Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | CC Docket No. 96-98          |
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**SUPPLEMENTAL ORDER CLARIFICATION**

**Adopted:** May 19, 2000 **Released:** June 2, 2000

By the Commission: Chairman Kennard and Commissioner Ness issuing
separate statements; Commissioner Furchtgott-Roth dissenting and issuing
a statement.

# INTRODUCTION

1.  On November 5, 1999, we released the *Third Report and Order and
    Fourth Further Notice of Proposed Rulemaking* in this docket
    responding to the U.S. Supreme Court's January 1999 decision that
    directed us to reevaluate the unbundling obligations of section 251
    of the Telecommunications Act of 1996 (1996 Act).[^1] On November
    24, 1999, we released a *Supplemental Order* that modified the
    *Third Report and Order and Fourth FNPRM* with regard to the ability
    of requesting carriers to use combinations of unbundled network
    elements to provide local exchange and exchange access service prior
    to our resolution of the *Fourth FNPRM*.[^2] In this Order, we take
    three actions to extend and clarify the temporary constraint that we
    adopted in the *Supplemental Order*. First, we extend the temporary
    constraint identified in the *Supplemental Order* while we compile
    an adequate record for addressing the legal and policy disputes
    presented here. Second, we clarify what constitutes a "significant
    amount of local exchange service." Third, we clarify that incumbent
    local exchange carriers (LECs) must allow requesting carriers to
    self-certify that they are providing a significant amount of local
    exchange service over combinations of unbundled network elements,
    and we allow incumbent LECs to subsequently conduct limited audits
    by an independent third party to verify the carrier's compliance
    with the significant local usage requirements.

# Background

2.  In the *Third Report and Order*, we explained that incumbent LECs
    routinely provide the functional equivalent of combinations of
    unbundled loop and transport network elements (also referred to as
    the enhanced extended link) through their special access offerings.
    Because section 51.315(b) of the Commission's rules precludes the
    incumbent LECs from separating loop and transport elements that are
    currently combined, we stated that a requesting carrier could obtain
    these combinations at unbundled network element prices.[^3] At the
    same time, we stated our concern that allowing requesting carriers
    to use loop-transport combinations solely to provide exchange access
    service to a customer, without providing local exchange service,
    could have significant policy ramifications because unbundled
    network elements are often priced lower than tariffed special access
    services. Because of concerns that universal service could be harmed
    if we were to allow interexchange carriers (IXCs) to use the
    incumbent's network without paying their assigned share of the
    incumbent's costs normally recovered through access charges,[^4] we
    agreed that we should further explore these considerations,
    recognizing that full implementation of access charge and universal
    service reform was still pending.[^5]

3.  The question of whether we should allow requesting carriers to use
    unbundled network elements to provide exchange access service to
    customers to whom the requesting carrier does not provide local
    exchange service has arisen in three contexts. First, in the *Local
    Competition* *Third Order on Reconsideration*, the Commission
    limited the obligation of incumbent LECs to provision shared
    transport as an unbundled network element to requesting carriers
    that provide local exchange service to a particular end user. It
    also sought comment on whether requesting carriers may use unbundled
    dedicated or shared transport facilities, in conjunction with
    unbundled switching, to originate or terminate interstate toll
    traffic to customers to whom the requesting carrier does not provide
    local exchange service.[^6] Second, in the *Fourth FNPRM*, we asked
    parties to address the legal and policy issues associated with the
    ability of requesting carriers to obtain entrance facilities, which
    consist of a dedicated link from a carrier's point-of-presence to an
    incumbent LECs' serving wire center, as an unbundled network
    element.[^7] We also asked that parties refresh the record in the
    *Local Competition* *Third Order on Reconsideration.*[^8] Third, in
    the *Supplemental Order*, we expanded the scope of the *Fourth
    FNPRM* to seek comment on whether incumbent LECs could decline to
    provide carriers combinations of unbundled loop and transport
    network elements solely for the provision of exchange access
    service.[^9]

4.  A series of events since the Commission issued its *Local
    Competition First Report and Order*, culminating in the Supreme
    Court's decision in *AT&T v. Iowa Utilities Bd*.,[^10] have shaped
    the issues associated with the ability of carriers to substitute
    unbundled network elements for tariffed special access services.
    Although the Commission found in the *Local Competition First Report
    and Order* that the Act does not permit incumbent LECs to place
    restrictions on the use of unbundled network elements,[^11] it
    concluded that it was necessary to adopt a temporary mechanism to
    avoid a reduction in contributions to universal service prior to
    full implementation of access charge and universal service
    reform.[^12] It therefore allowed incumbent LECs to recover access
    fees from purchasers of unbundled network elements until June 30,
    1997.[^13] Before this transition period expired, the Eighth Circuit
    stayed the Commission's unbundled network element pricing rules in
    October, 1996.[^14] Once these rules were stayed, it became
    uncertain whether or not unbundled network elements would continue
    to be priced at forward-looking cost and whether there would be a
    significant difference between tariffed access rates and unbundled
    network element rates. Then, in 1997, the Eighth Circuit also
    vacated sections 51.315(b)-(f) of the Commission's rules, which
    protected the right of requesting carriers to obtain combinations of
    unbundled network elements, such as loop-transport
    combinations.[^15] Vacatur of rule 51.315(b), in particular,
    precluded requesting carriers from obtaining access to such
    combinations without first incurring costly reconnection charges. In
    January 1999, the Supreme Court reinstated the Commission's pricing
    rules and rule 51.315(b).[^16] At the same time, however, it ordered
    the Commission to revisit its implementation of section 251(d)(2),
    which addresses the circumstances in which incumbent LECs must make
    unbundled network elements available to requesting carriers.[^17] We
    addressed this issue in the *Third Report and Order* and determined
    that incumbent LECs must unbundle loops and interoffice transport
    individually.[^18] The *Fourth FNPRM* asks about the legal and
    policy implications of allowing requesting carriers to substitute
    combinations of unbundled loop and transport network elements for
    the incumbent LECs' tariffed special access service.

5.  We took several steps in the *Supplemental Order* to ensure that we
    sufficiently preserved the status quo pertaining to the special
    access issue while the *Fourth FNPRM* remains pending. Specifically,
    we concluded that until resolution of the *Fourth FNPRM*, which we
    said would occur on or before June 30, 2000, IXCs may not convert
    special access services to combinations of unbundled loop and
    transport network elements. We explained that this constraint does
    not apply if an IXC uses such combinations to provide a significant
    amount of local exchange service, in addition to exchange access
    service, to a particular customer.[^19] In order to determine
    whether or not an IXC is using combinations of unbundled network
    elements to provide a significant amount of local exchange service,
    we stated that we would consider, for example, whether the IXC was
    providing at least one third of the customer's local traffic as
    described in a joint filing submitted by several parties.[^20] In
    addition, we stated that we would presume that the requesting
    carrier is providing a significant amount of local exchange service
    if it is providing all of the end user's local exchange
    service.[^21]

6.  In a joint filing submitted on February 28, 2000, several incumbent
    LECs and competitive LECs request that the Commission clarify the
    *Supplemental Order* regarding the minimum amount of local service a
    requesting carrier must provide in order to convert special access
    services to combinations of unbundled loop and dedicated transport
    network elements.[^22] They propose certain changes to the *Bell
    Atlantic September 1999 Joint Letter* and request that the
    Commission modify the amount of local traffic considered
    "significant" in accordance with these changes.[^23] The parties
    further request that the Commission allow limited auditing rights in
    order to ensure that requesting carriers meet the minimum threshold
    for purchasing combinations of unbundled loop and dedicated
    transport network elements.[^24] Several parties responded to the
    *February 28, 2000 Joint Letter*. They argue generally that the use
    limitations on combinations that the incumbent LECs and competitive
    LECs propose are too restrictive, and will prevent requesting
    carriers from being able to use combinations of unbundled network
    elements to serve their customers.[^25] We address these filings in
    this Order.

# discussion

7.  As we observed in the *Third Report and Order and Fourth FNPRM*, and
    as we reaffirmed in the *Supplemental Order*, permitting the use of
    combinations of unbundled network elements in lieu of special access
    services could cause substantial market dislocations and would
    threaten an important source of funding for universal service.[^26]
    For example, in the absence of completed implementation of access
    charge reform, allowing the use of combinations of unbundled network
    elements for special access could undercut universal service by
    inducing IXCs to abandon switched access for unbundled network
    element-based special access on an enormous scale.[^27] In the words
    of one incumbent LEC, this would amount to a "roundabout
    termination" of the access charge regime, prior to the actual
    elimination of the implicit universal service subsidies contained in
    access charges, and would require it to bear the expense of
    providing local dialtone service without a viable means of
    recovering the costs of universal service.[^28] We therefore invoked
    our longstanding authority to adopt temporary measures designed to
    protect universal service and prevent industry instability during
    periods of regulatory transition.[^29]

8.  Although we have recently taken significant steps in implementing
    access charge reform,[^30] a number of additional considerations,
    discussed below, require us to extend the temporary constraint
    identified in the *Supplemental Order* while we compile an adequate
    record in the *Fourth FNPRM* for addressing the legal and policy
    issues that have been raised. Therefore, until we resolve the issues
    in the *Fourth FNPRM*, IXCs may not substitute an incumbent LEC's
    unbundled loop-transport combinations for special access services
    unless they provide a significant amount of local exchange service,
    in addition to exchange access service, to a particular
    customer.[^31] We emphasize that by issuing this clarification
    order, we do not decide any of the substantive issues in the *Fourth
    FNPRM* on the merits.

