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    Before the
             Federal Communications Commission
                   Washington, D.C. 20554
                                 
                                        )
                                        )
  In the Matter of                     )
                                        )
  Deployment of Wireline Services Offering         )     CC Docket Nos. 98-147, 98-11, 98- 
                                        ) 26, 98-32, 98-78, 98-91
  Advanced Telecommunications Capability       )         
                                        )
  
  
  
                      ORDER ON REMAND 
                              
  
  
     Adopted:  December 23, 1999                                       Released: December 23, 1999
  
  
  By the Commission:  Commissioner Furchtgott-Roth approving in part, dissenting in part
  and issuing a statement.
                              
  
       I.    INTRODUCTION AND OVERVIEW
  
     1.     Among the fundamental goals of the Telecommunications Act of 1996 (1996 Act) is
     the promotion of innovation, investment and competition among all participants and
     for all services in the telecommunications marketplace, including advanced services. 
     The Commission has issued three orders in this proceeding to date and most recently
     took an additional step toward implementing Congress's goals for the deployment of
     competitive advanced services by instituting line sharing obligations for incumbent
     LECs pursuant to section 251, and establishing spectrum management policies and
     rules.
     2.     Central to Congress' goal of widespread deployment of advanced services is section
     251 of the 1996 Act.  Congress made clear that the 1996 Act is technologically neutral
     and is designed to ensure competition in all telecommunications markets.  In the
     Advanced Services Memorandum Opinion and Order, we determined, among other
     things, that incumbent LECs were subject to the obligations imposed by section 251 in
     connection with the offering of advanced services that employ packet-switching or
     other specific technologies such as digital subscriber line (xDSL) technologies.  At
     that time, we found that xDSL-based advanced services were "either" telephone
     exchange service or exchange access service.  Following adoption of the Advanced
     Services Memorandum Opinion and Order, US WEST Communications, Inc., (US
     WEST) sought review in the United States Court of Appeals for the District of
     Columbia Circuit, seeking reversal of the Commission's holding that advanced services
     are either telephone exchange service or exchange access.
     3.     Upon review of the record we determine that US WEST may not avoid the obligations
     placed on incumbent LECs under section 251(c) of the Act in connection with the
     provision of advanced services.  We also affirm our initial view in the Advanced
     Services Memorandum Opinion and Order that xDSL-based advanced services are
     either telephone exchange service or exchange access. We clarify that whether xDSL-
     based advanced services constitute telephone exchange service or exchange access
     depends on how such technology is used. We find that when xDSL-based advanced
     services both originate and terminate "within a telephone exchange," and provide
     subscribers with the capability of communicating with other subscribers in that same
     exchange, they are properly classified as "telephone exchange service."  We also find
     that xDSL-based advanced services constitute "exchange access" when they provide
     subscribers with the ability to communicate across exchange boundaries. We find that
     "information access service" is not a category separate and distinct from telephone
     exchange service and exchange access.  Therefore, even if xDSL-based advanced
     services are considered "information access services," this does not remove them from
     the classifications of telephone exchange service and exchange access. 
     4.     In the Advanced Services Memorandum Opinion and Order, we determined, among
     other things, that incumbent LECs were subject to the obligations imposed by section
     251 in connection with the offering of advanced services that employ packet-switching
     or other specific technologies such as digital subscriber line (xDSL) technologies.  At
     that time, we found that xDSL-based advanced services were "either" telephone
     exchange service or exchange access service.  We found it unnecessary at the time to
     determine into which of the two service categories the advanced services fell, noting
     that related issues were pending in other proceedings. 
     5.     In response, the Commission requested the opportunity to consider further the issues
     raised by US WEST because some of the statutory construction arguments advanced
     by US WEST in its appellate brief had been presented only summarily and in truncated
     form before the Commission.  The Commission asked that the court grant it the
     opportunity to address the threshold question of statutory interpretation based on a
     more complete administrative record.  On August 25, 1999, the court granted the
     Commission's request and remanded the matter back to the Commission. 
     Consequently, on September 9, 1999 the Common Carrier Bureau issued a Public
     Notice seeking comment on the issues raised by US WEST.
     6.     In response to this Public Notice, nineteen comments and twenty replies were filed. 
     The majority of the commenters maintain that the Commission should affirm its
     holding that xDSL-based advanced services are either telephone exchange service or
     exchange access.  Some commenters maintain, however, that xDSL-based advanced
     services are telephone exchange service, but not exchange access.  Others maintain
     that such services fall within the definition of exchange access, but not telephone
     exchange service.  A few commenters argue that xDSL-based advanced services are
     neither telephone exchange service or exchange access, but are more properly
     classified as "information access" services. 
       II.  US WEST is an Incumbent LEC and May Not Avoid Section 251 Obligations
       When Providing Advanced Services
     7.     Sections 251(a) and 251(b) of the Communications Act impose on all LECs certain
     duties regarding interconnection, resale of telecommunications services, number
     portability, dialing parity, access to rights-of-way, and reciprocal compensation. 
     Section 251(c) requires incumbent LECs to meet certain additional obligations to
     potential competitors with respect to interconnection, access to unbundled network
     elements, resale of their retail services, notification of interoperability changes to their
     facilities or networks, collocation, and good faith negotiation. 
     8.     US West and other commenters make several arguments in support of the contention
     that  xDSL based advanced services are not subject to the unbundling obligations
     under section 251(c)(3). US West argues that when a LEC is providing something
     other than telephone exchange service or exchange access (or network elements used
