**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

)

In the Matter of )

)

Implementation of the Non-Accounting ) CC Docket No. 96-149

Safeguards of Section 271 and 272 of the )

Communications Act of 1934, as amended. )

)

**ORDER ON REMAND**

**Adopted: April 23, 2001 Released: April 27, 2001**

By the Commission:

# Introduction

1.  Section 271 of the Communications Act of 1934, as amended
    (Communications Act or Act), states that neither a Bell operating
    company (BOC) nor its affiliate may provide "interLATA services"
    except as set forth in that section.[^1] In the *Non-Accounting
    Safeguards Order*, the Commission concluded that the term "interLATA
    services" as used in section 271 encompasses not only interLATA
    telecommunications services, but also interLATA information
    services.[^2] Following the Commission's reconsideration of other
    aspects of the *Non-Accounting Safeguards Order*,[^3] the Bell
    Atlantic telephone companies (now known as the Verizon telephone
    companies) and U S WEST, Inc. (now known as Qwest Communications
    International Inc.) (collectively, Petitioners) petitioned for
    judicial review of the Commission's determination that interLATA
    information services fall within the scope of interLATA services.
    Because the arguments advanced by the Petitioners in their appellate
    brief had not been raised in the administrative proceeding, the
    Commission moved for a voluntary remand to consider further the
    issues raised by the Petitioners. The D.C. Circuit granted the
    Commission's motion.[^4]

2.  In this Order on Remand, we examine the scope of the term "interLATA
    services" and reaffirm the Commission's conclusion in the
    *Non-Accounting Safeguards Order* that the term "interLATA services"
    as used in section 271 encompasses interLATA information services as
    well as interLATA telecommunications services. As explained below,
    we find this conclusion the most reasonable given the statutory
    language, structure, and history. We also find that the Commission's
    *Universal Service Report to Congress* is not inconsistent with this
    conclusion.[^5] A BOC therefore may provide interLATA information
    services only in accordance with the provisions of section 271.

# Procedural History

3.  Shortly after enactment of the Telecommunications Act of 1996 (1996
    Act), the Commission issued a Notice of Proposed Rulemaking seeking
    to implement the non-accounting provisions of sections 271 and 272.
    Although this Notice did not specifically seek comment on the scope
    of the term "interLATA services," it noted, without explanation,
    that an "interLATA service" under the Act referred to a
    telecommunications service.[^6] In response, several parties,
    including some of the BOCs, disputed the Commission's
    characterization of "interLATA services" and specifically sought an
    interpretation of the term "interLATA services" that includes
    interLATA information services.[^7] BellSouth, for example, pointed
    out that the statutory definition of "interLATA service" refers not
    to "telecommunications services" but rather to the more general
    concept of "telecommunications" across LATA boundaries.[^8] Thus,
    according to BellSouth, interLATA information services were a subset
    of "interLATA services."[^9]

4.  In the *Non-Accounting Safeguards Order*, the Commission broadened
    its initial interpretation consistent with the views of these
    commenters, concluding that "interLATA information services are
    provided via telecommunications transmissions and, accordingly, fall
    within the definition of interLATA service."[^10] The Commission
    observed that an "interLATA service," defined as a form of
    "telecommunications," is not limited to telecommunications services
    because "information services are also provided *via
    telecommunications*."[^11] Moreover, the Commission concluded that,
    because an "interLATA information service" incorporates as a
    necessary, bundled element an interLATA telecommunications
    transmission component provided to the customer for a single charge,
    a BOC would be required to obtain section 271 authorization prior to
    providing, in-region, the interLATA telecommunications transmission
    component of an interLATA information service.[^12] No party sought
    reconsideration of this aspect of the *Non-Accounting Safeguards
    Order*.

5.  Following the Commission's adoption of the *Third Reconsideration
    Order* in this docket,[^13] the Petitioners sought judicial review
    in the United States Court of Appeals for the District of Columbia
    Circuit, seeking reversal of the Commission's holding that the term
    "interLATA services" includes interLATA information services. In
    their joint appellate brief, the Petitioners contend that the
    agency's statutory interpretation conflicts with the statute's plain
    meaning. In support of their argument, the Petitioners relied on a
    1998 Commission *Universal Service Report to Congress* in which,
    they claim, the Commission had declared "that 'telecommunications'
    and 'information services' are mutually exclusive categories and
    that a provider of 'information services' does not *provide
    '*telecommunications' but rather *uses '*telecommunications.'"[^14]
    Proceeding from that premise, the Petitioners argued that when a BOC
    or its affiliate provides an information service between LATAs via
    telecommunications, the BOC does not thereby "provide" an "interLATA
    service" under section 271(a).[^15] Thus, Petitioners contended, the
    restrictions established by section 271 do not apply when a BOC or
    its affiliate provides an information service.

6.  In response to the Petitioners' appellate brief, the Commission
    moved for a voluntary remand to consider further the issues raised
    by the Petitioners. The Commission explained that a remand was
    necessary because the principal arguments advanced by the
    Petitioners in their appellate brief had not been presented in the
    administrative proceeding. The Petitioners' appellate brief relied
    largely on a *Report to Congress* that the Commission issued more
    than a year after release of the *Non-Accounting Safeguards Order*.
    The Commission further noted that, in comments filed during
    reconsideration of other aspects of the *Non-Accounting Safeguards
    Order*, the Petitioners had appeared to advocate the very same
    statutory interpretation that they now challenged on appeal.[^16] In
    light of these factors, the Commission asked that the court grant it
    the opportunity to consider the proper scope of the term "interLATA
    services" based on a more complete administrative record. On October
    27, 2000, the court granted the Commission's motion and remanded the
    matter to the Commission.[^17] The Commission subsequently sought
    further comment on the whether the term "interLATA service"
    encompasses interLATA information services.[^18]

# Discussion

7.  The question presented by the Petitioners is whether the term
    "interLATA services" in section 271 of the Act encompasses interLATA
    information services. As discussed below, we find that mere
    examination of the statutory language yields no conclusive answer.
    Rather, in considering, as we must, the statutory language and the
    structure, history, and purpose of the statute, we reaffirm that the
    most reasonable reading of the statute is that Congress intended
    that the term "interLATA service" in section 271 include interLATA
    information services as well as interLATA telecommunications
    services. Thus, the offering of an information service that involves
    telecommunications across a LATA boundary constitutes the provision
    of interLATA telecommunications in the unique context of section
    271's interLATA services restriction.

8.  As discussed below, our conclusion reaffirms the longstanding view
    of the federal courts and this Commission that limitations on BOC
    provision of interLATA services---under both the MFJ and the 1996
    Act---extend to interLATA information services. The D.C. Circuit
    examined precisely this question within the contours of the MFJ and
    concluded that a BOC provides telecommunications across LATA
    boundaries when it offers a service that bundles the capability to
    store or manipulate information with interLATA transmission
    facilities that the BOC either owns or leases.[^19] The D.C. Circuit
    explicitly rejected claims by some BOCs that an information service
    cannot also constitute the provision of interLATA telecommunications
    in the context of the MFJ's interLATA prohibition.[^20] The
    Commission reached this same conclusion in the *Non-Accounting
    Safeguards Order*, finding that an information service that contains
    a bundled interLATA telecommunications component includes
    "telecommunications" between points located in different LATAs, and
    thereby satisfies the statutory definition of an "interLATA
    service."[^21] Even though the terms "information service" and
    "telecommunications service" are mutually exclusive, each is a
    subset of the broader term "interLATA services" insofar as each type
    of service involves telecommunications that cross LATA boundaries.
    Indeed, this matter apparently was so clear in 1996 that the BOCs
    themselves urged the same construction of the statutory
    language.[^22] In a reversal of their prior position, the
    Petitioners now claim that the statutory language "clearly" requires
    precisely the opposite of what they previously asserted was the
    "clear" meaning. As discussed below, we reject their latest position
    as contrary to the Act's text, structure, history, and purpose.