9.  We previously asked commenters to discuss the source and extent of
    any right of incumbent LECs to withhold unbundled network elements
    from carriers seeking to use such elements solely for the purpose of
    providing special access services.[^32] As discussed below, several
    commenters argue that such a right follows from the "impair"
    standard of section 251(d)(2), which directs the Commission to order
    the unbundling of network elements only after "consider\[ing\], 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."[^33]
    In 1999, the Supreme Court rejected our prior rules implementing
    that provision and directed us to give greater effect to the
    "impair" standard.[^34]

10. In response to our inquiry in the *Fourth FNPRM*, the incumbent LECs
    argue that, in reexamining our implementation of section 251(d)(2),
    we must conduct a more market-specific analysis in deciding when
    network elements must be unbundled.[^35] They contend that, in some
    contexts, denial of particular elements in the incumbent's network
    may impair the ability of other carriers to provide services in one
    market but not in another. In those circumstances, the incumbents
    argue, the availability of such elements should be restricted to the
    carriers that intend to use them \-- substantially, though not
    necessarily exclusively \-- in the markets in which the "impair"
    standard is met. Here, the incumbents contend, denial of access to
    the loop-transport combinations at issue would not "impair" a
    carrier's ability to provide services in the special access market
    or, more generally, in the exchange access market, of which the
    special access market is a subset.[^36] Thus, the incumbents
    conclude, competitors have no statutory right to obtain access to
    such combinations for purposes of competing only in that market,
    even though the Commission has found that denial of access to those
    combinations would impair a carrier's ability to compete in the
    separate market for ubiquitous local exchange and xDSL
    services.[^37]

11. Other commenters, by contrast, contend that "\[t\]he Section
    251(d)(2) determination must . . . be made available on a *network
    element-by-network element* basis."[^38] Those commenters argue that
    if certain elements satisfy the "impair" standard with respect to
    *one* market, a carrier may automatically obtain access to those
    elements solely for purposes of competing in *other* markets,
    without using the elements to compete in the market that was the
    basis of the "impair" analysis.[^39]

12. Before the Supreme Court issued its decision in *Iowa Utilities
    Board*, we sometimes approached an incumbent's obligation to
    unbundle network elements as though it were an all-or-nothing
    proposition, suggesting that, if a competitor were entitled to
    obtain access to an element for one purpose, it was generally also
    entitled to obtain access to that element for wholly different
    purposes as well.[^40] At that time, however, we never specifically
    focused on the relationship between that issue (particularly as it
    relates to this special access dispute) and the \"impair" standard
    of section 251(d)(2). Now that the Supreme Court has rejected our
    previous interpretation of that provision as insufficiently
    rigorous, it is appropriate for us to revisit the issue.

13. In the *Third Report and Order*, we conducted a general "impair"
    analysis of loops and dedicated transport and ordered those elements
    to be unbundled.[^41] That analysis did not fully focus, however, on
    application of the "impair" standard to the exchange access market,
    with the limited exception of entrance facilities.[^42] With regard
    to entrance facilities, we determined that there was insufficient
    record evidence for us to find that requesting carriers had
    effective alternatives in the market to allow them to provide
    service.[^43] We sought additional evidence in the *Fourth FNPRM* on
    whether there was any basis in the statute or our rules, including
    the "impair" standard, under which the incumbent LECs could decline
    to provide entrance facilities at unbundled network element prices,
    and we later modified this inquiry in the *Supplemental Order* to
    include loop-transport combinations.[^44]

14. The exchange access market occupies a different legal category from
    the market for telephone exchange services; indeed, at the highest
    level of generality, Congress itself drew an explicit statutory
    distinction between those two markets.[^45] Even though the exchange
    access market is legally distinct from the local exchange market, we
    must determine whether the markets are otherwise interrelated from
    an economic and technological perspective, such that a finding that
    a network element meets the "impair" standard for the local exchange
    market would itself entitle competitors to use that network element
    solely or primarily in the exchange access market. Unless we find
    that these markets are inextricably interrelated in these other
    respects, it is unlikely that Congress intended to compel us, once
    we determine that a network element meets the "impair" standard for
    the local exchange market, to grant competitors access --- for that
    reason alone, and without further inquiry --- to that same network
    element solely or primarily for use in the exchange access market.

15. Contrary to the views of some commenters,[^46] section 251(d)(2)
    does not compel us, once we determine that any network element meets
    the "impair" standard for one market, to grant competitors automatic
    access to that same network element solely or primarily for use in a
    different market. That provision 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.*"[^47] 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. We
    adopted a similar approach in the *Third Report and Order*,
    observing that, because "Section 251(d)(2)(B) requires us to
    consider whether lack of access to the incumbent LEC's network
    elements would impair the ability of the carrier to provide the
    *services* it seeks to offer," it is "appropriate for us to consider
    the particular types of customers that the carrier seeks to
    serve."[^48] In any event, even if section 251(d)(2) were altogether
    silent on this issue, that provision directs us to consider the
    substantive criteria of subparagraphs (A) and (B) "at a minimum." As
    we have previously determined, that language authorizes us, at our
    discretion, to consider other factors in addition to those
    explicitly designated criteria, such as the development of
    facilities-based competition.[^49] Here, the statute plainly
    entitles us to ask, as part of our inquiry into whether network
    elements should be made available for the sole or primary purpose of
    providing exchange access services, whether denying competitors
    access to that combination would in fact impair their ability to
    provide those services.[^50]

16. Our identification of the network elements that "should be made
    available" for purposes of section 251(d)(2) is an ongoing exercise
    in legislative rulemaking authority. The inquiry we conduct in
    discharging that authority is necessarily empirical and dynamic. As
    we emphasized in the *Third Report and Order*, we properly look to
    actual developments in the telecommunications marketplace before
    imposing additional unbundling obligations on incumbent LECs; we
    generally do not impose such obligations first and conduct our
    "impair" inquiry afterwards.[^51] Here, we must gather evidence on
    the development of the marketplace for exchange access in the wake
    of the new unbundling rules adopted in the *Third Report and Order*
    before we can determine the extent to which denial of access to
    network elements would impair a carrier's ability to provide special
    access services. One of our tasks will be to resolve a key empirical
    dispute: whether the markets for local exchange service and special
    access are so closely interrelated from an economic and
    technological perspective that a showing of impairment with respect
    to the former market would by itself tend to suggest, as a practical
    matter, that the "impair" standard is satisfied with respect to the
    latter market.[^52]

17. Our new unbundling rules, issued in the wake of *Iowa Utilities
    Board*, should significantly increase competition in local markets
    by removing long-standing uncertainty about the scope of the
    incumbent LECs' unbundling obligations and by stimulating new
    investment. We must take the market effects of those new rules into
    account as we conduct our "impair" analysis for special access
    service, and we must therefore allow a meaningful period of time to
    elapse from the date on which those new rules became effective.[^53]
    We will issue a Public Notice in early 2001 to gather evidence on
    this issue so that we may then resolve it expeditiously. In
    addition, the Commission and the parties need more time to evaluate
    the issues raised in the record in the *Fourth FNPRM*. For example,
    the incumbent LECs have produced complex economic analyses of the
    effect on the marketplace of permitting requesting carriers to
    convert existing special access services to combinations of
    unbundled network elements.[^54] At least one party has argued that,
    in order to respond, it needs more information concerning the
    assumptions and calculations underlying the analysis.[^55]

18. Our extension of this temporary constraint is necessary for an
    independent reason as well. An immediate transition to unbundled
    network element-based special access could undercut the market
    position of many facilities-based competitive access providers.[^56]
    Competitive access, which originated in the mid-1980s, is a mature
    source of competition in telecommunications markets.[^57] We are
    reluctant to adopt a flashcut approach with potentially severe
    consequences for the competitive access market without first
    permitting the development of a fuller record.

19. Contrary to the concerns of some parties,[^58] the temporary
    constraint at issue here should not allow incumbent LECs that
    provide in-region long distance service to engage in "price
    squeezes" or other anticompetitive practices, either by allowing
    their long-distance affiliates to obtain access service below
    tariffed access charges or by impairing competition in the
    long-distance market by raising access charges across the board and
    simultaneously lowering the retail rates of its affiliate's
    long-distance services to below cost. Incumbent LECs seeking to
    provide interLATA services through an affiliate must adhere to
    certain structural separation and non-discrimination requirements.
    For example, Congress anticipated that some Bell Operating Companies
    ("BOCs") would obtain authorization under 47 U.S.C. 271 to originate
    in-region long-distance services before the completion of access
    charge reform (which includes reform not just of charges for the
    special access services at issue here, but also of charges for
    ordinary switched access as well). Congress therefore enacted
    Section 272, which requires a BOC competing in the in-region
    long-distance market to create a separate long-distance affiliate
    and to recover access charges from that affiliate on the same basis
    on which it recovers such charges from unaffiliated carriers.[^59]

20. As we have consistently determined, those structural and
    non-discrimination requirements provide adequate safeguards against
    any effort by an incumbent to obtain an unfair competitive advantage
    in the long-distance market by discriminating against unaffiliated
    IXCs or by improperly allocating costs or assets between itself and
    its long-distance affiliate.[^60] Indeed, those "separation
    requirements have been in place for over ten years, and independent
    (non-BOC) incumbent LECs have been providing in-region,
    interexchange services on a separated basis with no substantiated
    complaints of a price squeeze."[^61] Moreover, because the interim
    constraint at issue is merely temporary, we will of course be free
    to take into account any claims of unfair competition when we adopt
    permanent rules addressing the unbundling issue presented here.

21. To reduce uncertainty for incumbent LECs and requesting carriers and
    to maintain the status quo while we review the issues contained in
    the *Fourth FNPRM*, we now define more precisely the "significant
    amount of local exchange service" that a requesting carrier must
    provide in order to obtain unbundled loop-transport combinations. We
    recognize that making a determination about what constitutes a
    significant amount of local usage on a facility is not an exact
    science. We believe, however, that the incumbent LECs and
    competitive LECs that submitted the *February 28, 2000 Joint Letter*
    have presented a reasonable compromise proposal under which it may
    be determined that a requesting carrier has taken affirmative steps
    to provide local exchange service to a particular end user and is
    not seeking to use unbundled loop-transport combinations solely to
    bypass tariffed special access service. The local usage options we
    adopt below thus provide a safe harbor that allows the Commission to
    preserve the status quo while it examines the issues in the *Fourth
    FNPRM* in more detail, while still allowing carriers to use
    combinations of unbundled loop and transport network elements to
    provide local exchange service.