     to provide such services), it is not acting as a LEC and therefore is not subject to the
     obligations of section 251(c)(3).  In addition, US WEST argues that if we require
     access to network elements on an unbundled basis for the provision of advanced
     services, that could result in unlimited access to all of an incumbent LEC's facilities. 
     None of these arguments has merit.  For the reasons set forth below, we conclude that
     section 251(c)(3) requires incumbent LECs (as defined in section 251(h)) to provide
     nondiscriminatory access to network elements used to provide all telecommunications
     services, including advanced services.
     9.     At the outset, we affirm our prior conclusion that xDSL-based advanced services
     constitute telecommunications services as defined by section 3(46) of the Act. 
     Although US WEST has argued that these services are neither exchange access nor
     telephone exchange services, even US WEST has expressly conceded that advanced
     services fall within the broad ambit of telecommunications services.  In its comments,
     US WEST has stated that "a telephone company's obligation to provide access to
     unbundled elements is not dependent on the requester's provision of telephone
     exchange service or exchange access; rather, unbundled elements must be made
     available to providers of any telecommunications service, including advanced
     services."   Although US WEST has acknowledged that advanced services constitute
     a type of telecommunications service, US WEST nonetheless argues that the
     requirements of section 251(c) (3) are not triggered when a carrier provides access to
     network elements used solely for the provision of advanced services.  It contends
     that when an entity that is otherwise an incumbent LEC is providing something other
     than telephone exchange service or exchange access service (or network elements used
     to provide such services), it is not acting as an incumbent LEC and therefore is not
     subject to the obligations of section 251(c)(3).  We reject that assertion. 
     10.    We find no support for US WEST's position in the language of section 251. Nor has
     US WEST shown how the purposes of the section or the Act would be furthered by
     making section 251(h) subject to further constraints.  Congress has specifically
     defined an incumbent LEC for purposes of section 251. Pursuant to section 251(h), an
     incumbent local exchange carrier for any area means the local exchange carrier that
     "(A) on the date of enactment of the Telecommunications Act of 1996, provided
     telephone exchange service in such area" and (B) was a member of NECA, the
     exchange carrier association under section 69.601(b) of the Commission's regulations,
     or a successor or assign of such a member.  Thus, the relevant inquiry for purposes of
     determining who is an incumbent LEC pursuant to section 251(c) is whether a carrier
     provided telephone exchange and exchange access service in a given service area on
     February 8, 1996.  There can be no dispute that US WEST provided both telephone
     exchange and exchange access service on that date. US WEST thus satisfies the
     statutory definition in section 251(h) and is an incumbent LEC for purposes of section
     251.   Therefore, because advanced services are telecommunications services, an
     incumbent LEC (as defined in section 251(h)) must provide nondiscriminatory access
     to network elements used to provide xDSL-based advanced services consistent with
     the requirements of section 251(c)(3). We further agree with those commenters who
     argue that if Congress intended to remove xDSL-based advanced services from the
     reach of section 251(c), Congress would have done so in a more explicit fashion. 
     For example, in section 251(c)(2) Congress provided that the interconnection
     obligations thereunder are triggered not for all telecommunications service, but only
     "for the transmission and routing of telephone exchange service and exchange
     access."
     11.    In fact, as demonstrated by section 251, Congress elected to impose different and
     increasingly more rigorous obligations on "telecommunications carriers," "local
     exchange carriers," and "incumbent local exchange carriers." The statutory
     construction proferred by various incumbent LECs would effectively eliminate these
     distinctions.  Congress used these statutory definitions as a means of assigning carriers
     to the appropriate section 251 "box," or of exempting them from section 251
     entirely.  Once a carrier is classified as an incumbent LEC pursuant to section 251(h),
     the extent to which the individual duties established by the provisions of section 251(c)
     apply to its various services and facilities is determined by the specific provision in
     which the duty is set forth.  For example, because we determine below that xDSL-
     based advanced services are exchange access or telephone exchange services,
     incumbent LECs must provide requesting carriers with interconnection pursuant to
     section 251(c)(2).  Pursuant to section 251(c)(3), incumbent LECs must unbundle
     facilities used to provide xDSL-based advanced services because these services
     constitute telecommunications services. 
     12.    Moreover, neither US WEST, SBC, nor any other party has explained how exempting
     xDSL-based advanced services from section 251(c) would further the purposes of this
     section or the 1996 Act.  We find no evidence that Congress intended to eliminate the
     Commission's authority to require access to network elements used to provide
     advanced services --  a result which is at odds with the technology neutral goals of the
     Act and with Congress' aim to encourage competition in all telecommunications
     markets. 
     13.    Finally, we reject US WEST's contention that if we consider a carrier to be an
     incumbent LEC under section 251 when it provides a service other than telephone
     exchange service or exchange access service, then such a reading of section 251 would
     inevitably require GTE and Sprint, acting in their capacity as incumbent LECs, to
     unbundle all their facilities, including their long distance facilities.  We find no merit
     to this contention because it ignores the limitations Congress has established in section
     251(d)(2).
     14.    Section 251(d)(2) imposes a limitation on an incumbent LEC's unbundling obligation
     pursuant to section 251(c)(3). In a recent rulemaking proceeding, we set forth the
     standards the Commission will apply to determine which network elements should be
     unbundled. With regard to non-proprietary elements, a requesting carrier typically
     may access unbundled network elements if the failure to provide such access would
     impair the ability of a requesting carrier to provide the services it seeks to offer. With
     regard to proprietary network elements, a requesting carrier typically may obtain
     unbundled access to an incumbent LEC's network element if such access is necessary. 
     Pursuant to this standard, the Commission has declined to require incumbent LECs to
     provide unbundled access to their packet switches.  These standards provide ample