## Statutory Language 

9.  In order to determine whether section 271's restriction on the BOCs'
    provision of interLATA services includes interLATA information
    services, we must first examine the relevant statutory language.
    Section 271(a) states that a BOC or its affiliate may not "provide
    interLATA services except as provided in \[section 271\]."[^23] The
    Act defines "interLATA service" to mean "telecommunications between
    a point located in a local access and transport area and a point
    located outside such area."[^24] "Telecommunications," in turn, is
    defined as "the transmission, between or among points specified by
    the user, of information of the user's choosing, without change in
    the form or content of the information as sent and received."[^25]
    "Telecommunications," however, is distinct from a
    "telecommunications service," which the Act separately defines 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 the facilities used."[^26] The
    Act further provides that an "information service" means "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 such capability for the
    management, control, or operation of a telecommunications system or
    the management of a telecommunications service."[^27]

10. In examining this statutory language, we are faced with a number of
    interrelated questions. First, is the interLATA restriction in
    section 271(a) governed by a plain meaning interpretation? Second,
    does the term interLATA services as used in section 271(a) encompass
    only separate offerings of telecommunications? Finally, what impact
    does the Commission's previous interpretation of the term "provide,"
    as used in section 271, have on the scope of the term "interLATA
    services"?

### Is the interLATA restriction in section 271(a) governed by a plain meaning interpretation?

11. The BOCs assert that the Commission violated the plain meaning of
    the Act by concluding that a BOC can be providing an interLATA
    service when it offers an information service that is transmitted
    across LATA boundaries.[^28] The BOCs contend that a straightforward
    reading of the Act's definitions shows that a BOC that provides an
    information service via telecommunications cannot also be deemed to
    be providing an "interLATA service," which is defined as a form of
    telecommunications. The BOCs' argument rests on the proposition that
    a BOC that provides an information service which bundles or "uses"
    interLATA telecommunications cannot also be deemed to be providing
    an interLATA service in the context of section 271.

12. In contrast to the BOCs, several commenters claim that information
    services plainly are covered by section 271(a)'s "interLATA
    services" restriction.[^29] These commenters point out that the Act
    defines "interLATA services" broadly as telecommunications between
    points in different LATAs, and thus incorporates information
    services that are provided via interLATA telecommunications.
    According to these commenters, this is the only interpretation of
    the terms that is compatible with the overall language and structure
    of the Act, sections 271 and 272 in particular, and the historical
    genesis of the interLATA restriction in the MFJ. To find otherwise,
    these commenters claim, would run afoul of the purposes of the
    statute by permitting the BOCs to evade the restriction and thereby
    reduce the BOCs' incentives to open their local markets.

13. We conclude that the relevant statutory definitions, either
    separately or in combination, do not clearly indicate whether
    "interLATA services" in section 271 includes or excludes information
    services. Rather, we find that including interLATA information
    services within the scope of "interLATA services" in section 271 is
    the interpretation that most reasonably fits with the statutory
    language.

14. Our reading of the statute is consistent with the position espoused
    by many of the BOCs at an earlier stage of this proceeding.[^30] In
    comments filed in response to the *Non-Accounting Safeguards NPRM*,
    for example, BellSouth endorsed the very statutory interpretation
    that the BOCs now challenge.[^31] Stating that an "interLATA
    information service is a subset of interLATA service," BellSouth
    emphasized that "the definition of 'interLATA service' does not
    encompass 'telecommunications *service*' but applies instead to
    'telecommunications' across LATA boundaries."[^32] Accordingly,
    BellSouth explained, "an 'interLATA information service' is an
    'information service' that also constitutes an 'interLATA service'
    because it is provided via interLATA 'telecommunications.'"[^33]
    Other BOCs supported BellSouth's interpretation.[^34] Bell Atlantic,
    for example, claimed in a 1997 reconsideration proceeding that
    "interLATA information services clearly fall within the Act's
    definition of 'interLATA services' because, by definition, interLATA
    information services must include telecommunications that cross LATA
    boundaries."[^35] U S WEST maintained that the term "interLATA
    services" could reasonably be read to include information services,
    arguing that certain incidental services identified in section
    271(g)(1) and (2) plainly were information services.[^36] Given
    their past positions on the subject of "interLATA information
    services," the BOCs cannot plausibly claim that the statute plainly
    means what they now say it means.

### Do interLATA services as used in section 271(a) encompass only separate offerings of telecommunications?

15. The BOCs attempt to equate an interLATA service with a separate
    offering of telecommunications to customers, whether on a public or
    private basis. In the BOCs' view, the "telecommunications"
    referenced in the definition of "interLATA service" must comprise a
    separate offering to the customer and cannot be construed as an
    input in the offering of an information or other service.

16. The relevant statutory definitions, however, do not compel such an
    interpretation. Nowhere does the statutory definition of "interLATA
    service" require that the telecommunications aspect of such a
    service be provided directly to end-users rather than included as a
    component in a bundled offering.[^37] We view these statutory
    definitions, when read within the specific context of sections 271
    and 272, as part of a coherent overall framework. All information
    services require the use of telecommunications to connect customers
    to the computers or other processors that are capable of generating,
    storing, or manipulating information. The transmission of
    information to and from these computers constitutes
    "telecommunications," for the transmission itself does not alter the
    form or content of the information.[^38] Information services
    therefore are, as explicitly stated in the statutory definition,
    conveyed "via telecommunications," whether or not the
    telecommunications component is separately supplied by either the
    provider or the customer. Some information services may be conveyed
    via telecommunications that cross LATA boundaries, while others may
    be conveyed via transmissions that stay within the same LATA. Thus,
    we conclude the terms "interLATA service" and "information service"
    are not mutually exclusive. An information service---like a
    telecommunications service---may be either intraLATA or interLATA.
    An "information service" is an "interLATA service" when the
    telecommunications component of the information service offering
    crosses a LATA boundary. In other words, an "information service" is
    also an "interLATA service" if the associated telecommunications
    transmission is interLATA in nature.

17. Unlike the terms "telecommunications service" and "information
    service," both of which are defined by reference to the act of
    "offering," the Act defines the term "interLATA service" more
    broadly, without reference to its availability as a separate
    offering. InterLATA service means, quite simply,
    "telecommunications" between LATAs, without regard to whether the
    telecommunications is separately being "offered," or, if so, to
    whom. Juxtaposed against the definitions of "telecommunications
    service" and "information service," it is reasonable to infer that
    Congress intended that the "telecommunications" involved in an
    interLATA service could be a component in a broader service
    "offering." Read in conjunction with the term "provide," which
    precedes "interLATA services" in section 271(a), the focus is not,
    as the BOCs suggest, on whether a BOC is separately "providing"
    "telecommunications" to subscribers when it provides an information
    service.[^39] Presumably, if Congress had intended to focus on the
    BOCs' provision of telecommunications to subscribers, it would have
    defined "interLATA service" as a "telecommunications service." But
    that is not what the statute says. Rather, the Act defines
    "interLATA service" in terms of "telecommunications." Consequently,
    the language of section 271(a) is most reasonably read to prohibit a
    BOC from providing any telecommunications transmission that crosses
    LATA boundaries. This interpretation also is most consistent with
    Congress's use of the term "interLATA information service" elsewhere
    in the Act. The "information service" itself need not, as the BOCs
    suggest, "qualify as" or "be" "telecommunications" (for, in fact, an
    information service is by definition more than the pure transmission
    of information).[^40] It suffices under the broad "interLATA
    services" definition that the information service is conveyed via
    telecommunications that is interLATA in nature. A BOC can therefore
    "provide interLATA services" under the Act, even when it is not
    separately providing telecommunications to its subscribers.[^41]

### What impact does the Commission's previous interpretation of the term "provide," as used in section 271(a), have on the scope of the term "interLATA services?

18. To the extent that the BOCs' argument that an information service
    provider can never be deemed to be providing interLATA
    telecommunications turns on the meaning of "provide" in section
    271,[^42] we note that both the Commission and the D.C. Circuit have
    confirmed that the term "provide" has a unique and broad meaning in
    the context of section 271. Irrespective of the meanings given the
    term "provide" in other sections of the Act,[^43] the term "provide"
    in section 271 must be construed in the context of the unique terms,
    structure, history, and purposes of that section.[^44] Use of the
    term "provide" in section 271(a) therefore must be construed in
    light of that section's dual purposes of preventing the BOCs from
    using bottleneck local facilities to discriminate in favor of their
    owned or leased interLATA facilities and giving the BOCs maximum
    incentive to open their local markets to competition.[^45] As the
    D.C. Circuit recognized, a narrow reading of the term "provide" in
    section 271 would tempt the BOCs to defer conduct that Congress
    hoped to accelerate; acts facilitating the development of
    competition in the intraLATA market. [^46] In this context, we
    believe that "provide" should be read so that section 271 applies to
    information services that include interLATA transmission components.