22. We find that a requesting carrier is providing a "significant amount
    of local exchange service" to a particular customer if it meets one
    of three circumstances:

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(1) As we found in the *Supplemental Order*, the requesting carrier
    certifies that it is the exclusive provider of an end user's local
    exchange service.[^62] The loop-transport combinations must
    terminate at the requesting carrier's collocation arrangement in at
    least one incumbent LEC central office. This option does not allow
    loop-transport combinations to be connected to the incumbent LEC's
    tariffed services. Under this option, the requesting carrier is the
    end user's only local service provider, and thus, is providing more
    than a significant amount of local exchange service. The carrier can
    then use the loop-transport combinations that serve the end user to
    carry any type of traffic, including using them to carry 100 percent
    interstate access traffic; or

(2) The requesting carrier certifies that it provides local exchange and
    exchange access service to the end user customer's premises and
    handles at least one third of the end user customer's local traffic
    measured as a percent of total end user customer local dialtone
    lines; and for DS1 circuits and above,[^63] at least 50 percent of
    the activated channels on the loop portion of the loop-transport
    combination have at least 5 percent local voice traffic
    individually,[^64] and the entire loop facility has at least 10
    percent local voice traffic. When a loop-transport combination
    includes multiplexing (*e.g*., DS1 multiplexed to DS3 level),[^65]
    each of the individual DS1 circuits must meet this criteria. The
    loop-transport combination must terminate at the requesting
    carrier's collocation arrangement in at least one incumbent LEC
    central office. This option does not allow loop-transport
    combinations to be connected to the incumbent LEC's tariffed
    services. Under this option, a carrier's provision of at least one
    third of an end user's local traffic is significant because it
    indicates that the carrier is providing more than a de minimis
    amount, but less than all, of the end user's local service. As we
    stated above, we find this to be a reasonable indication that the
    requesting carrier has taken affirmative steps to provide local
    exchange service to the end user, and is not using the facilities
    solely to bypass special access service. Such a carrier may then use
    unbundled loop-transport combinations to serve the customer as long
    as the active channels on the facility, and the entire facility, are
    being used to provide the amount of local exchange service specified
    in this option, thereby offering the carrier some flexibility to use
    the combinations to provide other services besides local exchange
    service; or

(3) The requesting carrier certifies that at least 50 percent of the
    activated channels on a circuit are used to provide originating and
    terminating local dialtone service and at least 50 percent of the
    traffic on each of these local dialtone channels is local voice
    traffic, and that the entire loop facility has at least 33 percent
    local voice traffic. When a loop-transport combination includes
    multiplexing (*e.g*., DS1 multiplexed to DS3 level), each of the
    individual DS1 circuits must meet this criteria. This option does
    not allow loop-transport combinations to be connected to the
    incumbent LEC's tariffed services. Under this option, collocation is
    not required. The requesting carrier does not need to provide a
    defined portion of the end user's local service, but the active
    channels on any loop-transport combination, and the entire facility,
    must carry the amount of local exchange traffic specified in this
    option. This option may be the most efficient for requesting
    carriers that provide high capacity facilities to large end users
    that carry a significant amount of local voice traffic, but that
    represent only a small portion of the end user\'s total local
    exchange service. This option recognizes that although the
    requesting carrier is not providing one-third of the end user's
    local voice service, as set forth in option 2, the carrier has still
    taken affirmative steps to provide local service to the customer,
    and is not using the circuits simply to bypass special access. As
    the record indicates, while such a carrier may not be providing a
    significant amount of the customer's total local service, the 50
    percent facility threshold indicates that a significant portion of
    the service that the carrier does provide to the end user is
    local.[^66]

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23. We clarify that the three alternative circumstances described above
    represent a safe harbor for determining the minimum amount of local
    exchange service that a requesting carrier must provide in order for
    it to be deemed "significant." We acknowledge that there may be
    extraordinary circumstances under which a requesting carrier is
    providing a significant amount of local exchange service but does
    not qualify under any of the three options. In such a case, the
    requesting carrier may always petition the Commission for a waiver
    of the safe harbor requirements under our existing rules.[^67]

24. We find that the limited collocation requirements contained in local
    usage options 1 and 2 are reasonable. They are consistent with both
    the *Third Report and Order*, in which we stated that any requesting
    carrier that is collocated in a serving wire center is free to order
    loops and transport to that serving wire center as unbundled network
    elements,[^68] and with the *Supplemental Order*, in which we
    referred to a requesting carrier's provision of local exchange
    service terminating at a collocation arrangement as an example of
    significant local usage.[^69] We also stated in the *Third Report
    and Order* that the Commission expected that it would be most
    efficient for the incumbent LEC to connect unbundled loop-transport
    combinations directly to a requesting carrier's collocation
    cage.[^70] Finally, the collocation requirements contained in
    options 1 and 2 should not impose an undue burden on requesting
    carriers because they require only that the circuit that the
    requesting carrier seeks to convert terminate at a single
    collocation arrangement in the incumbent LEC's network.[^71]

25. We do not adopt MCI WorldCom's proposal that incumbent LECs should
    presume that any circuit that a requesting carrier connects to a
    port on a "Class 5" switch or its equivalent is used exclusively to
    provide local service.[^72] There is no basis to assume that every
    circuit that terminates in a certain type of switch is being used
    exclusively for local traffic, and for circuits that are multiplexed
    into larger capacity facilities, which are often the circuits that
    carriers seek to convert to unbundled loop-transport combinations,
    there may be no way to determine whether an individual line actually
    terminates into a particular switch.[^73] We also do not believe
    that we should regulate the type of equipment that a carrier must
    use while the temporary constraint is in effect.

26. We also do not adopt MCI WorldCom's proposal that we deem a circuit
    carrying at least ten percent local traffic to be carrying a
    significant amount of local traffic. It argues that this approach is
    consistent with the Commission's rules under which the revenues and
    costs generated by a special access circuit carrying at least ten
    percent interstate traffic are classified as "interstate."[^74] As
    the Commission has stated, the amount of interstate traffic carried
    on a circuit is deemed to be de minimis if it amounts to ten percent
    or less of the total traffic on a special access line.[^75] Because
    the Commission has found the ten percent threshold to represent a de
    minimis, not a significant, amount of traffic, we will not use this
    rule to determine significant local usage.

27. We do not adopt CompTel's proposal for significant local usage under
    which requesting carriers would be able to request wholesale
    conversions of special access circuits if (a) the carrier is
    certified as a competitive LEC and reports that at least 70 percent
    of its revenues reported to the Universal Service Fund Administrator
    are local, or (b) the special access arrangements are used to
    provide services that are "priced to attract (and are capable of
    completing) the customer's local usage," or (c) the carrier
    certifies that the special access arrangements are used for the
    completion of local calls, or (d) the special access arrangements
    are used to provide data services.[^76] It also argues that
    incumbent LECs that provide interexchange services in a certain
    market must make unbundled loop-transport combinations available to
    requesting carriers in that market regardless of whether the
    requesting carrier is providing any local exchange service to the
    end user.[^77] We reject these proposals because they offer no way
    to verify whether a requesting carrier is providing any specified
    amount of local service. In addition, its proposal to allow
    unconstrained use of unbundled loop-transport combinations in
    markets in which the incumbent LEC provides interexchange service
    does not allow us to preserve the status quo while we consider the
    issues in the *Fourth FNPRM*. Instead, the three options described
    above provide a reasonable threshold for determining whether a
    carrier has taken affirmative steps to provide local service. They
    are also verifiable for both the requesting carrier and the
    incumbent LEC and prevent parties from gaming implementation of the
    interim requirements. While CompTel expresses a concern about
    incumbent LECs being both an input supplier and a retail competitor
    in the interexchange market, the temporary constraint, as we explain
    above, should not allow incumbent LECs that provide in-region long
    distance service to engage in anticompetitive behavior.[^78]

28. We further reject the suggestion that we eliminate the prohibition
    on "co-mingling" (*i.e*. combining loops or loop-transport
    combinations with tariffed special access services) in the local
    usage options discussed above.[^79] We are not persuaded on this
    record that removing this prohibition would not lead to the use of
    unbundled network elements by IXCs solely or primarily to bypass
    special access services. We emphasize that the co-mingling
    determinations that we make in this order do not prejudge any final
    resolution on whether unbundled network elements may be combined
    with tariffed services. We will seek further information on this
    issue in the Public Notice that we will issue in early 2001.

29. We clarify that incumbent LECs must allow requesting carriers to
    self-certify that they are providing a significant amount of local
    exchange service over combinations of unbundled network
    elements.[^80] We do not believe it is necessary to address the
    precise form that such a certification must take, but we agree with
    ALTS that a letter sent to the incumbent LEC by a requesting carrier
    is a practical method of certification.[^81] The letter should
    indicate under what local usage option the requesting carrier seeks
    to qualify. In order to confirm reasonable compliance with the local
    usage requirements in this Order, we also find that incumbent LECs
    may conduct limited audits only to the extent reasonably necessary
    to determine a requesting carrier's compliance with the local usage
    options. We stated in the *Supplemental Order* that we did not
    believe it was necessary to allow auditing because the temporary
    constraint on combinations of unbundled loop and transport network
    elements was so limited in duration.[^82] Because we are extending
    the temporary constraint, we find that it is reasonable to allow the
    incumbent LECs to conduct limited audits.