     protection that the unbundling obligations under section 251(c) are consistent with
     section 251's underlying goal of opening the local market to competition. 
  III.   Statutory Classification of xDSL-Based Advanced Services
     15.    As noted above, certain obligations set forth in section 251 are specific to the
     provision of "telephone exchange service" or "exchange access."  The primary
     distinction between these two services is that, while telephone exchange services
     permit communication "within a telephone exchange" or "within a connected system
     of telephone exchanges within the same exchange area," exchange access refers to
     access to telephone exchange services or facilities for the purpose of originating or
     terminating communications that travel outside an exchange.  Thus, in order to
     determine into which category xDSL-based services fall, we must determine, as a
     threshold matter, whether such traffic originates and terminates within the equivalent
     of an exchange area, in which case it may be classified as "telephone exchange
     service," or whether such traffic originates in one exchange and terminates in another,
     in which case it is properly classified as "exchange access."
     16.    The Commission traditionally has determined the nature of communications by looking
     to the end points of the communication, and has consistently rejected attempts to
     divide communications at any intermediate points of switching or exchanges between
     carriers.   With respect to xDSL-based advanced services used to connect Internet
     Service Providers (ISPs) with their dial-in subscribers, the Commission has determined
     that such traffic does not terminate at the ISP's local server, but instead terminates at
     Internet websites that are often located in other exchanges, states or even foreign
     countries.  Consistent with this determination, we conclude that typically ISP-bound
     traffic does not originate and terminate within an exchange and, therefore, does not
     constitute telephone exchange service within the meaning of the Act.  As explained
     more fully below, such traffic is properly classified as "exchange access."  In contrast,
     work-at-home applications and other non-Internet communications may be properly
     classified as "telephone exchange service" if they originate and terminate within a local
     exchange area.
            A.   xDSL-Based Advanced Services May be Classified as Telephone Exchange
            Services
       1.   Background
     17.    We first address whether a service that employs xDSL technology may be classified as
     telephone exchange service within the meaning of the Act.  The 1996 Act provides
     two alternative definitions for the term "telephone exchange service."  The first
     definition, which is codified in section 3(47)(A), provides that telephone exchange
     service includes "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."  The second definition, which
     is codified in section 3(47)(B), provides that the term also includes "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."  In the Advanced Services Memorandum Opinion and
     Order, we noted that section 3(47)(B) was added to ensure that the definition of
     telephone exchange service was not limited to traditional voice telephony, but included
     non-traditional "means of communicating information within a local area."
     18.    U S WEST contends that prior decisions by the Commission establish that three
     characteristics must be present before a service may fall within the scope of the
     "telephone exchange service" definition.  First, the service must begin and end "within
     a telephone exchange" or "within a connected system of telephone exchanges." 
     Second, the service must permit "intercommunication," which U S WEST describes as
     the ability of every subscriber to communicate with every other subscriber connected
     to switched network within a particular exchange area.  Third, the service must be
     covered by "the exchange service charge."  U S WEST argues that xDSL-based
     services do not encompass any of the foregoing characteristics and, therefore, do not
     constitute telephone exchange services within the meaning of the Act.
     19.    U S WEST acknowledges that section 3(47)(B) may expand the range of services that
     constitute "telephone exchange service" within the meaning of the Act.  It argues,
     however, that the 1996 Amendment extends only to "those services that are
     functionally similar to and can substitute for the switched local services" described in
     section 3(47)(A).  According to U S WEST, support for this interpretation of section
     3(47)(B) can be found in at least two prior Commission orders.  It notes, for example,
     that the Commission previously has construed the term "comparable" as referring to:
     (1) services that could become "true economic substitutes for wireline local exchange
     service;" and (2) the provision of local exchange service over alternative facilities,
     such as substitutes for the copper loop.
            2.   Discussion
                 a) Section 3(47)(A)  
     1.     We conclude that xDSL-based advanced services, when used to permit
     communications among subscribers within an exchange, or within a connected system
     of exchanges, constitute telephone exchange services within the meaning of section
     3(47)(A) of the Act.  U S WEST correctly notes that, in cases involving voice
     communication, the Commission has long interpreted the traditional telephone
     exchange definition to refer to "the provision of individual two-way voice
     communication by means of a central switching complex to interconnect all subscribers
     within a geographic area."  Contrary to U S WEST's contention, however, the
     Commission has never suggested that the telephone exchange service definition is
     limited to voice communications provided over the public circuit-switched network. 
     2.     As we noted in the Advanced Services Memorandum Opinion and Order, neither the
     statutory language nor the legislative history accompanying section 3(47) limits the
     term "telephone exchange service" to the provision of voice services.  Moreover, we
     note that the local public switched network has been used for dial-up access to data
     transmission services for many years.  For example, whenever a facsimilie is sent
     from a home or office to another party within the local area, the transmission is a data
     transmission rather than a voice transmission, but such transmissions nevertheless
     constitute telephone exchange service.  Consistent with this, the Commission has
     expressly made the rules governing basic telephone exchange service equally
     applicable to LEC provision of data and voice services.  The parties have not
     persuaded us that we should depart from this long-standing practice.  Indeed, in this
     era of converging technologies, limiting the telephone exchange service definition to
     voice-based communications would undermine a central goal of the 1996 Act--
     opening local markets to competition to all telecommunications services.  We thus
     conclude, consistent with past practice, that the term "telephone exchange service"
