Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

)

)

In the Matters of )

)

Deployment of Wireline Services Offering ) CC Docket No. 98-147

Advanced Telecommunications Capability )

)

and )

)

Implementation of the Local Competition ) CC Docket No. 96-98

Provisions of the )

Telecommunications Act of 1996 )

)

)

**THIRD REPORT AND ORDER IN CC DOCKET NO. 98-147**

**FOURTH REPORT AND ORDER IN CC DOCKET NO. 96-98**

**Adopted: November 18, 1999 Released: December 9, 1999**

Before the Commission: Commissioner Furchtgott-Roth concurring in part,
dissenting in part, and issuing a statement.

**TABLE OF CONTENTS**

[Paragraph]{.underline}

I. INTRODUCTION AND OVERVIEW 1

II\. EXECUTIVE SUMMARY 6

III\. BACKGROUND 7

A. DSL Technology 7

B. History of the Proceeding 10

IV\. LINE SHARING 13

A. Commission Authority to Require Incumbent LECs to Unbundle the High
Frequency Portion of the Loop 15

1\. Background 15

2\. Discussion 16

B. Designation of High Frequency Loop Spectrum as an Unbundled Network
Element 20

1\. Background 20

2\. Discussion 25

C. Technical Feasibility of Spectrum Unbundling 62

1\. Background 62

2\. Discussion 63

D. Operational Issues Associated with the Implementation of Line Sharing
69

1\. Parameters for Line Sharing Deployment 69

2\. Loop Conditioning 81

3\. Digital Loop Carrier Systems 88

4\. Operational Support Systems 93

E. Economic, Pricing Methodology, and Cost Allocation Issues 131

1\. Background 131

2\. Discussion 133

F. Implementation of Unbundling Obligation 158

1\. Effective Date of New Rules 161

2\. States' Role in Fostering Local Competition Under Sections 251 and
252 162

3\. Duty to Negotiate in Good Faith 169

4\. Guidelines for State Arbitration Awards 171

V. SPECTRUM POLICY 178

A. Background 178

B. Discussion 183

1\. Standards-Setting Entities 183

2\. Mechanisms for Demonstrating Spectrum Compatibility 192

3\. Conditions for Acceptability of a Loop Technology for Deployment 195

4\. Binder Group Management 212

VI\. OTHER ISSUES 221

A. State Authority to Enact Additional Line Sharing Requirements 221

1\. Background 221

2\. Discussion 223

B. Takings 226

VII\. PROCEDURAL MATTERS AND ORDERING CLAUSES 228

APPENDIX A -- LIST OF COMMENTERS

APPENDIX B -- FINAL RULES

APPENDIX C -- DIAGRAM OF CENTRAL OFFICE EQUIPMENT CONFIGURATION

APPENDIX D -- REGULATORY FLEXIBILITY ANALYSIS

# INTRODUCTION AND OVERVIEW

1.  Among the fundamental goals of the Telecommunications Act of 1996
    (1996 Act)[^1] is the promotion of innovation, investment, and
    competition among all participants and for all services in the
    telecommunications marketplace, including advanced services.[^2] The
    Commission has issued three orders in this proceeding to date, and
    has issued other decisions intended to promote competition in the
    advanced services market.[^3] In this Third Report and Order we take
    additional, important steps toward implementing Congress's goals for
    the deployment of competitive advanced services by instituting line
    sharing obligations for incumbent LECs, and establishing spectrum
    management policies and rules.

2.  Carriers are increasingly transmitting electronic communications in
    digital, rather than analog form, and by means of \"packet
    switching.\"[^4] Packet-switched transmission of information
    promises a revolution in information services, communications
    services, and entertainment by offering businesses, residential
    users, schools and libraries, and other end users the ability to
    access and send large amounts of information quickly, reliably, and
    at low cost across the street or across the globe. Moreover, for
    wireline carriers, digital subscriber line technologies are making
    it possible for ordinary citizens to access various networks, such
    as the Internet, corporate networks, and governmental networks, at
    high speeds through the existing copper telephone lines that connect
    their residences or businesses to the incumbent local exchange
    carriers' (LEC\'s) central office. The existing infrastructure is
    beginning to be used in new ways that make available to average
    citizens a variety of new services and vast improvements to existing
    services. The ability of all Americans to access these high-speed,
    packet-switched networks will spur the growth and development of our
    nation.

3.  Incumbent and competitive LECs are beginning to provide xDSL-based
    services[^5] to customers in major markets nationwide.[^6] These
    xDSL-based services provide high-speed connections between
    subscribers and packet switched networks, over ordinary copper
    telephone "loops." Because the advanced services market is still in
    its developmental stage, robust competition among xDSL providers is
    just beginning to emerge in many markets. The economic realities of
    providing advanced services have also caused most xDSL providers to
    market primarily to large business customers. Nevertheless, both
    incumbent and competitive carriers appear to have recently begun to
    make some of the technological investment necessary to compete in
    the provision of advanced services to residential and small business
    consumers.

4.  In this Order we adopt measures to promote the availability of
    competitive broadband xDSL-based services, especially to residential
    and small business customers. We amend our unbundling rules to
    require incumbent LECs to provide unbundled access to a new network
    element, the high frequency portion of the local loop. This will
    enable competitive LECs to compete with incumbent LECs to provide to
    consumers xDSL-based services through telephone lines that the
    competitive LECs can share with incumbent LECs. The provision of
    xDSL-based service by a competitive LEC and voiceband service by an
    incumbent LEC on the same loop is frequently called "line sharing."
    In addition, we adopt spectrum management policies and rules to
    facilitate the competitive deployment of advanced services.

5.  The record shows that lack of access to the high frequency portion
    of the local loop materially diminishes the ability of competitive
    LECs to provide certain types of advanced services to residential
    and small business users, delays broad facilities-based market
    entry, and materially limits the scope and quality of competitor
    service offerings. The record reveals no evidence of substantial
    technical, economic, operational, or practical barriers to incumbent
    LEC line sharing with competitors. We believe that line sharing is
    vital to the development of competition in the advanced services
    market, especially for residential and small business consumers. We
    believe that unbundled access to the high frequency portion of the
    loop can be implemented rapidly and in an equitable manner that
    balances the needs of both potential competitors and incumbent LECs.

6.  In addition, we adopt rules in this Order that apply to spectrum
    compatibility and management. These rules will significantly benefit
    the rapid and efficient deployment of xDSL-based technologies.
    Specifically, we seek to encourage the voluntary development of
    industry standards while limiting the ability of any one class of
    carriers to impose unilateral and potentially anti-competitive
    spectrum management or compatibility rules on other xDSL providers.
    We believe that the spectrum policies we adopt in this Order will
    ensure the compatibility of technologies and minimize the risk of
    harmful spectrum interference among transmission services. As such,
    these policies will ensure that American consumers will not face
    undue delay in receiving the benefits of technological
    innovation.[^7]

# EXECUTIVE SUMMARY

**LINE** **SHARING**

-   [Unbundling Analysis.]{.underline} The high frequency portion of the
    loop meets the statutory definition of a network element and must be
    unbundled pursuant to sections 251(d)(2) and (c)(3). An incumbent
    LEC's failure to provide such access impairs the ability of a
    competitive LEC to offer certain forms of xDSL-based services. The
    record shows that lack of access would materially raise the cost for
    competitive LECs to provide advanced services to residential and
    small business users, delay broad facilities-based market entry, and
    materially limit the scope and quality of competitor service
    offerings. Our decision to unbundle the high frequency portion of
    the loop is consistent with the 1996 Act's goals of rapidly
    introducing competition and promoting facilities-based entry. This
    will promote the rapid deployment of advanced services to all
    Americans as mandated by section 706 of the 1996 Act.

-   [Line Sharing Requirements]{.underline}.

-   In order to ensure that line sharing does not significantly degrade
    analog voice service, incumbent LECs must provide unbundled access
    to the high frequency portion of the loop only to carriers seeking
    to provide xDSL-based service that meets one of the Commission's
    criteria regarding the presumption of acceptability for deployment
    on the same loop as analog voice service. Currently, ADSL is the
    most widely deployed line sharing technology meeting that
    presumption. As additional xDSL-based technologies that can co-exist
    on the same loop as analog voice service are demonstrated to meet
    that presumption, incumbents must permit requesting carriers to
    deploy those technologies as well.

-   Incumbent LECs must provide unbundled access to the high frequency
    portion of the loop to only a single requesting carrier, for use at
    the same customer address as the analog voice service provided by
    the incumbent.

-   Incumbents are not required to provide unbundled access to the high
    frequency portion of the loop if they are not currently providing
    analog voice service to the customer.

-   Subject to certain obligations, incumbent LECs may maintain control
    over the loop and splitter equipment and functions.

-   [Loop Conditioning.]{.underline} Incumbent LECs must condition loops
    to enable requesting carriers to provide acceptable forms of
    xDSL-based services over the high frequency portion of the loop
    unless such conditioning would significantly degrade the incumbent's
    analog voice service. We conclude that it would be unreasonable for
    incumbents to refuse to condition loops under 18,000 feet. For loops
    over 18,000 feet, an incumbent LEC must make an affirmative showing
    to the relevant state commission that such degradation will occur.

-   [Subloops.]{.underline} Incumbent LECs must unbundle the high
    frequency portion of the loop even where the incumbent LEC's voice
    customer is served by digital loop carrier (DLC) facilities.

-   [Operational Issues.]{.underline} The record shows that incumbents
    should be able to resolve operational issues associated with
    implementation of line sharing, including modifications to
    operations support systems, within six months. The record shows that
    incumbents have a number of process alternatives available and we
    will allow them the flexibility to choose the best and most
    economically feasible of them.

-   [Timing of Implementation]{.underline}. The rules advanced in this
    Order will go into effect 30 days from the date of publication in
    the Federal Register. We encourage parties to amend their
    interconnection agreements to provide for line sharing as soon as
    possible.

-   [State Authority.]{.underline} States may, at their discretion,
    impose additional or modified requirements for access to this
    unbundled network element, consistent with our national policy
    framework

    **SPECTRUM** **MANAGEMENT**

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-   [Standards-Setting.]{.underline} The charter of the Network
    Reliability and Interoperability Council (NRIC) will be amended to
    charge NRIC with advising the Commission on spectrum compatibility
    and management of xDSL-based and other advanced services. In this
    capacity, NRIC will receive input from industry standards bodies,
    such as T1E1.4, and monitor developments within them. The NRIC will
    report periodically to the Commission and prepare recommendations
    for it.

-   [Spectrum Compatibility.]{.underline} We decline to adopt a federal
    rule on specific methods of achieving spectrum compatibility and
    instead will defer to the conclusions to be reached by industry
    standards setting bodies on this issue. As a general matter,
    however, the use of generic power spectral density (PSD) masks
    and/or a calculation-based approach appears to be the best means to
    address spectrum compatibility. Taken together, these two mechanisms
    should protect network integrity while maximizing deployment of new
    competing technologies.

-   [Presumption of Acceptability for Deployment.]{.underline} We codify
    as permanent rules the rules we previously adopted on an interim
    basis that will govern when a loop technology is presumed acceptable
    for deployment. The circumstances include when the technology: (1)
    complies with existing industry standards; (2) has been approved by
    an industry standards body, the Commission, or any state commission;
    or (3) has been successfully deployed by any carrier without
    significantly degrading the performance of other services. We rely
    upon the states to determine whether a particular technology has
    significantly degraded the performance of other services.

-   [Degradation of Signals]{.underline}. Although we recognize the
    value of objective criteria to measure significant degradation, we
    do not have a basis in the record before us to adopt specific,
    objective criteria. We encourage industry standards bodies to
    continue addressing this issue. Based on the record before us, we
    believe that an objective measurement of what constitutes
    significant degradation should account for reductions in a service's
    distance (reach) and/or speed (rate), among other factors. Until
    industry standards bodies adopt an objective standard, carriers must
    apply the subjective standard we previously enunciated in the
    *Advanced Services First Report and Order*, namely, that significant
    degradation is an action that noticeably impairs a service from a
    user's perspective.

-   We reaffirm our conclusions from the *Advanced Services First Report
    and Order* regarding resolution of interference disputes. In the
    event that a LEC demonstrates to the relevant state commission that
    a deployed technology is significantly degrading the performance of
    other advanced services or traditional voice band services, the
    carrier deploying the technology shall discontinue deployment of
    that technology and migrate its customers to technologies that will
    not significantly degrade the performance of other services. We now
    adopt an exception to this rule: where the only service experiencing
    interference is itself a known disturber, that service shall not
    prevail against the newly deployed technology. We conclude that
    analog T1 service is a known disturber.

-   [Interfering Technologies.]{.underline} The only permissible forms
    of binder group management are the segregation of known disturbers
    and the use of the spectrum compatibility (interference protection)
    techniques described above. The states should determine disposition
    of known interfering technologies. The states may select one or more
    of several approaches towards disposition of known disturbers,
    including segregation or sunsetting of known disturbers, consistent
    with the national policy framework adopted in this Order.

# BACKGROUND

## DSL Technology

7.  The circuit--switched public telecommunications network (PSTN),
    which interconnects virtually every home and business, was designed
    to provide superior voice telephony. Until recently, carriers did
    not consider the PSTN's architecture well suited for the provision
    of interactive video or high-speed data communications.
    Specifically, the PSTN is predominately "circuit-switched,"
    maintaining an end-to-end channel of communication for the duration
    of each telephone call. Although this is an efficient technique for
    transmitting ordinary voice telephony, it is not efficient for
    transmitting digital information. In addition, carriers did not
    generally consider the copper "local loop," the telephone wire
    running the \"last mile\" to each home, capable of carrying more
    than a relatively modest stream of information.

8.  In the near future, xDSL-based technology and packet-switched
    networks may account for a large portion of the telecommunications
    facility.[^8] xDSL-based technology permits the transmission of data
    over the copper loop at significantly higher speeds than can be
    achieved by current "dial-up" analog data transmission systems and
    circuit-switched network systems.[^9] xDSL transmission systems
    consist of an xDSL terminating device attached to each end of an
    unmodified copper wire local loop. Combining xDSL-based technology
    with packet switching is more efficient than circuit-switched
    networks for the transmission of packetized data.[^10]

9.  In circumstances in which the xDSL-equipped line carries both POTS
    (\"plain old telephone service\") and data channels, the carrier
    must separate those two streams when they reach the telephone
    company\'s central office. Generally, this is done by two pieces of
    transmission equipment, a Digital Subscriber Line Access Multiplexer
    (DSLAM) and a splitter.[^11] The DSLAM sends the customer\'s voice
    traffic to the public, circuit-switched telephone network and the
    customer\'s data traffic (combined with that of other xDSL users) to
    a packet-switched data network. Once on the packet-switched network,
    the data traffic is routed to the location selected by the customer,
    for example, a corporate local area network or an Internet service
    provider. That location may itself be a gateway to a new
    packet-switched network or set of networks, like the Internet.

## History of the Proceeding

10. In March 1999, we released the *Advanced Services First Report and
    Order*, in which we adopted several measures to promote competition
    in the advanced services market.[^12] Specifically, we strengthened
    our collocation rules and implemented certain spectrum compatibility
    rules. In the accompanying *Further Notice of Proposed Rulemaking*
    (*FNPRM*)*,* we solicited comments to guide the further development
    of spectrum compatibility and management requirements and proposed
    line sharing requirements to enable competitors to offer advanced
    services to end-users using the same telephone line the LEC uses to
    offer voice services. We proposed these measures to enable advanced
    services providers to develop and deploy more rapidly new
    technologies and innovative services, benefiting consumers through
    lower prices and increased product choice.[^13]

11. We are aware, however, that US WEST has sought judicial review of
    the Commission's decision that advanced services, including those
    utilizing xDSL-based technologies, are either exchange access or
    telephone exchange services. US WEST further argues that the
    requirements of section 251(b) and (c) do not apply to its provision
    of advanced services.[^14] We note that the Commission has
    requested, and has received, a remand from the United States Court
    of Appeals for the District of Columbia Circuit to address US WEST's
    argument that the Commission is without statutory authority to
    require incumbent LECs to provide access to unbundled elements used
    in the provision of advanced services.[^15] We further note that the
    Commission has received a more complete administrative record on
    this matter and we intend to fully address US WEST's arguments in
    the *Advanced Services Memorandum Opinion and Order and NPRM* remand
    proceeding.[^16] The Commission must address the issues raised by US
    WEST within 120 days from the date of the D.C. Circuit Court's
    Order.

12. In remanding back to the agency, the court declined to vacate
    portions of the *Advanced Services Memorandum Opinion and Order and
    NPRM* challenged by US WEST. Accordingly, our decision in that Order
    that xDSL-based services are "either" telephone exchange service or
    exchange access service remains in effect during the pendency of the
    *Advanced Services Memorandum Opinion and Order and NPRM* remand
    proceeding.[^17] We therefore have the authority to consider whether
    unbundling the high frequency portion of the loop meets the
    impairment standard established in the *Local Competition Third
    Report and Order*.

# LINE SHARING 

13. In this section, we adopt a requirement that incumbent LECs unbundle
    the high frequency portion of the loop to permit competitive LECs to
    provide xDSL-based services by sharing lines with the incumbent's
    voiceband services.[^18] We find that unbundling this network
    element is technically feasible, presents no substantial operational
    issues, is legally justified, and serves the public interest. We
    also find that line sharing promises to bring broadband access to
    residential and small business consumers, and conclude that
    incumbents should be able to provide line sharing within 180 days of
    release of this Order.[^19] Our decisions herein should ensure that
    residential and small business consumers receive the benefits of
    competition and innovation promised in the Act.

14. The rules and standards we adopt in this Order build on industry
    development and technological advances that have occurred in the
    telecommunications marketplace since the advent of the 1996 Act.
    Both incumbent LECs and requesting carriers are beginning to deploy
    innovative technologies to meet the demand for high-speed,
    high-capacity advanced services. To encourage competition, the
    market for these services must be conducive to investment and
    innovation, and responsive to the needs of consumers. The
    requirements we adopt in this Order for access to the unbundled high
    frequency portion of the local loop are designed to fulfill these
    criteria, and to be administratively practical and responsive to
    business needs.

## Commission Authority to Require Incumbent LECs to Unbundle the High Frequency Portion of the Loop

### Background

15. In the *FNPRM*, we tentatively concluded that we have authority to
    require line sharing and sought comment on that tentative
    conclusion.[^20] Competitive LECs, advocacy organizations, and state
    and federal agencies generally agree that we have authority to
    mandate line sharing as an unbundled network element (UNE) pursuant
    to section 251(d)(2) of the Act.[^21] Several commenters also argue
    that we have authority to mandate line sharing as an interstate
    special access service under sections 201 and 202 of the Act.[^22]
    Incumbent LECs, however, argue that we lack authority to mandate
    line sharing either as an UNE or as an interstate special access
    service. Specifically, these commenters claim that the high
    frequency portion of the loop cannot be considered a network
    element, that such consideration is premature, and that, regardless
    of such consideration, access to that portion of the loop is not
    necessary for advanced service deployment under section 706 of the
    1996 Act.[^23]

### Discussion

16. We conclude that we have authority to require incumbent LECs to
    provide unbundled access to the high frequency spectrum of a local
    loop pursuant to our authority to identify a minimum list of network
    elements that must be unbundled on a nationwide basis.[^24] Section
    251(c)(3) imposes a duty on all incumbent LECs to provide to
    competitors access to network elements on an unbundled basis.[^25]
    Section 251(d)(2) provides that, in determining which network
    elements should be unbundled under section 251(c)(3), the Commission
    shall consider, "at a minimum, whether \-- (A) access to such
    network elements as are proprietary in nature is necessary; and (B)
    the failure to provide access to such network element would impair
    the ability of the telecommunications carrier seeking access to
    provide the services that it seeks to offer."[^26] As discussed
    below, we conclude that the high frequency portion of the loop is a
    network element that must be unbundled pursuant to section 251(c)(3)
    and section 251(d)(2).

17. Line sharing generally describes the ability of two different
    service providers to offer two services over the same line, with
    each provider employing different frequencies to transport voice or
    data over that line.[^27] Section 3(29) of the Act defines a network
    element as "a facility or equipment used in the provision of
    telecommunications services" including "features, functions, and
    capabilities, that are provided by means of such facility or
    equipment."[^28] As discussed in detail below, the frequencies above
    those used for analog voice services on any loop are a capability of
    that loop.[^29] Therefore, those otherwise unused frequencies that
    can be used for xDSL or other applications meet the definition of a
    "network element."

18. Specifically, sections 51.307(d) and 51.309(c) of our rules address
    the requesting carrier's right to loop access. These rules provide,
    respectively, that an incumbent LEC must provide competitors with
    "access to the facility or functionality of a requested network
    element separate from access to the facility or functionality of
    other network elements." The rules also state that a requesting
    carrier is "entitled to exclusive use" of an "unbundled network
    facility."[^30] Consequently, although we conclude that to the
    extent section 251(d) is satisfied requesting carriers may access
    unbundled loop functionalities, such as non-voiceband transmission
    frequencies, separate from other loop functions, they are also
    "entitled," at their option, to exclusive use of the entire
    unbundled loop facility.[^31]

19. Under the interpretation of section 251 that underlies these rules,
    we conclude that we have authority pursuant to section 251 to
    require unbundled access to the high frequency spectrum of a local
    loop so that carriers may use those frequencies to provide
    xDSL-based services while the incumbent LEC uses the voiceband
    frequencies for analog voice service. In light of our conclusion
    below to designate the high frequency spectrum as an unbundled
    network element, we need not and do not address the arguments of
    some parties that we have authority to order line sharing as a
    special access service.[^32]

## Designation of High Frequency Loop Spectrum as an Unbundled Network Element

### Background

20. In the *Advanced Services* *FNPRM*, we tentatively concluded that
    incumbent LECs must provide requesting carriers with access to "the
    transmission frequencies above that used for analog voice service on
    any lines that LECs use to provide exchange service."[^33] We
    observed that without line sharing, a competitive LEC's ability to
    competitively provide advanced services is impaired because the
    competitive LEC must obtain a new unbundled loop from the incumbent
    LEC to provide advanced services, while the incumbent LEC can
    provide advanced services, at little additional expense, by using
    the existing local exchange service line. We also noted that line
    sharing would enrich consumer choice by enabling customers to keep
    their analog voice service with the incumbent local exchange
    company, while choosing a competitive LEC to provide high-speed
    digital services over the same line without incurring the additional
    expense of a second line.[^34]

21. Additionally, we sought comment on whether we should more precisely
    define the network element that would permit shared line access, so
    that it is clear to all parties what the incumbent must unbundle to
    satisfy our line sharing requirements.[^35] In particular, we asked
    commenters to evaluate the possibility of setting a specific
    dividing line between a low frequency channel and a high frequency
    channel on the loop. We were concerned, however, that doing so would
    arbitrarily freeze technological development and deny carriers
    opportunities to use the loop to provision services that use
    different frequency bands.[^36] We tentatively concluded that our
    line sharing requirements should not mandate a particular
    technological approach to the use of a line for multiple
    services.[^37]

22. We recently set forth our framework for determining which elements
    should be unbundled pursuant to sections 251(c)(3) and
    251(d)(2).[^38] We look first to what is happening in the
    marketplace to determine whether and to what extent alternatives to
    the incumbent's facilities are available. In the *Local Competition
    Third Report and Order*, we concluded that the incumbent LEC's
    failure to provide a non-proprietary element "impairs" a requesting
    carrier if, considering the availability of alternative elements
    outside the incumbent's network, lack of access to that element
    materially diminishes the requesting carrier's ability to provide
    the services it seeks to offer.[^39] In determining whether
    alternative sources of network elements are actually available as a
    practical, economic, and operational matter, we look at specific
    factors including cost, ubiquity, quality, timeliness, and
    operational impediments.[^40]

23. In the *Local Competition Third Report and Order*, we stated that in
    addition to the "necessary" and "impair" standards set out in
    section 251(d)(2), the language of section 251(d)(2) and the Supreme
    Court decision suggest we should consider whether unbundling is
    consistent with the overall goals of the Act. We thus consider
    whether creating an unbundling obligation would (1) encourage
    competitors to rapidly enter the local market to serve the broadest
    number of consumers; (2) advance the development of facilities-based
    competition, while encouraging investment and innovation in new
    technologies and services; (3) reduce regulation where
    warranted; (4) provide market certainty to facilitate the creation
    and execution of viable new business plans; and (5) be
    administratively practical to apply.[^41] We refrained, however,
    from assigning any particular weight to the individual factors, but
    stated that we would consider the relationship among various factors
    when determining whether a particular network element should be
    unbundled.[^42]

24. In the *Local Competition Third Report and Order*, we applied the
    necessary and impair standards and weighed the above factors to
    establish a list of network elements that must be unbundled on a
    national basis.[^43] In addition, several parties to that proceeding
    requested that we identify access to the high frequency spectrum of
    a local loop as a network element that must be unbundled.[^44] We
    declined to address unbundled access to the high frequency spectrum
    of a local loop in the *Local Competition* proceeding, however,
    because the record in the instant proceeding more fully addresses
    this matter.

### Discussion

25. As discussed below, we conclude that access to the high frequency
    spectrum of a local loop meets the statutory definition of a network
    element and satisfies the requirements of sections 251(d)(2) and
    (c)(3). It is technically feasible for an incumbent LEC to provide a
    competitive LEC with access to the high frequency portion of the
    local loop as an unbundled network element.[^45] An incumbent LEC's
    failure to provide access impairs the ability of a competitive LEC
    to offer, on a competitive basis, certain forms of xDSL-based
    service that are capable of line sharing with voice services. The
    record shows that lack of access to the high frequency portion of
    the local loop would materially raise competitive LECs' cost of
    providing xDSL-based service to residential and small business
    users, delaying broad facilities-based market entry, and materially
    limiting the scope and quality of competitors' service
    offerings.[^46] Moreover, access to the high frequency portion of
    the loop encourages the deployment of advanced telecommunications
    capability to all Americans as mandated by section 706 of the 1996
    Act. Because some residential and small business markets may lack
    the economic characteristics that would support competitive entry in
    the absence of access to the high frequency spectrum of a local
    loop, it is clear that spectrum unbundling is crucial for the
    deployment of broadband services to the mass consumer market.

#### Definition

26. We define the high frequency spectrum network element to be the
    frequency range above the voiceband on a copper loop facility used
    to carry analog circuit-switched voiceband transmissions.[^47] We
    affirm our tentative conclusion that any rules we adopt should not
    mandate a particular technological approach to the use of a line for
    multiple services.[^48] As we acknowledged in the *Advanced Services
    First Report and Order and* *FNRPM*, line sharing relies on rapidly
    evolving technology and our requirement that incumbent LECs provide
    the high frequency spectrum of a local loop as an unbundled network
    element should stimulate technological innovation.[^49] We seek to
    ensure that, in the future, carriers are not denied the opportunity
    to provision services that rely on different frequency bands within
    the loop. Consequently, we do not set a specific dividing line
    between the low frequency channel and a high frequency channel on
    the loop.[^50]

27. As we discuss in detail in section IV.D.1.b) below, we support the
    use of any transmission technology that is presumed acceptable for
    shared-line deployment with analog voice service according to the
    criteria already identified in the *Advanced Services First Report
    and Order and NPRM* and codified herein.[^51] We note that industry
    standards are constantly evolving, and are supported by carriers
    that share mutual interest in avoiding service quality degradation.
    We believe that compliance with the criteria supporting a
    presumption of technical acceptability that we identify in section
    V.B.3 of this Order will facilitate the development and deployment
    of new technologies that utilize the high frequency spectrum of the
    local loop to provide consumer services, while ensuring the
    integrity of the PSTN and legacy services.

#### Proprietary Concerns Associated with Requiring Access to the High Frequency Spectrum of the Local Loop

28. The record indicates that there are no proprietary concerns
    associated with unbundled access to the high frequency spectrum of
    the local loop.[^52] No commenters argue that loop spectrum is
    proprietary under section 251(d)(2)(B). We do not discern any
    copyright, patent, or trade secrecy implications to unbundled access
    to the high frequency spectrum UNE. Carriers do not generally rely
    upon loop spectrum to differentiate themselves from their
    competitors. Thus, the high frequency spectrum is not proprietary,
    and we need not analyze requiring access to this unbundled loop
    spectrum according to the "necessary" standard. We therefore apply
    the "impair" standard of section 251(d)(2), to determine whether the
    high frequency portion of the loop is subject to the Act's
    unbundling obligations.

#### Analysis for Unbundled Access to the High Frequency Spectrum of a Local Loop Network Element

29. Applying the standard we announced in the *Local Competition Third
    Report and Order*, we conclude that a lack of access to high
    frequency spectrum of a local loop impairs a competitive carrier's
    ability to offer certain forms of xDSL-based service. As described
    below, just as the loop itself remains a facility available only
    from an incumbent LEC, so too is a competitor seeking to offer
    certain xDSL-based services impaired if it does not have access to
    the high frequency spectrum of the local loop available from an
    incumbent LEC.[^53]

30. We recognize that in the *Local Competition Third Report and Order*,
    the Commission concluded that cable companies and competitive LECs
    are actively deploying xDSL-based advanced services.[^54] We held
    there that competitors are not impaired in their ability to provide
    advanced services to medium and large business users without access
    to the incumbents' packet switching, a component of xDSL based
    advanced services. We found that requesting carriers may be impaired
    in their ability to offer xDSL-based services to residential and
    small business customers without packet switching capability, but
    declined to order unbundling of incumbent LEC packet switching
    capability because of the nascent nature of the advanced services
    market.[^55] However, we also specifically stated that impairment
    with regard to residential and small business segments may be due
    "in part, to the cost and delay of obtaining collocation in every
    central office where the requesting carrer provides service using
    unbundled loops."[^56] Thus, our impairment analysis for packet
    switching rests in part on the assumption that the impairment
    results from the intermediate step of getting to the loop, not from
    use of the loop. Using the loop to get to the customer is
    fundamental to competition. The issue before us now, whether
    competitive LECs are impaired without access to the high frequency
    portion of the loop when they seek to provide various forms of
    xDSL-based services, is a different question than whether requesting
    carriers are impaired without access to unbundled packet switching.

31. Section 251 requires incumbent LECs to provide unbundled access to a
    network element where lack of access impairs the ability of the
    requesting carrier to provide the services that it seeks to
    offer.[^57] In the *Local Competition Third Report and Order*, we
    found that it is appropriate to consider the specific services and
    customer classes a requesting carrier seeks to serve when
    considering whether to unbundle a network element.[^58] In general,
    competitive LECs seeking access to the unbundled high frequency
    portion of the loop only seek to offer voice-compatible xDSL-based
    services.[^59] We thus ask whether such carriers are impaired in
    their ability to offer such services without access to this network
    element.

32. As part of this analysis, we need to consider actual market
    activity. As we stated in the *Local Competition Third Report and
    Order,* what is occurring in the marketplace is relevant to our
    analysis of whether the cost of self-provisioning an element or
    obtaining it from a third party impairs the ability of a requesting
    carrier to provide the service it seeks to offer. [^60] Looking to
    the marketplace, we find that most xDSL lines have been deployed to
    residential or small business consumers, and incumbent LECs provide
    service on the vast majority of these lines where their xDSL-based
    service shares the line with their voice service. According to one
    survey, incumbent LECs have gained a more than 17-1 advantage in
    deploying voice-compatible xDSL-based services to residential and
    small business subscribers. In contrast, competitive carriers are
    generally not providing voice-compatible xDSL-based services to
    residential and small business consumers. [^61]

33. There is no question that incumbent LECs are offering xDSL on the
    same line as their voice service, and competitive LECs are at a
    significant disadvantage in offering xDSL-based services over the
    same line that is used to provide voice service. Incumbent LECs
    generally deploy forms of xDSL-based services that can coexist with
    voice service on a single line.[^62] This enables incumbent LECs to
    utilize the full capacity of the copper local loop to efficiently
    provide both voice and data service to a customer. As discussed
    below, competitive LECs seeking to deploy xDSL-based service to
    customers subscribing to the incumbent LEC's voice telephone service
    cannot deploy their xDSL with the same efficiency or at the same
    cost. Incumbent LECs currently do not permit competitive LECs to
    access the high frequency portion of the loop to provide xDSL-based
    services, even though the incumbent LECs utilize the high frequency
    portion of the loop to deploy their own services. As discussed
    below, this situation materially diminishes the competitive LEC's
    ability to provide the particular type of xDSL-based service that it
    seeks to offer.

34. In contrast, we conclude that competitors are not impaired where
    they seek to deploy those versions of xDSL-based services that
    require a dedicated local loop, such as SDSL or HDSL, because they
    can procure unbundled loops to deploy such service.[^63] We
    recognize that for larger business users, competitive and incumbent
    LECs have to date maintained a degree of competitive parity,
    acquiring similar customer volumes.[^64] The larger business market
    tends to favor robust, high-capacity, symmetrical forms of xDSL,
    such as SDSL. These types of xDSL are not compatible with voice
    service provided over the same line in a line sharing arrangement,
    because they utilize the whole loop frequency spectrum. Thus, both
    incumbent and competitive LECs must deploy these forms of xDSL over
    dedicated loops. We believe that the comparable levels of market
    penetration between incumbent and competitive LECs indicates that
    competitive LECs are not impaired where they can procure unbundled
    loops to provide these services.[^65] Moreover, the record does not
    indicate otherwise.

35. As discussed below, we are convinced that line sharing will level
    the competitive playing field and enable requesting carriers to
    accelerate the provision of voice-compatible xDSL-based services to
    residential and small business customers who, to date, have not had
    the same level of access to competitive broadband services as larger
    businesses.[^66] Therefore, because we expect residential and small
    business customers to demand voice-compatible xDSL-based services,
    we find that unbundled access to the high frequency portion of the
    loop offers the best opportunity to see these nascent markets evolve
    into competitive markets, just as early indications in the
    high-capacity offerings to larger business customers suggest that
    competition will take hold.[^67]

36. [Alternatives in the Marketplace]{.underline}. When we look to
    alternatives in the marketplace, we consider whether the competitive
    LEC can provide voice compatible forms of xDSL by self provisioning
    its own loop, by purchasing a second loop from the incumbent, by
    purchasing the first loop as an unbundled network element, or by
    obtaining the higher frequency portion of the loop from third party
    sources. We examine each alternative in turn, using the framework
    developed in the *Local Competition Third Report and Order*. We
    conclude that each alternative either is significantly more costly
    or not available ubiquitously, or both.

37. [Self-Provisioning Loops]{.underline}. The record is conclusive that
    carriers seeking to deploy voice-compatible xDSL-based services
    cannot self-provision loops.[^68] This finding is consistent with
    our conclusion in the *Local Competition Third Report and Order*,
    wherein we found that self-provisioning entire loops is not a viable
    alternative to the incumbent's unbundled loop because replicating an
    incumbent's vast and ubiquitous network would be prohibitively
    expensive and delay competitive entry.[^69]

38. [Second Loop]{.underline}. There are several reasons why purchasing
    or self-provisioning a second loop is not possible as a practical,
    operational or economic matter. First, second loops are not
    ubiquitously available.[^70] Refusing to unbundle the high frequency
    portion of the loop in this situation forecloses competitive access
    to the segment of consumers that lack additional copper pairs to
    their homes or small businesses. Where a customer premises is only
    addressed by one copper loop, or where end users have exhausted the
    facilities that serve them by installing multiple phone, modem, and
    fax lines, end users will have no additional facilities available at
    their premises which a competitive xDSL service provider could use
    to provide service. [^71] In those situations, competitive xDSL
    service providers are precluded from providing the services they
    seek to offer, and consumers are deprived of the benefits of
    competition. This is particularly a problem in rural areas, where
    spare copper facilities are less common.[^72] Without a requirement
    that the incumbent LEC must provide competitors with access to the
    high frequency portion of these loops, only the voice service
    provider that already controls the entire loop can provide
    xDSL-based service to that customer. In virtually all cases, this
    provider will be the incumbent LEC.[^73] Thus, lack of access to the
    high frequency portion of the loop reduces the efficient use of
    existing loop plant and diminishes the scope of potential customers
    to whom competitive LECs can market xDSL-based service, thereby
    limiting the competitive choices available to consumers for whom
    additional copper loops are not available.[^74] In addition, such
    lack of access can accelerate the depletion of copper loops in
    entire communities, necessitating inefficient capital expenditures
    that will increase costs imposed on consumers and competitors alike.
    Even if there are spare pairs in the "drop" to a home or business,
    there are not corresponding pairs in the feeder plant connecting the
    neighborhood to the central office.

39. Second, if competitive LECs were to purchase or self-provision a
    second unbundled loop to provide voice-compatible xDSL-based
    services, their provisioning of service would be materially more
    costly, and coincidentally less efficient, than purchasing the
    unbundled high-frequency portion of the loop.[^75] The inability of
    competing carriers to provide xDSL-based services over the same loop
    facilities that the incumbents use to provide local exchange service
    makes the provision of competitive xDSL-based services to customers
    that want a single line for both voice and data applications \--
    typically small businesses and mass market residential consumers \--
    not just marginally more expensive, but so prohibitively expensive
    that competitive LECs will not be able to provide such services on a
    sustained economic basis.[^76] Accordingly, a requesting carrier
    providing voice-compatible xDSL-based services is impaired without
    access to the unbundled high frequency portion of the loop.

40. Specifically, incumbent LECs refuse to permit competitive LECs to
    deploy xDSL-based service to their customers on the same customer
    loops through which incumbents provide voice services, although
    incumbents regularly deploy both services on the same loop.[^77] As
    a result, a competitive LEC providing xDSL to a customer subscribing
    to an incumbent LEC's voice service must provide a second customer
    loop for the customer's xDSL service, effectively doubling the line
    access charges for that customer's voice and xDSL services, and
    providing a distinct cost advantage to incumbent LEC-provided xDSL
    products.[^78] The record shows that the combined collocation and
    unbundled loop costs, exclusive of incremental and fixed network,
    equipment, and overhead costs, incurred by a competitive LEC seeking
    to deploy xDSL service can exceed 100% of the retail price for the
    comparable shared-line xDSL that the incumbent offers to the same
    customer that the competitor is vying for.[^79] The record also
    shows that incumbents charge requesting carriers almost as much or
    more, on a monthly basis, for an unbundled, conditioned loop, as the
    incumbent charges its retail customers for xDSL service.[^80] This
    price discrepancy between what an incumbent can charge its customer
    for its own shared-line xDSL and what a competitor must pay to the
    incumbent just to gain access to that customer materially diminishes
    the ability of the competitive carrier to offer voice-compatible
    xDSL-based services in competition with incumbent LEC.

41. It is not economical for competitive LECs to self-provision or
    purchase the entire loop as a second line just to obtain access to
    the high frequency portion of the loop.[^81] The record indicates
    that incumbent LECs generally allocate virtually all loop costs to
    their voice services, then deploy a voice-compatible xDSL service
    such as ADSL on the same loop, allocating little or no incremental
    loop costs to the new resulting service.[^82] In contrast, when the
    competitive LEC procures a second loop, it must pay the incumbent
    LEC the full price of that unbundled loop as an unbundled network
    element. The cost of that additional loop often accounts for 30 to
    50% of the competitor's total cost of providing service.[^83] Thus,
    the incumbent LEC's voice-compatible xDSL service enjoys substantial
    cost advantages over a competitive LEC's xDSL offerings.[^84]

42. Third, a competitive carrier faces a competitive disadvantage in
    providing xDSL over a second line when competing against the
    incumbent's single line offering. The incumbent is able to market
    its own service to customers as a quick and convenient add-on
    service, while the competitive carrier must persuade the customer to
    purchase a second line.[^85] For example, Bell Atlantic, BellSouth,
    and US WEST emphasize in their advertising that consumers can
    subscribe to their xDSL-based products without incurring the
    installation and additional monthly expense of acquiring an
    additional telephone line.[^86] In comparison, consumers that desire
    to obtain xDSL service from competitive LECs must encounter
    complications and expenses, including the need to arrange for a
    technician to install service, that do not arise if they procure the
    exact same service from the incumbent LEC. Providing competitive
    LECs with access to the high frequency portion of the loop would
    remove that additional burden from consumers that prefer to obtain
    xDSL service from competitors.

43. Finally, we disagree with CoreComm that a decision to unbundle the
    high frequency portion of the loop should be no different than the
    Commission's analysis of DSLAMs and packet switches, which the
    Commission decided not to unbundle.[^87] CoreComm argues that the
    same reasons which led the Commission to decline to unbundle packet
    switching should lead to a Commission decision to refrain from
    creating a high-frequency portion of the loop UNE. We disagree.
    Self-provisioning switches is vastly easier, less expensive, less
    time consuming, less complicated, and less risky than
    self-provisioning the outside plant that constitutes the ubiquitous
    loop network. Moreover, when we considered the impairment issue with
    regard to packet switches in the *Local Competition Third Report and
    Order*, we held that the presence of "multiple requesting carriers
    providing service with their own packet switches is probative of
    whether they are impaired without access to unbundled packet
    switching."[^88] To follow CoreComm's line of reasoning in the
    situation before us, we would be looking at whether competitive LECs
    have self-provisioned loops, or more precisely, have
    self-provisioned the high frequency portion of the loop in order to
    provide xDSL-based services. There can be little dispute that
    requesting carriers have not duplicated the incumbent LEC's
    ubiquitous loop plant and generally are not providing service with
    competitive loop facilities. Thus, we disagree with CoreComm that we
    should consider loops and packet switches as identical and therefore
    must be treated similarly for unbundling purposes.[^89]

44. [Purchasing the First Loop]{.underline}. We believe that if
    competitive LECs were to provide voice service in addition to
    xDSL-based service, they would be impaired in their ability to
    provide the data services they seek to offer. First, concluding that
    competitive LECs should be able to provide voice service on the
    customer's first line would impose on requesting carriers all of the
    cost and operational issues associated with providing
    circuit-switched voice services. To the extent the competitive
    carrier invests in its own switching facilities, it would face the
    same cost and operational impairments associated with collocation
    and the coordinated cutover process that we found in *the Local
    Competition Third Report and Order*.[^90] Competitive carriers
    providing voice service would also incur the costs of providing E911
    service and number portability.

45. Furthermore, requiring competitive LECs to provide voice services
    could require large investments in circuit switching network
    architectures that may have little to do with a requesting carrier's
    intention to offer advanced data services. Investments in circuit
    switched networks may only be justified by carriers that have
    attained sufficient scale and scope economies to justify deploying
    large-scale circuit switched networks.[^91] For other entrants,
    requiring this investment diverts financial resources and management
    focus away from competitive LECs' ability to offer advanced services
    and frustrates a requesting carrier's plan to migrate
    telecommunication services from circuit switched to packet switched
    networks.[^92] We find that frustrating the development of packet
    switched networks capable of bringing advanced telecommunications
    capability to all Americans is wholly inconsistent with the goals of
    section 706 of the 1996 Act and the deployment of efficient
    networks.

46. In the *Local Competition Third Report and Order*, we stated with
    regard to subloops, if competing carriers that need only a portion
    of the loop must either pay for the entire loop or forego access to
    that loop altogether, many consumers will be denied the benefits of
    competition.[^93] That reasoning applies with equal force here.

47. Incumbents argue that competitors have the same competitive options
    as incumbents, that they are free to provide both analog voice and
    data services in combination, using unbundled network elements, and
    that as a result, competitors are not impaired without access to the
    high frequency portion of the loop.[^94] We acknowledge that
    self-provisioning a circuit-switched network is not the sole means
    of providing voice service. In particular, requesting carriers could
    obtain combinations of network elements and use those elements to
    provide circuit-switched voice service as well data services.[^95]
    This would relieve a competitive carrier from the need to make
    significant investments in switching technology that may soon become
    obsolete.