## Statutory Structure

19. Our conclusion that interLATA services encompass information
    services not only makes sense under a natural reading of the
    statutory definitions, but also permits a uniform application of the
    terms and structure of sections 271 and 272.[^47] Section 271
    explicitly exempts some information services from the interLATA
    services restriction. Specifically, section 271(b)(3) permits the
    BOCs to provide certain "incidental interLATA services" enumerated
    in section 271(g) without first satisfying section 271's
    market-opening criteria.[^48] By exempting these services, the
    statute presupposes that "incidental interLATA services" are a
    subset of the broader category of interLATA services to which the
    restrictions apply. Section 271(g), in turn, defines "incidental
    interLATA services" as the interLATA provision by a BOC or its
    affiliate of certain specified services, some of which are
    information services. Section 271(g)(4), for example, refers to
    information storage and retrieval services that permit a customer
    located in one LATA to retrieve stored information from, or file
    information for storage in, information storage facilities located
    in another LATA.[^49] As another example, section 271(g)(1)(D)
    identifies alarm-monitoring services.[^50] If these and other
    information services identified in section 271(g), when conveyed via
    interLATA telecommunications, were not "interLATA services," it
    would have been unnecessary for Congress to exempt them from section
    271(a)'s restriction.[^51] By exempting certain information services
    as incidental interLATA services, Congress signaled that it viewed
    interLATA information services as a subset of the broader category
    of "interLATA services." Congress must have intended that section
    271(a) would restrict the BOCs from providing interLATA information
    services that were not specifically exempted.

20. The BOCs' sole rebuttal to the above statutory analysis is that
    Congress enacted certain provisions of section 271(g) as mere
    "extra, unnecessary assurance" that certain specified information
    services were not intended to be included within section 271(a)'s
    interLATA service restriction even though, under the BOCs'
    rationale, such services should already be excluded in a more
    comprehensive manner, under the plain meaning of section
    271(a).[^52] This internal inconsistency in the BOCs' argument
    demonstrates its fundamental flaw. First, as a matter of statutory
    interpretation, we are obligated to interpret statutory language in
    a manner that gives meaning to each word---if at all possible---over
    an interpretation that renders certain words superfluous.[^53] The
    interpretation we adopt does this. By contrast, the BOCs concede
    that their interpretation construes parts of section 271 as "extra,
    *unnecessary* assurance." (emphasis added). Indeed, if section
    271(a), on its face, so clearly excludes interLATA information
    services, Congress would not have found it necessary to reinforce
    this point by making an additional, redundant requirement that a
    certain subset of interLATA information services are excluded from
    the section 271(a) restriction on the grounds that they are
    "incidental." Surely, if Congress had intended to exclude all
    information services from the restrictions of section 271, it would
    have been more apt to ensure that the "core"---as opposed to the
    "incidental"---information services were expressly excluded.[^54]
    Alternatively, Congress could have made explicit that *any*
    interLATA information service is an incidental interLATA service
    exempt from the restrictions of section 271(a). Congress chose
    neither path. We find that the BOCs' interpretation of section
    271(g) violates basic canons of statutory construction by giving no
    independent meaning to the provisions of section 271(g) that address
    information services.

21. Moreover, the BOCs' argument conflicts with section 271(h), which
    states that the exceptions in section 271(g) are to be narrowly
    construed.[^55] In addition, section 271(h) directs that certain of
    the incidental interLATA services identified in section 271(g)(1)
    "are limited to those interLATA transmissions incidental to the
    provision by a \[BOC\] of video, audio, and other programming
    services that the company or its affiliate is engaged in providing
    to the public."[^56] Section 271(h), therefore, supports the view
    that section 271(a)'s restriction can reach services such as
    information services that a BOC provides to customers via interLATA
    transmissions, without requiring a finding that the BOC separately
    offered the transmission component to its subscribers.

22. Our conclusion that "interLATA services" in section 271 includes
    interLATA information services also harmonizes section 271 with the
    text and structure of section 272 of the Act. The BOCs' position, in
    contrast, would cause section 271 to be in tension with certain
    provisions of section 272. As an initial matter, we agree with
    several commenters who contend that section 272's explicit reference
    to both "interLATA telecommunications services" and "interLATA
    information services" is strong evidence that Congress viewed these
    two types of services as subsets of the broader category of
    "interLATA services."[^57]

23. We find little significance in the BOCs' observation that section
    272(a)(2)(B) refers specifically to section 271 and its attendant
    concepts (such as "origination") whereas section 272(a)(2)(C) does
    not.[^58] The BOCs attempt to justify their reliance on section
    272(a)(2)(B) by suggesting that Congress intended to distinguish
    between interLATA telecommunications provided on a common carrier
    basis (*i.e.*, telecommunications services) and interLATA
    telecommunications offered on a non-common carrier basis (*e.g.*,
    private services).[^59] We are unpersuaded by this argument. Even if
    there were some support for this unlikely assertion, which we do not
    find, the BOCs fail to offer any rational explanation for section
    272(a)(2)(C)'s explicit reference to "interLATA information
    services."[^60] We find that Congress's use of this term offers
    strong support for concluding that information services can be
    interLATA services. The BOCs offer no reasoned explanation why,
    under their interpretation, Congress would have used the term
    "interLATA information services" in the first place. If, as the BOCs
    contend, a carrier providing an information service can never be
    deemed to be providing an interLATA service, then Congress would
    have had no need to distinguish between interLATA and intraLATA
    information services. If the term "interLATA information service" is
    to have any meaning, then "interLATA services" in section 271 must
    be read to include information services.

24. The Petitioners also make much of the fact that section 272(f)
    establishes a sunset date for the "interLATA information services"
    separate affiliate requirement that is different from the sunset
    date for the "interLATA telecommunications services" separate
    affiliate requirement.[^61] The latter date is tied to a BOC's
    section 271 authorization, whereas the sunset date for the
    "interLATA information services" requirement is a date certain that
    is unrelated to the section 271 process.[^62] But there may be a
    simple explanation for the different sunset dates: unlike the
    separate affiliate requirement for interLATA telecommunications
    services, the requirement for interLATA information services applies
    to both in-region and out-of-region services, and the section 271
    authorization process does not apply to out-of-region services.[^63]
    In any event, we accord little significance to Congress's
    unexplained decision to treat the service offerings differently for
    sunset purposes in light of the other statutory evidence previously
    discussed. The sunset dates established by section 272(f) appear to
    have no bearing on the scope of the term "interLATA service" in
    section 271.[^64] Even assuming that the existence of differing
    sunset dates is consistent with the BOCs' reading of the statute,
    consistency is not enough to prove their point. This single factor
    arguably supporting the BOCs' position is outweighed by the
    extensive indications elsewhere that Congress intended to include
    information services within the scope of section 271's interLATA
    services. Moreover, the fact that Congress required a separate
    affiliate for interLATA information services in the first place
    demonstrates, as discussed below, that Congress understood that the
    BOCs retain significant market power that could potentially be
    leveraged into other adjacent markets.

## Statutory Purpose and History

25. As confirmed by the D.C. Circuit, the purpose and history of section
    271 are relevant to its meaning.[^65] As stated above, section 271
    creates a regulatory scheme that seeks to encourage the BOCs to open
    their local markets to competition by requiring them to do so before
    they may enter in-region, interLATA services market. The D.C.
    Circuit has recognized that the scheme established by section 271
    creates "a powerful incentive" for the BOCs to open their local
    markets, in addition to protecting against discrimination in the
    interLATA market.[^66] Allowing the BOCs immediately to provide
    information services across LATA boundaries would reduce the BOCs'
    incentive to comply with the market-opening requirements.[^67] We
    find no evidence that Congress intended to blunt the effectiveness
    of this incentive by excluding BOC provision of in-region, interLATA
    information services from the restrictions of section 271. Indeed,
    as discussed below, given the purpose and context of the 1996 Act,
    it is more logical to assume the contrary.