     encompasses voice and data services.
     3.     We further disagree with U S WEST that the statutory language or Commission
     precedent suggest that the term "telephone exchange service" is limited to services
     that employ circuit-switching technology.  Although the definition of what constitutes
     an "exchange" traditionally has been linked to the area served by a switch, or by an
     interconnected system of switches, the statutory language does not support a
     conclusion that only services that employ circuit-switching technology constitute
     telephone exchange service within the meaning of the Act.  Indeed, we have
     previously noted that the "[t]he concept of an exchange is based on geography and
     regulation, not equipment."  Thus, the interconnection obligations set forth in section
     251(c)(2) apply to packet-switched services as well as circuit-switched services.
     4.     Although we reject the contention that the term telephone exchange service is limited
     to voice communications, we agree with U S WEST that the statutory text and
     Commission precedent support a conclusion that telephone exchange services must
     permit "intercommunication" among subscribers within the equivalent of a local
     exchange area.  The term "intercommunication" is not defined in the Act or the
     Commission's rules.  Commission precedent establishes, however, that, as used in
     section 3(47)(A), "intercommunication" refers to a service that "permits a community
     of interconnected customers to make calls to one another over a switched network." 
     We, therefore, find that a service satisfies the "intercommunication" requirement of
     section 3(47)(A) as long as it provides customers with the capability of
     intercommunicating with other subscribers. 
     5.     U S WEST contends that because an xDSL-based advanced service subscriber must
     specify the ISP or third party with whom his or her computer is connected, such
     services do not permit the type of "intercommunication" described in section 3(47)(A). 
     We find, however, that U S WEST's narrow focus on the manner in which xDSL-
     based advanced services are provisioned is misplaced.  In classifying a particular
     service the relevant inquiry is broader.  We find that although a customer must
     designate the ISP or third party to whom his or her high-speed data transmissions are
     directed, once on the packet-switched network, a customer may rearrange the service
     to communicate with any other subscriber located on that network through the use of
     packet-switching technology.  We thus conclude that xDSL-based services provide
     end-users with the type of intercommunicating capability envisioned by section
     3(47)(A).
     6.     We further find the cases cited by U S WEST to support its contention that services
     offered over a predesignated transmission path do not constitute telephone exchange
     service to be readily distinguishable from the xDSL-based services we consider here. 
     Indeed, the services at issue in each of those proceedings were offered over private
     lines.  Private line service is defined as "a service whereby facilities for
     communications between two or more designated points are set aside for the exclusive
     use or availability of a particular customer and authorized users during stated periods
     of time."  The xDSL-based services we consider in the instant proceeding function
     differently than private line services.  Although an xDSL-based advanced service
     subscriber typically will predesignate the ISP or third party to whom his or her high-
     speed data transmissions are directed, the customer may, with relative ease, designate
     that his or her traffic be directed to a different ISP or third party.  Changing the
     destination of the permanent virtual connection (PVC) can be done administratively,
     without disconnecting the customer's service.  Customers subscribing to private line
     service, in contrast, may communicate only between those specific, predetermined
     points set aside for that customer's exclusive use.  If a private line customer wishes to
     communicate with a second end-point, the customer (unlike a xDSL-based advanced
     service subscriber) must order another private line.  Similarly, if the customer wishes
     to have only one private line, the customer must have the first line disconnected. 
     Thus, other than the fact that both services involve an initial connection between an
     end-user and a service provider, xDSL-based advanced services are readily
     distinguishable from private line service in ways critical to our application of the
     "telephone exchange service" classification.
     7.     We recognize that, in the GTE ADSL Tariffing Order, the Commission noted that a
     dedicated connection between an end-user and a service provider's point of presence
     is similar to private line service.  We do not find, however, that such an observation
     is relevant with respect to determining whether services that employ xDSL technology
     may constitute telephone exchange service within the meaning of the Act.  Rather, the
     key criterion for determining whether a service falls within the scope of the telephone
     exchange service definition is whether it permits "intercommunication."  As noted
     above, in this regard, xDSL-based advanced service and private line service are
     distinguishable in that xDSL-based services permit intercommunication and private line
     services do not.
     8.     The final requirement in section 3(47)(A) is that telephone exchange services be
     covered by "the exchange service charge."  Although this term is not defined in the
     Act or the Commission's rules we glean its meaning from the context in which the
     phrase is used.  We agree with those commenters who argue that the phrase implies
     that an end-user obtains the ability to communicate within the equivalent of an
     exchange area as a result of entering into a service and payment agreement with a
     provider of a telephone exchange service.  Specifically, we concur with AT&T that
     the "covered by the exchange service charge" clause comes into play only for the
     purposes of distinguishing whether or not a service is a local (telephone exchange)
     service, by virtue of being part of a "connected system of exchanges," and not a "toll"
     service.  Any other interpretation would confer upon LECs the ability to remove
     services at will from the definition of "telephone exchange services" simply by calling
     charges for these services something other than "exchange service charges" on their
     bills.  We thus find that any charges that a LEC assesses for originating and
     terminating xDSL-based advanced services within the equivalent of an exchange area
     would be covered by the "exchange service charge."
     9.     We thus reject U S WEST's contention that, because the price of xDSL-based services
     is not included within the price of basic local telephone service, such services are not
     covered by "the exchange service charge."  Indeed, we note that, in a competitive
     environment, where there are multiple local service providers and multiple services,