30. We agree with ALTS that once a requesting carrier certifies that it
    is providing a significant amount of local exchange service, the
    process by which special access circuits are converted to unbundled
    loop-transport combinations should be simple and accomplished
    without delay.[^83] We stated in the *Third Report and Order* that
    incumbent LECs and requesting carriers have developed routine
    provisioning procedures that can be used to deploy unbundled
    loop-transport combinations using the Access Service Request
    process, a process that carriers have used historically to provision
    access circuits.[^84] Under this process, the conversion should not
    require the special access circuit to be disconnected and
    re-connected because only the billing information or other
    administrative information associated with the circuit will change
    when a conversion is requested. We continue to believe that the
    Access Service Request process will allow requesting carriers to
    avoid material provisioning delays and unnecessary costs to
    integrate unbundled loop-transport combinations into their networks,
    and expect that carriers will use this process for conversions.

31. We agree with MCI WorldCom that upon receiving a conversion request
    that indicates that the circuits involved meet one of the three
    thresholds for significant local usage that the incumbent LEC should
    immediately process the conversion.[^85] We emphasize that incumbent
    LECs may not require a requesting carrier to submit to an audit
    prior to provisioning combinations of unbundled loop and transport
    network elements.[^86] There is broad agreement among the incumbent
    LECs and the competitive LECs on auditing procedures. In particular,
    parties agree that incumbent LECs requesting an audit should hire
    and pay for an independent auditor to perform the audit, and that
    the competitive LEC should reimburse the incumbent if the audit
    uncovers non-compliance with the local usage options.[^87] In order
    to reduce the burden on requesting carriers, we find that incumbent
    LECs must provide at least 30 days written notice to a carrier that
    has purchased a combination of unbundled loop and transport network
    elements that it will conduct an audit, and may not conduct more
    than one audit of the carrier in any calendar year unless an audit
    finds non-compliance. We agree with Bell Atlantic that at the same
    time that an incumbent LEC provides notice of an audit to the
    affected carrier, it should send a copy of the notice to the
    Commission.[^88] While the Commission will not take action to
    approve or disapprove every audit, the notices will allow us to
    monitor implementation of the interim requirements.

32. We expect that requesting carriers will maintain appropriate records
    that they can rely upon to support their local usage certification.
    For example, US West points out that records that demonstrate that a
    requesting carrier's unbundled loop-transport combination is
    configured to provide local exchange service should be adequate to
    support the carrier's certification without the need for extensive
    call detail records.[^89] We emphasize that an audit should not
    impose an undue financial burden on smaller requesting carriers that
    may not keep extensive records, and find that, in the event of an
    audit, the incumbent LEC should verify compliance for these carriers
    using the records that the carriers keep in the normal course of
    business. We will not require specifically that incumbent LECs and
    requesting carriers follow the other auditing guidelines contained
    in the *February 28, 2000 Joint Letter*. As the parties indicate, in
    many cases, their interconnection agreements already contain audit
    rights.[^90] We do not believe that we should restrict parties from
    relying on these agreements.

33. We note that the requirements in this order will take effect
    immediately upon publication in the Federal Register. We find good
    cause for doing so because they will allow incumbent LECs to
    promptly process requests from requesting carriers for access to
    unbundled loop-transport combinations, and provide the industry with
    more clearly defined standards for using combinations during the
    interim period prior to our resolution of the *Fourth FNPRM*.

# procedural issues: Final Regulatory Flexibility Certification

34. The Regulatory Flexibility Act (RFA)[^91] requires that regulatory
    flexibility analyses be prepared for notice and comment rulemaking
    proceedings, unless the agency certifies that "the rule will not, if
    promulgated, have a significant economic impact on a substantial
    number of small entities." [See]{.underline} 5 U.S.C. § 605(b). The
    RFA generally defines "small entity" as having the same meaning as
    the terms "small business," "small organization," and "small
    governmental jurisdiction." [See]{.underline} 5 U.S.C. § 601(6). In
    addition, the term "small business" has the same meaning as the term
    "small business concern" under the Small Business Act.
    [See]{.underline} 5 U.S.C. § 601(3). 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).
    [See]{.underline} 15 U.S.C. § 632. SBA rules provide that for
    establishments providing "Telephone Communications Except
    Radiotelephone," which is Standard Industrial Classification (SIC)
    Code 4813, a small entity is one employing no more than 1,500
    persons.

35. This Clarification of the *Supplemental Order* in CC Docket No.
    96-98 (Clarification Order) sets out the criteria under which a
    requesting carrier may use combinations of unbundled network
    elements to provide exchange access services. The criteria is
    consistent with several of the Commission's findings in the
    *Supplemental Order*.[^92] It also extends the date by which the
    Commission will resolve its *Fourth FNPRM* from June 30, 2000. Until
    resolution of the *Fourth FNPRM*, IXCs are prohibited from
    converting special access services that they purchase from the Bell
    Operating Companies or other incumbent local exchange carriers to
    combinations of unbundled loops and transport network elements
    unless they meet the designated criteria. This clarification
    therefore pertains directly to IXCs, and indirectly to Bell
    Operating Companies (BOCs), other incumbent local exchange carriers,
    competitive local exchange carriers, and competitive access
    providers.

36. We certify that this clarification of the *Supplemental Order* will
    not have a significant economic impact on a substantial number of
    small entities because it maintains the status quo regarding the
    ability of IXCs to purchase special access services for a longer
    period of time. It also maintains the status quo for any small
    incumbent local exchange carriers from which interexchange carriers
    purchase special access services. The Clarification Order also
    allows some limited auditing by incumbent local exchange carriers to
    determine whether IXCs that use combinations of unbundled network
    elements meet the established criteria in the Order. This limited
    auditing will not have a significant economic impact on a
    substantial number of small entities because any incumbent LEC that
    chooses to voluntarily exercise its limited auditing rights will
    bear all expenses associated with any resulting audit. The
    Commission has also required that audits be conducted based on the
    records that a small carrier keeps in the normal course of business.
    The Commission will send a copy of the Clarification Order,
    including a copy of this final certification, in a report to
    Congress pursuant to the Small Business Regulatory Enforcement
    Fairness Act of 1996, [see]{.underline} 5 U.S.C. § 801(a)(1)(A). In
    addition, the Clarification Order and this certification will be
    sent to the Chief Counsel for Advocacy of the Small Business
    Administration, and will be published in the Federal Register.
    [See]{.underline} 5 U.S.C. § 605(b).

# ordering clauses

37. Accordingly, IT IS ORDERED that pursuant to authority contained in
    sections 1,3,4,201-205, 251, 256, 271, and 303(r) of the
    Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 153, 154,
    201-205, 251, 252, 256, 271, 303(r), the Commission clarifies the
    *Supplemental Order* as set out above.

38. IT IS FURTHER ORDERED that the requirements in this order will
    become effective immediately upon publication in the Federal
    Register.

39. IT IS FURTHER ORDERED that the Commission\'s Consumer Information
    Bureau, Reference Information Center, SHALL SEND a copy of this
    Supplemental Order Clarification, including the Final Regulatory
    Flexibility Certification, to the Chief Counsel for Advocacy of the
    Small Business Administration.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Magalie Roman Salas
>
> Secretary

**SEPARATE STATEMENT OF**

**CHAIRMAN WILLIAM E. KENNARD**

> *Re: Implementation of the Local Competition Provisions of the
> Telecommunications Act of 1996*, Supplemental Order Clarification, CC
> Docket 96-98.

In his dissenting statement, Commissioner Furchtgott-Roth has suggested
that there is a close linkage between questions in this docket and those
in a docket considering reform of universal service and interstate
access charges.[^93] The dissenting statement suggests, incorrectly,
that the public has been unaware of any overlapping policy
considerations that may exist among the issues in the two dockets, and
he has concluded that the public "had no opportunity to comment
meaningfully on this issue." I concur in the observation that certain
policy considerations are relevant to both dockets. Where I disagree
with the dissent is in his perception that the public was unaware of any
commonality of policy issues between the dockets. I further disagree
with the suggestion that the determination to defer final resolution of
the matters in the instant docket was somehow tainted by consideration
of policy questions common to both proceedings.

First, the Commission's Local Competition Third Report and Order and
Fourth Further Notice of Proposed Rulemaking (FNPRM) in this docket
advised the public, very directly, that allowing requesting carriers to
use unbundled network elements solely to provide exchange access service
would have significant policy ramifications.[^94] The Commission stated
in those decisions that our determinations regarding the substitution of
combinations of unbundled network elements for special access service
could significantly reduce the incumbent LECs' special access revenues
prior to full implementation of access charge and universal service
reform.[^95] In seeking comment on the policy implications that such a
significant reduction would cause, the Commission expressly cited our
access charge reform proceeding and noted the relationship between that
proceeding and universal service concerns.[^96]

The overlapping policy considerations between the two dockets was not
lost upon commenters. In fact, MCI expressly requested that its comments
addressing the CALLS proposal be made part of the record in this docket,
initiated by the Fourth FNPRM, emphasizing that the public should be
able to comment on the connection between the special access and CALLS
issues.[^97] We agreed, and those comments are contained in the record
of both proceedings. It is therefore not surprising that, in the record
in this docket, several commenters argued that allowing carriers to
substitute combinations of unbundled network elements for special access
service could affect the ability of the CALLS plan to reform access
charges in a predictable, efficient manner.[^98] Recognizing the link
between special access and switched access, commenters also expressed
concern that allowing the use of combinations of unbundled network
elements for special access could undercut universal service by inducing
carriers to abandon switched access for unbundled network element-based
special access.[^99] In short, there is no merit to the suggestion that
the public was ignorant of the policy considerations common to both
dockets.

