Before the

Federal Communications Commission

**Washington, D.C. 20554**

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**ORDER ON RECONSIDERATION**

**Adopted:** April 17, 2000 **Released:** April 27, 2000

Before the Commission:

**TABLE OF CONTENTS**

Paragraph

I. INTRODUCTION 1

II\. BACKGROUND [2](#background)

A. Section 259 [2](#a.-section-259)

B. Petitions [3](#petitions)

III\. ISSUES ON RECONSIDERATION 4

A. Resale 4

B. Intellectual Property and Licensing Issues 8

C. Pricing Issues 16

IV\. CONCLUSION 20

V. PROCEDURAL ISSUES 21

A. Final Paperwork Reduction Act Analysis 21

VI\. ORDERING CLAUSES 22

APPENDIX A - List of Petitioners and Commenters

# INTRODUCTION

1.  In this Order, we consider petitions for reconsideration of various
    aspects of our Report and Order implementing section 259 of the
    Act.[^1] We affirm our decision to implement section 259 through a
    negotiation-driven approach that relies on parties to reach
    mutually-satisfactory terms for infrastructure sharing. We grant, in
    part, a petition from Southwestern Bell (SWBT) by making clear that
    section 259 cannot be used to resell the incumbent LEC\'s service
    within the incumbent LEC\'s telephone exchange area. We also grant,
    to the extent described herein, petitions of BellSouth, GTE, Octel,
    and SWBT concerning intellectual property rights by modifying our
    requirement that incumbent LECs be made responsible for obtaining
    licensing for the benefit of qualifying carriers. We further grant
    SWBT\'s petition for clarification that under section 259 incumbent
    LECs need not make available the intellectual property of third
    parties where appropriate licensing has not been obtained.[^2]
    Finally, we deny a request from MCI that we exercise pricing
    authority to ensure that section 259 arrangements are priced based
    on forward-looking costs. Our decisions here will reduce uncertainty
    over the scope and obligations under section 259, promoting the use
    of innovative agreements to bring more and higher quality services
    to the customers of smaller telephone companies at lower prices.

# BACKGROUND

## A. Section 259 {#a.-section-259 .unnumbered}

2.  In the Telecommunications Act of 1996, Congress moved to restructure
    the local telecommunications market by removing legal, regulatory,
    and economic impediments to competition that sustain a monopoly
    environment.[^3] As part of this restructuring, Congress adopted
    section 259, which requires incumbent LECs to make available, under
    certain conditions, public switched network infrastructure and other
    capabilities to qualifying carriers that are providing telephone
    exchange service outside the incumbent LEC\'s area. On February 7,
    1997, the Commission promulgated general rules and guidelines to
    define the obligations imposed by section 259. Recognizing that a
    qualifying carrier may not use the facilities or functions of the
    incumbent LEC to compete in the incumbent's telephone exchange area,
    as is the case in other market opening provisions of the
    Telecommunications Act of 1996 such as sections 251 and 252, the
    *Infrastructure Sharing Order* adopted an approach that depends in
    large part on negotiations among the interested parties. [^4]

## Petitions

3.  Five parties seek reconsideration or clarification of the
    *Infrastructure Sharing Order*.[^5] SWBT requests that the
    Commission reconsider its decision that qualifying carriers may
    resell an incumbent LEC\'s telecommunications services under section
    259, asserting that the absence of the phrase "telecommunications
    services" from the list in section 259(a) indicates a Congressional
    intent to exclude resale of services from section 259.[^6]
    Additionally, four parties filed petitions concerning the
    Commission\'s intellectual property licensing rules adopted in the
    *Infrastructure Sharing Order*, which are addressed in detail
    below.[^7] Finally, MCI asks that the Commission reconsider its
    decision to abstain from exercising pricing authority.[^8]

# ISSUES ON RECONSIDERATION

## Resale

4.  In the *Infrastructure Sharing Order*, the Commission declined to
    adopt specific definitions of the \"public switched network
    infrastructure, technology, information, and telecommunications
    facilities and functions\" that incumbent LECs must make available
    to qualifying carriers pursuant to section 259(a). Seeking to
    furnish parties with adequate flexibility both now and in the
    future, *i.e.*, as technology continues to evolve, the Commission
    reasoned that \"it is essential to ensure that the statutory purpose
    behind section 259 \-- to provide qualifying carriers with specific
    opportunities to obtain infrastructure \-- is not defeated by
    definitions that are restrictively based on perceptions of present
    network requirements.\"[^9] Consistent with this approach, the
    Commission found no reason to exclude, *per se*, any facilities,
    functions, or information from the negotiations and agreements under
    section 259. The Commission noted that there could be an overlap
    between those \"telecommunications facilities and functions\" that
    are the subject of section 259(a), and interconnection, unbundled
    network facilities, and resale made available pursuant to section
    251(b) and (c).[^10] The Commission concluded that qualifying
    carriers should be able to obtain section 251-available network
    facilities and functionalities, including lease arrangements and
    resale of services, pursuant to section 251 and/or section 259 \--
    except to the extent precluded by section 259(b)(6).[^11] SWBT
    requests that the Commission reconsider its decision in the
    *Infrastructure Sharing Order* and exclude \"resale\" and
    \"services\" from the scope of section 259(a).[^12] We grant, in
    part, SWBT\'s petition and make clear that section 259 may not be
    used to resell services to customers within the incumbent LEC\'s
    telephone exchange area. We deny, in part, SWBT\'s petition because
    we decline to exclude \"services\" from the scope of section 259(a).