     there will be no single "exchange service charge."  We further note that, if a service
     otherwise satisfies the telephone exchange service definition, a LEC has the option of
     including the price of that service within the price it charges consumers for basic local
     telephone service.  The fact that U S WEST, or any other LEC, chooses to list the
     charge for basic local telephone service and xDSL-based advanced service separately
     on end-users' bills is not relevant to a determination of whether the price for the
     xDSL-based advanced service offering is covered by the exchange service charge.
            (b)  Section 3(47)(B)
     10.    We conclude that a service falls within the scope of section 3(47)(B) if it permits
     intercommunication within the equivalent of a local exchange area and is covered by
     the exchange service charge.  In setting forth the types of services that may fall within
     the scope of section 3(47)(B), Congress determined, as an initial matter, that such
     services must be "comparable" to the services described in section 3(47)(A). 
     Although the term "comparable" is not defined in the Act, it is generally understood to
     mean "having enough like characteristics and qualities to make comparison
     appropriate."  The xDSL-based advanced services at issue here, when they originate
     and terminate within an exchange area, satisfy the statutory definition of telephone
     exchange service under clause (B) of section 3(47) as well, and that clause provides an
     alternative basis for our conclusion that these services may constitute telephone
     exchange services.  We note that neither the statutory text nor the legislative history
     accompanying section 3(47)(B) provides guidance on which characteristics and
     qualities must be present in order for a service to fall within the scope of section
     3(47)(B).  In these circumstances, we presume that Congress sought to provide the
     Commission with discretion in determining whether a particular telecommunications
     service is sufficiently "comparable" to the services described in section 3(47)(A) to
     constitute telephone exchange service within the meaning of the Act.
     11.    We agree with U S WEST that the term "comparable," as used in section 3(47)(B),
     means that the services described therein share some of the same characteristics and
     qualities as the services described in section 3(47)(A).  Because we find that the term
     "comparable" means that the services retain the key characteristics and qualities of the
     telephone exchange service definition under subparagraph (A), we reject the argument
     that subparagraph (B) eliminates the requirement that telephone exchange service
     permit "intercommunication" among subscribers within a local exchange area.  As
     prior Commission precedent indicates, a key component of telephone exchange service
     is "intercommunication" among subscribers within a local exchange area.
     12.    We reject U S WEST's contention, however, that section 3(47)(B) is limited to
     services that are "market substitutes" for two-way switched voice service.  We
     recognize that, in the Local Competition Order, the Commission determined that
     section 3(47)(B) includes cellular and other wireless services because such services
     provide two-way voice communication that could "become true economic
     substitute[s]" for traditional two-way switched voice services.  Contrary to U S
     WEST's contention, however, the Commission never suggested that the telephone
     exchange service definition is limited to voice services or that substitutability is a
     necessary criterion for determining whether a particular telecommunications service
     falls within the scope of section 3(47)(B).  We note however that xDSL-based
     services, in fact, are being used to replace local dial-up traffic to ISPs and third parties.
     13.    Other provisions in the Act support a conclusion that, although the services described
     in subsection (A) and subsection (B) of the telephone exchange service share some of
     the same characteristics and qualities, they are not necessarily identical services. 
     Section 271, in particular, states that, in order for a BOC to obtain authorization to
     provide in-region, interLATA service, it must demonstrate that it is providing access
     and interconnection to "one or more unaffiliated competing providers" of the type of
     telephone exchange service described in section 3(47)(A) to residential and business
     subscribers.  A BOC does not satisfy the requirements of section 271 on the basis of a
     competing provider of the type of services described in section 3(47)(B).  Congress's
     decision to specifically limit section 271 authorization to the types of services
     described in section 3(47)(A) suggests that, while the services described in subsection
     (B) and subsection (A) share similar qualities, they are not necessarily identical service
     offerings.                           
     B B.        xDSL-Based Services May Be Classified as Exchange Access
  1.     Background
     3.     The next question we address is whether, and under what circumstances, xDSL-based
     advanced services may be classified as exchange access under the Act.  As we have
     previously found in the Reciprocal Compensation Order, xDSL-based advanced
     services that are used to connect ISPs with their subscribers to facilitate Internet
     bound traffic typically constitute exchange access service because the call initiated by
     the subscriber terminates at Internet websites located in other exchanges, states, or
     foreign countries.  The mechanics of the Internet bound call are critical to our
     determination that the xDSL-based advanced service provided by the local exchange
     carrier indeed is exchange access.  For that reason, we briefly review the manner in
     which the call is executed.
     4.     An ISP is an entity that provides its customers with the ability to obtain a variety of
     on-line information through the Internet. However, ISPs typically own no
     telecommunications facilities.  In order to provide those components of Internet access
     services that involve information transport, ISPs lease lines, and otherwise acquire
     telecommunications, from telecommunications providers - - LECs, CLECs, IXCs and
     others.  ISP's purchase use of analog and digital lines from LECs to connect to their
     dial-in subscribers. Under one typical arrangement, an ISP customer dials a seven-digit
     number to reach the ISP server in the same local calling area.  To provide transport
     within its network, the ISP may purchase interexchange telecommunications services
     from telecommunications carriers, and for transport beyond its network, the ISP either
     purchases additional interexchange telecommunications from telecommunications
     carriers, or makes arrangements to interconnect its leased facilities with one or more
     Internet backbone providers. Thus, the information service is provisioned by the ISP
     "via telecommunications" including interexchange telecommunications although the
     Internet service itself is an "information service" under section 3(2) of the Act, rather
     than a telecommunications service. 
  