48. We find, however, that despite its ability to purchase transmission
    facilities from the incumbent to provide voice service, a competitor
    is still impaired if it must provide analog voice service in order
    to enter the market for voice-compatible xDSL services. There are
    additional costs associated with being a provider of voice service
    than the cost of the circuit switches. In particular, a competitive
    carrier would need to develop marketing, billing, and customer care
    *infra*structure designed to service the needs of its voice
    customers. In addition, competitive LECs seeking to enter the
    traditional voice services market must deploy sales and marketing
    forces, and invest in creating a recognizable brand. To compete
    against incumbent LECs that have a long history providing voice
    services, competitors must overcome the substantial goodwill,
    experience and market power of the incumbent LECs. These factors
    make it a considerable challenge for competitive LECs to motivate a
    consumer to adopt a new local exchange provider that offers much the
    same service that the consumer already receives from the incumbent
    LEC.[^96]

49. We are confident that competitors can rise to this challenge. At
    this time however, we find that competitive LECs would be impaired
    even if they attempted to provide multi-service offerings including
    voice-compatible xDSL services. In addition, we note that it is
    likely that competitive market entry would take longer to accomplish
    because competitors would need to develop all of these additional
    capabilities. To be sure, competitive LECs may well decide to
    diversify their offerings at some point in the future. But such
    action should occur in response to marketplace forces, not
    regulatory fiat. To conclude otherwise would be to ignore the
    statutory directive in section 251(d)(2) that requires the
    Commission to consider whether a requesting carrier is impaired "to
    provide the services that it seeks to offer."[^97]

50. Our unbundling analysis acknowledges that requesting carriers may
    address the impairment they face in the absence of line sharing by
    capturing their own efficiencies and offering integrated or
    innovative product offerings to customers.[^98] For example, in the
    absence of line sharing, requesting carriers could offer multiple
    services, such as voice and data, over a single loop to capture the
    additional revenues associated with local and long distance voice
    services. Alternatively, requesting carriers could offer innovative
    bundles of services to customers to counter an incumbent LEC who
    provides voice and data services on a single loop.[^99]

51. As discussed above, however, our unbundling analysis favors an
    analytical approach that considers the totality of the circumstances
    a requesting carrier will face, rather than a specific business case
    analysis, to determine whether lack of access to particular network
    elements materially diminishes a requesting carrier's ability to
    provide the services it seeks to offer. We do not rely upon the
    presence of a particular innovative business plan as a response to
    whether a requesting carrier is impaired because of the variety and
    difficulty of predicting the success of such a plan. We held in the
    *Local Competition Third Report and Order* that "such an approach
    would require the Commission to make specific assumptions regarding
    the competitor's business model, including which technology a
    competitor would choose to deploy, which market a competitor would
    choose to enter (e.g., business and/or residential), and what
    services a competitor would choose to offer."[^100] We find no
    evidence in the record to support the conclusion that a requesting
    carrier's ability to spread the costs of a loop between multiple
    services fully addresses a requesting carrier's impairment without
    access to line sharing. Accordingly, we disagree with parties who
    contend that a requesting carrier can adopt a business plan that
    requires it to provide voice services to address the impairment
    associated with the lack of access to line sharing.[^101]

52. Nothing in our decision to require incumbent LECs to implement line
    sharing pursuant to specific rules adversely affects a requesting
    carrier's ability to provide new services or execute innovative
    business plans. To the contrary, there is evidence that requesting
    carriers have premised innovative marketing arrangements upon the
    presence of a line sharing requirement.[^102] Requesting carriers
    providing only voice compatible xDSL services also propose to offer
    innovative voice over xDSL services when commercially
    practicable.[^103] By requiring line sharing, requesting carriers
    are able to begin to build a base of data customers and focus their
    innovation efforts upon providing packet-switched services which may
    substitute for traditional voice services over time. We find that
    requiring incumbent LECs to provide line sharing therefore, does not
    harm innovation. Conversely, requiring requesting carriers to
    provide voice services would divert a requesting carrier's resources
    away from innovative packet-switched services, such as voice over
    xDSL, that requesting carriers seek to provide.

53. [Third Party Sources:]{.underline} Finally, the record also shows
    that requesting carriers are not presently obtaining the high
    frequency portion of the loop from third-party sources rather than
    from an incumbent LEC under the section 251(c) unbundling
    obligation. At this time, there is no evidence of such alternatives
    in the record, nor are we aware of competitive LECs that provide
    analog voice services offering to partner with competitive LECs
    offering data services to share unbundled loops obtained from
    incumbent LECs, although such partnerships could develop in the
    future. CoreComm notes that some competitive LECs are beginning to
    form alliances with the intention of offering combined data and
    voice-over-DSL and integrated voice and data transmission
    packages.[^104] We support this type of cooperation, but distinguish
    voice-over-DSL and other forms of packetized voice transmission from
    the analog voiceband transmission that is fundamental to the line
    sharing we consider in this Order. Packet-based voice services are
    not yet a market substitute for traditional analog voice service.
    Packet-based services do not provide lifeline services during
    emergency situations such as power outages and do not generally
    offer E-911 functionality.[^105] As we held in the *Local
    Competition Third Report and Order*, our unbundling analysis looks
    to what is occurring in the marketplace today, not hypothetical
    business cases.[^106]

54. [Goals of the Act]{.underline}: Our decision to unbundle the high
    frequency portion of the loop is consistent with the 1996 Act's
    goals of rapid introduction of competition and the promotion of
    facilities-based entry. Moreover, our decision to require spectrum
    unbundling is consistent with Congress's mandate that the Commission
    encourage the deployment of advanced telecommunications capability
    in section 706 of the 1996 Act.[^107] We are convinced that line
    sharing will enable requesting carriers to accelerate the provision
    of xDSL-based service to residential and small business customers
    who, to date, have not had the same level access to competitive
    broadband services as larger businesses.[^108]

55. Because line sharing ensures the deployment of xDSL technologies and
    ensures that consumers will have at least a single choice in xDSL
    providers, even where only one loop is available, it also benefits
    the residents of rural areas. For example, because of the increasing
    constraints on the availability of second, stand-alone loops and the
    high cost of provisioning data services on such loops, failure to
    unbundle the high frequency spectrum of the local loop would cause
    residential and small business customers to forego competitive
    alternatives or the ability to receive xDSL-based service at all,
    particularly in rural areas. In instances where only one loop is
    available, a requesting carrier cannot obtain line sharing, and if
    the incumbent LEC chooses not to offer xDSL-based services, a
    consumer will not be able to obtain x-DSL based services. In
    instances where two loops are available and the incumbent LEC
    chooses to offer xDSL-based services, absent line sharing, a
    competitive LEC seeking to offer xDSL-based service would likely
    encounter a Hobson's choice between providing xDSL-based service at
    a significantly higher price than the incumbents, or take a
    significant economic loss in order to compete against the
    incumbent's price. The incumbent's price, however, is significantly
    lower because the incumbent deploys its voice-compatible xDSL
    service at little or no incremental cost by utilizing the same loop
    that it uses for local exchange service.[^109] Should the
    competitive LEC choose to bypass a rural area because of this
    situation, rural customers are then afforded only the option of
    subscribing to the incumbent LEC's xDSL service. It is an important
    goal of this Commission that competitive providers of xDSL and other
    broadband services do not bypass rural areas as competition brings
    more choices to consumers, in terms of price, quality, and types of
    services.

56. Some commenters argue that unbundling the high frequency portion of
    the loop will dampen investment by competitive LECs that offer voice
    services.[^110] We do not believe that facilitating competition in
    xDSL services will necessarily diminish the competitive opportunity
    in the provision of voice services. Certainly, offering voice
    service is not a technical prerequisite to the provision of xDSL
    service on a particular loop. Rather, it is the fact that the
    incumbent is already providing voice service on a loop that makes
    the preservation of competitive access to the high frequency portion
    of that loop so vital. Without line sharing, competitors would face
    substantial barriers to market entry, such as additional required
    investment for voiceband equipment and facilities, and the
    difficulties of competing against an entrenched, market-dominant
    competitor.[^111] Requiring that competitors provide both voice and
    xDSL services, or none at all, effectively binds together two
    distinct services that are otherwise technologically and
    operationally distinct. Such bundling, whether through
    self-provisioning or through partnerships, will not drive additional
    investment dollars toward voice, because it does not make voice more
    lucrative, but will drive investment away from the provision of
    advanced services, such as xDSL-based services, undermining the
    Congressional intention articulated in section 706 of the 1996
    Act.[^112] In addition, without line sharing consumers would need to
    forego their current voice service provider, virtually always an
    incumbent LEC, in order to subscribe to a competitive LEC's xDSL
    service, which robs consumers of market choices.[^113]

57. Moreover, the availability of shared-line access will encourage data
    carriers to continue investing in network facilities such as DSLAMs,
    interoffice networks, and backbone facilities, and should promote
    further innovation in xDSL technologies.[^114] We conclude that
    unbundling the high frequency portion of the loop will not deter
    investment by facilities-based competitive LECs that plan to offer a
    full range of services to consumers, including both voice and data
    services.[^115] We expect that such carriers will be able to
    differentiate themselves from competitive LECs offering only data
    services by offering consumers the benefits of one-stop shopping, or
    by providing access to superior facilities or technology. In
    addition, we do not agree that providing competitors with the option
    to deliver data services will permit incumbent LECs to become
    entrenched in the provision of voice service. We believe that
    product integration and technological innovation will, over time,
    enable competitive LECs continue to compete with incumbents for the
    provision of a full range of services.[^116]

58. We also disagree with US WEST's argument that the *Advanced Services
    FNPRM* fails to recognize the Commission's "hands-off treatment of
    the dominant providers of advanced services -- cable operators --
    and its heavy regulation of incumbent LECs."[^117] US WEST states
    that the requirement that incumbent LECs unbundle the high frequency
    loop spectrum network element to permit competitive LECs to provide
    xDSL services "violates principles of competitive neutrality" in the
    advanced services market.[^118] US WEST contends that, contrary to
    its treatment of incumbent LECs, the Commission has refrained from
    imposing any unbundling obligations on cable operators.[^119]

59. We note that the Act explicitly makes distinctions based on a common
    carrier's prior monopoly status.[^120] Therefore, US WEST's argument
    is inapposite to the issue at hand. We have not yet determined
    whether the provision of Internet access through a cable modem is a
    cable service, [^121] telecommunications service,[^122] or
    information service,[^123] and therefore potentially subject to
    Title VI or Title II of the Communications Act.[^124] We have
    determined, however, that lack of access to the high frequency
    portion of the incumbent's local loop impairs a competitive
    carrier's ability to offer advanced services, and that unbundling
    this network element furthers the goals of the Act.[^125] Therefore,
    we conclude that it is appropriate to unbundle access to the high
    frequency portion of the local loop, regardless of the regulatory
    status of cable modem Internet access.

60. While we cannot predict the impact that technological developments
    will have upon the ongoing need for the line sharing rules that we
    establish in this Order, our actions at this time need only respond
    to, and are well justified by, current market, technology, and
    industry conditions. Given the rapid changes in technology,
    competition, and the economic conditions of the telecommunications
    market, however, we expect that the conditions justifying our line
    sharing requirements will change over time. We therefore expect to
    reevaluate the applicability of unbundling obligations to the high
    frequency spectrum of the local loop in the course of our periodic
    review of the national rules for unbundled network elements.[^126]

61. Specifically, we expect to reexamine our national list of network
    elements that are subject to the unbundling obligations of the Act
    every three years.[^127] As we stated in the *Local Competition
    Third Report and Order*, we believe that revisiting our national
    network element unbundling rules in three years will provide
    carriers and capital markets the time and regulatory certainty they
    need to implement business plans.[^128] Thus, combining the review
    of our line sharing rules with our review of our other national
    rules for unbundled network elements will facilitate a more
    comprehensive and technologically neutral approach.

## Technical Feasibility of Spectrum Unbundling

### Background

62. In the *Advanced Services FNPRM*, based on the record as it existed
    at that time, we tentatively concluded that line sharing is
    technically feasible and sought comment on that tentative
    conclusion.[^129] We also observed that incumbent LECs already
    provide both voice and advanced services though a single line, and
    may also share lines with other service providers.[^130]

### Discussion

63. We adopt our tentative conclusion that there exists no *bona fide*
    issue of technical feasibility with regard to line sharing. In fact,
    individual LECs commenting in this proceeding no longer dispute
    whether line sharing can be provided to requesting carriers as a
    technical matter.[^131] It is clear from the record that incumbent
    LECs already provide both analog voice and high-speed data services
    over one loop by connecting the local loop facility to their DSLAM
    to utilize the loop's non-voiceband frequency data transmission
    capability for their own xDSL services.[^132] We conclude that
    two-carrier line sharing, where the incumbent LEC's analog voice
    service shares the line with a competitive LEC's data service, can
    be accomplished in the same manner.[^133]

64. The local loop can support transmissions on a wide range of
    frequencies. Analog voice service occurs on the lower "voiceband"
    frequency range, at least between 300 Hertz and 3,000 Hertz, and
    possibly up to 3,400 Hertz depending on equipment and
    facilities.[^134] Some forms of xDSL, such as ADSL[^135] use a
    higher frequency range, generally above 20,000 Hertz, that does not
    interfere with voiceband transmissions.[^136] xDSL services that do
    not use the voiceband frequency range can "share" a copper loop with
    voiceband services, such as POTS, without impairing the performance
    of either service. Therefore, the customer purchasing the xDSL
    service may continue to receive analog circuit-switched POTS from
    the incumbent LEC.[^137]

65. Most voice telephone customers are connected to the PSTN though a
    copper local loop circuit that runs from their premises, through the
    outside loop plant, to the main distribution frame (MDF) in the
    incumbent LEC's central office.[^138] All telecommunications
    services using the local loop are connected, directly or indirectly
    to the MDF.[^139] For traditional voice service, the customer's loop
    is "bridged," or cross-connected, at the MDF to a copper wire pair
    that connects to the incumbent LEC's Class 5 switch.[^140] The Class
    5 switch passes the voice traffic to and from the circuit-switched
    network.

66. xDSL service can be added to a local loop that is being used for
    "traditional" voice service by deploying special equipment at each
    end of the subscribing customer's local loop. Specifically, passive
    signal filters, or "splitters," are installed at each end of the
    customer's loop to accomplish this operation.[^141] One splitter is
    installed at the customer's premises, and another at the central
    office or remote terminal.[^142] A splitter bifurcates the digital
    and voiceband signals concurrently traversing the local loop,
    directing the voiceband signals through a pair of copper wires to
    the Class 5 switch, and directing the digital traffic though another
    pair of copper wires to a DSLAM attached to the packet-switched
    network.[^143]

67. The record indicates that incumbents that provide their own xDSL
    services on the same line that they are providing analog voice
    service are utilizing the single copper pair in the same manner as
    if the incumbent's voice service shared the line with a competitive
    carrier's data service.[^144] Incumbent LECs have not refuted that
    the same architecture that an incumbent uses to provide its own
    shared-line xDSL services is capable of providing shared line access
    to requesting carriers with minimal modifications.[^145]
    Specifically, after the xDSL traffic has passed though the splitter
    and into the output copper wire pair, it may be routed to a
    competitive carrier's DSLAM collocated in the incumbent's central
    office.[^146] We are persuaded that there is essentially no
    technical difference between sending xDSL traffic to a competitor's
    DSLAM and to the incumbent's DSLAM.[^147] Moreover, as commenters
    supporting line sharing emphasize, certain types of xDSL, including
    ADSL, were specifically developed to utilize this sort of
    architectural arrangement to share loops with voiceband services
    without degrading the voice service or causing harm to the
    network.[^148] The only technical limitations regarding the
    implementation of line sharing appear to be that the requesting
    carrier has collocated a DSLAM at the incumbent's central
    office,[^149] and that the requesting carrier deploy an xDSL
    technology that is designed not to interfere with voiceband
    services.[^150]

68. Accordingly, we require incumbent LECs to provide access to the high
    frequency portion of the loop based on the criteria for presumed
    acceptability for deployment that we establish below. By requiring
    conformance with this criteria, we ensure that competitive LECs
    utilize technology that does not interfere with analog voice
    frequencies. We believe that implementation of line sharing in
    compliance with the criteria for presumed acceptability for
    deployment will speed delivery of competitive services without
    impeding the development of new technologies. Moreover, spectrum
    unbundling based on this criteria will permit incumbents to
    implement line sharing promptly because they will be informed of
    their obligations and requirements with certainty and precision.

## Operational Issues Associated with the Implementation of Line Sharing

### Parameters for Line Sharing Deployment

#### Background

69. In the *FNPRM* we requested comment on several issues regarding the
    implementation of line sharing to help us determine exactly how
    incumbents might provide access to the high frequency loop spectrum
    network element. These issues include: whether carriers should be
    allowed to request only the high frequency portion of the local
    loop; whether carriers should be allowed to request any unused
    portion of a line; whether different customers should be allowed on
    the same physical loop; which carrier should manage the multiplexing
    equipment;[^151] and the effect of digital loop carrier (DLC)
    facilities on xDSL service.[^152]

#### Discussion

70. As described in detail below, we require incumbent LECs to provide
    access to this network element to a single requesting carrier, on
    loops that carry the incumbent's traditional POTS, to the extent
    that the xDSL technology deployed by the competitive LEC does not
    interfere with the analog voiceband transmissions.[^153] By imposing
    these limitations, we do not limit the availability of line sharing
    to any particular technology, but only seek to preserve the analog
    voice channel from significant degradation.[^154] We note that in
    adopting unbundling requirements based on a presumption of
    acceptability for deployment, we do not limit the availability of
    the high frequency portion of the local loop to competitive carriers
    providing only data services utilizing ADSL technology. Instead, we
    require that competitive LECs seeking to line share may deploy only
    xDSL-based services that conform with our criteria supporting a
    presumption of acceptability for deployment to ensure that that
    these services will not interfere with analog voice frequencies.

71. [Voice-Compatible Forms of xDSL]{.underline}. We require incumbent
    LECs to provide unbundled access to the high frequency portion of
    the loop to any carrier that seeks to deploy any version of xDSL
    that is presumed to be acceptable for shared-line deployment in
    accordance with our rules.[^155] xDSL technologies that meet this
    presumption include ADSL, as well as Rate-Adaptive DSL and Multiple
    Virtual Lines (MVL) transmission systems, all of which reserve the
    voiceband frequency range for non-DSL traffic.[^156] Among these,
    ADSL is the most widely deployed version of xDSL that is currently
    presumed acceptable for deployment on a shared line.[^157] Because
    line sharing as contemplated by this Order can occur only on lines
    that carry traditional analog voiceband service, lines that are not
    used for these services could not be shared.[^158] We conclude,
    therefore, that incumbent LEC arguments that we should not require
    unbundling of the high frequency portion of the loop because not all
    forms of xDSL technology are compatible with a line sharing
    arrangement are misplaced. Our rules ensure that xDSL technologies
    deployed in line sharing arrangements will not cause substantial
    interference to simultaneous voiceband services.

72. [Incumbent Remains the Voice Carrier]{.underline}. Incumbents are
    not required to provide unbundled access to carriers seeking just
    the data portion of an otherwise unoccupied loop (often referred to
    as a "dry loop.")[^159] As stated previously, line sharing
    contemplates that the incumbent LEC continues to provide POTS
    services on the lower frequencies while another carrier provides
    data services on higher frequencies.[^160] The record does not
    support extending line sharing requirements to loops that do not
    meet the prerequisite condition that an incumbent LEC be providing
    voiceband service on that loop for a competitive LEC to obtain
    access to the high frequency portion. Accordingly, we conclude that
    incumbent LECs must make available to competitive carriers only the
    high frequency portion of the loop network element on loops on which
    the incumbent LEC is also providing analog voice service (often
    referred to as a "wet loop"). We note that in the event that the
    customer terminates its incumbent LEC provided voice service, for
    whatever reason, the competitive data LEC is required to purchase
    the full stand-alone loop network element if it wishes to continue
    providing xDSL service. Similarly, incumbent carriers are not
    required to provide line sharing to requesting carriers that are
    purchasing a combination of network elements known as the
    platform.[^161] In that circumstance, the incumbent no longer is the
    voice provider to the customer.

73. GTE requests that we clarify that an incumbent carrier can
    disconnect a shared line if a customer does not pay its local voice
    telephone bill.[^162] If the incumbent carrier has disconnected the
    customer's voice service in compliance with applicable federal,
    state and local law, then there is no longer an incumbent voiceband
    service with which the competitive LEC can share the loop. The same
    holds true if the customer voluntarily cancels incumbent LEC
    provided voiceband services on the shared loop. In those situations,
    in order to continue to provide data services to that customer, the
    competitive LEC must purchase the entire unbundled loop and must pay
    the incumbent LEC the forward looking cost for that unbundled
    network element.[^163] We would find it unacceptable, and
    potentially discriminatory under section 201 or a violation of
    section 251 obligations, however, for the incumbent to cause or
    require any interruption of the competitive LEC's service in order
    to execute such a loop access status change.[^164]

74. [Single Requesting Carrier, One Customer Per Loop]{.underline}. We
    agree with both incumbent and competitive LECs that the unbundling
    obligations should be defined to permit only a single competitor to
    share the line with the incumbent.[^165] The record indicates
    significant support for two-carrier line sharing arrangements, with
    an incumbent LEC providing analog, circuit-switched voice service
    and a competitive LEC providing data service. It is clear from the
    record that the complexities involved with implementing line sharing
    dramatically increase where more than two service providers share a
    single loop.[^166] We believe that serving multiple customers would
    be very costly, time consuming, and would lead to complex
    operational difficulties. Moreover, the record does not sufficiently
    support the establishment of multiple customer line sharing
    requirements.

75. While we recognize that technology exists that will support more
    than two services on a single copper loop, we do not believe that
    requiring LECs to contemplate and accommodate more complex, but
    unlikely, multi-carrier or multi-service line sharing arrangements
    will benefit the public interest at this time. Indeed, the record
    does not support the need for multiple customer or multiple service
    line sharing.[^167] Thus, we have tailored our line sharing rules to
    avoid needlessly burdening the industry with requirements that far
    exceed the needs stated by the parties. Our intent in requiring
    incumbent LECs to provide unbundled access to the high frequency
    loop spectrum is to facilitate the deployment of advanced services
    to customers that seek both a data and a voice service on a single
    line. These customers typically are residential and small business
    customers. We believe that defining the unbundling obligation as
    described in this section will further that goal without imposing
    unreasonably burdensome, unnecessary, or excessive requirements upon
    incumbent LECs.

76. [Control of the Loop and Splitter Functionality.]{.underline} We
    conclude that, subject to certain obligations, incumbent LECs may
    maintain control over the loop and splitter equipment and functions.
    In fact, both the incumbents and the competitive LECs agree that
    subject to certain obligations, the incumbent LEC may maintain
    control over the loop and the splitter functionality if
    desired.[^168] Incumbent LECs and competitive LECs both argue
    reasonably for the right to control the splitter and to choose to
    isolate the splitter or incorporate it into the DSLAM. Incumbent
    LECs are concerned that passing incumbent LEC voiceband traffic
    through competitive LEC facilities could lead to voiceband service
    degradation.[^169] Competitive LECs have similar concerns with
    regard to xDSL service degradation caused by the incumbent LEC.
    Competitive LECs are amenable, however, to incumbent LEC ownership
    and control over the splitter, but they are concerned that the
    incumbent LEC's ownership and control of the splitter will permit
    the incumbent LEC to limit the competitive LEC's ability to deploy
    competitive services.[^170]

77. We find that an incumbent LEC seeking to maintain control of the
    splitter must promptly accommodate, in response to a competitive LEC
    request to do so, any line sharing technology that meets the
    deployment criteria established in this proceeding.[^171]
    Specifically, we expect that in response to such a request, the
    incumbent LEC will not delay its actions to procure the necessary
    equipment, and will inform the requesting carrier of what action it
    takes, and when the equipment can be installed. We also expect that
    it should take no longer to obtain and install such equipment in
    response to a competitive LEC's request than it would take the
    incumbent to procure and install the same equipment for itself. Any
    failure to make this accommodation in a reasonably prompt manner
    would constitute a violation of the incumbent LEC's section 251
    unbundling obligations.

78. As described by NorthPoint, the passive splitter called for in the
    T1E1.413 ADSL standard directs the voice and data traffic to the
    appropriate transmission equipment and is available from an array of
    vendors.[^172] These splitters are generally located at or adjacent
    to the main distribution frame (MDF) at an incumbent's central
    office. That configuration permits the incumbent to easily control
    the local loop and the splitter functions and reduces the
    possibility of signal attenuation.[^173] Allowing the incumbents to
    maintain control over the loop and the splitter addresses concerns
    that the competitive LEC might be able to use its control over the
    splitter to degrade the incumbent LEC's voice signal or to
    disconnect the customer without regard for the customer\'s voice
    service.[^174] This decision also addresses the incumbent's concern
    that the competitive LEC would be able to violate the privacy of an
    end user\'s voice communications when the end user\'s loop goes
    through a competitive LEC DSLAM.[^175]

79. If a state commission finds that an incumbent has unreasonably
    refused to accommodate the competitive LEC's preferred technology or
    requested equipment upgrades in a prompt fashion, the state
    commission may authorize the competitive LEC to purchase and
    collocate its own splitter, whether or not incorporated into the
    DSLAM. The incumbent LEC would then receive the voiceband signal by
    connecting to the competitive LEC's collocated splitter.
    Alternatively, the state commission may authorize the competitive
    LEC to purchase a splitter that complies with the deployment
    standards we adopt in this Order, and transfer that splitter to the
    incumbent.[^176] Where the competitive LEC obtains some degree of
    control over the splitter, the state commission should ensure that
    the integrity of the incumbent LEC's voice transmission's passing
    through the competitive LEC's equipment and do not interfere with
    the performance of the incumbent LEC's central office and network
    equipment.[^177]

80. [Line Sharing Does Not Impede Incumbent LECs' Ability to Manage the
    Loop Plant]{.underline}. We are not persuaded by incumbent LEC
    claims that they would be unable to manage properly their loop plant
    if required to provide unbundled access to the high frequency
    portion of the loop.[^178] When an incumbent LEC upgrades its loop
    plant from copper to fiber, the incumbent LEC rarely removes the
    existing copper, but instead lays the fiber along the existing
    copper routes.[^179] We believe that this practice allows the
    incumbent LEC to upgrade its plant by laying fiber, while allowing
    the competitive LEC to retain access to copper loops, including
    line-shared loops, they are currently leasing from the incumbents to
    offer xDSL-based services to end-users. We do not intend, however,
    to prevent incumbent LECs from constructing new facilities or
    decommissioning old facilities. We note that the incumbent LEC is
    not restrained, in the course of normal loop plant maintenance and
    improvement activities, from migrating customers from copper to
    fiber loop facilities. Where such activity takes place, however, the
    competitor may be required to forego access to only the high
    frequency portion of the loop serving that customer, and may have to
    obtain access to the entire unbundled copper loop or find another
    alternative to maintain service.[^180] We expect that incumbent and
    competitive LECs will be able to resolve these issues in the course
    of section 252 arbitration and negotiation proceedings.[^181] We
    also note that the Commission has previously defined the specific
    rights and responsibilities of each party in similar
    situations.[^182] Moreover, the retail xDSL service currently being
    offered by the incumbents themselves requires the same loop plant
    that CLECs require to offer shared line xDSL. Accordingly, we
    believe that the spectrum unbundling requirements we establish in
    this Order will not infringe the incumbents\' ability to rearrange
    or replace their loop plant in an equitable and pro-competitive
    manner.

### Loop Conditioning

#### Background

81. In the *Advanced Services FNPRM*, we tentatively concluded that,
    although there might be circumstances where loop conditioning
    activities such as the removal of loading coils and repeaters to
    enable the transmission of high frequency, non-voiceband signals
    would diminish voice service quality, such situations are isolated
    and can be remedied. We tentatively concluded, therefore, that loop
    conditioning should not interfere with the incumbent LEC's general
    obligation to share the line with requesting carriers.[^183] We also
    tentatively concluded that when an incumbent LEC can demonstrate to
    the state commission that digital loop conditioning would interfere
    with the analog voice service of the line, line sharing should not
    be considered technically feasible on that particular line, and line
    sharing obligations would not apply.[^184] Finally, we tentatively
    concluded that incumbent LECs would be required to perform other
    types of loop conditioning activities, such as removing bridge taps
    and cleaning up splices, that would not interfere with analog
    voiceband transmissions.[^185]

82. In the *Local Competition Third Report and Order* we clarified that
    incumbent LECs are required to condition loops to enable requesting
    carriers to offer advanced services, wherever a competitor requests,
    even if the incumbent LEC itself is not offering xDSL services to
    the customer on that loop. We explained that a conditioned loop
    describes a copper loop from which bridge taps, low-pass filters,
    range extenders, and similar devices that carriers use to improve
    voice transmission capability have been removed.[^186] We found that
    because competitors cannot access all of the loop's native
    "features, functions, and capabilities" unless it has been stripped
    of all accreted devices, loop conditioning falls within the
    definition of the loop network element.[^187] Moreover, we concluded
    that although loops of 18,000 feet or shorter normally should not
    require voice-transmission enhancing devices, these devices are
    sometimes present on such loops and the incumbent LEC should be able
    to charge for conditioning such loops.[^188]

#### Discussion

83. We conclude that, except in specific circumstances, incumbent LECs
    must condition loops to enable requesting carriers to provide
    xDSL-based services on the same loops the incumbent is providing
    analog voice service, regardless of loop length. We emphasize that
    shared line xDSL service deployed according to national standards
    will not impair voice services. The record indicates that the
    presence of loading coils, bridge taps, and other voiceband
    transmission enhancing equipment on a particular loop generally
    precludes the deployment of xDSL either on a stand-alone basis or in
    conjunction with voice service to the customer served by that
    loop.[^189] Commenters attest, however, that it is rare,
    particularly on loops that extend less than 18,000 feet from the
    central office, that such equipment is required to enhance voice
    transmission, or that the removal of such equipment will have an
    negative effect on voiceband services.[^190] In these instances,
    consistent with our conclusion in the *Local Competition Third
    Report and Order*, we require incumbent LECs to provide loops with
    all their capabilities intact whenever the competitive carrier
    requests access to the high frequency portion of the loop, even if
    the incumbent itself is not offering xDSL-based services to the
    customer on that loop.[^191] Specifically, the incumbent LEC is
    required to remove bridge taps, filters, range extenders, and
    similar devices where a competitive carrier requests unbundled
    access to the high frequency portion of the local loop.

84. Until recently, lines over 18,000 feet were not considered amenable
    to xDSL transmission.[^192] Commenters state, however, that these
    very long length loops are now compatible with certain xDSL
    transmission technologies, and represent an opportunity for further
    xDSL product development.[^193] Thus, we require incumbent LECs to
    condition loops of any length for which competing carriers have
    requested line sharing, unless conditioning of that loop will
    significantly degrade the incumbent's voice service as described
    below. We believe that this requirement is technology-neutral and
    supports the further development and deployment of xDSL-based
    services.

85. We conclude, however, that if conditioning a particular loop for
    shared-line xDSL will significantly degrade that customer's analog
    voice service, incumbent LECs are not required to condition that
    loop for shared-line xDSL. We recognize that in certain
    circumstances network architecture may necessitate the use of
    equipment such as loading coils on a particular line, and that the
    removal of that equipment would cause degradation of the voiceband
    already on that line.[^194] In such cases, we do not require the
    incumbent LEC to modify its network architecture in a way that will
    significantly degrade a customer's existing voiceband service.
    [^195]

86. We will require that the incumbent refusing a competitive carrier's
    request to condition a loop make an affirmative showing to the
    relevant state commission that conditioning the specific loop in
    question will significantly degrade voiceband services.[^196] The
    incumbent LEC must also show that there is no adjacent or
    alternative loop available that can be conditioned or to which the
    customer's service can be moved to enable line sharing.[^197] We
    believe an incumbent LEC will rarely, if ever, be able to
    demonstrate a valid basis for refusing to condition a loop under
    18,000 feet. In addition, if an incumbent LEC claims that a loop
    cannot be conditioned without degrading the voiceband service, the
    incumbent LEC cannot then or subsequently condition that loop and
    provide xDSL service itself without first making available to any
    requesting carrier the high frequency portion of the
    newly-conditioned loop.[^198] We strongly support state commission
    actions to deter incumbent LECs from misusing these measures for
    anti-competitive purposes.

87. Finally, consistent with our conclusion in the *Local Competition
    Third Report and Order*, we conclude that incumbent LECs should be
    able to charge for conditioning loops when competitors request the
    high frequency portion of the loop. The conditioning charges for
    shared lines, however, should never exceed the charges incumbent
    LECs are permitted to recover for similar conditioning on
    stand-alone loops for xDSL services.[^199] Accordingly, we conclude
    that if the incumbent LEC seeks compensation from the requesting
    carrier for line conditioning activities, or such activity will
    cause substantial loop provisioning delays, the requesting carrier
    has the option of refusing, in whole, or in part, to have the line
    conditioned. A requesting carrier refusing some or all aspects of
    line conditioning will not, however, lose its right of access to the
    high frequency portion of the loop.[^200]

### Digital Loop Carrier Systems

#### Background

88. In the *Advanced Services* *FNPRM*, we noted that in some
    circumstances advanced services cannot share a line with analog
    voice service, and sought additional comment to inform us of those
    situations.[^201] Some commenters argue that many rural areas are
    served by digital loop carrier (DLC) systems,[^202] and competitive
    LECs will not be able to provision xDSL services through DLC
    systems.[^203]

89. In the *Local Competition Third Report and Order,* we found that
    lack of access to subloop elements would preclude competitors from
    offering some broadband services to a significant market segment.
    Accordingly, we concluded that incumbent LECs must provide unbundled
    access to subloops, wherever technically feasible.[^204] In that
    order, we defined subloops as portions of the loop that can be
    accessed at terminals in the incumbent's outside plant.[^205] An
    accessible terminal is a point in the loop where technicians can
    access the wire or fiber within a cable without removing a splice
    case to reach the wire or fiber within.[^206]

90. In the *Local Competition Third Report and Order*, we specifically
    noted that requesting carriers are functionally precluded from
    deploying xDSL services where incumbent carriers have deployed DLC
    systems unless the requesting carrier can otherwise obtain access to
    the customer's copper loop before the traffic is multiplexed at the
    incumbent's remote terminal.[^207] We also observed that competitors
    seeking to offer services using xDSL technology need to access the
    copper wire portion of the loop and, moreover, that most currently
    available xDSL technologies require that the location of the DSLAM
    be within 18,000 feet of the customer.[^208] In both of these
    situations, a requesting carrier needs access to unbundled subloops
    to provide service to its customers.

#### Discussion

91. We conclude that incumbents must provide unbundled access to the
    high frequency portion of the loop at the remote terminal as well as
    the central office. Our subloop unbundling rules and presumptions
    allow requesting carriers to access copper wire relatively close to
    the subscriber, which is critical for a competitive carrier to offer
    services using xDSL technology over the high frequency network
    element.[^209] For the same reasons, we conclude that incumbent LECs
    are required to unbundle the high frequency portion of the local
    loop even where the incumbent LEC's voice customer is served by DLC
    facilities.

92. We note, however, that the functionality required to accomplish line
    sharing on DLC systems may not be available by the effective date of
    our spectrum unbundling rules. We, therefore, apply the same
    rebuttable presumption that we established in the *Local Competition
    Third Report and Order*, that for carriers requesting unbundled
    access to the high frequency portion of the loop, the subloop can be
    unbundled at any accessible terminal in the outside loop
    plant.[^210] Where the parties are unable to forge an agreement to
    facilitate line sharing where the customer is served by a loop
    passing through a DLC, the incumbent carrier bears the burden of
    demonstrating to the relevant state commission, in the course of a
    section 252 proceeding, that it is not technically feasible to
    unbundle the subloop to provide access to the high frequency portion
    of the loop.[^211]

### Operational Support Systems

#### Background

93. In the *Advanced Services FNPRM*, we asked commenters to provide
    additional feedback on operational concerns associated with line
    sharing.[^212] In particular, we asked to what extent LEC operations
    support systems (OSS) need to be modified in order to permit
    competitors to have access to the high frequency portion of the
    loop.[^213] We also asked who would be responsible for matters such
    as line testing, maintenance and repair, and how would incumbent and
    competitive LECs allocate customer service responsibilities.[^214]

94. In response, incumbent LECs state that to provide unbundled access
    to the high frequency portion of the loop, they will have to
    undertake extensive OSS modifications to provide service
    ordering,[^215] provisioning,[^216] and billing functions for the
    network element. They also state that they will need to undertake
    significant OSS modifications in order to provide electronic
    interfaces to requesting carriers that seek access to this network
    element.[^217] The incumbent LECs also state that these OSS changes
    will be exorbitantly expensive, complicated, and
    time-consuming.[^218] Moreover, incumbent LECs claim that the
    provision of unbundled access to the high frequency portion of the
    loop will complicate customer service functions, including line
    testing, maintenance and repair.[^219]

95. Competitive LECs, however, respond that the incumbent LECs can
    implement quick and relatively inexpensive temporary arrangements
    and workarounds to permit the provision of unbundled access to the
    high frequency portion of the loop to requesting carriers within
    weeks of adoption of an order mandating provision of this unbundled
    network element.[^220] Moreover, the competitive LECs argue that
    automated OSS changes would not be unreasonably expensive or
    difficult to implement.[^221] Competitive LECs also argue that many
    of these OSS and customer service modifications are already required
    to facilitate the incumbents' own xDSL-based services and for the
    provision of unbundled network elements pursuant to the *Local
    Competition Third Report and Order*.[^222]

#### Discussion

96. We conclude that incumbent LECs have the capability to accommodate
    the provisioning of the high frequency portion of the loop as a
    network element. Where incumbent LECs provide shared-loop xDSL
    services to their voice customers, either through their own
    subsidiaries or in cooperation with an unaffiliated ISP, the
    incumbent must resolve many of the same problems that they claim
    stand in the way of providing competitors with access to the high
    frequency portion of the loop.[^223] We therefore conclude that
    incumbent LEC arguments that operational issues will take at least
    12 months to resolve sufficiently to provide unbundled access to the
    high frequency portion of the loop are significantly
    overstated.[^224]

97. [Current Incumbent LEC OSSs]{.underline}. Incumbent LECs carry out
    pre-ordering, ordering, service provisioning, billing, and repair
    and maintenance functions using a set of OSSs that share a common
    baseline functionality, although each company's legacy systems vary
    from one another. As described below, these OSSs already support the
    xDSL-based services currently offered by incumbent LECs, and will be
    affected by the provision of unbundled access to the high frequency
    portion of the loop network element.

98. Incumbent LECs use both electronic and manual processes to provide
    unbundled network elements today, including local loops. These
    electronic interfaces may include electronic exchange of data (EDI)
    gateways that incumbents use to receive orders from requesting
    carriers,[^225] and graphical user interfaces (GUIs) for the receipt
    of orders individually input by requesting carriers.[^226]
    Requesting carriers may also submit orders by fax that the
    incumbent's personnel manually enter in to the incumbent's
    OSS.[^227]

99. [Service Ordering]{.underline}. We conclude that the type of effort
    required for incumbent LECs to establish appropriate line sharing
    ordering practices is incremental in nature, and does not require a
    major development initiative.[^228] Incumbent LECs already
    accommodate orders for the advanced services, such as ADSL, that
    they deploy on lines shared with their own voice services. There are
    substantial operational similarities between the line sharing
    situation involving a competitive and an incumbent LEC, and the
    deployment of shared line xDSL provided by an incumbent LEC or an
    ISP.[^229] The OSS capabilities required for incumbent LEC provision
    of shared-line xDSL services are substantially similar to the OSS
    capabilities required for competitive LEC provision of shared-line
    xDSL services, and could be easily adapted to support unbundled
    access to the high frequency portion of the loop network
    element.[^230]

100. We are not persuaded by arguments that a new ordering standard
     would have to be adopted by the Order and Billing Forum (OBF)
     before line sharing could be implemented.[^231] The record shows
     that while changes to the existing fields on the UNE order
     form/electronic order formats may appropriately involve the OBF for
     coordination and standardization, incumbents already have made
     interim modifications to accommodate their own ADSL products.[^232]
     Incumbent LECs argue, however, that competitive LECs will not be
     satisfied with such workarounds, and will require that automated
     OSS interfaces must become available immediately. We note that the
     specific temporary arrangements and workarounds we discuss in this
     section were largely identified and analyzed by a group of
     competitive LECs.[^233] Consequently, we see no reason to assume
     that these competitive LECs would complain if incumbent LECs
     quickly implement these workarounds in a manner that affords the
     competitors nondiscriminatory access to the high frequency portion
     of the loop on a reasonable and timely basis.[^234] Thus, we
     conclude that the interim arrangements that the incumbents use for
     themselves can be extended to competitive carriers as well.

101. A key ordering system function is establishing the records
     necessary for customer service, trouble management, billing, and
     inventory functions.[^235] For the purposes of our analysis, we
     observe that the incumbent LECs already use two circuit or service
     numbers to track their own shared-line xDSL services: (1) the
     existing telephone number to identify the voice service; and (2) a
     circuit number to identify the xDSL service sharing the line.[^236]
     Based on the record before us, we conclude that incumbent LECs can
     extend this practice to accommodate two-carrier shared line access
     to the high frequency portion of the loop network element.
     Specifically, incumbent LECs can identify a line shared with a
     competitive LEC by cross-referencing a circuit number with the POTS
     telephone number. Possible methods for establishing this
     cross-reference include embedding the telephone number in the
     incumbent-assigned circuit number or the customer-assigned circuit
     number, adding it as a cross-reference to the existing account
     number, making a notation in the remarks field, or by establishing
     a new field and field identifier (FID).[^237] An incumbent LEC
     could create two internal orders from a competitive LEC's order for
     access to the high frequency portion of the local loop submitted
     using the incumbent's UNE ordering process.[^238] In that case, one
     order would be used to establish the requesting carrier's access to
     the high frequency loop spectrum, and the other would be a
     record-type order to add line sharing indicators to the customer's
     analog voice service account and records. This system resembles
     those used for "from" and "to" orders to accommodate customers that
     change their address but want to retain the same telephone number,
     as well as the system that incumbents employ to respond to a
     customer's change to a competitive local service provider.[^239]

102. [Provisioning]{.underline}. As previously discussed, we do not in
     this Order require incumbents to provide access to the high
     frequency portion of the loop for multiple competitive carriers.
     Incumbent LECs do not dispute that additional functionality to
     provision a second service on a line does not require a massive
     redesign of the incumbent's inventory system.[^240] The record
     shows that incumbents will use much the same inventory
     functionality to inventory unbundled access to the high frequency
     portion of the loop whether for the purposes of providing access to
     that network element to their competitors, or for themselves.[^241]
     Otherwise, incumbents would have to undertake substantial rebuilds
     to accommodate their own shared-line xDSL service offerings.[^242]

103. Incumbent LECs OSSs already perform inventory and assignment of
     individual cable and pair loops, digital added main lines (DAMLs),
     integrated services digital network (ISDN), and xDSL lines. These
     involve inventorying multiple services on a single loop and are
     substantially similar functions to those necessary for line
     sharing.[^243] We are persuaded by the record that the capabilities
     already exist in the Loop Facilities and Assignment Control System
     (LFACS) to inventory and assign two services on one loop, and that
     with minor modifications, incumbent LECs can easily use existing
     capabilities to inventory services on a shared line.[^244]

104. Competitive LECs with collocation arrangements are assigned
     terminations on the incumbent LEC's MDF to terminate the tie cables
     running to splitters or to the DSLAMs within the collocation space.
     Incumbent LECs inventory and assign MDF locations using an OSS.
     When a competitive LEC orders a new UNE loop, it specifies the MDF
     termination on which the incumbent LEC should deliver the UNE loop.
     Incumbent LECs generally use one of two methods to cable the
     splitters connected to loops. The first approach is to cable the
     high frequency band directly to the DSLAM, and the second is to
     cable it to another MDF location (or to an intermediate
     distribution frame (IDF) location,) and then on to the DSLAM.

105. The second approach facilitates easy customer moves and changes as
     well as changes in the customer's service providers and services.
     In this situation, the splitter has three connections to the MDF --
     one to terminate the loop, a second to terminate the voiceband
     signal and a third to terminate the high frequency loop spectrum.
     Incumbent LEC OSSs such as the Computer System for Mainframe
     Operations (COSMOS) and SWITCH[^245] can be used to track these
     connections. Competitive LECs claim that these OSSs could also be
     used to further cross-reference competitive LEC-owned DSLAM
     equipment to splitters.[^246]

106. We find that, in light of the apparent availability of OSS
     modifications that will satisfy incumbent LEC inventory needs,
     there is no justification to withhold requesting carrier's access
     to the high frequency portion of the loop while OSS modifications
     are implemented to allow carriers to order line sharing through
     electronic interfaces. We expect that incumbent LECs may decide to
     develop new OSSs to accommodate their inventory needs as their
     product and service offerings increase, or to seek increased OSS
     efficiency. We find, however, that further incumbent LEC OSS
     development is not likely to be solely driven by unbundling
     requirements. Consequently, we urge the state commissions not to
     permit incumbent LECs to delay the availability of access to the
     high frequency portion of the loop while they implement automated
     OSS solutions, nor will we permit incumbent LECs to attribute an
     unreasonable portion of their OSS development costs to our spectrum
     unbundling requirements.[^247] We expressly make no judgment,
     however, that such non-automated measures would constitute
     nondiscriminatory access to OSS interfaces for the purposes of
     section 271 of the Act.

107. We expect that incumbent LECs will work with competitive LECs on an
     ongoing basis to design, implement, and maintain efficient and
     effective OSS interfaces that will support ongoing line sharing
     requirements. Specifically, we expect that incumbent LECs will
     implement ordering and provisioning mechanisms and interfaces that
     provide competitive LECs with the ability to obtain access to the
     high frequency portion of the loop in the same ordering and
     provisioning time intervals that the incumbent provides for its own
     xDSL-based service.[^248] We note that a failure to implement OSS
     modifications within the time frame we contemplate in this Order
     could be grounds for finding that a BOC is not providing
     nondiscriminatory access to unbundled network elements under
     section 271 of the Act.[^249]

108. [Billing.]{.underline} We also are not persuaded by the incumbent
     LECs' arguments that implementation of line sharing would require a
     major overhaul of their billing systems.[^250] We believe, based on
     the evidence in the record regarding the range of capabilities
     present in the incumbent LECs' billing systems, there is likely to
     be little, if any, billing system impact resulting from the
     provision of unbundled access to the high frequency portion of the
     loop. Indeed, incumbent LECs have already implemented changes to
     their billing systems to bill customers for their own xDSL-based
     services. The incumbent LECs' expanded billing capabilities include
     the ability to provide billing services for not only their own
     customers, but also on behalf of other service providers.[^251]
     Thus, we conclude that the billing system modifications necessary
     to support unbundled access to the high frequency loop spectrum
     network element are relatively minor compared to the "major
     overhauls" alluded to by US WEST.[^252]

109. [Maintenance, Repair, and Testing]{.underline}. We conclude that
     current industry methods and procedures for customer service, line
     maintenance, and service quality assurance can largely accommodate
     the demands of line sharing between competitive LECs and incumbent
     LECs.[^253] Loop plant maintenance is largely a function of
     adequate testing, repair, and customer service activities. In the
     following discussion, we examine each of these functions and find
     that the incumbent's concerns regarding testing, maintenance, and
     repair are mitigated by the availability of adequate methods and
     procedures for problem resolution. We also find that, in general,
     both incumbents and competitors have a significant interest in
     ensuring that the local loop plant remains fully functional and in
     good repair.[^254] We believe that cooperation and communication
     among incumbent and competitive LECs are the keys to preserving the
     vitality of the PSTN and the successful deployment of line sharing.