5.  In the *Infrastructure Sharing Order*, we concluded that the
    explicit language of section 259(b)(6) prevents qualifying carriers
    from using section 259-requested infrastructure to compete with the
    providing LEC in its telephone exchange area.[^13] Thus, "resale"
    arrangements like those contemplated under section 251,[^14] where
    the qualifying carrier uses the facilities to compete with the
    providing carrier in its telephone exchange area, simply are not
    permitted under section 259 arrangements. Therefore, to the extent
    that such agreements would run contra to the explicit language of
    section 259, we clarify that they are outside the scope of that
    section.

6.  We disagree, however, with SWBT\'s further argument that incumbent
    LECs are not obligated to make available to qualifying carriers
    anything that might be characterized as a \"service.\" To the
    contrary, we reiterate our belief that qualifying carriers should
    not be denied the benefits of section 259 sharing simply because
    some otherwise valid requests for functionalities might be
    characterized as \"service\" requests, or because the service
    derived from a section 259 sharing request might be offered to the
    *qualifying carrier\'s* customers (*i.e.*, to customers not within
    the incumbent LEC\'s telephone exchange area). Specifically, we are
    not persuaded by SWBT\'s argument that the omission of the phrase
    "telecommunications services" from the list in 259(a) indicates a
    Congressional intent to exclude services from section 259.[^15]
    Indeed, we note that other portions of section 259 indicate a
    Congressional understanding that an incumbent LEC might meet its
    section 259 obligations by offering a service to the qualifying
    carrier.[^16] These uses of the word \"services\" to describe the
    subject matter of section 259 agreements lead us to believe that
    Congress did not intend to exclude, *per se*, services from the
    scope of section 259. We, thus, reaffirm our earlier finding that
    our rules implementing section 259(a) should not rely on
    \"definitions that are restrictively based on perceptions of present
    network requirements.\"[^17]

7.  Nor are we persuaded by SWBT\'s argument that our decision to
    include services in the scope of section 259 sharing would violate
    the wholesale pricing standard of section 252(d)(3) and would
    unlawfully intrude upon the jurisdiction of the state
    commissions.[^18] Section 252(d)(3), pursuant to its express
    language, applies only to resale of services provided pursuant to
    section 251(c)(4). Quite apart from that section, section 259(a)
    grants the Commission authority to promulgate rules concerning any
    section 259 agreement. Therefore, section 252(d)(3) simply is not
    implicated.[^19] Thus, pricing for section 259 sharing agreements
    must comply with the rules and policies adopted in the
    *Infrastructure Sharing Order*, not section 252(d)(3).

## Intellectual Property and Licensing Issues

8.  In the *Infrastructure Sharing Order*, the Commission contemplated
    that incumbent LECs might receive from qualifying carriers section
    259 sharing requests that implicate the intellectual property or
    licensing interests of third parties.[^20] The Commission
    nevertheless expressed the expectation that, in many if not most
    cases, incumbent LECs and qualifying carriers would be able to
    negotiate section 259 arrangements without directly implicating
    those third-party rights. Where such negotiations failed because
    third-party rights could not be accommodated, the Commission
    concluded that incumbent LECs must take affirmative steps to ensure
    that otherwise valid qualifying carrier requests were not
    frustrated.[^21] Four petitioners seek reconsideration of the
    Commission\'s decision with respect to certain intellectual property
    and licensing rights.[^22]

9.  We grant petitioners\' requests and modify the requirements that we
    impose on incumbent LECs to accommodate qualifying carrier sharing
    requests. First, we accept SWBT\'s suggestion and make clear that
    nothing in our rules would require an incumbent LEC to make
    available the intellectual property of third parties without
    necessary licensing or in violation of existing licensing
    agreements.[^23] Second, we modify the *Infrastructure Sharing
    Order* by placing the primary burden to obtain third-party
    intellectual property and licensing rights on qualifying carriers.
    We, however, retain the requirement that incumbent LECs shall engage
    in good faith efforts, whenever requested, to help resolve
    intellectual property and licensing disputes between qualifying
    carriers and third parties. In so modifying our original order, we
    continue to interpret section 259 in a manner that facilitates the
    provision of telecommunications services by qualifying carriers that
    lack economies of scale and scope, while limiting the burdens placed
    on incumbent LECs and preserving the rights of third parties.