             2.    Discussion
     5.     The issue we address here is whether xDSL-based services may constitute exchange
     access under the Act.  This question arises primarily in the context of services
     provided to ISPs to facilitate their provision of Internet access services.  Applying the
     definitions contained in section 3 of the Act, we conclude that the service provided by
     the local exchange carrier to the ISP is ordinarily exchange access service because it
     enables the ISP to transport the communication initiated by the end-user subscriber
     located in one exchange to its ultimate destination in another exchange, using both the
     services of the local exchange carrier and in the typical case the telephone toll service
     of the telecommunications carrier responsible for the interexchange transport.
     6.     We evaluate two relevant definitions contained in the Act.  Section 3(16), a new
     provision of 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 service." (emphasis added)  Section 3(48), which was in the original
     Act, in turn defines "telephone toll service" as "telephone service between stations in
     different exchanges for which there is made a separate charge."  We conclude that
     because the local exchange carrier provides access permitting the ISP to complete the
     transmission from its subscriber's location to a destination in another exchange using
     the toll service it typically has purchased from the interexchange carrier, the access
     service provided by the local exchange carrier is for the "origination or termination of
     telephone toll service" within the meaning of the statutory definition.  In reaching this
     conclusion, we further find that the interexchange carrier that provides the
     interexchange telecommunications to the ISP charges the ISP for those
     telecommunications and that charge is separate from the exchange service charge that
     the ISP or end user pays to the LEC.  As a result, the "separate charge" requirement
     of section 3(48) is satisfied with respect to the underlying interexchange
     telecommunications.
     7.     We therefore reject the argument of those commenters who suggest that the only
     service originated or terminated by the local exchange carrier, when it provides access
     to the ISP, is an information service. We previously rejected a similar argument in the
     Universal Service Report to Congress, where we held that carriers that offer basic
     interstate telecommunications functionality to end users (such as ISP subscribers) are
     "telecommunications carriers" covered by the relevant provisions of section 251 and
     254 of the Act "regardless of the underlying technology those service providers
     employ, and regardless of the applications that ride on top of their services."   In
     other words, even though the access provided to the ISP by the local exchange carrier
     facilitates the delivery of an information service because of the "applications that ride
     on top" of the telecommunications service, that same access necessarily facilitates the
     origination of the underlying telephone toll service used to transport the ISP's Internet
     access service. Therefore, while some commenters object that the LECs' services
     cannot be "exchange access" because there is no origination and termination of traffic
     to and from a telecommunications carrier, their argument fails whenever the ISP
     effectuates its transmission using the telephone toll service of a telecommunications
     carrier, as it generally does.
     8.     We recognize that this analysis with respect to "exchange access" does not by its terms
     cover traffic jointly carried by an incumbent LEC and a competitive LEC to an ISP
     where the ISP self-provides the transport component of its internet service.  We leave
     for another day the question of whether the LEC-provided portion of such traffic
     (which we believe to be rare) falls within the definition of "exchange access" in section
     3(16) and whether, as a result, the incumbent LEC would be subject to the
     interconnection obligations of section 251(c)(2) with respect to such traffic.  We find,
     however, that even if such traffic traveling over the facilities of an incumbent LEC and
     a competitive LEC to an ISP falls outside the scope of section 3(16) and is not
     covered by section 251(c)(2), the ILEC would nevertheless be subject to
     interconnection obligations imposed by section 251(a) and (to the extent that the
     service is interstate) section 201(a). Moreover, we note that, to the extent that the
     LEC-provided portion of such traffic may not fall within the definition of "exchange
     access," the predominantly inter-exchange end-to-end nature of such traffic
     nevertheless renders it largely non-local for purposes of reciprocal compensation
     obligations of section 251(b)(5).   In light of our authority to require interconnection
     under sections 201(a) and 251(a) even in the ISP self-provisioning context, we expect
     incumbent LECs to continue providing interconnection to competitive LECs without
     imposing tariff, certification or other requirements on competitive LECs requesting
     interconnection.  We encourage parties alleging the imposition of such requirements to
     file complaints pursuant to section 208 of the Act. 
     9.     We also reject US WEST's argument that xDSL-based advanced services are not
     encompassed within the definition of exchange access because such services may not
     connect one "telephone" to another.  US WEST argues that because "telephone toll
     service" is defined as "telephone service between stations in different exchange,"  use
     of computers or other facilities than telephones as "stations" should remove a service
     from the classification of telephone toll service.  Based on this premise, US WEST
     further argues that "telephone toll service" should be narrowly construed and that only
     ordinary telephone to telephone long distance calling can be classified as telephone toll
     service. We reject these contentions for several reasons.  
     10.    First, nothing in the Act or legislative history equates the term "station" with any
     particular type of facility.  As several commenters point out, Commission precedent
     supports the conclusion that the term "station" in section 3(48) refers to any device
     used by an end-user to receive and terminate telecommunications. For example, long
     distance facsimile transmissions (which clearly involve data) have long been considered
     telephone toll service; yet those transmissions often are effectuated without the use of
     a "telephone" device.  Rather, as with computers, the facsimile machine is plugged into
     a telephone jack, and then uses the phone wires for the transmission. US WEST's
     argument ignores this longstanding precedent. Moreover, a narrow, technology-
     specific interpretation of the term "station" is not articulated in the Act itself and
     would be at odds with its "technology neutral" objectives.  US WEST would ask us
     to conclude that Congress intended to ignore the fact that facilities and equipment
     used to provide telecommunications services evolve over time.  We conclude that US
     WEST's interpretation is neither a "plain meaning," as it asserts, nor, in our view, a
     reasonable interpretation.
     11.    Similarly, we reject US WEST's assertion that "telephone service" is limited to voice
     communications.  The local switched network has been used for the origination and
     termination of interstate data communications for many years. As noted above, the
     network has long been used to transmit facsimile communications, which are data
     communications. In fact, in its arbitration with e-spire before the Arizona Corporation
     Commission, US WEST acknowledged that it is offering the equivalent of exchange
     access when it permits access to its network for the origination or termination of
     interstate frame relay services. Similar to xDSL-based services, frame relay service is
     a high-speed packet switching technology that is used to transmit digital data. 
     12.    We recognize that we did hold, in the Non-Accounting Safeguards Order, that ISPs
     do not receive "exchange access services in connection with their provision of
     unregulated information services because of their status as non-carriers."  However,
     that Order constitutes a departure from other Commission precedent on this matter. 
     In a contemporaneous Commission decision, the Local Competition Order, we
     specifically stated that, although "[t]he vast majority" of exchange access service
     purchasers are telecommunications carriers, non-carriers "do occasionally purchase"
     such services.  In fact, when the Non-Accounting Safeguards Order was issued, the
     question of whether an xDSL-based service offering directed at ISPs could be
     "exchange access" or "telephone exchange service" was not before the Commission. 
     Indeed, such service was first offered more than a year after release of that Order.  
     13.    On a more complete record in this proceeding, we correct the inconsistency in our
     prior orders and overrule the determination made in the Non-Accounting Safeguards
     Order that non-carriers may not use exchange access and affirm our determination in
     the Local Competition Order that non-carriers may be purchasers of those services. 
     We find that this conclusion is consistent with the Commission's longstanding
     characterization of the service that LECs offer to enhanced services providers (which
     include ISPs) as exchange access.   In MTS and WATS Markets Structure Order, the
     Commission held that "[a]mong the variety of users of access service are enhanced
     service providers."  As recognized in that case, the Commission has always required
     LECs to offer access services to parties that may not be common carriers.  Similarly,
     we noted in the Amendment of Part 69 of the Commission's Rules Relating to
     Enhanced Service Providers that enhanced service providers use "exchange access
     service"  More recently, in the GTE ADSL Tariffiing Order, we noted that "[t]he
     Commission traditionally has characterized the link from an end user to an ESP as an
     interstate access service." 
     14.    These holdings comport with the conclusion in the Local Competition Order that non-
     carriers may purchase exchange access services.  This historical treatment properly
     serves as a lens through which to view Congress's intent in codifying a definition of
     "exchange access" in the 1996 Act.  Nothing in the new definition of the Act or in its
     history suggests that Congress intended to narrow, for the first time, the availability of
     exchange access service to certain telecommunications service providers.  For these
     reasons, we overrule our statements in the Non-Accounting Safeguards Order that
     non-carriers may not use exchange access, which we find to be inconsistent with our
     own precedent, and with the structure of the Act.
     15.    Finally, we reject U S WEST's contention that including DSL-based advanced services
     within the definition of "exchange access" would be inconsistent with the
     Commission's prior determination that such services constitute "special access." 
     Rather, we find that, with respect to access to the local network for the purpose of
     originating or terminating an interexchange communication, any service that otherwise
     constitutes "special access" also falls within the definition of "exchange access."  We
     note that "special access" refers to a dedicated path between an end-user and a service
     provider's point of presence.  We agree that special access, which provides access to
     the exchange through dedicated facilities, is different than switched access, which
     provides access to the exchange using switches.  Both forms of access, however,
     provide access to exchange facilities, which is the pertinent point under the statutory
     definition of "exchange access." 
  