110. Incumbents contend that testing the metallic loop for one service
     on a shared line with traditional test systems will cause a
     temporary disruption and possibly lead to more serious problems
     with the other services sharing that line.[^255] In addition, the
     potential for service disruption is highest during installation,
     maintenance and repair activities relating to any service sharing
     the loop with other services, regardless of whether one or both of
     the services sharing the loop is provided by the incumbent
     LEC.[^256] Thus, commenters express a legitimate concern with
     regard to the establishment of equitable and nondiscriminatory
     testing access rights and responsibilities among service providers
     sharing a loop that will enable each carrier to perform testing
     without disturbing the other carrier's service.[^257]

111. [Loop Testing]{.underline}. Both incumbent and competitive LECs
     perform tests to support installation, repair, and maintenance
     processes. Incumbent LECs generally perform automated mechanized
     loop tests (MLTs) to diagnose loop performance for the lower,
     voiceband frequencies. Competitive LECs perform similar tests to
     ascertain the transmission performance of UNE loops when they order
     a second line to provide xDSL-based services.[^258] To perform loop
     tests, incumbent LECs generally gain access to the line through the
     voice switch at the central office. Competitive LECs, however,
     generally access the line at test points near their DSLAMs, which
     are usually located in the collocation space at the end office.

112. Competitive LECs state that there are two major loop testing issues
     that arise with shared line access to the unbundled high frequency
     portion of the loop.[^259] First, the customer must be informed
     that testing on one of their services will impact the other service
     sharing the customer's line. We are persuaded that either the
     incumbent or competitive LEC's customer service operations can
     provide sufficient customer education on this issue.[^260]
     Competitive LECs note that bringing the customer into the
     coordination process avoids the potential for conflicts and
     customer confusion.[^261] Doing so would require only minor
     modifications to existing customer care processes and
     procedures.[^262]

113. The second loop testing issue, however, is more complex.
     Specifically, both the incumbent and competitive LEC must have
     access to the shared loop facility for testing, maintenance, and
     repair activities.[^263] Assuming that the competitive LEC owns the
     DSLAM and installs it in its collocation space in the incumbent LEC
     end office or remote terminal, a splitter is required to isolate
     and direct the voice service to the incumbent LEC voice switch and
     the xDSL service to the competitive LEC's DSLAM.[^264] This
     splitter will likely be installed between the MDF and the other
     central office equipment. In this configuration, the incumbent LEC
     retains testing access to the outside part of the loop through the
     voice switch. The competitive LEC, however, can only access the
     high frequency portion of the loop at its DSLAM. This precludes the
     competitive LEC from engaging in certain important types of loop
     testing that require the competitive LEC to access the loop's whole
     frequency range.[^265] The ability to perform this type of loop
     testing is important for installation, maintenance, and repair
     activities in both shared and non-shared line situations.

114. Competitive LECs state that they have invested in automated
     industry-standard testing capabilities to support their xDSL OSSs,
     and that these testing capabilities are comparable to those used by
     incumbent LECs offering their own xDSL-based services.[^266]
     Competitive LECs argue that their access to the voiceband frequency
     must meet three minimum requirements to facilitate their access to
     the high frequency portion of the loop. First, competitive LECs
     claim that they require physical access on the loop side of the
     splitter for comprehensive loop testing.[^267] In addition,
     competitive LECs argue that such access should be of a type that is
     suitable for integration into their OSS applications.[^268]
     Finally, competitive LECs state that they require testing access at
     any incumbent LEC end office where competitive LECs collocate
     and/or access the high frequency portion of the loop.[^269]

115. Competitive LECs state that physical testing access will enable
     competitive LEC OSSs to access the loop for testing purposes as
     required. Competitive LECs also note that regardless of the ability
     of competitors to access the loop for testing, the incumbent LEC
     retains its access via the voice switch or via the testing access
     point at the splitter.[^270] The competitive LECs suggest that,
     assuming the splitter is controlled by the incumbent LEC and
     located between the MDF and the other central office equipment,
     there are several possible ways to provide testing access to the
     local loop. First, the incumbent LEC could provide physical test
     access points to the competitive LEC at the splitter through a
     cross-connection to the competitor's collocation space.[^271]
     Competitive LECs note that this option is efficient for both the
     competitive and incumbent LEC because each service provider retains
     direct loop access and uses its own OSS.[^272]

116. The competitive LECs also suggest that their OSS could interface
     directly with an incumbent LEC OSS through a standardized interface
     designed to provide physical access for testing purposes.[^273]
     Competitive LECs claim that this interface can be created though
     the creative use of a test access server that could be shared by
     multiple competitive LECs while providing appropriate security
     controls.[^274] This testing server could be owned, controlled, and
     maintained by either the incumbent LEC or the competitive
     LECs.[^275]

117. Finally, competitive LECs state that they could submit testing
     requests to the incumbent LEC for processing by the incumbent
     LEC.[^276] We do not support this practice, as it is less efficient
     from the perspective of the requesting carrier, and creates an
     opportunity for discriminatory incumbent LEC activity, such as the
     imposition of artificial delays and requirements for unnecessary
     and costly manual intervention by either the competitive LEC or
     incumbent LEC.[^277]

118. Based on the record before us, we agree with the competitive LECs
     that a relatively low level of incumbent LEC effort is required to
     ensure that competitive LECs have access to appropriate loop
     testing access points.[^278] Thus, we require that incumbent LECs
     must provide requesting carriers with access to the loop facility
     for testing, maintenance, and repair activities. We require that,
     at a minimum, incumbents must provide requesting carriers with loop
     access either through a cross-connection at the competitor's
     collocation space, or through a standardized interface designed for
     to provide physical access for testing purposes. Such access must
     be provided in a reasonable and nondiscriminatory manner. An
     incumbent seeking to utilize an alternative physical access
     methodology may request approval to do so from the state
     commission, but must show that the proposed alternative method is
     reasonable, nondiscriminatory, and will not disadvantage a
     requesting carrier's ability to perform loop or service testing,
     maintenance, or repair. We stress that incumbents may not use their
     control over loop testing access points and mechanisms for
     anti-competitive or discriminatory purposes, and that we will
     remain attentive and ready to respond to any reported
     anti-competitive incidents relating to competitive LEC access to
     loop testing mechanisms.

119. [Customer Service, Troubleshooting, and Repair]{.underline}. The
     incumbent LECs raise a number of general concerns relating to the
     customer service, troubleshooting, and repair impact of providing
     access to the high frequency portion of the loop to competitive
     LECs. In particular, BellSouth states that it is uncertain how
     ownership will be established for trouble isolation and maintenance
     of the individual services sharing a line.[^279] Bell Atlantic and
     SBC indicate that there may be significant operational problems,
     potentially leading to "finger-pointing" in which each organization
     asserts that the problem is due to the actions of the other
     organization."[^280] Bell Atlantic also argues that "cross-firm
     testing" of xDSL and voice services and the possibility of
     "finger-pointing" between the incumbent LEC and competitive LEC are
     potential sources of disagreement and customer confusion.[^281] SBC
     indicates that trouble resolution and testing will become more
     complicated, because incumbent LECs may lack testing equipment or
     training to test all of the technologies that competitive LECs may
     deploy.[^282]

120. U S WEST states that it would need to redesign its repair and
     maintenance systems because its current systems do not allow two
     providers to service a single facility.[^283] US WEST also
     indicates that service providers "would need to develop new
     processes to avoid the issuance of two repair tickets for a single
     problem."[^284] Although we recognize that the carriers will have
     to address these service and maintenance issues, we note that
     incumbent LECs have successfully deployed cooperative arrangements
     with ISPs, such as America On Line (AOL), that implicate many of
     the same issues that arise with competitive LEC line sharing
     arrangements.[^285] Bell Atlantic argues, however, that line
     sharing between and incumbent and competitive LEC is substantially
     different from the incumbent's retail ADSL services, as well as
     their unbundled network element-related OSSs.[^286] As illustrated
     in the preceding discussion, we recognize that existing OSSs will
     have to be modified to support the provision of access to the high
     frequency portion of the local loop. The record indicates, however,
     that these modifications will build upon existing incumbent LEC
     OSSs and practices.[^287] As more fully discussed below, the record
     also indicates that incumbent LECs can implement these
     modifications within a period of months.[^288]

121. Under some incumbent LEC tariffs for bulk xDSL service sold to
     ISPs, ISPs purchase the incumbent's xDSL. In those arrangements,
     the ISP, not the incumbent LEC, provides a high-speed Internet
     service package that includes xDSL service.[^289] These
     arrangements require that the incumbent LEC's OSS be able to
     recognize and administer the provision of multiple services on a
     single local loop. Competitive LECs also state that in a typical
     non-line sharing situation, the competitive LEC or its ISP partner
     is responsible for customer service when an xDSL customer served by
     a competitive LEC using a UNE loop from the incumbent LEC
     experiences a service difficulty.[^290] If the competitive LEC or
     ISP determines that there is a problem on the UNE loop, the
     competitive LEC opens a trouble ticket with the incumbent LEC and
     the two (or three in the case of an ISP) entities cooperate to
     restore the end user's loop and advanced service.[^291]

122. We conclude that the same would be true where the incumbent
     provides the high frequency portion of the loop as an unbundled
     network element because, just as the ISP is the competitive LEC's
     customer, the competitive LEC is the incumbent LEC's customer, and
     the end user is a customer of all three. If the problem encountered
     appears to impact primarily the xDSL service, the end user should
     call the ISP or the competitive LEC, depending on the customer
     service relationship between the two entities. If the problem
     impacts primarily the voice service, the end user should call the
     incumbent LEC. If both services are impaired, the recipient of the
     call should coordinate with the other service provider(s). We agree
     that each service provider has a responsibility to educate the end
     user regarding which service provider should be called for problems
     with their respective service offerings.[^292] Furthermore, we
     believe that current incumbent LEC trouble management OSSs have the
     capability to analyze and correlate multiple related trouble
     tickets. When related trouble tickets occur today, the incumbent
     LECs' OSS creates a master trouble ticket and associates the
     duplicate tickets with the master in a parent/child
     relationship.[^293]

123. Bell Atlantic also states that it will not be able to use its own
     equipment to test the data portion of the shared line, making Bell
     Atlantic's ability to maintain those competitors' xDSL services
     "more difficult."[^294] The record does not indicate, nor do we
     foresee, that incumbent LECs such as Bell Atlantic would have
     occasion to test a competitive LEC's xDSL equipment or products.
     The quality of the service that a competitive LEC provides to its
     customer is not the incumbent's responsibility, so long as the
     incumbent is providing sufficient quality of service to the
     requesting carrier. We agree with commenters that if they are
     provided with access to the high frequency portion of the loop that
     is of sufficient quality, competitive LECs have ample capability
     and incentive to ensure the quality of the services they offer to
     their customers, and the performance of their own equipment.[^295]

124. We envision that incumbent LECs will retain primary responsibility
     over the loop facility for voiceband trouble tickets and testing of
     the local loop facilities. We also expect that the incumbent LEC
     will remain responsible for any problems associated with the
     voiceband service it sells to the customer - where there is a
     problem reported with the customer's voiceband service, the
     incumbent LEC will remain responsible for resolving that problem.
     If there is a problem with the xDSL service, then we expect that
     the competitive LEC will resolve that problem. Should the customer
     become disenchanted with the complexity of obtaining incumbent LEC
     voiceband and competitive LEC xDSL-based services over the same
     line, the customer can always opt to procure both from the
     incumbent LEC, or purchase from an ISP an integrated xDSL and
     Internet access service package.

125. Furthermore, we find that maintenance, repair, and testing concerns
     can be handled by utilizing similar methods and procedures to those
     that incumbent LECs are implementing for the ordering and
     provisioning of the unbundled network elements identified in the
     *Local Competition Third Report and Order*. Specifically, the
     record indicates that incumbent LECs already have methods and
     procedures in place for the cooperative resolution of trouble and
     testing problems that arise with competitive LECs.[^296] The record
     also indicates that these methods and procedures can easily be
     modified to include provisions for escalating shared line trouble
     issues in a manner that minimizes customer confusion.[^297] We note
     that SBC and Ameritech, through their separate subsidiary proposal,
     provide an example of how cooperative planning can facilitate
     customer service, whether among separate affiliates or unaffiliated
     competitive LECs.[^298]

126. [Resolution of Operational Issues]{.underline}. Incumbents have
     voiced a number of concerns regarding the "back-office" processes
     that will be affected by providing competitors with access to the
     unbundled high frequency portion of the local loop.[^299] The
     record shows that these problems are not substantially unique, and
     that the process modifications required to resolve these issues are
     already supported by existing incumbent LEC OSS functionality,
     processes and procedures. The record also shows that incumbent LECs
     can implement suitable OSS modifications within the time frame we
     establish for implementation of this obligation.[^300] We believe
     that any remaining implementation or OSS problems are best remedied
     through the cooperative development of standard business practices
     and regular communications between the two service providers
     sharing a loop.[^301] We note, as an example of the potential for
     cooperation, that incumbent LEC and competitive LEC technicians
     currently perform co-operative testing for acceptance purposes,
     when the incumbent LEC technician is at the customer premise
     installing the UNE line to the demarcation point.[^302] We note,
     moreover, that carriers could address issues such as whether a
     service provider has an obligation to notify a customer before
     tests impacting both voice and xDSL services are conducted, contact
     information, and complementary customer services script on a
     collaborative basis. In addition, these tasks do not appear to be
     significantly different from the coordination activities that
     regularly occur among other service providers that share the PSTN.

127. The record indicates that incumbent LECs have already modified
     their OSS systems to accommodate their own xDSL products, and that
     those modifications and those required for line sharing are
     substantially similar.[^303] We believe that incumbent LECs can
     adapt expediently existing incumbent OSS systems to handle line
     sharing with a single requesting carrier.[^304] The record also
     indicates that incumbent LECs can perform the incremental
     modifications to the existing ordering processes required to
     provide competitive LECs with access to the high frequency portion
     of the loop in an expedient manner and at modest expense. The
     record also shows that in the absence of fully automated OSS
     interfaces, incumbent LECs have a variety of means available with
     which they can accommodate competitive LEC orders for the unbundled
     high frequency portion of the local loop, including the use of
     manual overrides of their current UNE ordering methods and
     procedures.[^305]

128. We recognize that unless incumbent and competitive LECs collaborate
     to establish OSS interfaces, regularized processes, and business
     practices for ordering, provisioning, billing, testing,
     maintenance, and repair responsibilities, disputes among incumbent
     and competitive LECs sharing the same local loops are likely to
     arise. We are concerned that these disputes may lead to delays and
     consumer confusion, frustrating the pro-competitive effect of
     providing unbundled access to the high frequency portion of the
     local loop. Accordingly, we urge requesting carriers and incumbent
     LECs to engage in a collaborative process at the regional level to
     develop solutions to incumbent LEC provision of shared line access.
     We believe that a publicly available plan of record that identifies
     a collaborative mechanism or forum wherein competitive and
     incumbent LECs will interface to solve problems that arise in the
     course of providing access to the high frequency portion of the
     local loop to competitive LECs will assist all entities by
     centralizing communications and reducing administrative
     costs.[^306] Accordingly, we urge incumbent LECs to post their
     collaboration plan, OSS interface information, and related methods
     and procedures on their Internet sites, and to modify and update
     this information on a regular basis to ensure that it remains
     accurate. We believe this public posting would benefit small
     entities and small incumbent LECs in particular by enabling
     multiple carriers to join in a single, region-wide, collaborative
     process.

129. We suggest that the plan include specific details of the process
     including, a timeline outlining how the collaborative effort will
     proceed, with milestones for resolution of issues, and the names
     and all necessary contact information for the employee who will be
     responsible for addressing business complaints that arise in the
     collaboration process and during the negotiation of the relevant
     interconnection agreements or amendments.[^307] We expect that
     these plans will form the basis for collaboration among the
     incumbent and competitive LECs on the establishment of common OSS
     interfaces as well as testing, maintenance, and repair
     responsibilities and procedures.

130. We do not identify or require incumbent LECs to make specific OSS
     methods and procedures, or facilities changes, and we do not
     prejudge whether specific OSS functionalities are necessary to
     fulfill an incumbent LEC's nondiscrimination duty. The record
     clearly shows that incumbent LECs have a number of process
     alternatives through which they can make line sharing available to
     requesting carriers in accordance with our rules. The record
     indicates that incumbent LECs should be able to develop and
     implement the majority of systems modifications necessary to
     provide access to the higher frequency portion of the loop 180 days
     from release of this order.[^308] As discussed in detail above, the
     record also indicates that there are alternatives, to those system
     modifications that can not be implemented in 180 days, and that
     these alternatives can be deployed in six months. Thus, the record
     shows that incumbent LECs should be able to implement system
     changes necessary to provide requesting carriers with
     nondiscriminatory access to the high frequency portion of the local
     loop within 180 days from release of this order.

## Economic, Pricing Methodology, and Cost Allocation Issues 

### Background

131. In the *Advanced Services* *FNPRM*, we requested comment on the
     economic, pricing, and cost allocation issues that may arise from
     line sharing.[^309] Specifically, we asked how line sharing might
     affect federal and state access charge regimes and universal
     service mechanisms.[^310] We requested comment on the pricing
     consequences of requiring line sharing, and asked, among other
     things, whether the entire cost of the loop should be allocated to
     the voice channel or divided equally or otherwise between the two
     services sharing the facility.[^311] In addition, we requested
     comment on the cost allocation issues, if any, that are raised by
     line sharing.[^312]

132. In this Order, we establish guidelines to assist the states in
     applying our unbundled network element pricing rules to line
     sharing when they arbitrate modifications to interconnection
     agreements or otherwise adopt permanent prices for this unbundled
     network element. These guidelines either follow directly from the
     Total Element Long Run Incremental Cost (TELRIC) methodology that
     the Commission set forth in the *Local Competition First Report and
     Order*[^313] to govern interconnection and unbundled network
     element pricing, or, if not a direct outgrowth of those principles,
     are consistent with them in the context of this particular
     unbundled network element. We note, in this regard, that virtually
     all states have already adopted the TELRIC methodology in setting
     prices for other unbundled network elements.

### Discussion

133. The impetus behind ordering line sharing is the need to expedite
     the deployment of xDSL-based advanced services while simultaneously
     fostering meaningful competition in the provision of those
     services.[^314] In the current environment, competitive LECs must
     purchase access to additional lines in order to offer xDSL-based
     services, while the incumbent LECs use their own voice loops to
     offer these same services. The incumbent LECs' xDSL services are,
     in fact, sharing the local loop facility with their voice services.
     In setting prices for interstate xDSL services, moreover, incumbent
     LECs currently attribute little or no loop cost to those services.
     The competitive LECs, on the other hand, are forced to purchase
     access to a second line, and pay the related unbundled network
     element rates for an entire loop. This puts competitive LECs at a
     severe competitive disadvantage when they offer xDSL-based services
     to the public. In some cases, the unbundled network element rate
     for a loop is so close to the rate the incumbent LEC charges for
     its xDSL-based services that it is not possible for the competitive
     LEC to offer service at a competitive price.[^315] Even if line
     sharing is made available to competitive LECs, however, it will not
     promote competition unless it is priced in a way that permits
     competitive LECs to enjoy the same economies of scale and scope as
     the incumbent LECs.[^316]

134. The Telecommunications Act of 1996 requires the states to set
     prices for unbundled network elements that are cost-based and
     nondiscriminatory, and that may include a reasonable profit.[^317]
     The Commission concluded in the *Local Competition First Report and
     Order* that the state commissions should set arbitrated rates for
     interconnection and access to unbundled network elements pursuant
     to a forward-looking economic pricing methodology, known as TELRIC,
     that sets prices for unbundled network elements based on "the
     forward-looking costs directly attributable to the specified
     element, as well as a reasonable allocation of forward-looking
     common costs."[^318] As the Commission anticipated, the states now
     conduct cost studies and apply an economic costing methodology
     consistent with the TELRIC methodology in arbitrating
     interconnection disputes and setting unbundled network element
     rates.[^319]

135. By requiring line sharing, we are creating a new unbundled network
     element. We conclude that, when arbitration is necessary, the price
     of this new element should be set by states in the same manner as
     they set the price for other unbundled network elements. We further
     conclude that offering the state commissions guidance to assist in
     pricing this new unbundled network element will facilitate
     consistency among the states and ensure that our line sharing
     guidelines do, in fact, promote competition in the provisioning of
     xDSL-based services. We note in this regard that California urged
     us to establish costing and pricing rules to further this
     purpose.[^320]

136. Based on the record, we find that there are five types of direct
     costs that an incumbent LEC potentially could incur to provide
     access to line sharing: (1) loops; (2) OSS; (3) cross connects; (4)
     splitters; and (5) line conditioning. We discuss each of these
     costs and their pricing methodology below.

     \(1\) Local Loop

137. The parties to this proceeding have suggested several approaches
     for pricing the loop facility over which line sharing will be
     provided. Several competitive LECs argue that we should permit the
     incumbent LECs to charge the competitive LECs whatever the
     incumbent LECs calculate the loop costs to be when they offer the
     same services. If an incumbent LEC allocates zero loop costs to
     xDSL service when it offers such services over a voice line, then
     it cannot charge the competitive LECs any loop cost for access to a
     line for the purpose of offering those same xDSL services. This
     approach, it is argued, would give the incumbent LECs the incentive
     to allocate those costs more reasonably.[^321] Parties supporting
     this approach also contend that, regardless of the precise
     allocation of costs between the incumbent voice services and the
     line sharing network element provided to the competitive LEC,
     incumbent LECs will still recover the full embedded cost of the
     local loop.[^322] Full recovery of local loop costs through voice
     services would leave the incumbent LEC whole even if the
     competitive LEC had access to the shared loop facility at a price
     that included no loop costs at all.[^323] On the other hand, there
     could be a double recovery if the incumbent LEC recovered the full
     cost of the loop from its voice and related services while,
     recovering an additional amount for loop costs from a competitive
     LEC for access to that same loop.

138. We note that the TELRIC methodology that the Commission adopted in
     the *Local Competition First Report and Order* does not directly
     address this issue. More specifically, the Commission in that order
     noted that the TELRIC methodology was designed to price "discrete
     network elements or facilities," rather than services.[^324] In the
     case of line sharing, however, the facility in question is, by
     definition, also used for two incumbent LEC services (local
     exchange service and interstate access service). We are thus
     presented with the question of how to establish the forward looking
     economic cost of unbundled bandwidth on a transmission facility
     when the full embedded cost of that facility is already being
     recovered through charges for jurisdictional services. Accordingly,
     we must extend the TELRIC methodology to this situation and adopt a
     reasonable method for dividing the shared loop costs.

139. We conclude that, in arbitrations and in setting interim prices,
     states may require that incumbent LECs charge no more to
     competitive LECs for access to shared local loops than the amount
     of loop costs the incumbent LEC allocated to ADSL services when it
     established its interstate retail rates for those services. This is
     a straightforward and practical approach for establishing rates
     consistent with the general pro-competitive purpose underlying the
     TELRIC principles. We find that establishing the TELRIC of the
     shared line in this manner does not violate the prohibition in
     section 51.505(d)(1) of our rules against considering embedded cost
     in the calculation of the forward looking economic cost of an
     unbundled network element.[^325] We also note that this approach
     was recently approved by the Minnesota PUC.[^326]

140. We find it reasonable to presume that the costs attributed by LECs
     in the interstate tariff filings to the high-frequency portion of
     the loop cover the incremental costs of providing xDSL on a loop
     already in use for voice services. Under the price cap rules for
     new access services, the recurring charges for such services may
     not be set below the direct costs of providing the service, which
     are comparable to incremental costs. The rates the incumbent LECs
     set for their special access xDSL services should cover those
     costs. The incumbent LECs filed their cost support for their own
     special access DSL services before we issued the notice giving rise
     to this Order compelling line sharing, and they have defended their
     cost support when challenged in petitions to reject or suspend
     their tariff filings.[^327] Since the incremental loop cost of the
     high-frequency portion of the loop should be similar to the
     incremental loop cost of the incumbent LEC's xDSL special access
     service, this approach should result in the recovery of the
     incremental loop cost of the high-frequency portion of the loop.

141. This approach also helps alleviate any potential price squeeze. A
     price squeeze may occur when incumbent LECs allocate little or no
     loop costs to their xDSL services, while competitive LECs, when
     offering xDSL service, must purchase access to a second line and
     pay for the related unbundled network element rates, which includes
     a loop cost for an entire loop. This difference in the cost of
     offering xDSL services leaves the competitive LECs at a significant
     competitive disadvantage. By requiring incumbent LECs to provide
     access to the shared local loops for no more than they allocate to
     their own xDSL services, the price squeeze may be redressed by
     ensuring competitive LECs and ILECs incur the same cost for access
     to the bandwidth required to provide xDSL services.

     \(2\) OSS

142. Incumbent LECs use OSS systems that carry out pre-ordering,
     ordering, service provisioning, billing, repair and maintenance
     functions for their current products and services. Although the OSS
     systems vary among incumbent LECs, they share a common
     functionality. Competitive LECs exchange information with incumbent
     LECs through Electronic Exchange of Data gateways, Web GUIs, or via
     paper fax transmissions. There is no dispute either that incumbent
     LECs will need to modify their OSS systems somewhat in order to
     implement line sharing, or that they will incur costs in doing so.
     The question here is what the incumbent LECs should be permitted to
     charge competitive LECs for those required modifications.

143. Estimates from the incumbent LECs vary from a low of three and a
     half to five and a half million dollars,[^328] to a high of
     hundreds of millions of dollars.[^329] Bell Atlantic's range of
     estimates runs from five to twenty-five million dollars.[^330]
     Competitive LECs contend that, because most of the necessary
     functionality already exists in the incumbent LECs' OSS systems,
     the costs of modifying OSS systems for line sharing nationwide are
     no more than GTE's estimate of five million dollars across GTE's
     entire service territory.[^331] A joint *ex* *parte* filed on
     behalf of several competitive LECs maintains that the incremental
     changes needed in OSS to support line sharing would be minimal, and
     that manual work arounds, where necessary, would be sufficient to
     implement xDSL line sharing.[^332]

144. We find that incumbent LECs should recover in their line sharing
     charges those reasonable incremental costs of OSS modification that
     are caused by the obligation to provide line sharing as an
     unbundled network element. We believe that this guideline is
     consistent with the principle set forth in the *Local Competition
     First Report and Order* that incumbent LECs cannot recover
     nonrecurring costs twice.[^333] We also reaffirm the conclusions in
     the *Local Competition First Report and Order*, that the states may
     require incumbent LECs in an arbitrated agreement to recover such
     nonrecurring costs such as these incremental OSS modification costs
     through recurring charges over a reasonable period of time; and
     that nonrecurring charges must be imposed in an equitable manner
     among entrants. [^334]

     \(3\) Cross Connects

145. Cross connections will be required to connect the competitive LECs'
     xDSL equipment to the incumbent LECs' facilities in order for the
     competitive LEC to be able to provide xDSL services via line
     sharing. The incumbent LECs currently provide cross connects to
     interconnect loops with the collocated facilities of competitive
     LECs installed in incumbent LEC offices, and the states are setting
     prices for the cross connects using the TELRIC methodology. We
     would expect that the costs of installing cross connects for xDSL
     services in general would be the same as for cross connecting loops
     to the competitive LECs' collocated facilities, particularly where
     the splitter is located within the incumbent LEC's MDF.
     Accordingly, we find it reasonable to establish a presumption that,
     where the splitter is located within the incumbent LECs' MDF, the
     cost for a cross connect for entire loops and for the high
     frequency portions of loops should be the same. We would expect the
     states to examine carefully any assessment of costs for cross
     connections for xDSL services that are in excess of the costs of
     connecting loops to a competitive LECs' collocated facilities where
     the splitter is located within the MDF. If the splitter is not
     located within the incumbent LEC's MDF, however, then we would
     expect the states to allow the incumbent LEC to adjust the charge
     for cross connecting the competitive LEC's xDSL equipment to the
     incumbent LECs' facilities to reflect any cost differences arising
     from the different location of the splitter, compared to the MDF.
     We would expect that this amount would be only minimally higher
     than for cross connecting a splitter located within the MDF to the
     competitive LEC's xDSL equipment.

     \(4\) Splitters

146. We concluded *supra*, that incumbent LECs must either provide
     splitters or allow competitive LECs to purchase comparable
     splitters as part of this new unbundled network element.[^335] The
     issue here is the price that incumbent LECs should be allowed to
     charge for such a device. We note, in this regard, that incumbent
     LECs do not currently provide access to a splitter as part of an
     existing unbundled network element offering or as part of a
     tariffed interstate service.

147. We conclude that, if the incumbent LEC purchases for a competitive
     LEC the same splitter that it uses itself for providing xDSL
     services, then a state may require that it only assess the
     competitive LEC the same amount that it itself pays for a delivered
     splitter. This guideline is reasonable and consistent with TELRIC
     principles, because it means that the incumbent LEC will recover
     the incremental cost it incurred in purchasing the splitter. We
     further conclude that a competitive LEC, at its option, should be
     allowed to purchase a splitter that complies with industry
     standards, and transfer it to the incumbent LEC, in the event that
     the competitive LEC can complete the transaction more expeditiously
     or cost effectively than the incumbent LEC. A state may also allow
     the incumbent LEC to include in its rate structure a charge to
     recover the cost of installing the splitters.

     \(5\) Line Conditioning

148. Finally, we consider the appropriate price an incumbent LEC may
     charge a competitive LEC to perform line conditioning, where such
     conditioning is necessary for the provision of shared-line DSL
     service. In order to prevent incumbent LECs from charging an
     excessive price for line conditioning, states may require that the
     conditioning charges for shared lines not exceed the charges the
     incumbent LECs are permitted to recover for similar conditioning of
     stand-alone loops for xDSL services. Furthermore, if the incumbent
     LEC is providing, or has already provided, xDSL service over a
     particular shared loop, a competitive LEC should not be charged
     with any line conditioning costs if it wins that customer and seeks
     access to that shared loop for providing xDSL service.

149. On a more general note, the incumbent LECs argue that pricing this
     new unbundled network element using the TELRIC methodology would
     discourage investment in new advanced services and technologies.
     Their argument is two pronged. First, if incumbent LECs must offer
     line sharing to competitive LECs at TELRIC rates, then the
     competitive LECs would be less likely to invest in alternative
     technologies, such as those using terrestrial wireless or satellite
     circuits.[^336] Secondly, if line sharing is mandated everywhere,
     it will reduce the ability of the incumbent LECs to recover any
     future fixed costs of developing advanced services which, in turn,
     will reduce the incumbent LECs' incentives to develop such
     services.[^337]

150. The argument that TELRIC pricing of line sharing will reduce the
     incentive of competitive LECs to invest in alternative technologies
     is inconsistent with the Commission's conclusions in the *Local
     Competition First Report and Order*. In that order, the Commission
     concluded that setting unbundled network element prices based on
     TELRIC would encourage efficient levels of investment and entry by
     competitive LECs.[^338] There is no evidence in this record to
     cause us to alter the Commission's conclusion that pricing
     unbundled network elements on the basis of TELRIC will not
     discourage efficient levels of investment and entry by competitive
     LECs. We also reject the argument that applying TELRIC principles
     to line sharing will reduce the incentives of incumbent LECs to
     develop advanced services. To the contrary, we find that the
     increased competitive pressures caused by the deployment of
     xDSL-based services by competitive LECs and of cable modem service
     by cable companies should increase the incentive of incumbent LECs
     to invest in advanced services.

151. Bell Atlantic argues that, if the Commission sets the price of the
     high-frequency portion of the loop at its long-run incremental cost
     (LRIC),[^339] this would deprive incumbent LECs of revenues needed
     to support voice services. Bell Atlantic explains that, if the
     price of voice service is set below cost,[^340] and the price of
     other services provided over the local loop are set at incremental
     cost, then the incumbent LEC may be unable to recover the common
     costs of the network, including the cost of the loop.

152. We reject Bell Atlantic's argument. To the contrary, we conclude
     that requiring line sharing and pricing it on the basis of TELRIC
     should not affect the ability of the incumbent LEC to recover costs
     associated with providing voice service. Currently, incumbent LECs
     are recovering the full embedded cost of their loops through
     revenues received from intrastate business and residential voice
     services, interstate access charges, and intrastate access charges.
     Nothing we do today affects the ability of incumbent LECs to
     continue to receive revenues from those services. Furthermore, the
     TELRIC methodology allows states to include in the price of an
     unbundled network element a reasonable allocation of
     forward-looking common costs. We anticipate, therefore, that states
     will set interim or arbitrated prices for line sharing to include
     forward-looking common costs as well as the directly-attributable
     costs discussed above. States should assign forward looking common
     costs to this new unbundled network element in the same way that
     they have assigned such costs to other unbundled network elements.
     Thus, we see no reason to depart from the use of the TELRIC-based
     methodology adopted in the *Local Competition First Report and
     Order* for this new unbundled network element.

153. We note that US WEST and Covad suggested a different method for
     setting the price of the line sharing unbundled network element as
     a fixed percentage of the TELRIC-based unbundled loop rate set by a
     state commission, or possibly as a percentage of the loop proxy
     ceilings contained in section 51.513 of our Rules. [^341] Covad
     argued that the price should be ten percent of the unbundled
     network element rate or the loop proxy. [^342] US WEST, in
     contrast, argued that 50 percent of the state-determined unbundled
     network element loop rate was a reasonable approximation of the
     value of the shared lines to the competitive LEC. [^343] Both
     proposals dealt with a scenario in which we would set forth interim
     pricing measures. Since we are not doing so in this Order, these
     proposals are moot.

154. US WEST further argues that, by requiring line sharing of the local
     loop we are, in effect, forcing the incumbent LECs to sell the
     entire local loop to the competitive LEC,[^344] and then to buy
     back that portion of the loop that the competitive LEC does not
     use. In other words, US WEST argues that competitive LECs seek to
     purchase an unbundled loop, extend the loop into their collocated
     space on the incumbent's property, attach their own preferred xDSL
     electronics, and then force the incumbent LECs to buy back whatever
     unused spectrum the competitive LEC chooses to let the incumbent
     use for voice telephony. US WEST then argues that line sharing
     requires them to bear the risk that its voice channel will not be
     adversely affected by the competitive LECs' xDSL services.
     According to US WEST then, the real question is what rebate should
     the competitive LEC receive for returning the voice channel to the
     incumbent LEC.[^345]

155. We do not see the issue in that manner, as we are not ordering the
     incumbent LECs to sell the entire loop, and do not agree with US
     WEST's characterization of what we are ordering. Incumbent LECs
     already provide voice and xDSL-based services over a shared line.
     In fact, the Internet sites of these companies would lead one to
     believe that sharing one's local loop with both voice and xDSL
     services has no ill effects upon one's voice communications at
     all.[^346] Moreover, we have provided sufficient measures in this
     Order to ensure that the integrity of the voice component is not
     compromised. Further, we do not force the incumbent LECs to sell
     the entire local loop to a competitive LEC for xDSL services by our
     decision here. The incumbent LEC retains ownership and control of
     the loop at all times. In light of this conclusion, the rebate
     question need not be addressed.

156. US WEST also argues that any price set for the higher frequencies
     in the local loop should reflect the "tremendous value that a
     \[competitive LEC\] would obtain by acquiring the loop's
     data-transmission potential."[^347] US WEST contends that the
     ability to offer voice and data over a single loop is also a
     function of technological efficiency, and allowing a competitive
     LEC access to share this efficiency without having to offer voice
     service could reduce the efficiencies enjoyed by the incumbent
     LECs, as they would be left with just the voice component and no
     xDSL component.[^348] If the incumbent LECs lose this efficiency,
     US WEST argues, then, that competitive LECs should pay a premium
     for acquiring the loop's data-transmission potential.[^349]

157. We reject US WEST's value-based pricing methodology. As we stated
     in the *Local Competition First Report and Order*, the price for
     unbundled network elements should be based on forward-looking
     costs. Setting the price for an unbundled network element based
     upon the competitive value that the facility confers upon another
     party does not conform with the TELRIC principles set forth both in
     this Order and in the *Local Competition First Report and Order*.

## Implementation of Unbundling Obligation

158. As the Commission has continually recognized, the states will play
     a critical role in promoting local competition.[^350] Moreover,
     this Commission shares with the states a commitment towards
     ensuring the deployment of advanced services to all
     Americans.[^351] We reiterate here our conclusion in the *Local
     Competition First Report and Order* that state arbitration of
     interconnection agreements will be expedited and simplified by a
     clear statement of terms that must be included in every arbitrated
     agreement, absent mutual consent to different terms.[^352] Based on
     the states' role and our mutual commitment to expeditious and
     broad-based deployment of advanced services, we have established in
     this order uniform, national rules for the unbundling of the high
     frequency portion of the loop. These rules include the specific
     parameters, set out in section IV.D.1 above, that incumbents and
     competitive carriers must follow when providing service on a shared
     loop. We also announce pricing guidelines that we urge the states
     to apply when they arbitrate modifications to interconnection
     agreements or adopt permanent prices for this unbundled network
     element. We expect that these rules and guidelines will allow
     parties promptly to reach mutually agreeable terms and conditions
     for shared line access. These rules and guidelines will also assist
     the states in arbitrating and reviewing agreements under
     section 252. We believe that the rules and guidelines set out in
     this order are consistent with Congress' vision of the
     complementary roles for the Commission and the states with respect
     to access to unbundled network elements under section 251 of the
     Act and the deployment of advanced services under section 706 of
     the 1996 Act.

159. We recognize, however, that while voluntary carrier-to-carrier
     negotiations will be expedited by the promulgation of these
     national rules and guidelines, there may be some instances where
     the parties seek arbitration of unresolved issues pursuant to
     section 252(b)(1). We urge the states to complete the arbitration
     on a timely basis and to set minimum requirements for the provision
     of line sharing in their arbitration awards, including provisioning
     intervals and penalties for failure to comply. We note that states
     are free to impose additional, pro-competitive requirements
     consistent with the national framework established in this order.

160. In addition, as explained in more detail below, we strongly
     encourage the states to issue interim arbitration awards setting
     out the necessary rates, terms, and conditions for access to this
     unbundled network element, with any unresolved issues subject to a
     true-up when the state commission completes its arbitration.[^353]
     We urge states to issue these awards as quickly as possible after a
     party petitions the state for arbitration under section 252(b)(1)
     so that competitive carriers are actually able to begin providing
     advanced services on a shared loop within 180 days of release of
     this order.

### Effective Date of New Rules

161. We firmly believe that any delay in the provision of the high
     frequency portion of the loop will have a significant adverse
     impact on competition in the provision of advanced services to
     customers that want both voice and data services on a single line,
     especially in residential and small business markets. Moreover, as
     stated above, we conclude that incumbent LECs should be able to
     implement OSS and other loop facility modifications within 180 days
     of the Commission's release of this order to accommodate requests
     for access to this new network element. We believe that there may
     be interim measures that will allow competitive carriers to begin
     obtaining some form of access to this unbundled network element
     even before 180 days. Therefore, our rules requiring the unbundling
     of the high frequency portion of the loop will become effective 30
     days from publication of this Order in the Federal Register.

### States' Role in Fostering Local Competition Under Sections 251 and 252

162. Because we have addressed with specificity the relevant issues
     necessary to enable the provision of line sharing, parties should
     be able to negotiate amendments to their interconnection agreements
     to include line sharing no later than 180 days of release of this
     order. Although we recognize the right to pursue arbitration under
     section 252, we are hopeful that parties will not need to do so to
     obtain interconnection agreements providing for line sharing.

163. If parties seek arbitration, however, modifications to existing
     interconnection agreements to actually provision this new unbundled
     network element could take up to nine months from the date that an
     incumbent LEC receives a competitor's request to commence
     negotiation.[^354] We find that a nine-month delay seriously
     impairs the rapid introduction of competition in the provision of
     xDSL-based services on a shared line, especially to residential and
     small business consumers. If they do not reach an agreement, either
     party may invoke arbitration in the period from day 135 to day 160,
     and the state is required to complete the arbitration within nine
     months from the date of the competing carrier's request.[^355]

164. We strongly encourage states to issue binding interim arbitration
     awards that would require the incumbent to begin provisioning this
     unbundled network element on interim arbitration terms and
     conditions within 180 days of release of this order. As detailed
     throughout this order, we have provided specific guidance for the
     states regarding arbitration awards. We believe that this is
     consistent with our goal of federal-state cooperation in
     facilitating the widespread deployment of advanced services.[^356]
     The state interim arbitration award would remain in effect until
     such time as the state issues a final award. We believe that such
     interim arbitration awards will reduce delays and enable swift
     market entry by new competitors, thereby furthering our joint goal
     of ensuring deployment of advanced services to all Americans.

165. We expect that such interim arbitration awards would incorporate
     the rules we adopt in this order and be sufficiently detailed to
     permit the incumbent LECs to begin providing this new unbundled
     network element immediately upon the effective date of the interim
     order. The interim arbitration awards, like final arbitration
     awards, should include the price of the high frequency portion of
     the loop based on the pricing guidelines we set out in this order.
     We encourage the states, when issuing their interim arbitration
     awards, to set the price for the unbundled high frequency portion
     of the loop at the amount that the incumbent assesses in
     establishing interstate rates for its own competing services.
     Moreover, we recommend that the states adopt provisioning intervals
     to be included in both the interim award and the final arbitration
     award. As discussed below, to the extent that states do not adopt
     their own provisioning intervals, we adopt guidelines that the
     states can follow in establishing these provisioning intervals.

166. We believe that interim arbitration awards, to the extent
     necessary, promote the policy established in section 7 of the Act:
     "to encourage the provision of new technologies and services to the
     public," and comports as well with section 706 of the 1996 Act, by
     "encourag\[ing\] the deployment . . . of advanced
     telecommunications capability to all Americans. . ."[^357] Both the
     states and this Commission share the objective of promoting
     competition among xDSL providers, particularly for residential and
     small business consumers. This shared objective supports state
     adoption of binding interim arbitration awards that will expedite
     market competition. Because incumbent LECs are the only carriers
     currently able to provide advanced and voice services on a single
     line, delaying the availability of this unbundled network element
     to competitive LECs until after the section
     252-negotiation/arbitration process is complete could deny mass
     market consumer access to competitively offered advanced services
     for nine months or more. If the incumbent is able to exploit its
     unique control over local loops to dominate the market for single
     line voice-data applications in the next year, we will have lost a
     unique opportunity to promote a competitive marketplace for
     advanced services. Thus, we find that delayed implementation will
     severely undermine the potentially pro-competitive effects of line
     sharing between incumbent and competitive LECs.

167. In addition to arrangements reached through section 252-negotiation
     and arbitration procedures, Bell Operating Companies (BOCs) may
     prepare and file with a state commission a statement of generally
     available terms and conditions (SGAT) that they offer to comply
     with the requirements of section 251.[^358] Given the importance of
     certain and prompt implementation of line sharing to broadband
     competition, especially in the residential and small business
     markets, we encourage the BOCs expeditiously to amend their SGATs
     setting out the terms and conditions pursuant to which they will
     offer access to shared loops in compliance with the requirements
     set out in this order. We note that pursuant to section 251(i),
     competitive carriers will be able to obtain access to the high
     frequency portion of the loop at the same rates, terms, and
     conditions offered in any approved interconnection agreement, as
     well as the BOCs' SGATs.[^359] Finally, we note that in the event
     that a state commission fails to take action in an arbitration
     proceeding within the nine months prescribed by Congress, we are
     prepared to act promptly, pursuant to section 252(e)(5) and our
     implementing rules,[^360] to issue an order "preempting the State
     commission's jurisdiction of that proceeding or matter" and
     thereafter to bring the arbitration to an orderly, expeditious
     conclusion.

168. We note that a few states have already taken significant steps
     toward requiring incumbent LECs in their jurisdiction to offer line
     sharing.[^361] Clearly, the Commission's requirement that line
     sharing be made available on a nationwide basis should not
     interfere with or delay the laudable efforts of individual states
     to make residential xDSL competition a reality more expeditiously.
     Rather, the timetable outlined above for implementing line sharing
     should be viewed as a maximum period for states that have not yet
     taken any actions to make line sharing available, either through
     the exercise of their authority under section 251-252 or pursuant
     to their authority under state law. We do not intend to constrain
     states that have undertaken such initiatives that likely will
     result in delivering the benefits of line sharing to their
     residential consumers more quickly.