10. As we have consistently stated, one benefit of section 259\'s
    negotiation-driven approach to infrastructure sharing is that
    parties can exercise great flexibility in fashioning specific
    section 259 agreements.[^24] As we concluded in the *Infrastructure
    Sharing Order* and reiterate here, our expectation is that, in many
    cases, incumbent LECs will be able to satisfy their section 259
    sharing requests without directly implicating the intellectual
    property and licensing rights of third parties.[^25] We have been
    presented with no fact that causes us to alter this expectation.
    Nevertheless, as the Commission recognized in the *Infrastructure
    Sharing Order*, there may be circumstances where parties cannot
    negotiate section 259 agreements without directly implicating
    third-party intellectual property rights.[^26] Where such
    circumstances arise, we fully expect that third-party vendors whose
    intellectual property or licensing rights are at issue in such cases
    will be included in associated negotiations. In every case, we
    reiterate our determination that the implementation of section 259,
    and the negotiation of section 259 agreements, must preserve
    vendors\' rights in their intellectual property and thus, we do not
    require an incumbent LEC to violate or void third-party agreements
    merely because it has received a valid request for infrastructure
    sharing from a qualifying carrier. [^27]

11. We remain optimistic that, in the ordinary course, parties
    negotiating section 259 agreements can readily accommodate
    third-party concerns, *i.e.*, through direct negotiations with third
    parties. Because section 259 does not allow the qualifying carrier
    to use the facilities and functionalities it receives under a 259
    arrangement to compete against the providing LEC, *all* parties \--
    incumbent LECs, qualifying carriers, and third parties \-- have the
    appropriate economic incentives to achieve mutually beneficial
    agreements.[^28] Based on these observations, we find persuasive
    BellSouth\'s contention that there is no reason to expect that
    qualifying carriers and incumbent LECs cannot work with third
    parties to achieve necessary licensing arrangements, given the
    unique level of cooperation contemplated by section 259. We
    conclude, therefore, that to the extent that such licensing is
    necessary, qualifying carriers, not incumbent LECs, have the primary
    and ultimate obligation to obtain such agreements from third
    parties.

12. Nevertheless, we retain our requirement that incumbent LECs must
    exercise good faith efforts to facilitate negotiations between
    qualifying carriers and third parties. While section 259 does not
    specifically address those situations where the infrastructure
    requested by a qualifying carrier is subject to the intellectual
    property or licensing rights of third parties, such a requirement is
    consistent with the language of section 259(a), which grants rights
    to qualifying carriers and places an affirmative obligation on
    incumbent LECs. Without access to infrastructure components that are
    subject to third-party rights, otherwise valid section 259 requests
    could be effectively nullified. Because the incumbent LEC has
    information that is essential in determining whether third-party
    intellectual property rights are implicated and in developing
    resolutions that accommodate the needs of all three parties, we
    believe that, in every case, an incumbent LEC should provide timely
    information that identifies third-party intellectual property and
    licensing rights that might be implicated by a qualifying carrier\'s
    request for section 259 sharing.[^29] At a minimum, such information
    should detail the name of specific third-party vendors, the subject
    intellectual property, and the relevant contracts which govern the
    incumbent LEC\'s use of that intellectual property.[^30] Further,
    because incumbent LECs can bring to negotiations over intellectual
    property disputes a knowledge of their own networks and facilities,
    [^31] where a qualifying carrier seeks the participation of the
    incumbent LEC in negotiations with third-party vendors, the
    incumbent LEC is obliged to participate in such negotiations and to
    assist in developing solutions that promote the goals of section
    259.[^32] Finally, where parties\' efforts to obtain necessary
    intellectual property or licensing rights fail or where qualifying
    carriers believe that incumbent LECs have not exercised good faith
    efforts to assist in the resolution of intellectual property
    disputes, parties have the opportunity to seek resolution of their
    dispute before this Commission.[^33]

13. The modifications to our *Infrastructure Sharing Order* that we
    adopt today are consistent with the Congressional directive in
    section 259(b)(5) to establish conditions for sharing agreements
    that promote cooperation between incumbent LECs and qualifying
    carriers.[^34] Moreover, they are consistent with our understanding
    of the limits on incumbent LEC obligations enumerated in sections
    259(b)(1) and (2).[^35] We do not believe it necessary at this time
    to further specify what efforts would satisfy or exceed the standard
    set out in section 259, as such determinations will be fact specific
    and must be resolved on a case-by-case basis.