### MFJ Precedent

26. Prior to the 1996 Act, the service offerings of the BOCs were
    governed by the consent decree, commonly known as the Modification
    of Final Judgment or MFJ, that settled the Department of Justice's
    antitrust suit against AT&T and required the divestiture of the
    BOCs.[^68] The MFJ prohibited the BOCs from entering certain lines
    of business, including interexchange (*i.e.*, long distance)
    services and information services (provided on either an interLATA
    or intraLATA basis).[^69] These line-of-business restrictions were
    premised upon the theory that, if the BOCs were allowed to enter
    these other markets, they could use their bottleneck control in the
    local and exchange access markets to obtain an unfair advantage in
    the interLATA and information services markets.[^70] Although the
    district court overseeing the decree eventually lifted the
    restriction on providing information services within a LATA, the
    court left intact the MFJ's "core" interLATA restriction, which
    prevented the BOCs from providing information services on an
    interLATA basis.[^71] The court specifically emphasized that the
    newly established authority for the BOCs to provide information
    services did not modify in any way the still-extant interLATA
    prohibition.[^72]

27. The court later reaffirmed that the decree's interLATA prohibition
    precluded the BOCs from providing information services across LATA
    boundaries. In a case involving a BOC proposal to provide a gateway
    service to customers seeking connection to information service
    providers, the district court held that the transmission of
    information across LATA boundaries in the context of a gateway
    information service would constitute the provision of an interLATA
    service in violation of the decree.[^73] The court reasoned that
    "when a call, transmission, or service crosses LATA boundaries, it
    is interexchange in character," and, as such, the BOCs are
    prohibited from providing it.[^74] The D.C. Circuit affirmed this
    ruling in a case known as the *Gateway Services Appeal*.
    Specifically, the D.C. Circuit held that "when information services
    are, as here, bundled with leased interexchange lines, the activity
    is covered by the decree."[^75] To conclude otherwise, the D.C.
    Circuit explained, would "create an enormous loophole in the core
    restriction of the decree" by permitting a BOC simply to package
    interLATA service, no matter how extensive, with some other
    nontelecommunications service.[^76] Although the BOCs subsequently
    sought a waiver of the interLATA prohibition to permit gateway
    information services across LATA boundaries, the court had not acted
    on the waiver petition when Congress enacted the 1996 Act.

### Legislative History and Purpose

28. With the passage of the 1996 Act, Congress overhauled
    telecommunications regulation and supplanted the MFJ with a
    "pro-competitive, de-regulatory national policy framework designed
    to accelerate rapidly private sector development of advanced
    telecommunications and information technologies and services to all
    Americans by opening all telecommunications markets to
    competition."[^77] Congress sought to promote telecommunications
    competition by creating a carefully balanced regime that
    fundamentally changed the conditions and incentives for market
    entry. With respect to the local telephone market, Congress enacted
    market-opening mechanisms to remove impediments to competition and
    give all carriers an opportunity to provide local services.[^78] By
    adding section 271, Congress also established a process for the BOCs
    to gain entry into the long distance market.[^79] Recognizing the
    continued and extensive market dominance of the BOCs in their
    regions, however, Congress chose to maintain the MFJ's restriction
    on BOC provision of in-region, interLATA services until such time as
    the BOCs demonstrated that their local markets are open to
    competition. Section 271 therefore prohibits a BOC or its affiliate
    from entering the in-region, interLATA market until the BOC complies
    with certain market-opening criteria. In this manner, Congress
    struck a careful balance that sought to cultivate a competitive
    environment by giving the BOCs a powerful incentive to open up their
    local markets.[^80]

29. The 1996 Act defined the term "interLATA service" to mean
    "telecommunications between a point located in a local access and
    transport area and a point located outside such area."[^81] The 1996
    Act also added or modified several other definitions found in the
    Communications Act, including those that apply to
    "telecommunications," "telecommunications service," and "information
    service." The Commission previously has found that Congress intended
    the definitions of "telecommunications," "telecommunications
    service" and "information service" to build upon the frameworks
    established prior to the passage of the 1996 Act, including the MFJ
    and Commission precedent.[^82] For our present purposes, there is no
    material difference between the scope of the terms
    "telecommunications" and "information services" under the MFJ and
    the Act. Both the MFJ and the Act define "telecommunications" as the
    transmission of information without change in its form or content,
    and both define information services as the offering of a capability
    for generating, acquiring, storing, transforming, processing,
    retrieving, or making available information "via
    telecommunications."[^83] Similarly, the Act's definition of
    "interLATA service" as telecommunications between a point located in
    a LATA and a point located outside such area is nearly identical to
    the MFJ's definition of "interexchange telecommunications."[^84] The
    Act's use of language substantially similar to that of the MFJ is
    strong evidence that Congress intended the operative terms to be
    construed as they had been under the MFJ, at least in the absence of
    evidence to the contrary.[^85]

30. In enacting the 1996 Act, Congress did not simply preserve the MFJ's
    core restriction without modification. Congress indeed modified the
    interLATA restriction explicitly to allow the immediate provision of
    out-of-region interLATA services. The BOCs claim that this action
    somehow shows that Congress also intended to lift the MFJ's
    restriction on interLATA transmission of information services. We
    disagree. The BOCs point to nothing in the 1996 Act or its
    legislative history to suggest that Congress intended to overrule
    the *Gateway Services Appeal*. Nor do we find anything to suggest
    that Congress intended in the 1996 Act to codify a BOC request that
    was pending before the MFJ court to waive the effect of the *Gateway
    Services Appeal*.[^86] We are not persuaded that Congress would
    preserve the in-region, interLATA restriction using language similar
    to that used in the decree yet intend a result sharply divergent
    from the D.C. Circuit's interpretation of that restriction.[^87] To
    the contrary, when Congress intended to modify the MFJ's
    restrictions, as in the case of out-of-region interLATA services, it
    did so explicitly.

31. We disagree with the BOCs that our construction of section 271
    undermines Congress's goal of promoting the deployment of
    information services by "opening all telecommunications markets to
    competition."[^88] Although Congress intended the end product of the
    1996 Act to be the creation of competition in all telecommunications
    markets and the removal of all historic monopolies, it did not seek
    to achieve this goal by permitting the BOCs to provide interLATA
    services---including interLATA information services---immediately.
    Instead, Congress appears to have codified the MFJ's interLATA
    restriction for services provided by the BOCs in their historic
    monopoly regions, and thereby preserved the consent decree's core
    prohibition until such time as the BOCs satisfied the market-opening
    criteria set forth by Congress in section 271.

32. We also reject the BOCs' argument that treating interLATA
    information services as interLATA services will somehow subject
    many, if not all, information service providers to regulation as
    common carriers, which would entail tariff filing requirements,
    interconnection obligations, and mandatory payments to the universal
    service fund.[^89] The BOCs' argument ignores the Act's distinction
    between "telecommunications" and "telecommunications service." An
    entity may be subject to common carrier obligations if it provides
    "telecommunications services." As explained below, the Commission
    has distinguished between telecommunications services and
    information services. Our construction of "interLATA services" to
    include interLATA information services does not have the effect of
    imposing common carrier obligations on information service providers
    that are simply using telecommunications as a means of providing an
    information service to end users. Even though a BOC information
    service offering may also be deemed to be the provision of interLATA
    telecommunications under section 271, information service providers
    as such are not providing "telecommunications service" under the
    Act, and thus are not subject to common carrier regulation.