### Duty to Negotiate in Good Faith

169. The Commission concluded in the *Local Competition First Report and
     Order*, that the unbundling obligations of section 251 seek to
     reduce the incumbent LECs ability to leverage their dominant
     position in the local market into a nascent market, in this
     instance, the data market.[^362] The Commission adopted rules in
     the *Local Competition First Report and Order* identifying factors
     or practices that constitute failure to negotiate in good
     faith.[^363]

170. In the *Local Competition First Report and Order*, we found if that
     a party causes significant delay by refusing throughout the
     negotiation process to designate a representative with authority to
     make binding decisions, such an action would constitute failure to
     negotiate in good faith.[^364] Consistent with this conclusion,
     upon commencement of the negotiation process we expect the
     incumbent LEC immediately to make available a representative who
     has region-wide decision-making authority to meet with the
     requesting carrier and any other competitive carriers seeking
     shared line access in the incumbent LEC's region at issue.

### Guidelines for State Arbitration Awards

171. Incumbent LEC implementation of Commission rules designed to
     facilitate local competition is likely to be pursued more quickly
     and diligently if the incumbent LECs have an incentive to comply
     with these rules, and if compliance is swiftly enforced.[^365]
     Accordingly, as discussed above, we conclude that offering to the
     state commissions guidelines to assist in pricing this new
     unbundled network element will facilitate consistency between the
     states and ensure that our line sharing rules, in fact, do level
     the competitive playing field. We further conclude that, when
     arbitration is necessary, the price of this new element should be
     set by states in the same manner as they set the price for other
     unbundled network elements. In addition to the pricing guidelines
     we set forth herein for use by the states in establishing a price
     for the high frequency portion of the loop, we also encourage the
     states to adopt performance measurements to include in their
     arbitration awards and to establish penalties for incumbent LEC
     failure to comply with their obligation to provide unbundled access
     to the high frequency portion of the loop. We set out below a
     presumption for the state commissions to use if necessary to
     establish performance standards for incumbent LEC provision of this
     unbundled network element. We also suggest that the states consider
     the imposition of forfeiture penalties on any incumbent LEC that
     fails to comply with the line sharing rules articulated in this
     order.

172. [Statutory Standard]{.underline}. Section 251(c)(3) requires an
     incumbent LEC to \"provide, to any requesting telecommunications
     carrier . . . nondiscriminatory access to network elements on an
     unbundled basis at any technically feasible point on rates, terms
     and conditions that are just, reasonable, and
     nondiscriminatory."[^366] In the *Local Competition First Report
     and Order*, the Commission concluded that the provision of access
     to OSS functions falls squarely within an incumbent LEC's duty
     under section 251(c)(3) to provide unbundled network elements under
     terms and conditions that are nondiscriminatory and just and
     reasonable. The Commission observed that if competing carriers are
     unable to perform the functions of pre-ordering, ordering,
     provisioning, maintenance and repair, and billing for network
     elements in substantially the same time and manner as the incumbent
     can for itself, competing carriers will be severely disadvantaged,
     if not precluded altogether, from fairly competing.[^367] For OSS
     functions that have no retail analogue -- namely, the ordering and
     provisioning of unbundled network elements -- an incumbent must
     offer access sufficient to allow an efficient competitor a
     meaningful opportunity to compete. [^368]

173. As a general matter, the nondiscrimination obligation requires
     incumbent LECs to provide to requesting carriers access to the high
     frequency portion of the loop that is equal to that access the
     incumbent provides to itself for retail DSL service its customers
     or its affiliates, in terms of quality, accuracy and timeliness.
     Thus, we encourage states to require, in arbitration proceedings,
     incumbent LECs to fulfill requests for line sharing within the same
     interval the incumbent provision xDSL to its own retail or
     wholesale customers, regardless of whether the incumbent uses an
     automated or manual process.[^369]

174. [Provisioning Interval]{.underline}. We urge states to adopt
     provisioning intervals for this unbundled network element as part
     of any arbitration award. Because there are currently no
     state-required provisioning intervals for the high frequency
     portion of the loop network element, we urge states to consider a
     standard based on the time required to provision xDSL capable
     loops. We believe that this is the most accurate analogue that
     exists currently. We note that the Texas Commission requires that
     the incumbent LEC provision 95 percent of xDSL orders within 3
     business days (for 1-10 loops), 7 business days (11-20 loops) and
     10 business days (20+ loops).[^370] In Texas, this provisioning
     interval runs from the application date to completion date for new,
     terminating, and change orders. The application date is the day
     that the requesting carrier authorizes the incumbent to provision
     the xDSL capable loop based on the loop qualification.[^371] The
     completion date is the day that the incumbent completes the service
     order activity.[^372]

175. Where the incumbent LEC is already providing shared line xDSL
     service to a particular customer, however, the provisioning
     interval should be significantly shorter, requiring only that the
     incumbent perform a simple cross-connect. We emphasize that states
     are free, and indeed, are encouraged to adopt more accurate
     provisioning standards for the high frequency portion of the loop
     for inclusion in their section 252 arbitration awards.

176. [Penalties and Enforcement]{.underline}. We encourage states to
     establish penalties for failure to meet provisioning intervals as
     part of any arbitration award. The state could use the provisioning
     intervals it establishes as a measure to determine whether the
     incumbent LEC has failed to comply with its line sharing
     obligations. For instance, the states could impose penalties on the
     incumbent LEC each time an incumbent LEC fails to comply with its
     section 251(c)(3) unbundling obligations, even if the state has
     already taken action on prior violations by the same incumbent LEC,
     with respect to the same central office or the same competing
     carrier. We encourage states to consider adoption of self-executing
     remedies to minimize litigation in this area. Given the importance
     of these obligations, we emphasize that, in addition to whatever
     actions the states may take, we intend to monitor carefully
     incumbent LEC practices in this area, and to take strong
     enforcement action in appropriate cases. We also note that carriers
     may utilize the complaint provisions of section 208 of the Act in
     the case of disputes regarding the incumbent\'s obligations to
     provide the high frequency portion of the loop and our rules
     implementing line sharing.[^373]

177. [Implementation Schedule]{.underline}: Section 252(c)(3) requires a
     state commission, in resolving an arbitration proceeding to
     "provide a schedule for implementation of the terms and conditions
     of the parties to the agreement."[^374] In light of our conclusion
     above that parties should be able to resolve all outstanding
     operational issues in six months or less, we strongly urge the
     states to adopt an implementation schedule that requires an
     incumbent to begin provisioning this network element to requesting
     carriers no later than 45 days after the issuance of an arbitration
     award. This should provide sufficient time for the parties to the
     arbitration to submit an interconnection agreement to the state
     commission for approval, and for the state commission to have an
     opportunity to act on that agreement as provided for in section
     252(e)(4).[^375]

# SPECTRUM POLICY

## Background

178. In this section, we address two broad and interrelated network
     issues: spectrum compatibility and spectrum management. Spectrum
     compatibility refers generally to the ability of a loop technology
     to reside and operate in the same or an adjacent "binder group" as
     another loop technology.[^376] As we explained in the *First
     Advanced Services Report and Order and FNPRM*,[^377] the continuing
     development of spectrum compatibility standards should help to
     minimize crosstalk, the noise caused by extraneous signals
     combining with the intended signal. This noise can result in the
     degradation of the intended signal. Spectrum compatibility is
     achieved when energy that transfers into a loop pair, from services
     and transmission system technologies on other pairs in the same
     cable, does not cause an unacceptable degradation of performance.
     Spectrum management refers to loop plant administration, such as
     binder group management,[^378] and other deployment practices that
     are designed to result in spectrum compatibility, preventing
     harmful interference between services and technologies that use
     pairs in the same cable.[^379]

179. Spectrum compatibility and management become a significant concern
     with the introduction of new high‑speed services in a multiple
     provider environment.[^380] Incumbent LECs generally take the
     position that they have the right to determine unilaterally whether
     particular xDSL-based or other advanced services may be deployed on
     the network side of the demarcation point, regardless of whether
     they or competitive LECs are seeking the deployment.[^381]
     Moreover, to the extent that incumbent LECs have deferred to
     industry standards-setting bodies for development of spectrum
     compatibility standards and spectrum management practices, such
     standards-setting bodies have been slow to respond and their
     processes have been skewed towards the interests of incumbent LECs.
     These circumstances have undermined the deployment of the
     technology to provide competitive deployment of xDSL services,
     contrary to Congress's goals in section 706 of the 1996 Act that
     the Commission "encourage the deployment on a reasonable and timely
     basis of advanced telecommunications capability to all
     Americans."[^382] While we strongly prefer to rely on natural
     market forces and mechanisms to address such network
     interoperability issues, we find that in order to achieve
     Congress's goals under section 706, under the circumstances at hand
     we must intervene to facilitate network deployment of advanced
     services by multiple providers.[^383] Therefore, in order to
     encourage deployment of innovative technologies and allow
     competitors the same opportunity as incumbent LECs to deploy
     advanced services in a multi-provider, multi-service environment,
     we need to establish ground rules concerning what technologies can
     be deployed and who has the final say on various deployment issues.
     By establishing minimal ground rules now, we enable the industry,
     through its standards-setting bodies, to develop spectrum
     compatibility standards and spectrum management practices on a
     continuously ongoing basis, with our assumption of the
     standards-setting function only in extreme cases where industry
     standards bodies continue to fail in upholding the general policies
     that underlie spectrum compatibility standards and spectrum
     management rules and practices.

180. In the *Advanced Services First Report and Order*, we concluded
     that the general policies that should underlie spectrum
     compatibility standards and spectrum management rules and practices
     are: (1) fostering competitive deployment of innovative
     technologies; and (2) ensuring the quality and reliability of the
     public telephone network.[^384] In order to promote these policies,
     we decided to establish certain spectrum management rules.[^385] We
     declared that incumbent LECs may not unilaterally determine what
     technologies may be deployed. The better approach, we concluded, is
     to establish competitively neutral spectrum compatibility standards
     and spectrum management rules and practices so that all carriers
     know, without being subject to unilateral incumbent LEC
     determinations, which technologies can be deployed and can design
     their networks and business strategies accordingly.[^386]
     Similarly, we found that uniform spectrum management procedures are
     essential to the success of advanced services deployment.[^387]

181. In the accompanying *FNPRM*, which we adopted because we found that
     we did not have a sufficient record to address adequately all of
     the long-term spectrum compatibility and management issues,[^388]
     we reached several tentative conclusions regarding the standards
     setting process itself. Specifically, we tentatively concluded
     that: (1) this process should include the active participation of
     the incumbent LECs, competitive LECs, equipment suppliers and the
     Commission; (2) this process should be competitively neutral in
     both structure and procedure; (3) representation should be spread
     equitably over all segments of the industry; and (4)
     representatives should have equal authority, with no party or
     groups of parties presuming to have greater weight or "veto"
     power.[^389]

182. We sought comment on the best process or forum for developing
     future power spectral density (PSD) masks[^390] and other spectrum
     compatibility standards. We tentatively concluded that T1E1.4, a
     working group of Alliance for Telecommunications Industry Solutions
     (ATIS)-sponsored Committee T1, which is accredited by the American
     National Standards Institute (ANSI), is the best forum for this
     task.[^391] We also tentatively concluded that T1E1.4 should serve
     as the forum to establish fair and open practices for the
     deployment of advanced services technologies.[^392] We sought
     comments on how to foster broader representation and participation
     in T1E1.4, and solicited suggestions on other fora for, or methods
     of, guaranteeing fair and timely resolution of spectrum
     compatibility issues.[^393] In addition, we requested that parties
     comment on whether a voluntary industry effort could address
     effectively loop management issues, and whether the Commission
     should solicit the assistance of a third party in developing
     spectrum compatibility standards and spectrum management policies.
     We asked what powers such a third party should have and what role
     it should serve.[^394]

## Discussion

### Standards-Setting Entities

183. We reiterate our general belief that industry standards bodies can,
     and should, create acceptable standards for deployment of
     xDSL-based and other advanced services. ATIS standards setting
     processes, which may culminate ultimately in the ANSI standards
     approval process, are facially neutral, open to all interested
     parties, and contain safeguards against domination by any one
     particular interest.[^395] Despite the neutrality and openness
     principles embedded in these processes, however, several commenters
     continue to express concerns that T1E1.4 is dominated by incumbent
     LECs.[^396] These commenters are concerned that T1E1.4's standards
     setting work is proceeding too slowly and, as a result, delays or
     precludes deployment of certain technologies particularly favored
     by competitive LECs.[^397] We are committed to the goals of
     reasonable and timely deployment of advanced services for all
     Americans, and thus we are concerned with any delays.

184. We remain convinced, therefore, that the Commission is compelled to
     play a role in fostering timely, fair, and open development of
     standards for current and future technologies.[^398] We conclude
     that the standards setting process must include the involvement of
     a third party to advise the Commission on spectrum compatibility
     standards and spectrum management practices.[^399] Specifically,
     the charter of an existing Federal Advisory Committee (FAC), the
     Network Reliability and Interoperability Council (NRIC),[^400] will
     be amended to charge NRIC with such an advisory function.[^401] We
     find that NRIC is the best choice amongst currently established
     FACs for this task, because its responsibility to assure
     interoperability of public telecommunications networks includes
     addressing spectrum compatibility issues.[^402]

185. In this capacity, NRIC will receive input from industry standards
     bodies, such as T1E1.4, and monitor developments within them, in
     turn reporting periodically to, and preparing recommendations for,
     the Commission on matters relating to spectrum compatibility and
     management.[^403] To that end, we request that NRIC V provide
     initial recommendations for resolution of spectrum compatibility
     and management issues to the Commission within 150 days from the
     establishment date of NRIC V.[^404] Moreover, because we have
     recognized the continuously ongoing nature of spectrum
     compatibility standards and spectrum management practices
     development,[^405] we expect NRIC to submit reports to the
     Commission on standards and practices development issues as further
     deemed necessary by NRIC or the Commission and, in any event,
     promptly after NRIC has received appropriate input from industry
     standards bodies.

186. We anticipate that NRIC will receive the majority of input from,
     and monitor most closely, the work of T1E1.4 with respect to
     developing spectrum compatibility standards. This expectation
     reflects our continued confidence, shared by an overwhelming
     majority of commenters in this proceeding, that T1E1.4 is well
     equipped to develop future PSD masks and other spectrum
     compatibility standards.[^406] T1E1.4, which maintains a
     participation list of over 400 representatives from incumbent LECs,
     competitive LECs, interexchange carriers, equipment manufacturers,
     and other interested parties, has the expertise and experience to
     develop spectrum compatibility standards.[^407] As we acknowledged
     in the *Advanced Services First Report and Order and FNPRM*, T1E1.4
     has been working on spectrum compatibility standards for over four
     years and on spectrum management for over a year.[^408] Moreover,
     it already has established technical standards for several
     varieties of xDSL technologies.[^409] In fact, T1E1.4's specific
     objective is to establish xDSL access standards.[^410]

187. We also expect that NRIC will receive the most input from, and
     monitor most closely, the work of T1E1.4 with respect to fair and
     open practices for the deployment of advanced services
     technologies,[^411] though we reiterate that NRIC will be open to,
     and will consider submissions from, any appropriate industry
     standards body. As we noted in the *Advanced Services First Report
     and Order,* these spectrum management practices include, for
     example, "the rules for testing and implementing xDSL-based and
     other advanced services."[^412] To clarify further, deployment
     practices essentially refer to practices addressing "how" an
     advanced services technology is deployed in a manner that
     safeguards spectrum compatibility, and to guidelines for choosing
     among technologies where they conflict with each other. The former
     generally are a matter of technical standards-setting, while the
     latter tend to move more towards policy-making.[^413]

188. We expect that NRIC's involvement in these issues will help in
     several ways to alleviate concerns about incumbent LEC domination
     of T1E1.4, and will help safeguard competitive neutrality in, and
     the timeliness of, xDSL standards setting for network
     interoperability generally. First, through our authority to appoint
     the members of NRIC, we will ensure that NRIC represents a
     balancing of industry interests.[^414] Because NRIC will make
     recommendations to the Commission based on input and submissions
     from T1E1.4 and other industry standards bodies, the balanced
     representation within NRIC should be able to recommend against any
     issues that are unduly weighted towards any one particular industry
     segment.

189. Second, because NRIC will be able to consider the processes behind
     any submissions from standards-setting bodies, and because the
     potential exists for presentation to NRIC of competing standards
     and practices from different standards-setting bodies, NRIC's view
     of which process best reflects competitive balance may and should
     influence its recommendations to the Commission. Moreover, the
     basis for NRIC's recommendations may be augmented by appearances
     before it or statements filed with it by any interested
     person.[^415]

190. Third, though we continue to recognize that the standards
     development process is by nature lengthy and may result in delay of
     the deployment of new technologies even in the absence of
     artificial and subtle delay tactics,[^416] we expect that NRIC will
     not recommend to the Commission the standards developed by a
     standards-setting body that unduly delays its standards setting
     process. If a standards-setting body does not submit its standards
     to NRIC in the same timely manner that another standards-setting
     body submits its acceptable standards, NRIC should not delay in
     issuing recommendations just to await the latecomer's submission.
     Finally, NRIC's objective and scope of activity will be defined to
     ensure that it considers principles of fairness and timeliness in
     its recommendations for resolution of spectrum compatibility and
     management issues.[^417]

191. We are reluctant to intervene in spectrum compatibility and
     management matters except in cases, such as here, where industry
     standards bodies have failed to encourage expeditious and
     competitively neutral deployment of innovative technologies.[^418]
     Not only will NRIC enhance the Commission's role through the
     advice, recommendations and reports that it provides to the
     Commission, but it also will be able to identify issues for
     consideration by industry standards bodies, based on issues that
     the Commission believes need to be addressed.[^419] Through the
     recommendations and reports that we receive from NRIC, we will
     evaluate whether T1E1.4 and other industry standards bodies are
     acting in a manner consistent with the policies that we have
     determined should underlie spectrum compatibility standards-setting
     and formation of spectrum management rules and practices.[^420]
     Should we find that certain industry standards bodies are adopting
     spectrum compatibility standards or spectrum management practices
     that continue to fail, in their underlying processes, in
     safeguarding principles of competitive neutrality and promoting
     innovation, we will look to other industry standards bodies that
     uphold these principles or we will exercise our authority to assume
     the standards-setting function ourselves.[^421] Because of our
     faith in T1E1.4 and other industry standards bodies going forward,
     however, we encourage interested competitive LECs to join such
     bodies and participate in them fully.[^422] We are committed to
     actively monitoring the activities of T1E1.4.[^423]

### Mechanisms for Demonstrating Spectrum Compatibility

192. In the *Advanced Services First Report and Order,* we sought
     comment on the best means to address spectrum compatibility.[^424]
     One option was through generic PSD masks,[^425] but we asked
     whether using that approach alone might restrict deployment of
     technologies that otherwise would not harm the network. We also
     sought comment on whether a calculation-based approach, in addition
     to a PSD mask-based approach, provides a better and more accurate
     tool for defining spectrum compatibility.[^426]

193. We decline to adopt a federal rule mandating the use of either
     generic PSD masks or a calculation-based approach.[^427] Instead,
     we will defer to the conclusions to be reached by industry
     standards setting bodies on this issue.[^428] For instance, T1E1.4
     currently is working on spectrum management standards that would
     allow for demonstration of spectrum compatibility using either PSD
     masks or a calculation-based (analytical) method.[^429]

194. Notwithstanding our abstention from adopting a federal rule
     governing methods for defining spectrum compatibility, we observe
     that the use both of generic PSD masks and a calculation-based
     approach appear to be the best means to address spectrum
     compatibility for purposes of spurring competition. Taken together,
     these two mechanisms should protect network integrity while
     maximizing deployment of new competing technologies. Depending on
     the precise approach used, a calculation-based approach, used in
     conjunction with or in lieu of generic PSD masks, presents several
     advantages. First, not only does a calculation-based approach, like
     generic PSD masks, provide a vehicle for swift introduction of a
     new technology without incurring delays associated with approval by
     standards-setting bodies of each individual new technology, but it
     further enables swift introduction where the technology does not
     fit within one of the already-approved generic masks. Second, it
     can help to maximize binder group efficiency through analyzing the
     interference potential of each loop in a binder group, assigning an
     aggregate interference limit to the binder group, and then adding
     loops to the binder group until that limit is met.[^430] This
     second benefit is consistent with our expectation, as we
     articulated in the *Advanced Services First Report and Order,* that
     incumbents will manage binder groups "in such a manner so as to
     maximize the number and types of advanced services that can be
     deployed."[^431] Third, it provides a "double check" of the
     interference environment.[^432] Finally, a calculation-based
     approach addresses the concerns of those who complain that a PSD
     mask-based approach alone is overly conservative and
     restrictive.[^433] Thus, although we defer at this juncture to
     T1E1.4 or other industry standards bodies to determine the best
     approach with respect to spectrum compatibility, we strongly
     encourage T1E1.4 to continue on its current course of recognizing
     both PSD masks and an analytical approach in its spectrum
     management standard, and to define further how the analytical model
     leads to deployment rules.

### Conditions for Acceptability of a Loop Technology for Deployment 

195. In the *Advanced Services First Report and Order,* we concluded
     that, "until long-term standards and practices can be
     established,"[^434] a loop technology should be presumed acceptable
     for deployment under any one of several circumstances.[^435] These
     circumstances include that the technology: (1) complies with
     existing industry standards;[^436] (2) is approved by an industry
     standards body, the Commission, or any state commission; or (3) has
     been successfully deployed by any carrier without "significantly
     degrading" the performance of other services.[^437] We found that
     any equipment deployed consistent with at least one of these
     factors can be connected to the public switched telephone network
     with reasonable confidence that the loop technology will not
     significantly degrade the performance of other advanced services,
     and with reasonable confidence that the technology will not impair
     traditional voice band services.[^438] We also concluded that an
     incumbent LEC may not deny a carrier\'s request to deploy
     technology that is presumed acceptable for deployment unless the
     incumbent LEC demonstrates to the relevant state commission that
     deployment of the particular technology will significantly degrade
     the performance of other advanced services or traditional voice
     band services.[^439] In recognition of the ongoing process of
     standards development as well as the ongoing innovation in advanced
     services technologies that we anticipate and hope will ensue, we
     now codify rules and clarify certain aspects below.[^440]

196. We emphasize that in codifying these rules, we have established a
     national framework, as contemplated by sections 251 and 252 of the
     Act,[^441] governing when a loop technology is presumed acceptable
     for deployment on the network. Given the states' role within this
     framework, we believe it appropriate for states to decide when a
     LEC has successfully rebutted the presumption of acceptability for
     deployment, when a proposed deployment does or does not establish a
     presumption, when a deployment significantly degrades another
     service, and other issues as set forth below.[^442] The state
     commissions which comment on the *Advanced Services First Report
     and Order and FNPRM* embrace our decision in the *Advanced Services
     First Report and Order* to accord to them the task of determining
     whether a specific technology is acceptable for deployment.[^443]
     We also observe that Congress, in section 706(a) of the 1996 Act,
     specifically charged this Commission *and each state commission*
     with taking measures to encourage the deployment of advanced
     services to all Americans.[^444] We will provide further guidance
     on these matters where requested by a state commission.

197. We reaffirm our conclusion from the *Advanced Services First Report
     and Order* that ADSL, HDSL, and ISDN services are presumed
     acceptable for deployment on fully unbundled loops where they
     comply with any one of certain enumerated standards. Though we
     recognized that TR28, which defines the technical standards for
     HDSL, is not a Committee T1 approved standard, we stated that its
     "universal deployment, however, results in its status as a *de
     facto* standard."[^445] Similarly, in accordance with the second
     and third criteria outlined above, we grant Rhythms' request that
     we declare SDSL to be presumed acceptable for deployment.[^446]
     Though, as described below, states will generally have the role of
     declaring when an advanced services technology is presumed
     acceptable for deployment by virtue of satisfying the successful
     deployment criterion,[^447] we find that successful deployment of
     SDSL has been sufficiently widespread that we believe it can be
     deployed further without appreciable risk of jeopardizing network
     integrity. Our finding, however, is limited to presuming SDSL
     acceptable for deployment on a fully unbundled loop. We do not
     establish here a presumption that SDSL is acceptable for deployment
     on a shared loop.[^448]

#### Successful Deployment Criterion

198. We find the third criterion outlined above -- successful deployment
     of a technology elsewhere without significantly degrading the
     performance of other services -- to be particularly useful for
     assisting the deployment of new technologies without subjecting
     them to delays often encountered with industry standards-setting
     fora. Moreover, as a method to achieve a presumption of
     acceptability for deployment that does not rely upon industry
     standards bodies, the successful deployment criterion provides a
     further antidote against concerns regarding the competitive
     neutrality of the industry standards-setting process.[^449] We
     reject the argument of certain commenters that the third criterion
     will lead to interference in the network, due to differing mixes of
     deployed technologies in local networks.[^450] Though protecting
     network integrity is our utmost concern, we must do so in a manner
     that also fulfills our statutory mandate to promote competition and
     innovation in advanced services. We conclude that a competing
     carrier's use of the calculation-based method for demonstrating
     spectrum compatibility, as a prelude in most cases to initial
     deployment of a technology, should go far towards allaying the
     concerns of some commenters over risks of interference to the
     network from the deployment of a technology that was successfully
     deployed elsewhere.[^451]

199. The LEC also will be able to rebut the presumption of acceptability
     before a state commission if the technology proposed for deployment
     poses a real interference threat in a certain area.[^452] We are
     confident that this represents a sufficient safeguard for network
     reliability. Indeed, because the power to rebut the presumption of
     acceptability for deployment of a technology before a state
     commission is an important safeguard for LECs, we decline to make
     the presumptions that are based on the technology's standardization
     or other approval by an industry standards body or this Commission
     irrebuttable.[^453] We reiterate, however, that a LEC may not deny
     a carrier's request to deploy technology that is presumed
     acceptable for deployment under one or more of the circumstances
     set forth above, unless the LEC first successfully rebuts the
     presumption of acceptability before the relevant state
     commission.[^454] Similarly, a carrier should seek redress from the
     relevant state commission where it encounters opposition from the
     incumbent LEC to its claim that the proposed deployment falls
     within the presumption of acceptability.[^455] We expect LECs to
     act in good faith in response to carriers' claims that their
     requested technology deployments fall within the presumption of
     acceptability. A LEC's failure to act in good faith in response to
     a carrier's request to deploy a technology constitutes a violation
     of our rules implementing section 251 of the Act.[^456]

200. Consistent with the *Advanced Services First Report and
     Order*,[^457] we leave it to the states to determine the specific
     criteria under which a technology will be deemed successfully
     deployed under the third presumption for acceptability, above.
     Leaving this determination to the states is advantageous because
     states have more familiarity with local network conditions, and
     thus should be able to gauge best an appropriate definition for
     successful deployment that suits local network conditions.[^458]
     The widely divergent proposals for a national definition that are
     contained in the record before us in this proceeding further lead
     us to the conclusion that at this juncture, determining the
     definition of successful deployment at the state level will be most
     fair both to carriers seeking to deploy new technologies and to
     LECs.[^459] Because one of our goals in this proceeding is to
     develop rules to address long-term spectrum management
     concerns,[^460] we may revisit this issue and establish national
     criteria if a record is created showing that the criteria utilized
     by certain states in making determinations of successful deployment
     are leading to an overly preclusive or overly permissive
     presumption of successful deployment.

#### Definition of "Significantly Degrade"

201. In the *Advanced Services* *First Report and Order*, we defined
     "significantly degrade" as "an action that noticeably impairs a
     service from a user's perspective."[^461] In adopting this
     definition, we recognized that a certain degree of interference is
     permissible and harmless. We also acknowledged that this definition
     is "subject to debate," and for the time being left it to the
     states to determine when a technology significantly degrades the
     performance of other services.[^462] In the accompanying *FNPRM*,
     we sought comment on how to define \"significantly degrade\" more
     precisely, so as to ensure that consumers have the broadest
     selection of services from which to choose without harming the
     network.[^463]

202. Although we recognize the value of objective criteria to measure
     "significant degradation," based on the record before us, we are
     unable to adopt an objective standard for determining whether a
     technology causes "significant degradation." We believe that an
     objective measurement of "significantly degrade" should account for
     reductions in a service's distance (reach) and/or speed (rate),
     among other factors, but parties to the proceeding have not
     adequately proposed specific numerical parameters for an objective
     standard.[^464] Accordingly, we reaffirm the subjective definition
     of "significantly degrade" that we adopted in the *Advanced
     Services* *First Report and Order.*[^465] We believe, however, that
     it is in all carriers' interest only to deploy new technologies
     that will not cause service compatibility problems. Moreover, we
     believe that deployment of advanced services according to approved
     PSD masks and/or calculation-based standards adopted by industry
     standards bodies such as T1E1.4 should prevent noticeable service
     degradation in most cases.[^466] Nevertheless, we encourage
     industry standards bodies to continue addressing the issue of
     establishing objective criteria to measure "significant
     degradation."[^467]

203. We also emphasize the "significance" component of the
     "significantly degrade" test. As binder groups fill up, service
     rates may decrease. Carriers must be realistic about the service
     rates that they are marketing. Moreover, as we expressed in the
     *Advanced Services* *First Report and Order*, "\[w\]hile we
     recognize that some minimal interference may develop as new
     services are introduced, we believe that it is in the public's best
     interest to encourage the timely deployment of advanced
     services."[^468] All providers should recognize that cooperation is
     essential in this shared environment.[^469]

204. Some incumbent LECs argue that they require certain information on
     a requested deployment in order to be able to assess properly the
     prospects of the deployment significantly degrading the performance
     of other services.[^470] In the *Advanced Services First Report and
     Order*, we required incumbent LECs to disclose to requesting
     carriers information with respect to the number of loops using
     advanced services technology within the binder and type of
     technology deployed on those loops. We also required incumbent LECs
     to disclose to requesting carriers information with respect to the
     rejection of the requesting carrier's provision of advanced
     services, together with the specific reason for the
     rejection.[^471] Furthermore, we required incumbent LECs to make
     available to competitive LECs intending to provide service in an
     area the procedures and policies that the relevant incumbent LEC
     uses in determining which services can be deployed.[^472] We affirm
     and codify these policies in this Order. Consistent with the
     information disclosure requirements that we applied to incumbent
     LECs in the *Advanced Services First Report and Order*, we agree
     that competitive LECs must provide to incumbent LECs information on
     the type of technology that they seek to deploy, including Spectrum
     Class information where a competitive LEC asserts that the
     technology it seeks to deploy fits within a generic PSD mask.[^473]
     We further agree that competitive LECs must provide this
     information in notifying the incumbent LEC of any proposed change
     in advanced services technology that the carrier uses on the loop,
     so that the incumbent LEC can correct its records and anticipate
     the effect that the change may have on other services in the same
     or adjacent binder groups.[^474] We emphasize that incumbent LECs
     must protect the proprietary rights of deploying carriers, and may
     use this information for network purposes only, without disclosing
     who is deploying what advanced services technologies on particular
     binders.[^475] We believe that the benefits of applying such
     information disclosure requirements to competitive LECs outweigh
     any burdens, particularly because we believe that the provision of
     such information is integral to a claimed presumption of
     acceptability anyway. Moreover, we anticipate and expect that the
     provision of such information by carriers will minimize conflicts
     over whether the proposed deployment falls within the presumption
     of acceptability.

205. In the *Advanced Services First Report and Order*, we required that
     a carrier that claims its services are being significantly degraded
     by another carrier's services "must notify the causing carrier and
     allow that carrier a reasonable opportunity to correct the
     problem."[^476] Sprint requests that we clarify that incumbent LECs
     are in all instances the initial point of contact for service
     degradation disputes among competitive LECs.[^477] Various
     incumbent LECs contend that they should not have to act as
     clearinghouses for those disputes.[^478] We confirm that an
     incumbent LEC need not act as the initial point of contact in all
     service degradation disputes. Instead, the carrier that believes
     its services are being significantly degraded should notify the
     causing carrier when the carrier experiencing degradation knows
     with certainty the identity of the causing carrier. We recognize,
     of course, that a carrier whose services are being degraded may not
     know the precise cause of the degradation and thus may not know
     which carrier to contact for corrective action.[^479] In this
     circumstance, the carrier experiencing service degradation must
     notify each carrier that may have caused or contributed to the
     degradation, including, where applicable, the incumbent LEC. Where
     the carrier experiencing service degradation does not know which
     carriers share the binder group or have deployed services in an
     adjacent binder group, it should request that the incumbent LEC
     provide it with the relevant contact information for those other
     carriers. The incumbent LEC must comply with any such request in
     the same time frame that the incumbent LEC employs for its own
     operations.[^480]

#### Interference Dispute Resolution

206. In the *Advanced Services FNPRM*, we asked commenters how best to
     resolve disputes arising out of claims that a particular technology
     is significantly degrading the performance of other services. We
     also sought comment on whether a dispute resolution process should
     rely on an outside party as an arbitrator, such as the state
     commission, the FCC, or a neutral third party, or whether the
     process simply should provide the rules by which players must
     conform.[^481]

207. As we held in the *Advanced Services First Report and Order,* a
     carrier must establish before a state commission that a particular
     technology significantly degrades another service.[^482] We are
     concerned that some incumbent LECs may plan to take unilateral
     action against allegedly interfering competitive LEC data services,
     rather than comply with the processes that we set out in the
     *Advanced Services First Report and Order*.[^483] We emphasize,
     therefore, that incumbent LECs are required to follow these
     procedures. Specifically, as we restate above, where a carrier
     claims that a deployed service is significantly degrading the
     performance of other advanced services or traditional voice band
     services, that carrier must notify the deploying carrier and allow
     the deploying carrier a reasonable opportunity to correct the
     problem. Any claims of network harm presented to the deploying
     entity or, if subsequently necessary, the relevant state
     commission, must be supported with specific and verifiable
     corroborating information.[^484]

208. We reaffirm and codify the policy that we enunciated in the
     *Advanced Services First Report and Order* to guide states in the
     resolution of interference disputes. Specifically, where a LEC
     demonstrates that a deployed technology is significantly degrading
     the performance of other advanced services or traditional voice
     band services, "the carrier deploying the technology shall
     discontinue deployment of that technology and migrate its customers
     to technologies that will not significantly degrade the performance
     of other such services."[^485] We now add an exception to this rule
     that we believe will further safeguard competitive neutrality and
     deployment of new technologies. Specifically, where the only
     interfered-with service itself is a known disturber, as designated
     by this Commission,[^486] that service shall not prevail against
     the newly deployed technology.[^487] This exception prevents the
     undue protection of noisier technologies that are at or near the
     end of their useful life cycle, at the same time preventing the
     undue preclusion of new, more efficient and spectrally compatible
     technologies. As we discuss more fully below, in the *Advanced
     Services First Report and Order* *and FNPRM* we solicited comment
     on the appropriate disposition of known disturbers, and we
     specifically asked whether we should establish a sunset period for
     known disturbers and whether we should require carriers to replace
     known disturbers with new and less interfering technologies.[^488]
     Thus, we find that this exception implicates, and is consistent
     with, other policies that we adopt in this order, pursuant to
     which, as discussed in detail below, a known disturber may be
     segregated or phased out in its entirety.[^489]

209. We are aware that T1E1.4 currently is considering a "guarded
     services" approach that would stand as an alternate to the policies
     that we set forth here.[^490] Such an approach would designate
     automatic winners in the event of interference disputes.[^491] Some
     competitive LECs have raised concerns with respect to this proposed
     approach. Chief among these concerns is that the guarded services
     approach is blatantly discriminatory, protecting technologies
     favored by incumbent LECs at the expense of newly-developed
     technologies favored by competitive LECs.[^492] There also are
     several other concerns that these commenters raise.[^493] First, a
     guarded, typically incumbent LEC-favored service, need not be
     deployed, yet merely the threat of its deployment may block
     deployment of a non-guarded, typically competitive LEC-favored xDSL
     technology, which could be deployed on a loop prior to deployment
     of the guarded service, but which then would need to be removed if
     interference ensued upon the subsequent deployment of the guarded
     service. Second, an xDSL technology that is spectrally identical to
     a guarded service yet not identified as "guarded" would not share
     the same protections as guarded services. Third, the guarded
     services approach does not define who prevails in interference
     disputes between guarded services. Fourth, T1E1.4 has proposed a
     known disturber, analog T1, and a technology that has yet to be
     deployed but that is "strongly supported" by incumbent LECs,
     HDSL-2,[^494] to become guarded. Fifth, the guarded services
     approach injects T1E1.4 into policy-setting, contrary to Committee
     T1 procedures.[^495]

210. We share many of these concerns about a guarded services approach.
     We emphasize that any criteria that favor incumbent LEC services in
     a manner that automatically trumps, without further consideration,
     innovative services offered by new entrants is neither consistent
     with section 706 of the 1996 Act nor with the Commission's goals as
     set out in the *Advanced Services First Report and Order*.[^496]
     The policies that we reiterate and adopt here as rules with respect
     to interference dispute resolution protect new technologies against
     otherwise guarded technologies having carte blanche to be deployed
     after-the-fact and cause interference.[^497] In addition, the
     exception that we carve out above ensures that noisier technologies
     that are at or near the end of their useful life cycle do not
     perpetually preclude deployment of newer, more efficient and
     spectrally compatible technologies. Though this exception pertains
     only to Commission-declared known disturbers, we encourage the
     industry to enhance the "living" nature of these policies and rules
     by voluntarily removing from deployment older, less efficient
     technologies which nonetheless do not rise to the level of a known
     disturber.

211. For all of these reasons, we find that the policies and rules that
     we reiterate and otherwise set forth here with respect to
     interference dispute resolution are superior to a guarded services
     approach, and these policies and rules, rather than a guarded
     services approach, will guide states in the resolution of
     interference disputes. We believe that our policies here strike the
     appropriate balance between protecting the integrity of the network
     and promoting competitively neutral deployment of innovative
     technologies. In addition, the policies that we articulate in this
     section and codify incorporate elements of a "first-in-time"
     concept that is the mainstay of interference protection within many
     other communications services.[^498] Thus, we apply to a new medium
     well-established policies concerning interference dispute
     resolution. These policies and rules also provide guidance at the
     national level, in accordance with our finding in the *Advanced
     Services First Report and Order* that "uniform spectrum management
     procedures are essential to the success of advanced services
     deployment" where they are possible, precisely to avoid requiring
     competitive LECs to conform to different specifications in each
     state.[^499] At the same time, these policies and rules permit the
     industry to work further towards deriving solutions, as described
     in the preceding paragraph. Though we do not agree with the concept
     of guarded services, particularly as it pertains to interference
     dispute resolution, we believe that the spectrum management work
     currently being performed in T1E1.4 will prove quite useful in
     ensuring the evolution of advanced services deployment in a manner
     that safeguards spectrum compatibility.[^500]

### Binder Group Management

212. In the *Advanced Services First Report and Order and FNPRM*, we
     asked commenters to consider how to maximize the deployment of new
     technologies within binder groups while minimizing interference. We
     sought comment on the development of xDSL binder group
     administration practices, including specifications on the types and
     numbers of technologies that can be deployed within a binder group.
     We also specifically solicited comment on the practice of
     segregating services based on the technology. As an example, we
     recognized that incumbent LECs currently assign analog T1 to
     separate binder groups from other technologies, because analog T1
     is a disturber.[^501]

213. We conclude that the only permissible forms of binder group
     management are the segregation of known disturbers and the use of
     the interference protection techniques described above.[^502]
     Several commenters argue that interference protection techniques,
     including generic PSD masks and/or a calculation-based approach,
     [^503] should go a long way towards ensuring the integrity of the
     network, if not completely supplanting the need for any other form
     of binder group management.[^504] Most also recognize, however,
     that some technologies are known disturbers, which are prone to
     cause significant interference with other services deployed in the
     network. We believe that the interference that known disturbers in
     particular are likely to cause in a multi-service environment
     renders it worthwhile for us to allow incumbent LECs to decide
     whether to segregate such disturbers as a further measure to
     protect against interference.[^505]

214. Currently, the only technology that we find causes interference
     with sufficient persistence to rise to the level of a known
     disturber is analog T1.[^506] By indicating generally that
     technologies we designate as known disturbers may be segregated,
     however, rather than limiting the segregation technique to analog
     T1, we seek to minimize interference with future
     technologies.[^507] Because the designation of a technology as a
     known disturber impacts various national-level rules and policies,
     such as those governing interference dispute resolution and binder
     group management, and also triggers the determination by states of
     how the known interfering technology will be disposed, we will
     decide which technologies should be considered as known
     disturbers.[^508]

215. In the *Advanced Services First Report and Order and FNPRM*, we
     specifically sought comment on the development of binder group
     management procedures allowing for deployment of xDSL-based
     services in a nonrestrictive manner.[^509] Numerous competitive
     LECs continue to express concern that if we vest in incumbent LECs
     the right to manage binder groups unfettered, we will provide ample
     opportunity for incumbent LECs to discriminate against introduction
     of new technologies and/or to institute binder configurations which
     significantly favor their own deployed technologies.[^510] To
     illustrate, Covad and Rhythms argue vehemently that SBC's
     "Selective Feeder Separation" (SFS) technique is
     anticompetitive.[^511] Covad and Rhythms assert that under SFS, SBC
     relegates competitive LEC non-ADSL loops to spectrally "dirty"
     binder groups, resulting in degradation of the potential bandwidth
     on those competitive LEC loops, and SBC over-reserves binder groups
     dedicated to ADSL, leading to exaggerated claims of spectrum
     exhaustion and denial of competitive LEC requests to deploy their
     own advanced services technologies.[^512] They also question the
     technical effectiveness of segregation practices, contending that
     cable splices during original installation and subsequent
     maintenance activities compromise binder group integrity, so that
     pairs carrying xDSL services actually may change binder groups at
     various points in the cable run.[^513]

216. We are persuaded that, for the reasons advanced by Covad and
     Rhythms, we must limit segregation practices to known disturbers,
     because only the interference risks of mixing known disturbers with
     other technologies outweigh the risks of anticompetitive
     segregation practices.[^514] Because we currently do not determine
     ADSL to be a known disturber,[^515] we find that SBC may not
     implement SFS, and we order that SBC dismantle any currently
     existing SFS implementations. Furthermore, any carrier currently
     implementing any binder group management techniques that we
     prohibit, including SFS, must discontinue and dismantle such
     implementations within 60 days after the release of this
     order.[^516] We emphasize that no carrier may implement any form of
     binder group management other than use of interference protection
     techniques and segregation of technologies that this Commission
     declares to be known disturbers. We further stress that carriers
     cannot use binder group management to preclude the deployment of
     new technologies that are otherwise presumed to be acceptable for
     deployment.[^517]

217. [Disposition of Known Disturbers]{.underline}. In the *Advanced
     Services First Report and Order and FNPRM*, we sought comment on
     whether we should establish a grandfathering process for
     interfering technologies, and asked whether the Commission should
     establish a sunset period for services such as analog T1. We
     further sought comment on whether carriers should be required to
     replace analog T1 with new and less interfering technologies, and,
     if so, what time frame would be reasonable.[^518] The commenters
     are divided between those who urge that we establish a three-year
     sunset period for known interfering technologies, particularly
     singling out analog T1,[^519] those who advocate that disposition
     of known disturbers be handled by the states,[^520] and those who
     maintain that such disposition should be left to market forces or
     directed by incumbent LECs.[^521]

218. We conclude that the states should determine disposition of known
     interfering technologies. Consistent with the national policy
     framework enunciated in this order of encouraging the competitive
     deployment of advanced services, states may select one or more of
     several approaches towards disposition of known disturbers. For
     instance, a state first could allow for segregation of the
     disturber by the incumbent LEC, as we set forth above with respect
     to binder group management.[^522] If the disturber still interferes
     or precludes deployment of new and less interfering technologies,
     the state then could establish a sunset period for it. With respect
     to new deployment of designated known disturbers, the state could
     use its enforcement mechanisms to block new, interfering services,
     such as analog T1, where their deployment constitutes an
     anticompetitive practice. These are merely a few examples of
     several approaches that states can take in their own discretion
     towards new deployment of known disturbers and disposition of
     disturbers that already have been deployed in the network.

219. We find leaving disposition of known interfering technologies to
     the states preferable to establishing a national sunset period for
     known disturbers in this proceeding. We are concerned that a
     blanket sunset period may lead to unnecessary replacement of analog
     T1 or other otherwise known disturbers, which could lead further to
     unnecessary network disruption and could force carriers to
     undertake exorbitant replacement expenditures.[^523] In addition,
     as we acknowledged in the *Advanced Services First Report and Order
     and FNPRM*, carriers have a substantial base of analog T1 in
     deployment, and in some areas it provides the only feasible
     high-speed transmission capability.[^524] We also recognized that
     transitioning customers to less interfering technologies may
     disrupt service for subscribers.[^525] Thus, placing disposition of
     known disturbers in the hands of the states, who are best equipped
     to assess the impact of such disturbers on specific areas,[^526]
     strikes the appropriate balance between the "competing goals of
     maximizing noninterference between technologies and not interfering
     with subscribers\' existing services."[^527] At the same time,
     states are better equipped than incumbent LECs to take an objective
     view of the disposition of known disturbers, because of the vested
     interest that incumbent LECs have in their own substantial base of
     known disturbers such as analog T1.

220. As we stated in the *Advanced Services First Report and Order and
     FNPRM*, newer technologies may be able to provide the end user with
     the same amount of bandwidth while causing less interference with
     other services.[^528] We anticipate that few carriers will choose
     to deploy analog T1, or any other technology that we declare
     ultimately to be a known disturber, because of the existence of
     newer technologies that are more efficient and compatible in most
     cases, and because the deployment of a known disturber could be
     subject to a state mandated sunset or other measure, such as an
     enforcement proceeding. Nevertheless, we reiterate our strong
     belief that industry should discontinue deployment of known
     disturbers.[^529] Likewise, we continue to emphasize that carriers
     should, to the greatest extent possible, replace known disturbers,
     including analog T1, with new and less interfering
     technologies.[^530] We will continue to monitor the disposition of
     known interfering technologies as it evolves in the states.

