings. *See LEC
    Classification Order*, 12 FCC Rcd at 15806, para. 88; *AT&T
    Reclassification Order* 11 FCC Rcd at 3288, para. 27; *see also*
    Qwest Comments a 59-60 (arguing that the imposition of tariff
    regulation of non-dominant carriers imposes unnecessary costs and
    skews competition). It also can limit the ability of customers to
    obtain service arrangements that are specifically tailored to their
    needs. *Policy and Rules Concerning the Interstate, Interexchange
    Marketplace, Second Report and Order*, 11 FCC Rcd. 20730, 20760-61,
    para. 53 (1996) (*IXC Forbearance Order*) (subsequent history
    omitted); SBC Comments at 60. Tariff regulation also imposes
    administrative costs on carriers, which must prepare and file
    tariffs, and on the Commission staff, which must review them. *See,
    e.g., LEC Classification Order*, 12 FCC Rcd at 15807-08, para. 89.

[^83]: *E.g.,* AT&T Comments at 52-54; CompTel Comments at 19; WorldCom
    Reply at 22-23.

[^84]: *E.g.,* CompTel Comments at 19-20; Earth Link Comments at 25;
    WorldCom Reply at 22-23.

[^85]: *See, e.g.,* DIRECTV Broadband Comments at 12; WorldCom Reply at
    22.

[^86]: We note that our forbearance action encompasses enterprise
    services (*i.e.*, services not described in a preexisting tariff or
    contract offering) that employ ATM or frame relay technology. *See*
    para. 13, *supra*. SBC has argued that interexchange carriers, such
    as AT&T, Sprint, and WorldCom, collectively account for the majority
    of the ATM and frame relay revenues. *See, e.g.,* SBC Reply at
    31-37.

[^87]: *See* para. 13, *supra*.

[^88]: *See, e.g.,* ITAA Comments at 28-29 (arguing that although
    separation requirements can effectively deter anticompetitive
    conduct, a separate advanced services affiliate should comply with
    the separation requirements set forth in section 272 of the Act).

[^89]: *See SBC/Ameritech Merger Order*, 14 FCC Rcd at 14859, para. 363.

[^90]: *Compare* SBC Petition at 2 (requesting forbearance from tariff
    regulation irrespective of whether SBC continues to provide advanced
    services though a separate affiliate) *with* *SBC Nov. 15, 2002
    Letter* at 7-8 (committing to certain safeguards pending action in
    broadband rulemakings).

[^91]: 47 U.S.C. § 160(c) (specifying that "any telecommunications
    carrier . . . may submit a petition to the Commission requesting
    that the Commission exercise its authority under \[section 10\] with
    respect to that carrier . . . , or any service offered by that
    carrier . . ."). We note that because we grant SBC all forbearance
    relief reasonably available under its petition, this situation
    differs from the situation before the Court in *AT&T v. FCC*, 236
    F.3d 729 (D.C. Cir. 2001), where the Commission had denied all
    requested forbearance relief based on the availability of part of
    that relief through a different mechanism.

[^92]: *See, e.g.,* AT&T Comments at 10-36; EarthLink Comments at 4-25;
    SBC Comments at 9-55; Verizon Comments at 8-22.

[^93]: *See* Covad Comments at 10 (arguing that we should address, in
    the *Wireline Broadband* rulemaking, the fundamental question of
    whether high speed Internet access service is a telecommunications
    service subject to Title II of the Communications Act before
    considering, in the *Incumbent LEC Broadband* rulemaking, the
    appropriate level of Title II regulation to apply to those
    services); US LEC Comments at ii (same).

[^94]: SBC Petition for Expedited Ruling that It is Non-Dominant in Its
    Provision of Advanced Services and for Forbearance from Dominant
    Carrier Regulation of Those Services, CC Docket No. 01-337 at 1.
    (filed Oct.3, 2001)("SBC Petition").

[^95]: *United States Telecom Association v. FCC*, 290 F3d 415, 428-429
    (DC Cir., May 24, 2002)

[^96]: *ASCENT v. FCC,* 235 F3d 662, 668 (DC Cir., Jan. 9, 2001)

[^97]: AT&T Corporation v. Federal Communications Commission, 236 F.3d
    729 (DC Cir., Jan. 23, 2001).

[^98]: *SBC Petition at* 2.

[^99]: *AT&T v. FCC, 236 F3d 729, 737-738.*