**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In re Application of )

)

GTE CORPORATION, )

Transferor, )

)

And ) CC Docket No. 98-184

)

BELL ATLANTIC CORPORATION, )

Transferee )

)

For Consent to Transfer Control of Domestic )

And International Section 214 and 310 )

Authorizations and Applications to Transfer )

Control of a Submarine Cable Landing License )

### Order {#order .unnumbered}

By the Chief, Common Carrier Bureau:

**Adopted:** May 31, 2001 **Released:** May 31, 2001

#  {#section .unnumbered}

## Introduction

1.  On April 9, 2001, Verizon requested the Commission's consent to
    allow the Verizon incumbent operating companies to own advanced
    services equipment in two instances before the sunset of the
    advanced services affiliate requirement found in the *Bell
    Atlantic-GTE Merger Order*.[^1] For the reasons explained below, we
    grant Verizon's request to the extent described herein.

    **II. Background**

2.  As an initial matter, we note that as a result of the *ASCENT v.
    FCC* ruling, Verizon may elect, at the end of a nine month period,
    to reintegrate its separate advanced services affiliate into the
    BOC.[^2] Verizon has submitted a letter requesting permission to
    reintegrate its advanced services subsidiary prior to the end of the
    nine month period. The Commission is currently considering this
    request.[^3] The instant Special Temporary Authority (STA) only
    governs until the Commission rules on Verizon's request to waive the
    nine month period. Verizon contends that it has a "unique
    opportunity to deploy fiber-to-the-home technology in a new
    community" to enable innovative combinations of services that are
    unavailable with copper and most hybrid fiber-copper systems.
    Verizon proposes to deploy an Ethernet switch and specialized
    routers which, acting together, function much like an optical
    concentration device (OCD) to perform routing and aggregation of
    packetized data. This configuration will allow multiple carriers to
    send their data signals over individual customer fiber loops and
    would permit multiple carriers to serve their customers over
    Verizon's fiber facilities through interconnecting at the serving
    central office or facilities terminal.[^4] Verizon states that the
    Ethernet switch and specialized routers that are part of the
    fiber-to-the-home network perform "a quintessential network function
    and needs to be owned and operated by the operating telephone
    company."[^5]

3.  Verizon acknowledges that under the precedent established in the
    *Project Pronto Order*, for purposes of the Merger Conditions, the
    routing and switching equipment described by Verizon is considered
    advanced services equipment under the Bell Atlantic-GTE Merger
    Condition that must be owned by the Verizon's separate data
    affiliate, Verizon Advanced Data Inc. ("VADI").[^6] Thus, absent
    action by the Commission, Verizon may not own or operate this
    equipment.

    **III. Discussion**

4.  The standard for granting an STA is whether the proposed action
    "will serve the public interest, convenience and necessity."[^7] The
    Commission has previously granted incumbent carriers authority to
    engage in limited advanced services trials to gain experience in
    operating next-generation networks.[^8] In so doing, the
    Commission's goal was to foster innovation, speed the delivery of
    advanced services and allow incumbents the opportunity to predict
    operational difficulties that may arise when a new network
    technology is deployed on a larger scale. Verizon states that the
    builder of the new housing development has asked Verizon to provide
    fiber to all the homes in the development and notes that "the
    developer is on a tight schedule."[^9] According to Verizon, this
    deployment will enable the provision of "high speed Internet access
    and video capabilities." Providing Verizon with the authority to own
    and operate the equipment described in the *STA Request* will permit
    Verizon and other carriers to provide innovative advanced services
    such as very high-speed Internet access and videoconferencing
    capabilities to their customers over a fiber-to-the-home
    architecture.[^10] Furthermore, providing Verizon with the authority
    requested herein will enable it to gain experience operating a
    deep-fiber network in a multi-carrier environment. Accordingly, we
    find that granting Verizon an STA is in the public interest.

5.  In granting Verizon's request, we emphasize that the authority
    granted by this action is limited to the "few hundred homes"
    described in Verizon's request and is limited to the geographic area
    of this new housing development.[^11] Moreover, we note that Verizon
    will not actually be providing advanced services to these homes
    until the nine month period has expired. We therefore conclude that
    allowing Verizon to own and operate advanced services equipment, to
    the extent necessary to build and deploy a fiber to-the-home network
    as described in Verizon's *STA Request*, is consistent with the
    public interest.

