**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matters of )

)

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

Advanced Telecommunications Capability )

)

Petition of Bell Atlantic Corporation ) CC Docket No. 98-11

For Relief from Barriers to Deployment of )

Advanced Telecommunications Services )

)

Petition of U S WEST Communications, Inc. ) CC Docket No. 98-26

For Relief from Barriers to Deployment of )

Advanced Telecommunications Services )

)

Petition of Ameritech Corporation to ) CC Docket No. 98-32

Remove Barriers to Investment in )

Advanced Telecommunications Technology )

)

Petition of the Alliance for Public ) CCB/CPD No. 98-15

Technology Requesting Issuance of Notice ) RM 9244

of Inquiry and Notice of Proposed )

Rulemaking to Implement Section 706 of )

the 1996 Telecommunications Act )

)

Petition of the Association for Local ) CC Docket No. 98-78

Telecommunications Services (ALTS) for a )

Declaratory Ruling Establishing Conditions )

Necessary to Promote Deployment of )

Advanced Telecommunications Capability )

Under Section 706 of the Telecommunications )

Act of 1996 )

)

Southwestern Bell Telephone Company, ) CC Docket No. 98-91

Pacific Bell, and Nevada Bell Petition for )

Relief from Regulation Pursuant to Section )

706 of the Telecommunications Act of 1996 )

and 47 U.S.C. \' 160 for ADSL Infrastructure )

and Service )

**MEMORANDUM OPINION AND ORDER, AND**

**NOTICE OF PROPOSED RULEMAKING**

**Adopted: August 6, 1998 Released: August 7, 1998**

**Comment Date: September 21, 1998**

**Reply Comment Date: October 13, 1998**

By the Commission: Commissioners Ness, Powell and Tristani issuing
separate statements.

**TABLE OF CONTENTS**

**Paragraph**

I. INTRODUCTION 1

II\. OVERVIEW 6

III\. EXECUTIVE SUMMARY 18

IV\. BACKGROUND 20

> A. Statutory Framework 20
>
> B. Petitions Before the Commission 23
>
> C. Advanced Services 28

V. MEMORANDUM OPINION AND ORDER 32

> A. Applicability of Section 251(c) to Incumbent Local Exchange
> Carriers 32
>
> 1\. Introduction 32
>
> 2\. Statutory Classification of Advanced Services 33
>
> a\. Telecommunications Services 34
>
> b\. Telephone Exchange Service or Exchange Access 38
>
> 3\. Interconnection 45
>
> 4\. Unbundled Network Elements 50
>
> 5\. Resale Obligations Under Section 251(c)(4) 59
>
> 6\. Collocation 62
>
> B. Forbearance and LATA Boundary Modifications 65
>
> 1\. Background 65
>
> 2\. Discussion 69
>
> a\. Forbearance 69
>
> b\. LATA Boundary Modifications 80

VI\. NOTICE OF PROPOSED RULEMAKING 83

> A. Introduction 83
>
> B. Provision of Advanced Services through a Separate Affiliate 85
>
> 1\. Background 89
>
> 2\. Advanced Services Affiliates 92
>
> a\. Circumstances Under Which an Advanced Services Affiliate Would Not
> Be an Incumbent LEC 95
>
> b\. Transfers from an Incumbent LEC to an Advanced Services Affiliate
> 104
>
> 3\. State Regulation 116
>
> C. Measures to Promote Competition in the Local Market 118
>
> 1\. Collocation Requirements 118
>
> a\. Background 118
>
> b\. Adoption of National Standards 122
>
> c\. Collocation Equipment 126
>
> d\. Allocation of Space 136
>
> e\. Space Exhaustion 145
>
> f\. Effects of Additional Collocation Requirements 150
>
> 2\. Local Loop Requirements 151
>
> a\. Overview 151
>
> b\. Background 152
>
> c\. Adoption of National Standards 154
>
> d\. Loops and Operations Support Systems 157
>
> e\. Loop Spectrum Management 159
>
> f\. Uniform Standards for Attachment of Electronic Equipment at the
> Central Office End of a Loop 163
>
> g\. Redefining the Local Loop to Ensure Competitive LEC Access to
> Loops Capable of Providing Advanced Services 164
>
> h\. Unbundling Loops Passing through Remote Terminals 165
>
> i\. Effects of Additional Requirements for Local Loops 177
>
> D. Unbundling Obligations Under Section 251(c)(3) 178
>
> E. Resale Obligations Under Section 251(c)(4) 185
>
> F. Targeted InterLATA Relief 190

VII\. PROCEDURAL MATTERS 197

> A. Ex Parte Presentations 197
>
> B. Initial Paperwork Reduction Act Analysis 198
>
> C. Initial Regulatory Flexibility Analysis 199
>
> D. Comment Filing Procedures 200
>
> E. Further Information 206

VIII\. ORDERING CLAUSES 207

APPENDIX A \-- LIST OF COMMENTERS

APPENDIX B \-- DESCRIPTION OF xDSL TECHNOLOGY

APPENDIX C \-- DESCRIPTION OF INTEGRATED DIGITAL LOOP CARRIER SYSTEMS

APPENDIX D \-- INITIAL REGULATORY FLEXIBILITY ANALYSIS

**I. INTRODUCTION**

1\. One of the fundamental goals of the Telecommunications Act of 1996
(1996 Act)[^1] is to promote innovation and investment by all
participants in the telecommunications marketplace, both incumbents and
new entrants, in order to stimulate competition for all services,
including advanced services. Congress provided the blueprint in the 1996
Act for ensuring that all markets are open to competition, while
encouraging the rapid deployment of new telecommunications
technologies.[^2] In this proceeding, we take steps to implement
Congress\' framework with respect to advanced services.

2\. As the demand for high-speed, high-capacity advanced services
increases, incumbent telecommunications companies and new entrants alike
are deploying innovative new technologies to meet that demand. The role
of the Commission is not to pick winners or losers, or select the
\"best\" technology to meet consumer demand, but rather to ensure that
the marketplace is conducive to investment, innovation, and meeting the
needs of consumers.

3\. This item is issued in response to six petitions suggesting action
we should take to speed the deployment by wireline carriers of advanced
services. Although the parties filing these petitions seek relief
pursuant to section 706[^3] of the 1996 Act, our authority to take
action lies in the heart of the Communications Act of 1934 (the Act), in
sections 201, 202, 251 and 271. For purposes of this item, we use the
term \"advanced services\" to mean wireline, broadband[^4]
telecommunications services, such as services that rely on digital
subscriber line technology (commonly referred to as xDSL)[^5] and
packet-switched technology.[^6]

4\. This item consists of a Memorandum Opinion and Order (Order) and a
Notice of Proposed Rulemaking (NPRM). After clarifying in the Order our
views on the applicability of existing statutory requirements in
sections 251 and 271 to advanced services, we seek comment on a wide
variety of issues associated with the provision of advanced services by
wireline carriers. We propose measures to promote the deployment of
advanced services in a competitive manner by both incumbent local
exchange carriers (LECs) and new entrants.

5\. We note that we are also issuing another item today that addresses
advanced services, a Notice of Inquiry (NOI), pursuant to our statutory
obligation under section 706(b) of the 1996 Act.[^7] In the NOI, we seek
information on the status of broadband deployment in all market sectors
\-- including wireless, wireline, cable, and satellite \-- and the types
of actions we can take in the future if we determine that advanced
telecommunications capability is not being deployed to all Americans in
a reasonable and timely fashion.[^8]

**II. OVERVIEW**

6\. Increasingly, all electronic communications are becoming digital.
Print, audio, video, voice and data[^9] can all be transmitted in
digital form, as collections of ones and zeros. Digitized information
can be efficiently transmitted by means of \"packet switching.\" Instead
of maintaining an end-to-end channel of communications for the length of
the information transfer, packet switching breaks the information up
into smaller packets that are transmitted separately over the most
efficient route available, and then reassembled, microseconds later, at
their destination. Packet-switched transmission of digitized information
promises a revolution in information, communications services, and
entertainment.[^10]

7\. High-speed, packet-switched networks offer businesses, residential
users, schools and libraries, and other end users of information the
ability to access and transport information across the street or across
the globe. If ordinary citizens can access these networks at high speeds
using existing copper wires, a variety of new services and vast
improvements to existing services will be available. In the near future,
these services could include real-time video in place of telephony, so
that families who connect over the phone can not only talk to each
other, but can see each other as well. They could also include
feature-length movies on demand, and faster access to the Internet. They
are bringing about explosive growth in electronic commerce and new paths
for distance learning. The ability of all Americans to access these
networks, and to share in their resources, will very likely spur our
growth and development as a nation.

8\. If all Americans are to have meaningful access to these advanced
services, however, there must be a solution to the problem of the \"last
mile.\" No matter how fast the network is, if the connection between the
network and the end-user is slow, then the end-user cannot take
advantage of the network\'s high-speed capabilities.[^11] For example,
information generally moves very quickly across the high-speed backbone
of the Internet. But its speed may be cut to a tiny fraction when it
passes through the ordinary copper telephone line that runs into a
residence. The end-user may not be able to receive data quickly enough
to take advantage of broadband applications.[^12]

9\. The six petitions we have received request that we use various
tools, including regulatory forbearance, to facilitate deployment of
advanced services. In broad terms, four Bell Operating Companies (BOCs)
request that we allow them to provide xDSL-based services in a
deregulated environment.[^13] At the same time, the Association for
Local Telecommunications Services (ALTS) requests a declaratory ruling
and commencement of a rulemaking to ensure that competing carriers can
deploy xDSL-based services quickly and efficiently.[^14] Finally, the
Alliance for Public Technology (APT) urges the Commission to initiate a
Notice of Inquiry and Notice of Proposed Rulemaking to adopt various
policies to remove barriers to deployment and actively promote
infrastructure investment.[^15]

10\. Today, incumbent wireline carriers and new entrants are at the
early stages of deploying xDSL and other advanced services. Thus, the
incumbent does not currently enjoy the overwhelming market power that it
possesses in the conventional circuit-switched voice telephony market.
Incumbents assert that rules mandating that they give their competitors
access to advanced services and the facilities used to provide those
services reduce their incentive to invest in these new facilities, and
are not necessary given their lack of market power in this area. At the
same time, new entrants argue that incumbents are attempting to evade
their obligation to provide access to those facilities and services that
are critical to competitive participation in the wireline market. We
seek in this proceeding to address both of these concerns, and to
encourage and enable all companies, both incumbents and new entrants, to
provide these advanced services.[^16]

11\. In the Order, we first conclude that the pro-competitive provisions
of the 1996 Act apply equally to advanced services and to
circuit-switched voice services. Congress made clear that the 1996 Act
is technologically neutral and is designed to ensure competition in all
telecommunications markets. We therefore conclude that incumbent LECs
are subject to section 251(c) in their provision of advanced services.
Specifically, we find that incumbent LECs are subject to the
interconnection obligations of sections 251(a) and 251(c)(2) with
respect to both their circuit-switched and packet-switched networks. We
also clarify that the facilities and equipment used by incumbent LECs to
provide advanced services are network elements and subject to the
obligations in section 251(c)(3). Thus, for example, all incumbent LECs
must provide requesting telecommunications carriers with unbundled loops
capable of transporting high-speed digital signals, and must offer
unbundled access to the equipment used in the provision of advanced
services, subject to considerations of technical feasibility and the
provisions of section 251(d)(2). As discussed in the NPRM below,
however, to the extent that an incumbent LEC chooses to establish an
affiliate that is truly separate from the incumbent to provide these
advanced services, that affiliate would not be an incumbent LEC under
the Act, and would therefore not be subject to incumbent LEC
regulation.[^17]

12\. Second, we deny in the Order the petitions of Ameritech, Bell
Atlantic, SBC,[^18] and U S WEST to the extent that they request us to
forbear from applying the requirements of sections 251(c) and/or 271
with respect to their provision of advanced services. We conclude that
Congress did not provide us with the statutory authority to forbear from
these critical market-opening provisions of the Act until their
requirements have been fully implemented. We also decline to grant the
requests to create a single, global LATA for packet-switched services,
because we believe that such a determination could effectively
eviscerate section 271 and circumvent the procompetitive incentives for
opening the local market that Congress sought to achieve through that
section of the Act.

13\. We are committed, however, to ensuring that incumbent LECs make
their decisions to invest in and deploy advanced telecommunications
services based on the market and their business plans, rather than
regulation. Accordingly, in the NPRM, we propose an optional alternative
pathway for incumbent LECs that would allow separate affiliates to
provide advanced services free from incumbent LEC regulation. In
particular, if an incumbent LEC chooses to offer advanced services
through an affiliate that is truly separate from the incumbent, that
affiliate would not be deemed an incumbent LEC and therefore would not
be subject to incumbent LEC regulation, including the obligations under
section 251(c). We make specific proposals in the NPRM on how separate
an affiliate would need to be so that it would not be deemed an
incumbent LEC. Our proposals reflect our view that, if the advanced
services affiliate derives an unfair advantage from its relationship
with the incumbent, that affiliate would have to be viewed as stepping
into the shoes of the incumbent LEC and would be subject to all the
requirements that Congress established for incumbent LECs.

14\. In addition, we seek to facilitate the ability of competing
carriers to offer advanced services on an equal footing with incumbent
carriers and their affiliates. In particular, to provide advanced
services, new entrants may need to collocate equipment on an incumbent
LEC\'s premises for interconnection and access to unbundled network
elements, such as loops. Consequently, we grant ALTS\' request that we
initiate a rulemaking to strengthen collocation requirements, which will
reduce the costs and delays associated with collocation. We also seek
comment on whether to review and revise our rules regarding the
provision of loops to eliminate barriers to entry for competing
providers. Specifically, we seek comment on whether we should revise our
definition of the loop, or require sub-loop unbundling in recognition of
new technological and market developments. We also seek comment on how
to unbundle loops that pass through remote concentration devices. We
note that, to the extent an incumbent LEC chooses to establish a
separate affiliate to provide advanced services, the incumbent LEC
should have an additional incentive to improve its processes and provide
unbundled elements and collocation space as quickly and cheaply as
possible to all competitors, including its advanced services affiliate.

15\. In addition, we seek comment on the specific unbundling obligations
for network elements used to provide advanced services and on whether we
should modify the current unbundling rules in light of technological and
market advances.

16\. Finally, we seek comment on a number of proposals that would
provide tailored relief to incumbent LECs and/or their affiliates. In
particular, we seek comment on whether limited LATA boundary
modifications or other targeted interLATA relief would be appropriate in
certain circumstances.

17\. We recognize the importance of the issues we raise in the NPRM to
the deployment of advanced services by both incumbents and competitors.
We further recognize the importance of regulatory certainty and the
impact it has on the ability of all carriers to plan and develop their
products and services. We therefore seek to issue an order resolving the
issues raised in the NPRM as expeditiously as possible.

**III. EXECUTIVE SUMMARY**

18\. In the Order, we take the following steps:

[Obligations of Incumbent LECs That Provide Advanced Services on an
Integrated Basis]{.underline}

\# We clarify, in response to a petition by ALTS, that sections 251 and
252 apply to advanced telecommunications facilities and services offered
by an incumbent local exchange carrier (LEC) as defined in the
Communications Act, *i.e.*, the local telephone operating company. An
affiliate is not an incumbent LEC unless it is a successor or assign of
the incumbent LEC, or comparable to the incumbent LEC, as set forth in
the statute. For example, we find that an incumbent LEC is subject to
the interconnection obligations of section 251(c)(2) with respect to
both circuit-switched and packet-switched networks.

\# We also clarify, in response to the ALTS petition, that the
facilities and equipment used by incumbent LECs to provide advanced
services are network elements and subject to section 251(c). Thus, upon
request, the incumbent LEC must provide new entrants with unbundled
loops capable of transporting high-speed digital signals, and must offer
unbundled access to the equipment used in the provision of advanced
services, to the extent technically feasible and subject to the
provisions of section 251(d)(2).

\# We also declare that, pursuant to the terms of section 251(c)(4), the
incumbent LEC must offer for resale, at wholesale rates, any advanced
services that the incumbent offers to subscribers that are not
telecommunications carriers.

[Forbearance from Sections 251(c) and 271]{.underline}

\# We deny requests to forbear from application of sections 251(c)
and/or 271, concluding that we do not have the statutory authority to
forbear from either section prior to its full implementation.

\# We deny requests for large-scale changes in LATA boundaries (such as
Ameritech\'s request for a global, \"data LATA\") because that would be
functionally the same as forbearing from section 271 for advanced
services and would eviscerate section 271 for those services. In the
NPRM, we seek comment on more targeted LATA boundary modification
issues.

19\. In the Notice of Proposed Rulemaking, we make the following
tentative conclusions and seek comment on the following issues:

[Provision of Advanced Services Through a Separate
Affiliate]{.underline}

\# We propose an optional alternative pathway for incumbent LECs that
would allow separate affiliates to provide advanced services free from
incumbent LEC regulation. As a non-incumbent LEC, an advanced services
affiliate would not be subject to the requirements of section 251(c). We
also tentatively conclude that, to the extent such an affiliate provides
interstate exchange access service, the affiliate: (1) would be presumed
to be nondominant, and, therefore, not subject to price cap regulation
or rate of return regulation for such services; and (2) would not be
required to file tariffs for such services.

\# We tentatively conclude that an advanced services affiliate that
meets the following specific structural separation and nondiscrimination
requirements will not be an incumbent LEC: (1) the incumbent must
\"operate independently\" from its affiliate; (2) transactions must be
on an arm\'s length basis, reduced to writing, and made available for
public inspection; (3) the incumbent and affiliate must maintain
separate books, records, and accounts; (4) the incumbent and advanced
services affiliate must have separate officers, directors, and
employees; (5) the affiliate must not obtain credit under any
arrangement that would permit a creditor, upon default, to have recourse
to the assets of the incumbent; (6) the incumbent LEC, in dealing with
its advanced services affiliate may not discriminate in favor of its
affiliate in the provision of any goods, services, facilities or
information or in the establishment of standards; and (7) an advanced
services affiliate must interconnect with the incumbent LEC pursuant to
tariff or pursuant to an interconnection agreement, and whatever network
elements, facilities, interfaces and systems are provided by the
incumbent LEC to the affiliate must also be made available to
unaffiliated entities.

\# We seek comment on how transfers to advanced services affiliates of,
among other things, facilities and customer accounts, should affect the
regulatory status of the affiliates. We are committed to ensuring that
the separate affiliate is a realistic option for incumbent LECs. We must
evaluate, however, whether certain transfers would render an advanced
services affiliate an \"assign\" of the incumbent LEC.

\# To the extent that an advanced services affiliate provides advanced
services on an intrastate basis, we encourage states to treat the
affiliate equivalently to any other competing carrier offering advanced
services.

[Collocation and Loop Requirements]{.underline}

\# We, in response to a request by ALTS, initiate a rulemaking to adopt
strengthened collocation requirements. We seek comment on a number of
measures that would optimize the space available for collocation and
would reduce unnecessary costs and delays, and thereby facilitate
deployment of advanced services, particularly to residential and rural
customers. For example, we seek comment on whether we should require
incumbent LECs to allow collocation of equipment that includes switching
functionality. We also tentatively conclude that incumbent LECs should
be required to offer alternative collocation arrangements, including
cageless collocation. We further tentatively conclude that, upon
request, incumbent LECs should provide competitors with written
information regarding space availability in the incumbent\'s facilities,
and that incumbent LECs that deny physical collocation, citing space
constraints, should allow competitors to tour the incumbent\'s premises.

\# We also seek comment on whether we should revise our rules regarding
the provision of loops to competitors in order further to eliminate
barriers to entry for entities that seek to provide advanced services.
Specifically, we seek comment on: (1) whether the operations support
system rules adequately ensure that competitive LECs have access to loop
information; (2) how we should address loop spectrum interference issues
and whether we should require loop spectrum unbundling; and (3) whether
we should revise our definition of the local loop to take account of new
technological developments. We also seek comment on how carriers should
unbundle loops that pass through remote concentration devices.

[Unbundling Obligations Under Section 251(c)(3)]{.underline}

\# We seek comment on the specific unbundling obligations that apply to
network elements used to provide advanced services. In addition, we seek
comment on whether we should adopt additional criteria when considering
the extent to which network elements must be made available on an
unbundled basis. We also seek comment on whether we should find section
251(c)(3) to be fully implemented on a service-by-service basis.

[Resale Obligations Under Section 251(c)(4)]{.underline}

\# We seek comment on whether we should modify our prior interpretation
of the requirements of section 251(c)(4) and require incumbent LECs to
make available for resale, at wholesale rates, certain advanced exchange
access services that they generally offer to subscribers that are not
telecommunications carriers.

[Limited InterLATA Relief]{.underline}

\# We seek comment on the scope of the incidental, interLATA exception
in section 271.

\# We seek comment on types of LATA boundary modifications that might
encourage deployment of advanced services to elementary and secondary
schools and classrooms, and other educational institutions.

\# We tentatively conclude that modification of LATA boundaries may be
necessary for subscribers in rural areas to have high-speed connections
to the Internet.

\# We seek comment on whether we have authority to take other targeted
actions to facilitate deployment of advanced services and, if so, on the
criteria we should use in evaluating such requests.

**IV. BACKGROUND**

**A. Statutory Framework**

20\. In the 1996 Act, Congress established a \"pro-competitive,
deregulatory national policy framework\" for telecommunications, opening
all telecommunications markets to competition so as to make advanced
telecommunications and information technologies and services available
to all Americans.[^19] Congress enacted provisions opening incumbent
LECs\' networks to competitors, and gave the Commission the authority to
adopt rules in this area to further the competitive goals of the 1996
Act.

21\. At the core of the Act\'s market-opening provisions are sections
251 and 271.[^20] In section 251, Congress sought to open local
telecommunications markets to competition by reducing inherent economic
and operational advantages possessed by incumbents. Section 251 requires
incumbent LECs to share their networks in a manner that enables
competitors to choose among three methods of entry \-- the construction
of new networks, the use of unbundled elements of the incumbent\'s
network, and resale. Thus, section 251 requires incumbent LECs to offer
at cost-based rates nondiscriminatory interconnection with their
networks[^21] and access to unbundled network elements.[^22] Section 251
also requires incumbent LECs to make their retail services available at
wholesale rates so they can be resold by new entrants.[^23] Together
with other pro-competitive provisions of the Act, section 251 provides
new entrants with the ability to offer competitive telecommunications
services.

22\. Section 271 conditions the provision of in-region, interLATA
services by BOCs on compliance with certain requirements, including
compliance with a competitive checklist.[^24] The critical
market-opening requirements of section 251 are incorporated into this
competitive checklist. Thus, through section 271, Congress requires BOCs
to demonstrate that they have opened their local markets to competition
before they are authorized to enter the in-region long distance market.

**B. Petitions Before the Commission**

23\. A number of parties have filed petitions pursuant to section 706,
seeking regulatory forbearance, initiation of a rulemaking, and
declaratory rulings with respect to the provision of xDSL and
packet-switched services. On January 26, 1998, Bell Atlantic filed a
petition with the Commission pursuant to section 706 of the 1996
Act.[^25] Bell Atlantic asks the Commission to forbear from applying the
provisions of sections 251 and 271 of the Act to its advanced services.
Specifically, Bell Atlantic asks the Commission to permit it to offer
xDSL and other high-speed broadband services free from pricing,
unbundling, and separations restrictions. In addition, Bell Atlantic
asks the Commission to forbear from applying section 271 of the Act to
its high-speed broadband services, or, in the alternative, to modify
LATA boundaries, so as to permit it to carry in-region interLATA
traffic.[^26]

24\. On February 18, 1998, APT filed a petition asking the Commission to
initiate a rulemaking to address various issues related to the
deployment of advanced services.[^27] APT urges the Commission to apply
section 251(c) only to the existing incumbent LEC network and not to
advanced services.[^28] In conjunction with this request, APT asks the
Commission to explore the possibility of requiring the incumbent LEC to
use a separate subsidiary as a marketing device for its advanced
services.[^29] APT also asks the Commission to address various pricing
issues, such as the development of an Internet service provider access
charge that would be acceptable to the Internet industry.[^30] APT also
urges the Commission to consider what type of conditions could be
attached to the Commission\'s approval of future mergers that would
promote the objectives of section 706.[^31] Finally, APT asks the
Commission to consider \"establishing a federal/state policy framework
for developing and supporting community/provider partnerships designed
to aggregate effective demand for community-based applications\" of new
services.[^32]

25\. On February 25, 1998, and March 5, 1998, respectively, U S WEST and
Ameritech filed petitions with the Commission pursuant to section 706 of
the 1996 Act.[^33] Like Bell Atlantic, both U S WEST and Ameritech ask
the Commission not to apply section 251(c) to their respective
high-speed data services.[^34] In addition, U S WEST argues that the
Commission should either forbear from applying section 271 to its \"data
carriage,\" or in the alternative define LATA boundaries so as to permit
U S WEST to aggregate data traffic across present LATA boundaries.[^35]
Ameritech contends that the Commission should create \"one global LATA
for packet-switched services.\"[^36] Ameritech also asks the Commission
to clarify that its separate affiliate need comply only with the
separation requirements adopted in the *Competitive Carrier Fifth Report
and Order*,[^37] in order to be regulated as a non-incumbent LEC and,
therefore, not be subject to the obligations of section 251(c).[^38]

26\. On May 27, 1998, ALTS filed a petition for declaratory ruling
pursuant to section 706 of the 1996 Act.[^39] The ALTS petition asks the
Commission to clarify that the obligations of sections 251, 252 and 271
of the Act apply fully to digital and broadband services and
facilities.[^40] ALTS suggests, for example, that the Commission declare
that incumbent LECs are obligated to unbundle a full range of loops and
electronic elements attached to loops. In addition, ALTS asks the
Commission to initiate a rulemaking to strengthen its collocation rules
in order to reduce obstacles to competitive provision of
telecommunications services.[^41]

27\. On June 9, 1998, SBC filed a petition with the Commission pursuant
to section 706 of the 1996 Act.[^42] SBC does not ask the Commission to
forbear from applying the provisions of section 271 of the Act, but
rather seeks forbearance from the unbundling and resale provisions of
sections 251(c) and 252 of the Act with respect to its ADSL facilities
and services.[^43] SBC also seeks relief from dominant carrier treatment
of its ADSL service.[^44] In addition, SBC seeks relief from the \"most
favored nation\" obligation of section 252(i) of the Act.[^45] We
address many of the issues raised by all six of these petitions in both
the Order and NPRM.

> **C. Advanced Services**

28\. The existing telephone network in the United States, with a line
running into virtually every home and business, has worked admirably for
the provision of ordinary voice telephony. Until recently, however, it
was not thought to be suitable for interactive video or high speed data
communications. First, the copper telephone wire running the \"last
mile\" to each home was generally thought to be capable of carrying only
a relatively modest stream of information. Second, the public telephone
network is circuit-switched, that is, it maintains an end-to-end channel
of communication for the entire duration of the call. While this is a
useful means of transmitting ordinary voice telephony, it is not
efficient for transmitting data and other types of information.

29\. xDSL technology, coupled with packet-switched networks, addresses
both of these constraints. Two xDSL modems are attached to each
telephone loop: one at the subscriber\'s premises, and one at the
telephone company\'s central office. The use of xDSL modems allows
transmission of data over the copper loop at vastly higher speeds than
those used for voice telephony or analog data transmission.[^46]
Further, the customer can potentially make ordinary voice calls over the
public switched network at the same time as he or she is using the same
line for high-speed data transmission.[^47]

30\. In circumstances in which the xDSL-equipped line carries separate
POTS (\"plain old telephone service\") and data channels, the carrier
must separate those two streams when they reach the telephone company\'s
central office. This is done in a device known as a digital subscriber
line access multiplexer, or DSLAM. The DSLAM and central office xDSL
modem send the customer\'s POTS traffic to the public, circuit-switched
telephone network. The DSLAM sends the customer\'s data traffic
(combined with that of other xDSL users) to a packet-switched data
network. Thus, the data traffic, after traversing the local loop, avoids
the circuit-switched telephone network altogether.

31\. Once on the packet-switched network, the data traffic is routed to
the location selected by the customer, for example, a corporate local
area network or an Internet service provider. That location may itself
be a gateway to a new packet-switched network or set of networks, like
the Internet. We have attached a diagram illustrating this network
architecture as Appendix B.

**V. MEMORANDUM OPINION AND ORDER**

> **A. Applicability of Section 251(c) to Incumbent Local Exchange
> Carriers**

**1. Introduction**

32\. In this section, we address several issues that ALTS raises in its
petition for a declaratory ruling.[^48] First, as described in greater
detail below, we grant the ALTS petition to the extent it asks the
Commission to clarify that the obligations of sections 251 and 252 of
the Act apply to advanced services and the facilities used to provide
those services. We hold that, pursuant to the Act and our implementing
orders, incumbent LECs are required to (1) provide interconnection for
advanced services; and (2) provide access to unbundled network elements,
including conditioned loops capable of transmitting high-speed digital
signals, used by the incumbent LEC to provide advanced services. We also
note that under the plain terms of the Act, incumbent LECs have an
obligation to offer for resale, pursuant to section 251(c)(4), all
advanced services that they generally provide to subscribers who are not
telecommunications carriers. Finally, for the reasons discussed below,
we conclude that incumbent LECs have an obligation under the statute and
our implementing rules to offer collocation arrangements that reduce
unnecessary costs and delays for competitors and that optimize the
amount of space available for collocation.

**2. Statutory Classification of Advanced Services**

33\. Before turning to the specific declaratory rulings requested by
ALTS, we first must address the regulatory classification of \"advanced
services.\" The specific obligations of the 1996 Act depend on
application of the statutory categories established in the Act\'s
definitions section.[^49] In particular, we consider whether advanced
services constitute \"telecommunications services,\" and, if so, what
type of telecommunications service.

> **a. Telecommunications Services**

**(1) Background**

34\. The obligations imposed by sections 251 and 252 of the Act are
triggered by the provision of a \"telecommunications service.\"[^50]
Thus, for example, section 251(a) requirements apply to each
\"telecommunications carrier,\"[^51] which is to say, each \"provider of
telecommunications services.\"[^52] Section 251(c)(3) obligates
incumbent LECs to provide unbundled access to \"network elements,\"
which is to say, \"facilit\[ies\] or equipment used in the provision of
a telecommunications service.\"[^53] The Act defines
\"telecommunications service\" to mean \"the offering of
telecommunications for a fee directly to the public . . . .\"[^54] It
defines \"telecommunications\" to mean \"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.\"[^55]

**(2) Discussion**

35\. We conclude that advanced services are telecommunications services.
The Commission has repeatedly held that specific packet-switched
services are \"basic services,\"[^56] that is to say, pure transmission
services.[^57] xDSL and packet switching are simply transmission
technologies. To the extent that an advanced service does no more than
transport information of the user\'s choosing between or among
user-specified points, without change in the form or content of the
information as sent and received, it is \"telecommunications,\" as
defined by the Act. Moreover, to the extent that such a service is
offered for a fee directly to the public, it is a \"telecommunications
service.\"[^58]

36\. Incumbent LECs have proposed, and are currently offering, a variety
of services in which they use xDSL technology and packet switching to
provide members of the public with a transparent, unenhanced,
transmission path. Neither the petitioners, nor any commenter, disagree
with our conclusion that a carrier offering such a service is offering a
\"telecommunications service.\"[^59] An end-user may utilize a
telecommunications service together with an information service, as in
the case of Internet access. In such a case, however, we treat the two
services separately: the first service is a telecommunications service
(*e.g.*, the xDSL-enabled transmission path), and the second service is
an information service, in this case Internet access.[^60]

37\. We note that, pursuant to the Commission\'s *Computer Inquiry* and
*Open Network Architecture* (*ONA*) proceedings, BOCs are permitted to
offer information services on either an integrated basis, *i.e.* through
the regulated telephone company, or through a separate affiliate. The
BOCs are obligated, however, to unbundle and make available to competing
information service providers (ISPs): (1) the network services that
underlie the BOCs\' own information services (pursuant to the *Computer
Inquiry* proceedings); and (2) additional network services that the BOCs
do not use in their information service offerings (pursuant to
*ONA*).[^61] We note that BOCs offering information services to end
users of their advanced service offerings, such as xDSL, are under a
continuing obligation to offer competing ISPs nondiscriminatory access
to the telecommunications services utilized by the BOC information
services. In the NPRM, we seek comment on whether we should apply any
similar safeguards if a BOC affiliate offers advanced services in
conjunction with a BOC information service.[^62]

> **b. Telephone Exchange Service or Exchange Access**

**(1) Background**

38\. Certain obligations under section 251 turn on whether the carrier
is providing \"telephone exchange service\" or \"exchange access.\"[^63]
Pursuant to section 251(c)(2), an incumbent LEC must provide
interconnection only \"for the transmission and routing of telephone
exchange service and exchange access.\"[^64] Section 251(b) applies to
each \"local exchange carrier\"; section 153(26), in turn, defines
\"local exchange carrier\" to include any person \"engaged in the
provision of telephone exchange service or exchange access.\"[^65]

39\. Prior to 1996, the Communications Act defined \"telephone exchange
service\" to include \"service within a telephone exchange, or within a
connected system of telephone exchanges within the same exchange area
operated to furnish to subscribers intercommunicating service of the
character ordinarily furnished by a single exchange and which is covered
by the exchange service charge.\"[^66] In the 1996 Act, Congress
expanded that definition to include \"comparable service provided
through a system of switches, transmission equipment, or other
facilities (or combination thereof) by which a subscriber can originate
and terminate a telecommunications service.\"[^67] The Act defines
\"exchange access\" to mean \"the offering of access to telephone
exchange services or facilities for the purpose of the origination or
termination of telephone toll services.\"[^68]

**(2) Discussion**

40\. We conclude that advanced services offered by incumbent LECs are
either \"telephone exchange service\" or \"exchange access.\" At this
time, we do not decide whether, or to what extent, specific xDSL-based
services offered by incumbent LECs are \"telephone exchange service\" as
opposed to \"exchange access.\" We note, however, that this question has
been raised in other pending proceedings, and we will continue to
address it on a case-by-case basis.[^69]

41\. Nothing in the statutory language or legislative history limits
these terms to the provision of voice, or conventional circuit-switched
service. Indeed, Congress in the 1996 Act expanded the scope of the
\"telephone exchange service\" definition to include, for the first
time, \"comparable service\" provided by a telecommunications
carrier.[^70] The plain language of the statute thus refutes any attempt
to tie these statutory definitions to a particular technology.[^71]
Consequently, we reject U S WEST\'s contention that those terms refer
only to local circuit-switched voice telephone service or close
substitutes, and the provision of access to such services.[^72]

42\. We note that in a typical xDSL service architecture, the incumbent
LEC uses a DSLAM to direct the end-user\'s data traffic into a
packet-switched network, and across that packet-switched network to a
terminating point selected by the end-user. Every end-user\'s traffic is
routed onto the same packet-switched network, and there is no technical
barrier to any end-user establishing a connection with any customer
located on that network (or, indeed, on any network connected to that
network).[^73] We see nothing in this service architecture mandating a
conclusion that advanced services offered by incumbent LECs fall outside
of the \"telephone exchange service\" or \"exchange access\" definitions
set forth in the Act.