# OTHER ISSUES 

## State Authority to Enact Additional Line Sharing Requirements

### Background

221. In the *FNPRM*, we tentatively concluded that nothing in the Act,
     our rules, or case law precludes states from mandating line
     sharing, regardless of whether the incumbent LEC offers line
     sharing to itself or others, and regardless of whether it offers
     advanced services. We sought comment on that tentative
     conclusion.[^531] Commenting state regulatory agencies advise that
     we should not preempt states from enacting line sharing
     requirements.[^532] Other commenters, however, argue that we should
     preempt state authority over line sharing.[^533]

222. In the *Local Competition Third Report and Order*, we determined
     that the 1996 Act permits state commissions to establish access
     obligations consistent with the Commission's national rules. We
     also outlined "compelling policy reasons" for not removing elements
     from the national list on a state-by-state basis. In particular, we
     noted that disparate state regulations could substantially
     undermine the reasons for enacting national rules in the first
     instance, such as the importance of regulatory certainty and
     national consistency to competitors seeking to roll out new
     services on a national scale.

### Discussion

223. In conformance with the rule established in the *Local Competition,
     Third Report and Order*, we do not permit the states to reduce the
     unbundling obligations established in this order. As with the
     presumption of acceptability for deployment of a loop technology on
     the network,[^534] in this order we establish a national framework
     governing the obligations of incumbent LECs to unbundle the high
     frequency portion of the loop. States may enact additional or
     modified unbundling requirements only to the same extent that we
     permit the states to modify the unbundling requirements in the
     *Local Competition Third Report and Order*.[^535] Any state that
     imposes unbundling requirements in contravention of section 253(a)
     of the Act will be subject to possible preemption by the Commission
     under section 253(d) of the Act.[^536]

224. Moreover, we decline to exempt rural incumbent LECs from our line
     sharing unbundling obligation. We note, however, that states retain
     the authority pursuant to section 251(f) to exempt certain rural
     LECs from all section 251 obligations.

225. It is impossible to predict every deployment scenario or the
     difficulties that might arise in the provision of the high
     frequency loop spectrum network element. States may take action to
     promote our overarching policies, where it is consistent with the
     rules established in this proceeding. We believe that this approach
     will permit the states to benefit from the informed debate on the
     record in this proceeding, and will promote consistency in federal
     and state regulations.

## Takings

226. U S WEST claims that line sharing mandated by the Commission
     constitutes a physical taking of incumbent LEC property.[^537]
     Specifically, US WEST argues that the *Gulf Power* decision[^538]
     holds that the right-of-way sharing on utility poles mandated by
     the 1996 Act constitutes a physical taking. US WEST claims that the
     requirement to provide access to unbundled high frequency spectrum
     on the local loop also constitute a physical taking, for which the
     incumbent LEC is entitled to just compensation, and for which the
     United States may be liable.[^539] We note at the outset that
     unbundling the high frequency spectrum of the local loop is a
     network element under 251(c)(2) and 251(d)(3) conforms to the
     Congressional intent for the 1996 Act. Moreover, we disagree with
     US WEST's characterization that declaring the high frequency
     portion of the local loop to be an UNE results in a physical
     taking. As we have previously stated in the *Local Competition
     Third Report and Order*, dedicating a particular element to the new
     entrant's exclusive use does not effect a physical occupation of
     any incumbent LEC's property because the incumbent LEC retains
     physical dominion over their network elements.[^540] Requesting
     carriers are simply permitted to send their communications over
     these elements. Moreover, to the extent requiring incumbent LECs to
     provide access to network elements could be characterized as a
     regulatory or physical taking, incumbent LECs have an adequate
     means available to secure just compensation.

227. Specifically, in *Gulf Power*, the Eleventh Circuit held that
     although the 1996 Act's mandatory access provisions with regard to
     utility poles effect a *per se* taking of property under the Fifth
     Amendment, those provisions are not facially unconstitutional
     because they provide a constitutionally adequate process to ensure
     just compensation.[^541] Thus, we conclude that even if requiring
     incumbent LECs to provide competitive LECs with access to the
     unbundled high frequency spectrum of the local loop constitutes a
     taking under the Fifth Amendment, this taking is not
     unconstitutional.

# PROCEDURAL MATTERS AND ORDERING CLAUSES

228. Accordingly, IT IS ORDERED that, pursuant to the authority
     contained in Sections 1-4, 7, 10, 201-205, 251-254, 256, 271, and
     303(r) of the Communications Act of 1934, as amended, 47 U.S.C. §§
     151-154, 157, 160, 201-205, 251-254, 256, 271, and 303(r), this
     *Third Report and Order* IS ADOPTED,

229. IT IS FURTHER ORDERED that Part 51 of the Commission's Rules, 47
     C.F.R. Part 51, IS AMENDED, as set forth in Appendix B hereto.

230. IT IS FURTHER ORDERED that the requirements adopted in this Order
     and rule amendments set forth in Appendix B not pertaining to new
     or modified reporting or recordkeeping requirements SHALL BECOME
     EFFECTIVE 30 days after publication of this Order in the Federal
     Register.

231. IT IS FURTHER ORDERED that SBC Communications Inc. and all of its
     affiliated companies shall dismantle any currently existing
     Selective Feeder Separation (SFS) implementations, unless such
     implementations solely designate, segregate or reserve particular
     loops or binder groups for use solely by analog T1 technology. IT
     IS FURTHER ORDERED that any carrier currently implementing any
     binder group management technique, including SFS, which we prohibit
     above in Section V.B.4. of this Order and that designates,
     segregates or reserves particular loops or binder groups for use
     solely by any particular advanced services loop technology other
     than analog T1, shall discontinue and dismantle such
     implementations within 60 days after the release of this Order.

232. The action contained herein has been analyzed with respect to the
     Paperwork Reduction Act of 1995 and found to impose new or modified
     reporting and recordkeeping requirements or burdens on the public.
     Implementation of these new or modified reporting and recordkeeping
     requirements will be subject to approval by the Office of
     Management and Budget (OMB) as prescribed by the Act, and will go
     into effect upon announcement in the Federal Register of OMB
     approval.

233. As required by Section 604 of the Regulatory Flexibility Act, 5
     U.S.C. § 604, the Commission has prepared a Final Regulatory
     Flexibility Analysis of the possible impact on small entities of
     the rules and policies adopted in this document. *See* Appendix E.
     IT IS FURTHER ORDERED that the Commission\'s Office of Public
     Affairs, Reference Operations Division, SHALL SEND a copy of this
     *Third Report and Order*, including the Final Regulatory
     Flexibility Analysis, to the Chief Counsel for Advocacy of the
     Small Business Administration.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Román Salas

Secretary

**APPENDIX** A

**List of Commenters in CC Docket No. 98-147**

\@link Networks Inc. (@link)

ADTRAN, Inc. (ADTRAN)

Alliance for Telecommunications Industry Solutions, Inc. (ATIS)

Ameritech

Association for Local Telecommunications Services (ALTS)

AT&T Corp. (AT&T)

Bell Atlantic Telephone Companies (Bell Atlantic)

BellSouth Corporation (BellSouth)

Burstein, David

Commercial Internet Exchange Association (CIX)

Competitive Telecommunications Association (CompTel)

Covad Communications Company (Covad)

DSL.net, Inc. (DSL.net)

General Services Administration (GSA)

GTE Service Corporation (GTE)

Independent Telephone and Telecommunications Alliance

Inline Connection Corporation (Inline)

Intermedia Communications Inc. (Intermedia)

MCI WorldCom, Inc. (MCI WorldCom)

Mitretek Systems, Inc. (Mitretek)

Network Access Solutions (NAS)

NEXTLINK Communications, Inc. (NEXTLINK)

Nortel Networks Inc. (Nortel)

Northpoint Communications, Inc. (Northpoint)

Oklahoma Corporation Commission (Oklahoma CC)

People of the State of California and

California Public Utilities Commission (California PUC)

Primary Network Communications (PNC)

Prism Communication Services, Inc. (Prism)

Rhythms Netconnections Inc. (Rhythms)

Rural Telephone Coalition (NRTA, NTCA, Opastco) (Rural Telephone
Coalition)

SBC Telecommunications, Inc. (SBC)

Sprint Corporation (Sprint)

Telecommunications Resellers Association (TRA)

Texas Public Utility Commission (Texas PUC)

United States Telephone Association (USTA)

U. S. Small Business Association, Office of Advocacy (SBA)

US West Communications, Inc. (US WEST)

**List of Commenters on Spectrum Unbundling in CC Docket No. 96-98**

Bell Atlantic

BellSouth

Covad

NAS

Northpoint

Ohio Public Utilities Commission (Ohio PUC)

Rhythms

SBC

##  {#section .unnumbered}

**APPENDIX** **B**

**Final Rules**

Part 51 of Title 47 of the Code of Federal Regulations is amended as
follows:

**PART** **51** \-- **INTERCONNECTION**

1\. The authority for part 51 continues to read as follows:

Authority: Sections 1-5, 7, 201-05, 207-09, 218, 225-27, 251-54, 271,
332, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 151-55, 157, 201-05,
207-09, 218, 225-27, 251-54, 271, 332, unless otherwise noted.

2\. In § 51.5, the following definitions are added in alphabetical
order, to read as follows:

[§ 51.5 Terms and definitions.]{.underline}

\* \* \* \* \*

[Binder]{.underline} or [binder group.]{.underline} Copper pairs bundled
together, generally in groups of 25, 50 or 100.

\* \* \* \* \*

[Known disturber]{.underline}. An advanced services technology that is
prone to cause significant interference with other services deployed in
the network.

\* \* \* \* \*

3\. In Section 51.319, paragraph (h) is added, to read as follows:

[§ 51.319 Specific unbundling requirements.]{.underline}

\* \* \* \* \*

(h) [High Frequency Portion of the Loop]{.underline}*.*

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(1) The high frequency portion of the loop network element is defined as
    the frequency range above the voiceband on a copper loop facility
    that is being used to carry analog circuit-switched voiceband
    transmissions.

(2) An incumbent LEC shall provide nondiscriminatory access in
    accordance with section 51.311 of these rules and section 251(c)(3)
    of the Act to the high frequency portion of a loop to any requesting
    telecommunications carrier for the provision of a telecommunications
    service conforming with section 51.230 of these rules.

> \(3\) An incumbent LEC shall only provide a requesting carrier with
> access to the high frequency portion of the loop if the incumbent LEC
> is providing, and continues to provide, analog circuit-switched
> voiceband services on the particular loop for which the requesting
> carrier seeks access.
>
> \(4\) [Control of the Loop and Splitter Functionality]{.underline}. In
> situations where a requesting carrier is obtaining access to the high
> frequency portion of the loop, the incumbent LEC may maintain control
> over the loop and splitter equipment and functions, and shall provide
> to requesting carriers loop and splitter functionality that is
> compatible with any transmission technology that the requesting
> carrier seeks to deploy using the high frequency portion of the loop,
> as defined in this subsection, provided that such transmission
> technology is presumed to be deployable pursuant to section 51.230.

(5)[Loop Conditioning.]{.underline}

> \(i\) An incumbent LEC must condition loops to enable requesting
> carriers to access the high frequency portion of the loop spectrum, in
> accordance with sections 51.319(a)(3), and 51.319(h)(1). If the
> incumbent LEC seeks compensation from the requesting carrier for line
> conditioning, the requesting carrier has the option of refusing, in
> whole, or in part, to have the line conditioned, and a requesting
> carrier's refusal of some or all aspects of line conditioning will not
> diminish its right of access to the high frequency portion of the
> loop.
>
> \(ii\) Where conditioning the loop will significantly degrade, as
> defined in section 51.233, the voiceband services that the incumbent
> LEC is currently providing over that loop, the incumbent LEC must
> either (A) locate another loop that has been or can be conditioned,
> migrate the incumbent LEC's voiceband service to that loop, and
> provide the requesting carrier with access to the high frequency
> portion of the alternative loop; or (B) make a showing to the relevant
> state commission that the original loop cannot be conditioned without
> significantly degrading voiceband services on that loop, as defined in
> section 51.233, and that there is no adjacent or alternative loop
> available that can be conditioned or to which the customer's voiceband
> service can be moved to enable line sharing.
>
> \(iii\) If the relevant state commission concludes that a loop cannot
> be conditioned without significantly degrading the voiceband service,
> the incumbent LEC cannot then or subsequently condition that loop to
> provide advanced services to its own customers without first making
> available to any requesting carrier the high frequency portion of the
> newly-conditioned loop.

\(6\) [Digital Loop Carrier Systems]{.underline}. Incumbent LECs must
provide to requesting carriers unbundled access to the high frequency
portion of the loop at the remote terminal as well as the central
office, pursuant to section 51.319(a)(2) and section 51.319(h)(1).

\(7\) [Maintenance, Repair, and Testing.]{.underline}

\(i\) Incumbent LECs must provide, on a nondiscriminatory basis,
physical loop test access points to requesting carriers at the splitter,
through a cross-connection to the competitor's collocation space, or
through a standardized interface, such as an intermediate distribution
frame or a test access server, for the purposes of loop testing,
maintenance, and repair activities.

\(ii\) An incumbent seeking to utilize an alternative physical access
methodology may request approval to do so from the relevant state
commission, but must show that the proposed alternative method is
reasonable, nondiscriminatory, and will not disadvantage a requesting
carrier's ability to perform loop or service testing, maintenance or
repair.

4\. New § 51.230 is added, to read as follows:

[§ 51.230 Presumption of acceptability for deployment of an advanced
services loop technology.]{.underline}

\(a\) An advanced services loop technology is presumed acceptable for
deployment under any one of the following circumstances, where the
technology:

\(1\) complies with existing industry standards; or

\(2\) is approved by an industry standards body, the Commission, or any
state commission; or

\(3\) has been successfully deployed by any carrier without
significantly degrading the performance of other services.

\(b\) An incumbent LEC may not deny a carrier\'s request to deploy a
technology that is presumed acceptable for deployment unless the
incumbent LEC demonstrates to the relevant state commission that
deployment of the particular technology will significantly degrade the
performance of other advanced services or traditional voiceband
services.

\(c\) Where a carrier seeks to establish that deployment of a technology
falls within the presumption of acceptability under paragraph (a)(3) of
this section, the burden is on the requesting carrier to demonstrate to
the state commission that its proposed deployment meets the threshold
for a presumption of acceptability and will not, in fact, significantly
degrade the performance of other advanced services or traditional voice
band services. Upon a successful demonstration by the requesting carrier
before a particular state commission, the deployed technology shall be
presumed acceptable for deployment in other areas.

5\. New § 51.231 is added, to read as follows:

[§ 51.231 Provision of information on advanced services
deployment.]{.underline}

\(a\) An incumbent LEC must provide to requesting carriers that seek
access to a loop or high frequency portion of the loop to provide
advanced services:

##### (1) information with respect to the spectrum management procedures and policies that the incumbent LEC uses in determining which services can be deployed; and {#information-with-respect-to-the-spectrum-management-procedures-and-policies-that-the-incumbent-lec-uses-in-determining-which-services-can-be-deployed-and .unnumbered}

\(2\) information with respect to the rejection of the requesting
carrier's provision of advanced services, together with the specific
reason for the rejection; and

\(3\) information with respect to the number of loops using advanced
services technology within the binder and type of technology deployed on
those loops.

\(b\) A requesting carrier that seeks access to a loop or a high
frequency portion of a loop to provide advanced services must provide to
the incumbent LEC information on the type of technology that the
requesting carrier seeks to deploy.

\(1\) Where the requesting carrier asserts that the technology it seeks
to deploy fits within a generic power spectral density (PSD) mask, it
also must provide Spectrum Class information for the technology.

\(2\) Where a requesting carrier relies on a calculation-based approach
to support deployment of a particular technology, it must provide the
incumbent LEC with information on the speed and power at which the
signal will be transmitted.

\(c\) The requesting carrier also must provide the information required
under paragraph (b) of this section when notifying the incumbent LEC of
any proposed change in advanced services technology that the carrier
uses on the loop.

6\. New § 51.232 is added, to read as follows:

[§ 51.232 Binder group management.]{.underline}

\(a\) With the exception of loops on which a known disturber is
deployed, the incumbent LEC shall be prohibited from designating,
segregating or reserving particular loops or binder groups for use
solely by any particular advanced services loop technology.

\(b\) Any party seeking designation of a technology as a known disturber
should file a petition for declaratory ruling with the Commission
seeking such designation, pursuant to § 1.2 of this chapter.

7\. New § 51.233 is added, to read as follows:

[§ 51.233 Significant degradation of services caused by deployment of
advanced services.]{.underline}

\(a\) Where a carrier claims that a deployed advanced service is
significantly degrading the performance of other advanced services or
traditional voiceband services, that carrier must notify the deploying
carrier and allow the deploying carrier a reasonable opportunity to
correct the problem. Where the carrier whose services are being degraded
does not know the precise cause of the degradation, it must notify each
carrier that may have caused or contributed to the degradation.

\(b\) Where the degradation asserted under paragraph (a) of this section
remains unresolved by the deploying carrier(s) after a reasonable
opportunity to correct the problem, the carrier whose services are being
degraded must establish before the relevant state commission that a
particular technology deployment is causing the significant degradation.

\(c\) Any claims of network harm presented to the deploying carrier(s)
or, if subsequently necessary, the relevant state commission, must be
supported with specific and verifiable information.

\(d\) Where a carrier demonstrates that a deployed technology is
significantly degrading the performance of other advanced services or
traditional voice band services, the carrier deploying the technology
shall discontinue deployment of that technology and migrate its
customers to technologies that will not significantly degrade the
performance of other such services.

\(e\) Where the only degraded service itself is a known disturber, and
the newly deployed technology satisfies at least one of the criteria for
a presumption that it is acceptable for deployment under section 51.230,
the degraded service shall not prevail against the newly-deployed
technology.

APPENDIX C

![](media/image1.wmf)

APPENDIX D

Final Regulatory Flexibility Analysis

1.  As required by the Regulatory Flexibility Act (RFA),[^542] an
    Initial Regulatory Flexibility Analysis (IRFA) was incorporated in
    the *Advanced Services First Report and Order and FNPRM*.[^543] The
    Commission sought written public comment on the proposals in the
    *Advanced Services First Report and Order and FNPRM*, including
    comment on the IRFA. This present Final Regulatory Flexibility
    Analysis (FRFA) conforms to the RFA.[^544]

#  {#section-1 .unnumbered}

# Need for and Objectives of this Third Report and Order and the Rules Adopted Herein.

2.  In this Third Report and Order (Order) we take additional, important
    steps toward implementing Congress' goals for deployment of advanced
    services by requiring incumbent LECs to unbundle the high frequency
    portion of the loop, and establishing spectrum compatibility and
    management policies.

3.  First, we amend our unbundling rules to require incumbent LECs to
    provide unbundled access to a network element, the high frequency
    portion of the loop. This will enable competitive LECs to provide
    xDSL service through telephone lines that they share with incumbent
    LECs, which is frequently called "line sharing." In order to ensure
    that line sharing does not significantly degrade analog voice
    service, incumbents must provide unbundled access to the high
    frequency portion of the loop only to carriers seeking to provide
    xDSL services that meet one of the Commission's criteria regarding
    the presumption of acceptability for deployment on the same loop as
    analog voice service.

4.  We also set out specific parameters for line sharing deployment in
    order to ensure that the analog voiceband is preserved from
    significant degradation. Incumbents are not required to provide
    unbundled access to the high frequency portion of the loop if they
    are not currently providing analog voice service to the customer.
    Moreover, incumbent carriers must provide unbundled access to the
    high frequency portion of the loop to only a single requesting
    carrier, for use at the same customer address as the analog voice
    service provided by the incumbent. In addition, subject to certain
    obligations, incumbent LECs may maintain control over the loop and
    splitter equipment and functions.

5.  We also set forth pricing methodologies for the states to use as
    guidelines when setting the price of this new unbundled network
    element. Based on the record, we find that there are five types of
    direct costs that an incumbent LEC potentially could incur to
    provide access to line sharing : (1) loops; (2) OSS; (3) cross
    connects; (4) splitters; and (5) line conditioning.

6.  In addition to line sharing requirements, we adopt rules in this
    Order that apply to spectrum compatibility and management. These
    rules will significantly benefit the rapid and efficient deployment
    of xDSL technologies. Specifically, we seek to encourage the
    voluntary development of industry standards while limiting the
    ability of any one class of carriers to impose unilateral and
    potentially anti-competitive spectrum management or compatibility
    rules on other xDSL providers. We believe that spectrum policies we
    adopt in this Order will ensure the compatibility of technologies
    and minimize the risk of harmful spectrum interference among
    transmission services. As such, these policies will ensure that
    American consumers will not face undue delay in receiving the
    benefits of technological innovation.

7.  We also adopt rules that will govern when a loop technology is
    presumed acceptable for deployment. The circumstances include when
    the technology: (1) complies with existing industry standards; (2)
    has been approved by an industry standards body, the Commission, or
    any state commission; or (3) has been successfully deployed by any
    carrier without significantly degrading the performance of other
    services.

8.  We affirm our conclusions from the *Advanced Services First Report
    and Order* regarding resolution of interference disputes. In the
    event that a LEC demonstrates to the relevant state commission that
    a deployed technology is significantly degrading the performance of
    other advanced services or traditional voice band services, the
    carrier deploying the technology shall discontinue deployment of
    that technology and migrate its customers to technologies that will
    not significantly degrade the performance of other services. We now
    adopt an exception to this rule: where the only service experiencing
    interference is itself a known disturber, that service shall not
    prevail against the newly developed technology. We conclude that
    analog T1 service is a known disturber.

9.  The only permissible forms of binder management[^545] are the
    segregation of known disturbers and the use of the spectrum
    compatibility (interference protection) techniques described above.
    The states may select one or more of several approaches towards
    disposition of known disturbers, including segregation or sunsetting
    of known disturbers.

# Summary of Significant Issues Raised by Public Comments in Response to the IRFA.

10. In the IRFA, we stated that any rule changes would impose minimum
    burdens on small entities, and solicited comment on alternatives to
    our proposed rules that would minimize the impact they might have on
    small entities. The Office of Advocacy, United States Small Business
    Administration (SBA), commented on the issues raised in the First
    Report and Order and Further Notice of Proposed Rulemaking. SBA
    argued that the Commission should consider all comments received in
    response to the FNPRM, but also issue a second Further Notice along
    with a revised IRFA that more accurately identifies all small
    businesses impacted and details the compliance burdens. Moreover,
    SBA is concerned that the Commission did not provide adequate notice
    regarding cost allocation and operational issues.

11. First, SBA argues that the *Advanced Services FNPRM* does not
    adequately identify all small entities affected by the line sharing
    and spectrum management proposals because the Commission did not
    identify small incumbent LECs as small entities.[^546] In fact, the
    Commission does include small incumbents in its RFA. While in the
    IRFA, the Commission stated that "\[a\]lthough some affected
    incumbent LECs may have 1,500 or fewer employees, we do not believe
    that such entities should be considered small entities within the
    meaning of the RFA because they are either dominant in their field
    of operations or are not independently owned and operated, and
    therefore by definition not 'small entities' or 'small business
    concerns' under the RFA,"[^547] the Commission goes on to state that
    "\[o\]ut of an abundance of caution, however, for regulatory
    flexibility analysis purposes, we will separately consider small
    incumbent LECs within this analysis and use the term 'small
    incumbent LECs' to refer to any incumbent LECs that arguably might
    be defined by the SBA as 'small business concerns.'"[^548] Moreover,
    as SBA is aware, the Commission continues formally to include small
    incumbent LECs in the RFA analysis of recent Commission items.[^549]

12. SBA also argues that the IRFA does not describe the possible
    reporting, recordkeeping, and other compliance requirements stemming
    from the proposals in the *Advanced Services FNPRM*.[^550] The
    Commission determined in the *Advanced Services FNPRM* that line
    sharing is technically feasible and requested comments on the
    operation issues relating to sharing a single line between two
    service providers. In addition, the Commission sought comment on
    additional measures the Commission could take to ensure that
    spectrum compatibility and management concerns are resolved in a
    fair and expeditious manner. The Commission sought comment on these
    two issues, and specifically identified issues such as the economic,
    pricing, and cost allocation implications of the line sharing
    proposals, as well as the burdens on the industry created by our
    spectrum policy proposals. As stated in the IRFA, we sought
    "comments on whether the Commission should establish rules for
    deployment of central office equipment similar to those set forth in
    Part 68 of our rules. We also ask\[ed\] commenters to address
    whether the Commission should be involved with the actual testing
    and compliance procedures or whether the industry is better suited
    to serve this function through the use of independent and accredited
    labs."[^551] The commenters in this proceeding addressed these
    specific issues in a detailed manner, including any reporting,
    recordkeeping, and other compliance requirements associated with the
    proposals, suggesting that the Commission proposals were neither
    vague not insufficient as alleged by SBA.

13. Third, SBA contends that the Commission's IRFA did not discuss any
    alternatives to the proposals made in the *Advanced Services FNPRM*,
    and that the Commission's claim that the proposals placed a minimum
    burden on small entities is unsupported by any analysis of the
    burdens.[^552] In the IRFA, the Commission sought "to develop a
    record sufficient enough to adequately address issues related to
    developing long-term standards and practices for spectrum
    compatibility and management, and to the sharing of loops by
    multiple providers." In addressing these issues, the Commission
    sought to ensure that competing carriers, including small entity
    carriers, obtain access to inputs necessary to the provision of
    advanced services. We also tentatively concluded that our proposals
    in the *FNPRM* would impose minimal burdens on small entities.
    Moreover, we sought comment on these proposals and the impact they
    may have on small entities."[^553]

14. Although the Commission did not describe explicitly each of the
    alternatives that we considered and rejected, as the proposals in
    the *Advanced Services FNRPM* make clear, the Commission is not
    considering proposals that would require small entities to engage in
    activities in which they are not already required to engage. These
    activities might require operational, accounting, billing, and legal
    skills that the small carriers already have. Moreover, certain
    proposals in the *Advanced Services FNPRM* clearly would benefit all
    carriers, including small carriers, by ensuring that all carriers
    have economic incentives to innovate and invest in new technologies.
    We note that in the text of the *Advanced Services FNPRM*, we did,
    in many instances, raise questions regarding alternatives to our
    proposals.[^554] These alternatives have the potential to benefit
    small entities. While we did not reiterate each of these questions
    in the IRFA, we did describe our actions in the IRFA, which was
    attached as an Appendix to the *Advanced Services FNPRM*, and as
    such, we provided sufficient notice for small entities.

# Description and Estimate of the Number of Small Entities Affected by the Third Report and Order.

15. In the RFA to the Commission's Advanced Services Order and FNPRM, we
    adopted the analysis and definitions set forth in determining the
    small entities affected by this order for purposes of this FRFA. The
    RFA directs agencies to provide a description of and, where
    feasible, an estimate of the number of small entities that will be
    affected by rules.[^555] The RFA generally defines \"small entity\"
    as having the same meaning as the term \"small business,\" \"small
    organization,\" and \"small governmental jurisdiction.\"[^556] In
    addition, the term \"small business\" has the same meaning as the
    term \"small business concern\" under the Small Business Act, unless
    the Commission has developed one or more definitions that are
    appropriate to its activities.[^557] Under the Small Business Act, a
    \"small business concern\" is one that: (1) is independently owned
    and operated; (2) is not dominant in its field of operation; and (3)
    meets any additional criteria established by the Small Business
    Administration (SBA).[^558] The SBA has defined a small business for
    Standard Industrial Classification (SIC) categories 4812
    (Radiotelephone Communications) and 4813 (Telephone Communications,
    Except Radiotelephone) to be small entities when they have no more
    than 1,500 employees.[^559] We first discuss the number of small
    telephone companies falling within these SIC categories, then
    attempt to refine further those estimates to correspond with the
    categories of telephone companies that are commonly used under our
    rules.

16. The most reliable source of information regarding the total numbers
    of common carrier and related providers nationwide, as well as the
    numbers of commercial wireless entities, appears to be data the
    Commission publishes annually in its *Carrier Locator* report,
    derived from filings made in connection with the Telecommunications
    Relay Service (TRS).[^560] According to data in the most recent
    report, there are 3,604 interstate carriers.[^561] These carriers
    include, *inter alia*, local exchange carriers, wireline carriers
    and service providers, interexchange carriers, competitive access
    providers, operator service providers, pay telephone operators,
    providers of telephone toll service, providers of telephone exchange
    service, and resellers.

17. We have included small incumbent LECs in the present RFA analysis.
    As noted above, a \"small business\" under the RFA is one that,
    *inter alia*, meets the pertinent small business size standard
    (*e.g.*, a telephone communications business having 1,500 or fewer
    employees), and \"is not dominant in its field of operation.\"[^562]
    The SBA\'s Office of Advocacy contends that, for RFA purposes, small
    incumbent LECs are not dominant in their field of operation because
    any such dominance is not \"national\" in scope.[^563] We have
    therefore included small incumbent LECs in this RFA analysis,
    although we emphasize that this RFA action has no effect on FCC
    analyses and determinations in other, non-RFA contexts.

18. *Total Number of Telephone Companies Affected*. The United States
    Bureau of the Census (\"the Census Bureau\") reports that, at the
    end of 1992, there were 3,497 firms engaged in providing telephone
    services, as defined therein, for at least one year.[^564] This
    number contains a variety of different categories of carriers,
    including local exchange carriers, interexchange carriers,
    competitive access providers, cellular carriers, mobile service
    carriers, operator service providers, pay telephone operators, PCS
    providers, covered SMR providers, and resellers. It seems certain
    that some of those 3,497 telephone service firms may not qualify as
    small entities or small incumbent LECs because they are not
    \"independently owned and operated.\"[^565] For example, a PCS
    provider that is affiliated with an interexchange carrier having
    more than 1,500 employees would not meet the definition of a small
    business. It seems reasonable to conclude, therefore, that fewer
    than 3,497 telephone service firms are small entity telephone
    service firms or small incumbent LECs that may be affected by the
    decisions and rules proposed in the Notice.

19. *Wireline Carriers and Service Providers*. SBA has developed a
    definition of small entities for telephone communications companies
    other than radiotelephone companies. The Census Bureau reports that,
    there were 2,321 such telephone companies in operation for at least
    one year at the end of 1992.[^566] According to SBA\'s definition, a
    small business telephone company other than a radiotelephone company
    is one employing no more than 1,500 persons.[^567] All but 26 of the
    2,321 non-radiotelephone companies listed by the Census Bureau were
    reported to have fewer than 1,000 employees. Thus, even if all 26 of
    those companies had more than 1,500 employees, there would still be
    2,295 non-radiotelephone companies that might qualify as small
    entities or small incumbent LECs. Although it seems certain that
    some of these carriers are not independently owned and operated, we
    are unable at this time to estimate with greater precision the
    number of wireline carriers and service providers that would qualify
    as small business concerns under SBA\'s definition. Consequently, we
    estimate that there are fewer than 2,295 small entity telephone
    communications companies other than radiotelephone companies that
    may be affected by the decisions and rules proposed in the Notice.

20. *Local Exchange Carriers.* Neither the Commission nor SBA has
    developed a definition of small local exchange carriers (LECs) or
    competitive local exchange carriers (CLECs). The closest applicable
    definition for these carrier-types under SBA rules is for telephone
    communications companies other than radiotelephone (wireless)
    companies.[^568] The most reliable source of information regarding
    the number of these carriers nationwide of which we are aware
    appears to be the data that we collect annually in connection with
    the Telecommunications Relay Service (TRS).[^569] According to our
    most recent data, there are 1,410 LECs, 129 CLECs,[^570] and 351
    resellers.[^571]

21. Although it seems certain that some of these carriers are not
    independently owned and operated, or have more than 1,500 employees,
    we are unable at this time to estimate with greater precision the
    number of these carriers that would qualify as small business
    concerns under SBA\'s definition. Consequently, we estimate that
    there are fewer than 1,410 small entity LECs, 129 CLECs,[^572] and
    351 resellers that may be affected by the decisions and rules
    adopted in the *Order.*

# Summary of Projected Reporting, Recordkeeping, and Other Compliance Requirements. 

A.  **Line Sharing**

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22. We set forth guidelines that states may use in pricing the higher
    frequencies of their local loops, which will be made available as an
    unbundled network element. We determine that complying with these
    guidelines may require use of operational, accounting, billing, and
    legal skills. These are skills that the carriers already have. We
    believe, however, that incumbent LECs will already have these
    skills. The burden of compliance is minimal because they use the
    higher frequencies of their local loops already to provide the
    service that will be offered to others pursuant to the unbundled
    network element.

#  {#section-2 .unnumbered}

23. In this *Order*, we identify the high frequency portion of the loop
    as an additional network element that incumbent LECs are obligated
    to offer to requesting carriers on an unbundled basis nationwide. We
    believe that incumbent LECs already have the skills necessary to
    accomplish this with little or no additional resources because
    incumbents will not have to hire new staff, or provide additional
    training to current staff. We note that, pursuant to section 251(c)
    and (d) of the 1996 Act, incumbent LECs, including those that
    qualify as small entities, are required to provide nondiscriminatory
    access to unbundled network elements. The only exception to this
    rule apply to those carriers that qualify for and have obtained an
    exemption, suspension, or modification pursuant to section 251(f) of
    the Act.[^573]

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B.  **Spectrum Policy**

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24. We require competitive LECs to provide to incumbent LECs information
    on the type of technology they seek to deploy, including Spectrum
    Class information where a competitive LEC asserts that the
    technology it seeks to deploy fits within a generic power spectral
    density (PSD) mask. Where a competitive LEC relies on a
    calculation-based approach to support deployment of a particular
    technology, it must furnish the incumbent LEC with information on
    the speed and power at which the technology will be transmitted.
    Competitive LECs must provide this information in notifying the
    incumbent LEC of any proposed change in advanced services technology
    that the carrier uses on the loop, so that the incumbent LEC can
    correct its records and anticipate the effect that the change may
    have on other services in the same or adjacent binder groups. The
    provision of such information is integral to a competitive LEC's
    claim that the technology it seeks to deploy is presumed acceptable
    for deployment. We determine that complying with these rules may
    require use of engineering, technical, operational, and legal skills

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

#  {#section-3 .unnumbered}

## Line Sharing

25. The high frequency portion of the loop meets the statutory
    definition of a network element and must be unbundled pursuant to
    sections 251(d) and (c)(3). Our unbundling analysis benefits
    competitive carriers, including small entities, by enabling the
    carriers to have access to shared loops in order to serve customers
    who, heretofore, it has been uneconomical to serve. In order to
    ensure that line sharing does not significantly degrade analog voice
    service, incumbents must provide unbundled access to the high
    frequency portion of the loop only to carriers seeking to provide
    xDSL-based service that meets one of the Commission's criteria
    regarding the presumption of acceptability for deployment on the
    same loop as analog voice service. Incumbent carriers must provide
    unbundled access to the high frequency portion of the loop only to a
    single requesting carrier, for use at the same customer address as
    the analog voice service provided by the incumbent. Incumbents are
    not required to provide unbundled access to the high frequency
    portion of the loop if they are not currently providing analog voice
    service to the customer. Subject to certain obligations, incumbent
    LECs may maintain control over the loop and splitter equipment and
    functions. The specific parameters pursuant to which incumbent LECs
    have to provide access to shared lines benefit small entities, both
    incumbent and competitive carriers, by ensuring that carriers do not
    have to devote scarce resources to address line sharing
    arrangements, such as multiple carriers and multiple customers on
    the same loop, in which it is unlikely carriers seek to engage.

26. Moreover, the record shows that incumbents should be able to resolve
    operational issues associated with implementation of line sharing,
    including modifications to operations support systems, within six
    months. The record shows that incumbents have a number of process
    alternatives available and we will allow them the flexibility to
    choose the best and most economically feasible of them. The 180-day
    implementation period will benefit small incumbents who might not
    have the resources to make immediate changes to their OSSs.

#  {#section-4 .unnumbered}

## Spectrum Policies

#  {#section-5 .unnumbered}

27. Although we reiterate our general belief that industry standards
    bodies should create acceptable standards for deployment of advanced
    services, we remain convinced, however, that the Commission is
    compelled to play a role in fostering timely, fair, and open
    development of standards for current and future technologies. We
    conclude that the standards setting process must include the
    involvement of a third party to advise the Commission on spectrum
    compatibility standards and spectrum management practices.
    Specifically, the charter of an existing Federal Advisory Committee
    (FAC), the Network Reliability Interoperability Council (NRIC), will
    be amended to charge NRIC with such advisory function.

28. Because NRIC will make recommendations to the Commission based on
    input and submissions from T1E1.4 and other industry standards
    bodies, that balanced representation within the NRIC should be able
    to recommend against any issues that are unduly weighted towards any
    one particular industry segment, we expect that NRICs involvement in
    these issues will help in several ways to alleviate small business
    concerns about incumbent LEC domination of T1E1.4, and will help
    safeguard competitive neutrality in, and the timeliness of xDSL
    standards setting for network interoperability generally.

29. Should we find that certain industry standards bodies are adopting
    spectrum compatibility standards or spectrum management practices
    that continue to fail, in their underlying processes, in
    safeguarding principles of competitive neutrality and promoting
    innovation, we will look to other industry standards bodies that
    uphold these principles or we will exercise our authority to assume
    that standards-setting function ourselves.

30. We find the criterion for acceptability for deployment outlined
    above -- successful deployment of a technology elsewhere without
    significantly degrading the performance of other services -- to be
    particularly useful for assisting the deployment of new technologies
    without subjecting them to delays often encountered with industry
    standards-setting fora. As a method to achieve a presumption of
    acceptability for deployment that does not rely upon industry
    standards bodies, the successful deployment criterion provides a
    further antidote against concerns regarding the competitive
    neutrality of the industry standards-setting process. This criterion
    should benefit small LECs because it relieves the LEC from having to
    meet the potentially burdensome requirements of the industry
    standards setting process.

31. The LEC also will be able to rebut the presumption of acceptability
    before a state commission if the technology proposed for deployment
    poses a real interference threat in a certain area. We are confident
    that this represents a sufficient safeguard for network reliability.
    Indeed, because the power to rebut the presumption of acceptability
    for deployment of a technology before a state commission is an
    important safeguard for LECs, we decline to make the presumptions
    that are based on technology's standardization or other approval by
    an industry standards body or this Commission irrebuttable. This
    rebuttable presumption benefits small LECs because it gives them a
    vehicle to protect the network and their deployed services. Small
    LECs particularly benefit by the fact that we allow carriers to
    rebut the presumption of acceptability for deployment before the
    relevant state commission.

32. We confirm that an incumbent LEC need not act as the initial point
    of contact in all service degradation disputes. This relieves small
    incumbent LECs from the potential responsibility for fielding all
    complaints; a task which could create an administrative burden and a
    resource drain on small incumbents.

33. We reaffirm and codify the policy that we enunciated in the
    *Advanced Services First Report and Order* to guide states in the
    resolution of interference disputes.[^574] Specifically, where a LEC
    demonstrates that a deployed technology is significantly degrading
    the performance of other advanced services or traditional voice band
    services, "the carrier deployning the technology shall discontinue
    deployment of that technology and migrate its customers to
    technologies that will not significantly degrade the performance of
    other such services. We now add an exception to this rule that we
    believe will further safeguard competitive neutrality and deployment
    of new technologies. Specifically, where the only interfered-with
    service itself is a known disturber, as designated by this
    Commission, that service shall not prevail against the newly
    developed technology. This exception prevents the undue protection
    of noisier technologies that are at or near the end of their useful
    life cycle, at the same time preventing the undue preclusion of new,
    more efficient and spectrally compatible technologies. This rule
    benefits incumbents, including small incumbents, by protecting the
    deployment of innovative services. The deployment of known
    disturbers is not at risk of being displaced by new technologies
    that do not meet the presumption of acceptability for deployment.

34. Such an approach would designate automatic winners in the event of
    interference disputes. Chief among these concerns is that the
    guarded services approach is blatantly discriminatory, protecting
    technologies favored by competitive LECs. We emphasize that any
    criteria that favor incumbent LEC services in a manner that
    automatically trumps, without further consideration, innovative
    services offered by new entrants is neither consistent with section
    706 of the 1996 Act nor with the Commission's goals as set out in
    the *Advanced Services First Report and Order.* The policies that we
    reiterate and adopt here as rules with respect to interference
    dispute resolution protect new technologies often deployed by small
    carriers against otherwise guarded technologies that tend to be
    deployed by incumbents who are generally larger than competitive
    carriers that do not favor the guarded services approach having
    carte blanche to be deployed after-the-fact and cause interference.
    These policies also provide guidance at the national level, in
    accordance with our finding in the *Advanced Services First Report
    and Order* that "uniform spectrum management procedures are
    essential to the success of advanced services deployment" where they
    are possible, precisely to avoid requiring competitive LECs to
    conform to different specifications in each state. These policies,
    therefore, benefit small carriers by making it administratively more
    efficient to deploy advanced services nationwide.

#  {#section-6 .unnumbered}

35. We conclude that only permissible forms of binder group management
    are the segregation of known disturbers and the use of interference
    protection techniques. We believe that the interference that known
    disturbers in particular are likely to cause in a multi-service
    environment renders it worthwhile for us to allow incumbent LECs to
    decide whether to segregate such disturbers as a further measure to
    protect against interference. This conclusion helps small incumbent
    LECs to the extent that they are likely to have some deployment of
    known disturbers (analog T1), because segregation is much less
    burdensome on small incumbents than forced replacement. This rule
    also helps small competitive carriers by prohibiting segregation of
    services in a discriminatory manner.

36. Numerous competitive LECs, which are often small businesses,
    continue to express concern that if we vest in incumbent LECs right
    to manage binder groups unfettered, we will provide ample
    opportunity for incumbent LECs to discriminate against introduction
    of new technologies and/or to institute binder configurations which
    significantly favor their own deployed technologies. We are
    persuaded that we must limit segregation practices to known
    disturbers, because only the interference risks of mixing known
    disturbers with other technologies outweigh the risks of
    anticompetitive segregation practices. Because we currently do not
    determine ADSL to be a known disturber, we find that SBC may not
    implement SFS, and we do order that SBC dismantle any currently
    existing SFS implementation. We further stress that carriers cannot
    use binder group management to preclude the deployment of new
    technologies that are otherwise presumed to be acceptable for
    deployment.

37. We find leaving disposition of known interfering technologies to the
    states preferable to establishing a national sunset period for known
    disturbers in this proceeding. We are concerned that a blanket
    sunset period may lead to unnecessary replacement of analog T1 or
    other otherwise known disturbers, which could lead further to
    unnecessary network disruption and could force carriers to undertake
    exorbitant replacement expenditures. In addition, as we acknowledged
    in the *Advanced Services First Report and Order and FNPRM*,
    carriers that have a substantial base of analog T1 in deployment,
    and in some areas it provides the only feasible high-speed
    transmission capability. We also recognize that transitioning
    customers to less interfering technologies may disrupt service for
    subscribers. This rule benefits incumbents, including small
    incumbents, by not imposing an automatic sunset period for known
    disturbers. Such a sunset could be expensive and have unnecessary
    detrimental effects on small carriers. At the same time, states are
    better equipped than incumbent LECs to take an objective view of the
    disposition of known disturbers, because of the vested interest that
    incumbent LECs have in their own substantial base of known
    disturbers such as analog T1.

# Report to Congress

38. The Commission will send a copy of the *Third Report and Order*,
    including this *FRFA*, in a report to be sent to Congress pursuant
    to the Small Business Regulatory Enforcement Fairness Act of
    1996.[^575] In addition, the Commission will send a copy of the
    *Third Report and Order*, including the FRFA, to the Chief Counsel
    for Advocacy of the Small Business Administration. A copy of the
    *Third Report and Order* and *FRFA* (or summaries thereof) will also
    be published in the Federal Register.[^576]

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

*Re: Deployment of Wireline Services Offering Advanced
Telecommunications Capability*, CC Docket No. 98-147.

I concur in the Commission's decision to require incumbent local
exchange carriers to unbundle the high frequency portion of local loops
on which an incumbent carrier provides voice service. There are some
customers, including some but not all small business and residential
customers, who do not need the speed and capacity of the types of
advanced services that are offered over a separate line, such as SDSL
and HDSL services. These customers prefer the less costly alternative of
an advanced services technology that can be provided over a single line,
such as ADSL service. If a competitive data carrier must purchase a
separate line to deploy advanced services to this segment of the
advanced services market, it is placed at a significant disadvantage vis
à vis the incumbent carrier, which can serve those customers more cost
effectively by offering both voice and data services as a single-loop
package. Consequently, I believe that requiring incumbent carriers to
unbundle the high frequency portion of those loops on which the
incumbent provides voice service is consistent with the requirements of
sections 251(c)(3) and 251(d)(2).