33. We also are not persuaded by the BOCs' argument that we should
    exclude interLATA information services from the category of
    interLATA services so as not to place BOC information service
    providers at a competitive disadvantage with respect to other
    information service providers.[^90] Our inclusion of interLATA
    information services appropriately recognizes that the statute
    imposes certain restrictions only on the BOCs. Among those
    restrictions, Congress clearly intended to preserve the "core" MFJ
    long distance restriction as an incentive for the BOCs to open their
    local markets. Our decision is consistent with that congressional
    determination.[^91]

## Universal Service Report to Congress

34. The BOCs contend that our conclusion that the term "interLATA
    services" in section 271 includes interLATA information services is
    inconsistent with statements the Commission made in a 1998
    *Universal Service Report to Congress*. In that Report, the
    Commission concluded that an information service provider does not
    provide telecommunications service and generally does not provide
    telecommunications to its subscribers. According to the BOCs, these
    statements demonstrate that a BOC that provides an information
    service cannot also be deemed to be providing an "interLATA service"
    under section 271.[^92] The BOCs therefore treat the *Report to
    Congress* as establishing the proposition that if an entity provides
    an information service, the Act's terms foreclose a finding that it
    can be deemed to be providing "telecommunications" for any purpose.
    We disagree, and find nothing in the *Report to Congress* that is
    inconsistent with our interpretation of interLATA service in section
    271.

35. The Commission's primary task in the *Report to Congress* was to
    examine the Commission's implementation of the 1996 Act provisions
    regarding universal service.[^93] Under the 1996 Act,
    telecommunications carriers that provide interstate
    telecommunications service must contribute to the mechanisms
    established by the Commission to preserve and advance universal
    service.[^94] The *Report to Congress* examined whether the 1996 Act
    overruled prior Commission precedent by requiring the Commission to
    treat information service providers as "telecommunications carriers"
    that are subject to the contribution requirement. That determination
    turned on the Act's definition of a "telecommunications carrier" as
    a provider of "telecommunications service."[^95] Upon examining the
    statutory language and context, the Commission concluded that the
    1996 Act did not require it to treat information service providers
    as telecommunications carriers. Quite clearly then, the *Report to
    Congress* was not intended to, and did not, address the issue of
    whether an information service could be an "interLATA service" under
    section 271.[^96]

36. In making its determination that information service providers are
    not telecommunications carriers, the Commission examined whether
    under the Act information service providers also provide a
    "telecommunications service," and concluded, as the Commission
    consistently has found in the past, that they do not. In examining
    the relationship between telecommunications services and information
    services, the Commission affirmed its prior findings that the
    categories of "telecommunications *service*" and "information
    service" are mutually exclusive.[^97] In recognizing this
    distinction, however, the Commission could not deny that information
    services by definition are provided "via telecommunications" and
    that telecommunications could therefore be a component of an
    information service.

37. The BOCs rely heavily on the passage that follows the Commission's
    recognition of the distinction between telecommunications services
    and information services:

> *Under this interpretation*, an entity *offering* a simple,
> transparent transmission path, without the capability of providing
> enhanced functionality, *offers* "telecommunications." By contrast,
> when an entity *offers* transmission incorporating the "capability for
> generating, acquiring, storing, transforming, processing, retrieving,
> utilizing, or making available information," it does not *offer*
> telecommunications. Rather, it *offers* an "information service" even
> though it uses telecommunications to do so.[^98]

This passage is properly interpreted as distinguishing between
information services and telecommunications services, both of which
include and use telecommunications. The passage discusses the act of
offering telecommunications, which is incorporated into the definition
of a telecommunications service.[^99] Moreover, the introduction of the
passage reinforces its intent to illustrate the mutual exclusivity
between telecommunications services and information services offered to
subscribers---not between information services and
telecommunications.[^100] The language makes the basic point that an
information service essentially bundles with it a telecommunications
component, making it impossible for an information service offered to a
subscriber to qualify as a telecommunications service. Yet, the passage
does not delink telecommunications from information services. The quoted
language, therefore, does nothing to foreclose the possibility that a
BOC that is using interLATA transmission capacity to provide an
information service to its subscribers could also be deemed to be
providing an "interLATA service" under section 271.

38. In fact, the *Report to Congress* recognized that in cases in which
    an information service provider owns the underlying transmission
    facilities, and engages in data transport over those facilities in
    order to provide an information service, one could argue that the
    information service provider is "providing" telecommunications to
    itself by furnishing raw transmission capacity for its own
    use.[^101] Although the Commission acknowledged that it does not
    currently require such information service providers to contribute
    to universal service mechanisms, the Commission also indicated that
    it may be appropriate to reexamine that result.[^102] Moreover, as
    the BOCs point out, the Commission stated that information service
    providers "*generally* do not provide telecommunications."[^103]
    This reflects the Commission's finding that at that time most
    information service providers were not also telecommunications
    service providers (*i.e.*, network providers). The Commission
    therefore examined the services provided by information service
    providers in general, leaving room for a different conclusion in
    specific situations. Notably, the Commission did not specifically
    examine BOC provision of information services in the *Report to
    Congress*, nor was it intending in any way to interpret the term
    "interLATA service" in the context of section 271. Yet, the very
    fact that the Commission recognized that a situation in which an
    information service provider owns the underlying transmission
    facilities might be cause for different treatment undercuts the
    BOCs' reliance on the language of the *Report to Congress* to
    demonstrate that BOCs could never be deemed to be providing
    interLATA telecommunications when they provide an information
    service.

39. In any event, to the extent that certain statements read in
    isolation and taken out of context could be construed to suggest
    that the terms "information services" and "telecommunications" are
    mutually exclusive, such an interpretation was not intended and,
    more importantly, we believe such an interpretation would be
    incorrect, for reasons outlined in this Order. As explained above,
    an information service cannot possibly be mutually exclusive of
    "telecommunications" because the Act defines "information service"
    as a service that is provided "via telecommunications."[^104] We
    reject any such interpretation.

# Conclusion 

40. Although the Act is not a model of clarity in many respects, our
    examination of the statutory terms, structure, history, and purposes
    all lead to the conclusion that a BOC's bundling of interLATA
    transmission with an information service offering constitutes the
    provision of an "interLATA service" in the context of section 271.
    We therefore reaffirm the Commission's conclusion in the
    *Non-Accounting Safeguards Order* that the term "interLATA service"
    used in section 271 encompasses interLATA information services as
    well as interLATA telecommunications services. Accordingly, the BOCs
    must comply with the requirements of section 271 before providing
    in-region, interLATA information services.

# ORDERING CLAUSES

41. Accordingly, IT IS ORDERED that the ORDER ON REMAND IS ADOPTED.

42. IT IS FURTHER ORDERED that the Motion for Extension of Time to File
    Reply Comments of the Illinois Commerce Commission IS GRANTED.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

[^1]: 47 U.S.C. § 271(a). Local access and transport areas, or LATAs,
    are the local calling areas that were originally established by the
    Modification of Final Judgment (MFJ), the consent decree that
    divested the BOCs from AT&T. *See United States v. AT&T Corp.*, 552
    F.Supp. 131 (D.D.C. 1982); *United States v. Western Elec. Co.*, 569
    F.Supp. 990, 993 n.9 (D.D.C. 1983). The Communications Act defines a
    "local access and transport area" as a contiguous geographic area
    established by a BOC before the date of enactment of the
    Telecommunications Act of 1996 or thereafter modified with approval
    of this Commission. *See* 47 U.S.C. § 153(25).

[^2]: *Implementation of the Non-Accounting Safeguards of Section 271
    and 272 of the Communications Act of 1934, as amended*, CC Docket
    No. 96-149, First Report and Order and Further Notice of Proposed
    Rulemaking, 11 FCC Rcd 21905, 21932-33 at ¶¶ 55-57 (1996)
    (*Non-Accounting Safeguards Order*). *See also* 47 C.F.R. § 53.3.

[^3]: No party asked the Commission to reconsider its ruling that the
    term "interLATA services" includes interLATA information services.

[^4]: *Bell Atlantic Tel. Companies v. Federal Communications Comm'n*,
    No. 99-1479 (D.C. Cir. Oct. 27, 2000) (order granting motion for
    remand).

[^5]: *See Federal-State Joint Board on Universal Service*, CC Docket
    No. 96-45, Report to Congress, 13 FCC Rcd 11501 (1998) (*Report to
    Congress*).