43\. U S WEST\'s reliance on the fact that the Commission in the *Local
Competition Order* noted that CMRS carriers \"provide local, two-way
switched voice service,\" as part of the analysis leading to its
conclusion that such carriers provide telephone exchange service, is
misplaced.[^74] The Commission nowhere suggested that two-way voice
service is a *necessary* component of telephone exchange service.[^75]
It certainly did not suggest that two-way voice service is a necessary
component of exchange access.

44\. We also reject U S WEST\'s contention that it is not subject to
section 251(c) for its provision of advanced services because such
services are neither \"telephone exchange services\" nor \"exchange
access services.\"[^76] To the extent that it offers advanced services,
U S WEST contends, it is not acting as a \"local exchange carrier\" or
\"incumbent local exchange carrier,\" and the obligations imposed by
section 251(c) on incumbent local exchange carriers do not apply.
Because we have determined that advanced services offered by incumbent
LECs are telephone exchange service or exchange access, we need not and
do not address the section 251(c) obligations of an incumbent local
exchange carrier offering services other than telephone exchange service
or exchange access.[^77]

**3. Interconnection**

**a. Background**

45\. Section 251(a) of the Act requires all \"telecommunications
carriers\" to \"interconnect directly or indirectly with the facilities
and equipment of other telecommunications carriers.\" Section 251(c)(2)
imposes interconnection obligations on incumbent LECs for purposes of
transmitting and routing telephone exchange or exchange access traffic.

> **b. Discussion**

46\. We agree with ALTS that the interconnection obligations of section
251 of the Act apply equally to facilities and equipment used to provide
data transport functionality and voice functionality.[^78] Because
advanced services that provide members of the public with a transparent,
unenhanced transmission path are telecommunications services, all
carriers offering such services are subject to the requirements of
section 251(a), including the interconnection obligation set out in
section 251(a)(1). In addition, because such services offered by an
incumbent LEC are either \"telephone exchange services\" or \"exchange
access,\" the incumbent LEC is subject to the interconnection
obligations of section 251(c). Thus, any telecommunications carrier in
need of interconnection with an incumbent LEC network \"for purposes of
transmitting and routing telephone exchange traffic or exchange access
traffic or both\" is entitled to interconnection pursuant to section
251(c)(2) of the Act.[^79]

47\. For purposes of determining the interconnection obligation of
carriers, the Act does not draw a regulatory distinction between voice
and data services.[^80] In particular, the Commission drew no such
distinction in the *Local Competition Order*, when it required incumbent
LECs to offer interconnection with competitors for the transmission and
routing of telephone exchange and exchange access traffic. Thus, the
interconnection obligations of incumbent LECs apply to packet-switched
as well as circuit-switched services.

48\. The ability of competitive LECs to interconnect with incumbent LEC
data networks \"will permit all carriers, including small entities and
small incumbent LECs, to plan regional or national networks using the
same interconnection points in similar networks nationwide.\"[^81] Our
rules make it possible for competing telecommunications providers to
offer seamless service to end-users by interconnecting with incumbents\'
networks. We therefore grant the ALTS request that we declare that the
interconnection obligations of sections 251(a) and 251(c)(2) apply to
incumbents\' packet-switched telecommunications networks and the
telecommunications services offered over them.

49\. We reject BellSouth\'s argument that Congress intended that section
251(c) not apply to new technology not yet deployed in 1996.[^82]
Nothing in the statute or legislative history indicates that it was
intended to apply only to existing technology. Moreover, Congress was
well aware of the Internet and packet-switched services in 1996,[^83]
and the statutory terms do not include any exemption for those
services.[^84]

**4. Unbundled Network Elements**

> **a. Background**

50\. We next consider the unbundling obligations of section 251(c)(3).
Section 251(c)(3) requires incumbent LECs to \"provide, to any
requesting telecommunications carrier for the provision of a
telecommunications service, nondiscriminatory access to network elements
on an unbundled basis at any technically feasible point on rates, terms,
and conditions that are just, reasonable, and nondiscriminatory . . .
.\"[^85] Section 153(29) defines \"network element\" to include any
\"facility or equipment used in the provision of a telecommunications
service\" along with the \"features, functions, and capabilities that
are provided by means of such facility or equipment.\"[^86] The
Commission noted in the *Local Competition Order*, however, that section
251(d)(2) gave it authority \"to refrain from requiring incumbent LECs
to provide all network elements for which it is technically feasible to
provide access.\"[^87] In considering whether to refrain from requiring
the unbundling of a particular network element, the Commission is to
weigh the standards set out in section 251(d)(2), as well as any other
standards the Commission considers consistent with the objectives of the
1996 Act.[^88]

51\. So as to \"promote efficient, rapid, and widespread new
entry,\"[^89] the Commission identified a minimum list of seven network
elements that incumbent LECs must make available to new entrants.[^90]
The Commission did not identify DSLAMs or packet switches as network
elements that incumbent LECs must unbundle. It emphasized, however, that
its list was a minimum one, because an exhaustive list would not
accommodate changes in technology or differing local conditions.[^91]
Further, the Commission noted that it might identify \"additional, or
perhaps different\" unbundling requirements in the future.[^92]

> **b. Discussion**

**(1) Loops**

52\. We grant the ALTS request for a declaratory ruling that incumbent
LECs are required, pursuant to section 251(c)(3) of the Act, to provide
unbundled loops capable of transporting high speed digital signals.[^93]
ALTS asserts that competitive LECs are having extreme difficulty
obtaining the digital loops needed to provide advanced services.[^94] We
agree with ALTS that, if we are to promote the deployment of advanced
telecommunications capability to all Americans, competitive LECs must be
able to obtain access to incumbent LEC xDSL-capable loops on an
unbundled and nondiscriminatory basis.[^95]

53\. In the *Local Competition Order*, the Commission identified the
local loop as a network element that incumbent LECs must unbundle \"at
any technically feasible point.\"[^96] It defined the local loop to
include \"two-wire and four-wire loops that are conditioned to transmit
the digital signals needed to provide services such as ISDN, ADSL, HDSL,
and DS1-level signals.\"[^97] To the extent technically feasible,
incumbent LECs must \"take affirmative steps to condition existing loop
facilities to enable requesting carriers to provide services not
currently provided over such facilities.\"[^98] For example, if a
carrier requests an unbundled loop for the provision of ADSL service,
and specifies that it requires a loop free of loading coils, bridged
taps, and other electronic impediments, the incumbent must condition the
loop to those specifications, subject only to considerations of
technical feasibility. The incumbent may not deny such a request on the
ground that it does not itself offer advanced services over the loop, or
that other advanced services that the competitive LEC does not intend to
offer could be provided over the loop. As the Commission stated in the
*Local Competition Order*, \"section 251(c)(3) does not limit the types
of telecommunications services that competitors may provide over
unbundled elements to those offered by the incumbent LEC.\"[^99]

54\. The incumbent LECs\' obligation to provide requesting carriers with
fully functional conditioned loops extends to loops provisioned through
remote concentration devices such as digital loop carriers (DLC). The
Commission concluded in the *Local Competition Order* that it was
\"technically feasible\" to unbundle loops that pass through an
integrated DLC or similar remote concentration devices, and required
incumbent LECs to unbundle such loops for competitive LECs.[^100]

55\. To the extent that a competitive LEC cannot obtain
nondiscriminatory access to an xDSL-capable loop, or any other loop
capabilities to which it is entitled by virtue of section 251(c)(3) and
the *Local Competition Order*, the competitive LEC can pursue remedies
before the Commission and the appropriate state commissions. We note
that the Commission has recently adopted an expedited complaint process
to resolve these types of competitive issues in an accelerated
fashion.[^101]

56\. Under our existing rules, incumbent LECs are also required to
provide competing carriers with nondiscriminatory access to the
operations support systems (OSS) functions for pre-ordering, ordering,
and provisioning loops.[^102] If new entrants are to have a meaningful
opportunity to compete, they must be able to determine during the
pre-ordering process as quickly and efficiently as can the incumbent,
whether or not a loop is capable of supporting xDSL-based
services.[^103] An incumbent LEC does not meet the nondiscrimination
requirement if it has the capability electronically to identify
xDSL-capable loops, either on an individual basis or for an entire
central office, while competing providers are relegated to a slower and
more cumbersome process to obtain that information. In the NPRM below,
we seek comment on whether we should adopt any additional rules to
ensure that competing providers have nondiscriminatory access to the
loop information they need to provide advanced services.[^104]

**(2) Other Network Elements**

57\. We further grant ALTS\' petition to the extent that ALTS requests a
declaratory ruling that advanced services are telecommunications
services, and that the facilities and equipment used to provide advanced
services are network elements subject to the obligations in section
251(c).[^105] Given our conclusion above that advanced services offered
by incumbent LECs are telecommunications services, all equipment and
facilities used in the provision of advanced services are \"network
elements\" as defined by section 153(29).[^106]

58\. We seek comment in the NPRM below on the specific unbundling
obligations that would apply to the network elements used to provide
advanced services.[^107] We note, for example, that the section
251(c)(3) unbundling requirement is subject to the question of technical
feasibility. We seek comment in the NPRM on whether the Commission
should weigh any criteria under section 251(d)(2) other than those
expressly listed in that provision to determine the extent to which
network elements used to provide advanced services should be
unbundled.[^108]

**5. Resale Obligations Under Section 251(c)(4)**

**(a) Background**

59\. Section 251(c)(4) requires incumbent LECs to offer for resale at
wholesale rates \"any telecommunications service that the carrier
provides at retail to subscribers who are not telecommunications
carriers.\"[^109] The Commission held in the *Local Competition Order*
that this obligation extends to *all* telecommunications services, not
merely voice services, that an incumbent LEC provides to subscribers who
are not telecommunications carriers.[^110] The Commission concluded that
an incumbent LEC must establish a wholesale rate for every retail
service that: (1) meets the statutory definition of a
\"telecommunications service,\" and (2) is provided at retail to
subscribers who are not telecommunications carriers.[^111] The
Commission concluded, however, that exchange access services are
generally offered to telecommunications carriers rather than retail
subscribers, and thus were not subject to the provisions of section
251(c)(4).[^112]

**(b) Discussion**

60\. Given our determination above that advanced services offered by
incumbent LECs are telecommunications services, by the plain terms of
the Act, incumbent LECs have the obligation to offer for resale,
pursuant to section 251(c)(4), all advanced services that they generally
provide to subscribers who are not telecommunications carriers. The
Commission in the *Local Competition Order* similarly emphasized that
the resale obligation extends to *all* such telecommunications services,
including advanced services.[^113]

61\. To the extent that advanced services are local exchange services,
they are subject to the resale provisions of section 251(c)(4). In the
*Local Competition Order*, however, the Commission concluded that
exchange access services are not subject to the provisions of section
251(c)(4) because \"\[t\]he vast majority of purchasers of interstate
access services are telecommunications carriers, not end users.\"[^114]
To the extent that advanced services are exchange access services, we
believe that advanced services are fundamentally different from the
exchange access services that the Commission referenced in the *Local
Competition Order* and concluded were not subject to section
251(c)(4).[^115] We expect that advanced services will be offered
predominantly to residential or business users or to Internet service
providers. None of these purchasers are telecommunications
carriers.[^116] We examine this issue further and propose specific
requirements in the NPRM below.[^117]

**6. Collocation**

> **a. Background**

62\. In order to provide advanced services, new entrants may need to
collocate equipment on the incumbent LEC\'s premises for interconnection
and access to network elements.[^118] Congress recognized competing
providers\' need for collocation in section 251(c)(6) of the Act, which
requires incumbent LECs to provide \"for the physical collocation of
equipment necessary for interconnection or access to unbundled network
elements at the premises of the local exchange carrier, except that the
carrier may provide for virtual collocation if the local exchange
carrier demonstrates to the State commission that physical collocation
is not practical for technical reasons or because of space
limitations.\"[^119] In the *Local Competition Order*, the Commission
implemented specific minimum requirements to implement the collocation
requirements of section 251(c)(6).[^120] The Commission adopted rules
for, among other things, space allocation and exhaustion, types of
equipment that could be collocated, and LEC premises where parties could
collocate equipment.[^121]

63\. ALTS asserts that excessive rates and unreasonably burdensome terms
and conditions for collocation are blocking competitive entry into data
service markets.[^122] As a result, ALTS requests that we initiate
proceedings to help ensure implementation of section 251 and 252 of the
Act with respect to deployment of advanced services. Among other
requests, ALTS asks us to exercise our authority under section 251(c)(6)
of the Act and establish additional rules governing collocation
arrangements.[^123]

> **b. Discussion**

64\. We conclude that the availability of cost efficient collocation
arrangements is essential for the deployment of advanced services by
facilities-based competing providers. Given incumbent LECs\' statutory
duty to provide physical collocation on just, reasonable, and
nondiscriminatory rates, terms, and conditions,[^124] we believe that
incumbent LECs have a statutory obligation to offer cost efficient and
flexible collocation arrangements. In addition, we expect that incumbent
LECs will fulfill their statutory collocation duty by taking steps to
offer collocation arrangements that permit new entrants to provide
advanced services using equipment that the new entrant provides.[^125]
Such steps include offering collocation to competing providers in a
manner that reduces unnecessary costs and delays for the competing
providers and that optimizes the amount of space available for
collocation. We conclude that measures that optimize the available
collocation space and that reduce costs and delays for competing
providers are consistent with an incumbent LEC\'s obligation under both
the statute and our rules. In addition, we agree with ALTS that we
should build upon our current physical and virtual collocation
requirements adopted in the *Expanded Interconnection*[^126] and *Local
Competition*[^127] proceedings to ensure that our rules promote, to the
greatest extent possible, the rapid deployment of advanced
telecommunications capability to all Americans. We, therefore, propose
specific additional physical and virtual collocation requirements in the
NPRM below.[^128]

**B. Forbearance and LATA Boundary Modifications**

**1. Background**

65\. As discussed above, sections 251(c)(3) and (4) require incumbent
LECs to provide nondiscriminatory access to unbundled network elements
and to offer for resale, at wholesale rates, any telecommunications
service the carrier provides at retail.[^129] Section 271(b)(1) provides
that a BOC or BOC affiliate \"may provide interLATA services originating
in any of its in-region States\" only \"if the Commission approves the
application of such company for such State under \[section
271(d)(3)\].\"[^130] Under section 271(d)(3), the Commission may grant a
BOC authorization to originate in-region, interLATA services only if it
finds that the BOC has met the competitive checklist set forth in
section 271(c)(2)(B) and other statutory requirements.[^131]

66\. Section 706(a) of the 1996 Act instructs the Commission and each
state commission to \"encourage the deployment on a reasonable and
timely basis of advanced telecommunications capability to all Americans
. . . by utilizing, in a manner consistent with the public interest,
convenience, and necessity, price cap regulation, *regulatory
forbearance*, measures that promote competition in the local
telecommunications market, or other regulating methods that remove
barriers to infrastructure investment.\"[^132]

67\. Section 10 of the Communications Act requires the Commission to
forbear from applying any regulation or any provision of the
Communications Act to telecommunications carriers or telecommunications
services, or classes thereof, if the Commission determines that certain
conditions are satisfied.[^133] Section 10(d) specifies, however, that
\"\[e\]xcept as provided in section 251(f), the Commission may not
forbear from applying the requirements of section 251(c) or 271 under
\[section 10(a)\] until it determines that those requirements have been
fully implemented.\"[^134]

68\. In their petitions, Ameritech, U S WEST, Bell Atlantic, and SBC
seek regulatory relief from the application of section 251 and/or
section 271 through Commission forbearance from applying those sections
or through LATA boundary changes.[^135] Recognizing that the Commission
may not forbear from application of sections 251(c) and 271 under
section 10(a) until the requirements in those sections have been fully
implemented, petitioners seek forbearance pursuant to section 706(a).
Petitioners contend that section 706(a) constitutes an independent grant
of forbearance authority that encompasses the ability to forbear from
sections 251(c) and 271. Ameritech, Bell Atlantic, and U S WEST seek
regulatory relief not only to provide xDSL-based services to end users,
but also to obtain freedom to become Internet backbone providers.[^136]
Ameritech and U S WEST, notwithstanding their request here for LATA
boundary changes, argue that this relief would not affect their
compliance with section 271 for voice services.[^137]

**2. Discussion**

**a. Forbearance**

69\. After reviewing the language of section 706(a), its legislative
history, the broader statutory scheme, and Congress\' policy objectives,
we agree with numerous commenters that section 706(a) does not
constitute an independent grant of forbearance authority or of authority
to employ other regulating methods.[^138] Rather, we conclude that
section 706(a) directs the Commission to use the authority granted in
other provisions, including the forbearance authority under section
10(a), to encourage the deployment of advanced services.

70\. To determine whether section 706(a) constitutes an independent
grant of forbearance authority, we look first to the text of the
statute. We recognize that the language of section 706 directs the
Commission to encourage the deployment of advanced services \"by
utilizing . . . regulatory forbearance . . . .\"[^139] It is not clear
from the text of section 706(a), however, whether Congress intended that
provision to constitute an independent grant of forbearance authority,
or, alternatively, a directive that the Commission use forbearance
authority granted elsewhere, in encouraging the deployment of advanced
services.[^140]

71\. Because the language of section 706(a) does not make clear whether
section 706(a) constitutes an independent grant of forbearance
authority, we look to the broader statutory scheme, its legislative
history, and the underlying policy objectives to resolve the ambiguity.
We examine the structure of the 1996 Act as a whole. As the courts have
recognized, \"\[t\]he literal language of a provision taken out of
context cannot provide conclusive proof of congressional intent, any
more than a word can have meaning without context to illuminate its
use.\"[^141] Rather, when we are \"charged with understanding the
relationship between two different provisions within the same statute,
we must analyze the language of each to make sense of the whole.\"[^142]

72\. As stated above, section 10(d) expressly forbids the Commission
from forbearing from the requirements of sections 251(c) and 271 \"until
it determines that those requirements have been fully
implemented.\"[^143] There is no language in section 10 that carves out
an exclusion from this prohibition for actions taken pursuant to section
706.

73\. If section 706(a) were an independent grant of authority, as the
BOCs argue,[^144] then it would allow us to forbear from applying
sections 251(c) and 271 regardless of whether either section were fully
implemented. Sections 251(c) and 271 are cornerstones of the framework
Congress established in the 1996 Act to open local markets to
competition.[^145] The central importance of these provisions is
reflected in the fact that they are the only two provisions that
Congress carved out in limiting the Commission\'s otherwise broad
forbearance authority under section 10. We find it unreasonable to
conclude that Congress would have intended that section 706 allow the
Commission to eviscerate those forbearance exclusions after having
expressly singled out sections 251(c) and 271 for different treatment in
section 10.[^146]

74\. We are not persuaded by Bell Atlantic\'s argument that a conclusion
that section 706(a) confers no independent authority would make that
section redundant.[^147] On the contrary, we conclude that section
706(a) gives this Commission an affirmative obligation to encourage the
deployment of advanced services, relying on our authority established
elsewhere in the Act. Our actions and proposals in this Order and NPRM
make clear that this obligation has substance.

75\. Furthermore, we find nothing in the legislative history of section
706 to indicate that Congress gave us independent authority in section
706(a) to forbear from provisions of the Act. Section 706 was adopted
contemporaneously with the forbearance authority in section 10, with
section 706 contained in section 304 of the Senate version of the
Communications Act of 1996, and the forbearance authority that was later
included in section 10 contained in section 303 of that bill.[^148]
Thus, when enacting section 706, Congress was well aware of the explicit
exclusions of our forbearance authority in section 10(d). Congress
presumably would have stated explicitly that those exclusions would not
apply to forbearance under section 706 had it so intended. We are not
persuaded by Ameritech\'s argument that the statement in the Senate
Commerce Committee\'s Report that section 706 is intended as a
\"fail-safe\" indicates that Congress provided independent forbearance
authority in section 706(a).[^149] The Senate Commerce Committee\'s
Report makes clear that section 706 \"ensures that advanced
telecommunications capability is promptly deployed by requiring the
\[Commission\] to initiate and complete regular inquiries,\" and then
take immediate action if it determines that such capability is not being
deployed to all Americans.[^150] The Report does not clarify, however,
whether section 706 is an independent grant of regulatory authority or
directs the Commission to use regulatory measures granted in other
provisions of the Act.[^151]

76\. Moreover, as a matter of policy, we believe that interpreting
section 706, not as an independent grant of authority, but rather, as a
direction to the Commission to use the forbearance authority granted
elsewhere in the Act, will further Congress\' objective of opening all
telecommunications markets to competition, including the market for
advanced services.[^152] As discussed above, because of the central
importance of the requirements in sections 251(c) and 271 to opening
local markets to competition, we consider these sections to be
cornerstones of the framework Congress established in the 1996 Act. We
find that this conclusion that section 706 does not provide the
statutory authority to forbear from sections 251(c) and 271 will better
promote Congress\' objectives in the Act.

77\. For the foregoing reasons, we conclude that, in light of the
statutory language, the framework of the 1996 Act, its legislative
history, and Congress\' policy objectives, the most logical statutory
interpretation is that section 706 does not constitute an independent
grant of authority. Rather, the better interpretation of section 706 is
that it directs us to use, among other authority, our forbearance
authority under section 10(a) to encourage the deployment of advanced
services. Under section 10(d), we may not use that authority to forbear
from applying the requirements of section 251(c) and 271 prior to their
full implementation. Petitioners do not suggest that either section
251(c) or section 271 has been fully implemented, and we have no record
on which to determine that either has been fully implemented. We,
therefore, deny the BOC requests that we forbear from applying the
requirements of sections 251(c) and 271. We seek comment in the NPRM
below on whether there are avenues other than forbearance that might
allow us to lessen the obligations of these sections in appropriate
circumstances.[^153]

78\. Ameritech also requests forbearance pursuant to section 706 from
application of section 272\'s requirements if we grant its request to
forbear from applying section 271\'s requirements. Because we deny that
request for section 271 forbearance, we also deny Ameritech\'s request
for section 272 forbearance.

79\. In addition, SBC requests forbearance, under section 10: (1) from
the dominant treatment of ADSL service to the extent that treatment
results in the imposition of tariff filing requirements and other
obligations under the Act and under parts 61 and 69 of the Commission\'s
rules; and (2) from the obligations of section 252(i).[^154] Section
10(a) requires us to forbear from the application of a statutory
provision or regulation if we determine that specific criteria are
met.[^155] We conclude, on the record before us, that SBC has not
demonstrated that the relief it requests pursuant to section 10 meets
these criteria. In particular, to the extent that advanced services are
offered by an incumbent LEC, we find, on the record before us, that it
is consistent with the public interest to subject such incumbents to
full incumbent LEC regulation.[^156] We therefore deny SBC\'s requests
for forbearance under section 10. We note, however, that, in the NPRM
below, we address the regulatory status of an advanced services
affiliate that competes without any unfair advantages derived from its
affiliation with the incumbent. In particular, we tentatively conclude
below that such an affiliate, to the extent it provides interstate
exchange access services, should, under existing Commission precedent,
be presumed to be nondominant and should not be required to file tariffs
for its provision of any interstate services that are exchange
access.[^157]

**b. LATA Boundary Modifications**

80\. As an alternative to forbearance from enforcing section 271,
Ameritech, Bell Atlantic and U S WEST request that the Commission permit
them to change LATA boundaries pursuant to section 3(25) of the
Communications Act in order to create a large-scale \"LATA\" for
packet-switched services.[^158] We decline to grant petitioners\'
requests for large-scale changes in LATA boundaries.

81\. Although section 3(25)(B) of the Act permits a BOC to modify LATA
boundaries upon Commission approval, we conclude that petitioners\'
requests for large-scale changes in LATA boundaries amount to more than
requests for \"modified\" LATAs as that term is used in section
3(25)(B).[^159] In *MCI v. AT&T*,[^160] the Supreme Court held that the
Commission\'s authority to \"modify\" portions of the Communications Act
means \"moderate change\" and not \"basic and fundamental changes in the
scheme created by \[the section at issue\]\"[^161] We conclude that such
large-scale changes in LATA boundaries for packet-switched services as
proposed by petitioners would effectively eliminate LATA boundaries for
such services.[^162]

82\. Such far-reaching and unprecedented relief could effectively
eviscerate section 271 and circumvent the procompetitive incentives for
opening the local market to competition that Congress sought to achieve
in enacting section 271 of the Act.[^163] We conclude, therefore, that
the requests for large-scale changes in LATA boundaries, such as
Ameritech\'s request for a global, \"data LATA,\" are functionally no
different than petitioners\' requests that we forbear from applying
section 271 to their provision of these services. It would exalt form
over substance if we were to grant the requested large-scale changes in
LATA boundaries. In the NPRM below, we seek comment on whether the
Commission should, in certain circumstances, modify LATA boundaries to
provide targeted relief.[^164]

**VI. NOTICE OF PROPOSED RULEMAKING**

**A. Introduction**

83\. In this NPRM, we propose an optional alternative pathway for
incumbent LECs that would allow separate affiliates to provide advanced
services free from incumbent LEC regulation. In particular, if an
incumbent LEC chooses to offer advanced services through an affiliate
that is truly separate from the incumbent, that affiliate would not be
deemed an incumbent LEC and therefore would not be subject to incumbent
LEC regulation, including the obligations under section 251(c). On the
other hand, if the advanced services affiliate derives an unfair
advantage from its relationship with the incumbent, that affiliate
should be viewed as stepping into the shoes of the incumbent LEC and
would be subject to all the requirements that Congress established for
incumbent LECs. We propose in this NPRM specific structural separation
and nondiscrimination requirements that we would require be in place in
order for an affiliate to be deemed a non-incumbent LEC, and thus not
subject to section 251(c). We also offer guidance on various factors
that the Commission should consider in determining when an advanced
services affiliate would be an \"assign\" of the incumbent LEC, and,
therefore, subject to the obligations of section 251(c).

84\. In this NPRM, we also propose additional rule changes that would
apply whether or not incumbent LECs choose to establish a separate
affiliate to provide advanced services.[^165] We propose rules to ensure
that all entities seeking to offer advanced services have adequate
access to collocation and loops, which is critical to promote
competition in the marketplace for advanced services. We then seek
comment on ways to modify the section 251(c) unbundling requirements,
once companies are in compliance with the rule changes we propose
regarding collocation and access to loops. Finally, we seek comment on
measures that would provide BOCs with targeted interLATA relief to
ensure that all consumers, even those in rural areas, are able to reap
the benefits of advanced telecommunications capability.

**B. Provision of Advanced Services through a Separate Affiliate**

85\. A number of parties have raised the question of whether incumbent
LECs may provide advanced services through separate affiliates that
would not be subject to incumbent LEC regulation. For example, APT
suggests in its petition that the Commission explore the possibility of
requiring incumbent LECs to form separate subsidiaries, which would not
be subject to rate regulation because of their lack of market
power.[^166] Ameritech asks that the Commission clarify that a BOC
\"data affiliate\" that complies with the separation requirements in the
*Competitive Carrier Fifth Report and Order*, as modified by the *LEC
Classification Order*,[^167] should be deemed a non-incumbent LEC, and
thus not subject to section 251(c) obligations, and nondominant in its
provision of interstate advanced services.[^168] SBC has requested that
the Commission \"confirm that an affiliate of an incumbent LEC that
satisfies applicable structural separation requirements is not itself an
incumbent LEC for purpose of section 251(c).\"[^169] Rhythms Net
suggests that incumbent LEC separate affiliates can be \"a meaningful
tool in assuring parity of treatment if the separate subsidiary is
required to be a \[competitive LEC\] that functions like any other
\[competitive LEC\] . . . .\"[^170] The Commission also explored the
separate affiliate issue with many industry representatives during an en
banc hearing on bandwidth issues.[^171]

86\. We are committed to ensuring that an optional alternative pathway
is available for incumbent LECs that are willing to offer advanced
services on the same footing as any of their competitors. As described
more fully below, we believe that, if advanced services are offered by
an affiliate that is truly separate from the incumbent LEC (an
\"advanced services affiliate\"), that affiliate should not be deemed an
incumbent LEC and, therefore, should not be subject to the incumbent LEC
regime established by Congress in section 251(c). In addition, we
tentatively conclude below that such an advanced services affiliate, to
the extent it provides interstate exchange access services, should,
under existing Commission precedent, be presumed to be nondominant (and,
therefore, not be subject to price cap regulation or rate of return
regulation for its provision of such services). We also tentatively
conclude below that such an affiliate, as a non-incumbent, also should
not be required to file tariffs for its provision of any interstate
services that are exchange access. We emphasize that we are not
proposing that incumbent LECs be required to establish affiliates to
provide advanced services. Any incumbent LEC is free to provide advanced
services on an integrated basis, but, in those circumstances, is subject
to section 251(c) requirements. Simply put, each incumbent LEC seeking
to provide advanced services must make a business decision as to whether
it wishes to provide such services free of section 251(c) requirements.

87\. In this NPRM we lay out a framework that will guide incumbent LECs
that choose to pursue this alternative. The proposals in this NPRM are
based on the underlying assumption that, to be free of incumbent LEC
regulation, an advanced services affiliate must function just like any
other competitive LEC and not derive unfair advantages from the
incumbent LEC.

88\. We recognize that many states have significant practical experience
in dealing with LEC affiliates in a variety of contexts. We therefore
welcome input from the states on each of the issues raised below
regarding provision of advanced services through a separate affiliate.

**1. Background**

89\. The obligations set out in section 251(c) of the Act are imposed
only on incumbent LECs.[^172] In the *Non-Accounting Safeguards Order*,
the Commission concluded that a BOC affiliate that satisfies appropriate
structural separation requirements is not deemed an incumbent LEC for
purposes of section 251 merely because it is engaged in local exchange
activities.[^173] Consistent with the reasoning in the Non‑Accounting
Safeguards Order, a determination as to whether a carrier is an
incumbent LEC is not based on the nature of the service the carrier
provides. Rather, in order to be deemed an incumbent LEC, a carrier must
meet the definition in section 251(h).

90\. Section 251(h)(1), in turn, defines an incumbent LEC as either a
member of NECA as of the date of the enactment of the 1996 Act, or a
\"successor or assign\" of such a member.[^174] When applying the
definition in section 251(h)(1)(B)(i) to separate affiliates in the
*Non-Accounting Safeguards Order*, the Commission concluded that
\"\[n\]o BOC affiliate was a member of NECA when the 1996 Act was
enacted.\"[^175] The Commission determined that an affiliate can,
however, be a \"successor or assign\" of a BOC. The Commission concluded
that, if a BOC transfers to its affiliate ownership of any network
elements that must be provided on an unbundled basis pursuant to section
251(c)(3), the affiliate would be deemed an assign of the BOC under
section 3(4) of the Act with respect to those network elements.[^176]

91\. In addition, we note that the Commission, under section 251(h)(2),
may, by rule, treat as an incumbent a LEC (or a class or category of
LECs) that occupies a position in the market for telephone exchange
service within an area that is comparable to the position occupied by
the incumbent LEC, and such carrier has substantially replaced an
incumbent LEC.[^177] The Commission stated in the *Local Competition
Order* that it \"will not impose incumbent LEC obligations on
non-incumbent LECs absent a clear and convincing showing that the LEC
occupies a position in the telephone exchange market comparable to the
position held by an incumbent LEC, has substantially replaced an
incumbent LEC, and that such treatment would serve the public interest,
convenience, and necessity and the purposes of section 251.\"[^178] In
the *Non-Accounting Safeguards Order*, the Commission determined that a
BOC affiliate is not \"comparable\" to an incumbent LEC under section
251(h)(2) merely because it is engaged in local exchange
activities.[^179]

**2. Advanced Services Affiliates**

92\. Building upon the reasoning in this existing precedent, we believe
that an advanced services affiliate of an incumbent LEC that (1)
satisfies adequate structural separation requirements (*i.e,* is
\"truly\" separate); and (2) acquires, on its own, facilities used to
provide advanced services (or leases such facilities from an
unaffiliated entity) is generally not an incumbent LEC, and, therefore,
is not subject to section 251(c) obligations with respect to those
facilities. We also note that, although we believe an advanced services
affiliate that is structured in accordance with rules we adopt in this
proceeding would not be an incumbent LEC, the affiliate would remain
subject to the general duties of telecommunications carriers in section
251(a)[^180] and the obligations of all local exchange carriers in
section 251(b).[^181] Thus, for example, under section 251(a)(1), such
an affiliate must \"interconnect directly or indirectly with the
facilities and equipment of other telecommunications carriers.\"[^182]

93\. In describing what we believe is an alternative pathway by which a
truly separate affiliate of an incumbent LEC may provide advanced
services free from the obligations of section 251(c), we emphasize that
we are not proposing to forbear from section 251(c) requirements.
Rather, we are setting forth proposals on the circumstances under which
an affiliate is not deemed an incumbent LEC in the first place.

94\. Certain competitive LECs argue that, regardless of how a separate
affiliate is structured, new entrants should be able to obtain unbundled
access to all such facilities used by the affiliate to provide advanced
services.[^183] We believe that such an interpretation violates section
251 of the Act. Under section 251(c), obligations to unbundle and to
offer resale at wholesale rates apply only to incumbent LECs, as defined
in section 251(h). Accordingly, to the extent that an entity is not an
\"incumbent LEC\" within the meaning of section 251(h), that entity will
not be subject to the obligations, under section 251(c), to unbundle and
to offer resale at wholesale rates.[^184] We believe that it would be
contrary to congressional intent to impose these obligations under
section 251(c) upon entities that do not fall within the definition of
an incumbent LEC. We seek comment on this statutory analysis and on our
belief that a truly separate affiliate of an incumbent LEC may provide
advanced services free from the obligations of section 251(c).

> **a. Circumstances Under Which an Advanced Services Affiliate Would
> Not Be an**
>
> **Incumbent LEC**

95\. [Separation Requirements for Non-Incumbent LEC Status]{.underline}.
We now explore the circumstances under which an advanced services
affiliate would not qualify as an \"incumbent LEC\" under the definition
set forth by Congress in section 251(h), and thus would not be subject
to section 251(c) obligations. In particular, we explore what structural
separation requirements for advanced services affiliates are sufficient
for those affiliates to be deemed non-incumbent LECs.

96\. We believe that, if an incumbent LEC wishes to establish an
advanced services affiliate that would not be deemed an incumbent LEC,
it should comply with the following structural separation and
nondiscrimination requirements.