At the same time, however, I believe that we should acknowledge the full
consequences of our decision. Specifically, a spectrum unbundling
requirement that is based on the needs of a narrow class of customers
means that the network element will available, without limit, to *all*
classes of customers. Data carriers certainly do not need unbundled
spectrum to provide service to *all* customers. Indeed, today they are
offering profitable services to thousands of customers without this
benefit. However, because of section 251(c)(3)'s nondiscrimination
principles, I do not believe that the Commission can restrict a
carrier's use of an unbundled element to services provided to a narrow
class of customers. I would nevertheless have preferred a more candid
assessment of the limited need for this new network element and a review
of alternatives that might limit the availability of line sharing to
those situations in which lack of access to unbundled spectrum actually
impairs a competitor's ability to provide service.

I also believe that it is important to acknowledge the following
inescapable predicament to which the Commission's new unbundling rules
lead: Reducing the impairment of the ability of one category of
competing carriers to provide a certain service (in this case, the data
carriers) inevitably increases the impairment of a different class of
carriers to provide a different service (here, the competing voice
carriers). This outcome is not inconsistent with the statute, but it
does put the Commission in the awkward position of favoring one class of
telecommunications companies over another.

In addition, I wish to emphasize that I do not support the Commission's
decision to address this question in an order separate from *Third
Report & Order* that was released less than two weeks ago. See Third
Report & Order, *Implementation of the Local Competition Provisions of
the Telecommunications Act of 1996*, CC Docket 96-98 (rel. Nov. 5,
1999). I believe that it would have been more appropriate for the
Commission to have implemented section 251's unbundling requirements in
a single proceeding, so that incumbent and competing local exchange
carriers are given clear guidelines regarding their obligations and
rights under the 1996 Act. Given the Commission's long delay in
releasing the *Third Report & Order* (which it adopted on September 15,
1999), I see no reason why these issues could not have been resolved
simultaneously.

Finally, I dissent from the Commission's decision to reexamine whether
line sharing should remain on the list of network elements only after
three years have passed. I believe that this decision is inconsistent
with section 11's requirement that, "in *every* even-numbered year," the
Commission is required to "review *all* regulations issued under this
Act in effect at the time of the review that apply to the operations or
activities of any provider of telecommunications service" in order to
determine whether those regulations continue to serve the public
interest. 47 U.S.C. § 161(a) (emphasis added). The Commission has no
authority to ignore this requirement, even if it thinks such review is
unneeded.

[^1]: Telecommunications Act of 1996, Pub.L. 104‑104, Feb. 8, 1996, 110
    Stat. 56, codified at 47 U.S.C. § 151 *et seq.* (1996 Act). The 1996
    Act amended the Communications Act of 1934. We refer to the
    Communications Act of 1934, as amended, as the "Communications Act"
    or the "Act."

[^2]: Joint Statement of Managers, S. Conf. Rep. No. 104-230, 104th
    Cong. 2d Sess. 1 (1996) *(Joint Explanatory Statement*). For
    purposes of this order, we use the term \"advanced services\" to
    mean high speed, switched, broadband, wireline telecommunications
    capability that enables users to originate and receive high‑quality
    voice, data, graphics and video telecommunications. The term
    \"broadband\" is generally used to convey sufficient capacity \-- or
    \"bandwidth\" \-- to transport large amounts of information. As
    technology evolves, the concept of \"broadband\" will evolve with
    it: we may consider today\'s \"broadband\" services to be
    \"narrowband\" services when tomorrow\'s technologies appear.

[^3]: *Deployment of Wireline Services Offering Advanced
    Telecommunications Capability*, CC Docket No. 98-147, Memorandum
    Opinion and Order and Notice of Proposed Rulemaking, 13 FCC Rcd
    24012 (1998) (*Advanced Services Order and NPRM);* *Deployment of
    Wireline Services Offering Advanced Telecommunications Capability*,
    CC Docket No. 98-147, First Report and Order and Further Notice of
    Proposed Rulemaking, 14 FCC Rcd 4761 (1999) (*Advanced Services
    First Report and Order or Advanced Services First Report and Order
    and FNPRM*); *Deployment of Wireline Services Offering Advanced
    Telecommunications Capability*, CC Docket No. 98-147, Second Report
    and Order, FCC 99-330 (rel. Nov. 9, 1999) (*Advanced Services Second
    Report and Order*). *See also* *GTE Telephone Operating Companies
    Tariff No. 1*, Docket No. 98-79, Memorandum Opinion and Order**,**
    13 FCC Rcd 22466 (1998); *1998 Biennial Regulatory Review --
    Modifications to Signal Power Limitations Contained in Part 68 of
    the Commission's Rules*, CC Docket No. 98-163, Notice of Proposed
    Rulemaking, 1998 WL 614472 (Sept. 16, 1998); *Paradyne Corporation
    Petition for Waiver of the Signal Power Limitations Contained in
    Section 68.308(e) of the Commission's Rules*, File No. NSD-L-98-93,
    Order, 14 FCC Rcd 4496 (Com. Car. Bur. Network Servs. Div. 1999)
    (*Paradyne Order*); *Petition for Waiver of the Signal Power
    Limitations Contained in Section 68.308(e) of the Commission's
    Rules*, File No. NSD-L-98-135**,** Order, DA 99-1350, 1999 WL 556954
    (Com. Car. Bur. Network Servs. Div., rel. Jul. 30, 1999) (*Nortel
    Order*).

[^4]: *See, e.g., Inquiry Concerning the Deployment of Advanced
    Telecommunications Capability to All Americans in a Reasonable and
    Timely Fashion, and Possible Steps to Accelerate Such Deployment
    Pursuant to Section 706 of the Telecommunications Act of 1996*, CC
    Docket 98-146, Notice of Inquiry, 13 FCC Rcd 15280, 15287-88, paras.
    20-22 (1998) (*Section 706 Report to Congress*). Digital
    transmission technologies have been used for some time in the
    network 'backbone' facilities, and now are starting to appear in the
    local feeder and distribution plant. Packet switching technologies
    segment information into small pieces, called packets, assigning
    each packet identifying characteristics as well as a destination
    address. The packets traverse the network, often following many
    different physical paths, until they arrive at their destination and
    are reassembled. *See* Newton\'s Telecom Dictionary, 14th Ed. 1998,
    at 527.

[^5]: Today\'s wireline broadband services include services that use
    digital subscriber line technology (commonly referred to as xDSL),
    including ADSL (asymmetric digital subscriber line), HDSL
    (high-speed digital subscriber line), UDSL (universal digital
    subscriber line), VDSL (very-high speed digital subscriber line),
    and RADSL (rate-adaptive digital subscriber line) to send signals
    over copper wires to packet switches. The small "x" before the
    letters DSL signify that we are referring to DSL as a generic
    transmission technology, as opposed to a specific DSL "flavor." Some
    versions of xDSL are compatible with simultaneous analog voice
    transmissions over a single copper loop.

[^6]: Installation of Digital Subscriber Lines (DSLs) grew 300 percent
    in the United States for the first half of 1999. *SeeTeleChoice, DSL
    Deployment Surges Well Beyond Projections*,
    **\<**<http://www.telechoice.com/content/pressreleases/08171999.asp>\>
    (*TeleChoice Press Release*) SBC Communications Inc. (SBC) has
    announced plans to invest six billion dollars over a four-year
    period to provide DSL service to 10 million customers by the end of
    1999, and 50 million customers by the end of its four-year plan.
    Bell Atlantic is accelerating its DSL rollout to deploy advanced
    services to 21 million customers by early 2000. SBC Communications
    Inc. News Release, SBC Launches \$6 Billion Initiative to Transform
    it into America's Largest Single Broadband Provider, Oct. 18, 1999,
    \<[http://www.sbc.com](http://www.sbc.com/)\>**.** *See also* Roger
    O. Crockett and Catherine Young, *Industries, Telecommunications,
    Faster, Faster, Faster*, B[US]{.smallcaps}. W[K]{.smallcaps}., Oct.
    18, 1999.

[^7]: In this proceeding, we emphasize that we are only addressing line
    sharing on the network side of the demarcation point; and spectrum
    management policy pertaining only to the network side of the
    demarcation point. We clarify that equipment and lines located on
    the customer side of the demarcation point are subject to Part 68 of
    our rules. In a separate proceeding, CC Docket No. 99-216, we have
    held fora and solicited comment on changes to our customer premises
    equipment (CPE) connection rules under Part 68. *See Common Carrier
    Bureau Will Hold Fora on Deregulation/Privatization of Equipment
    Registration and Telephone Network Connection Rules*, Public Notice,
    CC Docket No. 99-216, DA 99-1108 (rel. June 10, 1999) (*Part 68
    Notice*). Thus, the policies and rules promulgated herein do not
    apply to, and will not affect, CPE.

[^8]: Current projections indicate the following expected total xDSL
    line deployment levels: 575,000 by the end of 1999, 2,107,000 by the
    end of 2000, 5,103,000 lines by the end of 2001, and 7,655,000 lines
    by the end of 2002. Note that these numbers combine incumbent and
    competitive LEC-deployed lines, but excludes HDSL lines. *TeleChoice
    xDSL Deployment Tracking Survey*, End of Third Quarter 1999,
    \<<http://www.xdsl.com/content/resources/deployment_info.asp>\>.
    *See also* Robert Rosenberg, *Hard to Beat ATM is the Carrier\'s
    Silver Bullet*, America\'s Network, May 15, 1998,
    \<<http://www.americasnetwork.com/issues/98issues/980515/980515_insight.html>\>.

[^9]: In the United States, an ordinary voice channel generally allows
    transmission of digital information at the rate of up to 56,000 bits
    per second. By contrast, the most widely deployed xDSL service
    (known as ADSL) allows data to be transmitted to the home or
    residence at up to several million bits per second, depending on
    loop length, loop design, and the technology deployed. Provision of
    xDSL service is subject to a variety of important technical
    constraints. One is the length of the subscriber loop: ADSL, the
    most widely deployed xDSL-based service, generally requires loops of
    less than 18,000 feet using current technology. Another is the
    quality of the loop, which must be free of excessive bridged taps,
    loading coils, and other devices commonly used to aid in the
    provision of analog voice and data transmission, but which interfere
    with the provision of xDSL services. \"Conditioning\" loops to
    remove those impediments, or constructing fiber-based digital loop
    carrier systems to overcome loop length difficulties, can be
    expensive.

[^10]: K.G. Coffman and Andrew Odlyzko, *The Size and Growth Rate of the
    Internet*, First Monday, Issue 3_10,
    \<<http://www.firstmonday.dk/issues/issue3_10/coffman/index.html>\>.

[^11]: The splitter's primary function is to separate the high
    frequency, xDSL signals, from low frequency (voiceband) analog
    signals traversing the copper loop. In some circumstances, the DSLAM
    and the splitter are combined in the same piece of equipment.

[^12]: We initiated this proceeding in August 1998, in response to six
    petitions suggesting actions we should take to speed the deployment
    of advanced services by wireline carriers. *See Advanced Services
    Order and NPRM*, 13 FCC Rcd at 24023, 24035, paras. 21, 47-48
    (noting Congress\' intent to open local markets to competition by
    reducing inherent economic and operational advantages possessed by
    incumbents, particularly with respect to interconnection, access to
    unbundled network elements, and collocation). *See also* *Advanced
    Services First Report and Order and FNPRM,* 14 FCC Rcd 4784-85, at
    para. 42 nn.100 & 102.

[^13]: A list of parties that filed comments and replies in response to
    the *Advanced Services FNPRM* is provided in Appendix A.

[^14]: US WEST Comments at 56 n.122.

[^15]: *See US WEST v. Federal Communications Commission*, Order No.
    98-1410 (D.C. Cir. Aug. 25, 1999).

[^16]: *See Comments Requested in Connection with Court Remand of August
    1998 Advanced Services Order*, Public Notice, CC Docket Nos. 98-11,
    98-26, 98-32, 98-78, 98-91, 98-147, Notice, DA No.99-1853 (rel.
    Sept. 9, 1999).

[^17]: *Advanced Services Order and NPRM*, 13 FCC Rcd at 24032, para.
    40.

[^18]: Voiceband services, such as POTS, are analog telecommunications
    services that utilize the lower frequency portion of the local loop
    spectrum, from 300 Hertz to at least 3000 Hertz, and potentially up
    to 3400 Hertz, depending on equipment and facilities.

[^19]: Although, in many areas, incumbent LECs are already providing
    both voice and xDSL services on the same loop, we believe that
    incumbents require approximately six months to adapt their "back
    office" systems to comply with the two-carrier line sharing
    requirements set out in this Order. *See infra* Sections IV.C.2. and
    IV.D.4).

[^20]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4808, para. 98.

[^21]: California PUC Comments at 4-5; Oklahoma CC Comments at 17; ALTS
    Comments at 8; Primary Comments at 5; \@link Comments at 5; Prism
    Comments at 12; NAS Comments at 8-9; NorthPoint Comments at 23,
    Rhythms Comments at 3-5, Rhythms Reply Comments at 5; Covad Comments
    at 14; Covad Reply Comments at 4.

[^22]: ALTS Comments at 4, 14; MCI Comments at 10; Covad Comments at
    14-17, 20-23; Intermedia Comments at 2 NAS Comments at 12; NEXTLINK
    Comments at 1-4, 11; NEXTLINK Reply Comments at 2; NorthPoint
    Comments at 23.

[^23]: GTE Comments at 4, 18; RTC Comments at 6-8, 10; US WEST Comments
    at 17-19.

[^24]: The Supreme Court decision in Iowa Utils. Bd. supports our
    authority to develop a national list of unbundled elements. *AT&T v.
    Iowa Utils. Bd*., 119 S. Ct. 721, 733 (1999) (*Iowa Utils. Bd*.).

[^25]: Certain rural telephone companies may be exempt from the
    unbundling provisions of section 251. *See* 47 U.S.C. § 251(f).

[^26]: 47 U.S.C. § 251(d)(2).

[^27]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4805-06, para. 92. *See* GSA Comments at 5-6; Covad Comments at
    4-5 and Affidavit of Anjali Joshi at 2 (Covad Joshi Aff.). Line
    sharing through the simultaneous use of discrete electromagnetic
    frequencies on a single wire pair to provide separate communications
    services, is the only form of line sharing considered in this Order,
    and is only possible on metallic loops. Thus, fiber-based
    transmission systems are not considered in this Order, except if
    specifically noted otherwise.

[^28]: 47 U.S.C. § 153(29).

[^29]: This reasoning is consistent with our treatment of other
    unbundled network elements. For instance, in the *Local Competition
    Third Report and Order*, we affirmed that switch capabilities, e.g,
    call waiting, are part of the switching network element because a
    competitor's ability to access such capabilities are contingent upon
    access to switching. In the same order, however, we identify
    sub-loops and Network Interface Devices (NIDs) as separate network
    elements, even though the loop network element includes sub-loops
    and NIDs, because a competitor's sub-loop or NID access is not
    contingent upon its access to the entire loop. *See 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, FCC 99-238, at paras. 163-318
    (rel. Nov. 5, 1999) (*Local Competition Third Report and Order*).
    *See also* *Iowa Utils. Bd.*, 119 S. Ct. at 734 (discussing the
    breadth of the network element definition in section 153(29) and the
    reasonableness of our earlier decisions). In this Order, we identify
    the high frequency portion of the loop as a separate network element
    because a competitor need not access the entire loop to utilize only
    the high frequency portion.

[^30]: 47 C.F.R. §§ 51.307(d)), 51.309(c).

[^31]: Covad Comments at 19, n.34. *See also* ALTS Comments at 15.

[^32]: *See, e.g.,* Covad Comments at 14-18; NEXTLINK Comments at 4.

[^33]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4808, para. 99.

[^34]: *Id.*, 14 FCC Rcd at 4806-07, para. 96.

[^35]: *Id.*, 14 FCC Rcd at 4809, para. 100.

[^36]: *Id.*

[^37]: *Id.*, 14 FCC Rcd at 4809, para. 101.

[^38]: *Local Competition Third Report and Order*, at paras. 21-116.

[^39]: *Id.*, at para. 51.

[^40]: *Id.*, at paras. 62-100.

[^41]: *Id.*, at paras. 101-116.

[^42]: *Id.*, at para. 106.

[^43]: The national list of unbundled network elements adopted in the
    *Local Competition Third Report and Order* include: (1) local loops,
    including dark fiber and high-capacity loops; (2) subloops; (3)
    network interface devices; (4) local switching, except under certain
    conditions; (5) interoffice transport; (6) signaling and
    call-related databases; (7) operations support systems; and (8) in
    very limited situations, packet switching. 47 C.F.R. § 51.319;
    *Local Competition Third Report and Order*, at paras. 163-465.

[^44]: A list of parties that filed comments relating to spectrum
    unbundling in response to *Implementation of the Local Competition
    Provisions of the Telecommunications Act of 1996*, CC Docket No.
    96-98, Second Further Notice of Proposed Rulemaking, FCC No. 99-70
    (rel. Apr. 16, 1999) (*Local Competition Second FNPRM*) is provided
    in Appendix A.

[^45]: *See infra* Section IV.C.2.

[^46]: California PUC Comments at 5; Oklahoma CC Comments at 4, 11; ALTS
    Comments at 6-7, 12; \@link Comments at 4; CIX Comments at 2, 10;
    Covad Comments at 2, 18-22, 36-38; Inline Comments at 3; NAS
    Comments at 3-5, 10; NorthPoint Comments at 9-15; Primary Comments
    at 6; Prism Comments at 12; Rhythms Comments at 6.

[^47]: *See infra* Section IV.C.2. for a technical description of
    voiceband and non-voiceband copper loop transmission frequencies. We
    note that the issue of whether the voiceband meets the definition of
    a network element that must be unbundled pursuant to sections
    251(d)(2) and (c)(3) is not before the Commission in this
    proceeding.

[^48]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4809, para. 101.

[^49]: *Id.*

[^50]: This "dividing line" is generally referred to as the "guard
    band." We do not define specifically the frequency ranges for
    voiceband, guard band, and advanced services transmissions. We
    believe that doing so may risk arbitrarily freezing technological
    development, and our intention in this order is to ensure that the
    high frequency spectrum network element definition will apply to
    new, as well as current, technologies that do not interfere with the
    provision of analog voice service. Instead, we rely on a presumption
    of acceptability for deployment. *See infra* Section V.B.3.

[^51]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4802-05, paras. 80-91. A loop technology is presumed acceptable
    for deployment when the technology meets any one of the following
    circumstances: (1) it complies with existing industry standards; (2)
    it is approved by an industry standards body, the Commission, or any
    state commission; or (3) it has been successfully deployed by any
    carrier without "significantly degrading" the performance of other
    services. *See infra* Section V.B.3. Some xDSL technologies can
    "share lines" with voice service, because they do not use the
    frequencies in or immediately above the voiceband, thus ensuring
    compatibility with concurrent voiceband traffic. Not every xDSL
    technology, however, can be used for line sharing. HDSL and SDSL,
    for example, utilize voiceband frequencies, and thus are not
    acceptable for deployment on a shared line. *See* Covad Comments at
    5.

[^52]: *See* ALTS Comments at 11-13; NAS Comments at 8-9; NorthPoint
    Comments at 26-27; Rhythms Reply Comments at 8. In the *Local
    Competition Third Report and Order*, we stated that section
    251(d)(2) establishes separate standards that apply to proprietary
    and non-proprietary network elements. Specifically, we stated that
    the "necessary" standard in section 251(d)(2)(A) is a higher
    standard that applies to proprietary elements or to proprietary
    functions within an element, and that the "impair" standard in
    section 251(d)(2)(B) applies to non-proprietary elements. In that
    order, we adopted a limited definition of "proprietary" that
    generally tracks the intellectual property categories of patent,
    copyright, and trade secrets. A proprietary network element is
    "necessary" within the meaning of section 251(d)(2)(A) if, taking
    into consideration the availability of alternative elements outside
    the incumbent's network, including self-provisioning by a requesting
    carrier or acquiring an alternative from a third party supplier,
    lack of access to that element would, as a practical, economic, and
    operational matter, preclude a requesting carrier from providing the
    services it seeks to offer. *Local Competition Third Report and
    Order*, at paras. 34-40.

[^53]: We note that the 1996 Act does not permit the leveraging of a
    historic monopoly into a nascent industry or market. *See
    generally*, 47 U.S.C. § 251. Section 706 of the Act, however,
    encourages us to facilitate consumer access to low cost, high speed
    advanced services. Line sharing supports both of these mandates.
    *See* Pub.L. 104-104, Title VII, § 706, Feb. 8, 1996, 110 Stat. 153,
    reproduced in the notes under 47 U.S.C. § 157.

[^54]: *Local Competition Third Report and Order*, at para. 307.

[^55]: *Id.*, at para. 306.

[^56]: *Local Competition Third Report and Order*, at para. 306.

[^57]: 47 U.S.C. § 251(d)(2).

[^58]: *See Local Competition Third Report and Order*, at para. 84.

[^59]: GSA Comments at 7; ALTS Comments at 12; Covad Comments at 32-35;
    NAS Comments at 4-5; NorthPoint Comments at 14-15.

[^60]: *See Local Competition Third Report and Order*, at para. 82.

[^61]: Specifically, at the end of the third quarter of 1999, incumbent
    LECs served approximately 178,000 residential and small business
    customers, while competitive LECs served less than 11,000. *See*
    Telechoice Deployment Tracking Survey at 1,
    \<<http://www.xdsl.com/content/resources/deployment_info.asp>\>.
    (*TeleChoice Survey*).

[^62]: For instance, Ameritech uses ADSL. *See* Ameritech SpeedPath
    Frequently Asked Questions for Homes,
    \<<http://www.ameritech.com/navigation/site/1,1935,233,00.htm>\>.

[^63]: *See* 47 C.F.R. § 51.319(a).

[^64]: By the end of the third quarter of 1999, incumbent and
    competitive LECs had deployed approximately 41,000 business xDSL
    lines each. HDSL is not represented in these statistics, nor in the
    analysis below. HDSL has mostly been deployed by incumbent LECs as a
    substitute for analog T1 services. *See TeleChoice Survey* at 1.

[^65]: The TeleChoice survey reveals that competitive LECs have deployed
    79 percent of their voice compatible xDSL services to business
    customers while incumbent LECs have deployed 19 percent of the voice
    compatible xDSL service to business customers. In the residential
    market, competitive LECs have deployed only 21 percent of their
    voice-compatible xDSL service to the residential market while
    incumbent LECs have deployed 81 percent of their voice-compatible
    xDSL service to the residential marketplace. The survey also points
    out that small business users generally choose the residential
    offerings of competitive and incumbent LECs. *See id.*

[^66]: *See generally*, NorthPoint Comments at 15 (arguing that
    incumbent contentions that competitive carriers are not impaired
    without shared line access are "nothing more than a naked attempt to
    extend their voice monopoly into broadband.").

[^67]: Although we highlight the dramatic impact that line sharing
    promises with respect to residential and small business customers
    that are more price-sensitive and do not consume high volumes of
    data transport on a per-line basis, we note that requesting carriers
    providing voice-compatible xDSL services to medium and large
    business customers are also impaired without access to the unbundled
    high frequency portion of the loop. This impairment occurs for much
    the same reason that requesting carriers are impaired in their
    provision of voice-compatible xDSL service to residential and small
    business customers. The impairment suffered by a competitor that
    cannot access the high frequency portion of the loop to provide
    voice-compatible xDSL service occurs on a line-by-line basis, in
    that the incumbent with access to the high frequency portion of a
    loop will always have an advantage over the competitor lacking such
    access, regardless of the nature of the customer. So long as the
    customer is best served with the provision of a voice-compatible
    line sharing technology, no amount of loop density in a geographic
    region will alleviate the impairment that the competitor suffers on
    a per-line basis.

[^68]: ALTS Comments at 11-12; \@link Comments at 5; Covad Comments at
    19; Inline Comments at 3; NorthPoint Comments at 7, 27; Rhythms
    Reply Comments at 4-5; Letter from A. Richard Metzger, Jr., to
    Lawrence Strickling, Chief, Common Carrier Bureau, Federal
    Communications Commission, CC Docket No. 98-147, at 2 (filed Nov. 9,
    1999) (NorthPoint Nov. 9 *Ex Parte*).

[^69]: *Local Competition Third Report and Order*, at paras. 188-89.

[^70]: *Id.* at para. 182. Letter from Florence Grasso, Policy and
    Program Planning Division, Common Carrier Bureau, Federal
    Communications Commission, to Magalie Roman Salas, Secretary,
    Federal Communications Commission, CC Docket No. 98-147, audio tape
    (filed Sept. 22, 1999) (*Aug. 31 Technical Forum*).

[^71]: *See* Oklahoma CC Comments at 12-14; Rhythms Reply Comments at 4;
    CompTel Reply Comments at 5; NorthPoint Nov. 9 *Ex Parte* at 1.

[^72]: *See, e.g.,* RTC Comments at 13-16.

[^73]: *Aug. 31 Technical Forum*; Covad Comments at 22; Rhythms Reply
    Comments at 4.

[^74]: NorthPoint Nov. 9 *Ex Parte* at 2; Rhythms Reply Comments at 4-5.

[^75]: NorthPoint Nov. 9 *Ex Parte* at 1. *See* Rhythms Reply Comments
    at 4-5; MCI WorldCom Reply Comments at 15. *See also* *infra*
    Section IV.E.2.

[^76]: *See* Covad Comments at 8, 19; NorthPoint Comments at 27.

[^77]: *See, e.g.,* Oklahoma CC Comments at 11 ("the OCC is convinced
    that line sharing, if it is to be accomplished, must be mandated by
    the FCC").

[^78]: *GTE Telephone Operating Cos. GTOC Tariff No. 1 GTOC Transmittal
    No. 1148*, CC Docket No. 98-79, Memorandum Opinion and Order, 13 FCC
    Rcd 22466 (1998) (*GTE DSL Tariff Order*). *See* also NorthPoint
    Nov. 9 Ex Parte.

[^79]: For example, in the San Francisco Bay area, NorthPoint's
    wholesale loop and collocation costs are 116% of Pacific Bell's
    total retail, residential, shared-line xDSL product price, before
    NorthPoint begins to recover the incremental and fixed costs of
    network, equipment, or overhead. NorthPoint Comments at 8.

[^80]: For example, Bell Atlantic charges \$29.95 per month, with volume
    and term discount, as per Bell Atlantic Trans. No. 1138 for its ADSL
    service. In Virginia, Bell Atlantic will charge from \$19.87 to
    \$41.26 per month for an unbundled, conditioned loop. In Maryland,
    Bell Atlantic charges from \$13.63 to \$27.40. In New York, the
    rates are \$21.02 and \$28.26. In New Jersey, Bell Atlantic charges
    from \$15.02 to \$25.12. In Massachusetts, Bell Atlantic charges
    from \$19.87 to \$32.84. In Pennsylvania, the rates range from
    \$13.16 to 27.74, and in Delaware, from \$11.68 to \$18.21. These
    prices do not include non-recurring line conditioning costs. Perhaps
    the most sharply contrasted case is New Hampshire, where Bell
    Atlantic charges \$42.44 per month for an unbundled, conditioned
    loop, \$12.49 above its retail xDSL price. *See* Covad Comments at
    20; Rhythms Reply Comments at 8. *See also* 47 C.F.R. §
    51.513(c)(1), Proxies for Local Loops.

[^81]: *See* Covad Comments at 21; NorthPoint Nov. 9 *Ex Parte* at 2
    ("in cases where a separate loop is available . . . DSL competitive
    LECs must incur 'additional non-trivial costs' by purchasing a
    second loop to serve their customers, whereas an incumbent LEC may
    use a single copper pair to offer voice and DSL services"); Rhythms
    Reply Comments at 8-10. *See, e.g.,* Letter from Jonathan Askin,
    Vice President -- Law, ALTS, to Magalie Roman Salas, Secretary,
    Federal Communications Commission, CC Docket No. 98-147 at 6 (filed
    July 29, 1999) (ALTS July 29 *Ex Parte*).

[^82]: *See Bell Atlantic Telephone Cos., et al*, Memorandum Opinion and
    Order, FCC 98-317 (rel. Nov. 30, 1998) at para. 11 (noting incumbent
    LEC statements that there are no loop costs to be imputed to ADSL
    service). *See also* NorthPoint Comments at 7-8 (describing
    NorthPoint's wholesale loop and collocation costs ranging from 115%
    to 230% of the incumbent LECs' retail price for residential xDSL
    services).

[^83]: *See* Letter from Rodney L. Joyce, Counsel for Network Access
    Solutions Corp., to Magalie Roman Salas, Secretary, Federal
    Communications Commission, CC Docket 98-147, at 1 (filed Oct. 13,
    1999) (NAS Oct. 13 *Ex Parte*). *See also* Letter from Florence M.
    Grasso, Covad Communications, to Magalie Roman Salas, Secretary,
    Federal Communications Commission, CC Docket 98-147, Attachments
    (filed Oct. 5, 1999) (Covad Oct. 5 *Ex Parte*).

[^84]: *See* NorthPoint Nov. 9 *Ex Parte*; *See also* Letter from Jason
    Oxman, Senior Government Affairs Counsel, Covad, to Carol Mattey,
    Chief, Policy and Program Planning Division, Common Carrier Bureau,
    Federal Communications Commission, CC Docket No. 98-147 (filed Oct.
    13, 1999) (Covad Oct. 13 *Ex Parte*).

[^85]: Rhythms Reply Comments at 9; Sprint Reply Comments at 5-6;
    CompTel Reply Comments at 14.

[^86]: *See* Bell Atlantic Infospeed DSL advertisement,
    \<<http://www.bellatlantic.net/home/dsl>\>; BellSouth FastAccess
    Service advertisement,
    \<<http://services.bellsouth.net/external/adsl>\>; US WEST MegaBit
    Services advertisement,
    \<[http://www.uswest.com/features/megabit](http://www.uswest.com.features.megabit/)\>
    (stating that MegaBit installation is easy. "We provide the
    step-by-step instructions, plus a toll free number," indicating that
    customers can install their own shared-line MegaBit xDSL service.
    Connecting an additional line requires a technician to visit the
    customer's premises, adding to installation difficulties and
    expenses). *See also* Rhythms Reply Comments at 17.

[^87]: *See* Letter from James J. Valentino, Attorney for CoreComm, to
    Magalie Roman Salas, Secretary, Federal Communications Commission,
    CC Docket No. 98-147 (filed Nov. 10, 1999) (CoreComm Nov. 10 *Ex
    Parte*).

[^88]: *Local Competition Third Report and Order*, at para 306.

[^89]: *See* CoreComm Nov. 10 *Ex Parte* at 4.

[^90]: *Local Competition Third Report and Order*, at para. 266. We note
    that pursuant to our line sharing requirements, requesting carriers
    may provide data services without the incumbent LEC having to take
    the voice customer out of service through the coordinated cutover
    process.

[^91]: NEXTLINK Comments at 6.

[^92]: Covad Comments at 34-35; NEXTLINK Comments at 6; Rhythms Reply
    Comments at 10.

[^93]: *Local Competition Third Report and Order*, at para. 211.

[^94]: Bell Atlantic Comments at 5-6; GTE Comments at 24, 26; USTA
    Comments at 5.

[^95]: In this scenario, a requesting carrier would essentially share
    the line with itself by attaching a splitter to the loop at a
    technically feasible point and separating the voiceband from the
    high frequency portion of the loop to provide both voice and xDSL
    services.

[^96]: One means by which the competitor can entice the consumer to
    switch is to provide analog voice services at a lower price. Local
    voice service, however, is priced in response to a number of
    historical, public policy, and regulatory factors, such as Universal
    Service obligations, and various state and local regulations. Carl
    Shapiro and Hal R. Varian, *Information Rules*, HARV. BUS. SCH.
    PRESS, 1999, at 212-214.

[^97]: 47 U.S.C. § 251(d)(2).

[^98]: *See Local Competition Third Report and Order*, at para. 258.
    ("We find however, that facilities-based competitors need not deploy
    switches in exactly the same network configuration as an incumbent,
    thus allowing competitors to achieve their own unique and
    competitive efficiencies by deploying their own switches.")

[^99]: *See* Letter from A Richard Metzger, Jr., Counsel for NorthPoint,
    to Magalie Roman Salas, Secretary, Federal Communications Commission
    (filed Nov. 4, 1999) (NorthPoint and Tandy Nov. 4 *Ex Parte*).

[^100]: *Local Competition Third Report and Order*, at para. 257.

[^101]: *See* Ameritech Comments at 3-6; Bell Atlantic Comments at 2-7;
    BellSouth Comments at 12-13; SBC Comments at 14-16; US WEST Comments
    at 20-22; CoreComm Nov. 10 *Ex Parte* at 3-4.

[^102]: *See* NorthPoint and Tandy Nov. 4 *Ex Parte*.

[^103]: CIX Comments at 11; Oklahoma CC Comments at 21; NEXTLINK
    Comments at 6-7; Sprint Reply Comments at 11.

[^104]: CoreComm Nov. 10 *Ex Parte*.

[^105]: E-911 functionality requires that the voice-over-DSL service
    terminate on a circuit switch, creating the same sort of
    difficulties and impairments that competitive LECs face when trying
    to deploy circuit-switched analog voice services.

[^106]: *Local Competition Third Report and Order*, at para. 257.

[^107]: The principle section of the 1996 Act concerning advanced
    telecommunications services is Section 706, Pub.L. 104-104, Title
    VII § 706, Feb. 8, 1996, 110 Stat. 153, reproduced in the notes
    under 47 U.S.C. § 157. *See also* CIX Comments at 8.

[^108]: Rhythms Reply Comments at 5.

[^109]: *See* Covad Comments at 21. For the purposes of this discussion,
    we assume that the competitor's retail price includes the cost of
    the extra customer access line, regardless of whether that line is
    purchased by the customer from the incumbent, or by the competitor
    as an unbundled network element. Thus, where the competitive carrier
    relies on the customer to procure the second line, and the incumbent
    and the competitor's xDSL offerings are, for example, retail priced
    at \$29.95 per month, the apparent cost, from the customer's
    perspective, of the competitor's service, is higher than that of the
    incumbents by the amount that the incumbent charges for the second
    line, since a second line is not required for the incumbent's
    product. Where the competitor procures the second line as an
    unbundled network element, the competitor's cost for that line
    constitutes a large cost element (and a revenue stream for the
    incumbent) that the incumbent does not incur in its retail xDSL
    offering. *See* NEXTLINK Comments at 6-7; Rhythms Reply Comments at
    7-9.

[^110]: Bell Atlantic Comments at 4; GTE Comments at 1-2; RTC Comments
    at 5; USTA Comments at 4, 7; CoreComm Nov. 10 *Ex Parte* at 3.

[^111]: Covad Comments at 32-35; NorthPoint Comments at 13-15.

[^112]: NorthPoint Reply Comments at 8; Rhythms Reply Comments at 4.

[^113]: NorthPoint Reply Comments at 9.

[^114]: *See* Covad Comments; Letter from Thomas M. Koutsky, Assistant
    General Counsel, Covad, to Magalie Roman Salas, Secretary, Federal
    Communications Commission, CC Docket No. 98-147 at 3 (filed Sept.1,
    1999) (Covad Sept. 1 *Ex Parte*) (arguing that the availability of
    competitive advanced services will drive investment and innovation
    such as fiber transport to suburban and low-density areas, and the
    implementation of next-generation remote-terminal technology). *See
    also* Oklahoma CC Comments at 21-22; ALTS Comments at 7; Sprint
    Comments at 15; Rhythms Reply Comments at 4.

[^115]: *See* CoreComm Nov. 10 *Ex Parte*, at 1-2, 4. ("It is difficult
    to see why the Commission would expect \[competitive LECs\] to
    construct their own loop facilities or to procure unbundled
    \[incumbent LEC\] loops if a rival can offer both voice and
    high-speed data services over the same loop but without having to
    pay the full TELRIC price of that loop.") *See also* *infra* Section
    IV.D.1) (discussing requirement that competitive LEC may only access
    the high frequency portion of the loop where an incumbent LEC is
    already providing analog voiceband service on that loop). We note
    that this arrangement presupposes that the incumbent LEC will be
    charging the customer the line access charge, which exceeds the
    TELRIC price for an unbundled loop.

[^116]: NEXTLINK Comments at 6.

[^117]: US WEST Comments at 3. *See* SBC Reply Comments at 9.

[^118]: US WEST Reply Comments at 32--33. *See* Bell Atlantic Comments
    at 6--7; BellSouth Comments at 12--13.

[^119]: US WEST Reply Comments at 33.

[^120]: Compare, for example, section 251(b), which describes the
    interconnection obligations placed on all LECs, to section 251(c),
    which places additional obligations on incumbent LECs.

[^121]: The term "cable service" means "(A) the one-way transmission of
    (i) video programming, or (ii) other programming service, and (B)
    subscriber interaction, if any, which is required for the selection
    or use of such video programming or other programming service." 47
    U.S.C. § 602(6).

[^122]: A "telecommunications service" is defined as "the offering of
    telecommunications for a fee directly to the public, or to such
    classes of users as to be effectively available directly to the
    public, regardless of facilities used." 47 U.S.C. § 3(46).

[^123]: An "information service" is defined as "the offering of a
    capability for generating, acquiring, storing, transforming,
    processing, retrieving, utilizing, or making available information
    via telecommunications, and includes electronic publishing, but does
    not include any use of any such capability for the management,
    control, or operation of a telecommunications system or the
    management of a telecommunications service. 47 U.S.C. § 3(20).

[^124]: The Commission's Cable Services Bureau recently stated that it
    "is not persuaded that consumers are at risk of cable establishing a
    bottleneck monopoly in broadband services in the absence of
    immediate regulatory action." *Broadband Today, A Staff Report to
    William E. Kennard, Chairman, Federal Communications Commission*, at
    42, Oct. 1999, \<<http://www.fcc.gov/csb/>\>.

[^125]: *See supra* Section IV.B.

[^126]: *See Local Competition Third Report and Order*, at para.
    146**.** *See also* 47 U.S.C. §§ 251(d)(1) - (2).

[^127]: *Id.,* at para. 149.

[^128]: *Id.*

[^129]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4809, para. 103.

[^130]: *Id.*, 14 FCC Rcd at 4809-10, para. 103.

[^131]: Bell Atlantic Comments at 11; BellSouth Comments at 16; GTE
    Comments at 29.

[^132]: GSA Comments at 6; ALTS Comments at 7-8; CIX Comments at 3;
    Covad Comments at 2; Rhythms Reply Comments at 15-16; CompTel Reply
    Comments at 4.

[^133]: Line sharing between one carrier providing voice service and
    another providing data service most closely resembles current
    methods of shared line service deployment, comports with current
    industry standards, and provides a competitive market entry
    opportunity for carriers seeking to provide data services to small
    and residential businesses. While it is technically feasible for
    more than two carriers to share a loop, the record does not contain
    substantial support for requirements to facilitate such
    arrangements. Rhythms Reply Comments at 15. *See infra* Section
    IV.C.

[^134]: 1 Hertz is one cycle per second. Analog voice and modem
    transmissions up to 56 kilobits per second (kbps), generally utilize
    frequencies from 300 to 3000 or 3400 Hertz. *See* Covad Comments at
    5, n. 7.

[^135]: Asynchronous Digital Subscriber Line (ADSL) is the most common
    "flavor" of xDSL used for residential and small business
    applications. Using digital coding schemes and transmitting above
    the voiceband frequency range, ADSL modems are capable of
    transmitting at up to 120 times the speed of 56 kilobits per second
    (kbps) dial-up modems without interrupting basic voice services.
    Specifically, ADSL modems are capable of receiving up to 8 megabits
    per second (Mbps) "downstream," and transmitting up to 1 Mbps
    "upstream." The nomenclature "asymmetrical" refers to the asymmetry
    between the maximum upstream and downstream transmission rates.
    Actual downstream transmission speed decreases, however, in relation
    to the distance and the number of line impairments between the user
    and the serving central office. Thus, ADSL subscribers will
    generally experience downstream data rates from 1.54 to 6.14 Mbps,
    and upstream data rates from 176 to 640 kbps.

[^136]: These xDSL technologies do not use the frequencies immediately
    above the voiceband, preserving them as a "buffer" zone to ensure
    the integrity of voiceband traffic. ADSL technologies, including the
    relatively new Universal ADSL Working Group (UAWG) "G.Lite"
    standard, as well as Rate-Adaptive DSL and Multiple Virtual Lines
    (MVL) transmission systems reserve the voiceband frequency range for
    non-DSL traffic. Not every xDSL technology, however, avoids use of
    the voiceband frequency range. HDSL and SDSL are two systems that
    utilize voiceband frequencies. xDSL transmission systems that use
    the voiceband frequency range are not generally suitable for line
    sharing. *See* Covad Comments at 5; Rhythms Reply Comments at 16.

[^137]: Covad Comments at 5 and Joshi Aff. at 2; Rhythms Reply Comments
    at 4-5.

[^138]: NorthPoint Comments at 21.

[^139]: *Id.*

[^140]: *Id.*

[^141]: Splitters are generally standardized products, manufactured to
    comply with ANSI T1.413-1998, Annex E.1, Figure E.1. Covad Comments
    at 5, n.11 and Joshi Aff. at 4. *Cf.* Paradyne Oct. 12 *Ex Parte*
    (arguing that no single POTS splitter design will accommodate all
    technologies).

[^142]: The splitter at the customer end handles one line, and the
    splitter at the central office can handle multiple lines
    simultaneously. *See* Covad Comments at 5, n.11 and Joshi Aff. at 3.

[^143]: Covad Comments at 6, NorthPoint Comments at 21.

[^144]: GSA Comments at 6; ALTS Comments at 7-8; CIX Comments at 3;
    Covad Comments at 2-5, NorthPoint Comments at 21; Rhythms Reply
    Comments at 4-5.

[^145]: Covad Comments at 4-6.

[^146]: *Id.* at 6.

[^147]: *Id.* and Joshi Aff. at 3.

[^148]: *Id.* at 6; NorthPoint Comments at 21; Rhythms Reply Comments at
    4-5; Covad Sept. 1 *Ex Parte* at 2.

[^149]: Virtual collocation at the incumbent's remote terminal may also
    permit line sharing. *See infra* Section IV.D.3 for a discussion of
    digital loop carrier systems.

[^150]: Covad Comments at 6-7. *See infra* Section V.B.3 for discussion
    regarding the Commission's presumption of acceptability for
    deployment.

[^151]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4811, para. 105.

[^152]: *Id.* at para. 104. Digital loop carrier (DLC) systems digitally
    encode an individual voice channel into a 64 kilobit per second
    (kbps) digital signal, and aggregate, or "multiplex," the traffic
    from up to 24 subscriber lines into DS1 or higher signals to improve
    transmission efficiency and range. DS1 channels carry 1.544 megabits
    per second (Mbps) of data, the digital equivalent of 24 x 64 kbps
    analog voice channels. In a DLC system, analog signals are carried
    from the customer's premises to a remote terminal (RT), at which
    they are converted to digital information, multiplexed with other
    signals, and transported, generally through fiber facilities, to the
    LEC central office. Integrated digital loop carrier (IDLC) systems,
    a specific type of DLC system, establish a direct, digital interface
    with the LEC central office switch, making it difficult, if not
    impossible, for requesting carriers to access individual loops at
    that location.

[^153]: *See infra* Section V.B.3.

[^154]: *See* \@Link Reply Comments at 2; NorthPoint Comments at 18-19;
    Rhythms Reply Comments at 16.

[^155]: *See infra* Section V.B.3. *See also* NorthPoint Reply Comments
    at 21; SBC Comments at 27; Bell South Comments at 27.

[^156]: *See* Covad Comments at 5. *See also* *Paradyne Order*, 14 FCC
    Rcd. 4496; *Nortel Order*, 16 Communications Reg. (P&F) 1143. The
    relatively new Universal ADSL Working Group (UAWG) "G.Lite" standard
    may meet the criteria for the presumption of acceptability for
    deployment as well. We note that, although it is successfully
    deployed, MVL is a proprietary technology that is not compliant with
    the T1.413 Annex E splitter. *See* Network and Customer Installation
    Interfaces ‑ Asymmetric Digital Subscriber Line (ADSL) Metallic
    Interface (ANSI T1.413‑1995) (ANSI T1.413) (ANSI T1.413 standard
    presents the electrical and other characteristics of the ADSL
    signals appearing at the network interface).

[^157]: *See* ANSI T1.413.

[^158]: NorthPoint Comments at 19; NorthPoint Reply Comments at 16. *See
    generally supra* Section IV.B.2.

[^159]: We do not, however, preclude carriers from providing "dry loops"
    on a wholesale basis. For example, it may be in the incumbent LEC's
    interest to continue to provide access to the high frequency portion
    of local loops on which it is not providing voice service, such as
    where voice service has been switched to a fiber technology such as
    DLC, but the incumbent wants to continue to recover income from its
    extant copper plant.

[^160]: As previously discussed, we do not find impairment where the
    incumbent LEC is not providing voice service on the customer's loop,
    or where the competitive LEC is seeking to deploy a form of xDSL
    that is not compatible with voice service provided on a shared line.
    *See supra* Section IV.B.2

[^161]: The platform refers to combinations of loop, switching and
    transport unbundled network elements used to provide
    circuit-switched voice service. *See Local Competition Third Report
    and Order*, at para. 12.

[^162]: GTE Comments at 30.

[^163]: We do not, however, preclude incumbent carriers from providing,
    as an alternative, loop access on a wholesale basis. Moreover, we
    note that if the customer switches its voice provider from the
    incumbent LEC to a competitive LEC that provides voice services, the
    xDSL-providing competitive LEC may enter into a voluntary line
    sharing agreement with the voice-providing competitive LEC.
    NorthPoint Reply Comments at 17.