14. In modifying our original order, we also address the issues of
    privity of contract raised by Octel and SWBT.[^36] Octel, an
    equipment vendor, argues that there should be a direct legal
    relationship between third-party vendors and qualifying carriers in
    order to establish privity of contract.[^37] Under our requirements,
    as modified in this Order, where it is necessary to establish a
    direct contract between the qualifying carrier and the third party,
    such privity can be negotiated.[^38]

15. Finally, we note that by Memorandum Opinion and Order the Commission
    is concurrently adopting different standards relating to
    intellectual property issues in the context of implementing section
    251.[^39] Given the different context in which section 259 operates
    and the difference in statutory language, we think it important to
    state clearly that our decision on reconsideration here is made
    without effect on the disposition of intellectual property issues
    raised by parties in section 251 proceedings.[^40]

## Pricing Issues

16. In the *Infrastructure Sharing Order*, the Commission found nothing
    in either the express statutory language of section 259 or its
    legislative history that evidenced a congressional intent to impose
    any particular price outcome pursuant to this requirement.[^41]
    While the Commission found that the \"fully benefit\" language of
    section 259(b)(4) may implicate pricing concerns, the Commission
    reserved the specific question of pricing authority.[^42] The
    Commission concluded that the section 259 negotiation process, along
    with the availability of the Commission\'s dispute resolution,
    arbitration, and complaint processes, will ensure that qualifying
    carriers fully benefit from the economies of scale and scope of
    incumbent LECs. MCI requests that the Commission reconsider its
    decision not to assert pricing authority with respect to
    infrastructure sharing arrangements.[^43] Essentially, MCI argues
    that Congress\' intent in section 259 was that qualifying carriers,
    alone, should receive the benefits of the incumbent LECs\' economies
    of scale and scope in the context of infrastructure sharing
    arrangements and that this result can only be realized if the
    Commission ensures that prices for shared infrastructure are based
    solely on forward-looking costs.[^44] Thus, MCI concludes that the
    Commission\'s negotiation-driven approach directly contravenes the
    intent of Congress, as evinced by inclusion of the phrase \"fully
    benefit\" in section 259(b)(4).[^45] Four parties filed oppositions
    to MCI\'s petition and all disagree with MCI\'s argument that
    qualifying carriers will fully benefit from the economies of scale
    and scope of incumbent LECs only if the price of shared
    infrastructure is required to be exclusive of all joint and common
    costs.[^46]

17. We conclude that MCI has failed to show why the Commission should
    reconsider its decision in the *Infrastructure Sharing Order* to
    refrain from asserting pricing authority to mandate particular
    prices for shared infrastructure obtained by qualifying carriers
    pursuant to section 259.[^47] MCI\'s petition largely restates
    arguments it made in comments and reply comments submitted in the
    proceeding below. The Commission rejected MCI\'s analysis in its
    consideration of the *Infrastructure Sharing Order* and MCI has not
    brought any new information or arguments to our attention to
    persuade us to revisit our decision not to assert pricing authority
    to achieve such an outcome in the context of implementing section
    259 infrastructure sharing rules.

18. In its petition, MCI ignores the reasons why the Commission decided
    that party negotiations would best effectuate the statutory purpose.
    As the Commission determined in the *Infrastructure Sharing Order,*
    section 259 requires that a qualifying carrier not use
    infrastructure obtained pursuant to a section 259 agreement to
    compete with the incumbent LEC.[^48] Considering this determination
    and the section 259(b)(1) requirement that the incumbent LEC be
    allowed to recover its costs associated with providing
    infrastructure, the Commission stated its expectation that, in the
    ordinary course, incumbent LECs should lack the incentive to deny
    qualifying carriers the full benefits of infrastructure sharing
    arrangements. The Commission, thus, left to the parties in the
    negotiating process the task of identifying those benefits and
    deciding upon the terms of sharing, including appropriate price
    terms.[^49] The Commission expressly considered whether pricing
    regulations should be superimposed on the negotiation process in
    light of size or other alleged disparities between incumbent LECs
    and qualifying carriers.[^50] Our decision not to impose pricing
    regulations was amply supported by the record.[^51] Finally, we see
    no reason to alter the Commission\'s finding in the *Infrastructure
    Sharing Order* that price alone is not determinative of the terms
    and conditions of infrastructure sharing.[^52] Only after
    considering all these factors, none of which are discussed by MCI in
    its petition, did the Commission state its belief that negotiations
    could permit qualifying carriers to fully secure the benefits of
    section 259.[^53]

19. Our decision not to assert pricing authority is coupled with a
    commitment to monitor marketplace developments and section 259
    negotiations as they develop in fact. In light of our conclusion
    above \-- not to alter our decision on pricing authority \-- we need
    not address the specific arguments of those commenters that
    challenge the specific pricing standard advocated by MCI.[^54]

# CONCLUSION

20. For the reasons stated above, we grant, in part, SWBT's petition for
    reconsideration and clarification by making clear that section 259
    cannot be used to resell the incumbent LEC\'s service within the
    incumbent LEC\'s telephone exchange area. We also grant petitions
    for reconsideration from BellSouth, GTE, Octel, and SWBT concerning
    intellectual property rights by modifying our requirement that
    incumbent LECs be responsible for obtaining third-party owned
    licensing for the benefit of qualifying carriers. Finally, we deny a
    petition from MCI that asks the Commission to exercise pricing
    authority to ensure that section 259 sharing agreements are priced
    based on forward-looking costs.