> \-- First, the incumbent must \"operate independently\" from its
> affiliate.[^185] In particular, the incumbent and affiliate may not
> jointly own switching facilities or the land and buildings on which
> such facilities are located.[^186] In addition, the incumbent may not
> perform operating, installation, or maintenance functions for the
> affiliate.[^187]
>
> \-- Second, transactions must be on an arm\'s length basis, reduced to
> writing, and made available for public inspection.[^188] We propose
> that the affiliate be required to provide a detailed written
> description of any asset or service transferred and the terms and
> conditions of the transaction on the Internet, through the company\'s
> home page, within ten days of the transaction.[^189] This would
> provide a readily accessible mechanism for new entrants to ensure they
> are receiving treatment equivalent to that provided to the incumbent
> LEC\'s advanced services affiliate. All transactions between the
> incumbent and its affiliate also must comply with the affiliate
> transactions rules, as modified in the *Accounting Safeguards*
> proceeding.[^190] We believe that these affiliate transactions rules
> are, in the context of transfers from incumbent LECs to their advanced
> services affiliates, sufficient to discourage, and facilitate
> detection of, improper cost allocations in order to prevent incumbent
> LECs from imposing the costs of their competitive ventures on
> telephone ratepayers.
>
> \-- Third, the incumbent and affiliate must maintain separate books,
> records, and accounts.
>
> \-- Fourth, the incumbent and advanced services affiliate must have
> separate officers, directors, and employees.
>
> \-- Fifth, the affiliate must not obtain credit under any arrangement
> that would permit a creditor, upon default, to have recourse to the
> assets of the incumbent.
>
> \-- Sixth, the incumbent LEC, in dealing with its advanced services
> affiliate may not discriminate in favor of its affiliate in the
> provision of any goods, services, facilities or information or in the
> establishment of standards.[^191]
>
> \-- Seventh, an advanced services affiliate must interconnect with the
> incumbent LEC pursuant to tariff or pursuant to an interconnection
> agreement, and whatever network elements, facilities, interfaces and
> systems are provided by the incumbent LEC to the affiliate must also
> be made available to unaffiliated entities.[^192]

We seek comment on our proposal.

97\. To the extent commenters disagree with our reasoning, we invite
them to propose specific modifications to the framework set forth above,
and to describe with particularity why such modifications should be
adopted. In particular, commenters should address how any proposed
modification addresses concerns that incumbent LECs could improperly
discriminate against competing providers, for instance, by using control
over key facilities and services, in order to gain a competitive
advantage for their advanced services affiliates.[^193] Commenters also
should address how any proposed modification addresses concerns about
cost misallocation.

98\. We seek comment on whether the same separation requirements should
apply to all advanced services affiliates for them to be deemed not
incumbent LECs, regardless of the size of the associated incumbent LECs.
We note, for example, that section 251(f) provides exemptions from
section 251(c) obligations for certain rural telephone companies and
allows a local exchange carrier with fewer than 2 percent of the
Nation\'s subscriber lines to petition a state Commission for suspension
or modification of application of a particular requirement.[^194] We
also note that, to the extent a BOC is authorized to provide advanced
services on an interLATA basis pursuant to section 271, it will be
required to offer these services through an affiliate that complies with
the requirements of section 272. We seek comment on whether, as a
practical matter, a BOC would choose to establish two separate
affiliates to provide advanced services \-- one to provide such services
on an interLATA basis and another to provide such services on an
intraLATA basis \-- if we were to adopt separation requirements less
stringent than those in section 272 for advanced services affiliates.

99\. We seek comment on whether any separation and other safeguards
should sunset after a certain period of time or change in conditions.
For example, with respect to the BOCs, we seek comment on whether the
safeguards necessary to be deemed a non-incumbent LEC in the provision
of advanced services should sunset at the same time that the
statutorily-mandated section 272 requirements sunset with respect to the
BOCs\' provision of in-region interLATA services.[^195] We seek comment
on what other periods may be appropriate.

100\. [Non-Dominant Status]{.underline}. We also tentatively conclude
that an advanced services affiliate, to the extent it provides
interstate exchange access services,[^196] should, under existing
Commission precedent, be presumed to be nondominant.[^197] Therefore,
such affiliate would not be subject to price cap regulation or rate of
return regulation for its provision of such services.[^198] We
tentatively conclude that such an affiliate, as a non-incumbent, also
should not be required to file tariffs for its provision of any
interstate services that are exchange access.[^199] We seek comment on
these tentative conclusions.

101\. [Miscellaneous Issues]{.underline}. We seek comment on whether an
advanced services affiliate should be limited in its ability either to
resell telecommunications services offered by the incumbent LEC or to
purchase unbundled network elements from the incumbent LEC. We also seek
comment on whether a virtual collocation arrangement is more practical
or attractive to an incumbent\'s affiliate than to other competitive
LECs, and, therefore, creates an unfair competitive advantage for an
advanced services affiliate vis-a-vis other entrants. If so, are there
ways to make virtual collocation arrangements more equal?

102\. We also note that some incumbent LECs have formed their own
information services providers. Are advanced services affiliates likely
to favor such affiliated information services providers, and, if so, in
what ways? We also seek comment on whether competing information
services providers (such as, for example, Internet services providers)
will have the ability to offer service to customers of the advanced
services affiliate.[^200] Could the advanced services affiliate and the
incumbent LEC act in concert to engage in a price squeeze on
unaffiliated information service providers? Parties arguing that the
incentive and ability for affiliates to favor affiliated information
services providers should suggest means by which the Commission could
address these concerns.[^201]

103\. Finally, commenters should compare any anticompetitive concerns
they have with the operation of an advanced services affiliate to
similar concerns they may have with the offering of such services on an
integrated basis by the incumbent.

> **b. Transfers from an Incumbent LEC to an Advanced Services
> Affiliate**

104\. In order not to be subject to the requirements of section 251(c),
the advanced services affiliate must not be a successor or assign of the
incumbent LEC. A determination as to whether an affiliate is a successor
or assign is ultimately fact-based.[^202] In order to provide clarity
and regulatory certainty, we make certain proposals below regarding when
we would view an affiliate as a successor or assign. We seek to
establish principles to guide the conduct of firms that choose to avail
themselves of this pathway. We seek comment on how particular
transactions between incumbents and their advanced services affiliates
should affect the regulatory status of the affiliates. Commenters should
consider whether, in a particular situation, the affiliate would be
functioning like any other competitive LEC, or more like an assign of
the incumbent.[^203]

105\. [Transfers of Facilities]{.underline}. Under existing Commission
precedent, if a BOC transfers to an affiliated entity ownership of any
network elements that must be provided on an unbundled basis pursuant to
section 251(c)(3), such an entity would be deemed to be an assign of the
BOC under section 3(4) of the Act with respect to those network
elements.[^204] We seek comment on whether the converse is true: should
an affiliate not be deemed an assign of the incumbent LEC if the
affiliate acquires facilities on its own, and not by transfer from the
incumbent LEC?

106\. In the Order above, we state that network elements used to provide
advanced services must be unbundled pursuant to section 251(c)(3),
subject to considerations of technical feasibility.[^205] We seek
comment on the extent to which incumbent LECs already have purchased
facilities used to provide advanced services, including, but not limited
to DSLAMs and packet switches. We tentatively conclude that, subject to
any *de minimis* exception as discussed below, a wholesale transfer of
such facilities would make an affiliate the assign of the incumbent
LEC.[^206]

107\. Moreover, we tentatively conclude that any transfer of local loops
from an incumbent LEC to an advanced services affiliate would make that
affiliate an assign of the incumbent LEC and subject to section 251(c)
with respect to those loops. We seek comment on these tentative
conclusions.

108\. We seek comment on whether there should be a *de minimis*
exception, under which a limited transfer of equipment would not make an
advanced services affiliate an assign of the incumbent LEC. We ask
commenters to address with specificity what should be deemed a \"*de
minimis* transfer of equipment.\" We tentatively conclude that, if we
were to adopt a *de minimis* exception, such an exception should apply
only to transfers of facilities used specifically to provide advanced
services, such as DSLAMs, packet switches, and transport facilities, and
not to other network elements, such as loops. We seek comment on this
tentative conclusion. We also seek comment on whether a *de minimis*
exception should apply only to transfers of equipment that the incumbent
LEC purchased and installed, or whether it should apply only to
equipment that the incumbent LEC has ordered but not installed.

109\. We seek comment on whether, if we adopt a *de* *minimis*
exception, there should be a time limitation on when such transfers may
occur, and if so, whether six months would be an appropriate period. We
also seek comment on whether there should be any difference in treatment
for transfers of equipment ordered and/or installed prior to the release
date of this NPRM as opposed to prior to the effective date of any rule
adopted in this proceeding.

110\. We also seek comment on whether, if we allow any transfer of
ownership of equipment from the incumbent LEC to an advanced services
equipment, the affiliate should have the right to leave that equipment
in its current location on the incumbent\'s premises. We tentatively
conclude that to the extent there are space limitations on the incumbent
LEC\'s premises, either in the central office or remote terminal, an
affiliate may not leave such equipment in its current location. We seek
comment on this analysis.

111\. We also seek comment on whether, if we allow any transfer of
equipment between the incumbent LEC and the advanced services affiliate,
such transfers should be exempt from the nondiscrimination requirement
we propose above, for a limited time. Without such an exception from the
nondiscrimination requirement, the incumbent would be required to offer
such equipment on a nondiscriminatory basis to all entities. We seek
comment on whether six months would be an appropriate period for such
exemption. We tentatively conclude that even if we adopt such an
exemption from the nondiscrimination requirement, such transfers should
remain subject to the affiliate transactions rules.[^207] We seek
comment on this analysis.

112\. In addition, we seek comment on whether there are other
circumstances under which incumbent LECs should be permitted to transfer
facilities to their affiliates. For example, should the transfer of a
packet switch used solely for trial purposes make the advanced services
affiliate an assign of the incumbent LEC with respect to that packet
switch? Commenters should suggest other situations in which transfers of
network elements from an incumbent LEC to its advanced services
affiliate should not render the affiliate an incumbent LEC.

113\. [Other Transfers]{.underline}. Incumbent LECs also may seek to
transfer to their advanced services affiliates assets other than network
elements. In order to provide clarity and regulatory certainty, we ask
commenters to provide examples of what types of transfers an incumbent
LEC may wish to make to its advanced services affiliate and whether
these transfers should make advanced services affiliates assigns of
incumbent LECs. Commenters should consider, among other things,
transfers of customer accounts, employees, and brand names.[^208] In
addition, we seek comment on whether, and if so to what extent,
transfers of funds from an incumbent LEC\'s corporate parent to the
incumbent LEC\'s advanced services affiliate should affect the
affiliate\'s regulatory status as a non-incumbent LEC. We also seek
comment on whether use by an affiliate of customer proprietary network
information (CPNI) gathered by the incumbent LEC is one factor among
many that might be relevant in making the determination that an
affiliate is an assign of the incumbent LEC.[^209] In addition, we
tentatively conclude that, if an incumbent sells or conveys central
offices or other real estate in which equipment used to provide
telecommunications services is located to an advanced services
affiliate, that would make the affiliate an assign of the incumbent. We
seek comment on this analysis.

114\. We tentatively conclude that, if we adopt a *de minimis* exception
for transfers of network elements, we should adopt an analogous
exception for any transfers of other assets. We also tentatively
conclude that if we adopt any exception from the nondiscrimination
requirement for transfers of network elements, we should adopt an
analogous exception for transfers of other assets. We seek comment on
these tentative conclusions.

115\. [Other Issues]{.underline}. We also seek comment on whether the
network disclosure requirements in section 251(c)(5)[^210] are
sufficient to notify competitive LECs who might be using, or planning to
use, facilities of the incumbent LEC that those facilities are being
transferred to the advanced services affiliate. Parties arguing that the
existing network disclosure requirements are not sufficient should
suggest alternative disclosure rules, including suggestions regarding
how soon prior to the transfer the incumbent LEC must notify competing
carriers.

**3. State Regulation**

116\. We note that, to the extent that an advanced services affiliate
provides interstate exchange access services, the Commission has clear
authority to regulate the separate affiliate\'s provision of those
services.[^211] To the extent that an advanced services affiliate
provides advanced services on an intrastate basis, we encourage states
to treat the affiliate equivalently to any other competing carrier
offering advanced services. We believe that, if states regulate advanced
services affiliates equivalently to other competitive LECs, incumbents
are more likely to offer such services through separate affiliates. On
the other hand, if states impose incumbent LEC regulation on such
affiliates, incumbent LECs are not likely to incur the expense of
establishing such affiliates. We encourage the states, therefore, to the
extent they require certification for competitive carriers, to certify
such advanced services affiliates within their jurisdictions in the same
manner as they certify other entities to provide advanced services.
Moreover, we encourage states to apply regulatory policies in a
nondiscriminatory fashion to all entities seeking to provide such
services, including advanced services affiliates that qualify for
non-incumbent LEC treatment under the rules we adopt in this NPRM. We
believe that such nondiscriminatory treatment is essential in order to
encourage innovation and investment in these new technologies. Congress
has determined that state actions should not \"prohibit, or have the
effect of prohibiting, the ability of any entity to provide interstate
or intrastate telecommunications service.\"[^212] We seek comment on
whether, if we adopt safeguards less stringent than those proposed in
this NPRM, states might have a legitimate interest in regulating an
incumbent LEC\'s advanced services affiliate differently than other
competitive LECs offering advanced services, due to increased
entanglement of the incumbent LEC and its advanced services affiliate.

117\. We note, however, that our discussion here is limited to state
regulation of the provision by advanced services affiliates of advanced
services. We do not address state regulation of an advanced services
affiliate\'s provision of other services, such as circuit-switched voice
services. In addition, we note that some states have expressed concerns
about an incumbent LEC\'s incentive to continue to innovate and invest
in the public switched network.[^213] We are sensitive to these
concerns, and we seek comment on how we and the states can work together
to ensure that the incumbent LECs who choose to offer advanced services
through affiliates do not allow their existing incumbent LEC networks to
degrade.

> **C. Measures to Promote Competition in the Local Market**

**1. Collocation Requirements**

> **a. Background**

118\. In 1992, in the *Expanded Interconnection* proceeding, the
Commission adopted rules pursuant to section 201 of the Act that
required large incumbent LECs to offer physical and virtual
collocation[^214] for parties that want to locate interstate special
access and switched transport transmission facilities at LEC
premises.[^215] In that proceeding, the Commission adopted rules
governing, among other things, space allocation and exhaustion, types of
equipment that could be collocated, and LEC premises where parties could
collocate equipment.

119\. In 1994, the United States Court of Appeals for the District of
Columbia Circuit concluded that the Commission lacked the authority
under section 201 of the Act to require physical collocation and
remanded all other issues to the Commission.[^216] On remand, the
Commission adopted rules, which remain in place today, for both special
access and switched transport that required LECs to provide either
virtual or physical collocation.[^217]

120\. As part of the 1996 Act, Congress adopted section 251(c)(6). This
provision requires incumbent LECs to provide \"for the physical
collocation of equipment necessary for interconnection or access to
unbundled network elements at the premises of the local exchange
carrier, except that the carrier may provide for virtual collocation if
the local exchange carrier demonstrates to the State commission that
physical collocation is not practical for technical reasons or because
of space limitations.\"[^218] In the *Local Competition Order*, the
Commission adopted specific rules to implement the collocation
requirements of section 251(c)(6).[^219]

121\. ALTS, in its petition, argues that the rules adopted in the *Local
Competition Order* do not go far enough.[^220] ALTS contends that
incumbent LECs offer physical collocation, but impede competition by:
(1) restricting equipment that can be placed in collocation
spaces;[^221] and (2) imposing substantial costs and delays on competing
carriers for space and construction of collocation cages.[^222] In
addition, ALTS contends that the space available for physical
collocation at many LEC premises is extremely limited, and in an
increasing number of cases, altogether unavailable.[^223] ALTS,
therefore, urges the Commission to adopt additional collocation rules to
ensure that competing providers have access to physical collocation
space so that they are able to provide advanced services using their
equipment.[^224]

> **b. Adoption of National Standards**
>
> **(1) Background**

122\. In the *Local Competition Order*, the Commission adopted minimum
requirements for nondiscriminatory collocation arrangements.[^225] The
Commission adopted rules for, among other things, space allocation and
exhaustion, types of equipment that could be collocated, and LEC
premises where parties could collocate equipment.[^226] The Commission
also concluded that state commissions should have the flexibility to
adopt additional collocation requirements that are otherwise consistent
with the Act and the Commission\'s regulations.[^227]

> **(2) Discussion**

123\. We seek comment on the extent to which we should establish
additional national rules for collocation pursuant to sections 201 and
251 in order to remove barriers to entry and speed the deployment of
advanced services.[^228] Parties should address whether adoption of
additional uniform standards would encourage the deployment of advanced
services by increasing predictability and certainty, and by facilitating
entry by competitors providing advanced services in multiple states. We
also ask commenters to address how any collocation requirements they
suggest would affect investment in, and deployment of, advanced
services.[^229]

124\. We tentatively conclude that any standards we adopt in this
proceeding should serve as minimum requirements and that states should
continue to have flexibility to adopt additional requirements that
respond to issues specific to that state or region. In the past two
years, a number of states have adopted collocation requirements that go
beyond the minimum requirements the Commission adopted in the *Local
Competition* proceeding.[^230] With respect to each subsection that
follows, we encourage commenters to address whether any state approach
to collocation might provide useful guidelines for additional national
standards to facilitate deployment of advanced services. We welcome
input from the states on each of these issues.

125\. We note that competitive LECs can pursue remedies for violations
of our collocation requirements before the Commission and the
appropriate state commissions.[^231] We seek comment on any measures we
could take to aid enforcement of our collocation requirements.[^232]

> **c. Collocation Equipment**
>
> **(1) Background**

126\. Section 251(c)(6) requires incumbent LECs to allow collocation of
\"equipment necessary for interconnection or access to unbundled network
elements . . . .\"[^233] In the *Local Competition Order*, the
Commission concluded that section 251(c)(6) requires collocation only of
equipment used for: (1) interconnection for \"the transmission and
routing of telephone exchange service and exchange access\" pursuant to
section 251(c)(2); and (2) access to unbundled network elements for
\"the provision of a telecommunications service\" pursuant to section
251(c)(3).[^234]

127\. The Commission concluded in the *Local Competition Order* that new
entrants may collocate transmission equipment, including optical
terminating equipment and multiplexers, on incumbent LEC premises.[^235]
The Commission further concluded, at the time, that incumbent LECs need
not permit the collocation of other types of equipment, including
switching equipment and equipment used to provide enhanced
services.[^236]

128\. With respect to switching equipment, however, the Commission
recognized that \"modern technology has tended to blur the line between
switching equipment and multiplexing equipment.\"[^237] A current trend
in manufacturing appears to be to integrate multiple functions into
telecommunications equipment.[^238] This trend has benefited service
providers and their customers by reducing costs, promoting efficient
network design, and expanding the range of possible service
offerings.[^239] As a consequence of this integration, certain
facilities that competing carriers need to collocate to provide advanced
services efficiently may also perform switching functions.[^240] Because
incumbent LECs are currently not required by our rules to permit
collocation of switching equipment, competing providers argue that
incumbent LECs may delay competitive entry by contesting, on a
case-by-case basis, the functionality of a particular piece of equipment
(which may perform switching functions in addition to its other
functions) and whether it may be collocated.[^241]

> **(2) Discussion**

129\. We tentatively conclude that incumbent LECs should not be
permitted to impede competing carriers from offering advanced services
by imposing unnecessary restrictions on the type of equipment that
competing carriers may collocate.[^242] We seek comment on whether we
should require incumbent LECs to allow new entrants to collocate
equipment that is used for interconnection and access to unbundled
network elements even if such equipment also includes switching
functionality.[^243] Would allowing collocation of equipment that
performs both switching and other functions encourage competitive LECs
to use integrated equipment as a means to collocate equipment that
otherwise would not be allowed in central offices? Would restrictions on
placing switching equipment in collocation spaces prevent new entrants
from taking advantage of integrated equipment that may be more cost
efficient?[^244] We tentatively conclude that, if an incumbent LEC
chooses to establish an advanced services affiliate, the incumbent must
allow competitive LECs to collocate equipment to the same extent as the
incumbent allows its advanced services affiliate to collocate equipment
in order to meet its existing obligation to provide collocation on
nondiscriminatory terms and conditions.[^245]

130\. If we decide to allow carriers (whether they be new entrants or
advanced services affiliates) to collocate equipment that includes
switching functionality, should we limit such collocation to equipment
that performs both switching and other functions (such as multiplexing),
or should we extend such collocation to switching equipment in general?
If we allow carriers to collocate switching equipment, should we limit
such collocation to packet-switching equipment or should we allow
collocation of circuit-switching equipment? Does it makes sense to
differentiate among technologies? To the extent that parties urge the
Commission to permit collocation of switching or other equipment that is
not used for interconnection or access to unbundled network elements, as
required by section 251(c)(6),[^246] parties should indicate what
sections of the Act authorize the Commission to require collocation of
such equipment.

131\. We also seek comment on any other specific restrictions that we
should adopt for switching equipment, assuming new entrants and advanced
services affiliates are permitted to collocate such equipment. For
example, given the lack of space in many central offices, we seek
comment on whether we should adopt size restrictions on the switching
equipment that a competing provider may collocate at a LEC\'s premises.
Parties should address whether failure to impose size or other
restrictions could impede competition by, for example, allowing the
first competing provider in the market to request all of the available
space, thereby potentially depriving other competitors of the
opportunity to collocate facilities. We tentatively conclude that an
advanced services affiliate should not be permitted to collocate its
switching equipment if there is only enough room at the central office
for one carrier to collocate such equipment. We seek comment on this
tentative conclusion.

132\. We further seek comment on whether carriers should be permitted to
collocate other equipment on LEC premises. We tentatively conclude that
we should continue to decline to require collocation of equipment used
to provide enhanced services.[^247] We seek comment on this tentative
conclusion. Parties should address whether provision of other advanced
services would only be possible if we allow collocation of enhanced
services equipment. Parties should further address whether allowing any
other equipment in the collocation space will facilitate new entrants\'
ability to provide advanced services and thereby encourage widespread
deployment of such services.

133\. ALTS contends that some incumbent LECs will not allow competitive
LECs to interconnect their collocated equipment.[^248] Under our current
rules, an incumbent LEC is required to allow competing carriers to
establish cross-connects to the collocated equipment of other competing
carriers at the incumbent\'s premises.[^249] We seek comment on any
additional steps we might take so that competitive LECs are able to
establish cross-connects to the equipment of other collocated
competitive LECs.

134\. Finally, we tentatively conclude that incumbent LECs may require
that all equipment that a new entrant places on its premises meet safety
requirements to avoid endangering other equipment and the incumbent
LECs\' networks.[^250] Some performance and reliability requirements,
however, may not be necessary to protect LEC equipment. Such
requirements may increase costs unnecessarily, which would lessen the
ability of new entrants to serve certain markets and thereby harms
competition. We tentatively conclude that, to the extent that incumbent
LECs use equipment that does not satisfy the Bellcore Network Equipment
and Building Specifications (NEBS) requirements, competitive LECs should
be able to collocate the same or equivalent equipment. We further
tentatively conclude that incumbent LECs should be required to list all
approved equipment and all equipment they use.[^251]

135\. We seek comment on whether competitive LECs should be required to
use NEBS-compliant equipment where the incumbent LEC uses NEBS-compliant
equipment for equivalent functions.[^252] Parties should address whether
allowing competitive LECs to collocate non-NEBS-compliant equipment
would introduce new vulnerability into the central office. Commenters
should distinguish between those NEBS safety requirements, which address
the need to protect central office equipment and telecommunications
networks, and NEBS performance requirements, which set equipment
reliability standards.[^253]

> **d. Allocation of Space**

**(1) Background**

136\. ALTS contends that, although incumbent LECs offer physical
collocation, they impede competition by imposing substantial costs and
delays on competing carriers for space and construction of collocation
cages.[^254] In addition, ALTS and many commenters assert that space for
physical collocation cages in many LEC premises is extremely limited,
and in an increasing number of cases, is unavailable altogether.[^255]

**(2) Discussion**

137\. Given that space in incumbent LEC premises is limited, we
tentatively conclude that we should require incumbent LECs to offer
collocation arrangements to both new entrants and any advanced services
affiliate incumbent LECs establish that minimize the space needed by
each competing provider in order to promote the deployment of advanced
services to all Americans.[^256] Such alternative collocation
arrangements include: (1) the use of shared collocation cages, within
which multiple competing providers\' equipment could be either openly
accessible or locked within a secure cabinet;[^257] (2) the option to
request collocation cages of any size without any minimum requirement,
so that competing providers will not use any more space than is
reasonably necessary for their needs;[^258] and (3) physical collocation
that does not require the use of collocation cages (\"cageless\"
collocation).[^259]

138\. We anticipate that requiring such alternative collocation
arrangements would foster deployment of advanced services by
facilitating entry into the market by competing carriers. We tentatively
conclude that allowing these alternative collocation arrangements will
optimize the space available at a LEC\'s premises, thereby allowing more
competitive LECs to collocate equipment and provide service. Moreover,
as ALTS indicates, more cost-effective collocation solutions may spur
collocation in residential and less densely populated areas.[^260] We
seek comment on what specific rules we should adopt to ensure that these
alternative arrangements are offered in a manner that facilitates
deployment of advanced services to the greatest extent possible.

139\. We recognize that section 251(c)(6) requires the incumbent LEC to
offer physical collocation unless the incumbent demonstrates to the
state commission that such an arrangement is not technically
feasible.[^261] We note that U S WEST is currently offering a cageless
collocation arrangement,[^262] and SBC is permitting competitive LECs to
share collocation space.[^263] We seek comment on whether, if an
incumbent LEC offers a particular collocation arrangement, such a
collocation arrangement should be presumed to be technically feasible at
other LEC premises.[^264]

140\. In addition, we note that, in the *Local Competition Order*, the
Commission concluded that incumbent LECs should be permitted reasonable
security arrangements to protect their equipment and ensure network
security and reliability.[^265] We recognize that adequate security for
both incumbent LECs and competitive LECs is important to encourage
deployment of advanced services. We now seek comment on the security and
access issues and any other issues that may arise from a requirement
that incumbent LECs provide these alternative collocation arrangements,
including cageless collocation. In addressing any security or other
issues, parties should identify any safeguards or other measures that
would resolve such concerns.

141\. With cageless collocation, in particular, we seek comment on
whether incumbent LECs should be allowed to require escorts for
competitive LEC technicians; whether concealed security cameras or
badges with computerized tracking systems would provide sufficient
protection; whether security measures should vary, or be allowed to
vary, by central office; and what security measures are appropriate for
unstaffed offices in remote areas. Given that incumbent LECs currently
maintain control over competitive LEC equipment in virtual collocation
arrangements, and competitive LECs have access to each other\'s
equipment in shared collocation space, we tentatively conclude that
carriers should be able to resolve any security concerns raised by
cageless collocation. We ask parties with knowledge of virtual
collocation and shared collocation arrangements to address how these
arrangements might serve as models for cost-effective cageless
collocation arrangements.

142\. We further seek comment on any other alternative physical
collocation arrangements that we should require to lower the cost of
collocation and thereby facilitate competition in the advanced services
marketplace. In addition, we seek comment on any other measures that
would facilitate the implementation of collocation arrangements and
thereby enable firms to enter new markets.[^266] Given that space
preparation and construction times vary greatly depending on the
location, parties should address whether there should be any uniform
standards that would apply on a national level. We also ask commenters
to address whether we can and should require incumbent LECs to remove
obsolete equipment and non-critical offices in central offices to
increase the amount of space available for collocation.[^267]

143\. We also seek comment on other measures that would reduce the cost
of physical collocation arrangements. For example, we seek comment on
ALTS\' proposal that we establish rules for the allocation of up-front
space preparation charges.[^268] One approach, adopted by Bell Atlantic
in its pre-filing statement in the New York Commission\'s section 271
docket, is that the competing provider would be responsible only for its
share of the cost of conditioning the collocation space, whether or not
other competing providers are immediately occupying the rest of the
space.[^269] In addition, Bell Atlantic committed to allowing smaller
competing providers to pay on an installment basis.[^270] We seek
comment on whether we should adopt Bell Atlantic\'s approach, or any
other approach, as a national standard in order to speed the deployment
of advanced telecommunications capability to all Americans. We also seek
comment on the ramifications that such a national standard would have on
the implementation and enforcement of the requirements of section 251
and 271. We tentatively conclude that any standards we adopt in this
proceeding should serve as minimum requirements, and that states should
continue to have flexibility to adopt additional collocation
requirements, consistent with the Act.

144\. Finally, we seek comment on how to address the entry barrier posed
by delays between the ordering and provisioning of collocation
space.[^271] We seek comment on ALTS\' proposal that we should establish
presumptive reasonable deployment intervals for new collocation
arrangements and expansion of existing arrangements.[^272] Currently, a
new entrant typically must first seek state competitive LEC
certification, before it can begin to negotiate an interconnection
agreement. In addition, competitive LECs have asserted that some
incumbent LECs will not allow a requesting carrier to order collocation
space until an interconnection agreement becomes final.[^273] If certain
issues are taken to arbitration, there can be considerable delay. We
seek comment on ways to shorten collocation ordering intervals. We also
ask commenters to address whether we should set specific intervals by
which time the incumbent LEC must or should be expected to provide the
competitive LEC with: (1) information on collocation availability and
prices; and (2) collocation space. We also seek comment on what should
be done in the event that an incumbent LEC fails to meet a specified
interval.[^274]

> **e. Space Exhaustion**
>
> **(1) Background**

145\. One of the major barriers facing new entrants that seek to provide
advanced services on a facilities basis is the lack of collocation space
in many LEC central offices. Under the Act, incumbent LECs must provide
physical collocation unless they demonstrate to the state commission\'s
satisfaction that \"physical collocation is not practical for technical
reasons or because of space limitations.\"[^275] Because incumbent LECs
have the incentive and capability to impede competition by reducing the
amount of space available for collocation by competitors, the
Commission, in the *Local Competition Order*, required incumbent LECs
that deny requests for physical collocation on the basis of space
limitations to provide the state commission with detailed floor plans or
diagrams of their premises.[^276] The Commission concluded that such
submissions would aid the state commission in evaluating whether the
denial of physical collocation was justified.[^277]

> **(2) Discussion**

146\. We tentatively conclude that an incumbent LEC that denies a
request for physical collocation due to space limitations should not
only continue to provide the state commission with detailed floor plans,
but should also allow any competing provider that is seeking physical
collocation at the LEC\'s premises to tour the premises. Allowing
competing providers to walk through a LEC\'s premise will enable
competing providers to identify space that they believe could be used
for physical collocation. If, after the tour of the premise, the
incumbent LEC and competing provider disagree about whether space
limitations at that premise make collocation impractical, both carriers
could present their arguments to the state commission. We tentatively
conclude that state commissions will be better able to evaluate whether
a refusal to allow physical collocation is justified if competing
providers can view the LEC\'s premises and present their arguments to
the state commission. We seek comment on these tentative conclusions.

147\. We further tentatively conclude that, upon request from a
competitive LEC, an incumbent LEC should submit to the requesting
carrier a report indicating the incumbent LEC\'s available collocation
space. This report should specify the amount of collocation space
available at each requested premises, the number of collocators, and any
modifications in the use of the space since the last report. The report
should also include measures that the incumbent LEC is taking to make
additional space available for collocation. We seek comment on this
tentative conclusion. Parties should address whether the incumbent LEC
should be required to include any additional information in such a
report.

148\. We also seek comment on measures that would facilitate the use of
virtual collocation for the provision of advanced services. Although
competing providers may prefer physical collocation arrangements that
permit their employees to install and repair their own equipment, we
seek comment on measures that would make virtual collocation an
effective alternative in locations where physical collocation space is
unavailable. We tentatively conclude that all competitive LECs must be
offered the same virtual collocation arrangements as the incumbent
provides to its advanced services affiliate in order to meet its
existing obligation to provide collocation on nondiscriminatory terms
and conditions.[^278]

149\. We seek comment on any other measures that would help ensure that
sufficient collocation space will be available in the future. Such
measures may include, but are not limited to, modifying our rules on
warehousing of space.[^279] Parties should address how any such measures
they propose would affect investment in, and deployment of, advanced
services.[^280]

> **f. Effects of Additional Collocation Requirements**

150\. Although this NPRM addresses ways in which the Commission can
promote the deployment of advanced services, a number of our tentative
conclusions and rule proposals relating to collocation may affect
existing collocation arrangements. We seek comment on whether (and, if
so, to what extent) any of our tentative conclusions or proposals might
affect existing negotiated and arbitrated interconnection agreements,
existing state requirements, or pending state proceedings.[^281]

**2. Local Loop Requirements**

**a. Overview**

151\. In the Order above, we grant ALTS\' request for a declaratory
ruling that incumbent LECs are required to provide xDSL‑compatible loops
to requesting carriers pursuant to section 251(c)(3) and our
implementing rules.[^282] We are concerned, however, that our existing
rules requiring the unbundling of loops do not fully ensure that
competitive providers of advanced services have adequate access to the
\"last mile,\" which is critical to ensure that a variety of providers
are able to offer the full range of advanced services that consumers may
demand. Accordingly, in this section, we seek comment on rule changes
that we could adopt pursuant to section 251 that would strengthen the
ability of new entrants to gain access to xDSL-compatible loops.

> **b. Background**

152\. In the *Local Competition Order*, the Commission identified the
local loop as a network element that incumbent LECs must unbundle \"at
any technically feasible point.\"[^283] It defined the local loop to
include \"two-wire and four-wire loops that are conditioned to transmit
the digital signals needed to provide services such as ISDN, ADSL, HDSL,
and DS1-level signals.\"[^284] To the extent technically feasible,
incumbent LECs must \"take affirmative steps to condition existing loop
facilities to enable requesting carriers to provide services not
currently provided over such facilities.\"[^285] For example, if a
carrier requests an unbundled loop for the provision of ADSL service,
and specifies that it requires a loop free of loading coils, bridged
taps, and other electronic impedances, the incumbent must condition the
loop to those specifications, subject only to considerations of
technical feasibility. The incumbent may not deny such a request on the
ground that it does not itself offer advanced services over the loop, or
that other advanced services that the competitive LEC does not intend to
offer could be provided over the loop. As the Commission stated in the
*Local Competition Order*, \"section 251(c)(3) does not limit the types
of telecommunications services that competitors may provide over
unbundled elements to those offered by the incumbent LEC.\"[^286] Under
our existing rules, incumbent LECs are also required to provide
competing carriers with nondiscriminatory access to the operations
support systems functions for pre-ordering, ordering, and provisioning
loops.[^287]

153\. The Commission also concluded in the *Local Competition Order*
that it was \"technically feasible\" to unbundle loops that pass through
integrated digital loop carrier systems or similar remote concentration
devices, and required incumbent LECs to unbundle such loops for
competitive LECs.[^288] In the *Local Competition Order*, however, the
Commission did not require incumbent LECs to unbundle sub-loop elements,
which would allow competitors access to the loop at the remote
terminal.[^289] Even though the Commission determined that parties
commenting on the issue of sub-loop unbundling had presented no
technical impediments to such unbundling, the Commission concluded that
sub-loop unbundling should be addressed by the states \"on a
case-by-case basis at this time.\"[^290] The Commission further
concluded that it would revisit the issue of sub-loop unbundling at a
later time based on actions taken by states \"or other future
developments.\"[^291]

> **c. Adoption of National Standards**

154\. We seek comment on the extent to which we should establish
additional national rules for local loops pursuant to sections 201 and
251 in order to remove barriers to entry and speed the deployment of
advanced services.[^292] Parties should address whether adoption of
additional uniform standards would encourage the deployment of advanced
services by increasing predictability and certainty, and by facilitating
entry by competitors providing advanced services in multiple states. We
also ask commenters to address how any local loop requirements they
suggest would affect investment in, and deployment of, advanced
services.[^293]

155\. We tentatively conclude that any standards we adopt in this
proceeding should serve as minimum requirements and that states should
continue to have flexibility to adopt additional requirements that
respond to issues specific to that state or region. In the past two
years, a number of states have adopted local loop requirements that go
beyond the minimum requirements the Commission adopted in the *Local
Competition* proceeding.[^294] With respect to each subsection that
follows, we encourage commenters to address whether any state approach
to local loops might provide useful guidelines for additional national
standards to facilitate deployment of advanced services. We welcome
input from the states on each of these issues.