[^6]: *Implementation of the Non-Accounting Safeguards of Section 271
    and 272 of the Communications Act of 1934, as amended*, CC Docket
    No. 96-149, Notice of Proposed Rulemaking, FCC 96-308, at ¶ 41 n.80
    (1996) (*Non-Accounting Safeguards NPRM*). In the context of
    examining the scope of section 272(a)(2)(C)'s reference to
    "interLATA information services," however, the Commission invited
    comment on how to distinguish an interLATA information service from
    an intraLATA information service. The Commission specifically
    observed that "BOC provision of information services involves both
    basic underlying transmission components, which transmit end-user
    information without change in the form or content of the
    information, and enhanced or information service functionality,
    which generates, acquires, stores, transforms, processes, retrieves,
    utilizes or makes available end-user information." *Id*. at ¶ 44.
    The Commission further inquired whether it should classify an
    information service as interLATA "only when the service actually
    involves an interLATA telecommunications transmission component,"
    or, alternatively, whether the interLATA classification should apply
    to "any information service that potentially involves an interLATA
    telecommunications transmission component (*e.g.*, the service can
    be accessed across LATA boundaries)." *Id*.

[^7]: *See Non-Accounting Safeguards Order*, at ¶ 52 (citing comments
    and reply comments filed by Ameritech, BellSouth, ITAA, MCI, and
    MFS).

[^8]: *See, e.g.*, CC Docket No. 96-149, BellSouth Comments at 19, 22-23
    (filed Aug. 15, 1996). *See infra* n. 38-44.

[^9]: *Id*.

[^10]: *Non-Accounting Safeguards Order,* at ¶ 56. *See also* *id*. at ¶
    122 ("Whenever interLATA transmission is a component of an
    information service, that service is an interLATA information
    service, unless the end-user obtains that interLATA transmission
    service separately, *e.g.*, from its presubscribed interexchange
    provider.").

[^11]: *Id.* at ¶ 56 (emphasis added).

[^12]: *Id.* at ¶ 57.

[^13]: *See Implementation of the Non-Accounting Safeguards of Sections
    271 and 272 of the Communications Act of 1934, as amended*, CC
    Docket No. 96-149, Third Order on Reconsideration, 14 FCC Rcd 16299
    (1999) (*Third Reconsideration Order*). In the *Third
    Reconsideration Order*, the Commission, among other things,
    reaffirmed that the statute does not exclude out-of-region interLATA
    information services from the section 272(a)(2) separate affiliate
    requirement. *Id.* at ¶ 41.

[^14]: Petitioners' Brief at 4 (emphasis in original). *See also*
    Petitioners' Brief at 12-13.

[^15]: Petitioners' Brief at 2-3.

[^16]: *See, e.g.*, CC Docket No. 96-149, Bell Atlantic/NYNEX Joint
    Comments (filed April 2, 1997); U S WEST Reply Comments (filed April
    16, 1997); U S WEST Petition for Reconsideration (filed Feb. 20,
    1997).

[^17]: *See* *Bell Atlantic Tel. Companies v. Federal Communications
    Comm'n*, No. 99-1479 (D.C. Cir. Oct. 27, 2000) (order granting
    motion for remand).

[^18]: *See Comments Requested in Connection with Court Remand of
    Non-Accounting Safeguards Order*, CC Docket No. 96-149, Public
    Notice (rel. Nov. 8, 2000).

[^19]: *See United States v. Western Elec*., 1989-1 Trade Cases at
    68,400, 1989 WL 21992 (D.D.C. 1989), *aff'd* *United States v.
    Western Elec*., 907 F.2d 160 (D.C. Cir. 1990) (*Gateway Services
    Appeal*). *See infra* Part III.C.1.

[^20]: *See United States v. Western Elec.*, 907 F.2d at 163.

[^21]: *See Non-Accounting Safeguards Order,* at ¶ 55-57.

[^22]: *See id*., at ¶ 52 (citing comments and reply comments filed by
    Ameritech, BellSouth, ITAA, MCI and MFS); *infra* n. 38-44.

[^23]: 47 U.S.C. § 271(a).

[^24]: 47 U.S.C. § 153(21). Under the 1996 Act, a "local access and
    transport area" (LATA) is "a contiguous geographic area (A)
    established before the date of enactment of the \[1996 Act\] by a
    \[BOC\] such that no exchange area includes points within more than
    1 metropolitan statistical area, consolidated metropolitan
    statistical area, or State, except as expressly permitted under the
    AT&T Consent Decree; or (b) established or modified by a \[BOC\]
    after such date of enactment and approved by the Commission." 47
    U.S.C. § 153(25).

[^25]: 47 U.S.C. § 153(43).

[^26]: 47 U.S.C. § 153(44).

[^27]: 47 U.S.C. § 153(20). Section 272 specifically refers to
    "interLATA information services," but the Act does not separately
    define that term. *See* 47 U.S.C. § 272(a)(2)(C), (f)(2). The
    Commission's rules for implementing sections 271 and 272 define
    "interLATA information service" as "an information service that
    incorporates as a necessary, bundled element an interLATA
    telecommunications transmission component, provided to the customer
    for a single charge." 47 C.F.R. § 53.3. Like section 271, section
    272 applies only to the BOCs. It requires the BOCs to provide
    certain services through a separate affiliate.

[^28]: *See* BellSouth Comments at 5; Qwest Comments at 3-4; SBC
    Comments at 2-3; Verizon Comments at 1-2; BOC Reply Comments at 3-5.
    The BOCs---BellSouth, Qwest, SBC, and Verizon---each filed comments
    in support of the Petitioners' arguments and jointly filed reply
    comments.

[^29]: *See, e.g.*, AT&T Comments at 1-5; Commercial Internet Exchange
    (CIX) Comments at 3-4; Competitive Telecommunications Assoc.
    (CompTel) Comments at 6-8; Focal Comments at 1-2; Illinois Commerce
    Comm'n Reply Comments at 3, 5-13; Information Technology Assoc. of
    America (ITAA) Comments at 2, 5-7; Level 3 Comments at 1-3; WorldCom
    Comments at 1-14.

[^30]: *See Non-Accounting Safeguards Order*, at ¶¶ 52-54. *See also* CC
    Docket No. 96-149, Comments of BellSouth Corporation (filed Aug. 15,
    1996) (BellSouth 1996 Comments), at 19, 22-23; Reply Comments of
    Ameritech (filed Aug. 30, 1996) (Ameritech 1996 Reply Comments), at
    32-34.

[^31]: *See Non-Accounting Safeguards Order*, at ¶ 52. *See also* CC
    Docket No. 96-149, BellSouth 1996 Comments, at 19, 22-23.

[^32]: BellSouth 1996 Comments at 19 n.45, 22-23. Specifically,
    BellSouth observed that the Commission premised its discussion of
    interLATA information services in the *Non-Accounting Safeguards
    NPRM* on "the belief that such services do not fall within the
    definition of 'interLATA services,'" yet, BellSouth claims, "\[t\]he
    contrary is true, however, because interLATA information services do
    indeed fall within the definition of 'interLATA service.'" *Id*. at
    20. BellSouth made similar arguments in a petition for
    reconsideration concerning the section 272 separate affiliate
    requirements for out-of-region interLATA information services. *See*
    CC Docket No. 96-149, BellSouth Petition for Reconsideration (filed
    Feb. 20, 1997), at 10-13.

[^33]: *Id.*

[^34]: *See, e.g.*, Ameritech 1996 Reply Comments, at 32-34 (explaining
    that "'interLATA information service' is a term of art \[applying\]
    to the situation where the BOC provides transport across LATA
    boundaries bundled with its information service" and citing the
    *Gateway Services Appeal*). *See also* CC Docket No. 96-149,
    Opposition of SBC Communications Inc. to Petitions for
    Reconsideration (filed April 2, 1997), at 12-13 (explaining that the
    transmission associated with a service determines whether the
    service is interLATA or intraLATA---if it is transmitted across LATA
    boundaries, it is interLATA and if the transmission is wholly within
    a LATA, it is intraLATA).

[^35]: CC Docket No. 96-149, Joint Comments of Bell Atlantic and NYNEX
    on Petitions for Reconsideration (filed April 2, 1997), at 9.