# PROCEDURAL ISSUES

## Final Paperwork Reduction Act Analysis

21. In the *Infrastructure Sharing Order*, we conducted a Final
    Paperwork Reduction Act Analysis, as required by the Paperwork
    Reduction Act of 1995, Pub. L. No. 104-13.[^55] The changes we adopt
    in this Order do not affect that analysis.

# ORDERING CLAUSES

22. Accordingly, IT IS ORDERED that, pursuant to sections 4(i), 4(j),
    201-205, 259, 303(r), 403 of the Communications Act of 1934, as
    amended by the 1996 Act, 47 U.S.C. §§ 154(i), 154(j), 201-205, 259,
    303(r), 403, and pursuant to section 1.106 and 1.429 of the
    Commission\'s rules, 47 C.F.R. §§ 1.106, 1.429, the Order on
    Reconsideration is ADOPTED, effective 30 days after publication of a
    summary in the Federal Register.

23. IT IS FURTHER ORDERED that the petition for reconsideration filed by
    BellSouth Corporation IS GRANTED, as described herein.

24. IT IS FURTHER ORDERED that the petition for reconsideration filed by
    GTE Service Corporation IS GRANTED, as described herein.

25. IT IS FURTHER ORDERED that petition for reconsideration filed by MCI
    Communications Corporation IS DENIED.

26. IT IS FURTHER ORDERED that the petition for reconsideration filed by
    Octel Communications Corporation IS GRANTED, as described herein.

27. IT IS FURTHER ORDERED that the petition for reconsideration and
    clarification filed by SWBT Telephone Company IS GRANTED, as
    described herein.

    FEDERAL COMMUNICATIONS COMMISSION

    Magalie Roman Salas

    Secretary

# APPENDIX A - List of Petitioners and Commenters {#appendix-a---list-of-petitioners-and-commenters .unnumbered}

######### Petitions: {#petitions-1 .unnumbered}

######### BellSouth Corporation (BellSouth) {#bellsouth-corporation-bellsouth .unnumbered}

######### GTE Service Corporation (GTE) {#gte-service-corporation-gte .unnumbered}

######### MCI Communications Corporation (MCI) {#mci-communications-corporation-mci .unnumbered}

######### Octel Communications Corporation (Octel) {#octel-communications-corporation-octel .unnumbered}

######### Southwestern Bell Telephone Company (SWBT) {#southwestern-bell-telephone-company-swbt .unnumbered}

#########  {#section .unnumbered}

######### Oppositions to Petitions for Reconsideration: {#oppositions-to-petitions-for-reconsideration .unnumbered}

######### BellSouth {#bellsouth .unnumbered}

######### GTE {#gte .unnumbered}

######### Rural Telephone Coalition (RTC)[^56]  {#rural-telephone-coalition-rtc .unnumbered}

######### United States Telephone Association (USTA) {#united-states-telephone-association-usta .unnumbered}

**Reply Comments:**

BellSouth

GTE

Southwestern Bell (SWBT)

[^1]: *In the Matter of Implementation of Infrastructure Sharing
    Provisions in the Telecommunications Act of 1996*, Report and Order,
    12 FCC Rcd. 5470 (rel. Feb. 7, 1997) ("*Infrastructure Sharing
    Order*").