156\. We note that competitive LECs can pursue remedies for violations
of our local loop requirements before the Commission and the appropriate
state commissions.[^295] We seek comment on any measures we could take
to aid enforcement of our local loop requirements.[^296]

> **d. Loops and Operations Support Systems**

157\. We seek comment on whether our existing operations support system
rules adequately ensure that competitive LECs have access to necessary
information about loops.[^297] We tentatively conclude that incumbent
LECs should provide requesting competitive LECs with sufficient detailed
information about the loop so that competitive LECs can make an
independent determination about whether the loop is capable of
supporting the xDSL equipment they intend to install. Thus, competitive
LECs would need access to such information as whether the loops pass
through remote concentration devices, what, if any, electronics are
attached to loops, the condition and location of loops, loop length, the
electrical parameters that determine the suitability of loops for
various xDSL technologies, and other loop quality issues.[^298] We
tentatively conclude that it is important that competitors have the
ability to make their own assessments because the parameters for
determining whether a loop is xDSL-compatible may differ for different
technologies. Such parameters may also change as technology
evolves.[^299] We seek comment on these tentative conclusions and
whether other types of information should also be made available. We
note that, to the extent that a competitive LEC cannot obtain
nondiscriminatory access to operations support systems, competitive LECs
can pursue remedies for violations of our requirements before the
Commission and the appropriate state commissions.[^300] We seek comment
on any additional measures we could take to ensure that competitive LECs
receive nondiscriminatory access to operations support systems.[^301] We
tentatively conclude that incumbent LECs must provide competitors with
the same access to operations support systems as the incumbent provides
to its advanced services affiliate pursuant to its existing obligation
to provide nondiscriminatory access to operations support systems.[^302]

158\. We also seek comment on the type of information that is currently
available to incumbent LECs. Do incumbent LECs currently have a detailed
inventory of existing loops? Do incumbent LECs currently have electronic
access to such information? If so, is the same quality of access being
made available to new entrants? We tentatively conclude that, in order
to satisfy the nondiscrimination requirements of the Act, competitive
LECs should have access to the same electronic interfaces that are
available to incumbent LECs to obtain loop information.[^303] We also
tentatively conclude that, as new information becomes available,
incumbent LECs should be required to share such information with new
entrants immediately. We seek comment on these tentative conclusions.

> **e. Loop Spectrum Management**

159\. We seek comment on the way in which we should address loop
spectrum issues. In particular, we ask commenters to address any
interference that may result from provision of advanced
telecommunications capability using different signal formats on copper
pairs in the same bundle.[^304]

160\. Twisted copper pairs, used to deliver xDSL-based services and
other services, including plain old telephone service, are typically
housed within binder groups. Signals from one pair within a binder group
can generate noise in other pairs through electromagnetic coupling,
commonly termed \"crosstalk.\" Crosstalk can limit service
performance.[^305] We ask parties to suggest ways to determine when a
particular service, technology or piece of equipment causes network
interference such that use of the particular service, technology, or
piece of equipment should be prohibited.[^306] We also ask commenters to
suggest ways to distinguish between legitimate claims that particular
services, technologies or equipment create spectrum interference and
claims raised simply to impede competition. We seek comment on whether
the Commission should adopt any industry standards as the basis for
national spectrum management requirements.[^307] We also seek comment on
how any requirements should evolve over time so as to encourage and not
stifle innovation. In addition, we seek comment on other approaches to
spectrum management that would foster pro-competitive use of the loop
plant by incumbent LECs and new entrants, while providing necessary
network protection.

161\. If we adopt any national standards on spectrum management, we
propose to impose the same spectral requirements on both incumbent LECs
and new entrants.[^308] We seek comment on whether and how to
grandfather existing technology that does not satisfy any new
requirements. For example, we might adopt a \"riparian rights\"
approach, under which new users could not interfere with technology
already deployed, and would tolerate interference from the pre-existing
technology. We seek comment on how we might best administer the
grandfathering process.

162\. We also seek comment on whether two different service providers
should be allowed to offer services over the same loop, with each
provider utilizing different frequencies to transport voice or data over
that loop. xDSL technology, for example, separates a single loop into a
POTS channel and a data channel, and can carry both POTS and data
traffic over the loop simultaneously.[^309] A competitive LEC may want
to provide only high-speed data service, without voice service, over an
unbundled loop. Should the competitive LEC have the right to put a high
frequency signal on the same loop as the incumbent LEC\'s voice signal?
If a competitive LEC takes an entire loop, could the competitive LEC
sell the voice channel back to the incumbent LEC or to another carrier?
Should the competitive LEC be allowed to lease the loop for data
services and resell the voice service of the incumbent LEC? Commenters
should address with particularity the advantages and disadvantages of
these various possibilities, and what practical considerations would
arise in each situation. For example, which entity would manage the
frequency division multiplexing equipment if two carriers are offering
services over the same loop? We tentatively conclude that any voice
product that the incumbent LEC provides to its advanced services
affiliate would have to be made available to competitive LECs on the
same terms and conditions.[^310] For example, if the advanced services
affiliate leases the loop and resells the incumbent\'s voice service,
the competitive LEC must be allowed to do likewise.

> **f. Uniform Standards for Attachment of Electronic Equipment at the
> Central Office End of a Loop**

163\. To facilitate competition in the local loop, we tentatively
conclude that there should be uniform national standards for attachment
of electronic equipment (such as modems and multiplexers) at the central
office end of a loop by incumbent LECs and new entrants. The
requirements would apply to both incumbent LEC and new entrant
equipment. The requirements would serve the same role, for the
attachment of equipment to the central office end of a loop, as do the
*Part 68 - Connection of Terminal Equipment to the Telephone Network* -
rules for the attachment of customer premises equipment. Currently, each
incumbent LEC sets its own requirements for central office equipment,
and each has its own processes for certifying equipment before it can be
connected to loop plant. This increases new entrants\' costs and time to
market. A simple set of national requirements would reduce new
entrants\' costs, speed their time to market, and reduce confusion. We
seek comment on the content of these requirements. We also seek comment
on whether central office equipment complying with these requirements
should be certified, and if so, how.

> **g. Redefining the Local Loop to Ensure Competitive LEC Access to
> Loops Capable of Providing Advanced Services**

164\. In the Order above, we emphasize that, under our existing rules,
incumbent LECs are required to make xDSL-compatible loops available to
competitors.[^311] We seek comment on whether our current definition of
the loop is sufficient to ensure that competitive LECs have access to
the loop functionalities they need to offer advanced services, such as
xDSL-based services, or whether any refinements to that definition are
necessary to ensure that incumbent LECs are providing competitive LECs
with loops capable of delivering such advanced services.[^312]
Commenters should also address whether our current definition is
sufficiently flexible and forward-looking to facilitate deployment of
new technologies and new services in the future.

> **h. Unbundling Loops Passing through Remote Terminals**

**(1) Background**

165\. [xDSL-Based Services over Digital Loop Carrier
Technology.]{.underline} A traditional copper loop typically runs from
the network interface device at the customer\'s premises to the LEC\'s
central office. Because of voice transmission quality degradation and
maintenance challenges associated with long copper loops, along with the
economic efficiencies associated with aggregating individual loops, LECs
have begun to deploy remote concentration devices. Remote concentration
devices, such as digital loop carrier (DLC) systems,[^313] are an
efficient means of aggregating subscriber traffic on to common
transmission facilities, usually fiber, for transmission from a remote
terminal to the central office, rather than dedicating a separate
transmission facility (*e.g.*, a copper loop) for each subscriber\'s
traffic all the way from the customer\'s premises to the central office.

166\. Although many local loops are able to support xDSL technology,
some are not. For example, xDSL is distance sensitive, and bandwidth for
xDSL-based services decreases as loop length increases.[^314] In
addition, loop equipment such as loading coils[^315] and bridged
taps,[^316] which are deployed on many local loops, interfere with xDSL
transmission. Furthermore, with current xDSL technology, xDSL
transmissions can only be supported over continuous copper loops. Thus,
in order to provide an xDSL-based service over a loop passing through a
remote terminal, the loop must either be reassigned to a physical copper
pair connecting the end user\'s premises to the central office, or the
xDSL portion must terminate at the remote terminal, where it can be
converted to a format compatible with the digital loop carrier (*i.e.*,
through the use of a DSLAM at the remote terminal).

> **(2) Discussion**

167\. [Unbundling DLC-Delivered Loops.]{.underline} As discussed in the
Order above, we grant ALTS\' request for a declaratory ruling that
incumbent LECs are required to provide loops capable of transporting
high-speed digital signals where technically feasible.[^317] This
requirement includes the obligation to unbundle high-speed
data-compatible loops whether or not a remote concentration device like
a digital loop carrier is in place on the loop.[^318] We tentatively
conclude that providing an xDSL-compatible loop as an unbundled network
element is presumed to be \"technically feasible\" if the incumbent LEC
is capable of providing xDSL-based services over that loop. Consistent
with the pro-competitive goals of the Act, we tentatively conclude that
the incumbent LEC shall bear the burden of demonstrating that it is not
technically feasible to provide requesting carriers with xDSL-compatible
loops. We seek comment on these tentative conclusions.

168\. We note that, to the extent that a competitive LEC cannot obtain
nondiscriminatory access to xDSL-compatible loops, competitive LECs can
pursue remedies for violations of our requirements before the Commission
and the appropriate state commissions.[^319] We seek comment on any
additional measures we could take to ensure that competitive LECs
receive nondiscriminatory access to access to xDSL-compatible
loops.[^320] We tentatively conclude that if the incumbent chooses to
offer xDSL-based services through an advanced services affiliate,
whatever loops are provided to the affiliate must also be provided to
the other entrants.[^321]

169\. We ask commenters to address the technical issues that may arise
when local loops pass through digital loop carriers or similar remote
concentration devices. For example, we ask commenters to address the
issues of loop quality, analog-to-digital translation of signals,
electronic equipment attached to loops, loop length, and other issues
that arise with remote concentration devices. We ask commenters to
address the traffic management issues that may arise when local loops
pass through digital loop carrier systems or similar remote
concentration devices. We ask commenters to identify and evaluate any
concerns that they identify with having the traffic on the digital loop
carrier systems managed by the incumbent LEC and to identify feasible
alternatives.[^322] We encourage commenters to identify other
technological problems and to propose concrete solutions to those
problems. We also ask commenters to address the extent to which next
generation digital loop carrier systems and other new technologies will
affect the provision of advanced data services over unbundled loops.

170\. We ask commenters to propose methods of unbundling loops passing
through remote concentration devices that will enable competitive
carriers to provide advanced services. We ask commenters to identify and
evaluate the benefits and drawbacks of any proposed methods. For
example, migrating a DLC-delivered loop to copper plant, although
generally regarded as the means by which DLC-delivered loops can be made
xDSL-compatible,[^323] may not always provide an xDSL-compatible loop,
because customers served by digital loop carrier may be located far from
the central office, and xDSL-based services are distance sensitive.
Other methods, such as allowing the competitive LEC to collocate at the
remote terminal may pose problems due to space limitations. Other
methods may be extraordinarily costly or may require additional research
or development before they can be deployed. We ask commenters to
evaluate the technical feasibility, legal consequences, and policy
ramifications of any proposed unbundling methods. We also ask commenters
to consider how any loop requirements we may adopt will affect
investment in, and deployment, of advanced services.[^324]

171\. We tentatively conclude that the competitive LEC may request any
\"technically feasible\" method of unbundling the DLC-delivered loop,
and the incumbent LEC is obligated to provide the particular method
requested. We base this tentative conclusion on the premise that each
competitive LEC may have its own business strategy and unique reasons
for obtaining loop access in a particular manner or at a specific
interconnection point.[^325] We tentatively conclude that, in the event
that the incumbent LEC demonstrates that the unbundling method requested
by the competitive LEC is not technically feasible, the competitive LEC
may request other unbundling methods. In the event that the incumbent
LEC demonstrates that none of the requested methods are technically
feasible, the incumbent LEC may offer another unbundling method,
provided that the method would provide the competitive LEC with a loop
of equal quality and functionality as the incumbent\'s loop.[^326] We
seek comment on these tentative conclusions.

172\. We further tentatively conclude that competitive LECs should not
be comparatively disadvantaged by incumbent LECs regarding provisioning
of DLC-delivered loops. For example, if the technically feasible
solution to provide xDSL-based service to a customer presently served by
a DLC-delivered loop is bypass by additional copper infrastructure, an
incumbent LEC (or its advanced services affiliate) should not be able to
avail itself of that option while denying or delaying that option to a
competitive LEC. Similarly, if the incumbent LEC (or its advanced
services affiliate) provides xDSL-based services through the use of a
DSLAM at the remote terminal, the competitive LEC must be able to avail
itself of that option, either through the use of the incumbent LEC\'s
DSLAM or its own DSLAM collocated at the remote terminal.[^327]
Accordingly, we tentatively conclude that incumbent LECs must make
available, in a nondiscriminatory manner, to competitive LECs the same
methods that the incumbent (or its advanced services affiliate) uses
itself to provide advanced telecommunications capability such as
xDSL-based services. We further tentatively conclude that deployment
intervals for provisioning xDSL-compatible loops should be the same for
incumbent LECs and competitive LECs, regardless of whether the loop
passes through a remote concentration device.[^328] We seek comment on
these tentative conclusions. We also ask commenters to address whether
we should require incumbent LECs to provision xDSL-compatible loops
within a specified interval and, if so, what that interval should
be.[^329] Again, we tentatively conclude that whatever accommodations
are provided to the incumbent\'s advanced services affiliate must be
equally provided to new entrants.[^330]

173\. [Sub-Loop Unbundling and Collocation at the Remote
Terminal.]{.underline} We seek comment on whether we need to extend the
concept of loop unbundling to sub-loop elements in order to further the
pro-competitive goals of the 1996 Act and facilitate deployment of
advanced services.[^331] We ask commenters to address whether it is
technically feasible to require incumbent LECs to unbundle sub-loop
elements and provide competitive LECs access to the remote terminal so
that competitive LECs can provide advanced services.

174\. We tentatively conclude that incumbent LECs must provide sub‑loop
unbundling and permit competitive LECs to collocate at remote terminals,
unless the incumbent LEC can demonstrate one of the following with
respect to the particular remote terminal requested by the competitive
LEC: (1) sub-loop unbundling is not \"technically feasible;\" or (2)
there is insufficient space at the remote terminal to accommodate the
requesting carrier. We make this tentative conclusion because the use of
sub-loop elements and access to the remote terminal may be the only
means by which competitive LECs can provide xDSL-based services for
those end-users whose connection to the central office is currently
provided via digital loop carrier systems. If an incumbent deploys
digital loop carriers extensively and refuses to allow competitive LECs
access at the remote terminal, the incumbent can effectively deny market
entry by such competitive LECs and discourage the deployment of advanced
telecommunications capability. We further tentatively conclude that it
would be an unreasonable practice for an incumbent LEC to deny
competitive LECs collocation at the remote terminal on either of these
grounds, while allowing its own affiliate to collocate at the remote
terminal. We seek comment on these tentative conclusions. In particular,
we seek comment on whether such sub-loop unbundling and remote terminal
access are, in fact, necessary in order for competitive LECs to provide
high bandwidth services, such as xDSL-based services. We ask commenters
to consider whether new technologies, such as next generation digital
loop carrier systems, might reduce or eliminate the need for competitive
LEC access to sub-loop elements. As an alternative to requiring sub-loop
unbundling, or if sub-loop unbundling proves to be technically
infeasible or there is insufficient space at the remote terminal, we
seek comment on whether the incumbent LEC should be obligated to provide
an alternative unbundling method at no greater cost to the competitive
LEC. Should the incumbent LEC be obligated to demonstrate that such
unbundling method will provide the competitive LEC with a loop of the
same quality and functionality as the loop that the competitive LEC
would have obtained through access to the sub-loop element(s)?

175\. We also ask commenters to address the use to which competitive
LECs would put sub-loop elements and what specific sub-loop elements, if
any, should be unbundled. We also ask commenters to address the
technical issues involved with loops that pass through remote
concentration devices, including the ability of competitive providers of
advanced services to access the necessary elements of the incumbent LEC
networks. Commenters should address the extent to which the incumbent
LEC\'s control over the remote terminal and electronics therein might
limit the ability of end users to access a full range of competitive
services.[^332] We seek comment on the technical issues of customer
premises equipment and central office or remote terminal equipment
compatibility, and we ask commenters that perceive problems to propose
solutions that would ensure that end users have the widest possible
access to competitive services. We also ask commenters to address what
should be done if more competitive LECs request access to a remote
terminal than the remote terminal can accommodate. What would be a fair
means of allocating limited space? Should there be a lottery system?
Should the space be auctioned? Should the space be made available on a
\"first come, first served\" basis? If we conclude that \"first come,
first served\" is the most appropriate method, how can we ensure that
incumbent LECs do not fill up all the available space before competitive
LECs have the opportunity to collocate their equipment? We tentatively
conclude that an incumbent LEC may not take all the available space in a
remote terminal, and then transfer ownership of that equipment in the
remote terminal to an advanced services affiliate. We seek comment on
this tentative conclusion.

176\. We seek comment from those with evidence demonstrating or
challenging the proposition that sub-loop unbundling and competitive LEC
access to remote terminals may impair network reliability or pose
significant technical problems. We seek comment on whether
accountability for the network would be lost or compromised if
competitive LECs are allowed access to the incumbent LEC\'s remote
terminals or other plant in the field. We seek comment on whether there
is a need for operational, administrative, and maintenance procedures
for allowing access to the incumbent LEC\'s plant in the field in order
to ensure network quality and reliability. We seek comment on how best
to allow such access and ask commenters to propose operational,
administrative and maintenance procedures to ensure network quality and
reliability in the event that we permit competitive LECs access to
incumbent LEC plant in the field. We also seek comment on ways to
minimize the cost of providing such access.

> **i. Effects of Additional Requirements for Local Loops**

177\. We seek comment on whether (and if so, to what extent) any of our
tentative conclusions or proposals might affect existing negotiated or
arbitrated interconnection agreements, existing state requirements, or
pending state proceedings.[^333]

> **D. Unbundling Obligations Under Section 251(c)(3)**

**1. Background**

178\. In the Order, we grant the ALTS petition to the extent that ALTS
requests a declaratory ruling that (1) advanced services are
telecommunications services, and that the facilities and equipment used
to provide advanced services are network elements subject to the
obligations in section 251(c),[^334] and (2) incumbent LECs are required
to unbundle loops capable of transporting high speed digital
signals.[^335]

179\. Sections 251(c)(3) and 251(d)(2) of the Act set forth the
standards that the Commission must consider in identifying unbundled
network elements that incumbent LECs must make available to competitors.
Section 251(c)(3) requires incumbent LECs to provide requesting carriers
with \"nondiscriminatory access to network elements on an unbundled
basis at any technically feasible point . . . .\"[^336] The Commission
noted in the *Local Competition Order*, however, that section 251(d)(2)
gave it authority \"to refrain from requiring incumbent LECs to provide
all network elements for which it is technically feasible to provide
access.\"[^337] The Commission further concluded that, to identify
unbundled elements, the Commission \"shall \'consider, at a minimum,\'
whether access to proprietary elements is necessary (the \'proprietary
standard\'), and whether requesting carriers\' ability to provide
services would be impaired if the desired elements were not provided by
an incumbent LEC (the \'impairment standard.\').\"[^338] Although
section 251(d)(2) provides that the \"proprietary standard\" and the
\"impairment standard\" serve as \"minimum\" criteria that the
Commission must weigh, the Commission declined, at the time, to adopt
any additional criteria under section 251(d)(2) that might affect
incumbent LEC unbundling requirements.[^339]

> **2. Discussion**

180\. We now seek comment on the specific unbundling requirements we
should impose on network elements used by incumbent LECs in the
provision of advanced services. Parties should address the specific
network elements that incumbent LECs should be required to unbundle
pursuant to section 251(c)(3). In particular, parties should address the
applicability of section 251(d)(2), namely: (1) the extent to which
particular network elements are \"proprietary\" as that term is used in
section 251(d)(2)(a), and (2) the extent to which a carrier would be
\"impair\[ed\],\" as that term is used in section 251(d)(2)(b), in its
ability to offer advanced services without unbundled access to a
particular network element.

181\. We also seek comment on whether there are any additional criteria
under section 251(d)(2) that the Commission should consider when
identifying those network elements used to provide advanced services
that must be made available pursuant to section 251(c)(3). Parties
suggesting additional criteria should address the extent to which
consideration of those criteria could lead the Commission to remove
certain facilities used to provide advanced services from the unbundling
obligations of section 251(c)(3). Parties should also address the extent
to which consideration of each criterion will promote the deployment of
advanced services.

182\. In addition, we seek comment on the attributes of particular
network elements that may make unbundling of those elements technically
infeasible. For example, we note that it may not be technically feasible
to offer unbundled access to individual packet switches. If the
functionality offered by a single packet switch in the incumbent\'s
network is not available to a competitor using packet switches of a
different manufacturer, we seek comment on whether the unbundling of
that packet switch would be \"technically infeasible.\" In addition, we
ask commenters how an incumbent LEC\'s claim of technical infeasibility
should be verified, such as whether the lack of a standard network
interface, for example, should support such a claim.

183\. We also seek comment on NTIA\'s proposal that we find section
251(c) to be fully implemented on a service-by-service basis.[^340] For
example, NTIA suggests that the Commission should determine that section
251(c) is fully implemented with respect to xDSL services only after
incumbent LECs \"give competitors access to . . . loop facilities
capable of supporting DSL services and collocation space on
\[incumbent\] LEC premises.\"[^341] Parties commenting on this proposal
should address whether it provides an appropriate framework for ensuring
compliance with section 251(c) by incumbent LECs.

184\. In addition, given our objective in this proceeding to encourage
deployment of wireline advanced services by all telecommunications
carriers, including incumbent LECs, we seek comment in this section on
any other specific measures that the Commission should take to provide
regulatory relief from the obligations of section 251(c) for incumbent
LECs that choose to offer advanced services on an integrated basis.
Parties should address the extent to which any measures they propose
will give incumbent LECs greater incentive to offer advanced services,
promote competition in the advanced services market, and encourage
widespread deployment of such services. Parties should also address
whether such relief would justify the loss of significant
pro-competitive benefits that we expect would accompany a separate
affiliate approach.

**E. Resale Obligations Under Section 251(c)(4)**

> **a. Background**

185\. Section 251(c)(4) imposes on incumbent LECs the obligation to
offer for resale \"any telecommunications service that the carrier
provides at retail to subscribers who are not telecommunications
carriers.\"[^342] In the *Local Competition Order*, the Commission
explained that \"an incumbent LEC must establish a wholesale rate for
each retail service that: (1) meets the statutory definition of a
\'telecommunications service\'; and (2) is provided at retail to
subscribers who are not \'telecommunications carriers.\'\"[^343] The
Commission emphasized that the resale obligation extends to *all* such
telecommunications services.[^344]

186\. The Commission went on to state, though, that \"exchange access
services are not subject to the resale requirements of section
251(c)(4).\"[^345] Although \"end users do occasionally purchase some
access services\" such as special access, it reasoned, the \"vast
majority\" of purchases of interstate access service are
telecommunications carriers.[^346] The Commission drew a distinction
between telecommunications services \"targeted to end-user
subscribers,\" which Congress \"clearly intended\" to be subject to the
resale requirement, and those \"predominantly offered to, and taken by
\" interexchange carriers which are not subject to the resale
requirement.[^347] The Commission concluded that exchange access
services, as a class, fell in the latter category, and thus, the
Commission concluded, outside the bounds of section 251(c)(4).[^348]

> **b. Discussion**

187\. In the Order, we conclude that an incumbent LEC has the obligation
to offer for resale the advanced services that it generally offers to
subscribers who are not telecommunications carriers.[^349] We further
conclude above that, to the extent advanced services are telephone
exchange services, incumbent LECs must offer such services for resale.

188\. We now seek comment on the applicability of section 251(c)(4) to
advanced services to the extent that such services are exchange access
services. We tentatively conclude that such advanced services are
fundamentally different from the exchange access services that the
Commission referenced in the *Local Competition Order* and concluded
were not subject to section 251(c)(4). We expect that advanced services
will be offered predominantly to ordinary residential or business users
or to Internet service providers. None of these purchasers are
telecommunications carriers.[^350]

189\. By its terms, section 251(c)(4) applies to \"any
telecommunications service that the carrier provides at retail to
subscribers who are not telecommunications carriers.\" Advanced services
generally offered by incumbent LECs to subscribers who are not
telecommunications carriers meet this statutory test.[^351] We thus
tentatively conclude that these services fall within the core category
of retail services that both Congress and the Commission deemed subject
to the resale obligation, and the reasoning that led the Commission in
the *Local Competition Order* to exclude exchange access from the
section 251(c)(4) resale obligation does not apply. We tentatively
conclude, therefore, that advanced services marketed by incumbent LECs
generally to residential or business users or to Internet service
providers should be deemed subject to the section 251(c)(4) resale
obligation, without regard to their classification as telephone exchange
service or exchange access.[^352] We seek comment on these tentative
conclusions.

**F. Limited InterLATA Relief**

**1. Background**

190\. In this section, we seek comment on the scope of section 271(b)(3)
of the Act, which permits the BOCs and their affiliates to provide
certain \"incidental interLATA services.\"[^353] In addition, section
3(25)(B) of the Act permits the BOCs to modify LATA boundaries provided
that the Commission approves such modifications.[^354] Since the 1996
Act became law, both the Commission and the Common Carrier Bureau
(acting on delegated authority) have approved a significant number of
LATA boundary modifications.[^355] As a general matter, the Commission,
within the discretion granted to it under the Act, weighs the need for
the proposed modification against the potential harm from
anticompetitive BOC activity, and considers whether the proposed
modification will have a significant effect on the BOC\'s incentive to
open its local market pursuant to section 271.[^356] In the Order above,
we deny Ameritech\'s, Bell Atlantic\'s, and U S WEST\'s requests for
large-scale changes in LATA boundaries for packet-switched services,
because such changes could effectively eviscerate section 271 for those
services and circumvent the procompetitive incentives for opening the
local market to competition.[^357] In this section, we seek comment on
the criteria we should use in evaluating requests for more targeted LATA
boundary changes. We also seek comment on whether there are any other
forms of interLATA relief that we should consider.

**2 Discussion**

191\. [Incidental InterLATA Services.]{.underline} Section 271(b)(3)
permits the BOCs and their affiliates to provide \"incidental interLATA
services,\" as defined in section 271(g).[^358] We seek comment on the
scope of this authority as it relates to BOC provision of advanced
services. Section 271(g)(2), for example, permits the BOCs to provide
\"two-way interactive video services or Internet services over dedicated
facilities to or for elementary and secondary schools.\"[^359] This
authority clearly allows the BOCs to provide certain advanced services
to or for elementary and secondary schools. We seek comment on whether
the ability to provide the other incidental interLATA services defined
in section 271(g) affects the BOCs\' ability to deploy advanced services
on a reasonable and timely basis.

192\. [LATA Boundary Modifications for Elementary and Secondary Schools
and Classrooms.]{.underline} We seek comment on whether additional
relief beyond the incidental interLATA authority set forth in section
271(g)(2) would help ensure that elementary and secondary schools and
classrooms have adequate access to advanced services.[^360] We
tentatively conclude, for example, that it would be reasonable to
approve LATA boundary modifications that allow BOCs to provide advanced
services to entire elementary or secondary school districts on an
intraLATA basis, when the school districts straddle LATA boundaries. We
ask commenters to suggest other types of LATA boundary modifications
that would encourage deployment of advanced telecommunications
capability to elementary and secondary schools and classrooms. Parties
should address, with particularity, the criteria that we should use to
evaluate these requests. We seek comment, for example, on whether we
should adopt the same criteria used in the expanded local calling
service proceedings.[^361] Parties should also address whether we should
take such actions only to the extent that advanced services are provided
by BOC advanced services affiliates, rather than by the BOCs.

193\. [Network Access Points.]{.underline} We seek comment on the
criteria that we should use to evaluate LATA boundary modification
requests that would allow BOCs to carry packet-switched traffic across
current LATA boundaries for the purpose of providing their subscribers
with high-speed connections to nearby network access points, which are
points of access to the Internet.[^362] U S WEST contends that many
rural areas do not have high-capacity network access points.[^363] We
seek comment on the criteria we should use to determine whether a LATA
has high-speed access to the Internet. Commenters should provide
empirical data on the number and location of LATAs that do not contain
high-speed network access points.

194\. We tentatively conclude that some modification of LATA boundaries
may be necessary to provide subscribers in rural areas with the same
type of access to the Internet that other subscribers throughout the
nation enjoy. We also tentatively conclude that modification of those
boundaries for the purpose of facilitating high-speed access to the
Internet would further Congress\' goal of ensuring that advanced
services are deployed to all Americans.[^364] Furthermore, we
tentatively conclude that such boundary modifications would be
consistent with the Common Carrier Bureau\'s decision that, under
certain circumstances, a limited LATA boundary modification for
integrated services digital network (ISDN) services is appropriate where
such a modification is necessary to accommodate a demonstrated need and
would have only a small impact on competition.[^365] We seek comment on
these tentative conclusions. We also seek comment on whether LATA
modifications to facilitate high-speed access to the Internet for rural
subscribers would be consistent with the requirement under section 10(d)
of the Act that the Commission must ensure that the requirements of
section 271 are fully implemented before a BOC may offer interLATA
services.[^366]

195\. In addition, we seek comment on the type of documentation that
BOCs should submit in order to qualify for such a LATA boundary
modification. We note that in a July 23, 1998 petition, Bell Atlantic
asks that we modify LATA boundaries for the limited purpose of allowing
Bell Atlantic to provide high-speed connections between West Virginia\'s
two LATAs and between West Virginia and the nearest Internet access
points located in other states.[^367] We ask parties to address whether
the information in Bell Atlantic\'s petition is the appropriate type of
documentation that a BOC should submit. We also seek comment on whether
the LATA boundary modification should be withdrawn if a high-speed
network access point is established in the LATA or whether it should
expire at a certain date. We further seek comment on the competitive
impact of permitting LATA boundary modifications in this limited
context. Parties should address whether the BOCs are the only carriers
likely to serve areas that do not currently contain high-speed network
access points.[^368] Parties should also address whether we should take
such action only to the extent that advanced services are provided by
BOC advanced services affiliates, rather than by the BOCs.

196\. [Additional Targeted InterLATA Relief.]{.underline} We seek
comment on whether we have authority to take other actions to facilitate
deployment of advanced services and, if so, the criteria we should use
in evaluating such requests. For example, we seek comment on the
criteria we should use in evaluating requests to permit BOCs and/or BOC
affiliates to provide corporate intranet and extranet services or to
serve institutions such as universities or health care facilities.
Parties should address any safeguards that we should adopt to ensure
that these services are provided in a pro-competitive manner and that
any targeted interLATA relief does not undermine the incentives for
opening the local market to competition. Such safeguards may include,
but not be limited to, taking such actions only to the extent they are
provided by BOC advanced services affiliates, rather than by the BOCs.

**VII. PROCEDURAL MATTERS**

**A. Ex Parte Presentations**

197\. The matter in Docket No. 98-147, initiated by the NPRM portion of
this item, shall be treated as a \"permit‑but‑disclose\" proceeding in
accordance with the Commission\'s *ex parte* rules.[^369] Persons making
oral *ex parte* presentations are reminded that memoranda summarizing
the presentations must contain summaries of the substance of the
presentations and not merely a listing of the subjects discussed. More
than a one or two sentence description of the views and arguments
presented is generally required.[^370] Other rules pertaining to oral
and written presentations are set forth in Section 1.1206(b) as well.

**B. Initial Paperwork Reduction Act Analysis**

198\. The NPRM contains either a proposed or modified information
collection. As part of its continuing effort to reduce paperwork
burdens, we invite the general public and the Office of Management and
Budget (OMB) to take this opportunity to comment on the information
collections contained in this Notice, as required by the Paperwork
Reduction Act of 1995, Public Law No. 104-13. Public and agency comments
are due at the same time as other comments on this Notice; OMB comments
are due 60 days from date of publication of this Notice in the Federal
Register. Comments should address: (a) whether the proposed collection
of information is necessary for the proper performance of the functions
of the Commission, including whether the information shall have
practical utility; (b) the accuracy of the Commission\'s burden
estimates; (c) ways to enhance the quality, utility, and clarity of the
information collected; and (d) ways to minimize the burden of the
collection of information on the respondents, including the use of
automated collection techniques or other forms of information
technology.

**C. Initial Regulatory Flexibility Analysis**

199\. As required by the Regulatory Flexibility Act, *see* 5 U.S.C. \'
603, the Commission has prepared an Initial Regulatory Flexibility
Analysis (IRFA) of the possible impact on small entities of the
proposals suggested in this document. The IRFA is set forth as Appendix
D. Written public comments are requested with respect to the IRFA. These
comments must be filed in accordance with the same filing deadlines for
comments on the rest of the NPRM, but they must have a separate and
distinct heading, designating the comments as responses to the IRFA. The
Office of Public Affairs, Reference Operations Division, will send a
copy of this NPRM , including the IRFA, to the Chief Counsel for
Advocacy of the Small Business Administration, in accordance with the
Regulatory Flexibility Act.

**D. Comment Filing Procedures**

200\. The proceeding, Deployment of Wireline Services Offering Advanced
Telecommunications Capability, CC Docket No. 98-147, is initiated by the
NPRM portion of this item. Pursuant to Sections 1.415 and 1.419 of the
Commission\'s rules, 47 C.F.R. \'\' 1.415, 1.419, interested parties may
file comments on or before September 21, 1998 and reply comments on or
before October 13, 1998. All filings should refer [only]{.underline} to
Deployment of Wireline Services Offering Advanced Telecommunications
Capability, CC Docket No. 98-147. Comments may be filed using the
Commission\'s Electronic Comment Filing System (ECFS) or by filing paper
copies. *See Electronic Filing of Documents in Rulemaking Proceedings*,
63 Fed. Reg. 24,121 (1998). Comments filed through the ECFS can be sent
as an electronic file via the Internet to
\<http://www.fcc.gov/e-file/ecfs.html\>. Generally, only one copy of an
electronic submission must be filed. In completing the transmittal
screen, commenters should include their full name, Postal Service
mailing address, and the applicable docket or rulemaking number, which
in this instance is CC Docket No. 98-147. Parties may also submit an
electronic comment by Internet e-mail. To get filing instructions for
e-mail comments, commenters should send an e-mail to ecfs@fcc.gov, and
should include the following words in the body of the message, \"get
form \<your e-mail address.\" A sample form and directions will be sent
in reply.