6.  Finally, in contrast to the very limited request Verizon makes with
    respect to the new housing development in Virginia, Verizon also
    makes a more general request in its STA request. Specifically,
    Verizon seeks authority to buy, install and test the central office
    equipment necessary to deploy DSL capabilities in remote terminals;
    to offer a wholesale packet transport service to other carriers; and
    to provide retail DSL service in a fiber-fed network environment. We
    decline to grant this request at this time. We find that this
    request presents broader issues that are properly considered in the
    context of Verizon's request to accelerate the sunsetting of its
    advanced services affiliate. Accordingly, we defer action on
    Verizon's request to deploy DSL capabilities to that proceeding.

    **IV. Ordering Clause**

7.  Accordingly, IT IS ORDERED that, pursuant to 47 C.F.R. §§ 63.01,
    63.04, Verizon IS GRANTED, to the extent set forth herein, Special
    Temporary Authority to conduct a limited trial of fiber-to-the-home
    technology as described in its April 9, 2001 *STA Request* and
    Verizon's more general request IS DENIED. This authority is given
    without prejudice to any Commission action that may be taken in the
    future.

> FEDERAL COMMUNICATIONS COMMISSION

Dorothy T. Attwood

> Chief, Common Carrier Bureau

[^1]: *See* Letter from Gordon R. Evans, Vice President, Federal
    Regulatory, Verizon to Dorothy Attwood, Chief, Common Carrier
    Bureau, CC Docket No. 98-184 (filed April 10, 2001) (hereafter *STA
    Request*); *See also* *In re Application of GTE Corporation and Bell
    Atlantic Corporation for Consent to Transfer Control of Domestic and
    International Sections 214 and 310 Authorizations and Application to
    Transfer Control of a Submarine Cable Landing License*, 15 FCC Rcd
    14032, App. D (2000) ("Merger Conditions").

[^2]: *See Association of Communications Enterprises v. FCC*, Case No.
    99-1441, slip op. (D.C. Cir. Jan 9, 2001) (hereafter *ASCENT v
    FCC*). As applied to Verizon, this ruling holds that its separate
    advanced services affiliate is a successor or assign of the BOC.

[^3]: *See* Pleading Cycle Established for Comments on Verizon's May
    1^st^ Letter Concerning Relief from Bell Atlantic/GTE Merger
    Conditions, Public Notice, DA 01-1325 (May 31, 2001), which is being
    released with this order. *See also* Letter from Gordon R. Evans,
    Vice President, Federal Regulatory, Verizon to Dorothy Attwood,
    Chief, Common Carrier Bureau, CC Docket No. 98-184 (filed April 27,
    2001).

[^4]: *See STA Request* at 2.

[^5]: *Id.*

[^6]: *STA Request* at 2. In the *Project Pronto Order*, the Commission
    emphasized that its decision did not "prejudice the regulatory
    classification of plug-in ADLU Cards or similar multi-functional
    equipment in any other context*." Project Pronto Order*, 15 FCC Rcd
    17520, para. 16 n.46. The Commission found that an OCD "should be
    classified as Advanced Services Equipment" under the Merger
    Conditions. *Project Pronto Order*, 15 FCC Rcd 17521, para. 18
    (2000). For purposes of the Merger Conditions the term "'Advanced
    Services' means intrastate or interstate wireline telecommunications
    services, such as ADSL, IDSL, xDSL, Frame Relay and asynchronous
    transfer mode ('ATM') that rely on packetized technology and have
    the capability of supporting transmission speeds of at least 56
    kilobits per second in both directions." Merger Conditions at §1.2.

[^7]: 47 C.F.R. §§ 63.01, 63.04. *See also Telephone Company-Cable
    Television Cross-Ownership Rules*, 7 FCC Rcd 5781, 5836 para. 105
    (1992).

[^8]: For example, the Commission granted a Verizon telephone company
    special temporary authority to extend a technical trial of an
    innovative video service until the commercial service became
    available. *See* Letter from James Schlichting, Chief, Policy and
    Program Planning Division, Common Carrier Bureau, to Marie Breslin,
    Bell Atlantic Network Services, Inc. (rel. Sept. 27, 1994) (1994 FCC
    LEXIS 4938).

[^9]: *STA Request* at 1.

[^10]: Verizon notes that the project "is on a tight schedule." *STA
    Request* at 1. Verizon is required to complete an initial
    installation to the developers visitor center in July and to have
    model homes equipped by October, with the first residents moving in
    before the end of the year. *Id.*

[^11]: *STA Request* at 2.