[^2]: In this Order on Reconsideration we determine that section 259
    imposes on incumbent LECs certain obligations that implicate the
    intellectual property rights of third parties. Concurrently today,
    by a Memorandum Opinion and Order in CC Docket No. 96-98, we
    determine that different obligations affecting third party
    intellectual property rights are imposed on incumbent LECs by
    section 251 (c)(3). *See Petition of MCI for Declaratory Ruling*,
    FCC 00-139, CC Docket No. 96-98, CCB Pol 97-4 (rel. April 27, 2000)
    ("*MCI Order*"). This dissimilar treatment is mandated by the
    different requirements and operational contexts of the two statutory
    provisions. Section 251 governs interconnection and unbundled access
    requests, *inter alia*, on a non-discriminatory basis. *See* 47
    U.S.C. §§ 251(c)(2)(D), (c)(3). Construing this non-discrimination
    requirement in the *MCI Order*, we find that incumbent LECs must
    exercise "best efforts" to obtain co-extensive rights on behalf of
    competing LECs obtaining unbundled access pursuant section 251 where
    such access implicates third party intellectual property rights.
    *MCI Order* at ¶9. Section 259, to the contrary, applies only where
    *non-competing* carriers share access to an incumbent LECs "public
    switched network infrastructure, technology, information, and
    telecommunications facilities and functions." 47 U.S.C. § 259(a). As
    the Commission recognized in the *Infrastructure Sharing Order*,
    incumbent LECs in section 259 cases have less incentive to deny
    non-competing carriers the full benefit of infrastructure sharing
    agreements than they would competing carrier interconnection
    requests made pursuant to section 251. *See Infrastructure Sharing
    Order*, 12 FCC Rcd at 5528, 5530-31, ¶116. Also in contrast to
    section 251, section 259 contains no explicit non-discrimination
    requirement. Given these differences, we see no compelling reason to
    impose upon incumbent LECs in section 259 sharing cases the same
    "best efforts" requirement that we find is necessary in the very
    different context of section 251.

[^3]: Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
    (1996 Act).

[^4]: *Infrastructure Sharing Order*, 12 FCC Rcd at 5476, ¶ 8.

[^5]: *See* Appendix A.

[^6]: SWBT Petition at 7.

[^7]: SWBT, BellSouth, GTE, and Octel.

[^8]: MCI Petition at 1, 4-5.

[^9]: *Infrastructure Sharing Order*, 12 FCC Rcd at 5496, ¶ 51.

[^10]: 47 U.S.C. § 251(b), (c). *See also* *Implementation of the Local
    Competition Provisions in the Telecommunications Act of 1996*, First
    Report and Order, CC Docket No. 96-98, 11 FCC Rcd 15499 (1996)
    (*Local Competition Order*), *aff\'d in part and vacated in part sub
    nom*. *CompTel. v. FCC*, 117 F.3d 1068 (8th Cir. 1997) (*CompTel*),
    *aff\'d in part and vacated in part sub nom. Iowa Utilities Bd. v.
    FCC and consolidated cases*, No. 96-3321 *et al*., 120 F.3d 753
    (8th. Cir., Jul. 18, 1997), *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, 12 FCC
    Rcd 12453 (1997), *further recons. pending*.

[^11]: *Infrastructure Sharing Order*, 12 FCC Rcd at 5497, ¶ 54.

[^12]: SWBT Petition at 7. No parties addressed this issue in
    oppositions or reply comments.

[^13]: 47 U.S.C. § 259(b)(6) (stating that the Commission shall \"not
    require a \[providing local exchange carrier\] to engage in any
    infrastructure sharing agreement for any services or access which
    are to be provided or offered to consumers by the qualifying carrier
    in such local exchange carrier\'s telephone exchange area\").

[^14]: 47 U.S.C. § 251(b)(1), (c)(4).

[^15]: SWBT Petition at 7 (commenting that the "use of multiple
    descriptive words to list what is eligible for sharing indicates the
    exclusion of all others . . .").

[^16]: For example, subsection 259(b) prohibits the Commission from
    requiring \"the joint ownership or operation of public switched
    network infrastructure and *services* by or among\" an incumbent LEC
    and a qualifying carrier. Similarly, section 259(c) requires
    incumbent LECs to provide timely information about \"the planned
    deployment of telecommunications *services* and equipment . . . .\"
    47 U.S.C. § 259(b), (c) (emphasis added).

[^17]: *Infrastructure Sharing Order*, 12 FCC Rcd at 5496, ¶ 51.

[^18]: SWBT Petition at 8.

[^19]: 47 U.S.C. § 252(d)(3) (\"For the purposes of section 251(c)(4) .
    . . \").

[^20]: *See Infrastructure Sharing Order*, 12 FCC Rcd at 5504-05, ¶¶
    68-70. *See also* BellSouth Reply Comments at 2 (\"petitioners make
    no claim that licensed infrastructure is excluded from the sharing
    mandate . . .\").

[^21]: *Id*., 12 FCC Rcd at 5505, ¶ 70 ("where the only means available
    is including the qualifying carrier in a licensing arrangement, the
    incumbent LEC will be required to secure such licensing by
    negotiating with the relevant third party directly.\" If the
    incumbent LEC cannot secure such a licensing agreement, it must do
    \"what is necessary to ensure that the qualifying carrier
    effectively receives the benefits to which it is entitled under
    section 259\").

[^22]: BellSouth Petition at 1; GTE Petition at 1; Octel Petition at 1;
    SWBT Petition at 1.

[^23]: SWBT Petition at 9.