201\. Parties who choose to file by paper must file an original and four
copies of each filing. All filings must be sent to the Commission\'s
Secretary, Magalie Roman Salas, Office of the Secretary, Federal
Communications Commission, 1919 M St. N.W., Room 222, Washington, D.C.
20554.

202\. Parties who choose to file by paper should also submit their
comments on diskette. These diskettes should be submitted to Janice
Myles, Common Carrier Bureau, Policy and Program Planning Division, 1919
M Street, N.W., Room 544, Washington, D.C. 20554. Such a submission
should be on a 3.5 inch diskette formatted in an IBM compatible format
using WordPerfect 5.1 for Windows or compatible software. The diskette
should be accompanied by a cover letter and should be submitted in
\"read only\" mode. The diskette should be clearly labelled with the
commenter\'s name, proceeding (including the docket number, in this
case, CC Docket No. 98-147), type of pleading (comment or reply
comment), date of submission, and the name of the electronic file on the
diskette. The label should also include the following phrase \"Disk
Copy - Not an Original.\" Each diskette should contain only one party\'s
pleadings, preferably in a single electronic file. In addition,
commenters must send diskette copies to the Commission\'s copy
contractor, International Transcription Service, Inc., 1231 20th Street,
N.W., Washington, D.C. 20037.

203\. Regardless of whether parties choose to file electronically or by
paper, parties should also file one copy of any documents filed in this
docket with the Commission\'s copy contractor, International
Transcription Services, Inc., 1231 20th Street, N.W., Washington, D.C.,
20036. Comments and reply comments will be available for public
inspection during regular business hours in the FCC Reference Center,
1919 M Street, N.W., Room 239, Washington, D.C., 20554.

204\. Comments and reply comments must include a short and concise
summary of the substantive arguments raised in the pleading. Comments
and reply comments must also comply with section 1.49 and all other
applicable sections of the Commission\'s rules.[^371] We also direct all
interested parties to include the name of the filing party and the date
of the filing on each page of their comments and reply comments. All
parties are encouraged to utilize a table of contents, regardless of the
length of their submission. We also strongly encourage that parties
track the organization set forth in this NPRM in order to facilitate our
internal review process.

205\. Written comments by the public on the proposed and/or modified
information collections are due on or before September 21, 1998 and
reply comments on or before October 13, 1998. Written comments must be
submitted by the OMB on the proposed and/or modified information
collections on or before 60 days after date of publication in the
Federal Register. In addition to filing comments with the Secretary, a
copy of any comments on the information collections contained herein
should be submitted to Judy Boley, Federal Communications Commission,
Room 234, 1919 M Street, N.W., Washington, DC 20554, or via the Internet
to jboley@fcc.gov and to Timothy Fain, OMB Desk Officer, 10236 NEOB,
725 - 17th Street, N.W., Washington, DC 20503 or via the Internet to
fain_t@al.eop.gov.

**E. Further Information**

206\. For further information regarding this proceeding, contact Linda
Kinney, Assistant Division Chief, Policy and Program Planning Division,
Common Carrier Bureau, at 202-418-1580 or lkinney@fcc.gov or Jordan
Goldstein, Attorney, Policy and Program Planning Division, Common
Carrier Bureau, at 202-418-1580 or jgoldste@fcc.gov. Further information
may also be obtained by calling the Common Carrier Bureau\'s TTY number:
202-418-0484.

**VIII. ORDERING CLAUSES**

207\. Accordingly, IT IS ORDERED that, pursuant to sections 1-4, 10,
201, 202, 251-254, 271, and 303(r) of the Communications Act of 1934, as
amended, 47 U.S.C. \'\' 151-154, 160, 201, 202, 251-254, 271, and
303(r), the ORDER is hereby ADOPTED. The requirements adopted in this
Order shall be effective 30 days after publication of a summary thereof
in the Federal Register.

208\. IT IS FURTHER ORDERED that, pursuant to sections 1-4, 10, 201,
202, 251-254, 271, and 303(r) of the Communications Act of 1934, as
amended, 47 U.S.C. \'\' 151-154, 160, 201, 202, 251-254, 271, and
303(r), the NOTICE OF PROPOSED RULEMAKING is hereby ADOPTED.

209\. IT IS FURTHER ORDERED that the Commission\'s Office of Public
Affairs, Reference Operations Division, SHALL SEND a copy of this NOTICE
OF PROPOSED RULEMAKING, including the Initial Regulatory Flexibility
Certification, to the Chief Counsel for Advocacy of the Small Business
Administration, in accordance with the Regulatory Flexibility Act, *see*
5 U.S.C. \' 605(b).

210\. IT IS FURTHER ORDERED that, pursuant to sections 1-4, 10, 201,
202, 251-254, 271, and 303(r) of the Communications Act of 1934, as
amended, 47 U.S.C. \'\' 151-154, 160, 201, 202, 251-254, 271, 272, and
303(r), the Petitions filed by ALTS, Ameritech, SBC, U S WEST, and Bell
Atlantic are GRANTED to the extent described herein and otherwise
DENIED.

211\. IT IS FURTHER ORDERED that, pursuant to sections 1-4, 10, 201,
202, 251-254, 271, and 303(r) of the Communications Act of 1934, as
amended, 47 U.S.C. \'\' 151-154, 160, 201, 202, 251-254, 271, and
303(r), the Petition filed by the Alliance for Public Technology IS
GRANTED to the extent described herein.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**APPENDIX A**

CC Docket Nos. 98-11, 98-26, 98-32

Comments

Alliance for Public Technology

America Online, Inc.

American Communications Services, Inc. (ACSI)

Ameritech

APK Net, Ltd.; Cyber Warrior, Inc.; Helicon On-Line, L.P.; InfoRamp;
Internet Connect Company; MTP, LLC, dba JavaNet; and ProAxis
Communications, Inc.

Association for Local Telecommunications Services (ALTS)

AT&T Corp.

Aurora Chamber of Commerce

BellSouth Corporation

Bismarck/Mandan Development Association

Cablevision Lightpath, Inc.

Cedar City/Iron County Economic Development

Cheyenne Leads

Commercial Internet Exchange Association

Compaq Computer Corporation

Competition Policy Institute

Competitive Telecommunications Association (CompTel)

Computer & Communications Industry Association

Council of Chief State School Officers

Covad Communications Company

Division of the Ratepayer Advocate, State of New Jersey

DSL Access Telecommunications Alliance

Economic Strategy Institute

Electric Lightwave, Inc.

Excel Telecommunications, Inc.

Focal Communications Corporation; Hyperion Telecommunications, Inc.; KMC
Telecom Inc.; and McLeodUSA Incorporated

Global NAPs, Inc.

GTE Service Corporation

ICG Telecom Group, Inc.

Information Technology Association of America

Intermedia Communications Inc.

Internet Access Coalition

Laramie Economic Development Corporation

LCI International Telecom Corp.

Level 3 Communications, Inc.

MCI Telecommunications Corporation

Minnesota Department of Public Service

Montana Rural Development Partners

National Association of the Deaf

National Association of Development Organizations

National Association of Regulatory Utility Commissioners

National Black Chamber of Commerce, et al.

Network Access Solutions, Inc.

Next Level Communications

Omnipoint Communications Inc.

Organizations Concerned About Rural Education, American Association of
School Administrators, National Association of Secondary School
Principals, and National Association of Partners in Education, Inc.

Pennsylvania Public Utility Commission

Public Service Commission of Wisconsin and the Indiana Utility
Regulatory Commission

St. George Area Chamber of Commerce

SBC Communications Inc.

Sprint Corporation

State of Utah House of Representatives

Sun Microsystems, Inc.

Telecommunications Resellers Association

Teleport Communications Group Inc.

Transwire Communications, L.L.C.

United Homeowners Association, et al.

United States Telephone Association

University of North Dakota

U S WEST, Inc.

Utah Rural Development Council

Washington County, Utah Economic Development Council

WorldCom, Inc.

Wyoming State Legislature

XCOM Technologies, Inc.

Reply Comments

AT&T Corp.

Bell Atlantic

CAI Wireless Systems, Inc.

Cisco Systems, Inc.

Commercial Internet Exchange Association

Comcast Corporation

DSL Access Telecommunications Alliance

Economic Strategy Institute

Focal Communications Corporation; Hyperion Telecommunications, Inc.; KMC
Telecom Inc.; and McLeodUSA Incorporated

Intermedia Communications Inc.

Issue Dynamics, Inc.

LCI International Telecom Corp.

Level 3 Communications, Inc.

MCI Telecommunications Corporation

New York Department of Public Service

NEXTLINK Communications, Inc.

NYSERNet

Pennsylvania Public Utility Commission

PSINet, Inc.

SBC Communications Inc.

Sprint Corporation

United States Telephone Association

U S WEST Communications, Inc.

WorldCom, Inc.

CC Docket No. 98-78

Comments

AT&T Corp.

Bell Atlantic

BellSouth Corporation

Commercial Internet Exchange Association

Competitive Telecommunications Association (CompTel)

e.spire Communications, Inc.

GTE Service Corporation

Hyperion Telecommunications, Inc.

Independent Telephone & Telecommunications Alliance

Intermedia Communications Inc.

KMC Telecom Inc.

LCI International Telecom Corp.

Level 3 Communications, Inc.

MCI Telecommunications Corporation

Network Access Solutions, Inc.

New York Department of Public Service

NEXTLINK Communications, Inc.

SBC Communications Inc.

Sprint Corporation

Telecommunications Resellers Association

Teleport Communications Group Inc.

United States Telephone Association

U S WEST, Inc.

WorldCom, Inc.

Reply Comments

Association for Local Telecommunications Services (ALTS)

AT&T Corp.

GTE Service Corporation

KMC Telecom Inc.

LCI International Telecom Corp.

Level 3 Communications, Inc.

MCI Telecommunications Corporation

NEXTLINK Communications, Inc.

SBC Communications Inc.

Teleport Communications Group Inc.

United States Telephone Association

CC Docket No. 98-91

Comments

Allegiance Telecom, Inc.

AT&T Corp. and Teleport Communications Group Inc.

BellSouth Corporation

Campaign for Telecommunications Access

Coalition Representing Internet Service Providers

Commercial Internet Exchange Association

Competitive Telecommunications Association (CompTel)

Covad Communications Company

DSL Access Telecommunications Alliance

e.spire Communications, Inc.

GTE Service Corporation

Hyperion Telecommunications, Inc.

ICG Telecom Group, Inc.

Intermedia Communications Inc.

KMC Telecom Inc.

LCI International Telecom Corp.

McCollough and Associates, P. C.

MCI Telecommunications Corporation

Sprint Corporation

Telecommunications Resellers Association

United States Telephone Association

WorldCom, Inc.

Reply Comments

Allegiance Telecom, Inc.

AT&T Corp. and Teleport Communications Group Inc.

Comcast Corporation

KMC Telecom Inc.

MCI Telecommunications Corporation

New York Department of Public Service

SBC Communications Inc.

RM-9244

Comments

Alliance for Public Technology

Association for Local Telecommunications Services (ALTS)

AT&T Corp.

Commercial Internet Exchange Association

Janet Poley, et al.

Keep America Connected!

LCI International Telecom Corp.

MCI Telecommunications Corporation

National Association of the Deaf

Sprint Corporation

Reply Comments

Alliance for Public Technology

AT&T Corp.

BellSouth Corporation

Competitive Telecommunications Association (CompTel)

MCI Telecommunications Corporation

National Association of Community Action Agencies

Next Level Communications

SBC Communications Inc.

Sprint Corporation

TransWire Communications, L.L.C.

United States Telephone Association

Worldcom, Inc.

**APPENDIX C**

**Digital Loop Carrier Systems**

212\. Digital loop carriers (DLCs) digitally encode and multiplex
subscriber loop channels into DS1[^372] signals (or higher) for more
efficient transmission or extended range than traditionally allowed for
by copper loops. With DLC, analog signals, carried from the customer\'s
premises to a remote terminal, are converted to digital signals,
multiplexed with other signals and transported, generally over fiber, to
the LEC central office. The two traditional digital loop carrier systems
are universal digital loop carrier (UDLC) and integrated digital loop
carrier (IDLC). UDLC, the older version of DLC technology is not
directly integrated into the switch, and the digital signals must be
routed through a central office terminal and converted back to analog
signals before reaching the central office switch. Accordingly, UDLC
technology is capable of interfacing with any analog or digital central
office switch. In contrast, IDLC eliminates the need to perform this
digital-to-analog signal conversion and the demultiplexing of loop
circuits before the signals reach the switch, because IDLC technology
establishes a direct, digital interface to a digital central office
switch. IDLC technology can operate only with a digital switch.

213\. DLC technology provides significant economies. By concentrating
loops in the field and sending digitized signals to the central office
over fiber strands, incumbent LECs reduce loop costs and improve the
performance and quality of the loop. Terminating loops at the DLC remote
terminal reduces the effective length of the copper line, generally
improving the quality and reliability of the service. Another benefit of
DLC is that individual signals can be multiplexed into a higher speed
DS1 format for transmission to a central office over a single fiber
optic or 4‑wire circuit. While the remote terminal architecture solves
many problems for POTS, it makes provisioning of xDSL‑based services
more complicated. For example, xDSL-based services require that a clean
copper pair connect the customer premises to the DSLAM. The transmission
facility between the remote terminal and the central office in a DLC
environment, however, is typically fiber. As a result, xDSL-based
services generally cannot be deployed unless the remote terminal is
equipped with a DSLAM or the loop is migrated to copper.

**APPENDIX D**

**INITIAL REGULATORY FLEXIBILITY ANALYSIS**

214\. As required by the Regulatory Flexibility Act (RFA),[^373] the
Commission has prepared this Initial Regulatory Flexibility Analysis
(IRFA) of the possible significant economic impact on small entities by
the policies and rules proposed in this Notice of Proposed Rulemaking
(NPRM).[^374] Written public comments are requested on this IRFA.
Comments must be identified as responses to the IRFA and must be filed
by the deadlines for submitting comments in this proceeding. The
Commission will send a copy of the NPRM, including the IRFA, to the
Chief Counsel for Advocacy of the Small Business Administration.[^375]
In addition, the NPRM and IRFA (or summaries thereof) will be published
in the Federal Register.[^376]

**I. Need for and Objectives of this NPRM**

215\. In this NPRM, we propose an optional alternative pathway for
incumbent LECs that would allow separate affiliates to provide advanced
services free from incumbent LEC regulation. In particular, if an
incumbent LEC chooses to offer advanced services through an affiliate
that is truly separate from the incumbent, that affiliate would not be
deemed an incumbent LEC and therefore would not be subject to incumbent
LEC regulation, including the obligations under section 251(c). On the
other hand, if the advanced services affiliate derives an unfair
advantage from its relationship with the incumbent, that affiliate
should be viewed as stepping into the shoes of the incumbent LEC and
would be subject to all the requirements that Congress established for
incumbent LECs. We propose in this NPRM specific structural separation
and nondiscrimination requirements that need to be in place in order for
an affiliate to be deemed a non-incumbent LEC, and thus not subject to
section 251(c). We also offer guidance on various factors that the
Commission should consider in determining when an advanced services
affiliate would be an \"assign\" of the incumbent LEC, and, therefore,
subject to the obligations of section 251(c).

216\. In this NPRM, we also propose additional rule changes that would
apply whether or not incumbent LECs choose to establish a separate
affiliate to provide advanced services. We propose rules to ensure that
all entities seeking to offer advanced services have adequate access to
collocation and loops, which is critical to promote competition in the
marketplace for advanced services. We then seek comment on ways to
modify the section 251(c) unbundling requirements, once companies are in
compliance with the rule changes we propose regarding collocation and
access to loops. Finally, we seek comment on measures that would provide
BOCs with targeted interLATA relief to ensure that all consumers, even
those in rural areas, are able to reap the benefits of advanced
telecommunications capability.

**II. Legal Basis**

217\. The legal basis for any action that may be taken pursuant to the
NPRM is contained in sections 1-4, 10, 201, 202, 251-254, 271, and
303(r) of the Communications Act of 1934, as amended, 47 U.S.C. \'\'
151-154, 160, 201, 202, 251-254, 271, and 303(r).

**III. Description and Estimate of the Number of Small Entities to which
the Proposals, if Adopted, Would Apply**

218\. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposals in this NPRM, if adopted.[^377] The RFA
generally defines the term \"small entity \" as having the same meaning
as the terms \"small business,\" \"small organization,\" and \"small
governmental jurisdiction.\"[^378] In addition, the term \"small
business\" has the same meaning as the term \"small business concern\"
under the Small Business Act.[^379] A small business concern is one
which: (1) is independently owned and operated; (2) is not dominant in
its field of operation; and (3) satisfies any additional criteria
established by the Small Business Administration (SBA). [^380]

219\. Below, we further describe and estimate the number of small
entities that may affected by the proposals in this NPRM, if adopted.

220\. The most reliable source of information regarding the total
numbers of certain common carrier and related providers nationwide, as
well as the numbers of commercial wireless entities, appears to be data
the Commission publishes annually in its *Telecommunications Industry
Revenue* report, regarding the Telecommunications Relay Service
(TRS).[^381] According to data in the most recent report, there are
3,459 interstate carriers.[^382] These carriers include, *inter* *alia*,
local exchange carriers (LECs), wireline carriers and service providers,
interexchange carriers, competitive access providers, operator service
providers, pay telephone operators, providers of telephone toll service,
providers of telephone exchange service, and resellers.

221\. The SBA has defined establishments engaged in providing
\"Telephone Communications, Except Radiotelephone\" to be small
businesses when they have no more than 1,500 employees.[^383] Below, we
discuss the total estimated number of telephone companies and small
businesses in this category, and we then attempt to refine further those
estimates.

222\. Although some affected incumbent LEC may have 1,500 or fewer
employees, we do not believe that such entities should be considered
small entities within the meaning of the RFA because they are either
dominant in their field of operations or are not independently owned and
operated, and therefore by definition not \"small entities\" or \"small
business concerns\" under the RFA. Accordingly, our use of the terms
\"small entities\" and \"small businesses\" does not encompass small
incumbent LECs. Out of an abundance of caution, however, for regulatory
flexibility analysis purposes, we will separately consider small
incumbent LECs within this analysis and use the term \"small incumbent
LECs\" to refer to any incumbent LECs that arguably might be defined by
the SBA as \"small business concerns.\"[^384]

223\. [Local Exchange Carriers]{.underline}. Neither the Commission nor
the SBA has developed a definition for small LECs. The closest
applicable definition under the SBA rules is for telephone
communications companies other than radiotelephone (wireless)
companies.[^385] According to the most recent *Telecommunications
Industry Revenue* data, 1,371 carriers reported that they were engaged
in the provision of local exchange services.[^386] We do not have data
specifying the number of these carriers that are either dominant in
their field of operations, are not independently owned and operated, or
have more than 1,500 employees, and thus are unable at this time to
estimate with greater precision the number of LECs that would qualify as
small business concerns under the SBA\'s definition. Consequently, we
estimate that fewer than 1,371 providers of local exchange service are
small entities or small incumbent LECs that may be affected by the
proposed rules, if adopted.

224\. [Competitive LECs]{.underline}. Neither the Commission nor SBA has
developed a definition of small entities specifically applicable to
providers of competitive LECs. The closest applicable definition under
the SBA rules is for telephone communications companies except
radiotelephone (wireless) companies. The most reliable source of
information regarding the number of competitive LECs nationwide is the
data that we collect annually in connection with the TRS Worksheet.
According the most recent *Telecommunications Industry Revenue* data,
109 companies reported that they were engaged in the provision of either
competitive local exchange service or competitive access service, which
are placed together in the data.[^387] We do not have information on the
number of carriers that are not independently owned and operated, nor
have more than 1,500 employees, and thus are unable at this time to
estimate with greater precision the number of competitive LECs that
would qualify as small business concerns under the SBA definition.
Consequently, we estimate that there are fewer than 109 small
competitive LECs or competitive access providers.

**IV. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements**

225\. The collocation and loops sections of the NPRM include proposed
reporting requirements. With regard to collocation, the NPRM tentatively
concludes that incumbent LECs should be required to list all equipment
approved for use in a central office. The NPRM also tentatively
concludes that, upon request from a competitive LEC, an incumbent LEC
should submit to the requesting competitor a report indicating the
incumbent LEC\'s available collocation space. The NPRM indicates that
this report should: (1) specify the amount of collocation space
available at each requested premises, the number of collocators, and any
modifications in the use of the space since the last report; and (2)
include measures that the incumbent LEC is taking to make additional
space available for collocation. With regard to loops, the NPRM
tentatively concludes that incumbent LECs should be required to share
information about loops with new entrants.

**V. Steps Taken to Minimize Significant Economic Impact on Small
Entities and Significant Alternatives Considered**

226\. The proposals in this NPRM seek to ensure that competing carriers,
including small entity carriers, obtain access to inputs necessary to
the provision of advanced services. The proposals seek to encourage the
deployment of advanced services to all Americans, including those in
remote, rural areas. To gather relevant information from all interested
parties, including small business entities, the NPRM seeks comment on a
wide array of issues and asks that commenters suggest alternatives to
our proposals. We tentatively conclude that our proposals in the NPRM
would impose minimum burdens on small entities. We seek comment on these
proposals and the impact they may have on small entities.

**VI. Federal Rules that May Duplicate, Overlap, or Conflict with the
Proposals in the NPRM**

227\. None.

August 6, 1998

**Separate Statement of**

**Commissioner Susan Ness**

*Re: Inquiry Concerning the Deployment of Advanced Telecommunications
Capability to All Americans in a Reasonable and Timely Fashion, and
Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of
the Telecommunications Act of 1996, CC Docket No. 98-146; Deployment of
Wireline Services Offering Advanced Telecommunications Capability, CC
Docket No. 98-147.*

In Section 706(a) of the Telecommunications Act, Congress directed the
FCC to \"encourage the deployment on a reasonable and timely basis of
advanced telecommunications capability to all Americans.\" This
provision of the law is an explicit direction to anticipate and prepare
for the future. Fulfilling the hopes and needs of citizens in the 21st
Century will require widespread availability of much greater bandwidth
than has traditionally been available through \"plain old telephone
service.\"

Today we begin the task of ascertaining the progress of, and prospects
for, deployment of broadband capabilities throughout this country. We
must ensure that high-bandwidth services roll out as quickly as the
technology and the economics allow. Progress must not be impeded by
inadequate competition or excessive regulation.

I hope to learn in this proceeding what we can do not only to promote
the deployment of advanced telecommunications capability but also to
facilitate consumer [choice]{.underline} among broadband service
suppliers. Although we have several pending petitions filed by incumbent
telephone companies or their would-be competitors, we need to take a
broader view. In the deployment of advanced telecommunications
capability, multiple industry sectors can play a role.

Our notice of inquiry properly recognizes the multiplicity of potential
bandwidth suppliers \-- ILECs, CLECs, cable, wireless, and satellite
companies, digital broadcasters, etc. The notice asks questions that
will permit us to understand better how each industry sector can
participate effectively in the bandwidth race, what advantages and
disadvantages the various participants bring to the contest, and which
barrier-reducing and competition-promoting steps the Commission can and
should take. It also explores what special measures may be needed to
meet the special needs of rural areas or to serve elementary and
secondary schools and classrooms. I will welcome the development of a
full record on these issues.

In our companion order and notice of proposed rulemaking, we demonstrate
that we are prepared to do more than just ask questions. On certain
issues, we have already developed a considerable record, as a result of
various pending petitions, and this enables us to render certain
threshold decisions and to tender several concrete proposals.

As I see it, the key issue we address today is whether advanced
telecommunications capability is subject to the competitive framework so
carefully established by Congress in Sections 251 and 271 of the
Communications Act. The answer is yes. I don\'t believe that Congress
wrote detailed amendments to the Communications Act only to address
voice, but not data, services. To the contrary, I believe a
forward-looking and increasingly Internet-savvy Congress crafted a
framework to promote competition and deregulation throughout all
telecommunications markets as we enter a new chronological and
technological millennium.

The Telecommunications Act is rooted in a strong belief in the power of
competition, and in a recognition that the networks constructed over the
past century by the incumbent LECs need to be \"opened up\" to enable
competitive entry. What I like most about this order and notice of
proposed rulemaking is that it both (1) requires incumbent LECs to open
their networks in ways that allow multiple providers to offer
high-bandwidth services [and]{.underline} (2) provides a path for ILEC
affiliates who are willing to compete on their merits, rather than on
the basis of affiliation, to avoid regulation to the same degree as do
their competitors. The goal is to expedite full and fair competition
between a multiplicity of bandwidth providers, including ILEC
affiliates, and thereby speed the availability of high-quality,
reasonably priced, advanced telecommunications capability throughout the
nation.

August 6, 1998

**SEPARATE STATEMENT OF COMMISSIONER MICHAEL K. POWELL**

*Re: Memorandum Opinion and Order and Notice of Proposed Rulemaking,
Deployment of Wireline Services Offering Advanced Telecommunications
Capability et al. (CC Docket Nos. 98-147 et al.)*.

*Re: Notice of Inquiry, Inquiry Concerning the Deployment of Advanced
Telecommunications Capability to All Americans in a Reasonable and
Timely Fashion, and Possible Steps to Accelerate Such Deployment
Pursuant to Section 706 of the Telecommunications Act of 1996 (CC Docket
No. 98-146)*.

In this combined statement, I write separately to explain the bases upon
which I support this *Order/NPRM* and *Notice of Inquiry*.

I am very pleased to support the *Order/NPRM*. [First]{.underline}, I
think the item evidences our desire to devise ways that *all* interested
firms can participate in the deployment of advanced services \-- even
incumbents that possess market power in certain communications markets.
Make no mistake: as a strong proponent of vigorous antitrust
enforcement, I believe that government must continue and intensify its
efforts to contain and ameliorate the negative effects of such market
power where warranted. We should, in particular, be sensitive to the
power such companies have over truly essential facilities. We should not
fail, however, to recognize that these companies also may be
well-positioned to provide services of enormous value to consumers.
Simply put, we cannot relegate BOCs or other big companies to the
sidelines in the data services \"race\" unless we are prepared to deny
the economy and consumers of the benefits of these companies\' expertise
and capital.

[Second]{.underline}, and relatedly, I applaud the *Order/NPRM* for what
it signals. In particular, it signals that the Commission is willing to
allow incumbent LECs to provide some services through a separate
affiliate on a relatively unencumbered basis, subject primarily to our
enforcement mechanisms. I am committed, personally and firmly, to
ensuring that this alternative, \"deregulatory pathway\" is available to
the extent permitted under the law.

As I have noted on many occasions, communications policy historically
has emphasized prospective, prophylactic regulation. Yet such regulation
tends to stifle innovation and impede the beneficial operation of market
forces. We should look to performance measurement and vigorous
enforcement, more often than prospective regulation, as a means to
protect the public against certain identifiable harms. This approach
will avoid hindering companies from improving their existing offerings
and entering new markets that lie outside their traditional regulatory
boundaries, and will usher in a more effective and efficient regulatory
process.

The separate affiliate approach, if carefully implemented, offers the
prospect of allowing us to police potential anticompetitive conduct more
easily. As such, I believe this approach takes the Commission another
step away from the traditional regulatory model toward one that is more
consistent with a rapidly evolving competitive marketplace. I applaud
the Common Carrier Bureau and my colleagues for taking this important,
deregulatory step with respect to encouraging the development of
competition in advanced services.

[Third]{.underline}, I believe the separate affiliate pathway will serve
as a good example of how the Commission can promote congruence between
our policy goals and private firms\' self-interest. There is an
unfortunate tendency in communications policy to rely on polices that
depend for their implementation upon a company or an industry acting
against its self-interest. This reliance is entirely misplaced. Firms
are economic actors, not moral beings. Indeed, the market
[depends]{.underline} for its effectiveness on firms pursuing their
economic self-interest. We must accept these premises and craft policies
consistent with them. I am committed to pursuing the idea of a separate
affiliate pathway because I believe it constitutes an important move in
this direction. As the *Order/NPRM* notes, the requirement that an
incumbent treat its advanced services affiliate only as well as it
treats its competitors should give the incumbent a greater incentive to
improve its processes and provide unbundled elements and collocation
space as quickly and cheaply as possible to all competitors.

I should add that I am very cognizant of some of the fears expressed
regarding the separate affiliate approach, particularly fears about the
continued soundness of universal service support and new entrants\'
fears that allowing incumbents to use separate affiliates will somehow
allow incumbent LECs to leverage their dominance in the local telephone
market to control the market for advanced services. These fears are not
unfounded. With respect to universal service, however, I would point out
that it is my understanding that an incumbent\'s advanced services
affiliate would have the same obligation to contribute to universal
service as any other telecommunications carrier. With respect to new
entrants\' fears, I would urge us to consider the alternative to
establishing a separate affiliate pathway. The dynamism and demand in
the advanced services market is such that incumbents that do not provide
these services through separate affiliates will surely do so on a highly
integrated basis. If that happens, our ability to enforce
interconnection, unbundling and other requirements with respect to
advanced services will be as difficult and, I fear, as uphill a battle,
as our enforcement of these requirements for traditional
circuit-switched services. Thus, I submit that even if the separate
affiliate approach may involve risks \-- which I am committed to
addressing \-- the alternative may not put us in any better position to
promote competition in advanced services.

I also support the adoption of this *Notice of Inquiry.* Encouraging
deployment of advanced telecommunications services promises both to
challenge our conventional understanding of technology within the
existing statutory and regulatory framework and to usher in exciting new
communications capabilities for average Americans. The trick is getting
from here to there; that is, we must overcome the various technological,
legal and economic impediments to deployment in order to let consumers
and organizations appreciate fully the possibilities advanced
communications services offer. Indeed, section 706 requires not only
that these services be deployed, but that the Commission and each state
Commission encourage such deployment on a reasonable and timely basis to
all Americans. Moreover, we must do so consistent with the deregulatory,
market emphasis of the Act.

I invite parties commenting on the *Notice* to help us conduct a
thorough review of where we have been, where we are, and where we need
to be in order to encourage the deployment of advanced services. I hope
that, in using this information, we will be sensitive to the fact that
requiring certain firms to provide access to their facilities or
services to other firms or even to end users may have some negative
consequences. In particular, I think we should search for ways to
promote innovation and competition in the provision of \"last mile\"
transmission to homes and businesses. While mandating access is a useful
tool and can bring about short-term gains in retail competition, it also
may undermine incentives for developing new ways to circumvent the power
of incumbents over distribution.

Both the *Order/NPRM* and the *Notice of Inquiry* offer evidence that
the Commission understands that neither competition nor innovation is
the product of the well-meaning regulatory policies we adopt, even if
our policies create the appearance of competition in the short-term;
rather, competition and innovation are the result of self-interested
actors struggling in the marketplace to provide consumers with new and
better products and services. I firmly believe that our policies should
continue to take account of this fact. I believe we also must focus more
on the longer-term future in carrying out Congress\' instruction that we
encourage the deployment of advanced communications. I wish to
underscore my personal commitment to following this instruction at the
same time we seek to promote the deregulatory and pro-competitive goals
of the Act.

I praise the Bureau\'s efforts, as well as those of my colleagues, on
this critical and challenging subject. And I look forward to working
with everyone at the Commission, in the States and in Congress to help
make our effort to encourage the deployment of advanced communications a
success.

August 6, 1998

**Statement of Commissioner Gloria Tristani**

*Re:* *In the Matter of Deployment of Wireline Services Offering
Advanced Telecommunications Capability, Memorandum Opinion and Order and
Notice of Proposed Rulemaking, CC Docket No. 98-147*

I support today\'s action to provide incentives for all wireline
carriers to deploy high bandwidth services more quickly than they would
otherwise. That is what Congress directed us to do in section 706, and I
hope the proceedings we open today will allow us to fulfill this
obligation expeditiously.

I wish to indicate my preliminary support for the basic idea of separate
affiliates as a way for incumbent LECs to provide high speed data
service with minimal regulation. The separate affiliate model would
properly align incentives for incumbent LECs to take pro-competitive,
pro-consumer, actions in the area of advanced services. I am well aware
that separate affiliates impose costs on incumbent LECs, and that absent
those costs, incumbent LECs could be more efficient providers of
advanced data service. But at what price to competition? If we have
learned one lesson in the 30 months since the Act passed, it is that
pro-competitive regulations work best when incumbents have an incentive
to make them work. Using separate affiliates would encourage incumbent
LECs to improve their ordering and provisioning methods for competitors
because their affiliates won\'t tap into the lucrative high bandwidth
market unless they can obtain critical inputs to its product, such as
efficient collocation and DSL-capable loops, in a timely and efficient
fashion. In return, incumbent LECs\' affiliates would be freed of the
unbundling obligations for data equipment that will apply if DSL service
is provided on an integrated basis.

Section 706 makes states and the FCC partners in encouraging carriers to
deploy advanced telecommunications capabilities. It is clear that states
will play a major role in this effort, just as Congress intended. The
FCC can do its part by establishing, in close consultation with states,
a pro-competitive framework for data services that will bring consumers
the bandwidth services they want. State commissions, in turn, set the
rates competitors pay for DSL-capable loops and collocation. Without
fair and efficient access to these building blocks, DSL service will
remain a niche service rather than a mass market phenomenon. In the
coming months, the FCC will do its best to write effective loop and
collocation rules. After that, it will be up to state commissions to
make high bandwidth services a reality for their citizens.

Since the rapid deployment of advanced services will be greatly affected
by both federal and state policies, it is important that the Commission
work closely with state commissions in designing an advanced services
framework that serves our needs [and]{.underline} their needs. My recent
participation in NARUC\'s summer meeting afforded me the opportunity to
hear first hand the views of state commissioners. What I learned is that
state commissions have not had a full opportunity to evaluate the idea
of separate affiliates and to advise us of their views. Our decision to
adopt only a tentative framework for separate affiliates reflects this
Commission\'s desire to work cooperatively with state commissions in
this critical area of communications policy. In response to the NPRM
adopted today, I expect state commissions will furnish us with valuable
advice and guidance. I hope the specific proposals in the NPRM will
encourage focused discussion on the key issues surrounding separate
affiliates and allow us to move forward expeditiously with final rules.

The Order portion of today\'s item rejects Bell Company requests for
wholesale waivers of section 271. I believe that is the correct decision
as a matter of policy. Some say the elegant design of section 271 has
been weakened because increased competition has made the long distance
market less attractive than it once was for Bell Companies, and hence,
no longer a sufficient incentive to comply with Congress\'s plan for
local competition. Assuming for the moment that is true, it may well be
that the booming market for data communications, including interLATA
connections, will pick up where standard long distance has left off. If
that is correct, this Commission\'s denial of wholesale LATA relief is
entirely consistent with Congress\'s vision for section 271.

That does not mean all LATA relief for Bell Companies should be off the
table. At least in the near term, Bell Companies may well be the most
likely supplier of advanced services in parts of their territories. I
think there are potentially significant actions we could take regarding
LATA modifications for Bell Companies to reach under-served parts of
their territories. Targeted LATA modifications could allow Bell
Companies to configure their data networks in ways that makes advanced
service feasible in areas that otherwise would be ignored by the free
market.