[^36]: *See* CC Docket No. 96-149, Reply of U S WEST, Inc. to
    Oppositions to Petitions for Reconsideration (filed April 16, 1997),
    at 3 (supporting an interpretation that "interLATA services" as used
    in section 271(a) includes information services); *id*. at 4
    (acknowledging that interLATA information services contain an
    interLATA component). *See also* CC Docket No. 96-149, U S WEST
    Petition for Reconsideration (filed Feb. 20, 1997), at 2-5
    (contending that the BOCs could provide out-of-region interLATA
    information services without using a separate affiliate); *Request
    for Extension of the Sunset Date of the Structural,
    Non-Discrimination, and Other Behavioral Safeguards Governing Bell
    Operating Company Provision of In-Region, Inter-LATA Information
    Services*, CC Docket No. 96-149, Opposition of U S WEST
    Communications, Inc. (filed Dec. 17, 1999), at 7 (claiming that the
    BOCs would not act anticompetitively in the interLATA information
    services market upon sunset of the separate affiliate requirement
    because the BOCs cannot even provide those services).

[^37]: Telecommunications is the underlying medium, or the transmission
    path, by which information services are accessed by end users or
    made accessible by information service providers.

[^38]: *See* 47 U.S.C. § 153(43). *See* AT&T Comments at 7-8.

[^39]: *See* Petitioners' Brief at 11 ("a BOC or its affiliate must
    'provide' 'telecommunications'").

[^40]: *See* Petitioners' Brief at 7, 9, 17.

[^41]: This conclusion is consistent with the D.C. Circuit's rejection
    of a similar argument in the *Gateway Services Appeal*. *See*
    *infra* Part III.C.1. In that case, some of the BOCs contended that
    the interLATA portion of the gateway service was not offered for
    hire (*i.e.*, "not separately identified to the customers and not
    separately charged to the customer") even though it was bundled with
    the overall gateway service that clearly was offered for hire. The
    D.C. Circuit rejected this "rather strained interpretation," holding
    that such a view would create an enormous loophole in the decree's
    core interLATA prohibition. *United States v. Western Elec.*, 907
    F.2d at 163. The district court similarly had rejected the notion
    that the telecommunications component must be offered separately,
    finding more generally that when "a call, transmission, or service"
    crosses LATA boundaries, it is interLATA in nature. *United States
    v. Western Elec.*, 1989 WL 21992 at \*1.

[^42]: *See, e.g.*, BellSouth Comments at 6-7; BOC Reply Comments at 2,
    4-5.

[^43]: *See, e.g.*, 47 U.S.C. § 153(44) (defining "telecommunications
    carrier" as a provider of telecommunications services).

[^44]: *U S WEST v. Federal Communications Comm'n*, 177 F.3d at 1059-61.
    The D.C. Circuit reasoned that "the differences in the statutory
    contexts justifies different outcomes." *Id.* at 1061.

[^45]: *See id*. at 1060.

[^46]: *Id.* *See also* AT&T Comments at 18-20; CIX Reply Comments at
    14-17; WorldCom Comments at 6-7. The D.C. Circuit in *U S West* also
    found that it does not matter whether the facilities used to provide
    the interLATA service are owned or leased by the BOC.

[^47]: *See* *Gade v. National Solid Waste Management Ass'n*, 112 S.Ct.
    2374, 2384 (1992) (individual statutory provisions should be
    interpreted in a manner consistent with the structure and necessary
    assumptions of the other provisions).

[^48]: 47 U.S.C. § 271(b). *See Implementation of the Non-Accounting
    Safeguards of Section 271 and 272 of the Communications Act of 1934,
    as amended*, CC Docket No. 96-149, Order on Reconsideration, 12 FCC
    Rcd 2297 at ¶ 3 (1997). Section 271(b) specifies how section 271
    applies to certain classes of "interLATA services," including
    in-region services, out-of-region services, and incidental interLATA
    services.

[^49]: *See* 47 U.S.C. § 271(g)(4).

[^50]: 47 U.S.C. § 271(g)(1)(D). *See also* 47 U.S.C. § 271(g)(2)
    (Internet services provided over dedicated facilities to schools).

[^51]: *See* AT&T Comments at 11-12; Assoc. of Communications
    Enterprises (ASCENT) Reply Comments at 4-5; CIX Comments at 6;
    CompTel Comments at 5-6; WorldCom Comments at 7-8. To the extent
    that the BOCs attempt to derive an inconsistency with section
    272(a)(2)(B)'s enumeration of certain incidental interLATA services
    under the heading of "interLATA telecommunications services," we
    note that the storage and retrieval services identified in section
    271(g)(4) are not listed among those enumerated services. *See* BOC
    Reply Comments at 17, 20. Moreover, alarm monitoring services,
    identified as incidental in section 271(g)(1)(D), are specifically
    excluded from section 272(a)(2)(C)'s interLATA information services
    separate affiliate requirement rather than section 272(a)(2)(B)'s
    interLATA telecommunications services requirement.

[^52]: SBC Comments at 4-5; BOC Reply Comments at 22-24.

[^53]: *See, e.g., Hoffman v. Connecticut Dept. of Income Maintenance*,
    429 U.S. 96, 103 (1989) (statute should be construed to "give
    effect, if possible, to every clause and word"); *Northwest Forest
    Resource Council v. Glickman*, 82 F.3d 825, 833-34 (9th Cir. 1996)
    ("statute must be interpreted to give significance to all of its
    parts . . . statutes should not be construed to make surplusage of
    any provision."). *See also Office of Consumer's Counsel v. FERC*,
    783 F.2d 206, 220 (D.C. Cir. 1986) (same).

[^54]: *See* AT&T Reply Comments at 5-6 (claiming that, under SBC's
    view, Congress "obviously would have made its 'clarification' by
    exempting all interLATA information services, rather than just the
    few specific such services that are listed in Section 271(g).").

[^55]: *See* WorldCom Comments at 8.

[^56]: 47 U.S.C. § 271(h) (emphasis added).

[^57]: *See, e.g.,* AT&T Comments at 12-13; CIX Comments at 4; CompTel
    Comments at 5; Illinois Commerce Comm'n Reply Comments at 9-12;
    Level 3 Comments at 2; WorldCom Comments at 9-11.

[^58]: *See* Petitioners' Brief at 15; SBC Comments at 6; BOC Reply
    Comments at 15-16.

[^59]: Petitioners' Brief at 10, 19-20; Qwest Comments at 5-8; SBC
    Comments at 5; BOC Reply Comments at 16-17. To the extent that the
    Petitioners claim that Congress intended to distinguish private line
    services, we note that certain private line services are expressly
    subject to section 271's in-region, interLATA restriction. *See* 47
    U.S.C. § 271(j).

[^60]: *See also* 47 U.S.C. § 272(f)(2) (establishing a sunset date for
    applicability of section 272's provisions to interLATA information
    services).

[^61]: Petitioners' Brief at 15; Qwest Comments at 6; SBC Comments at 6;
    BOC Reply Comments at 18-19.

[^62]: *See* 47 U.S.C. § 272(f)(1), (2).

[^63]: *See* ASCENT Reply Comments at 9; ITAA Comments at 10-11;
    WorldCom Comments at 13.

[^64]: We note that the legislative history offers no support for the
    BOCs' explanation of the varying sunset dates. The 1996 Act grew out
    of a House bill that provided a single sunset date for the separate
    affiliate required to provide all interLATA services and a Senate
    bill that did not provide a sunset date for any services. *See* H.R.
    1555, 104th Cong., 1st Sess., 246(k) (1995); S. 652, 104th Cong.,
    1st Sess., 102 (1995). Thus, both the House and the Senate initially
    treated the services uniformly. The Conference Committee offers no
    explanation for the subsequent decision to establish different
    sunset dates for the different services. *See* WorldCom Comments at
    12-14.

[^65]: *See U S WEST Communications, Inc. v. FCC*, 177 F.3d at 1060.

[^66]: *Id*.

[^67]: *See* AT&T Comments at 4-5; Level 3 Comments at 5-7.

[^68]: *See United States v. American Tel. and Tel.*, 552 F.Supp. 131
    (D.D.C. 1982), *aff'd sub nom. Maryland v. United States*, 460 U.S.
    1001 (1983).

[^69]: Although the AT&T consent decree referred to "exchange areas" and
    "interexchange services," shortly after approving the decree, the
    district court switched to the "LATA" and "interLATA services"
    terminology to avoid confusion with the traditional exchange areas
    defined by various local regulators. *See* *United States v. Western
    Elec.*, 569 F.Supp. 990, 993 n.9 (D.D.C. 1983). The court explained
    that it would use the term "LATA" when referring to the exchange
    area that was created through the antitrust decree. *Id*. For
    simplicity, we use the LATA terminology consistently herein, even
    when referring to the decree.