[^24]: We, nonetheless, noted that the language of section 259 placed
    specific limitations on a qualifying carrier\'s use of section
    259-shared infrastructure. *See Infrastructure Sharing Order*, 12
    FCC Rcd at 5495, 5497-98, ¶¶ 50, 55.

[^25]: *See Infrastructure Sharing Order*, 12 FCC Rcd at 5504-05, ¶ 69
    (citing comments of AT&T and Sprint).

[^26]: We need not identify such cases in advance as they will turn on a
    host of considerations peculiar to the terms of specific agreements,
    including: the scope of the use restrictions placed on the
    intellectual property by the vendor; the nature of the access and
    use contemplated by the qualifying carrier; the nature of the
    intellectual property included in the request; and the applicable
    intellectual property or contract law.

[^27]: SWBT Petition at 9. *See also* *Infrastructure Sharing Order*, 12
    FCC Rcd at 5505, ¶ 70 (\"We emphasize that our decision is not
    directed at third party providers of information but at incumbent
    LECs.\").

[^28]: *Id*., 12 FCC Rcd at 5528, 5530-31, ¶ 116 (concluding that any
    unequal bargaining power between qualifying carriers \-- including
    new entrants \-- and incumbent LECs \"is less relevant than it is in
    the more general competitive situation (*i.e.*, between competing
    carriers) since the \[providing\] incumbent LEC has less incentive
    to exploit any inequality for the sake of competitive advantage\"),
    ¶ 121. *See also* GTE Reply at 3-4 (noting the \"statements of
    numerous vendors that they are ready and willing to work with any
    parties seeking licenses of their intellectual property\").

[^29]: *See, e.g.,* SWBT Petition at 6-7 (\"Subject to any
    non-disclosure obligations to \[intellectual property (IP)\]
    holders, incumbent LECs are in the best position to identify what IP
    would be implicated by an infrastructure sharing request, and to
    help clarify whether and how the existing license permits the IP to
    be shared.\"); USTA Comments at 5 (\"The \[incumbent LEC\] should be
    required to work with the \[qualifying carrier\] to identify in a
    timely manner those parts of the infrastructure to be shared that
    require separate licensing arrangements.\").

[^30]: It is our understanding that many contracts between incumbent
    LECs and third-party vendors may be subject to non-disclosure
    provisions. We leave to the parties to negotiate a reasonable means
    of conveying this information in a manner that does not violate the
    terms of any confidentiality agreement. We expect, however, that in
    many cases a redacted version of the contract could be made
    available to the qualifying carrier in order to assist the carrier
    in determining permissible uses of the infrastructure at issue.

[^31]: *See* RTC Reply at 5-6 (arguing that incumbent LECs will be able
    to negotiate better arrangements with third parties based on their
    existing relationships with any third-party vendors and based on
    their relative size); *contra* GTE Reply at 2; BellSouth Reply at 2;
    SWBT Reply at 2-5 (\"\[T\]he RTC Reply . . . seems to suggest that a
    sharing incumbent LEC\'s purchasing and negotiating abilities are
    economies of \[scale\] and scope that should be made available to
    qualifying carriers. There is no basis in the Act or Section 259 for
    such a conclusion.\").

[^32]: We note that both incumbent LECs and qualifying carriers
    generally are subject to a duty to negotiate in good faith. *See
    Infrastructure Sharing Order*, 12 FCC Rcd at 5531, ¶ 122. We also
    note that the Commission\'s interpretation of section 259(b)(1)
    allows incumbent LECs to recover their costs associated with section
    259 sharing and we see no reason why incumbent LECs should not be
    able to recover their costs associated with any additional
    third-party licensing that is reasonable and necessary. *See id.*,
    ¶¶ 95-98.

[^33]: *Id*., 12 FCC Rcd at 5511, ¶ 81 (concerning resolution of
    disputes).

[^34]: 47 U.S.C. §§ 259(b)(5).

[^35]: 47 U.S.C. §§ 259(b)(1), (2). We also note that our decision on
    reconsideration appears to be consistent with the comments of RTC, a
    representative of potential qualifying carriers. RTC maintains that
    the Commission in the *Infrastructure Sharing Order* merely required
    incumbent LECs to approach third-party vendors and to engage in a
    \"reasonable level of cooperation.\" RTC Reply at 5.

[^36]: *See* SWBT Petition at 5; Octel Petition at 2; USTA Opposition at
    5.

[^37]: Octel Petition at 2. *See also* BellSouth Petition at 7; SWBT
    Petition at 5.

[^38]: We reiterate our belief that, in many circumstances, an incumbent
    LEC may simply be able to extend its existing agreement with a
    third-party vendor in a way that would allow the incumbent LEC to
    provide additional services or functionalities to the qualifying
    carrier.

[^39]: ^ ?^ *See* *MCI Order*, FCC 00-139, CC Docket No. 96-98, CCB Pol
    97-4 (rel. April 27, 2000).