       C.   "Information Access Service" is Not a Statutory Classification Separate and
       Distinct from Telephone Exchange Service and Exchange Access 
     16.    US WEST contends that it is not subject to section 251(c) for its provision of xDSL-
     based advanced services because such services are "information access" services,
     which it considers a category distinct from both "telephone exchange services" and
     "exchange access" services.  US WEST argues that the category of "information
     access" in the Modification of Final Judgement (MFJ) should be extended to the
     Communications Act, notwithstanding that "information access" is not a defined term
     under the Act, and is cross-referenced in only two transitional provisions. SBC and
     GTE join US West's argument that advanced services are "information access," which
     they assert is a category of service distinct from telephone exchange or exchange
     access under the Communications Act.  A number of parties question whether
     Congress intended to establish "information access" as a separate category of services
     that are not subject to section 251 requirements.  We disagree with US WEST and
     the commenters who argue that information access services are a separate category of
     services not subject to section 251(c).  For the reasons set forth below, we decline to
     find that information access services are a separate category of services, distinct from,
     and mutually exclusive with, telephone exchange services or exchange access services.  
     
     17.    Although Congress made a number of changes to the definitional provisions of the Act
     in the 1996 Act it did not include a definition for the term "information access."  That
     omission is not surprising in light of the fact that this term is referenced only twice in
     the Act, and only for the purposes of transitioning from the MFJ.  In contrast, the
     1996 Act did provide for new or modified definitions of several terms critical to the
     statute, including both "exchange access" and "telephone exchange service," terms
     that appear throughout the Act.  The term "information access" first appears in
     sections 251(g).  That provision is a transitional enforcement mechanism that obligates
     the incumbent LECs to continue to abide by equal access and nondiscriminatory
     interconnection requirements of the MFJ when such carriers "provide exchange
     access, information access and exchange services for such access to interexchange
     carriers and information service providers ."  Because the provision incorporates into
     the Act, on a transitional basis, these MFJ requirements, the Act uses the MFJ
     terminology in this section. However, this provision is merely a continuation of the
     equal access and nondiscrimination provisions of the Consent Decree until superseded
     by subsequent regulations of the Commission. 
     18.    The reference to "information access" in section 274(h)(2)(A) adds little more to US
     West's argument.  That section states that the term "electronic publishing," which
     section 274 prohibits BOCs form providing for four years, does not include
     "information access" as defined in the MFJ.  The cross-reference to the MFJ reflects
     the fact that although a BOC would be precluded for a time from engaging in
     electronic publishing, that prohibition would not encompass other offerings related to
     information services, including "information access," that otherwise were permitted by
     the divestiture court.  Yet again, in this transitional four-year provision, Congress was
     merely reconciling certain aspects of the MFJ with the new law.  Equally significant,
     nothing in this provision suggests that "information access" is a category of services
     mutually exclusive with exchange access or telephone exchange service.  
     19.    For the reasons set forth above, we find that the requirements Congress set forth in
     section 251 apply to incumbent LECs providing xDSL-based advanced services and
     that these services are either telephone exchange or exchange access.
  