[^164]: We envision that a loop access status change can be accomplished
    by manipulating the connections to the splitter serving the customer
    line at the central office. Changes to the voice circuit on the
    carrier side of the splitter should not affect the competitor's
    continuing xDSL connection to the splitter.

[^165]: SBC Comments at 28-29; NorthPoint Reply Comments at 14-16.

[^166]: Although incumbent LECs state that provisioning xDSL through
    shared lines to multiple customers would be unduly complex, these
    commenters did not provide an example of a multiple customer
    scenario. We assume that one such possible scenario would involve
    several customers sharing a single xDSL connection in a single
    geographic location, such as an office building. We do not find that
    line sharing necessarily is required to prevent a competitor from
    being impaired in that type of situation, and note that the record
    does not indicate that such situation is likely. Thus, we do not
    require incumbents to preemptively prepare for such occurrence.
    *See* SBC Comments at 28-29; BellSouth Comments at 16.

[^167]: We note that multiple customer installations, such as office
    buildings, generally utilize completely digital services, such as
    T-1 lines or HDSL. In this proceeding we do not consider competitive
    impairment with respect to these high-capacity, non-line sharing
    compatible services. *See supra* section IV.B.2 for a discussion of
    competitive parity in business-oriented xDSL services.

[^168]: SBC Comments at 27, NorthPoint Reply Comments at 17-18. *But
    see* Letter from Kent D. Bressie, Counsel for Paradyne, to Magalie
    Roman Salas, Secretary, Federal Communications (filed Nov. 12, 1999)
    (Paradyne Nov. 12 *Ex Parte*) (arguing that xDSL provider should
    control splitter in order to ensure future innovation).

[^169]: *Aug. 31 Technical Forum*; Letter from Kathleen B. Levitz, Vice
    President -- Federal Regulatory, BellSouth, to Magalie Roman Salas,
    Secretary, Federal Communications Commission (filed Aug. 31, 1999)
    (BellSouth Aug. 31 *Ex Parte*) (arguing that permitting the
    competitive LEC to own the splitter would create issues regarding
    management of circuit terminations); Letter from Kathleen B. Levitz,
    Vice President -- Federal Regulatory, BellSouth, to Magalie Roman
    Salas, Secretary, Federal Communications Commission, Attach. at 4
    (filed Nov. 3, 1999) (BellSouth Nov. 3 *Ex Parte*) (arguing that
    competitive LEC ownership of splitters eliminates incumbent LEC's
    ability to properly police data services).

[^170]: *See* NorthPoint Comments at 22; NorthPoint Reply Comments at
    17-18; Sprint Comments at 12.

[^171]: We note, moreover, that the incumbent and requesting carrier may
    reach a voluntary agreement pursuant to which the competitive LEC
    will either purchase and collocate its own splitter, whether or not
    incorporated into the DSLAM, or purchase a splitter that complies
    with the deployment standards adopted herein and transfer that
    splitter to the incumbent. *See infra* Section IV.E.2.

[^172]: NorthPoint Reply Comments at 18.

[^173]: The further from the MDF the splitter is installed, the more
    likely the signal will experience some attenuation. *See* Appendix
    2. *See also* NorthPoint Reply Comments at n.50 (citing
    \<[http:/www.cisco.com/univercd/cc/td/doc/product/dsl_prod/6200/copots.htm]()\>
    installation instructions for Cisco POTS splitter chassis).

[^174]: SBC Comments at 24. *See also* Covad Reply Comments at 6-7.

[^175]: SBC Comments at 22.

[^176]: Letter from Charles W. Logan, Counsel for NorthPoint, to Magalie
    Roman Salas, Secretary, Federal Communications Commission, CC Docket
    No. 98-147, at 4-5 (filed Oct. 8, 1999) (NorthPoint Oct. 8 *Ex
    Parte*).

[^177]: We expect that incumbents and competitors will resolve issues
    and disputes relating to splitter deployment in the context of the
    collaborative process we discuss below. *See infra* Section IV.D.4.

[^178]: AT&T Comments at 18; Ameritech Comments at 7,10; Bell Atlantic
    Comments at 5 and Jackson Stmt. at para. 13; BellSouth Comments at
    18-19; SBC Comments at 24,27; USTA Comments at 21-24; US WEST
    Comments at 14-15.

[^179]: *See* NorthPoint Reply Comments at 19.

[^180]: *See infra* Section IV.D.3 for a discussion of digital loop
    carrier systems.

[^181]: 47 U.S.C. § 252.

[^182]: In the *Local Competition First Report and Order*, we discussed
    the parties' duty to negotiate in good faith in accordance with
    section 252 imposed on incumbents by section 251(c)(1). We also
    established rules, in section 51.301 governing the duty to
    negotiate, and we interpret these rules in this Order to ensure that
    line sharing negotiations will proceed in good faith and for mutual
    advantage. *See 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, 15569-15578 (1996) (*Local
    Competition First Report and Order*), aff'd in part and vacated in
    part sub nom., *Competitive Telecomunications Ass'n v. FCC*, 117
    F.3d 1068 (8^th^ Cir. 1997) and *Iowa Utilities Bd. v. FCC*, 120
    F.3d 753 (8^th^ Cir. 1997), petition for cert. granted, Nos. 97-826,
    97-829, 97-830, 97-831, 97-1075, 97-1087, 97-1099, and 97-1141 (U.S.
    Jan. 26, 1998) (collectively *Iowa Utils. Bd. v. FCC*), aff'd in
    part and remanded, *AT&T Corp., et al. v. Iowa Utils. Bd. et al*.,
    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, FCC 97-295 (rel. August 18, 1997), further recons.
    pending. *See also* 47 C.F.R. § 51.301.

[^183]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4811, para. 104.

[^184]: *Id.*, 14 FCC Rcd at 4811, para. 104.

[^185]: *Id*.

[^186]: *Local Competition Third Report and Order*, at para. 172.

[^187]: *Id.*, at para. 173.

[^188]: *Id.*, at para. 193. Where the incumbent LEC has previously
    agreed, or is obligated, not to charge for line conditioning, this
    Order does not authorize or require the incumbent LEC to impose line
    conditioning charges.

[^189]: NorthPoint Comments at 20.

[^190]: NorthPoint Comments at 20; NorthPoint Reply Comments at 21;
    Rhythms Reply Comments at 10**.** *See Local Competition Third
    Report and Order*, at paras. 190-195.

[^191]: *Local Competition Third Report and Order*, at para. 173. *See*
    47 C.F.R. § 51.319(a). We note that although the incumbent LEC need
    not be providing xDSL services over the specific loop, the incumbent
    must be providing analog voice service on that loop in order for
    incumbent LEC to be required to provide access to the high frequency
    loop spectrum network element.

[^192]: *See* Letter from Frank S. Simone, Government Affairs Director,
    AT&T, to Magalie Roman Salas, Secretary, Federal Communications
    Commission, CC Docket No. 98-147, Attachment Lee L. Selwyn, Scott C.
    Lundquist and Scott A. Coleman, "Bringing Broadband to Rural
    America: Investment and Innovation in the Wake of the Telecom Act,"
    Sept. 1999 at 10 (filed Sept. 10. 1999) (*Broadband to Rural
    America*). *See also* SBC Comments at 27.

[^193]: *See Broadband to Rural America*.

[^194]: Loading coils are generally required to provide voiceband
    service only on lines over 18,000 feet. *See* NorthPoint Comments at
    20; SBC Comments at 25, 27.

[^195]: *See infra* Section V.B.3 (defining significantly degrade).

[^196]: NorthPoint Comments at 20; NorthPoint Reply Comments at 20-21.

[^197]: NorthPoint Comments at 20. *See also* Oklahoma CC Comments at 15
    (incumbent must "be held to specific set of standards in
    demonstrating its case").

[^198]: *See* NorthPoint Comments at 20-21 n.28; NorthPoint Reply
    Comments at 20-21.

[^199]: *See infra* Section IV.E.2.

[^200]: Thus, where the incumbent LEC indicates that the particular loop
    requested by a competitor must be conditioned, the competitor has
    the option of declining to have that loop conditioned. The incumbent
    LEC may independently decide to condition that loop, but may not
    then require the competitive LEC to pay for loop conditioning, and
    may not adversely affect or otherwise interfere with the competitive
    LEC's service provision on that loop. We envision that these issues
    will be resolved in the course of ordering and provisioning the high
    frequency portion of the local loop. *See infra* Section IV.F.3.

[^201]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4811, para. 104.

[^202]: DLC systems digitally encode and aggregate, i.e. "multiplex,"
    the traffic from subscriber's loops into DS1 signals or higher for
    more efficient transmission or extended range beyond that
    traditionally permitted by copper loops. The analog signals are
    carried from the customer premises to a remote terminal (RT) where
    they are converted to digital signals, multiplexed with other
    signals, and carried, generally over fiber, to the LEC central
    office. Integrated Digital Loop Carriers (IDLC) establish a direct
    digital interface with the switch at the LEC central office, making
    it difficult or impossible for competitors to access individual
    loops at that location.

[^203]: RTC Comments at 14-15.

[^204]: *Local Competition Third Report and Order*, at para. 205.

[^205]: *Id.*, at para. 206.

[^206]: We also distinguished terminals from splice cases, which we
    previously deemed inaccessible because splice cases must be breached
    to access the wire or fiber within. *Local Competition Third Report
    and Order*, at para. 206 n.395.

[^207]: *Local Competition Third Report and Order*, at para. 206.

[^208]: *See* SBC Comments at 25-27.

[^209]: *Local Competition Third Report and Order*, at paras. 207,
    217-18.

[^210]: *Id.*, at para. 218.

[^211]: *Id.*, at para. 223. *See also* 47 U.S.C. § 252(b).

[^212]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4811, para. 104.

[^213]: Incumbent LECs maintain a variety of computer databases and
    "back-office" systems that are used to provide service to customers.
    We collectively refer to these computer databases and systems as
    operations support systems, or OSS. These systems enable a LEC's
    employees to process more efficiently customer orders for
    telecommunications services, provide the requested services to their
    customers, maintain and repair network facilities, and render bills.
    To provide these services efficiently to their customers,
    competitive LECs must have access to the incumbent LEC's OSSs.

[^214]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4811, para. 105.

[^215]: Ordering systems include customer request and service order
    systems. *See* Letter from Melissa Newman, US WEST, Inc., to Magalie
    Roman Salas, Secretary, Federal Communications Commission, CC Docket
    No. 98-147 at Attach. 3, p. 14 (filed Oct. 7, 1999) (US WEST Oct. 7
    *Ex Parte*).

[^216]: Provisioning system functions include loop assignment and
    technician dispatch. *See id.*

[^217]: Electronic interfaces include the Graphical User Interface
    (GUI), the Electronic Data Interface (EDI) and Electronic Bonding --
    Trouble Administration interface (EB-TA). *See id.* at Attach. 3,
    p.4.

[^218]: BellSouth Comments at 16-17, 21-22; Bell Atlantic Comments,
    Declaration of Robert Crandall at 4-11 (Bell Atlantic Crandall
    Decl.) and Statement of Dr. Charles Jackson at 8-11 (Bell Atlantic
    Jackson Stmt.).

[^219]: Repair system functions include repair call handling and
    technician dispatch. *See* USTA Comments at 18-20, 23-24; BellSouth
    Comments at 8; GTE Comments at 29-30; Bell Atlantic Reply Comments,
    Declaration of Alfred Khan at 10-13 (Bell Atlantic Reply Khan
    Decl.); US WEST Oct. 7 *Ex Parte*, Attach. 4, p.14.

[^220]: "The \[incumbent LECs\] have raised several OSS issues they say
    are directly related to \[line sharing\]. . . . In virtually every
    instance an immediate work around is available to address the issues
    raised within 2 to 4 weeks required for implementation and training
    of \[incumbent LEC\] staff. In the few instances requiring a more
    permanent solution, such as ordering, formalization should take less
    than 12 months. Letter from Michael E. Olsen, NorthPoint
    Communications, Inc., to Magalie Roman Salas, Secretary, Federal
    Communications Commission, CC Docket No. 98-147, at 13, 38 & 39
    (filed Sept. 30, 1999) (Combined Data CLEC Sept. 30 *Ex Parte*).

[^221]: *See, e.g.,* Covad Comments at 11-12; ALTS Reply Comments at 8;
    MCI Reply Comments at 17; Rhythms Reply Comments at 17-18; Combined
    Data CLEC Sept. 30 *Ex Parte* at 13.

[^222]: *See, e.g.,* Covad Comments at 4; Rhythms Comments at 8; Sprint
    Comments at 9-10; ALTS Reply Comments at 8; MCI Reply Comments at
    16; Combined Data CLEC Sept. 30 *Ex Parte*.

[^223]: *See* CIX Comments at 9; Covad Comments at 12; NAS Comments at
    7-8; NorthPoint Comments at 22; Rhythms Comments at 11; ALTS Reply
    Comments at 8; CompTel Reply Comments at 9.

[^224]: *See* SBC Comments at 20-26; SBC Reply Comments at 4 (projecting
    12-24 months for OSS development and implementation); Ameritech
    Comments at 8-9. *See also* Sprint Reply Comments at 7-8; CompTel
    Reply Comments at 9; NAS Comments at 7; Covad Comments at 7-14;
    NorthPoint Comments at 18, 21-23. *But see* BellSouth Nov. 3 *Ex
    Parte*, Attach. at 7, (stating that manual processes with minimal
    necessary system modifications can be made in 6 months).

[^225]: *See, e.g.,* Combined Data CLEC Sept. 30 *Ex Parte* at 11.

[^226]: *Id.* at 12. *See also* Letter from Ruth Milkman, Counsel for
    NorthPoint, to Magalie Roman Salas, Secretary, Federal
    Communications Commission, CC Docket No. 98-147 at 2 (filed Oct. 19,
    1999) (MTG Oct. 19 *Ex Parte*).

[^227]: Combined Data CLEC Sept. 30 *Ex Parte* at 12; MTG Oct. 19 *Ex
    Parte* at 2.

[^228]: Combined Data CLEC Sept. 30 *Ex Parte* at 17; MTG Oct. 19, 1999
    *Ex Parte* at 2.

[^229]: Combined Data CLEC Sept. 30 *Ex Parte* at 16, citing America's
    Network, Aug. 18, 1999,
    \<[www.americasnetwork.com/news/9908to9912/19990824015318.htm](http://www.americasnetwork.com/news/9908to9912/19990824015318.htm)\>
    ("US WEST is adding 500 new ADSL subscribers every day and its total
    ADSL customer base represents 40% of the xDSL lines in the \[United
    States\] today. . . . Clearly, at those volumes and with that
    embedded base of customers, capabilities exist within US WEST to
    process \[requesting carriers'\] line sharing orders."). *See*
    Oklahoma CC Comments at 17-18; Rhythms Comments at 10-11; NorthPoint
    Comments at 17, 22-23; Covad Comments at 10-12; CIX Comments at 9;
    NAS Comments at 7-8.

[^230]: *See* Combined Data CLEC Sept. 30 *Ex Parte* at 16; ALTS
    Comments at 2-3; Covad Comments at 12-14; NorthPoint Comments at 22;
    ALTS Reply Comments at 8; MTG Oct. 19, 1999 *Ex Parte* at 2. *But
    c.f.* Letter from Joseph Mulieri, Director, Government Relations --
    FCC, Bell Atlantic, to Magalie Roman Salas, Secretary, Federal
    Communications Commission, CC Docket No. 98-147 at 11 (filed Oct.
    19, 1999) (Bell Atlantic Oct. 19 *Ex Parte*). Letter from Louise L.
    M. Tucker, Senior Counsel, Telcordia, to Magalie Roman Salas,
    Secretary, Federal Communications Commission, at 1 (filed Oct. 21,
    1999) (Telcordia Oct. 21 *Ex Parte*) (stating that many of the OSS
    changes that are required to provide competitors with unbundled
    access to the high frequency portion of the loop have been well
    understood and can be integrated with OSS software updates that will
    be implemented to accommodate competitor's access to other unbundled
    network elements.).

[^231]: Bell Atlantic argues that manual workarounds are simply not
    feasible, and that modifications to mechanized ordering must be made
    in sync with Bell Atlantic's Line Sharing Service development, which
    would take approximately 9 months. *See* Bell Atlantic Oct. 18 *Ex
    Parte* at 11; Combined Data CLEC Sept. 30 *Ex Parte* at 12.

[^232]: *See* Covad Comments at 10; NorthPoint Comments at 18; Technical
    Forum; MTG Oct. 19 *Ex Parte* at 2.

[^233]: The competitive LECs jointly contributing the Combined Data CLEC
    Sept. 30 *Ex Parte* are: Bluestar Communications Inc., Covad
    Communications Company, HarvardNet Inc., Network Access Solutions
    Corp., NorthPoint Communications, Inc., and Rhythms NetConnections,
    Inc. Combined Data CLEC Sept. 30 *Ex Parte* at 1.

[^234]: The Combined Data CLECs state that US WEST's Interconnect &
    Resale Resource Guide (IRRG) provides a detailed explanation of
    standard UNE ordering procedures, and that these procedures will
    suffice for during the initial rollout of shared line access to the
    high frequency loop spectrum network element. Combined Data CLEC
    Sept. 30 *Ex Parte* at 16. We expect that incumbent LECs will be
    able to provide automated OSS interfaces in approximately the same
    time frame that they require to provide similar functionality for
    their own uses. We note that it is not, per se discriminatory for
    the incumbent to use, on an interim basis, a less automated OSS
    methodology. *See infra* Section IV.F.

[^235]: Combined Data CLEC Sept. 30 *Ex Parte* at 16, 17.

[^236]: *Id.* at 17 (citing US WEST Comments in FCC 98-188, Affidavit of
    Mark D. Schmidt at para. 12 (dated Sept. 24, 1998)).

[^237]: *Id.* at 17.

[^238]: *Id*.

[^239]: In that case, the incumbent uses the order to simultaneously
    establish the competitor's service, and to remove the voice service
    formerly provided by the incumbent LEC to the customer. Combined
    Data CLEC Sept. 30 *Ex Parte* at 17. *See also* MTG Oct. 19 *Ex
    Parte* at 2.

[^240]: Combined Data CLEC Sept. 30 *Ex Parte* at 19. *See, e.g.,* ALTS
    Comments at 2-3; Covad Comments at 12-14; NorthPoint Comments at 22;
    ALTS Reply Comments at 8; MTG Oct. 19 *Ex Parte* at 2.

[^241]: Combined Data CLEC Sept. 30 *Ex Parte* at 19. *Cf.* Telcordia
    Oct. 21 *Ex Parte* at 1 (stating that the solutions developed by
    Telcordia for xDSL involve numerous OSS products already used by the
    incumbents, but that line sharing will require significant
    additional functionality). *See also* ALTS Comments at 2-3; Covad
    Comments at 12-14; NorthPoint Comments at 22; ALTS Reply Comments at
    8; MTG Oct. 19 *Ex Parte* at 2.

[^242]: Combined Data CLEC Sept. 30 *Ex Parte* at 18. *See generally,
    Aug. 31 Technical Forum*.

[^243]: Bell Atlantic states that existing assignment systems, such as
    LFACS, cannot accommodate line sharing without enhancement to
    establish a Meet Point and to leave the voice line intact. *See*
    Bell Atlantic Oct. 18 *Ex Parte* at 11. We believe that Bell
    Atlantic and the other incumbent LECs can accommodate modifications
    such as this through their change management process by the time
    that they must make access to the high frequency portion of the loop
    available to competitive LECs.

[^244]: Competitive LECs note, however, that some effort may be required
    to assign new codes to properly describe the shared line discretely
    from other similar services and create the logical record holders
    for the two services. Combined Data CLEC Sept. 30 *Ex Parte* at 20.

[^245]: SWITCH inventories and assigns end office facilities that
    connect the outside plant facilities to the switch. SWITCH is a
    replacement for COSMOS. *See* US WEST Oct. 7 *Ex Parte*, at Attach.
    3, p.16.

[^246]: Combined Data CLEC Sept. 30 *Ex Parte* at 21.

[^247]: *See infra* Section IV.E.2.

[^248]: Historically, the Commission has held that most UNEs do not have
    a retail analog. xDSL may be different, however, in that the
    incumbent LEC is newly provisioning xDSL to its own customer, which
    permits a more direct comparison to the provisioning of a new UNE.

[^249]: *See* 47 U.S.C. § 271.

[^250]: Bell Atlantic Jackson Stmt. at para. 14; US WEST Reply Comments
    at 26. *See also* Combined Data CLEC Sept. 30 *Ex Parte* at 33.

[^251]: Competitive LECs maintain that most incumbent LEC billing
    systems employ Classes of Service codes, USOCs, FIDs, and logical
    rules to associate a customer of record (COR) with the products and
    services for which the COR should be billed, and that this
    functionality could be utilized to handle the billing of shared
    loops. Specifically, competitive LECs reason that as the service
    order moves through processing, the information identifying the two
    CORs (the customer and the competitive LEC) on the shared line can
    be propagated into other systems as required. When the new order
    completes, a double posting process can update both customer records
    with the xDSL shared line indication and cross-reference the
    telephone number and Circuit *ID.* Then, as the billing cycle runs,
    the combination of Class of Service codes and USOCs will result in
    proper billing of both the POTS and competitive LEC customers by the
    incumbent LEC. Combined Data CLEC Sept. 30 *Ex Parte* at 34.

[^252]: US WEST Oct. 7 *Ex Parte* at Attach. 3, pp. 19 & 22. *See*
    Combined Data CLEC Sept. 30 *Ex Parte* at 19; ALTS Comments at 2-3;
    Covad Comments at 12-14; NorthPoint Comments at 22; ALTS Reply
    Comments at 8; MTG Oct. 19 *Ex Parte* at 2.

[^253]: ALTS Reply Comments at 8; MCI Comments at 12. *See also* MTG
    Oct. 19, 1999 *Ex Parte* at Table 1.

[^254]: For example, NorthPoint states that it recognizes the business
    realities and maintenance requirements of the local loop plant and
    will cooperate with incumbent LECs to permit reasonable line
    testing, maintenance, and repair activities that accord with
    industry standards, even when such activities temporary impact
    NorthPoint's shared-line xDSL service. NorthPoint Comments at 18-22.
    *See also* CIX Comments at 9; Covad Comments at 10-12; Rhythms
    Comments at 8.

[^255]: *See* Ameritech Comments at 11 ("...performing a simple, routine
    loop-back test on a shared loop could unavoidably disrupt service to
    other carrier's customers using that loop."); Bell Atlantic Jackson
    Stmt. at para. 12 ("the test equipment for \[Bell Atlantic's\]
    copper loop ADSL systems is partially integrated with \[Bell
    Atlantic's\] ADSL DSLAMs. Testing of the xDSL portion, when provided
    by a party other than the party providing other services over that
    same loop\[,\] could not be done with Bell Atlantic's current test
    equipment."); GTE Comments at 27 ("...in a unbundled spectrum
    environment neither carrier will have the ability to isolate or
    remotely test their services."); Sprint Comments at 11 ( "...current
    automated test systems cannot perform POTS testing in line sharing
    applications."); US WEST Reply Comments at 27 (" ...routine metallic
    loop tests, which require disabling ADSL service, could not be
    accomplished where the competitive LEC's DSLAM powers the data
    service."). *See also* Combined Data CLEC Sept. 30 *Ex Parte* at 26.

[^256]: *See id.* at 27.

[^257]: Ameritech Comments at 11; AT&T Comments at 16; Bell Atlantic
    Comments at 11-13; BellSouth Comments at 24; US WEST Comments at
    15-16. *See* NorthPoint Reply Comments at 26. We also note that both
    AT&T and US WEST raise operational arguments relating to testing in
    the context of "mandatory" spectrum unbundling, but not against
    "voluntary" spectrum unbundling. *See* AT&T Comments at 17-18; US
    WEST Comments at 24.

[^258]: Competitive LECs use these tests to determine if the incumbent
    LEC has delivered the loop on the firm order commitment (FOC) date
    and to diagnose any obvious line impairments such as the presence of
    load coils, excessive noise, bad splices, unacceptable loop length,
    or unacceptable bridge taps. *See* Combined Data CLEC Sept. 30 *Ex
    Parte* at 26.

[^259]: *See* Combined Data CLEC Sept. 30 *Ex Parte* at 27.

[^260]: For example, when a carrier wants to test a line, or when an end
    user customer calls a service provider in response to a problem,
    whether incumbent or competitive, the carrier's OSS system will
    notify the customer service representative that the customer is
    receiving service over a shared line. The customer service
    representative, using the appropriate script, can then inform the
    customer of the testing impact on both services and obtain
    permission to conduct the test in order to isolate and repair the
    trouble. *Id.*

[^261]: *Id*.

[^262]: Competitive LECs state that training of customer service
    representatives on new customer education procedures and developing
    new scripts represents minor effort. Incorporating the scripts into
    the customer care systems is also routine in nature and not major
    development. *Id.*

[^263]: *Id.*

[^264]: *See supra* Section IV.D.1. *See also* Combined Data Sept. 30
    *Ex Parte* at 27; Letter from Ruth Milkman, Counsel for NorthPoint,
    to Magalie Roman Salas, Secretary, Federal Communications Commisson,
    CC Docket No. 98-147, Attachment at 3 (filed July 29, 1999)
    (NorthPoint July 29 *Ex Parte*).

[^265]: *See* Combined Data CLEC Sept. 30 *Ex Parte* at 27.

[^266]: *Id*.

[^267]: *Id.*

[^268]: *Id.*

[^269]: *Id.* at 28. *See also* NorthPoint July 29 *Ex Parte* at 1;
    Letter from Raymond L. Strassburger, Director, Government Relations
    -- Telecom, Internet, and Advanced Technology Policy, Nortel
    Networks, to Magalie Roman Salas, Secretary, Federal Communications
    Commission, CC Docket No. 98-147, Attachment at 2 (filed June 3,
    1999). (Nortel June 3 *Ex Parte*).

[^270]: Combined Data CLEC Sept. 30 *Ex Parte* at 28.

[^271]: *Id.*

[^272]: *Id*.

[^273]: *Id.*

[^274]: *Id.* *See also* NorthPoint July 29 *Ex Parte* at 1.

[^275]: Combined Data CLEC Sept. 30 *Ex Parte* at 28.

[^276]: *Id*.

[^277]: *Id*.

[^278]: We note that the incumbent LECs do not refute these testing
    requirements.

[^279]: BellSouth Comments at 24.

[^280]: Bell Atlantic Jackson Stmt. at paras. 10-11; SBC Comments at
    23-24.

[^281]: Bell Atlantic Comments at 12; NorthPoint Comments at 25-26
    (quoting Bell Atlantic Jackson Stmt. at paras. 10-12, 15).

[^282]: SBC Comments at 23-24.

[^283]: US WEST states that it would need new processes to manage
    trouble tickets in a single repair flow, because there are currently
    two repair flows: "POTS" and "design" services, and competitive LECs
    as a group presently can be assigned only to one or the other. US
    WEST July 22 *Ex Parte* at 26.

[^284]: Id.

[^285]: *See* Combined Data CLEC Sept. 30 *Ex Parte* at 28. *See also*
    ALTS Comments at 2-3; Covad Comments at 12-14; NorthPoint Comments
    at 22; ALTS Reply Comments at 8; MTG Oct. 19 *Ex Parte* at 2.

[^286]: Bell Atlantic Oct. 19 *Ex Parte* at 3-6.

[^287]: *See* Combined Data CLEC Sept. 30 *Ex Parte* at 28. *See also*
    ALTS Comments at 2-3; Covad Comments at 12-14; NorthPoint Comments
    at 22; ALTS Reply Comments at 8; MTG Oct. 19 *Ex Parte* at 2.

[^288]: *See infra* Section V.E.1.

[^289]: *See Advanced Services Second Report and Order*, at paras.
    14-19.

[^290]: *See* Combined Data CLEC Sept. 30 *Ex Parte* at 28.

[^291]: *Id*.

[^292]: The competitive LECs project that since an end user is likely to
    call only one of the service providers to initiate repair on a
    shared line rather than calling both, the number of trouble tickets
    opened by the incumbent LEC could possibly decline, although they
    allow that it is more likely that there would be no substantial
    difference in the volume of trouble tickets handled by an incumbent
    LEC OSS in line sharing versus UNE scenarios. *See* Combined Data
    CLEC Sept. 30 *Ex Parte* at 29.

[^293]: Some systems also analyze the various related trouble conditions
    to assist in pinpointing the problem and isolating the fault for
    repair. *See* Combined Data CLEC Sept. 30 *Ex Parte* at 29.

[^294]: Bell Atlantic Jackson Stmt. at para.12.

[^295]: Furthermore, we understand that incumbent LECs coordinate line
    testing with alarm companies that procure "alarm loops." *See* Aug.
    31 Technical Forum. We are confident that incumbent LECs are capable
    of coordinating maintenance, testing, and repair activities with
    competitive LECs as well as they currently do with alarm companies.
    *See* NorthPoint Comments at 27. *See also* Combined Data CLEC Sept.
    30 *Ex Parte* at 26.

[^296]: NorthPoint Reply Comments at 25-29.

[^297]: *See* NorthPoint Reply Comments at 27.

[^298]: Applications of Ameritech Corp. and SBC Communications Inc., For
    Consent to Transfer Control of Corporations Holding Commission
    Licenses and Lines Pursuant to Sections 214 and 310(d) of the
    Communications Act and Parts 5, 22, 24, 25, 63, 90, 95 and 101 of
    the Commission's Rules, CC Docket No. 98-141, Memorandum Opinion and
    Order, FCC No. 99-279, Appendix C at 12-13, para. 4(j) (rel. October
    8, 1999) (establishing procedures for resolution of trouble reports
    in a nondiscriminatory manner). *See* also NorthPoint Comments at
    25.

[^299]: Ameritech Comments at 9-11; Bell Atlantic Comments at 11-13;
    BellSouth Comments at 5, 21; GTE Comments at 5, 30; SBC Comments at
    20-24, USTA Comments at 23-27.

[^300]: *See* Combined Data CLEC Sept. 30 *Ex Parte* at 32. As discussed
    in detail below, the record shows that incumbent LECs should be able
    to implement system changes necessary to provide requesting carriers
    with nondiscriminatory access to the high frequency portion of the
    local loop within 180 days from release of this Order.

[^301]: For instance, we note that NorthPoint has proposed that
    incumbent LECs and competitive LECs establish methods and procedures
    for "warm transfers" of customer service calls, which it claims to
    be similar to those that incumbent LECs use to provide wholesale
    shared line xDSL to companies such as America Online. *See*
    NorthPoint Comments at 27.

[^302]: These co-operative tests are to further assure that the UNE loop
    meets typical voice standards and usually include a test that shorts
    the tip and ring to take advantage of the technician's presence at
    the premise to make a far end test. *See* Combined Data CLEC Sept.
    30 *Ex Parte* at 26.

[^303]: CIX Comments at 9; Covad Comments at 12; NAS Comments at 7-8;
    NorthPoint Comments at 22; Rhythms Comments at 11; ALTS Reply
    Comments at 8; CompTel Reply Comments at 9.

[^304]: Telcordia has commenced development of OSS solutions for
    providing access to the high frequency portion of the loop,
    including central office and DSLAM support. Telcordia Oct. 21 *Ex
    Parte* at 1.

[^305]: *See* Combined Data CLEC Sept. 30 *Ex Parte* at 17-18.

[^306]: We note that the Minnesota PUC requires a similar effort from US
    WEST. Minnesota requires US WEST and competitive LECs interested in
    obtaining line sharing to work together "collectively and on a
    carrier-to-carrier basis," to develop the terms and conditions under
    which US WEST will provide line sharing to competitive LECs.
    Minnesota also requires the incumbent and competitive LECs to "work
    with each other on this project in good faith and \[guided by the
    understanding that US WEST should\] provide line sharing to the
    \[competitive LECs\] on the same terms and conditions . . . that it
    provides to itself." *See Commission Initiated Investigation into
    the Practices of Incumbent Local Exchange Companies Regarding Shared
    Line Access*, Order Requiring Technical Trials, Good Faith
    Resolution of Operational Issues, and a Resulting Report, Docket No.
    P-999/CI-99-678, (Minnesota Public Utilities Commission, Issued
    October 8, 1999) at 6 (*Minnesota Line Sharing Order*).

[^307]: As an additional measure of protection, we encourage the
    incumbents to include in the plans the names and contact information
    for at least two levels of complaint escalation contacts, at least
    one of who has region-wide responsibility.

[^308]: *See* BellSouth Nov. 3 *Ex Parte*, Attach. at 7. *Cf.* Combined
    Data CLEC Sept. 30 *Ex Parte* at 5 (stating that "\[t\]he few minor
    incremental upgrades, primarily for ordering, could be formally
    completed over the next 3 to 12 months").

[^309]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4812, para. 106.

[^310]: *Id*.

[^311]: *Id.*

[^312]: *Id*.

[^313]: *Local Competition First Report and Order*, 11 FCC Rcd at
    15814-15868, at paras. 625-727.

[^314]: *See* 47 U.S.C. § 251.

[^315]: Letter from Jason Oxman, Covad Communications Company, to Carol
    Mattey, Chief, Policy and Program Planning Division, Common Carrier
    Bureau, Federal Communications Commission, CC Docket No. 98-147
    (filed October 13, 1999) (Covad Oct. 13 *Ex Parte*).

[^316]: *Local Competition First Report and Order*, 11 FCC Rcd at 15846,
    para. 679.

[^317]: 47 U.S.C. 252(d)(1).

[^318]: *Local Competition First Report and Order*, 11 FCC Rcd at 15813,
    para. 682. *See also id.*, at para. 620.

[^319]: *See*, *e.g.,* Covad Oct 5 *Ex Parte* (providing state
    commission-set local loop rates for five states).

[^320]: California PUC Comments at 6.

[^321]: \@Link Comments at 7. \@Link adds that, under no circumstances
    should the amount allocated to the competitive carrier be greater
    than 50 percent of the cost of the shared equipment. *Id.*

[^322]: NorthPoint Comments at 28.

[^323]: *Id.* at 28. We note, however, that the Federal-State Joint
    Board on Separations is considering the question of how to allocate
    local loop plant between voice and data services for purposes of
    jurisdictional separations in CC Docket No. 80-286. *GTE Telephone
    Operating Cos. GTOC Transmittal No. 1148*, CC Docket No. 98-79, FCC
    No. 99-41, Memorandum Opinion and Order, 1999 WL 98039, para 9 (rel.
    Feb. 26, 1999).

[^324]: *Local Competition First Report and Order*, 11 FCC Rcd at
    15845-46, para. 678.

[^325]: 47 CFR § 51.505 (d)(1); *See also Local Competition First Report
    and Order*, 11 FCC Rcd at 15857-59, paras. 704-707.

[^326]: Specifically, the Minnesota PUC held that it was "not presently
    concerned with how \[US West\] resolves the pricing issue, so long
    as the Company charges data CLECs the same loop rate that the
    Company presently imputes to its own DSL services." *Minnesota Line
    Sharing Order* at 5.

[^327]: *See, e.g., Bell Atlantic Telephone Companies Amendments to
    Tariff F.C.C. Nos. 1 and 11*, CC Docket No. 99-201, Reply of Bell
    Atlantic to Petitions to Reject and Investigate at 7 (filed May 28,
    1999).

[^328]: US West Oct. 7, 1999 *Ex Parte*. Note, this is the lower end of
    US West's estimate.

[^329]: SBC Comments at 21.

[^330]: Bell Atlantic Oct. 19 *Ex Parte*.

[^331]: Combined Data CLEC Sept. 30 *Ex Parte*. *See also* GTE Comments
    at 28-29.

[^332]: Combined Data CLEC Sept. 30 *Ex Parte*. This *Ex Parte* was
    jointly submitted by Bluestar Communications, Inc., Covad
    Communications Company, HarvardNet, Inc., Network Access Solutions
    Corp., NorthPoint Communications, Inc., and Rhythms NetConnections,
    Inc. This *Ex Parte* was jointly submitted by Bluestar
    Communications, Inc., Covad Communications Company, HarvardNet,
    Inc., Network Access Solutions Corp., NorthPoint Communications,
    Inc., and Rhythms NetConnections, Inc.

[^333]: *Local Competition First Report and Order*, 11 FCC Rcd at 15875,
    para. 749.

[^334]: *Id.,* 11 FCC Rcd at 15875 at paras. 749-50.

[^335]: *See supra* Section IV.D.1.

[^336]: Bell Atlantic Crandall Decl. at 3.

[^337]: *Id*.

[^338]: The Commission further concluded that setting prices based on
    embedded cost would distort the entry and investment decisions of
    competitive LECs. *Local Competition First Report and Order*, 11 FCC
    Rcd 15813, at para. 620.

[^339]: Where two services are provided over common facilities, the LRIC
    of the first service equals the difference between the stand-alone
    cost of providing the second service and the cost of providing both
    services together. *See, e.g., Telephone Company-Cable Television
    Cross-Ownership Rules, Section 63.54-63.58*, Memorandum Opinion and
    Order on Reconsideration and Third Further Notice of Proposed
    Rulemaking, 10 FCC Rcd 244 (1994) (*Videodialtone Reconsideration
    Order*). If common costs are large relative to total costs, then the
    incremental cost of individual services will be low, and possibly
    zero.

[^340]: When Bell Atlantic states that the price of voice services is
    below cost, it appears to mean the total cost of the common
    facilities, including the loop.

[^341]: 47 C.F.R. § 51.513.

[^342]: Covad Oct. 5 *Ex Parte*.

[^343]: *See* US West Oct. 7 *Ex Parte*.

[^344]: US West Comments at 2.

[^345]: *Id.* at 25.

[^346]: *See*, *e.g.,* Bell Atlantic's Infospeed Internet Website at
    \<<http://www.ba.com/nr/1998/Oct/19981005001.html>\>.

[^347]: US West Comments at 26.

[^348]: *Id.* at 26. US West's argument regarding a loss of efficiencies
    is primarily based on the fact that this new unbundled network
    element will occupy a greater frequency spectrum than voice service
    occupies over the same loop. It is the loss of that capacity, if
    offered separately, to which US West objects. US West Oct. 7 *Ex
    Parte*.

[^349]: US West Comments at 26. *See* also US West Oct. 7 Ex Parte.

[^350]: *Local Competition First Report and Order*, 11 FCC Rcd at 15566,
    para. 133.

[^351]: 47 U.S.C. § 157(a). Federal-State Joint Conference on Advanced
    Telecommunications Services, CC Docket No. 99-294, Order, FCC 99-293
    (rel. Oct. 8, 1999) (*Joint Conference on Advanced Services*).

[^352]: *Local Competition First Report and Order*, 11 FCC Rcd at 15528,
    para. 56.

[^353]: NorthPoint Nov. 9 *Ex Parte* at 4.

[^354]: *See* 47 U.S.C. § 252(b)(4)(C).

[^355]: 47 U.S.C. § 252(b).

[^356]: *See* 47 U.S.C. § 157(a). *See also Jt. Conference on Advanced
    Services* at para. 6.

[^357]: 47 U.S.C. § 157(a).

[^358]: 47 U.S.C. § 252(f)(1).

[^359]: 47 U.S.C. § 252(i).

[^360]: *See* 47 U.S.C. § 252(e)(5); 47 C.F.R. §§ 51.801 et seq.

[^361]: *See Minnesota Line Sharing Order*; Letter from Harris N.
    Miller, President, Information Technology Association of America
    (ITAA) to the Honorable Louis J Papan, California State Assembly,
    Apr. 6, 1999 (supporting Calif. AB 991 promoting xDSL deployment
    through line sharing),
    \<<http://www.itaa.org/isec/archive/papan.htm>\>.

[^362]: *Local Competition First Report and Order*, 11 FCC Rcd at 15570,
    para. 141.

[^363]: *Id.*, 11 FCC Rcd at 15574-15578, paras. 148-156.

[^364]: *Id.*, 11 FCC Rcd at 15577, para. 154. We have also stated that
    we would impose penalties pursuant to sections 501, 502 and 103 of
    the Act on parties who fail to negotiate in good faith. *Id.*, 11
    FCC Rcd at 15571, para. 143.

[^365]: As we noted in the *Local Competition First Report and Order*,
    the section 252-negotiation process bears little resemblance to a
    typical commercial negotiation. The competitive carrier that seeks
    access to a shared loop has little, if nothing, to offer the
    incumbent in a negotiation. The incumbent, however, has control over
    the critical element the competitive LEC needs to compete. *Local
    Competition First Report and Order*, 11 FCC Rcd at 15566, para. 134.

[^366]: 47 U.S.C. 251(c)(3).

[^367]: *Local Competition First Report and Order*, 11 FCC Rcd at
    15763-15764, para. 518.

[^368]: *Local Competition Second Reconsideration Order*, 11 FCC Rcd at
    19742.

[^369]: We do not determine herein whether providing the unbundled high
    frequency portion of the loop utilizing manual processes meets the
    nondiscrimination obligations of the incumbent LEC.

[^370]: SWBT Performance Measurements and Business Rules, Version 1.6,
    Measurement #55.1, Average Provisioning Intervals for Unbundled
    Network Elements, at 65 and 69, Installation Interval - DSL.

[^371]: In the event that the loop qualification determines that no
    conditioning is required, the day that the loop qualification is
    returned from the incumbent engineering staff will be the
    application date. If conditioning is required, the requesting
    carrier must notify the incumbent of the appropriate action to take.
    If the requesting carrier supplements the request to order the
    shared loop, the application date becomes the date that the
    incumbent receives the supplement. *See* SWBT Performance
    Measurements and Business Rules, Version 1.6, at 65.

[^372]: *Id*.

[^373]: The Commission, for example, has authority under section
    503(b)(1)(B) of the Act, to impose forfeiture penalties and, if such
    a situation was before it properly, would consider imposing
    penalties on any incumbent LEC that fails to comply with the line
    sharing rules articulated in this order. Pursuant to section
    503(b)(2)(B) of the Act (47 U.S.C 503(b)(2)(B)) and section 1.80 of
    the Commission's rules (47 C.F.R 1.80), the amount of the forfeiture
    would not exceed \$110,000 for each violation or each day of a
    continuing violation up to a total of \$1,100,000. We would be
    prepared to take action each time an incumbent LEC fails to comply
    with its section 251(c)(3) unbundling obligations, even if we have
    already taken action on prior violations by the same incumbent LEC,
    with respect to the same central office or the same competing
    carrier. *See Local Competition First Report and Order*, 11 FCC Rcd
    at 15564, para. 127 (ruling that an aggrieved party could file a
    section 208 complaint with the Commission alleging that the
    incumbent LEC has failed to comply with the requirements of sections
    251 and 252).

[^374]: 47 U.S.C. § 252(c)(3).

[^375]: Section 252(e)(4) requires that the agreement will be deemed
    approved if the state commission does not act to approve or reject
    the agreement within 90 days from submission by the parties of an
    agreement adopted by negotiation under subsection 252(a), or within
    30 days from submission by the parties of an agreement adopted by
    arbitration under subsection 252(b). The provision also states that
    no state court shall have jurisdiction to review the action of a
    state commission in approving or rejecting an agreement under
    section 252. 47 U.S.C. §252(e).

[^376]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4794, para. 61. A binder group generally consists of 25, 50 or
    100 copper pairs bundled together.

[^377]: *Id.*

[^378]: *Id.*, 14 FCC Rcd at 4799, para. 71. Binder group management
    refers to choices concerning which technologies are deployed over
    which pairs. Ideally, binder group management is aimed towards
    preventing interference and maximizing service deployment.

[^379]: *See* Committee T1 LB 785, T1E1.4/99-002R4, at 1, § 1.1. Though
    we conceded in the *Advanced Services First Report and Order* that
    the terms "spectrum compatibility" and "spectrum management" often
    are used interchangeably, we drew the further distinction that the
    former refers to a service provider's general right to deploy a
    particular technology, while the latter refers to the provider's
    right to deploy a technology in a particular situation. *Id.*, 14
    FCC Rcd at 4794 n.151. Of course, in the latter situation, the
    provider also has a responsibility to administer the loop plant to
    achieve spectrum compatibility.

[^380]: The policies and rules that we set forth in this section
    concerning spectrum compatibility and management address the
    coexistence of various loop technologies on different loops within
    the same or adjacent binder groups. In contrast, the policies and
    rules that we set forth herein concerning line sharing address the
    ability of two different service providers to offer service over the
    same line, with each provider employing different underlying
    frequencies to transport voice or data over that line. *Id.*, 14 FCC
    Rcd at 4805, para. 92. While we use the term "spectrum
    compatibility" in this order solely in the context of analyzing the
    coexistence of various loop technologies on different loops, the
    general concept of compatibility between loop technologies also is
    essential in order to implement line sharing successfully. *See,
    e.g.,* ALTS July 29 *Ex Parte* ("To avoid problems with service
    quality arising from potentially incompatible equipment and xDSL
    technologies, line sharing should be required whenever the
    applicable standard includes capability for shared provision of
    voice/data on \[a\] single loop"); Covad Sept. 1 *Ex Parte*
    (countering the "myth" that line sharing will cause interference
    with analog voice services); Letter from Lincoln E. Brown, Director
    -- Federal Regulatory, SBC Telecommunications, Inc., to Magalie
    Roman Salas, Secretary, Federal Communications Commission, CC Docket
    No. 98-147, Attach. (filed July 28, 1999) (SBC July 28 *Ex Parte*)
    (arguing that line sharing is infeasible in some situations, such as
    when technology used by competitive LECs is not compatible with
    voice services).