[^70]: With respect to the interLATA services restriction, for example,
    the district court found that permitting the BOCs to compete in that
    market would "undermine the very purpose of the proposed decree---to
    create a truly competitive environment in the telecommunications
    industry." *United States v. American Tel. and Tel.*, 552 F.Supp. at
    188. Were the BOCs allowed to provide interLATA services while they
    maintained bottleneck control of the local exchange facilities, the
    court found that they would have the incentive and ability to
    discriminate against competitors in the interLATA market and
    subsidize their interLATA prices with profits earned from their
    monopoly services. *Id*. Thus, the interLATA restriction on the BOCs
    represented "an integral and vital part of the prophylactic remedy
    represented by the decree." *United States v. Western Elec.*, 673
    F.Supp. 525, 543 (D.D.C. 1987).

[^71]: In 1987, the district court partially removed the information
    services restriction by permitting the BOCs to transmit information
    generated by others and to provide gateway services between
    customers and information service providers within a LATA. At that
    time, however, the district court continued the prohibition on BOC
    generation or manipulation of information. *See United States v.
    Western Elec*., 673 F.Supp. 525 (D.D.C. 1987); *United States v.
    Western Elec.*, 714 F.Supp. 1 (D.D.C. 1988). In response to a remand
    from the D.C. Circuit, the district court fully removed the
    information services line-of-business restriction. *See United
    States v. Western Elec.*, 767 F.Supp. 308 (D.D.C. 1991). Although
    this ruling enabled the BOCs to generate information, it did not
    permit the BOCs to provide information services on an interLATA
    basis. Specifically, the removal of the information services
    restriction did not affect the district court's prior ruling,
    affirmed on appeal, that the decree's interLATA prohibition
    precluded the BOCs from providing information services across LATA
    boundaries. *See supra* n. 17, 31.

[^72]: *See* *United States v. Western Elec.*, 690 F.Supp. 22, 28
    (D.D.C. 1988) ("Clearly, the Court did not modify the interexchange
    prohibition of the decree when it allowed \[BOC\] participation in
    the transmission of information services."). *See also United States
    v. Western Elec.*, 714 F.Supp. at 21 (emphasizing the continuation
    of the core long distance restriction).

[^73]: *See United States v. Western Elec*., 1989 WL 21992.

[^74]: *Id.* at \*1. The court found it "immaterial" whether the BOC
    provided the services directly or through the use of facilities
    leased from long distance carriers, and rejected the notion that the
    interLATA portion of the offering was merely incidental to or an
    auxiliary part of the whole. *See id*. at n.12, n.14.

[^75]: *United States v. Western Elec*., 907 F.2d at 163.

[^76]: *Id.* Like the district court, the D.C. Circuit declined to draw
    a distinction between whether the BOC leased or owned the underlying
    interLATA transmission facilities. *Id*.

[^77]: *Non-Accounting Safeguards Order*, at ¶ 1 (quoting Joint
    Statement of Managers, S. Conf. Rep. No. 104-230, at 1 (1996)).
    Section 601 of the 1996 Act states that "\[a\]ny conduct or activity
    that was . . . subject to any restriction or obligation imposed by
    the AT&T Consent Decree" shall, as of February 8, 1996, give way to
    the "restrictions and obligations imposed by \[the 1996 Act\]." Pub.
    L. 104-104, Title VI, § 601(a)(1), Feb. 8, 1996, 110 Stat. 143
    (codified at 47 U.S.C. § 152 note).

[^78]: *See, e.g.*, 47 U.S.C. §§ 251, 253.

[^79]: *See* 47 U.S.C. § 271.

[^80]: *See AT&T Corp. v. Ameritech Corp.*, File No. E-98-41 *et al.*,
    Memorandum Opinion and Order, 13 FCC Rcd 21438, 21441-47, ¶¶ 4-7
    (1998); *aff'd* *U S WEST Communications Inc. v. Federal
    Communications Comm'n*, 177 F.3d 1057 (D.C. Cir. 1999), *cert
    denied*, 528 U.S. 1188 (2000).

[^81]: 47 U.S.C. § 153(21).

[^82]: *See generally* *Non-Accounting Safeguards Order* at ¶¶ 102-07;
    *Report to Congress* at ¶ 21.

[^83]: *Compare* 47 U.S.C. § 153(20), (43) *with United States v.
    American Tel. & Tel.*, 552 F.Supp. at 229 (*MFJ* at IV.J, IV.O). The
    MFJ defined information services as "the offering of a capability
    for generating, acquiring, storing, transforming, processing,
    retrieving, utilizing, or making available information *which may be
    conveyed* via telecommunications . . ." whereas the Act defines
    information services as "the offering of a capability for
    generating, acquiring, storing, transforming, processing,
    retrieving, utilizing, or making available information via
    telecommunications . . . ." We find no substantive distinction in
    these definitions for our present purposes.

[^84]: *Compare* 47 U.S.C. § 153(21) *with United States v. American
    Tel. & Tel.*, 552 F.Supp. at 229 (*MFJ* at IV.K). The MFJ's
    prohibition extended to BOC provision of "interexchange
    telecommunications services," whereas the Act refers simply to
    "interLATA services." *Compare* 47 U.S.C. § 271(a) *with United
    States v. American Tel. & Tel.*, 552 F.Supp. at 227 (*MFJ* at
    II.D.1). The Act contains no requirement that the offering of
    "interLATA service" necessarily entail the provision of a
    "telecommunications service." *See* AT&T Comments at 11.

[^85]: *See, e.g.*, *Johnson v. United States*, 529 U.S. 694, 710 (2000)
    ("\[W\]hen a new legal regime develops out of an identifiable
    predecessor, it is reasonable to look to the pre-cursor in fathoming
    the new law.").

[^86]: *See* BOC Reply Comments at 13-14.

[^87]: *See* CIX Reply Comments at 7 ("Congress was well aware of the
    *Gateway Services Appeal* when drafting the Act.").

[^88]: BOC Reply Comments at 14 (quoting Joint Statement of Managers, S.
    Conf. Rep. No. 104-230, at 1 (1996)).

[^89]: *See* BOC Reply Comments at 2, 6-10.

[^90]: *See* BOC Reply Comments at 10-15.

[^91]: *See, e.g.,* 47 U.S.C. § 160(d).

[^92]: *See, e.g.,* BellSouth Comments at 2-5; Qwest Comments at 3-4;
    SBC Comments at 2-4.

[^93]: *See Report to Congress*, at ¶¶ 1, 6, 13 (explaining that the
    Commission revisited its findings regarding the way it interpreted
    the terms "information service," "local exchange carrier,"
    "telecommunications," "telecommunications service,"
    "telecommunications carrier," and "telephone exchange service" when
    it implemented the universal service provisions of the 1996 Act).

[^94]: *See* 47 U.S.C. § 254(d).

[^95]: *See* 47 U.S.C. § 153(44).

[^96]: *See* AT&T Comments at 16-17; Consumers Union Reply Comments at
    2-3.

[^97]: *Report to Congress*, at ¶ 39 (emphasis added).

[^98]: *Id.* (emphasis added).

[^99]: *See* 47 U.S.C. § 153(46) (defining "telecommunications service"
    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 the facilities used.")
    (emphasis added).

[^100]: *See, e.g.*, Illinois Commerce Comm'n Reply Comments at 4, 7
    (maintaining that the Commission's finding of mutual exclusivity
    between telecommunications and information services applies to those
    services from an end-user perspective).

[^101]: *Report to Congress*, at ¶¶ 15, 69.

[^102]: Under section 254(d), all telecommunications service providers
    are required to contribute to universal service mechanisms, whereas
    the Commission has discretion to require providers of interstate
    telecommunications to contribute if the public interest so requires.
    *See* 47 U.S.C. § 254(d).

[^103]: *Report to Congress*, at ¶¶ 15, 55 (emphasis added).

[^104]: *See* 47 U.S.C. § 153(20).