I also wish to register my particular interest in two matters related to
separate affiliates for data services. The first is my interest in
seeing that Internet service providers unaffiliated with incumbent LECs
can compete fairly in the world of DSL-delivered Internet access service
with ISPs affiliated with incumbent LECs. An incumbent LEC\'s data
affiliate presumably has an incentive to favor its affiliated ISP over
unaffiliated ISPs. I will be particularly interested in parties\' views
on whether the creation of advanced services affiliates is truly a risk
to the high-speed Internet access market, or whether this danger is too
speculative for immediate Commission action.

The second issue is collocation space at incumbent LECs\' remote
terminals. Collocation of all types is a threshold issue for competitors
to provide DSL service. No collocation means no competition. And with
collocation space apparently quite limited not only in many central
offices but also in remote terminals, I will be particularly interested
in learning how we can level the playing field regarding access to
collocation space. It is important to me that, beginning today, there be
no opportunity for incumbent LECs to foreclose DSL competition in
certain areas by gaming the collocation process.

Finally, I would acknowledge the efforts of the incumbent and
competitive local carriers in pressing their case at the FCC. They
understood better than us that telecommunications technology was
advancing at light speed, and that our regulations needed to better
accommodate carriers\' needs in responding to the explosive demand for
high speed data communications. Rather than waiting for the FCC to open
its inquiry under section 706, the carriers sought faster resolution of
their concerns through petitions relating to sections 251 and 271 of the
1996 Act. Today\'s actions by the Commission moves us closer to policies
that reflect what consumers are demanding and what carriers want to
provide.

\# \# \#

[^1]: ^?^ Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat.
    56, *codified at* 47 U.S.C. \'\' 151 *et seq.* Hereinafter, all
    citations to the 1996 Act will be to the 1996 Act as it is codified
    in the United States Code. The 1996 Act amended the Communications
    Act of 1934. We will refer to the Communications Act of 1934, as
    amended, as the \"Communications Act\" or as the \"Act.\"

[^2]: ^?^ Preamble to Pub. L. 104-104, 110 Stat. 56 (1996).

[^3]: ^?^ Pub.L. 104‑104, Title VII, \' 706, Feb. 8, 1996, 110 Stat.
    153, reproduced in the notes under 47 U.S.C. \' 157.

[^4]: ^?^ The term \"broadband\" is generally used to convey sufficient
    capacity \-- or \"bandwidth\" \-- to transport large amounts of
    information. As technology evolves, the concept of \"broadband\"
    will evolve with it: we may consider today\'s \"broadband\" services
    to be \"narrowband\" services when tomorrow\'s technologies appear.

[^5]: ^?^ The \"x\" in xDSL is a place holder for the various types of
    DSL service, such as ADSL (asymmetric digital subscriber line), HDSL
    (high-speed digital subscriber line), UDSL (universal digital
    subscriber line), VDSL (very-high speed digital subscriber line),
    and RADSL (rate-adaptive digital subscriber line). We discuss the
    functionality offered by xDSL in greater detail in section IV(C),
    *infra*.

[^6]: ^?^ We further describe advanced services in section IV(C),
    *infra*. We note that services that rely on digital subscriber line
    technology are but one of the advanced services currently in
    existence, and we in no way mean to suggest digital subscriber line
    is the preferred technology. We consider it preferable to provide
    illustrative examples rather than attempting to create a list of all
    advanced services.

[^7]: ^?^ *See* 47 U.S.C. \' 157 note. Section 706(b) of the
    Telecommunications Act of 1996 requires the Commission to initiate,
    within 30 months of the enactment of the 1996 Act, an inquiry into
    the availability of advanced telecommunications capabilities to all
    Americans. The Commission must complete the inquiry within six
    months, and must take \"immediate action to accelerate the
    deployment\" of advanced telecommunications capability if the
    inquiry determines that such capability is not being deployed to all
    Americans in a reasonable and timely fashion. *See id*.

[^8]: ^?^ We note that the states recently urged the Commission to
    initiate an NOI and solicit additional ideas, including those put
    forth by the states, before granting any specific remedial actions
    or requests for interim relief proposed in the petitions of Bell
    Atlantic, the Alliance for Public Technology, Ameritech, U S WEST,
    and SBC. NARUC Convention Floor Resolution No. 6, \"Resolution
    Regarding Additional Petitions to the FCC for Action Under Section
    706\" (adopted by the Exec. Comm. on July 30, 1998).

[^9]: ^?^ We use the term \"data\" broadly to refer to a representation
    of facts, concepts, instructions, or information in a manner
    suitable for communication, interpretation, or processing.

[^10]: ^?^ Packet-switched technology is discussed in further detail in
    section IV(C), *infra*.

[^11]: ^?^ Although advanced services can also be deployed using other
    technologies over satellite, cable, and wireless systems, we limit
    the discussion here to wireline services, because none of the
    petitioners raise issues about these other technologies.

[^12]: ^?^ Consumers may also experience delays in accessing information
    that stem from sources other than the \"last mile.\" For example,
    they may experience delays at the servers containing the information
    they wish to access, or delays relating to congestion in the
    Internet itself.

[^13]: ^?^ *Petition of Bell Atlantic Corporation for Relief from
    Barriers to Deployment of Advanced Telecommunications Services*, CC
    Docket No. 98-11 (filed Jan. 26, 1998); *Petition of U S WEST
    Communications, Inc., for Relief from Barriers to Deployment of
    Advanced Telecommunications Services*, CC Docket No. 98-26 (filed
    Feb. 25, 1998); *Petition of Ameritech Corporation to Remove
    Barriers to Investment in Advanced Telecommunications Capability*,
    CC Docket No. 98-32 (filed Mar. 5, 1998); *Southwestern Bell
    Telephone Company, Pacific Bell, and Nevada Bell Petition for Relief
    from Regulation Pursuant to Section 706 of the Telecommunications
    Act of 1996 and 47 U.S.C. \' 160 for ADSL Infrastructure and
    Service*, CC Docket No. 98-91 (filed June 9, 1998).

[^14]: ^?^ *Petition of the Association for Local Telecommunications
    Services (ALTS) for a Declaratory Ruling Establishing Conditions
    Necessary to Promote Deployment of Advanced Telecommunications
    Capability Under Section 706 of the Telecommunications Act of 1996*,
    CC Docket No. 98-78 (filed May 27, 1998).

[^15]: ^?^ *See* *Petition of the Alliance for Public Technology
    Requesting Issuance of Notice of Inquiry and Notice of Proposed
    Rulemaking to Implement Section 706 of the 1996 Telecommunications
    Act*, CCB/CPD No. 98-15 (filed Feb. 18, 1998).

[^16]: ^?^ *See* Letter from Larry Irving, Assistant Secretary for
    Communications and Information, National Telecommunications and
    Information Administration, U.S. Department of Commerce, to William
    E. Kennard, Chairman, Federal Communications Commission, CC Docket
    Nos. 98-91, 98-32, 98-26, and 98-11 at 2 (filed July 17, 1998) (NTIA
    July 17 *ex parte*).

[^17]: ^?^ We recognize that the corporate holding company may be the
    entity that would establish the affiliate, rather than the incumbent
    LEC per se.

[^18]: ^?^ This petition was actually filed by SBC\'s incumbent LEC
    entities, Southwestern Bell Telephone Company, Pacific Bell, and
    Nevada Bell.

[^19]: ^?^ Joint Statement of Managers, S. Conf. Rep. No. 104-230, 104th
    Cong. 2d Sess. 1 (1996) (*Joint Explanatory Statement*).

[^20]: ^?^ 47 U.S.C. \'\' 251, 271.

[^21]: ^?^ 47 U.S.C. \' 251(c)(2)(D).

[^22]: ^?^ 47 U.S.C. \' 251(c)(3).

[^23]: ^?^ 47 U.S.C. \' 251(c)(4).

[^24]: ^?^ 47 U.S.C. \' 271.

[^25]: ^?^ *Commission Seeks Comment on Bell Atlantic Petition for
    Relief from Barriers to Deployment of Advanced Telecommunications
    Services*, CC Docket No. 98-11, Public Notice, 13 FCC Rcd 2495
    (1998). On February 25, 1998, the Chief, Policy and Program Planning
    Division, Common Carrier Bureau, issued an Order granting the motion
    of the Commercial Internet eXchange Association (CIX) requesting an
    extension of the comment deadline in the above-mentioned docket.
    *Bell Atlantic\'s Petition for Relief from Barriers to Deployment of
    Advanced Telecommunications Services*, CC Docket 98-11, Order, 13
    FCC Rcd 4495 (1998).

[^26]: ^?^ Bell Atlantic Petition at 11.

[^27]: ^?^ *Alliance for Public Technology Petitions the Commission for
    Issuance of a Notice of Inquiry and a Notice of Proposed Rulemaking
    to Implement Section 706 of the Telecommunications Act*, RM 9844,
    Public Notice, 13 FCC Rcd 5126 (1998).

[^28]: ^?^ APT Petition at 2.

[^29]: ^?^ *Id.* at 17.

[^30]: ^?^ *Id.* at 2-3.

[^31]: ^?^ *Id.* at 3.

[^32]: ^?^ *Id.* at 3. We note that we do not address all of the issues
    raised by the APT Petition in the context of this rulemaking, but
    rather only address those issues discussed in the NPRM below.

[^33]: ^?^ *Commission Seeks Comment on U S WEST Petition for Relief
    from Barriers to Deployment of Advanced Telecommunications
    Services*, CC Docket No. 98-26, Public Notice, 13 FCC Rcd 4739
    (1998); *Commission Seeks Comment on Ameritech Petition for Relief
    from Barriers to Deployment of Advanced Telecommunications
    Services*, CC Docket No. 98-32, Public Notice, 13 FCC Rcd 4741
    (1998). On March 16, 1998, the Chief, Policy and Program Planning
    Division, Common Carrier Bureau, issued an Order granting the motion
    of ALTS to consolidate the pleading cycles of the Bell Atlantic, U S
    WEST, and Ameritech petitions. *Petition of Bell Atlantic for Relief
    from Barriers to Deployment of Advanced Telecommunications Services,
    Petition of U S WEST for Relief from Barriers to Deployment of
    Advanced Telecommunications Services*, *Petition of Ameritech for
    Relief from Barriers to Deployment of Advanced Telecommunications
    Services*, *Motion to Consolidate Filing of Comments and Replies by
    the Association for Local Telecommunications Services*, Order, 13
    FCC Rcd 5179 (1998).

[^34]: ^?^ Ameritech Petition at 22-27; U S WEST Petition at 44-52.

[^35]: ^?^ U S WEST Petition at 44.

[^36]: ^?^ Ameritech Petition at 13.

[^37]: ^?^ *Policy and Rules Concerning Rates for Competitive Common
    Carrier Services and Facilities Authorizations Therefor*, CC Docket
    No. 79-252, Fifth Report and Order, 98 F.C.C. 2d 1191 (1984)
    (*Competitive Carrier Fifth Report and Order*).

[^38]: ^?^ Ameritech Petition at 14-22.

[^39]: ^?^ *Pleading Cycle Established for Comments on Association for
    Local Telecommunications Services Petition for Declaratory Ruling
    Regarding Section 706*, CC Docket No. 98-78, Public Notice, DA
    98-1019 (rel. May 28, 1998).

[^40]: ^?^ ALTS Petition at 2.

[^41]: ^?^ *Id.* at 18-22.

[^42]: ^?^ *Pleading Cycle Established for Comments on SBC Petition for
    Relief from Regulation Pursuant to Section 706 of the
    Telecommunications Act and 47 U.S.C. \' 160 for ADSL Infrastructure
    and Service*, CC Docket No. 98-91, Public Notice, DA 98-1111 (rel.
    June 11, 1998).

[^43]: ^?^ SBC Petition at 25-28.

[^44]: ^?^ *Id.* at 30-32.

[^45]: ^?^ *Id.* at 33-34.

[^46]: ^?^ An ordinary voice channel, in the United States, generally
    allows transmission of digital information at the rate of 56,000
    bits per second. By contrast, the most widely deployed xDSL service
    (known as ADSL) allows data to be transmitted to the home or
    residence at up to several *million* bits per second, depending on
    loop length, loop design, and the technology deployed. Provision of
    xDSL service is subject to a variety of important technical
    constraints. One is the length of the subscriber loop: ADSL, the
    most widely deployed xDSL-based service, generally requires loops of
    less than 18,000 feet using current technology. Another is the
    quality of the loop, which must be free of excessive bridged taps,
    loading coils, and other impediments. \"Conditioning\" loops to
    remove those impediments, or constructing fiber-based digital loop
    carrier systems to overcome loop length difficulties, can be
    expensive. For further explanation of these loop electronics, see
    *infra* nn.314, 315.

[^47]: ^?^ We note that, at the present time, not all existing xDSL
    deployments are taking advantage of that capability; some carriers
    offer only high-speed data services without the voice component over
    the xDSL-equipped loop.

[^48]: ^?^ *See* ALTS Petition at 10-32.

[^49]: ^?^ *See* 47 U.S.C. \' 153.

[^50]: ^?^ Under the 1996 Act, any service with a communications
    component must be either a \"telecommunications service\" or an
    \"information service\" (but not both). *See Federal-State Joint
    Board on Universal Service*, CC Docket No. 96-45, Report to
    Congress, FCC No. 98-67, at && 21-48 (rel. Apr. 10, 1998) (*Report
    to Congress on Universal Service*).

[^51]: ^?^ 47 U.S.C. \' 251(a).

[^52]: ^?^ 47 U.S.C. \' 153(44). The definition excludes aggregators of
    telecommunications services, as defined in section 226. *See* 47
    U.S.C. \' 226.

[^53]: ^?^ 47 U.S.C. \'\' 251(c)(3), 153(29).

[^54]: ^?^ 47 U.S.C. \' 153(46).

[^55]: ^?^ 47 U.S.C. \' 153(43).

[^56]: ^?^ The Commission, under the regime established in its *Computer
    II* proceeding, classified all services offered over a
    telecommunications network as either \"basic\" or \"enhanced.\" A
    basic service consists of the offering, on a common carrier basis,
    of \"pure transmission capability over a communications path that is
    virtually transparent in terms of its interaction with customer
    supplied information.\" *Amendment of Section 64.702 of the
    Commission\'s Rules and Regulations* (*Computer II*), 77 FCC 2d 384,
    419-20, && 93, 96 (1980) (*Computer II Final Decision*), *recon*.,
    84 FCC 2d 50 (1980) (*Reconsideration Order*), *further recon*., 88
    FCC 2d 512 (1981) (*Further Reconsideration Order*), *affirmed sub
    nom*. *Computer and Communications Industry Ass\'n v. FCC*, 693 F.2d
    198 (D.C. Cir. 1982), *cert. denied,* 461 U.S. 938 (1983). An
    enhanced service, by contrast, includes \"any offering over the
    telecommunications network which is more than a basic transmission
    service.\" *Id.* at 420, & 97. We have found that Congress intended
    the categories of \"telecommunications\" and \"information
    service,\" established in the 1996 Act, to parallel these \"basic\"
    and \"enhanced\" categories. *Report to Congress on Universal
    Service*, & 21. The Commission has concluded that the definitions of
    \"information service\" and \"enhanced service\" should be
    interpreted to extend to the same functions. *Implementation of the
    Non‑Accounting Safeguards of Sections 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 (1996) (*Non‑Accounting Safeguards Order*), Order
    on Reconisderation, 12 FCC Rcd 2297 (1997), *recon. pending*,
    *petition for summary review in part denied and motion for voluntary
    remand granted sub nom., Bell Atlantic v. FCC*, No. 97‑1067 (D.C.
    Cir. filed Mar. 31, 1997), Second Order on Reconsideration, 12 FCC
    Rcd 8653 (1997), *aff\'d sub nom. Bell Atlantic Telephone Cos. v.
    FCC*, 131 F.3d 1044 (D.C. Cir. 1997), Second Report and Order, 12
    FCC Rcd 15756 (1997). In a separate proceeding, we have sought
    comment on whether the definitions of \"telecommunications service\"
    and \"basic service\" should be interpreted to extend to the same
    functions. *Amendment of Section 64.702 of the Commission\'s Rules
    and Regulations* (*Computer III*), Report and Order, CC Docket No.
    85-229, Phase I, 104 FCC 2d 958 (1986) (*Phase I Order*), *recon*.,
    2 FCC Rcd 3035 (1987) (*Phase I Recon. Order*), *further recon.*, 3
    FCC Rcd 1135 (1988) (*Phase I Further Recon. Order*), *second
    further recon*., 4 FCC Rcd 5927 (1989) (*Phase I Second Further
    Recon*.), *Phase I Order and Phase I Recon. Order, vacated*,
    *California v. FCC*, 905 F.2d 1217 (9th Cir. 1990) (*California I*);
    Phase II, 2 FCC Rcd 3072 (1987) (*Phase II Order*), *recon*., 3 FCC
    Rcd 1150 (1988) (*Phase II Recon. Order*), *further recon*., 4 FCC
    Rcd 5927 (1989) (*Phase II Further Recon. Order*), *Phase II Order
    vacated*, *California I*, 905 F.2d 1217 (9th Cir. 1990); *Computer
    III Remand Proceedings*, 5 FCC Rcd 7719 (1990) (*ONA Remand Order*),
    *recon*., 7 FCC Rcd 909 (1992), *pets. for review denied*,
    *California v. FCC*, 4 F.3d 1505 (9th Cir. 1993) (*California II*);
    *Computer III Remand Proceedings: Bell Operating Company Safeguards
    and Tier 1 Local Exchange Company Safeguards*, 6 FCC Rcd 7571 (1991)
    (*BOC Safeguards Order*), *recon. dismissed in part*, Order, 11 FCC
    Rcd 12513 (1996); *BOC Safeguards Order vacated in part and
    remanded*, *California v. FCC*, 39 F.3d 919 (9th Cir. 1994)
    (*California III*), *cert. denied*, 115 S.Ct. 1427 (1995) (referred
    to collectively as the *Computer III* proceeding). We note that we
    are addressing modifications to these rules in another proceeding.
    *Computer III Further Remand Proceedings, Bell Operating Company
    Provision of Enhanced Services, 1998 Biennial Regulatory Review \--
    Review of Computer III and ONA Safeguards and Requirements*, CC
    Docket Nos. 95-20 and 98-10, Further Notice of Proposed Rulemaking,
    13 FCC Rcd 1640 (1998) (*Computer III FNPRM)*.

[^57]: ^?^ *See Independent Data Communications Manufacturers
    Association, Inc. Petition for Declaratory Ruling that AT&T\'s
    InterSpan Frame Relay Service Is a Basic Service*, *American
    Telephone and Telegraph Company Petition for Declaratory Ruling that
    all Interexchange Carriers be Subject to the Commission\'s Decision
    in the IDCMA Petition*, Memorandum Opinion and Order, 10 FCC Rcd
    13717 (1995) (*Frame Relay Order*), *recon. pending*; *American
    Telephone and Telegraph Company, for Authority under Section 214 of
    the Communications Act of 1934, as amended, to Install and Operate
    Packet Switches at Specified Telephone Company Locations in the
    United States,* Memorandum Opinion, Order and Authorization, 94 FCC
    2d 48 (1983); *Computer II Final Decision*, 77 FCC 2d at 420, & 95
    (\"Use internal to the carrier\'s facility of . . . bandwidth
    compression techniques, . . . packet switching, error control
    techniques, etc. that facilitate economical, reliable movement of
    information does not alter the nature of the basic service.\"); *see
    generally, Report to Congress on Universal Service*, at & 41. So
    long as the user sees no protocol conversion on the service level,
    it is irrelevant whether protocol processing takes place internal to
    the call. *See Non-Accounting Safeguards Order*, 11 FCC Rcd at
    21958, & 106; *see also Computer III Phase II Order*, 2 FCC Rcd at
    3081-82, && 64-71 (1987).

[^58]: ^?^ *See* 47 U.S.C. \' 153(46).

[^59]: ^?^ *See, e.g.,* CIX Comments (CC Docket No. 98-11) at 13, 15;
    AT&T Reply Comments (CC Docket Nos. 98-11, 98-26, 98-32) at 11.

[^60]: ^?^ *See Frame Relay Order*, 10 FCC Rcd at 13722-23, && 40-46;
    *Report to Congress on Universal Service*, at & 60; CIX Comments (CC
    Docket No. 98-11) at 15.

[^61]: ^?^ We also note that GTE is subject to ONA. *See Application of
    Open Network Architecture and Nondiscrimination Safeguards to GTE
    Corporation*, 9 FCC Rcd 4922, 4924, 4932-36, && 3, 16-24 (1994).

[^62]: ^?^ *See infra* & 49.

[^63]: ^?^ The Act defines \"telephone exchange service\" as:

    > \(A\) service within a telephone exchange, or within a connected
    > system of telephone exchanges within the same exchange area
    > operated to furnish to subscribers intercommunicating service of
    > the character ordinarily furnished by a single exchange, and which
    > is covered by the exchange service charge, or (B) comparable
    > service provided through a system of switches, transmission
    > equipment, or other facilities (or combination thereof) by which a
    > subscriber can originate and terminate a telecommunications
    > service.

    47 U.S.C. \' 153(47). The Act defines \"exchange access\" as \"the
    offering of access to telephone exchange services or facilities for
    the purpose of the origination or termination of telephone toll
    services.\" 47 U.S.C. \' 153(16). \"Telephone toll service\" means
    \"telephone service between stations in different exchange areas for
    which there is made a separate charge not included in contracts with
    subscribers for exchange service.\" 47 U.S.C. \' 153(48).

[^64]: ^?^ 47 U.S.C. \' 251(c)(2).

[^65]: ^?^ 47 U.S.C. \'\' 251(b), 153(26).

[^66]: ^?^ This language is now 47 U.S.C. \' 153(47)(A).

[^67]: ^?^ 47 U.S.C. \' 153(47)(B).

[^68]: ^?^ 47 U.S.C. \' 153(16).

[^69]: ^?^ *See, e.g.,* *GTE Telephone Operations, GTOC Tariff No. 1,
    GTOC Transmittal No. 1148 (GTE DSL Solutions \-- ADSL Service)*,
    CCB/CPD 98-79 (set for investigation May 28, 1998); *SBC
    Communications, Inc., Pacific Bell Telephone Company, Pacific
    Transmittal No. 1986*, CC Docket No. 98-103 (set for investigation
    June 28, 1998).

[^70]: ^?^ 47 U.S.C. \' 153(47)(B). This amendment in turn has modified
    the scope of \"exchange access,\" which the Act defines as \"the
    offering of access *to telephone exchange services or facilities*
    for the purpose of the origination or termination of telephone toll
    services.\" 47 U.S.C. \' 153(16) (emphasis added).

[^71]: ^?^ *See* Comments of Senators Stevens and Burns, *Federal-State
    Joint Board on Universal Service*, CC Docket No. 96-45 (Report to
    Congress) (filed Jan. 26, 1998), at 2, n.1:

    > \[The 1996 amendment\] would not have been necessary had Congress
    > intended to limit telephone exchange service to traditional voice
    > telephony. The new definition was intended to ensure that the
    > definition of local exchange carrier, which hinges in large part
    > on the definition of telephone exchange service, was not made
    > useless by the replacement of circuit switched technology with
    > other means \-- for example packet switches or computer intranets
    > \-- of communicating information within a local area.

[^72]: ^?^ *See* U S WEST Comments (CC Docket No. 98-78) at 15-17; *see
    also* U S WEST Reply Comments (CC Docket No. 98-26) at 19-20; *see
    also* NTIA July 17 *Ex Parte* at 7, n.22 (\"neither \[section
    251(c)\] nor its legislative history suggests that its requirements
    apply only to an ILECs\' circuit-switched facilities and
    services\").

[^73]: ^?^ Subscribers typically set up what are termed \"permanent
    virtual connections\" in routing their traffic across a
    packet-switched network. Such a connection, which gives the end user
    an \"always-on\" connection over a preset physical path, is easier
    to provision than a \"switched virtual circuit,\" in which the
    connection path is determined on a call-by-call basis. A \"permanent
    virtual connection,\" however, is not so \"permanent\" as the term
    would suggest. Any subscriber located on a packet-switched network
    can request the establishment of a permanent virtual connection
    connecting its own computers with those of any other subscriber.
    Indeed, it appears that customers can easily create and tear down
    different permanent virtual connections to different destinations on
    the network, giving them a degree of \"switched\" functionality.

[^74]: ^?^ *See* U S WEST Comments (CC Docket No. 98-78) at 16 & n.16.

[^75]: ^?^ *See Local Competition Order*, 11 FCC Rcd at 15999, & 1013.

[^76]: ^?^ *See* U S WEST Petition at 45, n.24; U S WEST Comments (CC
    Docket Nos. 98-11, 98-32) at 7; U S WEST Reply Comments (CC Docket
    No. 98-26) at 18-20.

[^77]: ^?^ *See supra* && 40-43.

[^78]: ^?^ ALTS Petition at 12-14; *see also* Level 3 Comments (CC
    Docket No. 98-78) at 4; MCI Comments (CC Docket No. 98-78) at 2;
    NEXTLINK Comments (CC Docket No. 98-78) at 13-14; Teleport Comments
    (CC Docket Nos. 98-11, 98-26, 98-32) at 10; TRA Comments (CC Docket
    No. 98-78) at 2; WorldCom Comments (CC Docket No. 98-78) at 2; LCI
    Comments (CC Docket No. 98-78) at 6, 8. *But see, e.g.,* SBC
    Comments (CC Docket No. 98-78) at 19-21; USTA Comments (CC Docket
    No. 98-78) at 2, 4-7.

[^79]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15594, & 184.

[^80]: ^?^ *See supra* && 40-43.

[^81]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15592, & 179.

[^82]: ^?^ *See* BellSouth Comments (CC Docket Nos. 98-11, 98-26, 98-32)
    at 10-11.

[^83]: ^?^ For example, Congress in the 1996 Act favored \"the continued
    development of the Internet,\" which the Act defines as \"the
    international computer network of . . . interoperable
    packet-switched data services.\" 47 U.S.C. \' 230(b)(1), (e)(1);
    *see also* 47 U.S.C. \' 223.

[^84]: ^?^ *See, e.g.,* WorldCom Comments (CC Docket Nos. 98-11, 98-26,
    98-32) at 30.

[^85]: ^?^ 47 U.S.C. \' 251(c)(3); *see also Local Competition Order*,
    11 FCC Rcd at 15640, & 278.

[^86]: ^?^ 47 U.S.C. \' 153(29); *see also Local Competition Order*, 11
    FCC Rcd at 15627-34, && 249-64.

[^87]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15641, & 279.

[^88]: ^?^ 47 U.S.C. \' 251(d).

[^89]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15624, & 241.

[^90]: ^?^ *Id.* at 15683, & 366.

[^91]: ^?^ *Id.* at 15624-25, & 243.

[^92]: ^?^ *Id.* at 15626, & 246.

[^93]: ^?^ ALTS Petition at 13; *see also,* e.spire Comments (CC Docket
    No. 98-78) at 5, LCI Reply Comments (CC Docket No. 98-78) at 6-7,
    MCI Comments (CC Docket No. 98-78) at 2-3, NEXTLINK Comments (CC
    Docket No. 98-78) at 5, 8-9, WorldCom Comments (CC Docket No. 98-78)
    at 11, NAS Comments (CC Docket No. 98-78) at 2.

[^94]: ^?^ ALTS Petition at 3.

[^95]: ^?^ *See, e.g.*, NEXTLINK Comments (CC Docket No. 98-78) at 5
    (Commission should clarify that for essential network elements
    (including the unbundled loop), incumbent LECs have a continuing
    obligation to provide nondiscriminatory access to such facilities
    for the provision of any telecommunications service); NAS Comments
    (CC Docket No. 98-78) at 2 (Commission should reaffirm that
    incumbent LECs must offer xDSL-capable loops as unbundled network
    elements); TCG Comments (CC Docket No. 98-78) at 4-6 (the ability of
    an xDSL loop to carry high speed data is an \"embedded feature\"
    functionally inseparable from the physical xDSL-conditioned copper
    loop, which is expressly an unbundled network element under the
    *Local Competition Order*); TRA Comments (CC Docket No. 98-78) at 7
    (competitive LECs must have unbundled access to the network elements
    necessary to provide advanced telecommunications services).

[^96]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15690, & 379.

[^97]: ^?^ *Id.* at 15691, & 380.

[^98]: ^?^ *Id.* at 15692, & 382. The requesting carrier bears the cost
    of such conditioning. *Id.*

[^99]: ^?^ *Id.* at 15691-92, & 381.

[^100]: ^?^ *Id.* at 15692, & 383.

[^101]: ^?^ *Implementation of the Telecommunications Act of 1996 -
    Amendment of Rules Governing Procedures to be Followed When Formal
    Complaints are Filed Against Common Carriers*, CC Docket No. 96-238,
    Second Report and Order, (rel. July 14, 1998).

[^102]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15766, & 523.

[^103]: ^?^ *See id.* at 15763-64, & 518. The Commission\'s rules define
    pre-ordering and ordering collectively as \"the exchange of
    information between telecommunications carriers about current or
    proposed customer products and services or unbundled network
    elements or some combination thereof.\" 47 C.F.R. \' 51.5.
    Pre-ordering generally includes those activities that a carrier
    undertakes to gather and confirm the information necessary to
    formulate an accurate order for a customer.

[^104]: ^?^ *See infra* && 157-72.

[^105]: ^?^ ALTS petition at 14-17; NTIA July 17 *Ex Parte* at n.34.

[^106]: ^?^ The term \"network element\" is defined in the Act as \"a
    facility or equipment used in the provision of a telecommunications
    service. Such term also includes features, functions and
    capabilities that are provided by means of such facility or
    equipment . . . .\" 47 U.S.C. \' 153(29).

[^107]: ^?^ *See infra* & 82.

[^108]: ^?^ *See infra* & 83. We also note that, pursuant to section
    251(f)(2) of the Act, incumbent LECs \"with fewer than two percent
    of the nation\'s subscriber lines installed in the aggregate
    nationwide\" may petition state commissions for suspension or
    modification of the requirements in section 251(c). 47 U.S.C. \'
    251(f)(2).

[^109]: ^?^ 47 U.S.C. \' 251(c)(4).

[^110]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15934-36, &&
    871-77; *see also, e.g.,* AT&T Reply Comments (CC Docket Nos. 98-11,
    98-26, 98-32) at 11.

[^111]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15934, & 871.

[^112]: ^?^ *Id*. at 15934, & 873.

[^113]: ^?^ *Id.* at 15930, 15931, 15934, && 863, 865-66, 871; *see,
    e.g.,* AT&T Reply Comments (CC Docket Nos. 98-11, 98-26, 98-32) at
    11.

[^114]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15934, & 873.

[^115]: ^?^ In the Order, we do not decide whether or to what extent
    advanced services are \"exchange access\" services rather than local
    exchange services. *See supra* & 40.

[^116]: ^?^ *See Report to Congress on Universal Service*, at && 73-82
    (concluding that Internet service providers are not
    telecommunications carriers).

[^117]: ^?^ *See infra* & 85.

[^118]: ^?^ *See, e.g.,* Covad Comments (CC Docket Nos. 98-11, 98-26,
    98-32) at 13; DSL Access Telecommunications Alliance Comments (CC
    Docket Nos. 98-11, 98-26, 98-32) at 7-8.

[^119]: ^?^ 47 U.S.C. \' 251(c)(6).

[^120]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15782-15811, &&
    555-617.

[^121]: ^?^ *Id.*

[^122]: ^?^ ALTS Petition at 2-3; *see also* Intermedia Comments (CC
    Docket No. 98-78) at 5 (the costs, delays, and restrictions
    associated with collocation are an impediment to the growth of
    facilities-based competition in local and advanced services
    markets).

[^123]: ^?^ ALTS Petition at 2-3.

[^124]: ^?^ 47 U.S.C. \' 251(c)(6).

[^125]: ^?^ Several of the petitioners acknowledge this obligation to
    allow competitors to collocate the equipment necessary to provide
    advanced services. *See* SBC Petition at 20-21; U S WEST Comments
    (CC Docket No. 98-78) at 31-34; Bell Atlantic Reply (CC Docket Nos.
    98-11, 98-26, 98-32) at 26-27.

[^126]: ^?^ *Expanded Interconnection with Local Telephone Company
    Facilities*, First Report and Order, 7 FCC Rcd 7369 (1992) (*Special
    Access Order*), *vacated in part and remanded, Bell Atlantic
    Telephone Cos. v. FCC*, 24 F.3d 1441 (D.C. Cir. 1994) (*Bell
    Atlantic v. FCC*); First Reconsideration, 8 FCC Rcd 127 (1993);
    *vacated in part and remanded, Bell Atlantic v. FCC*, 24 F.3d 1441;
    Second Reconsideration, 8 FCC Rcd 7341 (1993); Second Report and
    Order, 8 FCC Rcd 7374 (1993) (*Switched Transport Order*), *vacated
    in part and remanded, Bell Atlantic v. FCC,* 24 F.3d 1441; Remand
    Order, 9 FCC Rcd 5154 (1994) (*Virtual Collocation Order*),
    *remanded, Pacific Bell v. FCC,* 81 F.3d 1147 (D.C. Cir. 1996),
    *further recon. pending* (collectively referred to as *Expanded
    Interconnection).*

[^127]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15782-15811, &&
    555-617.

[^128]: ^?^ *See infra* && 118-150.

[^129]: ^?^ *See* 47 U.S.C. \'\' 251(c)(3), (4).

[^130]: ^?^ 47 U.S.C. \' 271(b)(1). Section 3(25) of that Act defines
    local access and transport area (LATA) as:

    > \[A\] contiguous geographic area \--
    >
    > \(A\) established before the date of enactment of the
    > Telecommunications Act of 1996 by a Bell operating company 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 Bell operating company after
    > such date of enactment and approved by the Commission.

    47 U.S.C. \' 153(25).

[^131]: ^?^ 47 U.S.C. \' 271(d)(3).

[^132]: ^?^ 47 U.S.C. \' 157 note (emphasis added).

[^133]: ^?^ 47 U.S.C. \' 160.

[^134]: ^?^ 47 U.S.C. \' 160(d).

[^135]: ^?^ We note that each petitioner seeks slightly different
    relief. Ameritech requests that the Commission provide section 271
    relief either by exercising forbearance authority with respect to
    advanced data services or by establishing a single, global \"data
    LATA\" for packet switched services. *See* Ameritech Petition at 2-3
    & 12-14. Ameritech notes that if the Commission grants section 271
    relief through forbearance, it should likewise forbear from applying
    section 272 requirements. *Id.* at 3 n.4. Bell Atlantic seeks
    regulatory relief from the requirements of section 271 through,
    among other things, forbearance pursuant to section 706, and relief
    from LATA boundaries, with \"one large access area.\" *See* Bell
    Atlantic Petition at 10-12. U S WEST and SBC argue that the
    Commission should forbear from applying the unbundling requirements
    of section 251(c)(3) and the resale requirements of section
    251(c)(4) to non-circuit-switched data services and facilities and
    to the provision of ADSL, respectively. *See* U S WEST Petition at
    44-45; SBC Petition at 25-28. U S WEST requests, in addition, that
    the Commission permit it to carry data across current LATA
    boundaries either by lifting the ban on such carriage in section 271
    or by redefining LATA boundaries. *See* U S WEST Petition at 42-44.
    SBC does not seek relief from section 271, either through
    forbearance or modification of LATA boundaries. SBC, however,
    requests forbearance from dominant carrier regulation for provision
    of ADSL as well as from the obligations of section 252(i). *See* SBC
    Petition at 28-34.