Finally, I reject Commissioner Furchtgott-Roth's passing suggestion that
the CALLS proceedings have improperly "tainted" the Commission's
proceedings in this docket. The Order we release today speaks for
itself, and it rests on several explicit legal grounds. The most
prominent of those is our determination that, in considering whether
loop-transport combinations meet the "impairment" standard with respect
to the exchange access market, we should first take into account the
market effects of the comprehensive unbundling rules that we adopted
last fall and that did not become effective until this year.
Commissioner Furchtgott-Roth barely addresses our "impairment" analysis
on the merits, even though that analysis amply justifies our decision to
extend the interim constraint at issue, quite apart from additional
concerns about the massive industry dislocations that could result from
an immediate lifting of that constraint. I am happy to rest on the
reasoning set forth in the Order, and, in the proceedings that follow, I
encourage all interested parties to help us fine-tune our implementation
of Section 251(d)(2) in the wake of the Supreme Court's decision in
*Iowa Utils. Bd. v. FCC.*[^100]

Commissioner Furchtgott-Roth apparently expects the Bureau and this
Commission to put blinders on and ignore policy considerations that may
be relevant to both dockets. While it is true that blinders can help a
horse race faster by shielding distractions from its view, we need to
see the entire landscape to get to where we want to be. This isn't a
race. Time helps, not hurts, our thinking here.

**Separate Statement of**

**Commissioner Susan Ness**

Re: Implementation of the Local Competition Provisions of the
Telecommunications Act of 1996, Supplemental Order Clarification (CC
Docket No. 96-98)

I support the steps we have taken to clarify further the interim
requirement that a carrier provide a significant amount of local service
in order to convert special access services to unbundled network
elements. This clarification should reduce disputes by providing a safe
harbor for carriers to satisfy this interim requirement. Some carriers
however, have indicated that there may be situations in which a carrier
is providing a significant amount of local service, but does not fit
within any of the safe harbors in this order. As we state in this order,
such carriers may petition the Commission for a waiver. Given that this
is an interim rule, I would have preferred to adopt a more streamlined
waiver process, enabling the Commission to rule on any waiver requests
within a short period of time. Nonetheless, I would urge the Commission
to act on any such requests as expeditiously as possible.

**DISSENTING STATEMENT OF COMMISSIONER HAROLD FURCHTGOTT‑ROTH**

> *Re: Implementation of the Local Competition Provisions of the
> Telecommunications Act of 1996,* Supplemental Order Clarification*,*
> CC Docket 96-98.

This order is procedurally and substantively at odds with the law that
Congress has directed this agency to follow. My chief criticism of this
decision is that it, like the recently initiated depreciation waiver
proceeding, is an integral -- but unacknowledged -- part of the deal
that was struck between the Commission and a select group of parties to
the "CALLS negotiations" that were held in January and February of this
year. Contrary to Chairman Kennard's separate statement, I do not
dispute that there may be "policy considerations" relevant to both
dockets. Rather, I object to the Commission's allowing the outcome in
this proceeding to become a bargaining chip in what was publicly
advertised as an entirely separate proceeding.

***This Order Is Illegitimately Linked to the CALLS Negotiations.***
This order -- like the Further Notice of Proposed Rulemaking that the
Commission recently issued regarding incumbent local exchange carriers'
requests for waivers from this agency's depreciation requirements[^101]
-- is essentially an outgrowth of negotiations between the Commission,
acting chiefly through the Common Carrier Bureau, and the Coalition for
Affordable Local and Long Distance Service ("CALLS"). A brief
description is in order. Last summer, the Coalition submitted to the
Commission a proposal for reforming universal service and interstate
access charges, and the Commission sought comment on this proposal.
*See* Notice of Proposed Rulemaking, *Access Charge Reform, Low-Volume
Long Distance Users, Federal-State Joint Board on Universal Service*, CC
Docket Nos. 92-262, 94-1, 99-249, 96-45 (Sept. 15, 1999).

Rather than simply render a decision on the CALLS proposal based on
comments submitted by interested parties, the Commission instead set
itself up as a sort of referee of negotiations between a small, select
group of some -- but by no means all -- of the parties with interests in
this proceeding, including the members of the Coalition and groups
purporting to represent consumer interests. In the early part of this
year, a series of meetings between these parties and the Bureau were
held. The substance of what was discussed at these meetings was not made
public, nor were a number of parties with interests in the outcome of
this proceeding (including the Ad Hoc Telecommunications Users
Committee, Time Warner Telecom, and the Association for Local
Telecommunications Services) allowed to participate in these
discussions. Although the Commission could legally have attempted to
narrow the differences between the various parties with interests in
this docket in advance of a formal rulemaking proceeding by following
the framework set forth in the Negotiated Rulemaking Act, 5 U.S.C. § 561
*et seq*.,[^102] it ignored that statute completely.

At some point in this process, proceedings in separate dockets,
unrelated to the issue of switched access charge reform, became part of
the negotiations. Incumbent local exchange carrier members of the
Coalition apparently contended that they could not commit to certain
modifications of the CALLS proposal unless they had confidence that two
separate matters -- one relating to the Commission's depreciation
requirements and this special access proceeding -- would be resolved
favorably to them. As a consequence, part of the final agreement reached
by the participants to the CALLS negotiations concerned these separate
matters. The Bureau agreed to recommend to the Commission that it
approve the incumbents' applications for a modification to the
depreciation waiver requirements and terminate the CPR audits.
Additionally, the Bureau agreed to recommend to the Commission that the
Commission "clarify" the existing rules regarding special access and
defer further rulemaking until 2001.

The linkage between the depreciation and special access items was
utterly clear -- at least internally. Indeed, to brief the Commissioners
and their staff on the outcome of the CALLS negotiations, the Bureau
distributed briefing sheets describing different aspects of the CALLS
deal, two of which were entitled "CALLS -- Depreciation" and "CALLS --
Special Access." The special access briefing sheet stated that the
special access rulemaking posed particular financial problems for the
ILECs, because they could be hit twice with significant revenue losses
due to regulatory action, given that the CALLS proposal required the
LECs to make a substantial reduction in access charges this year, and
this special access proceeding put a significant amount of annual
special access revenues at risk without a possibility to recoup the lost
revenues with a low-end adjustment. The briefing sheet went on to say
that incumbent carriers initially felt that they could not agree to the
CALLS proposal given the uncertainty relating to the special access
issue, and therefore proposed that the Commission deal first with the
special access issue, and then the CALLS proposal.

According to the briefing sheet, the Bureau objected to the incumbent
carriers' original proposal because it might prevent the implementation
of CALLS by July 1 and because with the overhang of a pending CALLS
order, the credibility of a decision on the special access issue could
be undercut. As a compromise, the ILECs were willing to postpone
resolution of the special access rulemaking for a year, but wanted the
Commission to clarify the meaning of the term "significant amount of
local exchange service," which it used in the November 1999 Supplemental
Order in this docket. In the briefing sheet, the Bureau embraced the
incumbent carriers' position, recommending that the Commission "clarify"
the existing supplemental order to provide a more detailed definition of
"significant amount of local exchange service" and defer the further
rulemaking until 2001. It therefore comes as no surprise whatsoever to
find the Commission a few months later taking precisely this course.

Given these facts, it is simply not plausible to think of this order as
anything but a part of the CALLS deal, although the order itself nowhere
acknowledges the connection between these two dockets. Under these
circumstances, even if I agreed with its substance, which I do not, I
would be unable to join this order. The public generally has never been
made aware that the outcome of the CALLS proposal hinged on the
Commission's resolution of this item, and it therefore had no
opportunity to comment meaningfully on this issue. Equally disturbing is
the failure of this Commission to maintain the strict neutrality
demanded of an agency engaged in rulemaking. Its participation in the
CALLS negotiations, however well-meaning, has improperly influenced its
decision in a separate docket. The order here is ineradicably tainted by
the Commission's participation in the CALLS negotiations, and the
process by which this order has been adopted falls short of the
principles of openness and transparency that should govern the behavior
of all administrative agencies.

Chairman Kennard, in his separate statement, asserts that the Commission
has simply considered "overlapping policy considerations" between these
separate dockets.[^103] To think otherwise, he claims, is "to put
blinders on" to avoid "seeing the entire landscape," preventing the
Commission from "get\[ting\] where we want to be." But these metaphors
apply far more aptly to the Commission itself. By shielding from public
scrutiny the totality of the deal it made with a select group of parties
with interests in the CALLS proposal, it is the Commission that wishes
to blind the public to the "entire landscape." I certainly have no
objection to the Commission's trying to reach a desirable outcome. I
would simply like for us to reach our goals through a forthright process
that is consistent with the law.

***The Use Restrictions that the Commission Places on the Enhanced
Extended Link Are Inconsistent with the Statute.*** The Commission
postpones yet again a decision on how to solve a problem created by last
year's *UNE Remand Order*,[^104] which requires incumbent local exchange
carriers to offer loop/transport combinations as unbundled network
elements. Incumbent carriers are concerned that competitors will
purchase these combinations, at TELRIC rates, and offer the combinations
to customers as a substitute for the existing special access services
that they currently purchase, at tariffed rates subject to price-cap
regulation, from incumbents. Various parties have urged the Commission
to restrict the uses to which competitors may put these combinations, in
order to prevent competitors from undercutting the prices charged for
special access services. In two orders issued last year, the Commission
imposed "interim" restrictions on the ways in which carriers could use
the loop/transport combinations and postponed deciding whether such
restrictions were consistent with the statute. This order again
postpones finally resolving the issue.

I disagree with the Commission's decision in two key respects. *First*,
I believe that postponing a decision on the merits of this issue
violates the timetable for establishing unbundling requirements set
forth in the 1996 Act. Specifically, the statute requires the Commission
to implement section 251's requirements expeditiously, thereby giving
carriers certainty regarding their obligations and rights under the 1996
Act. *See* 47 U.S.C. § 251(d)(1) ("Within 6 months after the date of
enactment of the Telecommunications Act of 1996, the Commission shall
complete all actions necessary to establish regulations to implement the
requirements of this section."). Since 1996, the Commission has ignored
this statutory directive with respect to this special access issue. In
the *Local Competition First Report & Order*,[^105] it refused to
resolve the problem and instead asked interested parties to submit
comments. It punted again last fall, when it ruled that the record
needed further development in order for it to resolve the issue.