[^381]: *See Advanced Services First Report and Order and FNPRM,* 14 FCC
    Rcd at 4798, para. 70.

[^382]: *See* 47 U.S.C. § 157.

[^383]: In a separate proceeding, CC Docket No. 99-216, we have held
    fora and solicited comment on changes to our customer premises
    equipment connection rules under Part 68. *See Part 68 Notice*.

[^384]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4795-96, para. 63. *See also* *id.*, 14 FCC Rcd at 4803, para.
    84.

[^385]: *See id.*, 14 FCC Rcd at 4798-99, para. 70.

[^386]: *Id.*, 14 FCC Rcd at 4796, para. 63; *see id.*, 14 FCC Rcd at
    4801-02, para. 79.

[^387]: *Id.*, 14 FCC Rcd at 4799, para. 71. Notwithstanding our clearly
    articulated positions in the *Advanced Services First Report and
    Order and FNPRM,* certain incumbent LECs continue to insist that
    they should have unfettered jurisdiction over spectrum management.
    *See, e.g.,* GTE Comments at 11 ("the Commission should assign
    unambiguous responsibility for network reliability and integrity to
    the facility owner"); SBC Comments at 12 ("the Commission . . .
    should leave it to the \[incumbent LECs\] on how best to manage
    their networks").

[^388]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4796, 4803 and 4805, paras. 64, 84 and 90.

[^389]: *Id.*, 14 FCC Rcd at 4801-02, para. 79. No commenter objected to
    these tentative conclusions.

[^390]: PSD masks are represented as graphical templates that define the
    limits on signal power densities across a range of frequencies, so
    as to minimize interference. A PSD mask charts the maximum power and
    frequency levels that a particular xDSL technology will attain,
    enabling engineers to deploy a xDSL technology in a manner that
    minimizes crosstalk between that xDSL technology and the other
    technologies deployed within the local loop plant. *See* Letter from
    Jeffrey Blumenfeld, General Counsel, Rhythms NetConnections Inc., to
    Stagg Newman and Douglas Sicker, Office of Engineering and
    Technology, Federal Communications Commission, CC Docket No. 98-147,
    at 3 (filed Oct. 12, 1999) (Rhythms Oct. 12 *Ex Parte*). We discuss
    in detail in Section V.B.2 below the use of PSD masks to address
    spectrum compatibility issues.

[^391]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4802, para. 81.

[^392]: *Id*., 14 FCC Rcd at 4803, para. 85.

[^393]: *Id.*, 14 FCC Rcd at 4802, para. 81. Similarly, we premised our
    tentative conclusion that T1E1.4 should serve as the forum to
    establish fair and open deployment practices on the assumption that
    a method will be developed to ensure "active participation of all
    segments of the industry" in T1E1.4. *Id.,* 14 FCC Rcd at 4803,
    para. 85.

[^394]: *Id.*, 14 FCC Rcd at 4804-05, para. 89.

[^395]: *See* ATIS Comments at 5-8, 14, 19-21.

[^396]: *See* ALTS Comments at 21-24; Covad Comments at 43; GSA Comments
    at 5; NorthPoint Comments at 43; NorthPoint Reply Comments at 44,
    50-52; Rhythms Reply Comments at 37-39 (T1E1 currently is "captured"
    by incumbent LECs). *But see* BellSouth Comments at 29; Sprint
    Comments at 2; GTE Comments at 5-6 ("the working groups of Committee
    T1 already operate in an open, neutral manner. . . . Committee T1 is
    not dominated by any single interest group").

[^397]: *See* Covad Sept. 1 *Ex Parte*; Rhythms Reply Comments at 25-26.
    *See also* *OMB Circular A-119*, 63 Fed. Reg. at 8555 (when
    considering use of an industry voluntary consensus standard, an
    agency "should take full account of the effect of . . . applicable
    federal laws and policies, including laws and regulations relating
    to antitrust . . . small business . . . \[and\] technology
    development").

[^398]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4802, para. 80. *See* ALTS Comments at 21; NorthPoint Comments at
    32, 40-42.

[^399]: *See* ALTS Comments at 22-25; Covad Comments at 48, 53-54;
    Sprint Comments at 5, 7 (proposing an ad hoc industry forum,
    consisting of incumbent LECs, competitive LECs and manufacturers, to
    develop spectrum management policies). *But see* BellSouth Reply
    Comments at 33; SBC Comments at 11 ("adding a third party to the
    loop spectrum management process would only further complicate
    matters. . . . \[Incumbent LECs\], in implementing these standards,
    have every incentive to manage the network in the most efficient
    manner and to safeguard the integrity and reliability of all
    services on the network").

[^400]: The rechartering of NRIC as NRIC V is a separate process,
    outside of this proceeding. Our proposal for NRIC V is subject to
    approval by the Administrator of the General Services
    Administration. *See* 41 C.F.R. §§ 105-54.201 --105-54.202.

[^401]: We note that we sought comment in the *Advanced Services First
    Report and Order and FNPRM* on whether we should empower any third
    party, whose assistance we solicited in spectrum compatibility and
    management matters, to develop binder group management procedures
    and resolve disputes between carriers over the existence of
    disturbers in shared facilities. 14 FCC Rcd at 4804-05, para. 89.
    Because we establish in this order rules governing binder group
    management and mechanisms for interference dispute resolution
    between carriers, NRIC will have no responsibility in these areas
    other than to report to us on the effectiveness of these rules and
    mechanisms. *See infra* Sections V.B.3.c. and V.B.4.

[^402]: Similarly, in its final report to the Commission, NRIC III,
    whose charter ran from April 1996 through early January 1998,
    described, inter alia, user interoperability issues involved when
    mixing ADSL technologies with other digital services. NRIC III
    concluded that "\[s\]pectrum compatibility needs to be addressed to
    resolve these potential interoperability issues." Network
    Reliability and Interoperability Council, *NRIC Network
    Interoperability: The Key to Competition*, at 139, § 7.2.2.2.3 (July
    15, 1997) \<<http://www.nric.org/pubs>\> (*NRIC Interoperability
    Report*). Both NRIC III and its successor, NRIC IV, were chartered
    to assure interoperability of public telecommunications networks,
    among several other objectives. Consistent with this objective, NRIC
    V will be chartered to address several network interoperability
    issues, including spectrum compatibility standards and spectrum
    management processes. *See Id.* at 133-34, § 7.1.2.1 (with respect
    to access standards development, such as that occurring in Committee
    T1, NRIC III advised that "to improve compatibility, standards
    should have a sharp technical focus and standards bodies should
    strive to minimize the complexity and optionality of requirements.
    At the same time, standards should focus on achieving a basic level
    of interoperability, and should not be so specific as to stifle
    innovative approaches to a problem").

[^403]: *See generally* NorthPoint Comments at 32, 41, 45-47 (asserting
    that the Commission should establish a FAC to develop spectrum
    policy with the input of industry bodies including T1E1, and in a
    manner that preserves the Commission's ultimate authority to resolve
    spectrum policy issues, balances the Commission's goals of promoting
    innovation and protecting existing services from harmful
    interference, and is open, nondiscriminatory, and participatory). We
    anticipate that industry standards bodies periodically will report
    to NRIC on the status of work within them relating to spectrum
    compatibility and management, and will submit to NRIC standards that
    they have developed. NRIC also may relay to standards bodies issues
    on which it is seeking to report to or prepare recommendations for
    the Commission. Pursuant to the Federal Advisory Committee Act
    (FACA), but contrary to NorthPoint's suggestion that a FAC
    "implement and administer spectrum policy," NorthPoint Comments at
    32, determinations of actions to be taken and policy to be expressed
    with respect to matters upon which NRIC reports or makes
    recommendations shall be made solely by the Commission or Commission
    staff. 5 U.S.C. App. 2 § 9(b).

[^404]: *See* 41 C.F.R. § 105-54.202(b).

[^405]: *See Advanced Services First Report and Order and FNPRM,* 14 FCC
    Rcd at 4802, 4805, paras. 80, 90.

[^406]: *See, e.g.,* BellSouth Comments at 29; GSA Comments at 5 ("the
    T1E1.4 working group appears to have ample technical capabilities");
    GTE Comments at 8; NorthPoint Comments at 43; Rhythms Comments at
    17; SBC Comments at 3; Sprint Comments at 3 ("T1E1.4 is the forum
    where the industry experts reside, and there is no similar assembly
    of industry expertise in any other forum in North America").

[^407]: *See* ATIS Comments at 5, 20.

[^408]: *See Advanced Services First Report and Order and FNPRM,* 14 FCC
    Rcd at 4805, para. 90; ATIS Comments at 11, 13-14, 18.

[^409]: *See, e.g.,* Network and Customer Installation Interfaces ‑
    Asymmetric Digital Subscriber Line (ADSL) Metallic Interface (ANSI
    T1.413‑1995) (ANSI T1.413 standard presents the electrical and other
    characteristics of the ADSL signals appearing at the network
    interface).

[^410]: *See* ATIS Comments at 1.

[^411]: *See, e.g.,* California PUC Comments at 4; GTE Comments at 10.

[^412]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4799, para. 71.

[^413]: The line between policy-making and technical standards-setting
    often is blurred in the realm of deployment practices, however. The
    distinction between policy-making and technical standards-setting is
    significant because, by Committee T1's own procedures, policy-making
    generally is not an appropriate activity for T1E1.4. *See* ATIS
    Standards Committee T1 -- Telecommunications Procedures Manual,
    11^th^ Issue, October 1998 (Revised as of the June 25, 1999
    Committee T1 Meeting), at 67, § 8.2.1 (Committee T1 Procedures
    Manual)
    [\<ftp://ftp.t1.org/pub/t1/t1proc.pdf\>.](ftp://ftp.t1.org/pub/t1/t1proc.pdf)
    These procedures state: "Committee T1 will respond to . . .
    technical issues as commensurate with its primary objective of
    developing American National Standards . . . Policy issues, on the
    other hand, are not within the mission and scope of Committee T1."
    The procedures go on to explain, however, that "\[t\]here are times
    when it is very difficult to differentiate between technical and
    policy issues. Further, it should be recognized that even though a
    question is presented in technical form, it may evolve policy
    issues." Responsibility for differentiating between technical and
    policy issues is vested in Committee T1 or its designate, Committee
    T1 Advisory Group.

    Though we conclude that T1E1.4's charge to establish xDSL access
    standards renders it the most appropriate industry forum for
    developing fair and open advanced services deployment practices, and
    anticipate that NRIC likewise will be most solicitous for
    contributions from T1E1.4, we believe that, consistent with
    Committee T1 procedures, ATIS should ensure that the appropriate
    forum is working on deployment practices. For instance, several
    commenters advocate one of the subtending fora of ATIS's Carrier
    Liaison Committee, the forum most commonly mentioned being its
    Network Interconnection Interoperability Forum (NIIF). *See, e.g.,*
    ATIS Comments at 23. BellSouth takes a different position
    altogether, viewing deployment practices not as policy or technical
    judgments, but rather as business decisions that should not be
    subject to overall industry input or oversight. BellSouth "strongly
    oppose\[s\] vesting any forum with authority" to develop deployment
    practices. BellSouth Comments at 30-31. *See also* SBC Comments at
    10-11.

[^414]: *See* 41 C.F.R. § 105-54.201(c) ("\[a\]dvisory committees are
    established only if there is a . . . truly balanced membership").
    NRIC IV and previous incarnations of NRIC have been composed of
    CEO-level representatives of approximately 35 carriers, equipment
    manufacturers, state regulators, and large and small consumers.

[^415]: FACA, 5 U.S.C. App. 2 § 10(a)(3).

[^416]: *See Advanced Services First Report and Order and FNPRM,* 14 FCC
    Rcd at 4800-01, para. 77. *See also* Sprint Comments at 3.

[^417]: Similarly, on an ongoing basis NRIC's topic-specific scope of
    activity will be framed to ensure that NRIC considers principles of
    fairness and timeliness in its recommendations for resolution of
    additional topics that we specify.

[^418]: *See* NorthPoint Comments at 40-41, 45.

[^419]: We note that our indirect involvement with industry standards
    bodies with respect to identification of topics on which we seek
    recommendations falls far short of "compel\[ling\] industry bodies
    to adhere to any requirements we establish for the functioning of
    such bodies," and thus we need not address further our authority to
    compel industry bodies in such a manner. *See Advanced Services
    First Report and Order and FNPRM,* 14 FCC Rcd at 4802, para. 79.

[^420]: *See supra* Section V.A. *See also* ALTS Comments at 20-21, 24.
    In this respect, we reject arguments that we take a more proactive
    approach towards the industry standards process in general and the
    standards determined by T1E1.4 in particular. *See* Oklahoma CC
    Comments at 6 ("the FCC should have greater weight or 'veto' power
    over the industry representatives \[in industry standards bodies\]
    because the FCC will protect all consumers without bias and, at the
    same time, balance the competing interests of industry"); Rhythms
    Comments at 15-18; Rhythms Reply Comments at 39-41; Rhythms Oct. 12
    *Ex Parte* at 7. Covad asserts that we are the most appropriate
    forum for advanced services standards-setting, because we have a
    public interest mandate, and are not driven by the commercial
    interests which motivate private industry participants. *See* Covad
    Comments at 48; Covad Sept. 1 *Ex Parte*.

[^421]: The Commission previously has found that it "has avoided a
    dominant role in standards-setting as long as the activities of
    standards bodies do not frustrate the Commission's goals and
    policies. However, to the extent that such activities do not support
    public interest goals, it has reserved a role for itself and could
    play some part in standards development." *Intelligent Networks,
    Notice of Proposed Rulemaking*, 8 FCC Rcd 6813, 6820 n.64 (1993).

[^422]: *See* Sprint Comments at 3 ("the importance of these issues to
    competition in broadband communications should be ample incentive
    for future participation at increased levels from newer entrants
    into the telecommunications marketplace").

[^423]: This is consistent with previous recommendations of the industry
    itself through NRIC, which advised the Commission to commit
    sufficient resources to provide direct monitoring of standardization
    activities at meetings of industry standards bodies. *See NRIC
    Interoperability Report* at 186, § 9.4.3. *See also* ALTS Comments
    at 16-17; Covad Comments at 53; SBC Comments at 9; Rhythms Reply
    Comments at 40.

[^424]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4802-03, paras. 82-83.

[^425]: As we explain above, PSD masks define the limits on signal power
    across a range of frequencies. A generic PSD mask establishes
    spectral compatibility by defining a general purpose mask that could
    apply to several technologies. Ideally, use of generic PSD masks
    could expedite deployment of new technologies, because a new
    technology may be introduced without having to wait for a
    standards-setting body to approve a specific mask for the new
    technology.

[^426]: Unlike a PSD mask-based approach, which is static, a
    calculation-based approach uses a computational model for evaluating
    spectrum compatibility in specific situations. *See Advanced
    Services First Report and Order and FNPRM,* 14 FCC Rcd at 4803
    n.194. With a calculation-based approach, mathematical and computer
    simulations are used to determine the power characteristics of a
    technology, and hence, the new technology's compatibility with other
    technologies. Thus, a calculation-based approach allows for more
    flexibility in demonstrating the spectrum compatibility of a new
    technology.

[^427]: For example, certain incumbent LECs argue that we should
    *require* the use of PSD masks. *See* BellSouth Comments at 30; SBC
    Comments at 3.

[^428]: *See, e.g.,* Oklahoma CC Comments at 8-9. *But see* Rhythms
    Comments at 16 ("a policy of deference is not best applied to issues
    of spectrum compatibility").

[^429]: *See* T1E1.4/99-002R4. Though this document, containing proposed
    standards on many issues, was defeated narrowly in an August 1999
    Committee T1 Letter Ballot, T1E1 still is considering this approach
    actively. *Id.* at 10-12. *See* T1E1.4/99-002R4 at 10, § 4.3.3.
    T1E1.4's analytical method is contained in Annex A, Method B to the
    proposed spectrum management standards. *See* T1E1.4/99-002R4 at 12,
    § 4.3.5.

[^430]: *See* AT&T Comments at 6-8, 10-13.

[^431]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4800, para. 76.

[^432]: *See* US WEST Comments at 6.

[^433]: *See* GTE Comments at 9. *But see* Oklahoma CC Comments at 8
    ("The OCC does not believe that the establishment of PSD masks would
    restrict the development of new technologies").

[^434]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4796-97, para. 66.

[^435]: Though we established these presumptions in the spectrum
    management context, in this order we also apply them to deployment
    of a loop technology for line sharing. *See supra* Section
    IV.D.1.b).

[^436]: We reject Rhythms' requested clarification that this criterion
    include any technology that merely complies with a PSD mask which an
    industry standards body has developed. *See* Rhythms Comments at 19;
    Rhythms Oct. 12 *Ex Parte* at 8. Industry standards include
    additional specifications, such as modulation schemes and electrical
    characteristics.

[^437]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4797, para. 67.

[^438]: *Id.*, 14 FCC Rcd at 4797, para. 66.

[^439]: *Id.*, 14 FCC Rcd at 4798, para. 68.

[^440]: Several commenters express support for these rules. *See, e.g.,*
    NorthPoint Comments at 34, 36 n.57; Rhythms Comments at 18-20;
    Rhythms Oct. 12 *Ex Parte* at 5.

[^441]: *See* 47 U.S.C. §§ 251 and 252. *See also* GTE Comments at 13.

[^442]: If a particular state commission chooses not to accept one or
    more of the tasks that we accord to state commissions regarding
    deployment of advanced services, the aggrieved party may present its
    claims to this Commission. *See* 47 U.S.C. § 252(e)(5); 47 C.F.R. §§
    51.801 and 51.803.

[^443]: *See* California PUC Comments at 4 ("there will clearly be a
    role for the states in resolution of disputes arising from actual
    local deployment practices"); Oklahoma CC Comments at 10 ("the OCC
    is both willing and able to arbitrate these types of disputes");
    Texas PUC Comments at 5-6 ("Given that it is impossible to predict
    every deployment scenario and difficulty, state commissions should
    be allowed to address these \[deployment\] issues as they arise. . .
    . The Texas PUC has also chosen to exercise its authority in
    determining whether a technology significantly degrades the
    performance of other services.").

[^444]: *See* Oklahoma CC Comments at 10.

[^445]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4797, para. 67.

[^446]: *See* Letter from Stephanie Joyce, Blumenfeld & Cohen, to
    Magalie R. Salas, Secretary, Federal Communications Commission, CC
    Docket No. 98-147, Attach. (filed Sept. 2, 1999).

[^447]: *See infra* Section V.B.3.a.

[^448]: *Compare supra* Section IV.D.1.b.

[^449]: *See* Covad Comments at 50; Rhythms Comments at 19-20.

[^450]: *See, e.g.,* BellSouth Reply Comments at 28-30; Sprint Reply
    Comments at 16-19. *But see* NorthPoint Comments at 34 (asserting
    that consistent with the presumptions of acceptability for
    deployment, technologies have been, and continue to be, deployed
    "without incident," thus vindicating our previous tentative
    conclusion that a significant degradation test is sufficient to
    prevent actual interference and disruption of services in the
    network).

[^451]: *See* Covad Comments at 51.

[^452]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4798, 4800, paras. 68, 76.

[^453]: *See* NAS Comments at 18. Though a LEC may attempt to rebut the
    presumption that a technology is acceptable for deployment in a
    specific situation by claiming that deployment of the technology
    will cause interference in that situation, the designation by this
    Commission of a technology as generally presumed acceptable for
    deployment is irrebuttable.

[^454]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4798, para. 68.

[^455]: Where the technology that the carrier seeks to deploy does not
    conform to existing industry standards and has not been approved by
    an industry standards body, the Commission, or a state commission,
    the burden is on the requesting carrier to demonstrate that its
    proposed deployment meets the threshold for a presumption of
    acceptability and will not, in fact, significantly degrade the
    performance of other advanced services or traditional voice band
    services. *Id.,* 14 FCC Rcd at 4798, para. 69. Where the carrier
    asserts, however, that the technology does conform to existing
    industry standards or has been approved by an industry standards
    body, the Commission, or a state commission, the burden rests with
    the LEC to prove that the deployment does not fall within the
    presumption of acceptability.

[^456]: *See* 47 C.F.R. §§ 51.301(a) and (c)(6), 51.305(e).

[^457]: *See Advanced Services First Report and Order and FNPRM,* 14 FCC
    Rcd at 4798, para. 69.

[^458]: *See* Oklahoma CC Comments at 11 ("the OCC, as the agency which
    regulates the telecommunications industry in Oklahoma, is the entity
    most informed about the realities of competition in the local
    exchange market in Oklahoma").

[^459]: *Compare, e.g.,* Letter from Lincoln E. Brown, Director --
    Federal Regulatory, SBC Telecommunications, Inc., to Magalie Roman
    Salas, Secretary, Federal Communications Commission, CC Docket No.
    98-147, Attach. (filed Aug. 20, 1999) (technology is successfully
    deployed when, inter alia, it has been deployed over a minimum of
    200 circuits, the deployment constitutes a minimum of five percent
    penetration level in at least one binder group, and the deployment
    lasts a minimum of 90 days with no unresolved interference-related
    service complaints from end users or other carriers) *with* Rhythms
    Oct. 12 *Ex Parte* at 8 (technology is successfully deployed if
    deployed in one central office on at least 25 loops for 30 days
    without interference).

[^460]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4805, para. 90.

[^461]: *Id.*, 14 FCC Rcd at 4797 n.166.

[^462]: *Id.*

[^463]: *Id.*, 14 FCC Rcd at 4804, para. 88.

[^464]: SBC, for example, attempts to provide a multi-component
    definition, which includes, inter alia, "\[m\]aterially reducing the
    distance over which the service can be provided (i.e., significantly
    reducing its availability and reach to prospective or existing
    customers)." SBC Comments at 6. The key, of course, is pinpointing
    what constitutes a material reduction in distance, which essentially
    brings the question back to square one. Covad advocates an objective
    definition that assures that deployed technologies do not exceed
    specific tolerable noise levels, but Covad also does not detail what
    the threshold noise levels should be. Covad Comments at 48. *See
    also* Sprint Comments at 6.

[^465]: *See, e.g.,* ALTS Comments at 20 n.48; GTE Comments at 14;
    NorthPoint Comments at 35 ("By focusing on the end user's
    perception, the significant degradation test balances the interest
    in promoting new technology with the protection of existing
    services"); Rhythms Reply Comments at 40.

[^466]: *See supra* Section V.B.2.

[^467]: *See* Sprint Comments at 6 ("it would be best to attempt to
    achieve industry consensus on such a definition through the T1E1.4
    committee").

[^468]: *Id.*, 14 FCC Rcd at 4797 n.166.

[^469]: *Id.*, 14 FCC Rcd at 4800-01, para. 77.

[^470]: For instance, SBC maintains that we should require competing
    carriers to provide Spectrum Class identification information with
    their loop orders. *See* SBC Comments at 4-6. *See also* GTE
    Comments at 14; Sprint Comments at 6.

[^471]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4799, para. 73. With respect to PSD mask information in
    particular, SBC argues that provision by competitive LECs of such
    information is necessary for incumbent LECs to meet their disclosure
    obligations concerning the type of technologies deployed on loops.
    SBC Comments at 4-5. *See also* Sprint Comments at 4-5, 6.

[^472]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4799, para. 72.

[^473]: We agree with Rhythms that where a competitive LEC asserts that
    the technology it seeks to deploy fits within a generic PSD mask, it
    need not provide to the incumbent LEC the speed or power at which
    the particular technology will be transmitted, because the incumbent
    LEC will be able to discern this information from the PSD mask that
    the competitive LEC identifies. *See* Rhythms Comments at 27. We
    add, however, that where a competitive LEC relies on a
    calculation-based approach to support deployment of a particular
    technology, it must furnish the incumbent LEC with information on
    the speed and power at which the signal will be transmitted.

[^474]: SBC Comments at 5. Thus, we reject Rhythms' stipulation that
    competitive LECs may change deployed technologies without delay.
    *See* Rhythms Comments at 27. As with initial deployment of a
    technology by a competitive LEC, the incumbent LEC must be afforded
    an opportunity to rebut the presumption of acceptability for
    deployment of a replacement technology, where such presumption
    applies.

[^475]: *See* Rhythms Comments at 27; Sprint Comments at 6.

[^476]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4800, para. 75.

[^477]: Sprint raises this request in a petition for reconsideration of
    the *Advanced Services First Report and Order*. Sprint Petition at
    6-7; s*ee* AT&T Comments on Sprint Recon. Petition at 2-3. Because
    we find this issue relevant to spectrum management rules, we address
    it here.

[^478]: *See* Ameritech Comments on Sprint Recon. Petition at 7; Bell
    Atlantic Comments on Sprint Recon. Petition at 7-10; BellSouth
    Comments on Sprint Recon. Petition at 12; SBC Comments on Sprint
    Recon. Petition at 13-14.

[^479]: For this reason, we also reject the request that Sprint poses in
    comments on the *Advanced Services First Report and Order and
    FNPRM,* that we allow the incumbent LEC unilaterally to suspend
    service from the carrier causing interference, because this would be
    tantamount to allowing incumbent LECs to suspend all service
    deployment suspected of causing or contributing to degradation of
    other service. *See* Sprint Comments at 7. If the Commission were to
    allow such suspension of service while the incumbent LEC
    experiencing service degradation searched to ascertain the proper
    culprit(s), several carriers may be forced to suspend the service
    deployment in question, and may lose customers or be forced to
    undergo costly remedial measures which may prove subsequently to
    have been unnecessary. *Compare infra* Section V.B.4. (where we
    decline to establish a national sunset period for known disturbers,
    out of concerns that a blanket sunset period may lead to unnecessary
    replacement of known disturbers, and lead further to unnecessary
    network disruption and forcing of carriers to undertake exorbitant
    replacement expenditures). We find that this scenario provides
    fertile ground for abuse. Therefore, we reiterate, as we do below,
    that incumbent LECs must comply with the processes that we set out,
    rather than taking unilateral action against allegedly interfering
    competitive LEC data services. *See infra* Section V.B.3.c).

[^480]: *See Advanced Services First Report and Order and FNPRM,* 14 FCC
    Rcd at 4799, para. 72.

[^481]: *Id.*, 14 FCC Rcd at 4804, para. 88.

[^482]: *Id.*, 14 FCC Rcd at 4797 n.166. *See* California PUC Comments
    at 4 ("\[t\]he state commissions are the appropriate entities to
    develop a record and resolve disputes based on the pivotal issue of
    whether deployment of advanced services 'significantly degrades' the
    performance of other advanced services and traditional voice
    services for end users"); ALTS Comments at 20; NorthPoint Comments
    at 36 n.57.

[^483]: *See, e.g.,* Letter from Kathleen B. Levitz, Vice President --
    Federal Regulatory, BellSouth Corporation, to Magalie Roman Salas,
    Secretary, Federal Communications Commission, CC Docket No. 98-147,
    Attach., at 4 (filed Sept. 9, 1999) (BellSouth Sept. 9 *Ex Parte*)
    ("Splitters are necessary to allow \[an incumbent LEC\] to
    disconnect data services which significantly degrade voice services
    (after notice has been given)"); GTE Comments at 13 n.22 (where a
    competitive LEC's service interferes with GTE's, "GTE must be able
    to disconnect the \[competitive LEC's\] loop and subsequently notify
    the \[competitive LEC\] of the problem"). *See also* Sprint Comments
    at 7.

[^484]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4800, para. 75. We note that because the incumbent LEC manages
    the binder group, subject to Commission rules and policies, it has
    standing to present claims of significant degradation of any other
    service in the binder group, not merely services that the incumbent
    LEC itself is deploying.

[^485]: *Id.*, 14 FCC Rcd at 4798, para. 68. *See* NAS Comments at 19.
    We note that this rule addresses the concerns of incumbent LECs that
    analog voice services have precedence over data services such as
    xDSL if the data services interfere with the voice services in any
    manner. *See* BellSouth Sept. 9 *Ex Parte* at 5; SBC July 28 *Ex
    Parte*. *But see* Rhythms Oct. 12 *Ex Parte* at 3 n.6 (asserting
    that this is a non-issue, because "\[t\]here is no danger of DSL
    services creating harmful interference with POTS").

[^486]: *See infra* Section V.B.4. A "known disturber" is an advanced
    services technology that is prone to cause significant interference
    with other services deployed in the network.

[^487]: In accordance with the *Advanced Services First Report and Order
    and FNPRM,* 14 FCC Rcd at 4798, para. 69, this exception applies
    only where the newly deployed technology satisfies at least one of
    the criteria for a presumption that it is acceptable for deployment.

[^488]: *Id.*, 14 FCC Rcd at 4804, para. 87.

[^489]: *See infra* Section V.B.4.

[^490]: Though this approach was part of Draft Proposed Standard
    T1E1.4/99-002R4, which recently was defeated narrowly in Committee
    T1 Letter Ballot LB 785, the concept still is being considered
    actively by T1E1.4.

[^491]: *See* Committee T1 Letter Ballot LB 785, T1E1.4/99-002R4, at 8,
    § 4.3.1.

[^492]: *See* NorthPoint Comments at 43; NorthPoint Reply Comments at
    49-52; Covad Sept. 1 *Ex Parte* (Covad argues further that the
    guarded services approach would enshrine a preference for ADSL
    deployed by incumbent LECs, thereby thwarting deployment of SDSL by
    competitive LECs); Rhythms Oct. 12 *Ex Parte* at 7.

[^493]: *See* Covad Sept. 1 *Ex Parte*; Rhythms Oct. 12 *Ex Parte* at 7.

[^494]: *See* Rhythms Oct. 12 *Ex Parte* at 7.

[^495]: *See supra* Section V.B.1.

[^496]: *See* NorthPoint Comments at 44.

[^497]: *See* Rhythms Oct. 12 *Ex Parte* at 7 (observing that all
    guarded services are acceptable for deployment without
    restrictions).

[^498]: For instance, we have stated with respect to the Multipoint
    Distribution Service and the Instructional Television Fixed Service,
    which together are referred to commonly as "wireless cable," that
    "\[i\]nterference protection rights within these services are based
    on a 'first in time, first in right' philosophy." *See Amendment of
    Parts 1, 21 and 74 to Enable Multipoint Distribution Service and
    Instructional Television Fixed Service Licensees to Engage in Fixed
    Two-Way Transmissions; Request for Declaratory Ruling on the Use of
    Digital Modulation by Multipoint Distribution Service and
    Instructional Television Fixed Service Stations*, MM Docket No.
    97-217, Report and Order on Reconsideration, FCC 99-178 (rel. July
    29, 1999). *See also Revision of Part 22 of the Commission's Rules
    Governing the Public Mobile Services*, CC Docket Nos. 92-115, 94-46,
    RM 8367, CC Docket No. 93-116, Report and Order, 9 FCC Rcd 6513,
    6558 (1994) (explaining that under 47 C.F.R. § 22.371, Public Mobile
    Services licensees who construct or modify towers in the immediate
    vicinity of AM broadcast stations are obligated to take all
    necessary steps to correct interference problems caused by the new
    or modified construction); *Sudbrink Broadcasting of Georgia*, 65
    FCC 2d 691, 692 (1977) (in interference dispute between two
    broadcast stations, "\[i\]t is clear that the 'newcomer' is
    responsible, financially and otherwise, for taking whatever steps
    may be necessary to eliminate objectionable interference\"); 47
    C.F.R. § 74.703(d) ("When a low power TV or TV translator station
    causes interference to a CATV \[cable\] system . . . the earlier
    user, whether cable system or low power TV or TV translator station,
    will be given priority on the channel, and the later user will be
    responsible for correction of the interference"); 47 C.F.R. §
    101.105 (establishing interference protection criteria under which
    fixed microwave services must protect existing or previously applied
    for systems).

[^499]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4799, para. 71.

[^500]: *See* SBC Comments at 4.

[^501]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4803-04, para. 86. Rhythms also describes other forms of
    segregation of analog T1, such as separation of transmit and receive
    copper pairs into separate binder groups, and the use of binder
    groups on the outside portion of the feeder cable. Rhythms Comments
    at 24; Rhythms Oct. 12 *Ex Parte* at 2 n.5.

[^502]: *See* NorthPoint Comments at 35; Rhythms Oct. 12 *Ex Parte* at
    2-3.

[^503]: *See supra* Section V.B.2.

[^504]: *See* Bell Atlantic Comments at 19-20; Rhythms Reply Comments at
    33; Rhythms Oct. 12 *Ex Parte* at 3-4. As we stated above, use of a
    calculation-based interference protection approach also may help
    particularly in maximizing service deployment, including new
    technologies, in a binder group. *See supra* Section V.B.2.

[^505]: Though incumbent LECs may segregate known disturbers at their
    option, we do not require them to do so. *But see* Rhythms Reply
    Comments at 35-36 (requesting that we require segregation of analog
    T1). Incumbent LECs also have other options with respect to
    disposition of known disturbers, such as replacing them with new
    technologies.

[^506]: *See* BellSouth Comments at 31; Covad Comments at 50; NorthPoint
    Comments at 38; Rhythms Reply Comments at 35-36; Rhythms Oct. 12 *Ex
    Parte* at 5. We recognize that repeatered HDSL poses many of the
    same problems as analog T1. Therefore, we hope that T1E1.4 will
    address the spectrum management issue of repeatered HDSL in the near
    future.

[^507]: *See Advanced Services First Report and Order and FNPRM,* 14 FCC
    Rcd at 4803, para. 86.

[^508]: Going forward, any party seeking designation of a technology as
    a "known disturber" should file a petition for declaratory ruling
    with the Commission seeking such designation, pursuant to 47 C.F.R.
    § 1.2.

[^509]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4803, para. 86.

[^510]: *See* Covad Comments at 45-47; Rhythms Comments at 23 (binder
    group management "is generally employed in a pernicious manner as a
    means for \[incumbent LECs\] to limit consumer choice of xDSL
    services and preserve priority for their own ADSL deployment");
    Rhythms Oct. 12 *Ex Parte* at 1-2. *See also* *Advanced Services
    First Report and Order and FNPRM,* 14 FCC Rcd at 4803-04, para. 86.

[^511]: *See, e.g.,* Rhythms Oct. 12 *Ex Parte* at 3 (SFS is "simply a
    means of perpetrating anticompetitive conduct in the name of network
    safety"). SFS is a binder group management technique that segregates
    ADSL in the feeder plant. *See* SBC Comments at 8-9. *See also*
    Sprint Comments at 4 (advocating that different technologies be
    segregated into different binder groups, and maintaining that "the
    greatest potential for cross-talk and other interference within
    binder groups lies in the feeder cable closest to the central
    office, rather than the distribution cable from an intermediate
    point of concentration to end-user premises").

[^512]: Covad Comments at 45-46; Rhythms Oct. 12 *Ex Parte* at 4-5. We
    note that such practices run afoul of our expectation that
    incumbents will manage binder groups in such a manner so as to
    maximize the number and types of advanced services that can be
    deployed. *See Advanced Services First Report and Order and FNPRM,*
    14 FCC Rcd at 4800, para. 76. *See also* NorthPoint Comments at 39
    ("binder management may be an effective tool to maximize the
    utilization of the network, provided that it is administered on an
    efficient and nondiscriminatory basis").

[^513]: In support of their view that the reliability of segregation is
    questionable, Covad and Rhythms both cite to Bell Atlantic's
    February 1999 contribution to T1E1.4, which Rhythms claims "actively
    rejects" the validity of segregation practices. *See* Rhythms Oct.
    12 *Ex Parte* at 4. *See also* Covad Comments at 46 (citing Bell
    Atlantic, "Binder Group Segregation is not Feasible," T1E1.4/99-018
    (Feb. 1999)); BellSouth Comments at 28 n.44; BellSouth Reply
    Comments at 31 ("BellSouth does not support SBC's practice of binder
    group management").

[^514]: Nevertheless, if an incumbent LEC segregates a known disturber
    in a manner such that the anti-competitive effects meet or exceed
    the interference protection benefits of segregating the disturber,
    the relevant state commission may choose to sunset the deployment of
    the disturber or apply another remedial approach towards disposition
    of the disturber.

[^515]: *But cf.* SBC Comments at 8 (ADSL is a "major interferer" with
    other xDSL technologies, but creates little interference with
    itself).

[^516]: *See* Rhythms Comments at 26.

[^517]: *See* Rhythms Oct. 12 *Ex Parte* at 5.

[^518]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4804, para. 87.

[^519]: *See, e.g.,* ALTS Comments at 24; Covad Comments at 50; Rhythms
    Oct. 12 *Ex Parte* at 5.

[^520]: *See, e.g.,* Oklahoma CC Comments at 9.

[^521]: *See, e.g.,* BellSouth Comments at 31; GTE Comments at 11-12;
    SBC Comments at 11-12; Sprint Comments at 5.

[^522]: *See* Oklahoma CC Comments at 9; NorthPoint Comments at 39.

[^523]: For example, SBC's subsidiary Pacific Bell estimates costs in
    excess of \$300 million to replace all analog T1 pairs in California
    alone. SBC Comments at 12. Similarly, GTE estimates that it would
    cost approximately \$400 million to replace all analog T1 in its
    network. GTE Comments at 11-12 n.18. SBC also argues that binder
    group administration techniques are largely sufficient to manage
    harmful interference due to analog T1 services. *See* SBC July 28
    *Ex Parte*.

[^524]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4804, para. 87. *See also* SBC Comments at 11; BellSouth Reply
    Comments at 32-33.

[^525]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4804 n.199. *See* also SBC Comments at 12.

[^526]: *See* Oklahoma CC Comments at 9 ("Considering that the status
    and nature of technology deployment varies among states, the OCC
    believes that individual states are better suited to assess the
    necessary processes and timeframes for grandfathering current
    technologies").

[^527]: *See Advanced Services First Report and Order and FNPRM,* 14 FCC
    Rcd at 4804 n.199.

[^528]: *Id.*

[^529]: *Id.*, 14 FCC Rcd at 4800, para. 74.

[^530]: *Id.* *See* Oklahoma CC Comments at 9; GTE Comments at 12 n.19
    ("GTE uses HDSL for new HiCap service and, through attrition, will
    remove \[analog\] T1 technology from its network"); Sprint Comments
    at 5-6 (in the case of Sprint's incumbent LEC operations, analog T1
    lines "are being removed through gradual attrition. . . . It also
    may be noted that as \[incumbent LECs\] begin to deploy their own
    xDSL offerings, they will have a heightened self-interest in
    replacing older technologies such as \[analog T1\] that could cause
    interference with their new service offerings").

[^531]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4808, para. 98.

[^532]: *See generally*, California PUC Comments at Comments at 1-3
    (describing the California PUC's efforts to implement line sharing
    in California); Oklahoma CC Comments at 22 (arguing that state
    commission should be allowed to implement more stringent standards
    if there is a need); Texas PUC Comments at 5 (arguing that the
    Commission should continue to allow states to develop deployment
    guidelines at their discretion).

[^533]: *See generally,* ALTS Comments at 8-9; Covad Comments at 7, n.12
    (arguing against the proposal to permit incumbents to demonstrate to
    the state commission that line sharing on a particular line would
    interfere with analog voice service on that line).

[^534]: *See supra* Section V.B.3.

[^535]: *Local Competition Third Report and Order*, at para. 153-161.

[^536]: *See* 47 U.S.C. § 253(a)-(d).

[^537]: US WEST Oct. 7 *Ex Parte*.

[^538]: *See Gulf Power Co. v. United States*, 998 F. Supp 1386 (N.D.
    Fla. 1998), *aff'd*, 187 F.3d 1324 (11th Cir. 1999) (*Gulf Power*).

[^539]: US WEST adds that the requirement to provide unbundled loops
    established in the *Local Competition Third Report and Order*. US
    WEST Oct. 7 *Ex Parte*. *See Local Competition Third Report and
    Order*, at para. 182.

[^540]: *Local Competition First Report and Order*, 11 FCC Rcd at 15631,
    para. 258.

[^541]: The plaintiff utilities companies brought suit against the
    United States and the Federal Communications Commission, claiming
    that the 1996 Act's amendment to the Pole Attachments Act was
    facially unconstitutional because it took the utilities' property
    without adequate process for securing just compensation. *Gulf
    Power*, 187 F.3d at 1324-27, 1339. *See also* 47 U.S.C. § 224(f).

[^542]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et. seq.*,
    has been amended by the Contract With America Advancement Act of
    1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of
    the CWAAA is the Small Business Regulatory Enforcement Fairness Act
    of 1996 (SBREFA).

[^543]: *Advanced Services First Report Order* *and FNPRM,* 14 FCC Rcd
    at 4826.

[^544]: *See* 5 U.S.C. § 604.

[^545]: *See supra* Section VI.B.4.

[^546]: SBA Reply Comments at 4-5.

[^547]: *See Advanced Services First Report and Order and FNPRM,* 14 FCC
    Rcd at 4853, Appendix C, para. 8.

[^548]: *See id*.

[^549]: *See, e.g., Advanced Services Second Report and Order*, at
    Appendix C, para. 7.

[^550]: SBA Reply Comments at 5.

[^551]: *See Advanced Services First Report and Order and FNPRM,* 14 FCC
    Rcd at 4836, Appendix C, para. 11.

[^552]: SBA Reply Comments at 5-6.

[^553]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4836, Appendix C, para. 12.

[^554]: *See, e.g., Advanced Services First Report and Order and FNPRM,*
    11 FCC Rcd at 4801-4805, paras. 80-91 and 4811-12, paras. 104-107
    (noting specifically the impact that our spectrum policies will have
    on all segments of the industry, including small entities, and
    requesting comment on the effect our line sharing proposals will
    have on incumbent and competitive carriers alike, including small
    entities).

[^555]: *Advanced Services First Report and Order and FNPRM,* 14 FCC Rcd
    at 4826.

[^556]: 5 U.S.C. § 601(6).

[^557]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    \"small business concern\" in 5 U.S.C. § 632). Pursuant to 5 U.S.C.
    § 601(3), the statutory definition of a small business applies
    \"unless an agency after consultation with the Office of Advocacy of
    the Small Business Administration and after opportunity for public
    comment, establishes one or more definitions of such term which are
    appropriate to the activities of the agency and publishes such
    definition in the Federal Register.\"

[^558]: 15 U.S.C. § 632. *See, e.g., Brown Transport Truckload, Inc. v.
    Southern Wipers, Inc*., 176 B.R. 82 (N.D. Ga. 1994).

[^559]: 13 C.F.R. § 121.201.

[^560]: FCC, Carrier Locator: Interstate Service Providers, Figure 1
    (Jan. 1999) (*Carrier Locator*). *See also* 47 C.F.R. § 64.601 *et
    seq.*

[^561]: *Carrier Locator* at Fig. 1.

[^562]: 5 U.S.C. § 601(3).

[^563]: Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to
    William E. Kennard, Chairman, FCC (filed May 27, 1999). The Small
    Business Act contains a definition of \"small business concern,\"
    which the RFA incorporates into its own definition of \"small
    business.\" *See* U.S.C. § 632(a) (Small Business Act); 5 U.S.C. §
    601(3) (RFA). SBA regulations interpret \"small business concern\"
    to include the concept of dominance on a national basis. 13 C.F.R. §
    121.102(b). Since 1996, out of an abundance of caution, the
    Commission has included small incumbent LECs in its regulatory
    flexibility analyses. *See, e.g., Implementation of the Local
    Competition Provisions of the Telecommunications Act of 1996*, CC
    Docket 96-98, First Report and Order, 11 FCC Rcd 15499, 16144-45
    (1996).

[^564]: United States Department of Commerce, Bureau of the Census,
    *1992 Census of Transportation*, Communications, and Utilities:
    Establishment and Firm Size, at Firm Size 1‑123 (1995) (\"1992
    Census\").

[^565]: 15 U.S.C. § 632(a)(1).

[^566]: 1992 Census, *supra*, at Firm Size 1‑123.

[^567]: 13 C.F.R. § 121.201, SIC Code 4813.

[^568]: 13 C.F.R. § 121.210, SIC Code 4813.

[^569]: *See* 47 C.F.R. § 64.601 *et seq.*; *Carrier Locator* at Fig. 1.

[^570]: The total for CLECs includes both CLECs and competitive access
    providers (CAPs).

[^571]: *Carrier Locator* at Fig. 1. The total for resellers includes
    both toll resellers and local resellers.

[^572]: This TRS category also includes Competitive Access Providers
    (CAPs).

[^573]: 47 U.S.C. § 251(f).

[^574]: For this reason, we also reject the request that Sprint poses in
    comments on the *Advanced Services First Report and order and
    FNPRM,* That we allow the incumbent LEC unilaterally to suspend
    service from the carrier causing interference, because this would be
    tantamount to allowing incumbent LECs to suspend all service
    deployment suspected of causing or contributing to degradation of
    other service. *See* Sprint Comments at 7. While the incumbent LEC
    experiencing service degradation searches to ascertain the proper
    culprit(s), several carriers may be forced to suspend deployment in
    question, and may lose customers or be forced to undergo costly
    remedial measures which may prove subsequently to have been
    unnecessary. Therefore, we reiterate that incumbent LECs must comply
    with the processes that we set out, rather than taking action
    against allegedly interfering competitive LEC data services.

[^575]: *See* 5 U.S.C. § 801(a)(1)(A).

[^576]: *See* 5 U.S.C. § 604(b).