[^136]: ^?^ *See* Ameritech Petition at 9 (stating that section 271 bars
    Ameritech from providing Internet backbone services); Bell Atlantic
    Petition at 4 (stating that Commission relief \"would enable Bell
    Atlantic to proceed with current plans to build a regional backbone
    network\"); U S WEST Petition at 42 (urging that the Commission
    \"carry out its mandate \[under section 706\] by allowing U S WEST
    to enter and compete in th\[e\] market for \[I\]nternet backbone
    services\").

[^137]: ^?^ Ameritech argues that its proposal would not undermine the
    objectives of section 271 and 10(d). Ameritech asserts that it
    \"remains committed to meeting the requirements of section 271 . . .
    so that it can satisfy its customers\' demands for integrated
    packages that include circuit-switched, voice-grade, long distance
    services.\" Ameritech Reply Comments (CC Docket No. 98-32) at 10. U
    S WEST asserts that the LATA boundary relief proposed by Ameritech
    would not affect LATA boundaries and associated restrictions
    applicable to two-way voice telephone service. U S WEST asserts
    further that it \"has made a firm commitment that it will not
    use . . . relief \[for the provision of advanced data services\] to
    evade restrictions on the provision of voice services.\" U S WEST
    Reply Comments (CC Docket No. 98-26) at 21-22.

[^138]: ^?^ *See, e.g.*, ACSI Comments (CC Docket Nos. 98-11, 98-26,
    98-32) at 5; AT&T Comments (CC Docket No. 98-11) at 5-6; Cablevision
    Lightpath Comments (CC Docket Nos. 98-11, 98-26, 98-32) at 8; CIX
    Comments (CC Docket No. 98-11) at 24-26; CompTel Comments (CC Docket
    Nos. 98-11, 98-26, 98-32) at 10-12; CPI Comments (CC Docket Nos.
    98-11, 98-26, 98-32) at 21; Electric Lightwave Comments (CC Docket
    Nos. 98-11, 98-26, 98-32) at 31; Excel Comments (CC Docket Nos.
    98-11, 98-26, 98-32) at 4-5; Focal Communications Comments (CC
    Docket Nos. 98-11, 98-26, 98-32) at 5-6; ITAA Comments (CC Docket
    No. 98-11) at 5; LCI Comments (CC Docket Nos. 98-11, 98-26, 98-32)
    at 18; Level 3 Communications Comments (CC Docket Nos. 98-11, 98-26,
    98-32) at 8; MCI Comments (CC Docket No. 98-32) at 24-25; TRA
    Comments (CC Docket Nos. 98-11, 98-26, 98-32) at 5-6; WorldCom
    Comments (CC Docket Nos. 98-11, 98-26, 98-32) at 10-11, 28-29; XCOM
    Comments (CC Docket Nos. 98-11, 98-26, 98-32) at 4-5, 11-14; NTIA
    July 17 *Ex Parte* at 5-7. *But see, e.g.,* Ameritech Petition at
    14; Bell Atlantic Petition at 10-11; SBC Petition at 5-6; U S WEST
    Petition at 37-40.

[^139]: ^?^ 47 U.S.C. \' 157 note.

[^140]: ^?^ *Compare Chevron v. National Resources Defence Council*, 467
    U.S. 837, 842-43 (1984).

[^141]: ^?^ *See Bell Atlantic Tel. Cos. v. FCC*, 131 F.3d 1044, 1047
    (D.C. Cir. 1997) (construing section 272(e)(4) of the Act).

[^142]: ^?^ *Id.*

[^143]: ^?^ 47 U.S.C. \' 157 note.

[^144]: ^?^ *See, e.g.,* Bell Atlantic Reply (CC Docket Nos. 98-11,
    98-26, 98-32) at 4-9; SBC Reply (RM 9244) at 1-9; U S WEST Reply (CC
    Docket No. 98-26) at 8.

[^145]: ^?^ *See*, *e.g.*, ALTS Comments (CC Docket Nos. 98-11, 98-26,
    98-32) at 1; MCI Comments (CC Docket No. 98-32) at 13; TRA Comments
    (CC Docket Nos. 98-11, 98-26, 98-32) at 7; Level 3 Communications
    Reply (CC Docket Nos. 98-11, 98-26, 98-32) at 5; NTIA July 17 *Ex
    Parte* at 6.

[^146]: ^?^ *See*, *e.g.*, ALTS Comments (CC Docket Nos. 98-11, 98-26,
    98-32) at 3 (arguing that \"\[t\]he only way the Telecommunications
    Act can be interpreted as a whole is \[to\] make the meaning of
    \'forbearance\' in section 706 consistent with the . . . limitation
    of the same term as used in section 10\"); MCI Comments (CC Docket
    No. 98-11) at 21-22 (stating that it is hard to imagine that
    Congress intended section 706 to override the specific limitations
    on forbearance in section 10).

[^147]: ^?^ Bell Atlantic Reply (CC Docket Nos. 98-11, 98-26, 98-32) at
    5.

[^148]: ^?^ 141 Cong. Rec. H9954, H9970-71 (Oct. 12, 1995) (text of S.
    652 as read in Senate); S. 652, 104th Cong., 1st Sess. 150-53 (1995)
    (S. 652 as passed by the Senate).

[^149]: ^?^ Ameritech Reply (CC Docket No. 98-32) at 4, *citing* S. Rep.
    No. 104-23, 104th Cong., 1st Sess. 115 (1995) (*1995 Senate
    Report*).

[^150]: ^?^ *1995 Senate Report, supra,* at 114.

[^151]: ^?^ *Id.* at 113-15. Bell Atlantic also points to a floor
    statement that it claims supports its view that section 706 grants
    independent forbearance authority. Bell Atlantic Reply (CC Docket
    Nos. 98-11, 98-26, 98-32) at 7 (*citing* 141 Cong. Rec. S699-90
    (daily ed. Feb. 1, 1996). As with the statement in the Senate
    Commerce Committee Report, this statement does not indicate whether
    section 706(a) gives the Commission independent forbearance
    authority or whether it directs the Commission to use regulatory
    measures granted elsewhere in the Act to achieve the objectives
    stated in section 706. Even if that statement were interpreted to
    indicate that section 706 gives the Commission independent
    forbearance authority, we conclude that statements of an individual
    member of Congress does not overcome the other evidence discussed in
    this section that indicates Congress\' intention that the Commission
    not forbear from sections 251(c) and 271 until those sections are
    fully implemented. *See Bath Iron Works Corp. v. Office of Workers
    Compensation Programs*, 506 U.S. 153, 166 (1993); *Pappas v. Buck
    Consultants, Inc.*, 923 F.2d 531, 536-37 (7th Cir. 1991).

[^152]: ^?^ *See Joint Explanatory Statement, supra* at 1, 113.

[^153]: ^?^ *See* *infra* && 178-196.

[^154]: ^?^ SBC Petition at 5-6.

[^155]: ^?^ 47 U.S.C.\' 160(a).

[^156]: ^?^ 47 U.S.C. \' 160(a)(3); *see generally* AT&T Comments (CC
    Docket No. 98-11) at 17; CIEA Comments (CC Docket No. 98-11) at
    17-18; Hyperion Comments (CC Docket No. 98-11) at 10; Sprint
    Comments (CC Docket No. 98-11) at 5.

[^157]: ^?^ *See* *infra* & 48.

[^158]: ^?^ 47 U.S.C. \' 3(25). *See* *supra* n.135, for a description
    of the individual petitioners\' requests.

[^159]: ^?^ 47 U.S.C. \' 3(25)(B); *see*, *e.g.*, AT&T Comments (CC
    Docket No. 98-11) at 12; ITA Comments (CC Docket No. 98-11) at 6-7.

[^160]: ^?^ *MCI Telecommunications Corp. v. AT&T*, 512 U.S. 218 (1994)
    (*MCI v. AT&T*).

[^161]: ^?^ *Id.* at 225, 228 (holding that the Commission\'s decision
    to forbear from statutory tariff filing requirements exceeded the
    Commission\'s authority to modify section 203(a) of the 1934 Act);
    *see* *also* AT&T Comments (CC Docket No. 98-11) at 11-12; CIEA
    Comments (CC Docket No. 98-11) at 26-27; ITAA Comments (CC Docket
    No. 98-11) at 6-7.  Section 3(25)(B) appears to have been crafted to
    give the Commission the same authority that the district court
    exercised in adjusting LATA boundaries under the AT&T Consent
    Decree. *See, e.g, Western Electric Co. v. United States*, 578 F.
    Supp. 643 (D.C.C. 1983) (modifying LATA boundaries for mobile radio
    services in selected areas).

[^162]: ^?^ The United States Court of Appeals for the District of
    Columbia Circuit has held that the ability of the Commission to
    modify a requirement does not permit the Commission to adopt a
    \"wholesale abandonment or elimination of a requirement.\" *MCI
    Telecommunications v. FCC*, 765 F.2d 1186, 1192 (D.C. Cir. 1985);
    *see also* *AT&T v. FCC*, 978 F.2d 727, 736 (D.C. Cir. 1992), *cert.
    denied* 509 U.S. 913 (1993); ITAA Comments (CC Docket No. 98-11) at
    7; MCI Comments (CC Docket No. 98-11) at 28-29; TCG Comments (CC
    Docket Nos. 98-11, 98-26, 98-32) at 5-9 (changing LATA boundaries as
    the BOCs propose would thwart Congress\' objectives in section 271
    and therefore are beyond the Commission\'s authority); WorldCom
    Comments (CC Docket Nos. 98-11, 98-26, 98-32) at 29 (section 3(25)
    at most allows modification, not elimination, of existing LATA
    boundaries).

[^163]: ^?^ *See, e.g.*, Cablevision Lightpath Comments (CC Docket No.
    98-11) at 9; CIEA Comments (CC Docket No. 98-32) at 24-25; CTA
    Comments (CC Docket Nos. 98-11, 98-26, 98-32) at 14-15; LCI Comments
    (CC Docket Nos. 98-11, 98-26, 98-32) at 19-20; Level 3 Comments (CC
    Docket Nos. 98-11, 98-26, 98-32) at 8; MCI Comments (CC Docket No.
    98-11) at 29-30; Transwire Comments (CC Docket No. 98-32) at 16;
    WorldCom Comments ((CC Docket Nos. 98-11, 98-26, 98-32) at 29.

[^164]: ^?^ *See infra* && 192-196.

[^165]: ^?^ As noted above, we recognize that the corporate holding
    company may be the entity that would establish the affiliate, rather
    than the incumbent LEC per se. *See* *supra* n.17.

[^166]: ^?^ APT Petition at 17.

[^167]: ^?^ *Competitive Carrier Fifth Report and Order*, 98 F.C.C. 2d
    1191; *Regulatory Treatment of LEC Provision of Interexchange
    Services Originating in the LEC\'s Local Exchange Area and Policy
    and Rules Concerning the Interstate, Interexchange Market Place*, CC
    Docket No. 96‑149, Second Report and Order, CC Docket No. 96‑61,
    Third Report and Order, 12 FCC Rcd 15756, 15802 (*LEC Classification
    Order*), Order on Reconsideration, 12 FCC Rcd 8730 (1997); Order, 13
    FCC Rcd 6427 (Comm. Car. Bur. 1998), *further recon. pending*.
    Hereafter, we will refer to these requirements as the *Competitive
    Carrier Fifth Report and Order* requirements.

[^168]: ^?^ Ameritech Petition at 22-27.

[^169]: ^?^ *See* SBC Comments (CC Docket No. 98-11, 98-26, 98-32) at 4.

[^170]: ^?^ Letter from Jeffrey Blumenfeld, Rhythms Net, to Kathryn C.
    Brown, Chief, Common Carrier Bureau, Federal Communications
    Commission, CC Docket Nos. 98-11, 98-26, 98-32, 98-91, at 1 (filed
    July 24, 1998) (Rhythms Net July 24 *Ex Parte*).

[^171]: ^?^ *See, e.g.,* Statement of Chuck McMinn, Chairman of the
    Board, Covad Communications Company, before the Federal
    Communications Commission, En Banc Hearing on Bandwidth, July 9,
    1998, at 2 (stating that, \"if \[incumbent LECs\] wish to provide
    DSL services in-region, they should be required to provide these
    services through a separate entity . . . \[that\] would have to
    obtain the inputs essential to provide DSL service in exactly the
    same manner as Covad or any other competitor.\").

[^172]: ^?^ 47 U.S.C. \' 251(c).

[^173]: ^?^ *See* *Non-Accounting Safeguards Order*, 11 FCC Rcd at
    22055, & 312.

[^174]: ^?^ 47 U.S.C. \' 251(h)(1).

[^175]: ^?^ *Non-Accounting Safeguards Order*, 11 FCC Rcd at
    22055-22056, & 312.

[^176]: ^?^ *See* *id*., 11 FCC Rcd at 22054, & 309; *see* *also* 47
    C.F.R. \' 53.207.

[^177]: ^?^ 47 U.S.C. \' 251(h)(2); *Non-Accounting Safeguards Order*,
    11 FCC Rcd at 22060, & 321.

[^178]: ^?^ *Local Competition Order*, 11 FCC Rcd at 16110, & 1248,
    *citing* 47 U.S.C. \' 251(h)(2). The Commission recently adopted a
    rule treating Guam Telephone Authority (GTA) as an incumbent LEC for
    purposes of section 251. *See* *Treatment of Guam Telephone
    Authority and Similarly Situated Carriers as Incumbent Local
    Exchange Carriers under Section 251(h)(2) of the Communications
    Act*, CC Docket No. 97-134, Report and Order, FCC 98-163 (rel. Jul.
    20, 1998). The Competitive Telecommunications Association recently
    filed a petition asking the Commission to issue a declaratory ruling
    determining that certain affiliates of incumbent LECs should be
    treated as \"successors or assigns\" of the incumbent LECs. CompTel
    asks, in the alternative, that the Commission initiate a rulemaking
    under section 251(h)(2). *See* *Commission Seeks Comment on Petition
    Regarding Regulatory Treatment of Affiliates of ILECs*, CC Docket
    No. 98-39, Public Notice, 13 FCC Rcd 6669 (1998). We do not address
    CompTel\'s petition in this proceeding, although we seek comment on
    certain issues raised by CompTel as they relate to the provision of
    advanced services by an affiliate.

[^179]: ^?^ *Non-Accounting Safeguards Order*, 11 FCC Rcd at
    22055-22056, & 312.

[^180]: ^?^ 47 U.S.C. \' 251(a).

[^181]: ^?^ Section 251(b) imposes on each local exchange carrier the
    following duties:

    > OBLIGATIONS OF ALL LOCAL EXCHANGE CARRIERS.‑‑Each local exchange
    > carrier has the following duties: (1) RESALE.‑‑The duty not to
    > prohibit, and not to impose unreasonable or discriminatory
    > conditions or limitations on, the resale of its telecommunications
    > services. (2) NUMBER PORTABILITY.‑‑The duty to provide, to the
    > extent technically feasible, number portability in accordance with
    > requirements prescribed by the Commission. (3) DIALING
    > PARITY.‑‑The duty to provide dialing parity to competing providers
    > of telephone exchange service and telephone toll service, and the
    > duty to permit all such providers to have nondiscriminatory access
    > to telephone numbers, operator services, directory assistance, and
    > directory listing, with no unreasonable dialing delays. (4) ACCESS
    > TO RIGHTS‑OF‑WAY.‑‑The duty to afford access to the poles, ducts,
    > conduits, and rights‑of‑way of such carrier to competing providers
    > of telecommunications services on rates, terms, and conditions
    > that are consistent with section 224. (5) RECIPROCAL
    > COMPENSATION.‑‑The duty to establish reciprocal compensation
    > arrangements for the transport and termination of
    > telecommunications.

    47 U.S.C. \' 251 (b).

[^182]: ^?^ 47 U.S.C. \' 251(a)(1). Moreover, we note that in the *Local
    Competition Order*, the Commission stated that \"unlike section
    251(c), which applies to incumbent LECs, section 251(a)
    interconnection applies to all telecommunications carriers including
    those with no market power.\" *Local Competition Order*, 11 FCC Rcd
    at 15991, & 997.

[^183]: ^?^ *See*, *e.g*., LCI Comments (CC Docket No. 98-78) at 3-4.

[^184]: ^?^ *See* *Non-Accounting Safeguards Order*, 11 FCC Rcd at
    22055, & 312.

[^185]: ^?^ *See* *id*. at 21914, & 15.

[^186]: ^?^ *Id*.

[^187]: ^?^ *See* *id*. at 21981, & 158.

[^188]: ^?^ *See* *id*. at 21992, & 181.

[^189]: ^?^ *See Implementation of the Telecommunications Act of 1996:
    Accounting Safeguards Under the Telecommunications Act of 1996*, CC
    Docket No. 96-150, 11 FCC Rcd 17539, 17593 (1996) (*Accounting
    Safeguards Order)*. We note that below we seek comment on the extent
    to which certain transfers of assets or services may be made without
    resulting in the affiliate\'s being considered an incumbent LEC.
    *See*, *infra*, subpart 2(b).

[^190]: ^?^ *See* *id*., 11 FCC Rcd at 17686, & 108.

[^191]: ^?^ 47 U.S.C. \' 272(c)(1).

[^192]: ^?^ *See* Letter from Jim Earl, Covad Communications, to Rebecca
    Dorch, Office of Engineering Technology, and Marcelino Ford-Livene,
    Office of Plans and Policy, Federal Communications Commission,

    CC Docket Nos. 98-11, 98-26, 98-32, 98-78, 98-91 (filed July 20,
    1998) (arguing that an incumbent LEC\'s affiliate providing advanced
    services must use an existing interconnection agreement rather than
    one that is unique to the affiliate) (July 20 Covad *Ex Parte*);
    NTIA July 17 *Ex* *Parte* at 11 (stating that an incumbent LEC\'s
    affiliate providing DSL would have to negotiate an interconnection
    agreement in order to secure unbundled DSL-compatible loops and
    collocation space on the same terms and conditions as are made
    available to other DSL providers).

[^193]: ^?^ *See, e.g*., MCI Comments (CC Docket No. 98-11, 98-26,
    98-32) at 39; CIX Comments (CC Docket No. 98-78) at 4-5.

[^194]: ^?^ *See* 47 U.S.C. \' 251(f).

[^195]: ^?^ Section 272(f)(1) provides that the provisions of section
    272 (other than subsection (e)) \"shall cease to apply with respect
    to . . . the interLATA telecommunications services of a Bell
    operating company 3 years after the date such Bell operating company
    or any Bell operating company affiliate is authorized to provide
    interLATA telecommunications services under section 271(d), unless
    the Commission extends such 3-year period by rule or order.\" 47
    U.S.C. \' 272(f)(1).

[^196]: ^?^ We conclude in the Order above that advanced services
    offered by incumbent LECs are \"telephone exchange service\" or
    \"exchange access.\" *See* *supra* & 40. As previously noted, the
    question of whether, or to what extent, specific xDSL-based services
    offered by incumbent LECs are \"telephone exchange service\" as
    opposed to \"exchange access\" has been raised in other pending
    proceedings, and the Commission will continue to address this
    question on a case-by-case basis. *See* *supra* & 40 and n.69.

[^197]: ^?^ *See* 47 C.F.R. \'\' 61.3(o), 61.3(u) (defining a dominant
    carrier as one that possesses market power, and a non‑dominant
    carrier as a carrier not found to be dominant); *Hyperion
    Telecommunications Inc., Petition Requesting Forbearance, Time
    Warner Communications Petition for Forbearance, Complete Detariffing
    for Competitive Access Providers and Competitive Local Exchange
    Carriers*, CCB/CPD No. 96-3, CCB/CPD No. 96-7, CC Docket No. 97-146,
    Memorandum Opinion and Order, 12 FCC Rcd 8596, 8608, n.71 (1997)
    (*Hyperion/Time Warner MO&O*) (\"our policy since the *Competitive
    Carrier Proceeding* has consistently been that a carrier is
    nondominant unless the Commission makes or has made a finding that
    it is dominant\") and && 23-24 (finding no demonstration that
    non-incumbent LEC providers of interstate exchange access services
    possess market power); *Access Charge Reform*, *Price Cap
    Performance Review for Local Exchange Carriers*, *Transport Rate
    Structure and Pricing*, *End User Common Line Charges*, CC Docket
    Nos. 96‑262, 94‑1, 91‑213, 95‑72, First Report and Order, 12 FCC Rcd
    15982, 16140-16141, && 360-63 (1997) (determining that non-incumbent
    LECs should be treated as nondominant in their provision of
    terminating access); *Local Competition Order*, 11 FCC Rcd at 15981,
    & 976 (stating that non-incumbent LECs definitionally lack the
    market power possessed by incumbent LECs).

[^198]: ^?^ *See* *Policy and Rules Concerning the Interstate,
    Interexchange Marketplace*, *Implementation of Section 254(g) of the
    Communications Act of 1934, as amended*, CC Docket No. 96-61, Second
    Report and Order, 11 FCC Rcd 20730, 20746 n.29 (1996), *stayed on
    other grounds pending review sub nom*, *MCI Telecommunications Corp.
    v. FCC*, Case No. 96‑1459 (D.C. Cir., Feb. 19, 1997), Order on
    Reconsideration, 12 FCC Rcd 15014 (1997); *Policy and Rules
    Concerning Rates for Competitive Common Carrier Services and
    Facilities Authorizations Therefor,* CC Docket No. 79-252, First
    Report and Order, 85 FCC 2d 1, 33-35, && 97-101 (1980). *See also*
    *Policy and Rules Concerning Rates for Dominant Carriers*, CC Docket
    No. 87-313, Second Report and Order, 5 FCC Rcd 6786, 6818‑19, &&
    262‑65 (1990), Erratum, 5 FCC Rcd 7664 (Com. Car. Bur. 1990);
    *modified on recon*., 6 FCC Rcd 2637 (1991); *aff\'d sub nom*.
    *National Rural Telecom Ass\'n v. FCC*, 988 F. 2d 174 (D.C. Cir.
    1993). U S WEST, while maintaining that a separate affiliate is not
    necessary to qualify for nondominant status, agrees with Ameritech
    that an affiliate complying with the requirements in the
    *Competitive Carrier Fifth Report and Order* should be classified as
    nondominant. *See* U S WEST Comments (CC Docket Nos. 98-11, 98-32)
    at 8-9. *But see* CompTel Comments (CC Docket Nos. 98-11, 98-26,
    98-32) at 16-17 (stating that grant of nondominant status to BOCs
    providing advanced services is inappropriate because new entrants
    are dependent upon BOC provisioning of local loops and other
    essential facilities, providing a powerful vehicle for BOCs to
    exercise market power in data services).

[^199]: ^?^ *See* *Hyperion/Time Warner MO&O*, 12 FCC Rcd at 8596, & 1
    (granting petitions seeking permissive detariffing for provision of
    interstate exchange access services by providers other than
    incumbent LECs).

[^200]: ^?^ *See, e.g.*, Letter from George Vradenburg III, Senior Vice
    President and General Counsel, America Online, to Kathryn C. Brown,
    Chief, Common Carrier Bureau, Federal Communications Commission, CC
    Docket Nos. 98-11, 98-32, 98-78, 98-91, at 3 (filed July 30, 1998)
    (expressing concern that a data services affiliate that is not a
    successor or assign \"would be free to afford preferential treatment
    to the affiliated ISP, whose operations could even be integrated
    into the data services affiliate\"); *but see* *Computer II Final
    Decision*, 77 FCC 2d at 475, & 231; 47 C.F.R. \' 64.702(a).

[^201]: ^?^ *See* *generally,* NTIA July 17 *Ex* *Parte* at 17-19.

[^202]: ^?^ *See*, *e.g.*, *Howard Johnson Co, v. Detroit Local Joint
    Executive Board*, 417 U.S. 249, n.9 (1974) (stating that
    determinations about successorship must be based on \"the facts of
    each case and the particular legal obligation which is at issue\"
    and that \"there is and can be no single definition of \'successor\'
    which is applicable in every legal context.\").

[^203]: ^?^ *See* *State of Connecticut, Department of Public Utility
    Control Investigation of the Southern New England Telephone Company
    Affiliate Matters Associated with the Implementation of Public Act
    94-83*, Decision at 37 (June 25, 1997) (determining that SNET
    America, Inc., is not an assign of the SNET Telco under section
    251(h)(1) merely because the latter planned to transfer to the
    former rights to provide retail services).

[^204]: ^?^ *See Non-Accounting Safeguards Order*, 11 FCC Rcd at 22054,
    & 309; 47 C.F.R. \' 53.207.

[^205]: ^?^ *See* *supra* & 58.

[^206]: ^?^ We note that, to the extent facilities used to provide
    advanced services remain in the incumbent LEC, such facilities must
    be unbundled pursuant to section 251(c)(3) where technically
    feasible. *See* *supra* & 58.

[^207]: ^?^ *See* 47 C.F.R \' 32.27. In the *Non-Accounting Safeguards
    Order*, the Commission concluded that, if a BOC seeks to transfer to
    its section 272 affiliate ownership of a unique facility (such as
    its official services network), the BOC must ensure that the
    transfer takes place in a non-discriminatory manner, and must
    comport with the Commission\'s affiliate transactions rules. *See*
    *Non-Accounting Safeguards Order*, 11 FCC Rcd at 22034, & 266,
    *citing* 47 C.F.R. \' 32.27(b).

[^208]: ^?^ *See* Letter from Russell Frisby, President, Competitive
    Telecommunications Association, and Heather Burnett Gold, President,
    Association for Local Telecommunications Services, to William E.
    Kennard, Chairman, Federal Communications Commission, CC Docket Nos.
    98-11, 98-26, 98-32, 98-91, at 3 (filed July 29, 1998) (CompTel/ALTS
    July 29 *Ex Parte*).

[^209]: ^?^ The Commission previously has concluded that customers do
    not expect that carriers will need their approval to use CPNI for
    offerings within the existing total service arrangement to which
    they subscribe. *See* *Implementation of the Telecommunications Act
    of 1996: Telecommunications Carriers\' Use of Customer Proprietary
    Network Information and Other Customer Information; Implementation
    of the Non-Accounting Safeguards of Sections 271 and 272 of the
    Communications Act of 1934, as Amended*, CC Docket Nos. 96-115,
    96-149, Second Report and Order and Further Notice of Proposed
    Rulemaking, 13 FCC Rcd 8061, 8102-07, && 55-59 (1998), *recon.
    pending*; *clarified*, Order, DA 98-971 (Com. Car. Bur. rel. May 21,
    1998). In this proceeding, we consider only the competitive
    consequences of an advanced services affiliate\'s use of CPNI,
    rather than any privacy issues.

[^210]: ^?^ 47 U.S.C. \' 251(c)(5) (imposing on incumbent LECs \"the
    duty to provide reasonable public notice of changes in the
    information necessary for the transmission and routing of services
    using that local exchange carrier\'s facilities or networks, as well
    as of any other changes that would affect the interoperability of
    those facilities and networks\").

[^211]: ^?^ *See* 47 U.S.C. \' 151 (creating Commission for \"purpose of
    regulating interstate and foreign commerce in communication by wire
    and radio . . . .\"). We conclude in the Order above that advanced
    services offered by incumbent LECs are \"telephone exchange
    service\" or \"exchange access.\" *See* *supra* & 40.

[^212]: ^?^ 47 U.S.C. \' 253(a).

[^213]: ^?^ *See*, *e.g.*, Public Service Commission of Wisconsin and
    the Indiana Utility Regulatory Commission Comments (CC Docket Nos.
    98-11, 98-26, 98-32) at 4.

[^214]: ^?^ In a physical collocation arrangement, a competitor leases
    space at a LEC premises for its equipment. The competing provider
    has physical access to this space to install, maintain, and repair
    its equipment. *See Local Competition Order*, 11 FCC Rcd at 15784,
    n.1361; *Special Access Order*, 7 FCC Rcd at 7391, & 42. In a
    virtual collocation arrangement, the competitor designates the
    equipment to be placed at the incumbent LECs\' premises. The
    competing provider, however, does not have physical access to the
    incumbent\'s premises. Instead, the equipment is under the physical
    control of the incumbent LEC, and the incumbent is responsible for

    installing, maintaining, and repairing the competing provider\'s
    equipment. *See Local Competition Order*, 11 FCC Rcd at 15785, &
    559; *Virtual Collocation Order*, 9 FCC Rcd at 5158, & 7.

[^215]: ^?^ *Special Access Order*, *supra*, 7 FCC Rcd 7369. Interstate
    access is a service traditionally provided by local telephone
    companies and enables interexchange carriers and other customers to
    originate and terminate interstate telephone traffic. Special access
    is a form of interstate access that uses dedicated transmission
    lines between two points, without switching the traffic on those
    lines. Switched transport is another form of interstate access
    comprising the transmission of traffic between interexchange
    carriers\' (or other customers\') points of presence and local
    telephone companies\' end offices, where the traffic is switched and
    routed to end users. *Local Competition Order*, 11 FCC Rcd at 15784,
    n.1359.

[^216]: ^?^ *Bell Atlantic v. FCC*, 24 F.3d 1441 (D.C. Cir. 1994).

[^217]: ^?^ *Virtual Collocation Order*, *supra*, 9 FCC Rcd 5154; *see
    also Pacific Bell v. FCC*, 81 F.3d at 1147 (remanding the *Virtual
    Collocation Order* to the Commission to consider the impact of the
    1996 Act on the collocation rules).

[^218]: ^?^ 47 U.S.C. \' 251(c)(6).

[^219]: ^?^ 47 C.F.R. \'\' 51.321, 51.323; *see also Local Competition
    Order*, 11 FCC Rcd at 15782-15811, && 555-617. These rules were
    specifically upheld by the Eighth Circuit in *Iowa Utilities Board
    v. FCC,* 120 F.3d 753, 818 (8th Cir. 1997) (*Iowa Utilities Board*),
    *cert. granted sub nom, AT&T Corp. v. Iowa Utils. Bd.*, 118 S.Ct.
    879 (1998).

[^220]: ^?^ ALTS Petition at 20-22; *see also* e.spire Comments (CC
    Docket No. 98-78) at 6-7; NTIA July 17 *Ex Parte* at 14-17.

[^221]: ^?^ ALTS Petition at 21; *see also* Covad Comments (CC Docket
    Nos. 98-11, 98-26, 98-32) at 17; e.spire Comments (CC Docket No.
    98-78) at 7.

[^222]: ^?^ ALTS Petition at 18-22; *see also* Covad Comments (CC Docket
    Nos. 98-11, 98-26, 98-32) at 13-16; DATA Comments (CC Docket Nos.
    98-11, 98-26, 98-32) at 7-8, Att. 1; LCI Comments (CC Docket No.
    98-78), Attach. at 22-27.

[^223]: ^?^ ALTS Petition at 20; *see also* Covad Comments (CC Docket
    Nos. 98-11, 98-26, 98-32) at 14; DATA Comments (CC Docket Nos.
    98-11, 98-26, 98-32), Attach. 1 at 4-5; e.spire Comments (CC Docket
    No. 98-78) at 6.

[^224]: ^?^ ALTS Petition at 18-22; *see also* CIX Comments (CC Docket
    No. 98-78) at 5-6 (collocation is a necessity for competitors
    because xDSL services can only be offered to customers in close
    proximity of the incumbent LEC central office; Covad Comments (CC
    Docket Nos. 98-11, 98-26, 98-32) at 13-16; DATA Comments (CC Docket
    Nos. 98-11, 98-26, 98-32) at 7-8, Attach. 1; e.spire Comments (CC
    Docket No. 98-78) at 6-8 (the accomplishment of the purposes of
    Section 706 requires that the Commission revise its collocation
    rules to increase available collocation space, broaden the use that
    may be made of such collocation space, and dramatically reduce the
    expense of physical collocation); Intermedia Comments (CC Docket No.
    98-78) at 5-6 (Commission should revisit the existing collocation
    rules and include cageless collocation, cage sharing,
    cross-connection, and removal of equipment limitations in the
    collocation rules); LCI Comments (CC Docket No. 98-78), Attach. at
    22-27; MCI Comments (CC Docket No. 98-78) at 6 (competitive LECs
    need to be able to collocate xDSL equipment); NAS Comments (CC
    Docket No. 98-78) at 4-5 (Commission should update central office
    collocation rules to require that incumbent LECs provide xDSL access
    providers with a right to small collocation cages or cageless
    collocation; to permit shared collocation cages and establish
    cross-connections to cages of other collocated carriers; to permit
    collocation of xDSL line cards, Internet routers, and remote
    switching modules); NEXTLINK Comments (CC Docket No. 98-78) at 5-6
    (Commission should reopen its proceeding to revise the collocation
    rules, because the rules were developed before the development of
    xDSL-based services); CIX *Ex Parte*, CC Docket Nos. 98-11, 98-26,
    98-32, 98-78, RM 9244, at 2 (filed July 30, 1998) (CIX July 30 *Ex
    Parte*) (a competitive Internet industry requires competitive LEC
    collocation at incumbent LEC offices on terms that are more
    efficient and flexible); NTIA July 17 *Ex Parte* at 14-17.

[^225]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15782-15811, &&
    555-617. The relevant collocation requirements are summarized in the
    following sections dealing with specific collocation issues.

[^226]: ^?^ *Id*.

[^227]: ^?^ *Id*. at 15783-84, & 558.

[^228]: ^?^ *See* ALTS Petition at 18-22; MCI July 30 *Ex Parte* at 24;
    NTIA July 17 *Ex Parte* at 14-17.

[^229]: ^?^ *See* Letter from Lawrence Chimerine, Senior VP and Chief
    Economist, Erik Olbeter, Director, Advanced Telecom and Information
    Technology Program, and Larry C. Darby, Visiting Fellow, Economic
    Strategy Institute, to William E. Kennard, Chairman, Federal
    Communications Commission, regarding Section 706 of the
    Telecommunications Act of 1996, at 5-6 (dated July 30, 1998) (ESI
    July 30 *Ex Parte*).

[^230]: ^?^ *See, e.g.*, *Joint Complaint of AT&T Communications of New
    York, Inc., et. al. Against New York Telephone Company Concerning
    Wholesale Provisioning of Local Exchange Service by New York
    Telephone Company and Sections of New York Telephone\'s Tariff No.
    900*, Case 95‑C‑0657, *Proceeding on Motion of the Commission to
    Examine Issues Related to the Continuing Provision of Universal
    Service and to Develop a Regulatory Framework for the Transition to
    Competition in the Local Exchange Market*, Case 94‑C‑0095,
    *Proceeding on Motion of the Commission Regarding Comparably
    Efficient Interconnection Arrangements for Residential and Business
    Links*, Case 91‑C‑1174, *Complaint of AT&T Communications of New
    York, Inc. Against New York Telephone Company Concerning AT&T\'s
    Request for Four Collocated \"Cages\" to be Provided by New York
    Telephone Pursuant to its Optical Transport Interconnection Service
    II Tariff*, Case 96‑C‑0036, Order Directing Tariff Changes for
    Non-Pricing Terms and Conditions for Collocation (N.Y.P.S.C. Mar. 2,
    1998).