  IV.  ORDERING CLAUSES
     20.    Accordingly, IT IS ORDERED that, pursuant to the authority contained in Sections 1-
     4, 7, 10, 201-205, 251-254, 256, 271, and 303(r) of the Communications Act of 1934,
     as amended, 47 U.S.C.  151-154, 157, 160, 201-205, 251-254, 256, 271, and
     303(r), this Order on Remand IS ADOPTED.
     21.    IT IS FURTHER ORDERED that the Commission's holding in its Advanced Services
     Opinion and Order, that incumbent local exchange carriers are subject to the
     obligations imposed by section 251 of the Communications Act in connection with the
     offering of advanced services that employ packet switching or other specific
     technologies such as digital subscriber line technologies, IS AFFIRMED except to the
     extent that the Commission has deferred a determination on the narrow question set
     forth in paragraph 38.
  
                           FEDERAL COMMUNICATIONS COMMISSION
  
  
  
                           Magalie Romn Salas
                           Secretary
                      
                           Appendix A
         List of Commenters in CC Docket No. 98-147
  
  Comments:
  
  Advanced Telcom Group, et al.
  AT&T Corp.
  CDS Networks, Inc.
  CoreComm Limited
  Covad Communications Company
  DSLnet Communications, LLC
  Focal Communications Corporation, et al.
  General Services Administration
  GTE Service Corporation
  Level 3 communications
  MCI WorldCom, Inc.
  Mindspring Enterprises, Inc. 
  Northpoint Communications, Inc.
  Prism Communications Services
  Rhythms Netconnections Inc.
  SBC Communications Inc.
  Sprint Corporation
  Telecommunications Resellers Association
  U.S. West Communications, Inc.
  
  Reply Comments:
  
  America Online, Inc.
  AT&T Corp.
  Cable & Wireless USA, Inc.
  Competitive Telecommunications Association
  DLSnet Communications, LLC
  GTE Service Corporation
  GVNW Consulting, Inc.
  ICG Communications, Inc.
  Level 3 Communications, LLC
  MCI WorldCom, Inc.
  NARUC
  Network Access Solutions Corporation
  Northpoint Communications, Inc.
  Prism Communications Services, Inc.
  RCN TeleCom Services, Inc., et al.
  Rhythms Netconnections Inc.
  SBC Communications Inc.
  U.S. West, Inc.
  USTA
  Williams Communications, Inc.
        STATEMENT OF COMMISSIONER HAROLD FURCHTGOTT-ROTH
           APPROVING IN PART & DISSENTING IN PART
                              
        Re: Deployment of Wireline Services Offering Advanced Telecommunications
  Capability, Order on Remand, CC Docket Nos. 98-147, 98-11, 98-26, 98-32, 98-78, 98-
  91.
  
       I agree with the Commission's decision that US WEST is an incumbent local
  exchange carrier and may not avoid the obligations imposed by section 251(c)(3) when
  providing advanced services.  I also agree with its conclusion that "information access
  service" is not a statutory classification separate and distinct from telephone exchange
  service and exchange access.  I cannot, however, approve of the Commission's
  conclusions that advanced services are either telephone exchange service or exchange
  access, and I dissent from this aspect of its order.
  
       The statute supplies two definitions of "telephone exchange service."  It is either 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 it is a "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.  3(47).  Exchange access means "the offering of access to telephone exchange
  services or facilities for the purpose of the origination or termination of telephone toll
  services." Id.  3(16).   
  
  At the outset, I recognize that these definitions are hardly models of clarity.  They
  incorporate terms better suited to the traditional circuit-switched network, some of which
  are left undefined in the statute, such as "telephone exchange," "intercommunicating," "the
  exchange service charge," "origination," and "termination."
  
       Although I agree with the Commission that "telephone exchange service" is not
  limited to the provision of voice services, I do not think that all advanced services can
  necessarily be shoehorned into the definition of  "telephone exchange service."  In my
  view, some advanced services do not permit the type of "intercommunication"
  contemplated by section 3(47)(A).  
  
  `For example, as the Commission acknowledgesan end-user's communication
  using an xDSL-based service is with an Internet service provider ("ISP") or other third
  party to which the end-user subscribes.  It is not with  and thus not in intercommunication
  with--other subscribers to a local telephone exchange network, or with subscribers on a
  different telephone exchange network, or even with the party to  whom the end-user's
  Internet traffic is ultimately directed.  
  
       Because communication with an advanced service such as xDSL is with and
  through an ISP, I find it difficult to classify such services as either telephone exchange
  service or access service.  First, as I explained in the reciprocal compensation order, I
  believe that traffic to an ISP, whether dial-up traffic or provided through an advance
  service, terminates at a the ISP   The so-called "two-call theory" was properly advanced
  by the Commission before January of this year and then improperly abandoned to provide
  a short-term remedy to reciprocal compensation issues  As I view local exchange traffic as
  terminating at an ISP, I consequently cannot view traffic subsequently routed by an ISP as
  part of a single call, or part of a telephone exchange service.
  
       Second, the Commission has long held that an ISP is not a telecommunications
  carrier or telecommunications provider Thus, even under a single-call theory for ISP-
  bound traffic, it is hard to explain how traffic handled and routed by  an ISP could, end-to-
  end, be an identifiable telecommunications service.  How does one characterize the role
  and identity of the non-telecommunications ISP in a communication that it routes or
  delivers? This paradox applies for both dial-up traffic and traffic by means of advanced
  services.
  
       Third, communications through ISPs do not in most instances "terminate" at the
  facilities of other subscribers.  Rather, messages are stored at remote servers, in region or
  out of region, but not with the ultimate addressee.  The addressee, in turn, retrieves the
  message from the remote server.  All of the activities of sending, storing, and retrieving
  messages are conducted on facilities that the Commission has not suggested are associated
  with a particular telecommunications service, much less with a particular telephone
  exchange service or exchange access service.  
  
  Fourth, the current use of xDSL services appears fundamentally at odds with the
  concept of "intercommunication."   The end-user cannot change the ISP to whom his
  high-speed data communications are directed without first disconnecting from that ISP
  and designating a replacement ISP.  Whatever "intercommunication" is occurring in this
  scenario is between the end-user and the ISP, and I therefore do not think that the end-
  user is employing advanced services for "intercommunication" with other subscribers
  within the meaning of section 3(47)(A).  Moreover, because the end-user is not
  "intercommunicating" with other subscribers, I do not agree that advanced services can be
  deemed "comparable services" under section 3(47)(B).
  
       For similar reasons, I do not believe that advanced services may be classified as
  "exchange access," which the statute 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.  3(16).  In the first place, I do not see how an xDSL-
  based communication is used in the origination or termination of a "telephone toll
  service," which is a "telephone service between stations in different exchange areas for
  which there is made a separate charge not include in contracts with subscribers for
  exchange access," Id. 3(48).  In any event, as indicated above, I disagree with the
  Commission's theory regarding the jurisdictional nature of Internet traffic.  In my view, an
  xDSL-based communication to an ISP terminates with the ISP, and so such traffic is not
  properly classified as "exchange access."