Yet again, the Commission avoids answering this question. It claims to
need more time to "compile an adequate record for addressing the legal
and policy disputes presented here." *Supplemental Order Clarification*
¶ 1. I do not understand why. Both the *Local Competition First Report &
Order* and last year's *UNE Remand Order* asked parties to comment on
whether there is any statutory basis for "limiting an incumbent LEC\'s
obligation to provide entrance facilities as an unbundled network
element." *See id.* ¶ 495. Interested parties have had a more than
adequate opportunity to weigh in on the issue, and to the extent that
empirical evidence informs this issue, parties have submitted such data.
There is no reason why the Commission cannot answer this question today
-- no reason, that is, other the Commission's agreement with the
incumbent carrier members of CALLS that it would delay resolution of
this matter until next year. Not only is the Commission's refusal to
decide the matter inconsistent with section 251(d)(1), but also it has
led to needless litigation on the issue in the D.C. Circuit. *See* Br.
of AT&T, *AT&T v. FCC*, No. 99-1538 (D.C. Cir.).

*Second*, I believe that the "interim" use restrictions imposed by this
order are at odds with sections 251(c)(3) and 251(d)(2). As the
Commission recognized in the *Local Competition First Report and Order*,
11 FCC Rcd 15499, 15679 \[¶ 356\], section 251(c)(3) places no
restriction on the uses to which a requesting carrier may put an
unbundled network element. Nor does the Act authorize the Commission to
limit the ways in which a requesting carrier may use an incumbent's
network elements. Section 251(c)(3) simply imposes on incumbents the
duty to give requesting carriers nondiscriminatory access to unbundled
network elements "for the provision of a telecommunications service." 47
U.S.C. § 251(c)(3). Thus, so long as a competitor uses unbundled network
elements to provide "a telecommunications service" -- and exchange
access service is inarguably a telecommunications service -- that use is
permissible under section 251(c)(3).

The Commission now suggests that a use restriction could be based on
language in section 251(d)(2), which provides that the Commission, in
determining whether a network element should be unbundled, must consider
whether lack of access to that element "would impair the ability of the
telecommunications carrier seeking access to provide the services it
seeks to offer." *See* *Supplemental Order Clarification* ¶ 17 (citing
47 U.S.C. § 251(d)(2)(B)). The Commission's reasoning stretches the
language of this provision past the breaking point. The straightforward
way to apply this subsection is first to identify the service the
requesting carrier "seeks to offer" and then to determine whether lack
of access to a given network element would "impair" the carrier's
ability to provide that service. There is no basis in section
251(d)(2)(B) for then layering restrictions on the requesting carrier's
use of the network element.

If there is a problem here, the solution lies not in coming up with
detailed and hard-to-enforce definitions of "significant amount of local
usage." Instead, the Commission should confront the real problem:
whether local transport should be unbundled in all circumstances or
whether its UNE pricing rules make sense. I urge the parties to this
proceeding to build a record that addresses these issues, rather than
urge the Commission to perpetuate its misguided use restrictions.

[^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, 3699, para. 1 (1999) (citing *AT&T v. Iowa Utils. Bd*.,
    119 S.Ct. 721 (1999)) (*Third Report and Order and Fourth FNPRM*).

[^2]: *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98, Supplemental
    Order, FCC 99-370 (rel. Nov. 24, 1999) (*Supplemental Order*).

[^3]: *Third Report and Order*, 15 FCC Rcd at 3909, paras. 480-81
    (citing 47 C.F.R. 51.315(b)).

[^4]: *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 Aug. 9, 1999 Letter*)).

[^5]: *Third Report and* Order, 15 FCC Rcd at 3912-13, paras. 485-89.

[^6]: *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-98, Third Order on
    Reconsideration and Further Notice of Proposed Rulemaking, 12 FCC
    Rcd 12460, 12494-96, paras. 60-61 (1997) (*Local Competition Third
    Order on Reconsideration*).

[^7]: *Fourth FNPRM*, 15 FCC Rcd at 3914-15, paras. 494-96.

[^8]: *Id.* at 3915, para. 496.

[^9]: By limiting the ability of carriers to convert the entrance
    facility portion of special access service to unbundled network
    element pricing in the *Third Report and Order*, we believed that
    could sufficiently preserve the status quo while we examined the
    legal and policy ramifications of allowing requesting carriers to
    substitute unbundled network elements for special access service. We
    concluded subsequently in the *Supplemental Order* that we had
    underestimated the extent of the policy implications associated with
    temporarily constraining IXCs only from substituting entrance
    facilities for the incumbent LEC's special access service, and
    extended the temporary constraint to include combinations of
    unbundled loops and dedicated interoffice transport network
    elements. *Supplemental Order* at para. 4, n.5.

[^10]: *Iowa Utils. Bd. v. FCC*, 119 S. Ct. 721, 729-32, 736-38 (1999)
    (*Iowa Utils. Bd.*).

[^11]: *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, 15680, para. 359 (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), aff'd in part and remanded*, AT&T v. Iowa
    Utils. Bd.*, 119 S. Ct. 721 (1999); 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.

[^12]: *Local Competition First Report and Order*, 11 FCC Rcd at
    15862-64, paras. 716-20.

[^13]: *Id.* at 15864-66, para. 721-25. The Eighth Circuit Court of
    Appeals upheld the imposition of the temporary mechanism.
    *Competitive Telecommunications Association v. FCC*, 117 F.3d 1068,
    1073-75 (8^th^ Cir. 1997) (*CompTel v. FCC*).

[^14]: *Iowa Utils. Bd. v. FCC*, 109 F.3d 418, 423-26 (8^th^ Cir. 1997).
    The Commission's pricing rules are based on forward-looking costs.
    *See* *Local Competition First Report and Order*, 11 FCC Rcd at
    15844-62, paras. 672-715. The Eighth Circuit made final its
    determination that the Commission lacked authority under the 1996
    Act to determine the rates involved in the implementation of the
    local competition provisions of the Act, including rates for access
    to unbundled network elements. *Iowa Utilities Bd. v. FCC*, 120 F.3d
    753, 793-796 (8^th^ Cir. 1997).

[^15]: *Iowa Utils. Bd. v. FCC*, 120 F.3d at 813 (citing 47 C.F.R. §
    51.315(b)-(f)).

[^16]: *Iowa Utils. Bd. v. FCC*, 119 S. Ct. at 736-38. The validity of
    rules 51.315(c)-(f), requiring incumbent LECs to combine network
    elements that are not currently combined, is again pending before
    the Eighth Circuit after the Commission asked the Court to reinstate
    the rules. *See* *Third Report and Order*, 15 FCC Rcd at 3907, para.
    475.

[^17]: *Iowa Utils. Bd. v. FCC*, 119 S. Ct. at 733-36 (citing section 47
    U.S.C. § 251(d)(2)).

[^18]: *Third Report and Order*, 15 FCC Rcd at 3779-3787, 3842-3866,
    paras. 181-201, 321-79.

[^19]: *Supplemental Order* at paras. 4-5.

[^20]: *Id.* at n. 9 (citing Letter from Edward D. Young, III, Senior
    Vice President and Deputy General Counsel, Bell Atlantic; Heather B.
    Gold, Vice President-Industry Policy, Intermedia Communications;
    Robert W. McCausland, Vice President-Regulatory and Interconnection,
    Allegiance Telecom; Don Shepheard, Vice President, Federal
    Regulatory Affairs, Time Warner Telecom, to Chairman Kennard and
    Commissioners, FCC, CC Docket No. 96-98, at 1-2 (filed Sept. 2,
    1999)) (*Bell Atlantic September 1999 Joint Letter*).

[^21]: *Supplemental Order* at n.9.

[^22]: Letter from Gordon R. Evans, Vice President Federal Regulatory,
    Bell Atlantic; Robert T. Blau, Vice President Executive and Federal
    Regulatory Affairs, BellSouth; Richard Metzger, Vice President
    Regulatory and Public Policy, Focal Communications; Alan F.
    Ciamporcero, Vice President-Regulatory Affairs, GTE Service
    Corporation; Heather B. Gold, Vice President-Industry Policy,
    Intermedia Communications; Priscilla Hill-Ardoin, Senior Vice
    President-Federal Regulatory, SBC Communications, Inc.; Don
    Shepheard, Vice President, Federal Regulatory Affairs, Time Warner
    Telecom; Melissa Newman, Vice President-Regulatory Affairs, U.S.
    West, Inc.; Russell C. Merbeth, Vice President, Legal and Regulatory
    Affairs, WinStar Communications, Inc. to Chairman Kennard and
    Commissioners, FCC, CC Docket No. 96-98 (filed February 28, 2000)
    (*February 28, 2000 Joint Letter*).

[^23]: *February 28, 2000 Joint Letter* at 1-2.

[^24]: *Id.* at 3.