[^40]: *See supra* n.1.

[^41]: *Infrastructure Sharing Order*, 12 FCC Rcd at 5500, ¶ 60. *See
    also* 47 U.S.C. § 259(b)(4).

[^42]: *Id.*, 12 FCC Rcd at 5528, ¶¶ 115-116.

[^43]: MCI Petition at 2. Four parties filed oppositions to MCI\'s
    petition regarding the pricing of infrastructure sharing
    arrangements. BellSouth Opposition; GTE Opposition; RTC Reply
    Comments; USTA Opposition and Comments.

[^44]: *Id*. at 4-5 (specifically arguing that section 259 requires
    incumbent LECs to share infrastructure at prices that are no higher
    than average incremental cost, exclusive of joint and common costs).
    MCI also argues that the Commission should require incumbent LECs to
    file incremental cost studies, utilizing the methodology of the
    *Local Competition First Report and Order*, and set prices for
    shared infrastructure equal to these costs. MCI Petition at 6
    (citing *Local Competition Order*, 11 FCC Rcd at 15844-45, ¶ 675).

[^45]: *Id*. at 3 (asserting that by the \"fully benefit\" phrase
    Congress intended that an incumbent LEC \"should *not* benefit from
    economies of scale and scope\" in its relation with a qualifying
    carrier (emphasis in original)).

[^46]: BellSouth Opposition at 6 (a qualifying carrier \"may benefit
    from the just and reasonable terms of a negotiated agreement without
    being the *sole* beneficiary of the agreement . . . \[by\]
    obtain\[ing\] infrastructure under a sharing arrangement at prices
    lower than it would achieve if it obtained infrastructure on a
    stand-alone basis, notwithstanding that the \[incumbent LEC\] may
    also realize some benefit from the arrangement\"); GTE Opposition at
    3-4 (qualifying carriers \"fully benefit by gaining access to
    infrastructure at a reasonably negotiated cost that enables them to
    provide service to their customers at just and reasonable rates\");
    RTC Reply Comments at 3 (it does not \"follow legally that
    maximizing the benefits for one party to an agreement equates to
    prohibiting any benefit to the other\"); USTA Opposition and
    Comments at 4 (MCI ignores \"the benefits the \[qualifying carrier\]
    achieves by avoiding having to make the uneconomical infrastructure
    investment it would otherwise need to make on its own\").

[^47]: We note that our conclusion is supported by most commenters in
    the underlying proceeding and by all other parties who filed in this
    reconsideration proceeding. *See, e.g.,* RTC Reply Comments at 2;
    USTA Opposition at 2 (\"neither the statutory language nor its
    accompanying legislative history remotely support MCI\'s
    argument\").

[^48]: *Infrastructure Sharing Order*, 12 FCC Rcd at 5497-98, 5534, ¶¶
    55, 128. *See also* USTA Opposition and Comments at 3-4 (section 259
    prohibits the competitive use of shared infrastructure against the
    incumbent LEC).

[^49]: The Commission noted the availability of its declaratory ruling
    and complaint processes, both to parties and competitors, where
    parties are unable to reach agreement or where evidence suggests
    that section 259 arrangements are being used to establish barriers
    to competitive entry. *See Infrastructure Sharing Order*, 12 FCC Rcd
    at 5499, 5530-31, 5528, ¶¶ 59, 116, 121.

[^50]: *Id*., 12 FCC Rcd at 5528, ¶¶ 115-116. *See also* BellSouth
    Opposition at 4.

[^51]: *See* BellSouth Opposition at 5 (citing *Infrastructure Sharing
    Order*, ¶ 113). For example, RTC argues that the Commission\'s
    decision to rely on negotiation is consistent with section
    259(b)(5), which requires the Commission to establish conditions
    that promote cooperation between participants in an infrastructure
    sharing arrangement. *See* RTC Reply Comments at 3 (\"The mutuality
    inherent in sharing is better served by negotiation, with regulatory
    intervention confined to failures in cooperative efforts to set
    terms and conditions agreeable to both parties.\").

[^52]: *Infrastructure Sharing Order*, 12 FCC Rcd at 5528-29, ¶ 117
    ("\[A\]vailability, timeliness, functionality, suitability, and
    other operational aspects are also relevant to whether or not the
    qualifying carrier fully benefits from the economies of scale and
    scope of the providing LEC.").

[^53]: *Id*.

[^54]: *See, e.g.*, BellSouth Opposition at 5; RTC Reply Comments at 4.

[^55]: ^ ?^ *See* 5 C.F.R. §§ 1320.1 *et seq*.

[^56]: RTC styled these comments as \"Reply Comments,\" and, to prevent
    confusion, we will refer to RTC\'s pleading as Reply Comments.