[^231]: ^?^ *See supra* & 55 (discussing the Commission\'s expedited
    complaint process to resolve competitive issues in an accelerated
    fashion).

[^232]: ^?^ *See, e.g.*, NorthPoint July 29 *Ex Parte* at 4 (Commission
    should ensure that competitors actually receive critical services
    and facilities such as cageless collocation); CIX July 30 *Ex Parte*
    at 2 (a competitive Internet industry requires swift and effective
    enforcement of collocation requirements).

[^233]: ^?^ 47 U.S.C. \' 251(c)(6).

[^234]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15795, & 581.

[^235]: ^?^ *Id.* 15794, & 580.

[^236]: ^?^ *Id.* at 15795, & 581; 47 U.S.C. \' 51.323(c). The
    Commission noted that switching equipment generally performs
    functions other than providing interconnection or access to
    unbundled network elements. *Local Competition Order*, 11 FCC Rcd at
    15795, n.1417. The Commission indicated that it might reexamine the
    issue of collocation of switching equipment if it appeared that
    \"such action would further achievement of the 1996 Act\'s
    procompetitive goals.\" *Id.* at 15795, & 581.

[^237]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15795, & 581; *see
    also* NTIA July 17 *Ex Parte* at 15.

[^238]: ^?^ *See* NTIA July 17 *Ex Parte* at 15.

[^239]: ^?^ *See id.*

[^240]: ^?^ *See* ALTS Petition at 21; Covad Comments (CC Docket Nos.
    98-11, 98-26, 98-32) at 17; e.spire Comments (CC Docket No. 98-78)
    at 7; NTIA July 17 *Ex Parte* at 15.

[^241]: ^?^ Covad Comments (CC Docket Nos. 98-11, 98-26, 98-32) at 17;
    *see also* ALTS Petition at 21.

[^242]: ^?^ ALTS Petition at 21 (Commission should eliminate
    restrictions on competitive LECs\' ability to collocate remote
    switching modules, xDSL electronics, Internet routers and other
    advanced data equipment); *see also* CIX July 30 *Ex Parte* at 2 (a
    competitive Internet industry requires that incumbent LECs permit
    competitive LECs to collocate a range of equipment and technologies
    demanded by end users); Covad Comments (CC Docket Nos. 98-11, 98-26,
    98-32) at 17; e.spire Comments (CC Docket No. 98-78) at 7; Letter
    from Steven Gorosh, Vice President and General Counsel, NorthPoint
    Communications, to Magalie Salas, Secretary, Federal Communications
    Commission, CC Docket Nos. 98-11, 98-26, 98-32, 98-91, at 6 (filed
    July 7, 1998) (NorthPoint July 7 *Ex Parte*); NTIA July 17 *Ex
    Parte* at 15-17.

[^243]: ^?^ *See, e.g.*, TRA Comments (CC Docket No. 98-78) at 16) at
    8-9; WorldCom Comments (CC Docket No. 98-78) at 13 (incumbent LECs
    must allow competitive LECs to collocate their own xDSL electronics
    at the central office).

[^244]: ^?^ *See, e.g.*, NTIA July 17 *Ex Parte* at 15-17 (ban on
    collocation of switching equipment could discourage use of
    multifunction equipment and disadvantage competitive providers of
    advanced digital services).

[^245]: ^?^ *See supra* && 85-117 (discussing advanced services
    affiliates).

[^246]: ^?^ *See Local Competition Order*, 11 FCC Rcd at 15795, & 581 &
    n.1417.

[^247]: ^?^ We conclude above that xDSL-based services are
    telecommunications services, not information services. *See supra* &
    35.

[^248]: ^?^ ALTS Petition at 19-20.

[^249]: ^?^ *See* 47 C.F.R. \' 51.323(h); *Local Competition Order*, 11
    FCC Rcd at 15801-02, && 594-95.

[^250]: ^?^ Incumbent LECs generally require that equipment collocated
    at their premises complies with Bellcore\'s Network Equipment and
    Building Specifications (NEBS). These specifications, which tend to
    increase the cost of equipment, include both safety requirements,
    such as fire prevention specifications, and performance
    requirements. *See* DATA Comments (CC Docket Nos. 98-11, 98-26,
    98-32) at 21, Attach. 1; Covad Comments (CC Docket Nos. 98-11,
    98-26, 98-32) at 16-18; NorthPoint July 7 *Ex Parte* at 6-7.

[^251]: ^?^ *See* NorthPoint July 7 *Ex Parte* at 7 (asserting that
    incumbent LECs have refused to allow it to collocate certain
    equipment (as non-NEBS-compliant), although the incumbent LECs are
    using the same equipment).

[^252]: ^?^ *See* NorthPoint July 7 *Ex Parte* at 6-7 (NEBS performance
    requirements irrelevant for establishing safety standards).

[^253]: ^?^ Equipment reliability standards may be better left to the
    mutual agreement of the competitive LEC, its customers and its
    equipment providers. By requiring competitive LECs to satisfy NEBS
    performance requirements, on top of NEBS safety requirements,
    competitive LECs may be compelled to engage in unnecessary, costly
    and lengthy testing which could delay competitive LECs\' ability to
    provide advanced services. *See* NorthPoint July 7 *Ex Parte* at
    6-7.

[^254]: ^?^ ALTS Petition at 18-22; *see also* Covad Comments (CC Docket
    Nos. 98-11, 98-26, 98-32) at 13-16; DATA Comments (CC Docket Nos.
    98-11, 98-26, 98-32) at 7-8, Attach. 1; LCI Comments (CC Docket No.
    98-78), Attach. at 22-27; NorthPoint July 7 *Ex Parte* at 1-5.

[^255]: ^?^ ALTS Petition at 20; Covad Comments (CC Docket Nos. 98-11,
    98-26, 98-32) at 14; DATA Comments (CC Docket Nos. 98-11, 98-26,
    98-32), Attach. 1 at 4-5; e.spire Comments (CC Docket No. 98-78) at
    6; NorthPoint July 7 *Ex Parte* at 1-2.

[^256]: ^?^ *See, e.g.*, CIX July 30 *Ex Parte* at 2 (a competitive
    Internet industry requires competitive LEC collocation at incumbent
    LEC offices on terms that are more efficient and flexible); CompTel
    Comments (CC Docket No. 98-78) at 3, 7 (Commission should reform
    collocation to provide competitors the option to collocate through
    more economical and efficient means, such as through smaller
    collocation spaces, sharing of collocation space, or \"cageless\"
    collocation); WorldCom (CC Docket No. 98-78) at 14, n.26 (incumbent
    LECs should be required to offer competitive LECs a more efficient
    use of collocation space, space in smaller increments, and shared
    space).

[^257]: ^?^ ALTS Petition at 21; e.spire Comments (CC Docket No. 98-78)
    at 7.

[^258]: ^?^ *See* ALTS Petition at 21 (urging the Commission to require
    that incumbent LECs offer smaller collocation cages than they
    currently offer); e.spire Comments (CC Docket No. 98-78) at 7.

[^259]: ^?^ *See* ALTS Petition at 21; Covad Comments (CC Docket Nos.
    98-11, 98-26, 98-32) at 15-16; e.spire Comments (CC Docket No.
    98-78) at 7.

[^260]: ^?^ ALTS Petition at 21, n.38.

[^261]: ^?^ For the definition of \"technically feasible,\" see 47
    C.F.R. \' 51.5.

[^262]: ^?^ *See* U S WEST Comments (CC Docket No. 98-78) at 32.

[^263]: ^?^ *See* Letter from Thomas Horn, Senior Counsel, SBC, to James
    Galloway, Clerk, Public Utility Commission of Texas, dated November
    3, 1997, transmitting SBC Physical Collocation Tariff (section 7 of
    the Physical Collocation Tariff provides for sharing of collocation
    space).

[^264]: ^?^ *See* NTIA July 17 *Ex Parte* at 15.

[^265]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15803, & 598; *see
    also supra* && 134-135.

[^266]: ^?^ We note that, in another proceeding, we are considering
    whether 251-type obligations should be extended to information
    service providers. *See Computer III Further Remand Proceedings:
    Bell Operating Company Provision of Enhanced Services; 1998 Biennial
    Review \-- Review of Computer III and ONA Safeguards and
    Requirements*, CC Docket Nos. 95-20, 98-10, Further Notice of
    Proposed Rulemaking, 13 FCC Rcd 6040 (rel. Jan. 30, 1998).

[^267]: ^?^ *See* NorthPoint July 7 *Ex Parte* at 2.

[^268]: ^?^ ALTS Petition at 21.

[^269]: ^?^ *See Petition of New York Telephone Company for Approval of
    its Statement of Generally Available Terms and Conditions pursuant
    to Section 252 of the Telecommunications Act of 1996 and Draft
    Filing of Petition for InterLATA Entry pursuant to Section 271 of
    the Telecommunications Act of 1996*, New York Commission Case
    97-C-0271, Pre-Filing Statement of Bell Atlantic - New York, at
    21-23 (N.Y.P.S.C. filed April 6, 1998).

[^270]: ^?^ *Id.*

[^271]: ^?^ *See* *NorthPoint July 7* *Ex Parte* at 2-4.

[^272]: ^?^ ALTS Petition at 21; NAS Comments (CC Docket No. 98-78) at
    4-5.

[^273]: ^?^ *See, e.g.*, NorthPoint July 7 *Ex Parte* at 2-3 (alleging
    that U S WEST has prevented NorthPoint from ordering collocation for
    several months by refusing to allow NorthPoint to place an order in
    any state in which it has not yet been approved as a competitive
    LEC, signed an interconnection agreement, and obtained state
    commission approval of the agreement, a process that NorthPoint
    asserts takes a minimum of six months in most states).

[^274]: ^?^ *See* NorthPoint July 7 *Ex Parte* at 2-4.

[^275]: ^?^ 47 U.S.C. \' 251(c)(6).

[^276]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15805, & 602; *see
    also* NorthPoint July 7 *Ex Parte* at 1.

[^277]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15805, & 602.

[^278]: ^?^ *See supra* && 85-117 (discussing advanced services
    affiliates); *see also* NorthPoint July 29 *Ex Parte* at 1-2 (If the
    incumbent LEC requires that it perform the installation and
    maintenance of virtually collocated equipment for the competitive
    LEC, the requirement also must extend to the incumbent\'s advanced
    services affiliate, so that the incumbent\'s employees (not the
    affiliate\'s employees) install the equipment and charge the
    affiliate. Similarly, if the incumbent allows no one else to perform
    maintenance functions such as emergency repair in the event of an
    outage, the incumbent must extend this rule to its affiliate, and
    must charge the affiliate for maintenance costs, such as training.).

[^279]: ^?^ In the *Local Competition Order*, the Commission concluded
    that incumbent LECs may retain a limited amount of floor space for
    defined future uses, but must allow competing providers to reserve
    space for future use on terms that are no less favorable. The
    Commission concluded, however, that incumbent LECs must relinquish
    any space held for future use prior to denying virtual collocation,
    but not physical collocation, due to lack of space. *Local
    Competition Order*, 11 FCC Rcd at 15805-06, && 604-06; *see also*
    NorthPoint July 7 *Ex Parte* at 2.

[^280]: ^?^ ESI July 30 *Ex Parte* at 5-6.

[^281]: ^?^ *See* ALTS Petition at 38; CIX (CC Docket No. 98-78) at
    10-11; e.spire Comments (CC Docket No. 98-78) at 10; Intermedia
    Comments (CC Docket No. 98-78) at 7; TRA Comments (CC Docket No.
    98-78) at 9.

[^282]: ^?^ *See supra* & 52.

[^283]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15689-90, &&
    377-79.

[^284]: ^?^ *Id.* at 15691, & 380.

[^285]: ^?^ *Id.* at 15692, & 382. The requesting carrier bears the cost
    of such conditioning. *Id.*

[^286]: ^?^ *Id.* at 15691-92, & 381.

[^287]: ^?^ *Id.* at 15766, & 523.

[^288]: ^?^ *Id.* at 15692-93, && 383-84.

[^289]: ^?^ *Id.* at 15696, & 391. Sub-loop elements in a digital loop
    carrier environment typically include the following components: (1)
    distribution cable, which typically is a two-wire or four-wire
    copper line that runs from the customer\'s premises to electronic
    equipment located at some point between the customer premise and the
    central office; (2) the feeder/distribution interface or
    concentration electronics, which generally are housed in underground
    controlled environmental vaults or above-ground enclosures, and
    which are used to aggregate distribution cables from individual
    customers and multiplex them onto a single high-capacity channel;
    and (3) feeder cable, typically fiber-optic cable that transports
    the high-capacity signal from the concentration electronics in the
    field to the incumbent LEC\'s central office.

[^290]: ^?^ *Id.* at 15696, & 391.

[^291]: ^?^ *Id.* at 15696, & 391.

[^292]: ^?^ *See* ALTS Petition at 18-22; MCI July 30 *Ex Parte* at 24;
    NTIA July 17 *Ex Parte* at 14-17.

[^293]: ^?^ ESI July 30 *Ex Parte* at 5-6.

[^294]: ^?^ *See, e.g.*, *In Re Petitions by AT&T Communications of the
    Southern States, Inc., MCI Metro Access Transmission Services, Inc.,
    for Arbitration of Certain Terms and Conditions of a Proposed
    Agreement with GTE Florida Inc., Concerning Interconnection and
    Resale Under the Telecommunications Act of 1996*, Docket Nos.
    960847-TP, 960980-TP, Order No. PSC-97-0064-FOF-TP (Fla. P.S.C. Jan.
    17, 1997) (requiring sub-loop unbundling).

[^295]: ^?^ *See supra* & 55 (discussing the Commission\'s expedited
    complaint process to resolve competitive issues in an accelerated
    fashion).

[^296]: ^?^ *See, e.g.*, NorthPoint July 29 *Ex Parte* at 1, 4-5
    (Commission should ensure that competitors actually receive loop and
    operations support systems parity); CIX July 30 *Ex Parte*, Att. at
    2 (a competitive Internet industry requires swift and effective
    enforcement of local loop requirements).

[^297]: ^?^ *See, e.g.*, NAS Comments (CC Docket No.98-78) at 4;
    NorthPoint July 29 *Ex Parte* at 5.

[^298]: ^?^ *See* MCI July 30 *Ex Parte* at 23; NEXTLINK Comments (CC
    Docket No. 98-78) at 14-15; NorthPoint July 7 *Ex Parte* at 8.

[^299]: ^?^ Various manufacturers and research and development firms are
    improving upon and developing new varieties of xDSL technology.
    Furthermore, these firms may develop new methods to determine
    whether, and to what extent, loops are xDSL-compatible. *See e.g.*,
    http://telecom‑info.bellcore.com/site‑cgi/ido/index.html;
    http://www.xdsl.com/.

[^300]: ^?^ *See supra* & 55 (discussing the Commission\'s expedited
    complaint process to resolve competitive issues in an accelerated
    fashion).

[^301]: ^?^ *See, e.g.*, CompTel/ALTS July 29 *Ex Parte* at 3; *see
    also* CIX July 30 *Ex Parte*, Att. at 2 (a competitive Internet
    industry requires that competitive LECs obtain timely access to
    conditioned loops and swift and effective enforcement of this
    requirement).

[^302]: ^?^ *See supra* && 85-117 (discussing advanced services
    affiliates).

[^303]: ^?^ *See* 47 U.S.C. \' 251(c)(3).

[^304]: ^?^ *See, e.g.*, NorthPoint July 7 *Ex Parte* at 8-9.

[^305]: ^?^ *See* MCI July 30 *Ex Parte* at 19.

[^306]: ^?^ *See, e.g.*, *id.*

[^307]: ^?^ The T1E1.4 working group of the American National Standards
    Institute (ANSI) is developing standards for xDSL spectrum
    management. *See e.g.*, Network and Customer Installation Interfaces
    ‑ Asymmetric Digital Subscriber Line (ADSL) Metallic Interface (ANSI
    T1.413‑1995) (ANSI T1.413 standard presents the electrical
    characteristics of the ADSL signals appearing at the network
    interface. The physical interface between the network and the
    customer installation is also described. The transport medium for
    the signals is a single twisted‑wire pair that supports both Message
    Telecommunications Service (POTS) and full‑duplex (simultaneous
    two‑way) and simplex (from the network to the customer installation)
    digital services. This interface standard provides the minimal set
    of requirements for satisfactory transmission between the network
    and the customer installation. Equipment may be implemented with
    additional functions and procedures.) ftp://ftp.t1.org/pub/

    t1stds/413‑95.txt. *See also* US West Spectrum Management *Ex
    Parte*, CC Docket No. 98-26, at 7 (filed July 21, 1998) (U S WEST
    July 21 *Ex Parte*); NorthPoint July 7 *Ex Parte* at 8-9.

[^308]: ^?^ *See* NorthPoint July 7 *Ex Parte* at 8-9.

[^309]: ^?^ *See* Sprint Comments (CC Docket Nos. 98-11, 98-26, 98-32)
    at 8; APK Net, Cyber Warrior, Helicon Online, Inforamp, Internet
    Connect, MTP, and Proaxis Communications Comments (CC Docket Nos.
    98-11, 98-26, 98-32) at 14-15; US West Comments (CC Docket Nos.
    98-11, 98-32) at 5-6.

[^310]: ^?^ *See supra* && 85-117 (discussing advanced services
    affiliates).

[^311]: ^?^ *See supra* & 52.

[^312]: ^?^ *See, e.g.*, ALTS Petition at 16-17; e.spire Comments (CC
    Docket No. 98-78) at 5-6 (if competitive LECs are refused permission
    to interconnect with xDSL equipment, are refused loops with xDSL
    electronics, and not given access to loops free of loading coils or
    bridged taps, competitive LECs will effectively be prevented from
    providing xDSL-based services on a significant number of loops).

[^313]: ^?^ The use of DLCs varies by telephone company and typically
    ranges from almost zero to as much as 30 percent of the local loops
    within a given LEC\'s local network. A DLC converts analog signals,
    from many copper loops that terminate at a remote terminal, into
    digital signals, multiplexes the signals, and transports them,
    usually over fiber, to the central office. The two traditional DLC
    systems are universal DLC (UDLC) and integrated DLC (IDLC). UDLC,
    the older of the two systems, is not directly integrated with the
    switch, and converts digital signals back to analog at the central
    office before delivering the signals to the central office switch.
    IDLC is integrated with the switch and provides a direct, digital
    interface to a digital central office switch. It is more difficult
    to unbundle IDLC traffic, because UDLC traffic is demultiplexed
    before it reaches the central office switch, while IDLC traffic is
    not. For a more detailed discussion of IDLC and the methods of
    unbundling IDLC-delivered loops, *see infra*, Appendix C.

[^314]: ^?^ Different variations of xDSL technology have different
    distance limitations. *See* \"General Introduction to Copper Access
    Technologies,\" http://www.adsl.com/general_tutorial.html.

[^315]: ^?^ LECs use loading coils to modify the electrical
    characteristics of the local loop, allowing better quality voice
    frequency transmission over extended distances (typically greater
    than 18,000 feet). In this extended distance scenario, loading coils
    are placed every 6,000 feet on the line. Loading coils are not
    compatible with the higher frequency attributes of xDSL
    transmissions and they must be removed before xDSL‑based services
    can be provisioned. The use of loading coils varies by LEC and
    typically ranges from virtually zero to as much as 20 percent of the
    local loops within a given LEC\'s access network.

[^316]: ^?^ A bridged tap is any portion of a loop that is not in the
    direct talking path between the central office and the service
    users\' terminating equipment. For example, a bridged tap may be an
    extension of the circuit beyond the service user\'s location. In
    order to provide xDSL, bridged taps generally have to be removed.
    Incomplete documentation on the physical layout of the network and
    opening and closing cable splices can make the process of locating
    and removing bridged taps a time consuming and, therefore, costly
    process.

[^317]: ^?^ *See supra* & 52.

[^318]: ^?^ *See supra* && 54, 153; *see also* NAS Comments (CC Docket
    No 98-78) at 2-3 (Commission should affirm that incumbent LECs have
    a duty to provide xDSL-equipped loops as an unbundled element when
    those loops are provisioned through a digital loop carrier or
    similar remote terminal).

[^319]: ^?^ *See supra* & 55 (discussing the Commission\'s expedited
    complaint process to resolve competitive issues in an accelerated
    fashion).

[^320]: ^?^ *See, e.g.*, CompTel/ALTS July 29 *Ex Parte* at 3; *see
    also* CIX July 30 *Ex Parte*, Att. at 2 (a competitive Internet
    industry requires that competitive LECs obtain timely access to
    conditioned loops and swift and effective enforcement of this
    requirement).

[^321]: ^?^ *See supra* && 85-117 (discussing advanced services
    affiliates); *see also* NorthPoint July 29 *Ex Parte* at 2 (if the
    incumbent\'s advanced services affiliate receives digital loops,
    competitive LECs should be able to obtain unbundled digital loops).

[^322]: ^?^ *See, e.g.,* MCI July 30 *Ex Parte* at 21.

[^323]: ^?^ *See, e.g.*, BellSouth *Ex Parte*, CC Docket Nos. 97-208,
    97-231, 97-121, 97-131 (filed April 1, 1998).

[^324]: ^?^ ESI July 30 *Ex Parte* at 5-6.

[^325]: ^?^ There currently appear to be three general types of
    competitive LECs that may request unbundled DLC-delivered loops.
    Each type of requesting carrier may want or need the DLC loop to be
    unbundled in a different way. First, certain competitive LECs may
    want to enter the market through a combination of unbundled network
    elements, such as the DLC-delivered loop and the unbundled switch
    (including all features, functions, and capabilities). Second, other
    competitive LECs that have their own switch may want only the
    functionality of a loop between the customer and the incumbent
    LEC\'s central office switch. Such competitive LECs may want to
    provide high-speed data access via xDSL technologies and may prefer
    a copper pair from the central office to the customer, provided a
    properly qualified, and sufficiently short, copper pair is
    available. Third, other competitive LECs, seeking to provide
    high-speed data access via xDSL technologies, may want to access the
    unbundled loop at the remote terminal. Access to the remote terminal
    implicates the sub-loop unbundling issues considered *infra* at &&
    173-176.

[^326]: ^?^ *See* 47 C.F.R. \'\' 51.307, 51.311, 51.313.

[^327]: ^?^ For a discussion of competitive LEC access to remote
    terminals, *see infra* && 173-176.

[^328]: ^?^ *See* NorthPoint July 7 *Ex Parte* at 7.

[^329]: ^?^ *See* *id*.

[^330]: ^?^ *See supra* && 85-117 (discussing advanced services
    affiliates); *see also* NorthPoint July 29 *Ex Parte* at 2 (if the
    incumbent\'s advanced services affiliate is permitted to place its
    DSLAM in remote terminals, competitive LECs should be permitted to
    do so as well).

[^331]: ^?^ *See* ALTS Petition at 41-44; MCI July 30 *Ex Parte* at 23
    (incumbent LECs must provide access to all network elements
    encompassing distribution plant, remote terminals, and feeder plant;
    incumbent LECs must provide collocation options in remote
    terminals); CIX July 30 *Ex Parte*, Att. at 2 (a competitive
    Internet industry requires interconnection at points of aggregation,
    including remote terminal units of digital loop carrier systems);
    NAS Comments (CC Docket No. 98-78) at 3-4 (Commission should require
    incumbent LECs to permit a competitor\'s xDSL line cards in the
    incumbent LEC\'s remote terminals as part of the existing
    requirement for incumbent LECs to permit carrier collocation at any
    technically feasible point. This would allow customers served by
    loops provisioned through remote terminals to have a choice of any
    carrier, and would also expand consumer choice, if the competitor\'s
    xDSL line card has a potentially wider array of xDSL offerings than
    the incumbent LEC\'s); WorldCom Comments (CC Docket No. 98-78) at 16
    (competitive LEC must have choice of either putting its own
    electronics in the remote terminal or utilizing incumbent\'s
    electronics).

[^332]: ^?^ For example, the xDSL customer premises equipment must have
    an electronic match at the carrier\'s remote terminal or other xDSL
    termination point. An incumbent LEC\'s installation of a particular
    manufacturer\'s DSLAM at a remote terminal might limit the ability
    of customers using the xDSL customer premises equipment of another
    manufacturer to utilize the remote terminal DSLAM.

[^333]: ^?^ *See* ALTS Petition at 38; CIX (CC Docket No. 98-78) at
    10-11; e.spire Comments (CC Docket No. 98-78) at 10; Intermedia
    Comments (CC Docket No. 98-78) at 7; TRA Comments (CC Docket No.
    98-78) at 9.

[^334]: ^?^ *See supra* & 29.

[^335]: ^?^ *See supra* & 27.

[^336]: ^?^ 47 U.S.C. \' 251(c)(3); *see Local Competition Order*, 11
    FCC Rcd at 15640, & 278.

[^337]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15641, & 279.

[^338]: ^?^ 47 U.S.C. \' 251(d)(2) (emphasis added).

[^339]: ^?^ *Local Competition Order,* 11 FCC Rcd at 15644, & 288.

[^340]: ^?^ NTIA July 17 *Ex Parte* at 8, n.23.

[^341]: ^?^ *Id*. at 8.

[^342]: ^?^ 47 U.S.C. \' 251(c)(4).

[^343]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15934, & 871.

[^344]: ^?^ *Id.* at 15930, 15931, 15934, && 863, 865-66, 871; *see,
    e.g.,* AT&T Reply Comments (CC Docket Nos. 98-11, 98-26, 98-32) at
    11.

[^345]: ^?^ *Local Competition Order*, 11 FCC Rcd at 15934, & 873.

[^346]: ^?^ *Id.*

[^347]: ^?^ *Id.* at 15935, & 874.

[^348]: ^?^ *Id.*

[^349]: ^?^ *See supra* & 30.

[^350]: ^?^ *See Report to Congress on Universal Service* at && 73-82
    (Internet service providers are not telecommunications carriers).

[^351]: ^?^ As noted above, advanced services are telecommunications
    services. *See supra* && 35-36.

[^352]: ^?^ 47 U.S.C. \' 251(c)(4). To the extent that specific advanced
    services are marketed primarily to telecommunications carriers,
    however, they would remain outside the scope of the resale
    obligation.

[^353]: ^?^ 47 U.S.C. \' 271(b)(3).

[^354]: ^?^ 47 U.S.C. \' 3(25)(B).

[^355]: ^?^ *See, e.g., Petitions for Limited Modifications of LATA
    Boundaries to Provide Expanded Local Calling Service (ELCS) at
    Various Locations*, CC Docket No. 96-159, Memorandum Opinion and
    Order, 12 FCC Rcd 10646 (1997) (*ELCS MO&O*) (granting 23 requests
    for boundary modifications to permit calls within certain extended
    local calling service areas that straddle LATA boundaries to be
    treated as intraLATA); *see also Petitions for LATA Association
    Changes by Independent Telephone Companies*, Memorandum Opinion and
    Order, CC Docket No. 96-158, 12 FCC Rcd 11769 (1997) (*Association
    Order*) (granting requests to modify LATA boundaries to switch three
    independent telephone company exchanges in Texas from one SBC LATA
    to another); *Guadalupe Valley Telephone Cooperative Request for
    LATA Relief Between the Waelder Exchange and Corpus Christi LATA*,
    Memorandum Opinion and Order, 13 FCC Rcd 4560 (Network Services
    Div., Com. Car. Bur., 1998).

[^356]: ^?^ *ELECs MO&O* at 12 FCC Rcd at 10657-57, & 23; *see also
    Petition for Declaratory Ruling Regarding US West Petitions to
    Consolidate LATAs in Minnesota and Arizona*, Order, 12 FCC Rcd 4738
    (Com. Car. Bur. 1997) (*LATA Modification Order*), *petition for
    recon. and application for review or stay pending* (determining, in
    regard to U S WEST requests to create single LATAs within each of
    Arizona and Minnesota, that the Commission could not have, and did
    not, delegate its authority over LATA boundary changes to the
    states).

[^357]: ^?^ *See supra* && 39-82.

[^358]: ^?^ 47 U.S.C. \' 271(b)(3).

[^359]: ^?^ 47 U.S.C. \' 271(g)(2).

[^360]: ^?^ We note that section 706(a) directs us \"to encourage the
    deployment . . . of advanced telecommunications capability to . . .
    elementary and secondary schools and classrooms . . . .\" 47 U.S.C.
    \' 157 note.

[^361]: ^?^ *See, e.g., ELCS MO&O*, 12 FCC Rcd 10646.

[^362]: ^?^ Harry Newton, Newton\'s Telecom Dictionary at 477 (14th ed.
    1998).

[^363]: ^?^ U S WEST Petition at 8-24.

[^364]: ^?^ 47 U.S.C. \' 157 note.

[^365]: ^?^ *Southwestern Bell Telephone Company Petition for Limited
    Modification of LATA Boundaries to Provide ISDN at Hearne, Texas*,
    Memorandum Opinion and Order, NSD No. NSD-LM-97-26, DA 98-923 (Com.
    Car. Bur. rel. May 18, 1998) (granting SBC\'s request for a limited
    LATA boundary modification for the purpose of providing ISDN
    services in one LATA through facilities in a different LATA).

[^366]: ^?^ *See supra* && 80-82; *LATA Modification Order*, 12 FCC Rcd
    at 4751, & 25 (concluding that section 10(d) limits the manner in
    which the Commission may exercise its sole and exclusive authority
    to approve the modification of LATA boundaries).

[^367]: ^?^ Emergency Request of Bell Atlantic-West Virginia for
    Authorization to End West Virginia\'s Bandwidth Crisis, CC Docket
    No. 98-11 (filed July 23, 1998). *See Request by Bell Atlantic-West
    Virginia for Interim Relief Under Section 706, or, in the
    Alternative, a LATA Boundary Modification - Pleading Cycle
    Established*, DA-98-1506, Public Notice (rel. July 28, 1998). We do
    not act upon this petition at this time.

[^368]: ^?^ We note that several parties support the BOCs\' Petitions
    for LATA boundary relief on the ground that the BOCs are in the best
    position to provide the advanced telecommunications capabilities
    needed by their communities. *See*, *e.g.*, Cheyenne Leads Comments
    (CC Docket No. 98-26) at 1; Laramie Economic Development Corporation
    Comments (CC Docket No. 98-26) at 1; St. George Area Chamber of
    Commerce Comments (CC Docket No. 98-26) at 1; Washington County,
    Utah, Economic Development Council Comments (CC Docket No. 98-26) at
    1.

[^369]: ^?^ *See* *Amendment of 47 C.F.R. \' 1.1200 et seq. Concerning
    Ex Parte Presentations in Commission Proceedings*, GC Docket No.
    95-21, Report and Order, 12 FCC Rcd 7348, 7356‑57, & 27 citing 47
    C.F.R. \' 1.1204(b)(1) (1997).

[^370]: ^?^ *See* 47 C.F.R. \' 1.1206(b)(2), as revised.

[^371]: ^?^ *See* 47 C.F.R. \' 1.49.

[^372]: ^?^ A DS1 is the 1.544 Mbps first-level signal in the digital
    transmission hierarchy. Traditionally, 24 64-kbps DS0 channels have
    been multiplexed up to the 1.544 Mbps DS1 rate, with each DS0
    channel carrying the digital representation of an analog voice
    channel.

[^373]: ^?^ *See* 5 U.S.C. \' 603. The RFA, *see* 5 U.S.C. \' 601 *et.
    seq.*, has been amended by the Contract With America Advancement Act
    of 1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II
    of the CWAAA is the Small Business Regulatory Enforcement Fairness
    Act of 1996 (SBREFA).

[^374]: ^?^ The NPRM is in the matter of Petition of Bell Atlantic
    Corporation For Relief from Barriers to Deployment of Advanced
    Telecommunications Services, CC Docket No. 98-11; Petition of U S
    West Communications, Inc. For Relief from Barriers to Deployment of
    Advanced Telecommunications Services, CC Docket No. 98-26; Petition
    of Ameritech Corporation to Remove Barriers to Investment in
    Advanced Telecommunications Technology, CC Docket No. 98-32;
    Petition of the Alliance for Public Technology Requesting Issuance
    of Notice of Inquiry and Notice of Proposed Rulemaking to Implement
    Section 706 of the 1996 Telecommunications Act, RM-9244, Petition of
    the Association for Local Telecommunications Services (ALTS) for a
    Declaratory Ruling Establishing Conditions Necessary to Promote
    Deployment of Advanced Telecommunications Capability Under Section
    706 of the Telecommunications Act of 1996, CC Docket No. 98-78;
    Southwestern Bell Telephone Company, Pacific Bell, and Nevada Bell
    Petition for Relief from Regulation Pursuant to Section 706 of the
    Telecommunications Act of 1996 and 47 U.S.C. \' 160 for ADSL
    Infrastructure and Service, CC Docket No.98-91; Deployment of
    Wireline Services Offering Advanced Telecommunications Capability
    Pursuant to Section 706(a) of the Telecommunications Act of 1996, CC
    Docket No. 98-XX.

[^375]: ^?^ *See* 5 U.S.C. \' 603(a).

[^376]: ^?^ *See id*.

[^377]: ^?^ *See* 47 U.S.C. \' 603(b)(3).

[^378]: ^?^ *See* 47 U.S.C. \' 601(6).

[^379]: ^?^ 47 U.S.C. \' 601(3) (incorporating by reference the
    definition of \"small business concern\" in 15 U.S.C. \' 632).
    Pursuant to the RFA, the statutory definition of a small business
    applies \"unless an agency, after consultation with the Office of
    Advocacy of the Small Business Administration and after opportunity
    for public comment, establishes one or more definitions of such term
    which are appropriate to the activities of the agency and publishes
    such definition(s) in the Federal Register.\" 5 U.S.C. \' 601(3).

[^380]: ^?^ Small Business Act, 15 U.S.C. \' 632 (1996).

[^381]: ^?^ FCC, Telecommunications Industry Revenue: TRS Fund Worksheet
    Data, Figure 2 (Number of Carriers Paying Into the TRS Fund by Type
    of Carrier) (Nov. 1997) (*Telecommunications Industry Revenue*).

[^382]: ^?^ *Id*.

[^383]: ^?^ 13 C.F.R. \' 121.201, SIC codes 4812 and 4813. *See*
    Executive Office of the President, Office of Management and Budget,
    *Standard Industrial Classification Manual* (1987).

[^384]: ^?^ *See* 13 C.F.R. \' 121.201, SIC code 4813. Since the time of
    the Commission\'s 1996 decision, *Implementation of the Local
    Competition Provisions in the Telecommunications Act of 1996, First
    Report and Order*, 11 FCC Rcd 15499, 16144-45 (1996), 61 FR 45476
    (August 29, 1996), the Commission has consistently addressed in its
    regulatory flexibility analyses the impact of its rules on such
    incumbent LECs.

[^385]: ^?^ *Id*.

[^386]: ^?^ *Telecommunications Industry Revenue*, Figure 2.

[^387]: ^?^ *Id*.