[^25]: Letter from Joseph Kahl, Director Regulatory Affairs, RCN
    Telecommunications Services; and other members of the Competitive
    Telecommunications Association (CompTel) to The Honorable William E.
    Kennard, Chairman, FCC, CC Docket No. 96-98 (filed March 13, 2000)
    (*Comptel March 13, 2000 Letter*); Letter from Chuck Goldfarb,
    Director, Law and Public Policy, MCI WorldCom, to Larry Strickling,
    Chief, Common Carrier Bureau, FCC, CC Docket No. 96-98 (filed March
    10, 2000)(*MCI WorldCom March 10, 2000 Letter)*; Letter from
    Jonathan Askin, General Counsel, Association for Local
    Telecommunications Services (ALTS), CC Docket No. 96-98 (filed March
    24, 2000) (*ALTS March 24, 2000 Letter*); Letter from Jonathan E.
    Canis, Counsel for Winstar Communications and e.spire
    Communications, to Magalie R. Salas, Secretary, FCC, CC Docket No.
    96-98 (filed Mar. 29, 2000); Letter from Douglas G. Bonner, Counsel
    for VoiceStream Wireless Corporation, Daniel Waggoner, Counsel for
    AT&T Wireless Corporation, Mary Davis, Esq., Manager-External
    Affairs, United States Cellular Corporation, to The Honorable
    William E. Kennard, Chairman, and Commissioners, FCC, CC Docket No.
    96-98 (filed Apr. 12, 2000); Letter from Ross A. Buntrock, Counsel
    for e.spire Communications, to Magalie R. Salas, Secretary, FCC, CC
    Docket No. 96-98 (filed Apr. 19, 2000).

[^26]: *Third Report and Order and Fourth FNPRM*, 15 FCC Rcd at 3912,
    3913, paras. 485, 489; *Supplemental Order* at 7.

[^27]: *See* *BellSouth Aug. 9, 1999 Letter* at 3-7; Bell Atlantic Reply
    Comments at 5; GTE Reply Comments at 9. The comments and reply
    comments cited in this order refer to the filings parties submitted
    in response to the *Fourth FNPRM* on January 19, 2000 and February
    18, 2000.

[^28]: *BellSouth Aug. 9, 1999 Letter* at 6.

[^29]: *See Fourth FNPRM*, 15 FCC Rcd at 3914, para. 492 (citing
    *CompTel v. FCC*, 117 F.3d at 1073-75); *see also* *MCI
    Telecommunications Corp. v. FCC*, 750 F.2d 135, 140 (D.C. Cir.
    1984); *Supplemental Order* at para. 4, n.5.

[^30]: *Access Charge Reform, Price Cap Performance Review for Local
    Exchange Carriers, Low-Volume Long Distance Users, Federal-State
    Joint Board on Universal Service*, CC Docket Nos. 96-262, 94-1,
    99-249, 96-45, Sixth Report and Order in CC Docket Nos. 96-262 and
    94-1; Report and Order in CC Docket No. 99-249, Eleventh Report and
    Order in CC Docket No. 96-45, FCC 00-193 (rel. May 31, 2000).

[^31]: *Supplemental Order* at para. 4. This temporary constraint does
    not apply to stand-alone loops. *See* *Third Report and Order*, 15
    FCC Rcd at 3777, para. 177.

[^32]: *Fourth FNPRM*, 15 FCC Rcd at 3914-15, para. 494; *Supplemental
    Order* at para. 6.

[^33]: 47 U.S.C. 251(d)(2)(B).

[^34]: *Iowa Utils. Bd. v. FCC*, 119 S.Ct. at 733-36.

[^35]: *See, e.g*., Bell Atlantic Comments at 13-16; BellSouth Comments
    at 22-29; SBC Comments at 6-10; US West Comments at 2-12.

[^36]: Special access service employs dedicated, high-capacity
    facilities that run directly between the end user, usually a large
    business customer, and the IXC's point-of-presence. *See* *Access
    Charge Reform; Price Cap Performance Review for Local Exchange
    Carriers, et al.*, CC Docket Nos. 96-262, 94-1, Fifth Report and
    Order and Further Notice of Proposed Rulemaking, FCC 99-206, para. 8
    (rel. Aug. 27, 1999) (*1999 Access Charge Reform Order*); US West
    Comments at 8-9.

[^37]: *See, e.g.,* SBC Comments at 7; Bell Atlantic Comments at 18-19.

[^38]: AT&T Reply Comments at 11 (emphasis in original).

[^39]: *Id.* at 9-12; *see also* MCI WorldCom Reply Comments at 3-6.

[^40]: *See generally* *Third Report & Order,* 15 FCC Rcd at 3911-12,
    para. 484 (discussing prior Commission orders); *but see id.* at
    para. 81 (finding that section 251(d)(2)(B) permits consideration of
    "the particular types of customers that the carrier seeks to
    serve"); SBC Comments at 8-9 (characterizing the Commission's
    limitation on access to circuit switches in the *Third Report &
    Order* as a use restriction).

[^41]: *Third Report and Order*, 15 FCC Rcd at 3779-82, 3846-3852,
    paras. 182-189, 332-348.

[^42]: *Id.* at 3852, para. 348.

[^43]: *Id.*.

[^44]: *Fourth FNPRM*, 15 FCC Rcd at 3914-15, para. 494; *Supplemental
    Order* at para. 6.

[^45]: *See, e.g.,* 47 U.S.C. 153(16) (defining "exchange access");
    153(47) (defining "telephone exchange service").

[^46]: *See, e.g.,* AT&T Reply Comments at 9-12.

[^47]: 47 U.S.C. 251(d)(2)(B) (emphasis added). Along similar lines,
    Rule 309(a), which we promulgated in 1996, addresses limitations on
    the use of network elements "that would *impair* the ability of a
    requesting telecommunications carrier" to offer particular services.
    47 C.F.R. 51.309(a) (emphasis added).

[^48]: *Third Report and Order*, 15 FCC Rcd at 3737-38, para. 81
    (emphasis in original).

[^49]: *See id*. at 3745-50, paras. 101-16.

[^50]: AT&T alternatively argues that section 251(c)(3) overrides any
    suggestion in section 251(d)(2) that we may conduct a
    market-specific analysis in making our unbundling determinations.
    AT&T Reply Comments at 10-12. We disagree. Section 251(c)(3) does
    not speak directly to whether a market-specific analysis is
    appropriate in determining whether carriers may obtain access to
    particular elements, and it could therefore pose no conflict with an
    otherwise proper implementation of section 251(d)(2). Moreover, as
    the Supreme Court held in *Iowa Utilities Board,* section 251(c)(3)
    does not itself create "some underlying duty" to "provide all
    network elements for which it is technically feasible to provide
    access." 119 S.Ct. at 736. Instead, it is section 251(d)(2) that
    directs the Commission to issue legislative rules imposing
    unbundling obligations on incumbent LECs, and that provision permits
    the Commission to consider criteria that include "the services that
    \[the requesting carrier\] seeks to offer."

[^51]: *See Third Report and Order*, 15 FCC Rcd at 3712, para. 21 ("In
    considering whether to unbundle a particular network element, we
    look first to what is occurring in the marketplace today.").

[^52]: *See* AT&T Reply Comments at 15-19 (arguing that the facilities
    that competitive LECs use to provide special access are no different
    from the facilities they use to provide other services, and that
    thus, there is no basis to treat competitive LECs' use of these
    elements to provide special access service differently from the use
    of the same facilities to provide other telecommunications
    services); MCI WorldCom Reply Comments at 7-10 (arguing that if
    there are insufficient lines from some incumbent LEC serving wire
    centers to IXC points-of-presence (POPs) such that competitive LECs
    are impaired without access to these lines to provide the "services
    they seek to offer," then it follows that there are insufficient
    lines from some serving wire centers to IXC POPs such that they are
    also impaired in their ability to provide access services). *Contra*
    SBC Comments at 10-12 (arguing that the traditional special
    access/private line market is distinct from transport generally
    because competitive carriers have deployed fiber to specifically
    provide these services).

[^53]: While most of the unbundling rules that we adopted in the *Third
    Report and Order* became effective on February 17, 2000, certain
    requirements in the rules did not become effective until May 17,
    2000. 65 Fed. Reg. 2542 (Jan. 18, 2000).

[^54]: *See* USTA Comments, Special Access Fact Report, Jan. 19, 2000.

[^55]: *See* MCI WorldCom Comments at 26-29.

[^56]: *See* Time Warner Telecom Comments at 19.

[^57]: The Commission has observed competition develop in the special
    access market and has taken steps to increase the incumbent LECs'
    pricing flexibility and ability to respond to the advent of such
    competition. *1999 Access Charge Reform Order* at para. 14 (citing
    *Special Access Expanded Interconnection Order*, CC Docket Nos.
    91-141 and 92-333, Report and Order, 7 FCC Rcd 7369 (1992)
    (subsequent citations omitted). *See also* *Third Report and Order*,
    15 FCC Rcd at 3852, para. 348 (discussing alternatives to unbundled
    transport for certain point-to-point routes).

[^58]: *See* MCI WorldCom Comments at 16; TRA Comments at 9.

[^59]: *See* 47 U.S.C. 272(e)(3). In the *Accounting Safeguards Order*,
    the Commission determined that, "where a BOC charges different rates
    to different unaffiliated carriers for access to its telephone
    exchange service, the BOC must impute to its integrated operations
    the highest rate paid for such access by unaffiliated carriers."
    *Accounting Safeguards Under the Telecommunications Act of 1996*, CC
    Docket No. 96-150, Report and Order, 11 FCC Rcd at 17539, 17577,
    para. 87 (1996). *See also* *Implementation of the Non-Accounting
    Safeguards of Sections 271 and 272 of the Communications Act of
    1934, as* amended, CC Docket No. 96-149, Report and Order, 11 FCC
    Rcd 21905, 22028-30, paras. 256-58 (1996) (implementing section
    272(e)(3)).

[^60]: *E.*g., Access *Charge Reform*; *Price Cap Performance Review for
    Local Exchange Carriers, et al.*, CC Docket Nos. 96-262, 94-1, First
    Report and Order, 12 FCC Rcd 15982, 16101-04, paras. 277-82 (1997).

[^61]: *Id*. at 16101, para. 279.

[^62]: *Supplemental Order* at n.9.

[^63]: A DS1 circuit contains 24 voice-grade channels.

[^64]: Traffic is local if it is defined as such in a requesting
    carrier's state-approved local exchange tariff and/or it is subject
    to a reciprocal compensation arrangement between the requesting
    carrier and the incumbent LEC. This is consistent with the
    Commission's statement in the *Local Competition First Report and
    Order* that state commissions have the authority to determine what
    geographic areas should be considered "local areas" for purposes of
    applying reciprocal compensation arrangements, consistent with their
    historical practice of defining local service areas for local
    exchange carriers. *Local Competition First Report and Order*, 11
    FCC Rcd at 16013, para. 1035.

[^65]: A DS3 circuit contains 24 DS1s. A DS1 circuit that is multiplexed
    to the DS3 level passes through electronic equipment that allows the
    signals carried on the DS1 to be consolidated on to the DS3.

[^66]: Letter from Susanne A. Guyer, Assistant Vice President, Federal
    Regulatory, Bell Atlantic, to Magalie Roman Salas, Secretary, FCC,
    CC Docket No. 96-98, Attachment at 2 (filed Apr. 11, 2000) (*Bell
    Atlantic Apr. 11, 2000 Letter*).

[^67]: 47 C.F.R. § 1.3.

[^68]: *Third Report and Order*, 15 FCC Rcd at 3912, para. 486

[^69]: *Supplemental Order* at n.9.

[^70]: *See Third Report and Order*, 15 FCC Rcd at 3831, para. 298.

[^71]: *See* *February 28, 2000 Joint Letter* at 2 (stating in options 1
    and 2 that "the loop/transport combination originates at a
    customer's premises and terminates at the telecommunications
    carrier's collocation arrangement."); Letter from Melissa Newman,
    Vice President -- Federal Regulatory, US West, to Magalie Roman
    Salas, Secretary, FCC, CC Docket No. 96-98, at 2 (filed Apr. 13,
    2000) (*US West Apr. 13, 2000 Letter*) ("US West also emphasized
    that the collocation requirement is not burdensome because a
    requesting carrier only needs one collocation arrangement per switch
    it places in service").

[^72]: *MCI WorldCom Mar. 22, 2000 Letter* at 9. Some carriers use
    circuit switches with a "Class 5" designation to provide local
    exchange service.

[^73]: *See* *Bell Atlantic Apr. 11, 2000 Letter*, Attachment at 3.

[^74]: Letter from Chuck Goldfarb, Director Law and Public Policy, MCI
    WorldCom, to Larry Strickling, Chief, Common Carrier Bureau, FCC, CC
    Docket No. 96-98, at 9-10 (filed Apr. 4, 2000) (*MCI WorldCom Apr.
    4, 2000 Letter*). MCI WorldCom proposed subsequently that we find
    that a requesting carrier is providing a significant amount of local
    exchange service if 25 percent or more of the activated channels on
    a DS-1 facility are used for local service. It based this proposal
    on an analysis of the costs and benefits associated with a
    requesting carrier converting some of the DS-0 channels on a DS-1
    circuit to local usage. Letter from Chuck Goldfarb, Director, Law
    and Public Policy, MCI WorldCom, to Magalie Roman Salas, Secretary,
    FCC, CC Docket No. 96-98, Attachment at 2 (filed Apr. 28, 2000).
    This proposal appears highly dependent on a carrier's individual
    costs and does not enable the Commission to verify that a requesting
    carrier is providing a significant amount of local exchange service
    to a particular end user.

[^75]: *MTS and WATS Market Structure Amendment of Part 36 of the
    Commission's Rules and Establishment of a Joint Board*, CC Docket
    Nos. 78-72, 80-286, Decision and Order, 4 FCC Rcd 5660, 5660-61
    (1989).

[^76]: With regard to data services, we note that the local usage
    options we adopt do not preclude a requesting carrier from providing
    data over circuits that it seeks to convert, as long as it meets the
    thresholds contained in the options.

[^77]: Letter from Jonathan D. Lee, Vice President, Regulatory Affairs,
    CompTel, to Magalie Roman Salas, Secretary, FCC, CC Docket No. 96-98
    (filed Apr. 27, 2000) (*CompTel Apr. 27, 2000 Letter*). Sprint
    supports CompTel's proposal except for the requirement that
    incumbent LECs that provide interexchange services in a certain
    market make unbundled loop-transport combinations available to
    requesting carriers in that market regardless of whether the
    requesting carrier is providing any local exchange service to the
    end user. Letter from Richard Juhnke, General Attorney, Sprint, to
    Magalie Roman Salas, Secretary, FCC, CC Docket No. 96-98, at 1
    (filed May 2, 2000).

[^78]: *CompTel Apr. 27, 2000 Letter* at 2.

[^79]: *See* *MCI WorldCom Apr. 4, 2000 Letter* at 6-8; *February 28,
    2000 Joint Letter* at 2.

[^80]: *See Supplemental Order* at n.9.

[^81]: *See* *ALTS March 24, 2000 Letter* at 13.

[^82]: *See Supplemental Order* at n.9

[^83]: *ALTS March 24, 2000 Letter* at 13.

[^84]: *See* *Third Report and Order*, 15 FCC Rcd at 3831, para. 298,
    n.581. ALTS states that the Access Service Request process has been
    adopted by industry consensus in New York. *ALTS March 24, 2000
    Letter* at 13.

[^85]: *MCI WorldCom Apr. 4, 2000 Letter* at 9.

[^86]: The incumbent LEC and competitive LEC signatories to the
    *February 28, 2000 Joint Letter* state that audits will not be
    routine practice, but will only be undertaken when the incumbent LEC
    has a concern that a requesting carrier has not met the criteria for
    providing a significant amount of local exchange service. *February
    28, 2000 Joint Letter* at 3. We agree that this should be the only
    time that an incumbent LEC should request an audit.

[^87]: *See, e.g*., *February 28, 2000 Joint Letter* at 3; *ALTS March
    24, 2000 Letter* at 12*; MCI WorldCom Apr. 4, 2000 Letter* at 10.

[^88]: *Bell Atlantic Apr. 11, 2000 Letter* at 3.

[^89]: *US West Apr. 13, 2000 Letter* at 1.

[^90]: *February 28, 2000 Joint Letter* at 3.

[^91]: The RFA, [see]{.underline} 5 U.S.C. § 601 [et. seq]{.underline}.,
    has been amended by the Contract With America Advancement Act of
    1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of
    the CWAAA is the Small Business Regulatory Enforcement Fairness Act
    of 1996 (SBREFA).

[^92]: *Supplemental Order* at n.9.

[^93]: *Access Charge Reform; Low-Volume Long Distance Users,
    Federal-State Joint Board on Universal Service*, CC Docket Nos.
    96-262, 94-1, 99-249, 96-45, Notice of Proposed Rulemaking (rel.
    Sept. 15, 1999).

[^94]: *Third Report and Order and Fourth FNPRM*, 15 FCC Rcd at 3912-15,
    paras. 485, 489, 494-96.

[^95]: *Id.* at 3913, 3915, paras. 489, 496.

[^96]: *Id.* at 3915, para. 496 & n.994.

[^97]: Letter from Chuck Goldfarb, Director, Law and Public Policy, MCI
    WorldCom, to Magalie Roman Salas, Secretary, FCC, CC Docket No.
    96-98, Attachment at 5-7 (filed Apr. 6, 2000).

[^98]: GTE Comments at 20-22; GTE Reply Comments at 13-14; National
    Exchange Carrier Association, Inc., National Rural Telecom
    Association, National Telephone Cooperative Association, and
    Organization for the Promotion and Advancement of Small
    Telecommunications Companies Joint Reply Comments at 7; Cf. Sprint
    Reply Comments at 9-10.

[^99]: *See, e.g.* Bell Atlantic Reply Comments at 5; GTE Reply Comments
    at 9.

[^100]: 119 S. Ct. 721 (1999).

[^101]: Further Notice of Proposed Rulemaking,*1998 Biennial Regulatory
    Review \-- Review Of Depreciation Requirements For Incumbent Local
    Exchange Carriers, Ameritech Corporation Telephone Operating
    Companies\' Continuing Property Records Audit, et al.,* CC Docket
    Nos. 98-137, 99-117 (Rel. Apr. 3, 2000).

[^102]: Section 563 of this statute provides for the establishment of a
    committee that, with the assistance of the relevant agency, will
    negotiate to reach a consensus on a given issue. An agency that
    undertakes a negotiated rulemaking must publish in the Federal
    Register a notice that, among other things, (1) announces the
    establishment of the committee; (2) describes the issues and scope
    of the rule to be developed; and (3) proposes a list of persons that
    will participate on the committee. 5 U.S.C.§ 564(a). In addition,
    the agency must give persons with interests that will be affected by
    the new rule an opportunity to apply to participate in the
    negotiated rulemaking process. *Id.* § 564(b).

[^103]: The Chairman asserts that five parties submitted comments that
    "recogniz\[ed\] the link between special access and switched
    access," which he suggests demonstrates that the public was aware of
    the "policy considerations" common to both dockets. Notably, three
    of these commenters (Bell Atlantic, GTE, and Sprint) were members of
    the Coalition, and therefore well aware of the link that the
    Commission had drawn internally between these two proceedings. And
    it is not surprising that MCI and the National Exchange Carriers
    Association, *et al.*, persons that appear frequently in matters
    before the Commission, may have gotten wind of the connection
    between this docket and the CALLS proceeding. MCI has, of course,
    also challenged the propriety of the process by which the Commission
    conducted the CALLS negotiations.

[^104]: Third Report and Order and Fourth Further Notice of Proposed
    Rulemaking, *Implementation of the Local Competition Provisions of
    the Telecommunications Act of 1996,* CC Docket 96-98 (rel. Nov. 5,
    1999).

[^105]: *See Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, CC Docket 96-98, First Report and
    Order, 11 FCC Rcd 15499 (1997) (hereinafter *Local Competition First
    Report and Order*).